State v. Northwestern Nat. Bank of Minneapolis

• Decision Date: 13 April 1945
• Docket Number: No. 33942.,No. 33946.,No. 33945.,No. 33941.,33942.,33946.,33941.,33945.
• Citation: 219 Minn. 471,18 N.W.2d 569
• Parties: STATE v. NORTHWESTERN NAT. BANK OF MINNEAPOLIS. SAME v. ALDONS et al.
• Court: Minnesota Supreme Court

18 N.W.2d 569

219 Minn. 471

STATE v. NORTHWESTERN NAT. BANK OF MINNEAPOLIS.

SAME v. ALDONS et al.

No. 33942.

No. 33946.

No. 33941.

No. 33945.

Supreme Court of Minnesota.

April 13, 1945.

Rehearing Denied May 17, 1945.

Appeal from District Court, Ramsey County; James C. Michael, Judge.

Actions, tried together, by the State against the Northwestern National Bank of Minneapolis for a declaratory judgment determining the validity of the act authorizing escheat to the state of abandoned bank deposits, application thereof to defendant, and plaintiff's right to establish and enforce its rights in and to the funds on deposit, and against George C. Aldons and others, depositors, to recover the amount of certain checking and savings accounts, cashier's check and a certificate of deposit, in which the bank intervened. From a judgment for plaintiff in part and for the bank in part, both parties appeal.

Affirmed on the bank's appeal, and reversed on plaintiff's appeal.

J. A. A. Burnquist, Atty. Gen., and William C. Green, Asst. Atty. Gen., for the State.

Faegre & Benson and Armin M. Johnson, all of Minneapolis, for Northwestern Nat. Bank.

JULIUS J. OLSON, Justice.

We have cross-appeals in two cases, both tried together below and consolidated here. The vital issue common to both cases is whether L.1943, c. 620, is a constitutionally valid enactment.

We shall first consider the issues presented in State v. Northwestern National Bank. There the state, by action for a declaratory judgment, sought to have the cited act determined to be a valid enactment; that defendant is subject to all its provisions; that the state "is entitled to establish and enforce its rights in and to the funds and other property" described in its complaint which will, under the provisions of the act, "escheat to and become the property of" the state "by reason of the abandonment thereof" by its original owner. Paragraph II of the state's complaint alleged:

"That said defendant held on deposit and otherwise on June 30, 1943, funds and other property, and increase and proceeds thereof, which had been left with it on deposit and otherwise and had not been dealt with for a period of twenty (20) years by additions thereto, withdrawals therefrom, or the assertion of any claim thereto and had been abandoned by the persons who had left said funds and other property on deposit and otherwise with defendant; * * *."

The bank's answer admitted its corporate existence as a national bank and that there was an actual and justiciable controversy between the parties in respect to the constitutionality of the act as applied to it. In the fourth paragraph thereof the bank alleged:

"Answering paragraph II of said complaint, defendant denies the allegations thereof but alleges that on June 30, 1943, it was indebted to certain individuals, partnerships and corporations, including residents of the State * * * and nonresidents" thereof "which indebtedness was evidenced in part by credit balances in commercial or savings accounts, in part by negotiable certificates of deposit, and in part by outstanding negotiable cashier's checks, which said indebtedness had not been dealt with by the owners thereof, by additions thereto or withdrawals therefrom for a period of twenty (20) years preceding said June 30, 1943."

In the companion case of State v. Aldons, the state sought judgment against defendant depositors (13 in number), all of whom are the bank's creditors in various forms of credit such as checking and savings accounts, a cashier's check, and a certificate of deposit. All causes relate to deposits made prior to June 30, 1923, and as to each, separately, a cause of action was pleaded. Jurisdiction was obtained by means of attachment of each depositor's credit in the bank and by publication of process with notice to unknown claimants. The bank intervened on the ground that it had "an interest in the outcome" in each and all of these actions "of such a nature that it may suffer a loss by the direct, legal effect of any judgment entered for plaintiff."

