Commonwealth v. Thomas' Adm'r

• Decision Date: 25 November 1910
• Citation: 140 Ky. 789,131 S.W. 797
• Parties: COMMONWEALTH v. THOMAS' ADM'R.
• Court: Kentucky Court of Appeals

131 S.W. 797

140 Ky. 789

COMMONWEALTH v. THOMAS' ADM'R.

Court of Appeals of Kentucky.

November 25, 1910

Appeal from Circuit Court, Jefferson County, Chancery Branch, Second Division.

James Breathitt, Atty. Gen., Jno. F. Lockett, Asst. Atty. Gen., and A. W. Dorsey, for the Commonwealth.

Harrison & Harrison, for appellee.

O'REAR J.

In 1909 this action was filed in the Jefferson circuit court to settle the estate of Emma Thomas who died a resident of Jefferson county in 1908. A. W. Dorsey, an escheator appointed by the state, who was made a defendant, came into the action, and set up on behalf of the commonwealth that Emma Thomas died intestate, the owner of considerable property, as well as some real estate situated in the city of Louisville. He asked that upon the settlement of the estate any surplus left after the payment of debts vest in the commonwealth of Kentucky upon the ground that Emma Thomas did not leave any heirs or descendants. Pending the action the Louisville School Board by consent of all of the parties entered its appearance, and afterwards a demurrer interposed by the administrator of Emma Thomas to the pleading filed by the escheator was sustained and his pleading dismissed. From this order, this appeal is prosecuted by the commonwealth of Kentucky. It is the contention of the commonwealth that the escheator had the right on behalf of the commonwealth to assert claim to the residue of the estate left by Emma Thomas after the payment of her debts, upon the ground that the same escheated to the state. On the other hand, it is insisted by the administrator that Dorsey as escheator had no right or authority to come into the action and assert any claim on behalf of the state because the estate left by Emma Thomas after the payment of her debts in the absence of any heirs vested in the school board of the city of Louisville, and the school board alone had the right to assert claim to the surplus estate. In disposing of the case, it becomes necessary that we should consider certain provisions of the statute relative to estates of deceased persons who die intestate without leaving heirs.

Section 1606 of chapter 44 of the Kentucky Statutes (Russell's St. § 3824) relating to escheats and escheators, provides in part: "That part of estates lying or found in this commonwealth not disposed of by will of persons who have died, or may hereafter die, without heirs or distributees entitled to the same *** who *** has not claimed the same, or shall not claim the same within eight years after such death shall vest in the commonwealth subject to the debts and liabilities of the decedent." Other sections of this chapter provide that the proceeds of escheated estates that have been sold shall be paid over to the escheator for the commonwealth, and that any escheated property that vests in the commonwealth shall be subject to the right of the owner, his heirs or devisees, to be reimbursed upon presentation and allowance of his claim in the manner provided in the statute.

Section 2971 (section 850) of the chapter relating to municipal corporations of the first class, the city of Louisville being one, provides in part, that: "So much real, personal or mixed property in the city, which, from alienage, defect of heirs, failure of kindred, or other causes, shall escheat to the commonwealth of Kentucky, shall vest in the board for the use and benefit of the schools. Said board (board of education) may, in the name of the commonwealth, for the use and benefit of the public schools of the city, by its president or other officer to be designated by it, enter upon and take possession of said property, or sue for and recover the same by an action at law or in equity, and without office found. The board may sell and convey any of such property by warranty deed or otherwise."

The validity of this last-mentioned section is assailed by counsel for the commonwealth upon the ground that it is unconstitutional for two reasons: First, because it is in violation of section 60 of the Constitution, providing that: "The General Assembly shall not indirectly enact any special or local act by the repeal in part of a general act, or by exempting from the operation of a general act any city, town, district or county; but laws repealing local or special acts may be enacted. No law shall be enacted granting powers or privileges in any case where the granting of such powers or privileges shall have been provided for in a general law, nor where the courts have jurisdiction to grant the same or to give the relief asked for ***"--and, second, because, although it is conceded that the estates of persons who die intestate without heirs escheat to the state, that the property or its proceeds so escheated should go into the state treasury for the benefit of the state at large, and it is not competent for the Legislature to declare that property or its proceeds so escheated shall be given to any specific fund or devoted to any particular purpose. And so it is said that the escheator for the commonwealth under the general laws of the state, and not the board of education in the city of Louisville, had the right to assert claim to the property involved upon the ground that it had escheated. The argument is further made that there is no provision in the legislation relative to the escheat of property for the benefit of schools in cities of the first class whereby the heirs, if they should appear within the time provided in the statute, can recover back the property or its proceeds if sold, although there is a provision in the general laws relating to escheats that guards and protects the rights of heirs and distributees and enables them to recover the property or the proceeds if they are entitled to it, although it may have been taken possession of by the commonwealth or covered into the state treasury by proceedings instituted by an escheator on behalf of the state.

In Bank of Louisville v. Board of Trustees of Public Schools, 83 Ky. 219, 5 S.W. 735, the facts were these: The law then in force being article 1, c. 36, Gen. St., providing that all property, rights of property, credits or moneys, held on deposit or otherwise, the last known owner of which has not been heard of for eight years, and has not exercised any act of ownership over the same for eight years, should vest in the commonwealth without office found; and that the receipt of the auditor should be a full discharge or acquittance to the person or depository surrendering the possession of the property; and, further, that property in the city of Louisville subject to escheat should vest in the board of trustees of the schools for the benefit of the schools. It further provided that the state as well as the board of trustees of the public schools should refund property escheated to the person entitled to the same upon a showing that such person was entitled to recover it as heir of the decedent. The bank resisted the right of the school board to recover the deposit, and in passing upon the question the court--putting its decision upon the ground that the act divested the bank as well as the depositor of contract rights without giving either a substantial remedy for the recovery of the money in the event heirs entitled to the same should present claim to it--held the act invalid, saying in part: "When a deposit is made in a bank a contract is created between the depositor and it, by which it acquires the right to retain, use and control the money, subject to be returned to its customer upon his demand. That moment a right vests in him to look to the bank, and to it alone, for repayment; and, upon the other hand, the bank is invested with the right to hold the deposit against all others. The law then existing becomes an integral part of the contract, and creates these vested rights. The act now in question divests both the bank of its right to hold the money, and the depositor of his right to it, because he has not been heard of for more than eight years, and vests it in the appellee." It was, however, said in the course of the opinion that if the deposits belonged to the state, then it had a right to transfer them to the school board.

In the case of Louisville School Board v. Bank of Kentucky, 86 Ky. 150, 5 S.W. 739, 9 Ky. Law Rep. 433, the doctrine announced in the case of Bank of Louisville v. Board of Trustees, supra, was approved, and it was again held that the state had no power to divest persons of property to which they might be entitled under the law of escheat and require the rightful owners who sought to recover the same to look to school boards or other bodies for the recovery of their money, saying: "When the money is paid into the treasury and becomes a part of the state's finances it may be disposed of under legislative authority when not in violation of the organic law; but to authorize a corporation or private citizen to sue for and recover of one in the rightful possession, that character of money or property, because it has no real owner, or on the presumption by reason of the lapse of time that no such owner exists, and to hold it as a gift from the state, leaving the bailee responsible to the real owner, if he should appear, and requiring both to look to the done of the state for its value, is changing the legal status of the parties without their consent, and a character of legislation in plain violation of the Constitution."

As will be noted these last two cases are rested upon the fact that the statute then under investigation changed the contract which then existed in law between the depositor and the bank without the latter's consent, whereby the bank was left liable not only to the depositor whenever he might appear and demand his money, but took the money from the...