State of Texas v. State of New Jersey

Decision Date01 February 1965
Docket NumberNo. 13,O,13
Citation85 S.Ct. 626,13 L.Ed.2d 596,379 U.S. 674
PartiesSTATE OF TEXAS, Plaintiff, v. STATE OF NEW JERSEY et al. riginal
CourtU.S. Supreme Court

W. O. Shultz, Asst. Atty. Gen., Austin, Tex., for plaintiff.

Charles J. Kehoe, Trenton, N.J., for defendant, State of New Jersey.

Fred M. Burns, Tallahassee, Fla., for intervenor, State of Florida.

Ralph M. Oman, Topeka, Kan., for Life Ins. Ass'n of America, as amicus curiae.

Joseph H. Resnick, Philadelphia, Pa., for defendant, State of Pennsylvania.

Augustus S. Ballard, Philadelphia, Pa., for defendant, Sun Oil Co.

Mr. Justice BLACK delivered the opinion of the Court.

Invoking this Court's original jurisdiction under Art. III, § 2, of the Constitution,1 Texas brought this action against New Jersey, Pennsylvania, and the Sun Oil Company for an injunction and declaration of rights to settle a controversy as to which State has jurisdiction to take title to certain abandoned intangible personal property through escheat, a procedure with ancient origins2 whereby a sovereign may acquire title to abandoned property if after a number of years no rightful owner appears. The property in question here consists of various small debts totaling $26,461.653 which the Sun Oil Company for periods of approximately seven to 40 years prior to the bringing of this action has owed to approximately 1,730 small creditors who have never appeared to collect them. The amounts owed, most of them resulting from failure of creditors to claim or cash checks, are either evidenced on the books of Sun's two Texas offices or are owing to persons whose last known address was in Texas, or both.4 Texas says that this intangible property should be treated as situated in Texas, so as to permit that State to escheat it. New Jersey claims the right to escheat the same property because Sun is incorporated in New Jersey. Pennsylvania claims power to escheat part or all of the same property on the ground that Sun's principal business offices were in that State. Sun has disclaimed any interest in the property for itself, and asks only to be protected from the possibility of double liability. Since we held in Western Union Tel. Co. v. Com. of Pennsylvania, 368 U.S. 71, 82 S.Ct. 199, 7 L.Ed.2d 139, that the Due Process Clause of the Fourteenth Amendment prevents more than one State from escheating a given item of property, we granted Texas leave to file this complaint against New Jersey, Pennsylvania and Sun, 371 U.S. 873, 83 S.Ct. 144, 9 L.Ed.2d 113 and referred the case to the Honorable Walter A. Huxman to sit as Special Master to take evi- dence and make appropriate reports, 372 U.S. 926, 83 S.Ct. 869, 9 L.Ed.2d 732.5 Florida was permitted in intervene since it claimed the right to escheat the portion of Sun's escheatable obligations owing to persons whose last known address was in Florida. 373 U.S. 948, 83 S.Ct. 1677.6 The Master has filed his report, Texas and New Jersey each have filed exceptions to it, and the case is now ready for our decision. We agree with the Master's recommendation as to the proper disposition of the property.

With respect to tangible property, real or personal, it has always been the unquestioned rule in all jurisdictions that only the State in which the property is located may escheat. But intangible property, such as a debt which a person is entitled to collect, is not physical matter which can be located on a map. The creditor may live in one State, the debtor in another, and matters may be further complicated if, as in the case before us, the debtor is a corporation which has connections with many States and each creditor is a person who may have had connections with several others and whose present address in unknown. Since the States separately are without constitutional power to provide a rule to settle this interstate controversy and since there is no applicable federal statute, it becomes our responsibility in the exercise of our original jurisdiction to adopt a rule which will settle the question of which State will be allowed to escheat this intangible property.

