Gorny v. Trustees of Milwaukee County Orphans Board

• Decision Date: 05 January 1938
• Docket Number: No. 6154.,6154.
• Citation: 93 F.2d 107,115 ALR 1000
• Parties: GORNY et al. v. TRUSTEES OF MILWAUKEE COUNTY ORPHANS BOARD.
• Court: U.S. Court of Appeals — Seventh Circuit

115 ALR 1000, 93 F.2d 107 (1937)

GORNY et al. v. TRUSTEES OF MILWAUKEE COUNTY ORPHANS BOARD.

No. 6154.

Circuit Court of Appeals, Seventh Circuit.

December 3, 1937.

Rehearing Denied January 5, 1938.

Albert B. Houghton, of Milwaukee, Wis., for appellant.

George C. Brown, of Grand Rapids, Mich., and H. H. Bodenstab, of Milwaukee, Wis., for appellees.

Before EVANS and MAJOR, Circuit Judges, and LINDLEY, District Judge.

MAJOR, Circuit Judge.

This is an appeal from a decree obtained in an equity action instituted by appellees September 13, 1935, to recover from appellant the sum of $20,909.99, being the escheated estate of Mary Bulewicz, deceased, and paid to appellant in conformity with a decree of the county court of Milwaukee county, entered in probate, February 26, 1926. The decree was entered pursuant to section 2, chapter 471, Priv. & Loc.Laws 1871 of Wisconsin, as follows: "If, after the expiration of one year from the granting of letters of administration to the public administrator on any estate, no heirs shall appear or be heard from, the county court shall, by decree, direct and order the public administrator to transfer and pay over the residue of the personal estate of the deceased to the trustees of the Milwaukee county orphans' board, and such trustees shall forthwith invest the moneys which may be paid over to them by the public administrator, in bonds of the United States or of this state, the interest of which shall be used for the purposes prescribed in the act of incorporation of said trustees and the principal shall be subject to the order of the county court for the period of five years; if at any time within five years after such moneys have been paid over to the said trustees as aforesaid, any heir shall appear before said county court and make satisfactory proof that he is entitled to the residue or any moiety of such moneys, the county court may, by order, direct the said trustees to pay over to said heir so much of said principal as he may be entitled to; such appearance shall be made by petition, and a notice of said application shall be served on the president of said board at least ten days prior thereto; but if no heir shall appear within five years after such moneys have been paid over as aforesaid, then such principal shall vest absolutely in the trustees of the Milwaukee county orphans' board, for the uses and purposes prescribed in the act of incorporation of said board."

Appellant is a creature of the Wisconsin statute and is required to hold in trust all property turned over to it for the benefit and support of certain enumerated orphans designated by said statute.

Relying upon the above statute, a part of the appellees (referred to as foreign heirs), on February 25, 1931, filed a petition in the county court asking for refund of said escheated estate. A hearing was had upon said petition and the same taken under advisement. Prior to the announcement of a decision, the Supreme Court of Wisconsin (In re Lillian Payne's Estate, 208 Wis. 142, 242 N.W. 553), held the provision about quoted unconstitutional. On June 21, 1932, certain other of the appellees (termed American heirs) filed their petition in the county court praying for a refund to them from the state of Wisconsin of one-half of the estate in question.

October 14, 1932, the county court dismissed both of said petitions; the first because of the decision of the Supreme Court decreeing the above-quoted provision unconstitutional, and the second because the state of Wisconsin did not have the funds in question in its possession. This ruling was, on September 12, 1933, affirmed by the Supreme Court of Wisconsin. In re Estate of Mary Bulewicz, deceased, 212 Wis. 426, 249 N.W. 534. The state of Wisconsin instituted an action against appellant to recover the escheated fund which the Supreme Court (In re Trustees of Milwaukee County Orphans' Board, 218 Wis. 518, 261 N.W. 676) denied on the theory that the judgment of the county court of February 26, 1926, was res adjudicata as to the state, even though based upon the unconstitutional provision. Following that decision the present action was commenced. The depositions of certain witnesses which had been taken for and used in the county court proceeding were, over objection of appellant, admitted in evidence in this proceeding. The identity of the deceased is in dispute.

