Standard Oil Co v. State of New Jersey Parsons

Citation95 L.Ed. 1078,71 S.Ct. 822,341 U.S. 428
Decision Date28 May 1951
Docket NumberNo. 384,384
PartiesSTANDARD OIL CO. v. STATE OF NEW JERSEY, by PARSONS, Attorney General of State of New Jersey
CourtUnited States Supreme Court

Mr.

Josiah Stryker, Newark, N.J., for appellant.

Mr. Emerson Richards, Atlantic City, N.J., for appellee.

Mr. Justice REED delivered the opinion of the Court.

The Standard Oil Company a New Jersey corporation, appeals from a judgment of the Supreme Court of New Jersey insofar as it declares escheated to the State of New Jersey unpaid dividends declared upon the stock of Standard Oil, and twelve shares of the common stock of the Company.

The New Jersey Escheat Act reads in part:

'If any person, who, at the time of his death, has been or shall have been, the owner of any personal property within this State, and shall have died, or shall die, intestate, without heirs or known kindred, capable of inheriting the same, and without leaving a surviving spouse, such personal property, of whatsoever nature the same may be, shall escheat to the State.'

'Whenever the owner, beneficial owner, or person entitled to any personal property within this State, has been or shall be and remain unknown for the period of fourteen successive years, or whenever the whereabouts of such owner, beneficial owner or person, has been or shall be and remain unknown for the period of fourteen successive years, or whenever any personal property wherever situate has been or shall be and remain unclaimed for the period of fourteen successive years, then, in any such event, such personal property shall escheat to the State.' N.J.Rev.Stat. 2:53 16, 2:53—17, N.J.S.A.

In accordance with the procedure prescribed by the Act, a petition in the name of the State of New Jersey for a decree escheating certain personal property, 1 including the property in issue here, was filed in the Chancery Division of the Superior Court of New Jersey. The petition alleged that appellant had in its custody or possession property which was subject to escheat under the Act for each of the alternative reasons listed in the above provisions: the owners of the property had died intestate without leaving anyone capable of taking the property; the owners had been unknown for fourteen successive years; the whereabouts of the owners had been unknown for fourteen successive years; the property had been unclaimed for fourteen successive years.

The appellant answered the petition and, after notice and hearing, the Chancery Division of the Superior Court entered a final judgment ordering escheat of the personal property. 2 N.J.Super. 442, 64 A.2d 386, 5 N.J.Super. 460, 68 A.2d 499. This judgment was modified and affirmed as modified by the Supreme Court of New Jersey. 5 N.J. 281, 74 A.2d 565.

Standard Oil, appealing from the decision of the Supreme Court of New Jersey, claims that the New Jersey Escheat Act and the judgment thereunder deprived the Company of its property without due process of law in violation of the Fourteenth Amendment. This unconstitutional deprivation is alleged to arise from the fact that the judgment of escheat does not protect Standard Oil from later liability to the stockholders whose claims to stock and dividends are escheated, because: (1) both the notice to the claimants of the property prescribed by the statute and the notice actually published were so inadequate that claimants were afforded no reasonable opportunity to learn of the escheat proceeding and of its effect on their claims, or to appear and protect their rights; (2) the obligation of the contracts of the persons whose property was escheated was impaired by the statute and judgment thereunder in violation of Art. I, § 10, cl. 1 of the Constitution of the United States; (3) the New Jersey courts were without jurisdiction to enter the judgment since neither the shares of stock nor the divi- dends had a situs in New Jersey for the purpose of escheat, nor were either lawfully seized in the escheat proceedings.2

Notice.—Appellant contends that the judgment of escheat deprives the various claimants against Standard Oil of their property without adequate notice, and since the claimants may therefore sue appellant later and recover on these claims, this statute and judgment deprive appellant of its property without due process of law.3

The statute, N.J.Rev.Stat. 2:53—21, N.J.S.A., provides:

'A notice containing a summary of the order designating the time and place of hearing, as approved by the court shall be published in a manner directed by the court and shall also be published once a week for three successive weeks in a newspaper of general circulation designated by the court; * * *.'

The Supreme Court of New Jersey authoritatively construed this to require 'that the notice shall identify the property of which escheat is sought and the last known owner.' 5 N.J. at page 307, 74 A.2d at page 577.4 The published notice in this case corresponded with this construction. It described the property in accordance with the state court's understanding of the requirements of N.J.Rev.Stat. 2:53—21, N.J.S.A., and clearly indicated that the petition was one for escheat.

