State by Parsons v. Standard Oil Co.

• Decision Date: 27 June 1950
• Docket Number: No. A--134,A--134
• Citation: 74 A.2d 565,5 N.J. 281
• Parties: STATE by PARSONS v. STANDARD OIL CO.
• Court: New Jersey Supreme Court

Page 281

5 N.J. 281

74 A.2d 565

STATE by PARSONS v. STANDARD OIL CO.

No. A--134.

Supreme Court of New Jersey.

Argued May 8, 1950.

Decided June 27, 1950.

Josiah Stryker, Newark, argued the cause for appellant. Stryker, Tams & Horner, Newark, attorneys.

Emerson Richards, Deputy Attorney General, argued the cause for the State. Theodore D. Parsons, Attorney General, on the brief.

The opinion of the court was delivered by

HEHER, J.

The primary question here is the constitutional sufficiency of ch. 155 of the Session Laws of 1946, as amended by ch. 357 of the Session Laws of 1947 (N.J.S.A. 2:53--15, et seq.), providing for the escheat in certain circumstances of 'moneys, negotiable instruments, choses in action, interest, debts or demands due to the escheated estate, stocks, bonds, deposits, machinery, farm crops, live stock, fixtures, and every other kind of tangible or intangible property and the accretion thereon,' but excluding 'real property or property' in Custodia legis and 'unclaimed bank deposits' made subject to escheat by ch. 199 of the Session Laws of 1945, N.J.S.A. 17:9--18 et seq.

The statute escheats to the State such personal property 'within this State' of one who has died, or shall die, intestate, 'without heirs or known kindred, capable of inheriting the same, and without leaving a surviving spouse;' the personal property 'within this State' of an 'owner, beneficial owner, or person entitled' thereto who 'has been or shall be and remain unknown for the period of fourteen successive years,' or whose 'whereabouts * * * has been or shall be and remain unknown for the period of fourteen successive years;' and personal property 'wherever situate' which 'has been or shall be and remain unclaimed for the period of fourteen successive years.'

Jurisdiction to enter a judgment of escheat, originally granted to the old Court of Chancery, is now vested in the Chancery Division of the Superior Court. It is invoked by a petition setting forth the jurisdictional requisites. The court is enjoined to 'make an order requiring the defendant to answer the petition within a time therein limited.' And there is provision for 'such other directions' as the court may deem appropriate 'for the speedy determination of the cause, the protection of the property, or for the disclosure of information pertinent to the prosecution of the cause.' Provision is also made for service of a copy of the petition and order 'upon the defendant in the manner provided in the said order;' and the defendant is directed, within the time limited, to answer the petition and comply with the order. Upon the filing of the defendant's answer, and his compliance with the order, it is incumbent upon the court, by a further order, to designate a time and place for the hearing of the petition. A 'notice' summarizing 'the order designating the time and place of hearing, as approved by the court,' shall then '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,' provided that where the value of the personal property 'of any one owner is less than $50, publication may be dispensed with if the court so directs.' The notice shall direct that 'any person who may claim to be entitled' to the property, or any interest therein, shall file his claim in the general form of an answer at least five days prior to the date fixed for the hearing. If no 'answering pleadings' be filed within the time prescribed 'by order of the court,' the court may proceed upon the petition alone, and enter judgment declaring that the property 'has escheated to the State.' Upon the entry of a judgment of escheat, the person 'in possession' shall deliver the property to the State Treasurer; and the Treasurer is enjoined to convert the property into money after 'public notice' and deposit the proceeds in the State Treasury.

The judgment of escheat, by express provision, operates 'as a full, absolute and unconditional release and discharge of the person having such property in possession or custody from any and all claim, demand, or liability to any person whatever other than the State Treasurer with respect to such property,' and is pleadable 'as an absolute bar to any action brought against such person with respect to such property by any person other than the State Treasurer.'

