Western Union Telegraph Company v. Commonwealth of Pennsylvania Gottlieb

• Decision Date: 04 December 1961
• Docket Number: No. 15,15
• Parties: WESTERN UNION TELEGRAPH COMPANY, Appellant, v. COMMONWEALTH OF PENNSYLVANIA, by Sidney GOTTLIEB, Escheator
• Court: U.S. Supreme Court

368 U.S. 71

82 S.Ct. 199

7 L.Ed.2d 139

WESTERN UNION TELEGRAPH COMPANY, Appellant,

v COMMONWEALTH OF PENNSYLVANIA, by Sidney GOTTLIEB, Escheator.

No. 15.

Argued Oct. 12, 1961.

Decided Dec. 4, 1961.

John G. Buchanan, Jr., Pittsburgh, Pa., for appellant.

Ruth Kessler Toch, Albany, N.Y., for the State of New York, as amicus curiae.

A. Jere Creskoff, Philadelphia, Pa., for appellee.

Mr. Justice BLACK delivered the opinion of the Court.

Pennsylvania law provides that 'any real or personal property within or subject to the control of this Commonwealth * * * shall escheat to the Commonwealth' whenever it 'shall be without a rightful or lawful owner,' 'remain unclaimed for the period of seven successive years' or 'the whereabouts of such owner * * * shall be and remain unknown for the period of seven successive years.'¹ These proceedings were begun under that law in a Pennsylvania state court to escheat certain obligations of the Western Union Telegraph Company—alleged to be 'property within' Pennsylvania—to pay sums of money owing to various people who had left the monies unclaimed for more than seven years and whose whereabouts were unknown. The facts were stipulated.

Western Union is a corporation chartered under New York law with its principal place of business in that State. It also does business and has offices in all the other States except Alaska and Hawaii, in the District of Columbia, and in foreign countries, and was from 1916 to 1934 subject to regulation by the I.C.C. and since then by the F.C.C. In addition to sending telegraphic messages throughout its world-wide system, it carries on a telegraphic money order business which commonly works like this. A sender goes to a Western Union office, fills out an application and gives it to the company clerk who waits on him together with the money to be sent and the charges for sending it. A receipt is given the sender and a telegraph message is transmitted to the company's office nearest to the payee directing that office to pay the money order to the payee. The payee is then notified and upon properly identifying himself is given a negotiable draft, which he can either endorse and cash at once or keep for use in the future. If the payee cannot be located for delivery of the notice, or fails to call for the draft within 72 hours, the office of destination notifies the sending office. This office then notifies the original sender of the failure to deliver and makes a refund, as it makes payments to payees, by way of a negotiable draft which may be either cashed immediately or kept for use in the future.

In the thousands of money order transactions carried on by the company, it sometimes happens that it can neither make payment to the payee nor make a refund to the sender. Similarly payees and senders who accept drafts as payment or refund sometimes fail to cash them. For this reason large sums of money due from Western Union for undelivered money orders and unpaid drafts accumulate over the years in the company's offices and bank accounts throughout the country. It is an accumulation of this kind that Pennsylvania seeks to escheat here—specifically, the amount of undisbursed money held by Western Union arising out of money orders bought in Pennsylvania offices to be transmitted to payees in Pennsylvania and other States, chiefly other States.

