Evans Prods. Co. v. Fry

• Decision Date: 29 December 1943
• Docket Number: No. 15.,15.
• Citation: 307 Mich. 506,12 N.W.2d 448
• Parties: EVANS PRODUCTS CO. (PERE MARQUETTE RY. CO. et al., Interveners) v. FRY, State Treasurer, et al.
• Court: Michigan Supreme Court

307 Mich. 506

12 N.W.2d 448

EVANS PRODUCTS CO. (PERE MARQUETTE RY. CO. et al., Interveners)

v.FRY, State Treasurer, et al. ^*

No. 15.

Supreme Court of Michigan.

Dec. 29, 1943.

Proceeding for a declaration of rights by the Evans Products Company, wherein the Pere Marquette Railway Company and others intervened as plaintiffs, against Theodore I. Fry, state treasurer, and others, involving the constitutionality of Act No. 170, Pub. Acts 1941 (Comp.Laws Supp.1942, § 13458-1 et seq.). The circuit court in chancery held the act constitutional within certain limitations, and all plaintiffs appeal.

Decree holding the act constitutional in accordance with opinion.Appeal from Circuit Court, Ingham County, in Chancery; Leland W. carr, judge.

Before the Entire Bench.

Milburn & Semmes, of Detroit (James McEvoy, Jr., of Detroit, of counsel), for appellant Evans Products Co.

John C. Shields, Glenn C. Wilber, and Edward H. Goodman, all of Detroit, for appellant Pere Marquette Ry. Co.

John J. Danhof and William A. Alfs, both of Detroit, for appellant New York Cent. R. Co.

William R. Roberts, of Jackson (Brownell & Gault and Ralph E. Gault, all of Flint, of counsel), for appellant Consumers Power Co.

Herbert J. Rushton, Atty. Gen., Edmund E. Shepherd, Sol. Gen., of Lansing, Arthur L. Fitch, State Public Adm. and Asst. Atty. Gen., and Daniel J. O'Hara, Asst. Atty. Gen., for appellees.

BOYLES, Chief Justice.

Evans Products Company, a Delaware corporation, filed a petition for a declaration of rights, in the circuit court for Ingham county, under Act. No. 36, Pub. Acts 1929 (3 Comp.Laws 1929, §§ 13903-13909, Stat.Ann. §§ 27.501-27.507). Subsequently the Consumers Power Company, Pere Marquette Railway Company and the New York Central Railroad Company upon leave granted in the court below were allowed to intervene as plaintiffs. The defendants constitute the State board of escheats, the attorney general, and the State public administrator. In their petitions plaintiffs asked the court to hold Act No. 170, Pub. Acts 1941 (Stat.Ann.1943 Cum.Supp. § 26.1021 et seq.), unconstitutional, to construe the act, and to restrain defendants from enforcing said act. The lower court granted a temporary injunction to that effect. The case was submitted on the pleadings and an agreed statement of facts and the court held the act constitutional within certain limitations as construed by the court. All plaintiffs appeal.

Act No. 170, Pub. Acts 1941, under challenge in this case, purports to amend the escheat law (Act No. 238, Pub. Acts 1897, as amended [3 Comp.Laws 1929, § 13455 et seq. (See Comp.Laws Supps. 1940, 1942, § 13458-1 et seq., Stat.Ann. and Stat.Ann.1943 Cum.Supp. § 26.1021 et seq.)]).