Intervener, in the fourth paragraph of its complaint in intervention, stated that as to the first eleven causes the named defendants had "from time to time prior to June 30, 1923, deposited with" it the amounts alleged by the state "in said causes of action, by reason of which complainant in intervention is now indebted to said named defendants," and that "said defendants have not dealt with said indebtedness * * * by making additions thereto or withdrawals therefrom" since June 30, 1923. It averred lack of knowledge or information sufficient to form a belief as to whether "said defendants have abandoned said indebtedness and therefore denies that said indebtedness has been abandoned." As to the two remaining defendants, Bruno and Larson, it alleged that Bruno, on May 21, 1917, acquired from the bank's predecessor "a negotiable certificate of deposit for $4.95," which has ever since "remained outstanding, and by reason thereof" it "is now indebted to said defendant." But, in avoidance, it denied liability, because, as to whoever may now be the owner of the certificate, the statute of limitations has run against the owner's claim. It has cited and relies upon Minn.St.1941, § 541.05, Mason St.1927, § 9191. As to Larson, it alleged that on April 15, 1910, a negotiable cashier's check for $6.98 was issued to him and that at all times since the check has "remained outstanding and by reason thereof" it "is now indebted to said defendant," but, in avoidance, it pleads the six-year statute of limitations above referred to.

In this, as in the other action, the bank asserted its claim of unconstitutionality of the act as applied to national banks. That the procedural steps taken are in conformity with all directions and requirements of the act is not questioned.

The trial court was of opinion, and so found, that the act "is valid; that it rightfully includes national banks; and that the procedural steps required by the Act for its enforcement constitute due process of law." It found for the state on all issues, except that as to defendant Bruno it sustained intervener's claim that the statute of limitations was a good defense, basing its conclusion upon our decision in Mitchell v. Easton, 37 Minn. 335, 33 N.W. 910. In respect to defendant Larson's cashier's check, the court was of opinion that —"in view of the weight of more recent decisions, I do not feel it necessary to extend the rule of the Mitchell case beyond the exact question decided by it. Or, in other words, I do not feel compelled to extend the reasoning of that decision by analogy to either cashier's checks or certified checks."

Judgment was entered upon these findings, and both parties have appealed. The bank assails the validity of the entire act but does not object to the court's findings as to the holder of the certificate of deposit. It is from that part that the state has appealed.

We have stated the issues pleaded, except those upon which the bank places reliance in both cases to support its theory that the act as to it is wholly void on constitutional grounds. Its contentions are set forth as follows:

(1) Since intervener is a national bank, it is by reason thereof "an instrumentality of the Government," and to enforce the act as to it "would be an improper and unwarranted interference" with its functions as such instrumentality, and that the act "restrains and impedes" the national government in the exercise of its power under U.S.Const. art. I, § 8.

(2) "It purports to authorize this court to declare the escheat" of deposits "owing by complainant" to its depositors; that "to the extent said indebtedness has been or is owned by natural persons, plaintiff is not required to prove that such persons are dead"; that "to the extent that said indebtedness has been or is owned by corporations or other artificial persons, the existence of any such owners continues until" terminated by "law other than" c. 620, "and the property of such owners does not pass to the State by escheat."

(3) "It purports to authorize the court" to "transfer" to the state the ownership of money "owing by complainant" to its depositors; that the act "fails to provide any adequate notice" to them "of the commencement of this action" and fails to afford them adequate "opportunity to be heard." As to its certificate of deposit to Bruno and its cashier's check to Larson, "owing by complainant," that although these "may have been negotiated to a holder in due course or to other transferee" now unknown, the act does not provide adequately for notice to such holder or transferee "of the commencement of this action or any opportunity" to be heard. Therefore, it is said, these creditors will be deprived "of their property without due process of law." Minn.Const. art. 1, § 7, and U.S.Const. Amend. XIV.

(4) Lastly, the act is void "because it purports to authorize the court in this proceeding to transfer to plaintiff the ownership of indebtedness owing by complainant * * * to defendants herein, but fails to provide that in the event of said transfer the obligation of complainant * * * to said defendants is discharged and said Chapter 620 and the enforcement thereof in this action are in violation of the rights of complainant * * * under the contract clause" of Minn.Const. art. 1, § 11, and U.S.Const. art. I, § 10, and "will subject the" bank "to loss without due process of law."

The state put in issue all these contentions. It is clear, therefore, that the constitutionality of the act is the important question here. While there are other questions involved, to be disposed of later, we shall go at once to that issue.

The procedure under our act, to accomplish its avowed purpose, follows closely the provisions of the California act, construed and sustained in Security Sav. Bank v. California, 263 U.S. 282, 44 S.Ct. 108, 68 L.Ed. 301, 31 A.L.R. 391, and the Wisconsin act, construed and...