Western Union, while not claiming these monies for itself, challenged Pennsylvania's right to take ownership of them for itself.² Among other grounds the company urged that a judgment of escheat for Pennsylvania in its courts would not protect the company from multiple liability either in Pennsylvania or in other States. Its argument in this respect was that senders of money orders and holders of drafts would not be bound by the Pennsylvania judgment because the service by publication did not, for two reasons, give the state court jurisdiction: (1) that under the doctrine of Pennoyer v. Neff, 95 U.S. 714, 24 L.Ed. 565, the presence of property, called a 'res,' within the State is a prerequisite for service by publication and that these obligations did not constitute such property within Penn- sylvania, and (2) that the notice by publication given in this case did not give sufficient information or afford sufficient likelihood of actual notice to meet due process requirements. In addition, Western Union urged that there might be escheats claimed by other States which would not be bound by the Pennsylvania judgment because they were not and could not be made parties to this Pennsylvania proceeding. Western Union's apprehensions that other States might later escheat the same funds were buttressed by the Pennsylvania court's finding that New York had already seized and escheated a part of the very funds here claimed by Pennsylvania. With reference to this the Pennsylvania Court of Common Pleas said: 'We take this opportunity of stating that we do not recognize New York's authority to escheat that money, but since it has been done we have no jurisdiction over this sum.' 73 Dauphin County Rep. 160, 173. Both the Pennsylvania trial court and the State Supreme Court rejected the contentions of Western Union and declared the unclaimed obligations escheated. 73 Dauphin County Rep. 160; 74 Dauphin County Rep. 49; 400 Pa. 337, 162 A.2d 617. Since the record showed substantial questions as to the jurisdiction of the Pennsylvania courts over the individual owners of the unclaimed monies and as to the power of the State of Pennsylvania to enter a binding judgment that would protect Western Union against subsequent liability to other States, we noted probable jurisdiction. 365 U.S. 801, 81 S.Ct. 466, 5 L.Ed.2d 459.

We find it unnecessary to decide any of Western Union's contentions as to the adequacy of notice to and validity of service on the individual claimants by publication. For as we view these proceedings, there is a far more important question raised by this record—whether Pennsylvania had power at all to render a judgment of escheat which would bar New York or any other State from escheating this same property.

Pennsylvania does not claim and could not claim that the same debts or demands could be escheated by two states. See Standard Oil Co. v. State of New Jersey, 341 U.S. 428, 443, 71 S.Ct. 822, 831, 95 L.Ed. 1078. And our prior opinions have recognized that when a state court's jurisdiction purports to be based, as here, on the presence of property within the State, the holder of such property is deprived of due process of law if he is compelled to relinquish it without assurance that he will not be held liable again in another jurisdiction or in a suit brought by a claimant who is not bound by the first judgment. Anderson National Bank v. Luckett, 321 U.S. 233, 242—243, 64 S.Ct. 599, 604, 88 L.Ed. 692; Security Savings Bank v. People of State of California, 263 U.S. 282, 286—290, 44 S.Ct. 108, 110—111, 68 L.Ed. 301. Applying that principle, there can be no doubt that Western Union has been denied due process by the Pennsylvania judgment here unless the Pennsylvania courts had power to protect Western Union from any other claim, including the claim of the State of New York that these obligations are property 'within' New York and are therefore subject to escheat under its laws. But New York was not a party to this proceeding and could not have been made a party, and, of course, New York's claims could not be cut off where New York was not heard as a party. Moreover, the potential multi-state claims to the 'property' which is the subject of this escheat make it not unlikely that various States will claim in rem jurisdiction over it. Therefore, Western Union was not protected by the Pennsylvania judgment, for a state court judgment need not be given full faith and credit by other States as to parties or property not subject to the jurisdiction of the court that rendered it. Pennoyer v. Neff, 95 U.S. 714, 24 L.Ed. 565; Riley v. New York Trust Co., 315 U.S. 343, 62 S.Ct. 608, 86 L.Ed. 885.

It is true that, on the facts there presented, this Court said in Standard Oil Co. v. State of New Jersey, 341 U.S. 428, 443, 71 S.Ct. 822, 831, that 'The debts or demands * * * having been taken from the appellant company by a valid judgment of New Jer- sey, the same debts or demands against appellant (Standard Oil) cannot be taken by another state. The Full Faith and Credit Clause bars any such double escheat.' But the Court went on to point out that 'The claim of no other state to this property is before us and, of course, determination of any right of a claimant state against New Jersey for the property escheated by New Jersey must await presentation here.' Here, unlike Standard Oil, there is in reality a controversy between States, possibly many of them, over the right to escheat part or all of these funds.

The claims of New York are particularly aggressive, not merely potential, but actual, active and persistent—best shown by the fact that New York has already escheated part of the very funds originally claimed by Pennsylvania. These claims of New York were presented to us in both the brief and oral argument of that State as amicus curiae. In presenting its claims New York also called our attention to the...