Any person 'whose property may have escheated to the State as provided' in the Act, 'or any rightful heir entitled to such property by descent, may, within two years after' the entry of the judgment of escheat, apply for a reopening of the judgment, and 'upon proof that' he was 'without actual knowledge' of the escheat proceedings and 'proof of ownership of such property or the right to possession thereof, the court may in its discretion reopen' the judgment: and 'in the event' that the judgment 'in part or in whole be revised or amended, the court may direct the State Treasurer to repay such part of the moneys received by the State Treasurer by reason' of the judgment 'to the party or parties in the amended' judgment 'entitled to have the same, and upon the entry of such' judgment 'the State Treasurer shall repay the said moneys as provided' in the judgment, less the 'expenses and charges that may have accrued or been paid out by reason of the entry of the original' judgment.

The judgment under review escheated to the State the following classes of personal property found to be in the possession of the defendant corporation:

(a) Unpaid dividends declared upon shares of its capital stock, aggregating $6,238.01 (b) Twelve shares of its common capital stock, of the aggregate par value of $300;

(c) Unpaid wages of former employees of the corporation whose services were rendered in New Jersey, aggregating $31,381.08;

(d) Moneys withheld from wages of former employees of the corporation for the purchase of Liberty Bonds, aggregating.$1210;

(e) The amounts of unpresented commercial bank checks issued by the corporation, aggregating $8,561.62; and

(f) Moneys withheld by the corporation on account of coupons of its Twenty-Year 5% Debenture issue of 1926, aggregating $3125.

The Standard Oil Company is a domestic corporation. It was organized in 1882 under the laws of New Jersey; and it subsists under that franchise grant. It maintains its registered office in Flemington, New Jersey. It is stipulated that the stated items of property have remained unclaimed for more than fourteen successive years prior to the institution of this proceeding, and still remain unclaimed, and that the whereabouts of the owners or persons entitled to the property have remained unknown for a period of fourteen successive years prior to the commencement of this proceeding, and still remain unknown.

The Superior Court concluded that 'Implicit in the terms and provisions of the Escheat Act is the persuasion of the legislature that the retention of abandoned and unclaimed personal property for an ultimate and eventual disposition to the beneficial owner has constituted a relationship in the nature of a trust, hence the investment of jurisdiction in equity;' (68 A.2d 499, 503) that while as between the debtor and creditor the debt or cause of action 'has become extinct' by the lapse of time prescribed by the statute of limitations, 'the right of recovery by the State in a proceeding in the nature of escheat is distinguishable and independent of the rights of the individuals and that such isolated prerogative right did not become extinct;' that the State 'acts initially as a conservator of the abandoned property, not as a party to a contract, and that the sovereign right cannot be demolished or suppressed by the acts of the individual debtors and creditors;' that it was not the design of the statute of limitations to 'abate the pursuit by the State of its sovereign power to escheat unclaimed and abandoned property;' and that where 'the diversities of legal argumentation concerning the constitutionality of a statute and the exercise of a prerogative power in pursuance thereof approximate an equiponderance, it is in accord with recognized policy for the court to resolve the issue in favor of validity,' and it is therefore 'unnecessary to discuss the application of the statute of limitations to the respective classes of intangible property here sought to be escheated.'

I.

It is the insistence of the defendant corporation that there was error in construing the Escheat Act as applicable to choses in action barred by the statute of limitations 'at the time the right of the State accrued;' and that this construction and application contravenes paragraphs 1 and 16 of Article I of the Constitution of 1844, now paragraphs 1 and 20, respectively, of Article I of the Constitution of 1947.

The argument, in brief, is that the property subject to escheat under R.S. 2:53--17, N.J.S.A., considered in relation to the definitive terms of R.S.2:53--15, N.J.S.A., 'is property to which some person is entitled and which is in the possession or custody of some other person who is to be the defendant in the escheat proceeding;' that in the case of debts, 'it is the claim or chose in action which is escheated, not the property of the debtor out of which the chose in action, if enforced, would be satisfied;' that if the unclaimed property is a debt, the State 'takes the claim which the owner has * * *, subject to all defenses which the debtor is entitled to assert against the owner who has failed to claim the debt;' and that the defendant has a vested right to interpose the defense of the bar of the statute of limitations which the Legislature is not free to destroy.

It is not to be supposed that the Legislature intended to revive all outlawed debts and demands for appropriation by the State, no matter when the obligation came into being and however long the right of enforcement ceased to exist. The inclusion of 'debts or...