This case differs from Wuchter v. Pizutti, 276 U.S. 13, 48 S.Ct. 259, 72 L.Ed. 446, relied on by appellant, since it is not here attempted to validate a defective statutory provision for notice by recourse to the sufficiency of the notice which, although not required by statute, was in fact given. Here it is the statute itself, as interpreted by the state court, which requires what we think is adequate notice.

In Security Savings Bank v. California, 263 U.S. 282, 44 S.Ct. 108, 68 L.Ed. 301, a case involving statutory escheat of the bank deposits presumed abandoned, where nothing to the contrary is known by bank officials, because unused and unclaimed for twenty years, it was similarly contended the bank was denied due process because depositors would not be bound by the judgment of escheat. 263 U.S. at page 286, 44 S.Ct. at page 110. This Court said '(T)he essentials of jurisdiction over the deposits are that there be seizure of the res at the commencement of the suit, and reasonable notice and opportunity to be heard.' 263 U.S. at page 287, 44 S.Ct. at page 110. The procedural provision made the depositors affected parties and required publication in Sacramento County, only, of the summons with no requirement of the depositors' addresses. Delivery of a copy of the summons on the bank was commanded. It was held, 263 U.S. at page 287, 44 S.Ct. at page 110, that the personal service on the bank effected seizure of the deposit and the publication of the summons was effective as similar publication would be in litigation involving unknown persons with possible claims to property. Cf. Anderson National Bank v. Luckett, 321 U.S. 233, 243, 64 S.Ct. 599, 604, 88 L.Ed. 692.

In Mullane v. Central Hanover Trust Co., 339 U.S. 306, 70 S.Ct. 652, 94 L.Ed. 865, in a proceeding to settle trusts with numerous parties as possible beneficiaries whose names and interests were unknown to the trustee, we commented on the subject of notice:

'This Court has not hesitated to approve of resort to publication as a customary substitute in another class of cases where it is not reasonably possible or practicable to give more adequate warning.' 339 U.S. at page 317, 70 S.Ct. at page 658.

We held that:

'Accordingly we overrule appellant's constitutional objections to published notice insofar as they are urged on behalf of any beneficiaries whose interests or addresses are unknown to the trustee.' 339 U.S. at page 318, 70 S.Ct. at page 659.

The sound reasons stated in the foregoing cases for deeming the notices there given adequate to bind interested persons in the respective proceedings, lead us to the conclusion that the notice by publication in this case was adequate. If the state has the responsibility of looking after abandoned property subject to its sovereign power, these publications are adequate to affect the owner's rights.

Impairment of Contract.—Appellant attacks the validity of the New Jersey escheat statute on the ground that it impairs the contract rights of the owners of the dividends and stock certificates in violation of Art. I, § 10, cl. 1, of the Constitution: 'No State shall * * * pass any * * * Law impairing the Obligation of Contracts * * *.' This New Jersey law was enacted to authorize the state to take possession of 'personal property' whenever the owner entitled to that 'personal property within (New Jersey) * * * shall be and remain unknown' or his 'whereabouts' remain unknown or the property remains 'unclaimed' for fourteen successive years. N.J.Rev.Stat. 2:53—15 and 17, N.J.S.A. We need not consider whether a state possesses inherent power for such legislation as to personalty as the successor to a prerogative of royal sovereignty.5

As a broad principle of jurisprudence rather than as a result of the evolution of legal rules, it is clear that a state, subject to constitutional limitations, may use its legislative power to dispose of property within its reach, belonging to unknown persons.6 Such property thus escapes seizure by would-be possessors and is used for the general good rather than for the chance enrichment of particular individuals or organizations. Normally the obligor or holder and the obligee or owner of abandoned property would, as here, have no contractual arrangement between themselves for its disposition in case of the owner's failure to make claim. As the disposition of abandoned property is a function of the state, no implied contract arises between obligor and obligee to determine the disposition of such property. Consequently, there is no impairment of contract by New Jersey's statute, enacted subsequent to the creation of the obligations here under examination, but only the exercise of a regulatory power over abandoned property.7

Situs of Property.—Appellant argues that the escheat to New Jersey of the stock and...

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