The facts are not in dispute. Plaintiffs are ‘depositories' as defined in section 4b of said Act 170. Seven years or more prior to the effective date of Act 170, plaintiffs became indebted or accountable to certain natural persons, copartnerships, corporations, associations, both residents and nonresidents of Michigan, as depositors of money or property, which indebtedness or accountability has not been extinguished by payment or delivery, and plaintiffs are still in possession of such property. In some instances plaintiffs have not contacted or had any business dealings, either directly or indirectly, with the depositors for more than seven years prior to the effective date of Act 170. Evans Products Company alleges, and defendants admit, that it is in the possession of moneys, credits, securities, or other intangible property at one time carried upon its books of account in the name of or held for the account of or owing to natural persons, copartnerships, companies and corporations where no dealings or transactions have been had with respect thereto with such natural persons, copartnerships, companies or corporations for a period of seven years or more. Such property specifically includes unpaid wages, accounts payable for the purchase of goods, wares and merchandise, unclaimed or uncalled-for dividends upon capital stock, and moneys deposited with said plaintiff upon uncompleted transactions where upon completion of the transaction the deposits was to be applied as a part of the total consideration and where the transaction was never completed. The Consumers Power Company alleges, and defendants admit, that it has in its possession moneys, credits, securities, or other intangible personal property at one time carried on its books in the name of or held for the account of or owing to natural persons, copartnerships and corporations where no dealings or transactions have been had with respect thereto with such persons for a period of seven years or more, including unclaimed security deposits, unclaimed wages, unclaimed dividends upon its capital stock, unclaimed checks other than checks for dividends on its capital stock, and book balances. Said security deposits consist of cash deposits made by former customers of Consumers Power Company as a guarantee or security for the prompt payment of bills for electric, gas, water, and steam heat service furnished by it, upon which deposits the company pays interest until the deposit is refundable, provided the customer takes service for at least three consecutive months. Said deposit is refundable to the customer with accrued interest, less any indebtedness to the company, when service is discontinued, or in the absence of discontinuance whenever the customer's credit is satisfactorily established. The plaintiff railroad companies allege, and defendants admit, that they are common carriers doing an international and interstate business, subject to the provisions of the Interstate Commerce Act and the regulations of the Interstate Commerce Commission, that they have in their possession moneys, credits, securities, or other intangible personal property at one time carried on their books in the name of or held for the account of or owing to others where no dealings or transactions have been had with respect thereto with such persons for seven years or more, including unpaid wages, funds deposited with fiscal agents and fiduciaries, prepaid transportation charges, unclaimed and refused personal property, unclaimed overcharges, damages not based on overcharges, accounts payable for the purchase of goods, wares and merchandise, unclaimed dividends on common stock. Defendants admit that the attorney general has served on plaintiffs a demand for report of escheated proporty, pursuant to the provisions of section 6a of said Act 170, and plaintiffs assert that for various reasons compliance with such demand is impossible.

Plaintiffs assert that Act 170 is unconstitutional in its entirety for two reasons. They claim (1) that Act No. 170, Pub. Acts 1941, violates section 21 of article 5 of the Michigan Constitution (1908) in that it alters, amends and repeals by implication certain sections of the statute of limitations (3 Comp.Laws 1929, §§ 13964-13996, as amended [Stat.Ann. §§ 27.593-27.634]); and (2) that Act No. 170, Pub. Acts 1941, deprives plaintiffs of their property without due process of law in violation of section 16, article 2, of the Michigan Constitution, and the Fourteenth Amendment to the Constitution of the United States. Plaintiffs also propound certain other questions which will be referred to later.

A review of the general purpose and trend of the Michigan escheat law and of the changes effected by Act No. 170, Pub.Acts 1941, is essential to a proper understanding of the questions raised for consideration.

‘In passing upon the constitutionality of a statute, it is of first importance to be mindful of the subject-matter to which the statute pertains or is applicable.’ Braun v. McPherson, 277 Mich. 396, 269 N.W. 211, 212.

The governor and judges of Michigan Territory adopted an escheat law in 1818, and throughout the early statutes passed in 1842 and 1846, until Act No. 238, Pub. Acts 1897 (3 Comp.Laws 1929, § 13455 et seq., Stat.Ann. § 26,1021 et seq.), became effective, the law of escheats in Michigan was predicated on the idea that the State should claim lands or other property by reason of the owners thereof dying intestate leaving no legal heirs. Likewise, beginning with the earliest statutes of descent and distribution of the property of a deceased person (Rev.Stat. 1846, chap. 67, § 1[9], chap. 70, § 1) and down through a succession of amendments to the present statutes of descent and distribution, still a part of our statute law (Act No. 288, chap. 2, §§ 80, 93, Pub.Acts. 1939, Comp.Laws Supp. 1940, §§ 16289-2[80], 16289-2[93], Stat.Ann.1942 Cum.Supp. §§ 27.3178[150], 27.3178[163]), if one dies intestate without heirs or kindred, his estate escheats to the people of the State. Other statutes of similar import have long been in effect. Under chapter 127 of the Revised Statutes of 1846 still in effect (2 Comp.Laws 1929, §§ 9014-9025, Stat.Ann. §§ 18.721-18.732), the proceeds from sale of certain unclaimed property escheats to the State. Money or property found on the body of an unknown deceased person may ultimately pass into the State treasury (3 Comp.Laws 1929, §§ 17419, 17420, Stat.Ann. §§ 28.1185, 28.1186). In absence of a legal demand, unclaimed property of a convict in State prison dying before his release becomes the property of the State. 3 Comp.Laws 1929, § 17554 (Stat.Ann. § 28.1381). The doctrine of the law of escheats is well established, that where there appears to be lack of ownership of real or personal property the State takes it over to conserve for any person who might ultimately establish his right, or otherwise for the common benefit of the people of the State. Until 1897 this doctrine was usually limited to the property of persons dying intestate leaving no legal heirs.

Enlarging the earlier doctrine of escheats, the legislature, in enacting Act No. 238, Pub. Acts 1897, put into said act, in addition to the provisions regarding the escheat of lands and property of...