The issues raised by this appeal are:

(1) Is the final decree entered by the county court of Milwaukee county on February 26, 1926, finding that Mary Bulewicz died without heirs, res adjudicata as to the appellees and immune from collateral attack?

(2) Is there any right of refund to the escheated estate of Mary Bulewicz, under either state or federal law?

(3) Has the statute of limitations run as to any rights claimed by the appellees?

(4) Did the court err in permitting the appellees to use in this case, depositions which were taken for use in proceedings in the county court of Milwaukee county?

(5) Was Mary Gorny, who was born in 1862 in Gross Schoenbrueck, Poland, the same person as Mary Bulewicz, who died in Milwaukee, Wis., 1920?

Appellant cites a number of authorities in support of its theory that the judgment of the county court on February 26, 1926, is res adjudicata as to the appellees and immune from collateral attack. That such is the case in so far as the judgment escheats the estate, there seems to be no doubt; in fact, appellees make such concession. It does not follow from this, however, that the judgment, or that portion of the judgment concerning heirship to the estate is conclusive. In fact, a judgment founded upon an escheat statute, providing for a refund, must recognize, as does the statute, that it is limited by the right of an heir to claim a refund under such conditions as the state may prescribe. Nor does the judgment in this case contain a finding in this respect which can be regarded as final. The pertinent words found in the statute are, "If * * * no heirs shall appear or be heard from, the county court shall" make payment as the statute directs. The court, in its decree, actually found as follows: "And it further appearing that said deceased left her surviving no husband, issue nor next of kin to the knowledge, information or belief of the public administrator." It will thus be observed that the court made no finding of "no heirs", and, even if it had done so, such finding would have been not only beyond its power under the statute in question, but inconsistent with its provisions which contemplated that any heir might establish a right to the fund by complying with the conditions therein contained. The case of Christianson v. King County, 239 U.S. 356, 36 S.Ct. 114, 60 L.Ed. 327, quoted at length by appellant, is not in point. There the right of refund was not involved, as the escheat statute with which the court was dealing contained no provision for such, and the judgment of escheat alone was held to be final. Other cases cited by appellant are distinguishable upon similar grounds. In the present case the judgment of escheat is final and binding upon the parties, but whatever finding the court might have made with respect to heirship could not be final in the sense that it can be successfully invoked as a defense to an action for refund.

We do not understand this conclusion to be contrary to the holding of the Supreme Court of Wisconsin. In re Trustees of Milwaukee County Orphans' Board, supra. There, it is true, the court held the judgment of the county court res adjudicata as to the state. The judgment referred to must have been that which determined the estate to be escheat and not a judgment determining that no heirs existed. Assume the state had been successful in that case and the funds turned over to the state treasurer, or assume the funds had been originally paid to the state treasurer, could any one contend that the judgment of the county court was res adjudicata on the question of heirship when the very statute under which the judgment of escheat, and under which the funds were paid into the state treasury, likewise made provision for heirs making claim for refund?

The question as to whether a right of refund exists under the perplexing situation presented, and, if so, whether barred by the statute of limitations, are so interwoven they will be considered together. In doing so, we believe it important to understand both the power to escheat and the rights of heirs to claim a refund in such property. The following statement from appellees' brief is pertinent: "The power to escheat is a sovereign power and when the sovereign escheats he may do so absolutely or conditionally, with or without reservation of right of refund; or he may refuse to enact an escheat law at all, as is the policy of the state of New York. If no law authorizes a refund there can be no refund enforced. There is no common law right of refund, nor is there any general Federal escheat law, applying to the states, and it is beyond the power of congress to enact such a law."

As bearing upon the matter, we also quote from Corpus Juris 21, page 862: "* * * While the state may as a matter of grace agree to reimburse the rightful owner of escheated property subsequently appearing, it is not bound to do so, and it may exact conditions on which it will make reimbursement and limit the time within which reimbursement will be made, provided such limitation does not interfere with vested rights."

In discussing an escheat state, the court in Commonwealth v. Thomas' Adm'r, 140 Ky. 789, 131 S.W. 797, 800, said: "The state may in its generosity, or sense of fairness, say that it will not in such case hold the proceeds against the original claimant, if he subsequently appears, and may provide for his reimbursement. It may do less, as by shortening the...