Four different possible rules are urged upon us by the respective States which are parties to this case. Texas, relying on numerous recent decisions of state courts dealing with choice of law in private litigation,7 says that the State with the most significant 'contacts' with the debt should be allowed exclusive jurisdiction to escheat it, and that by that test Texas has the best claim to escheat every item of property involved here. Cf. Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 70 S.Ct. 652, 94 L.Ed. 865; Atkinson v. Superior Court, 49 Cal.2d 338, 316 P.2d 960, appeals dismissed and cert. denied sub nom. Columbia Broadcasting System, Inc. v. Atkinson, 357 U.S. 569, 78 S.Ct. 1381, 2 L.Ed.2d 1546. But the rule that Texas proposes, we believe, would serve only to leave in permanent turmoil a question which should be settled once and for all by a clear rule which will govern all types of intangible obligations like these and to which all States may refer with confidence. The issue before us is not whether a defendant has had sufficient contact with a State to make him or his property rights subject to the jurisdiction of its courts, a jurisdiction which need not be exclusive. Compare McGee v. International Life Ins. Co., 355 U.S. 220, 78 S.Ct. 199, 2 L.Ed.2d 223; Mullane v. Central Hanover Bank & Trust Co., supra; International Shoe Co. v. State of Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95.8 Since this Court has held in Western Union Tel. Co. v. Com. of Pennsylvania, supra, that the same property cannot constitutionally be escheated by more than one State, we are faced here with the very different problem of deciding which State's claim to escheat is superior to all others. The 'contacts' test as applied in this field is not really any workable test at all—it is simply a phrase suggesting that this Court should examine the circumstances surrounding each particular item of escheatable property on its own peculiar facts and then try to make a difficult, often quite subjective, decision as to which State's claim to those pennies or dollars seems stronger than another's. Under such a doctrine any State likely would easily convince itself, and hope to convince this Court, that its claim should be given priority—as is shown by Texas' argument that it has a superior claim to every single category of assets involved in this case. Some of them Texas says it should be allowed to escheat because the last known addresses of the creditors were in Texas, others it claims in spite of the fact that the last known addresses were not in Texas. The uncertainty of any test which would require us in effect either to decide each escheat case on the basis of its particular facts or to devise new rules of law to apply to ever-developing new categories of facts, might in the end create so much uncertainty and threaten so much expensive litigation that the States might find that they would lose more in litigation expenses than they might gain in escheats.9

New Jersey asks us to hold that the State with power to escheat is the domicile of the dobtor—in this case New Jersey, the State of Sun's incorporation. This plan has the obvious virtues of clarity and ease of application. But it is not the only one which does, and it seems to us that in deciding a question which should be determined primarily on principles of fairness, it would too greatly exhalt a minor factor to permit escheat of obligations incurred all over the country by the State in which the debtor happened to incorporate itself.

In some respects the claim of Pennsylvania, where Sun's principal offices are located, is more persuasive, since this State is probably foremost in giving the benefits of its economy and laws to the company whose business activities made the intangible property come into existence. On the other hand, these debts owed by Sun are not property to it, but rather a liability, and it would be strange to convert a liability into an asset when the State decides to escheat. Cf. Case of the State Tax on Foreign-Held Bonds, 15 Wall. 300, 320, 21 L.Ed. 179. Moreover, application of the rule Pennsylvania suggests would raise in every case the sometimes difficult question of where a company's 'main office' or 'principal place of business' or whatever it might be designated is located. Similar uncertainties would result if we were to attempt in each case to determine the State in which the debt was created and allow it to escheat. Any rule leaving so much for decision on a case-by-case basis should not be adopted unless none is available which is more certain and yet still fair. We think the rule proposed by the Master, based on the one suggested by Florida, is.

The rule Florida suggests is that since a debt is property of the creditor, not of the debtor,10 fairness among the States requires that the right and power to escheat the debt should be accorded to the State of the creditor's last known address as shown by the debtor's books and records.11 Such a solution would be in line with one group of cases dealing with intangible property for other purposes in other areas of the law.12 Adoption of such a rule involves a factual issue simple and easy to resolve, and leaves no legal issue to be decided. It takes account of the fact that if the creditor instead of perhaps leaving behind an uncashed check had negotiated the check and left behind the cash, this State would have been the sole possible escheat claimant; in other words, the rule recognizes that the debt was an asset of the creditor. The rule recommended by the Master will tend to distribute escheats among the States in the proportion of the commercial activities of their residents. And by using a standard of last known address, rather than technical legal concepts of residence and domicile, administration and application of escheat laws should be...

