State by Van Riper v. American Sugar Refining Co., A--46

• Decision Date: 09 January 1956
• Docket Number: No. A--46,A--46
• Citation: 20 N.J. 286,119 A.2d 767
• Parties: The STATE of New Jersey--by Walter D. VAN RIPER, Attorney General of the State of New Jersey, Plaintiff-Appellant, v. The AMERICAN SUGAR REFINING COMPANY, a corporation of the State of New Jersey, Defendant-Respondent, and The Commonwealth of Massachusetts, Intervenor-Claimant-Respondent.
• Court: New Jersey Supreme Court

Page 286

20 N.J. 286

119 A.2d 767

The STATE of New Jersey--by Walter D. VAN RIPER, Attorney General of the State of New Jersey, Plaintiff-Appellant, v. The AMERICAN SUGAR REFINING COMPANY, a corporation of the State of New Jersey, Defendant-Respondent and The Commonwealth of Massachusetts, Intervenor-Claimant-Respondent.

No. A--46.

Supreme Court of New Jersey.

Argued Nov. 14, 1955.

Decided Jan. 9, 1956.

Harold Kolovsky, Asst. Atty. Gen., argued the cause for appellant (Grover C. Richman, Jr., Atty. Gen., Charles J. Kehoe, Asst. Deputy Atty. Gen., on the brief).

Harris A. Reynolds, of the Massachusetts Bar and Asst. Atty. Gen., of Massachusetts, argued the cause for the intervenor-claimant-respondent (William R. Blair, Jr., Red Bank, George Fingold, Atty. Gen. of Massachusetts, and George Luftman, Boston, Mass., on the brief).

Josiah Stryker, Newark, argued the cause for the defendant-respondent (Stryker, Tams & Horner, Newark, attorneys).

The opinion of the court was delivered by

JACOBS, J.

The State of New Jersey appealed to the Appellate Division from the judgment of the Chancery Division that dividends which had been declared many years ago by The American Sugar Refining Company, a New Jersey corporation, and had remained unclaimed by stockholders whose last known addresses were in Massachusetts, escheated to Massachusetts rather than New Jersey. We certified New Jersey's appeal under R.R. 1:10--1.

The early common-law doctrine of escheat was confined to real property; it was an incident of tenure and related to the right of the lord to take for want of a tenant. State v. Otis Elevator Co., 19 N.J.Super. 107, 108, 88 A.2d 20 (Ch.1952), reversed 12 N.J. 1, 95 A.2d 715 (1953); 3 Holdsworth's History o English Law (3rd ed. 1923), 67. Later it was extended to personal property which had no owner or whose owner or owner's whereabouts was unknown. State, by Parsons, v. Standard Oil Co., 5 N.J. 281, 297, 74 A.2 565 (1950), affirmed sub nom. Standard Oil Co. v. State of New Jersey, 341 U.S. 428, 71 S.Ct. 822 95 L.Ed. 1078 (1951). Cf. 7 Holdsworth's History of English Law 495 (1926); 10 Id. 350 (1938); Garrison, Escheats, Abandoned Property Acts and Their Revenue Aspects, 35 Ky.L.J. 302 (1947). The New Jersey Legislature first asserted its sovereign power to appropriate such personal property within its borders by the passage of its Escheat Act of 1946 (L.1946, c. 155; N.J.S.A. 2:53--15 et seq.; N.J.S. 2A:37--11 et seq., N.J.S.A.). That act provides that whenever personal property within the State remains unclaimed for the period of 14 successive years it 'shall escheat to the state'; its constitutionality has been expressly sustained by the United States Supreme Court and is not in question here. Standard Oil Co. v. State of New Jersey, supra. Its definitions and terms are comprehensive and its reference to 'any personal property within this state' includes unclaimed tangible and intangible property within New Jersey no matter where the last owners were last situated. Unclaimed dividends owing from a New Jersey corporation to its stockholders wherever located constitute property within this State within the contemplation of the Act. See State, by Parsons, v. Standard Oil Co., supra. Cf. Security Sav. Bank v. California, 263 U.S. 282, 285, 44 S.Ct. 108, 110, 68 L.Ed. 301, 306 (1923), where Justice Brandeis described unclaimed deposits in a local bank as 'intangible property within the state' over which 'the state has the same dominion that it has over tangible property.' See also Anderson National Bank v. Luckett, 321 U.S. 233, 64 S.Ct. 599, 88 L.Ed. 692 (1944).

On January 14, 1949 the State of New Jersey instituted action under its Escheat Act against the defendant The American Sugar Refining Company, a corporation of New Jersey. Its complaint alleged that the defendant had in its possession 'certain personal property which has escheated' to the State of New Jersey and sought discovery and, after hearing, a judgment escheating such property as came within the terms of the act. On January 24, 1949, the court entered an order providing for answer and discovery and directing that the defendant retain possession of the escheatable property in its custody until further order of the court. On July 17, 1951 the defendant filed its answer which listed (among other matters) the last known addresses of the last known owners of unclaimed dividends payable between January 10, 1891 and January 14, 1935. The list contained 1,162 names of which 501 indicated last known addresses in Massachusetts; whether these were residences, places of business, or other addresses, is mostly undisclosed; some were post office addresses, others were in care of banks or other institutions or individuals, and still others were in municipalities without street addresses. Some individual claims were filed and honored by the court but there remained the sum of $8,235.45 unclaimed on dividends payable to persons with last known addresses somewhere in Massachusetts. It is this sum which is now in dispute, with New Jersey claiming it under its Escheat Act and Massachusetts, an intervening party under petition filed on October 20, 1952, claiming it under chapter 200A of Massachusetts General Laws.

About 18 months after the State of New Jersey filed its complaint, Massachusetts enacted chapter 200A of its General Laws; prior thereto there was no pertinent escheats legislation in effect in Massachusetts. Chapter 200A provides that dividends held 'for the benefit of a person residing or having a place of business' in Massachusetts and unclaimed for 14 years or more shall be presumed abandoned an shall be surrendered to the State Commissioner of Corporations and Taxation. It provides further that property which has been surrendered to the Commissioner shall vest in the Commonwealth of Massachusetts and that the Commissiner shall thereafter transfer it or its proceeds to the Treasurer and Receiver General for placement in an abandoned property fund. Whenever such fund exceeds $100,000 the excess is then to be placed in the Old Age Assistance Fund. Any person claiming an interest in property surrendered to the Commissioner is authorized to establish his claim 'at any time thereafter.' The State of New Jersey contends that the Massachusetts statute is merely a custody rather than an absolute escheats law and that, in any event it unconstitutionally fails to satisfy due process requirements. Cf. State v. Otis Elevator Co., supra, 12 N.J. at page 18, 88 A.2d 20. For present purposes, we accept the position advanced by Massachusetts that its enactment may be construed as an absolute escheats law and that it is not violative of any constitutional requirement. See Anderson National Bank v. Luckett, supra.

Almost three years after the State of New Jersey filed its complaint, the Legislature passed chapter 304 of he Laws of 1951. See N.J.S. 2A:37--29 et seq., N.J.S.A. This statute provides a method for taking custody of (and thereafter escheating) personal property when it has remained unclaimed for five successive years. It is admittedly an alternative method and has nothing to do with the proceeding in the instant matter. See State by Parsons v. National Newark & Essex Banking Co., 31 N.J.Super. 246, 250, 106 A.2d 358 (Ch.Div.1954); State v. American-Hawaiian Steamship Co., 29 N.J.Super. 116, 122, 101 A.2d 598 (Ch.Div.1953). Cf. State v. Thermoid Co., 16 N.J. 274, 275, 108 A.2d 421 (1954). We find no merit to the contention advanced by Massachusetts that it may in some manner serve to delimit the scope of the original Escheat Act and that the State of New Jersey was under obligation to apply for an amendment of its complaint to seek relief under L.1951, c. 304. It is true, as Massachusetts points out, that L.1951, c. 304 contains a provision that when a proceeding to escheat personal property is pending under the original 14-year act it 'may be amended at any time to include proceedings uner the alternate method'; but as its very language indicates that provision was not designed to convert an absolute escheat proceeding under the 14-year statute into a custody proceeding under the short 5-year statute.

Massachusetts concedes that unclaimed dividends due from The American Sugar Refining Company to its stockholders have a situs in New Jersey sufficient to support the institution of proceedings for their escheat under L.1946, c. 155, as amended (N.J.S. 2A:37--11 et seq., N.J.S.A.); in view of the Supreme Court's decision in Standard Oil Co. v. State of New Jersey, supra, it could hardly do otherwise. Although the company does business in many states including Massachusetts, New Jersey is the only state of incorporation and the relations between it and its stockholders are derived from and rest upon the laws of New Jersey. As Judge Jayne stated in State v. Standard Oil Co., 5 N.J.Super. 460, 68 A.2d 499 (Ch.Div.1949), New Jersey is the state of 'habitation or domicile' within the rule which affords jurisdiction over claims against the corporation at its domicile; he soundly indicated that the rule ought to have special applicability where the claimant's status has long been unknown:

'In an escheat proceeding such as this in which the residence, domicile, whereabouts and, indeed, existence of an owner of the Res are unknown and the Res is circumstantially presumed to be Bona vacantia, the application of the general jurisdictional rule to the Situs of an escheatable Res within the class here described seems to be manifestly sensible, just, and pragmatical.' 5 N.J.Super. at page 476, 68 A.2d at page 507.

Similarly in Amparo Mining Co. v. Fidelity Trust Co., 75 N.J.Eq. 555, 558, 73 A. 249, 250 (E. & A.1909), Justice Swayze, while recognizing that a stockholder's property right in his corporation is an intangible thing without physical situs 'in the sense that real estate or tangible chattels have,' nevertheless pointed out that it is the...