To continue reading

Request your trial
111 cases
  • Temple-Inland, Inc. v. Cook, Civ. No. 14-654-GMS
    • United States
    • United States District Courts. 3th Circuit. United States District Court (Delaware)
    • 28 Junio 2016
    ......Thomas COOK, in his capacity as the Secretary of Finance for the State of Delaware; David M. Gregor, in his capacity as the State Escheator of ...(D.I. 113 at 2). Its principal place of business is in Texas, and its operations are primarily in Texas, Indianapolis, and Indiana. ( ...New Jersey , 379 U.S. 674, 678–79, 85 S.Ct. 626, 13 L.Ed.2d 596 (1965). To resolve ......
  • Illinois v. City of Milwaukee, Wisconsin, 49
    • United States
    • United States Supreme Court
    • 24 Abril 1972
    ... 406 U.S. 91 . 92 S.Ct. 1385 . 31 L.Ed.2d 712 . State of ILLINOIS . v. . CITY OF MILWAUKEE, WISCONSIN, et al. . No. 49, Orig. ...Texas (176 U.S. 1, 20 S.Ct. 251, 44 L.Ed. 347), where the acts sought to be ... .           In New York v. New Jersey, 256 U.S. 296, 41 S.Ct. 492, 65 L.Ed. 937, the State of New York brought ......
  • Glus v. G. C. Murphy Co., AFL-CI
    • United States
    • United States Courts of Appeals. United States Court of Appeals (3rd Circuit)
    • 3 Noviembre 1980
    ......829, 855-63 (1979) (reviewing state law on contribution). The vast majority of the states have now rejected ...448, 77 S.Ct. 912, 1 L.Ed.2d 972 (1957) (federal labor law); Texas & Pacific Railway v. Rigsby, 241 U.S. 33, 36 S.Ct. 482, 60 L.Ed. 874 ... See Texas v. New Jersey, 379 U.S. 674, 677, 85 S.Ct. 626, 628, 13 L.Ed.2d 596 (1965). It can ......
  • U.S. Industries, Inc. v. Gregg, 75-2177
    • United States
    • United States Courts of Appeals. United States Court of Appeals (3rd Circuit)
    • 19 Julio 1976
    ...Telegraph Co. v. Pennsylvania, 368 U.S. 71, 82 S.Ct. 199, 7 L.Ed.2d 139 (1961); Texas v. New Jersey, 379 U.S. 674, 85 S.Ct. 626, 13 L.Ed.2d 596 (1964), 380 U.S. 518, 85 S.Ct. 1136, 14 L.Ed.2d 49 (1965). No Supreme Court case has actually considered the due process issues tendered by this ap......
  • Request a trial to view additional results
9 firm's commentaries
  • Loyalty Reward Programs Raise A Host Of Questions Under State Unclaimed Property Laws
    • United States
    • Mondaq United States
    • 17 Agosto 2011
    ...or its cash value to the state for custodial holding until the owner establishes a rightful claim to the property. Texas v. New Jersey, 379 U.S. 674 (1965); Delaware v. New York, 507 U.S. 490 (1993). If the state of corporate domicile does not escheat the property, some states then rely on ......
  • Pennsylvania Corporations To Fund State Spending Increase
    • United States
    • Mondaq United States
    • 17 Marzo 2014
    ...Reed Smith attorney with whom you normally work. Governor's Budget in Brief at 8, available at PA Budget in Brief. 2. Texas v. New Jersey, 379 U.S. 674 (1965). 3. See http://www.patreasury.gov/unclaimedProperty.html (publicizing approximately $2BB of unclaimed property held by state and rep......
  • Delaware Expands Unclaimed Property Voluntary Disclosure Program
    • United States
    • Mondaq United States
    • 11 Marzo 2013
    ...VDA after June 30, 2013. 7 31-200-2000, CODE DEL. REGS. (CDR), § 1. 8 DEL. CODE ANN. tit. 12, § 1198(7), (8), (11). 9 Texas v. New Jersey, 379 U.S. 674, 682 10 Id. 11 DEL. CODE ANN. tit. 12, § 1198(9). 12 31-200-2000, CODE DEL. REGS. (CDR), § 9.2.2. 13 31-200-2000, CODE DEL. REGS. (CDR), § ......
  • Delaware Unclaimed Property Voluntary Disclosure Program Ends September 30, 2014
    • United States
    • Mondaq United States
    • 30 Septiembre 2014
    ...enter into a VDA before the conclusion of this program. Footnotes 1 DEL. CODE ANN. tit. 12, § 1198(7), (8), (11). 2 Texas v. New Jersey, 379 U.S. 674 3 DEL. CODE ANN. tit. 12, § 1198(9). 4 DEL. CODE ANN. tit. 12, §§ 1199; 1201. 5 In 2013, Delaware estimated that it would collect approximate......
  • Request a trial to view additional results
11 books & journal articles
  • Rethinking the Supreme Court’s Interstate Waters Jurisprudence
    • United States
    • Georgetown Environmental Law Review No. 33-2, January 2021
    • 1 Enero 2021
    ...several escheat cases, where it held that one and only one state could claim intangible property by escheat, see Texas v. New Jersey, 379 U.S. 674, 677 (1965); W. Union Tel. Co. v. Pennsylvania, 368 U.S. 71, 75 (1961); Standard Oil Co. v. New Jersey, 341 U.S. 428, 443 (1951), shared waters ......
  • CHAPTER 2 ADVANCED MINERAL CONVEYANCING AND TITLE ISSUES - PART 2
    • United States
    • FNREL - Special Institute Advanced Mineral Title Examination (FNREL)
    • Invalid date
    ...2d Escheat § 8 (2013), for a discussion of the issues surrounding escheat of Indian-owned property. [366] State of Tex. v. State of N.J., 379 U.S. 674, 677 (1965), supplemented by 380 U.S. 518 (1965). [367] N.D. Cent. Code § 54-01-02 . [368] Tom Galbraith & Timothy R. Smock, "Remaindermen a......
  • Unclaimed property and due process: justifying "revenue-raising" modern escheat.
    • United States
    • Michigan Law Review Vol. 110 No. 2, November 2011
    • 1 Noviembre 2011
    ...where no ownership records exist, the holder's state of incorporation has the right to take custody of the property. Texas v. New Jersey, 379 U.S. 674, 681-82 (1965). Accordingly, Delaware may extrapolate a holder's total unclaimed property liability for years past and often, as a preferred......
  • CHAPTER 3 DOTTING YOUR I'S AND CROSSING YOUR T'S: ENSURING PROPER PAYMENT AND EXECUTION
    • United States
    • FNREL - Special Institute Drafting and Negotiating the Modern Oil and Gas Lease (FNREL)
    • Invalid date
    ...To Have and to Hold: the Use and Abuse of Oil and Gas Suspense Accounts, 31 Okla. City U. L. Rev. 1 (2006). [76] Texas v. New Jersey, 379 U.S. 674 (1965). [77] Id. at 682. [78] For a summary, see Stephen P. Kranz et al., Revised Uniform Unclaimed Property Act Finalized for State Enactment -......
  • Request a trial to view additional results
1 provisions
  • IL Register Vol. 42 Issue 39. Issue 39 - September 28, 2018 - Pages 16,965-17,281
    • United States
    • Illinois Register
    • Invalid date
    ...to the State of Illinois pursuant to the Act and the federal common law as established by the U.S. Supreme Court (Texas v. New Jersey, 379 U.S. 674 (1965); Pennsylvania v. New York, 407 U.S. 206 (1972); and Delaware v. New York, 507 U.S.490 (1993)). b) The administrator's goal in every exam......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT