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State v. American-Hawaiian Steamship Co.

Decided: December 21, 1953.

THE STATE OF NEW JERSEY, BY THEODORE D. PARSONS, ATTORNEY-GENERAL OF THE STATE OF NEW JERSEY, PLAINTIFF,
v.
AMERICAN-HAWAIIAN STEAMSHIP COMPANY, A CORPORATION OF THE STATE OF NEW JERSEY, DEFENDANT



The opinion of the court was delivered by Schettino, J.s.c.

Schettino

[29 NJSuper Page 121] This opinion is applicable to a number of cases which have been argued together and

duplicates will be filed in all of those causes. For convenience, the opinion is captioned in one of the causes and the names of all counsel who participated in the briefing or argument are set forth above.

These proceedings are brought by the State of New Jersey for judgments compelling defendant corporations to deliver certain intangible property to the State Treasurer for protective custody pursuant to N.J.S. 2 A:37-29 et seq. Orders to show cause issued to defendant corporations who raise constitutional and other objections which are now here for decision.

Chapter 304 of the Laws of 1951, effective July 13, 1951, amended the prior escheat statute and added the additional method for escheat which is here involved. The earlier statute, N.J.S. 2 A:37-11 et seq. , provided for judgment of escheat without an intermediate custodial procedure. The provisions of the earlier statute, prior to the 1951 amendment, are summarized in State v. Standard Oil Co. , 5 N.J. 281 (1950), affirmed 341 U.S. 428, 71 S. Ct. 822, 95 L. Ed. 1078 (1951), wherein challenges to their validity were determined.

The pertinent provisions of the 1951 law, establishing the additional method for escheat, including the custodial provisions here involved, are these. N.J.S. 2 A:37-29 provides:

"In addition to the method provided for the escheat generally of personal property as defined in article 2 of this chapter, an alternate method may be employed in certain cases defined in this article 3. By this latter method the state may take into its protective custody property consisting of cash, dividends, interest or wages owed by any corporation organized or doing business under the laws of this state, belonging to any person remaining unknown, or whose whereabouts is unknown, or whose property remains unclaimed as defined herein for a period of 5 successive years; and after a period of protective custody has expired as herein prescribed, the state may proceed to escheat such property to itself."

Article 2 refers to the earlier statute mentioned above as amended, and article 3 is the article containing the alternate method.

N.J.S. 2 A:37-30 provides:

"Whenever a corporation organized under the laws of this state shall have custody or possession of, or shall have deposited with or given to an agent or trustee residing within or without the state custody or possession of, any moneys which are or shall be payable to any person as a dividend upon the capital stock, preferred or common, of the corporation, or as interest payable upon the corporation's bonds, indentures, notes or other formal instruments evidencing the indebtedness of the corporation, or any moneys payable as wages from the corporation to any person, and whenever any person or any corporation organized under the laws of any other state and authorized to do business in this state shall have custody or possession of any moneys payable by such person or corporation to any person as wages earned within this state, or of any moneys otherwise having a situs within this state, which moneys are payable to any one person in any of the categories above enumerated and the owner of, beneficial owner of, or person entitled to the same has been and remains unknown for the period of 5 successive years, or the whereabouts of such person has been and remains unknown for the period of 5 successive years, or such personal property has been and remains unclaimed for the period of 5 successive years, then the superior court may in a summary action brought in the name of the state of New Jersey by the attorney general or such attorney-at-law as he may designate, direct the corporation or other person aforesaid to deliver such moneys to the state treasurer for safekeeping."

N.J.S. 2 A:37-31 provides:

"Upon the entry of the judgment in the action, a copy of the judgment shall be served upon the corporation, or other person aforesaid, who shall forthwith deliver the said moneys to the state treasurer, together with a list of the individual amounts, the names, if known to the corporation or other person aforesaid, of the owners or beneficial owners of, or persons entitled to, such moneys, the last-known address of such persons, and any other information he may have relating to the last-known address of any person having an interest in, together with any other information relating to, such personal property or the whereabouts of such owner."

N.J.S. 2 A:37-32 provides:

"The state treasurer shall thereupon mail a letter or post card to each person named in the list, to his last-known address, as shown by such list, informing him that the state treasurer holds such moneys in the amount designated in the list as his property, for the benefit of the person therein named, and that if said

person does not, in writing, make claim to such moneys within 2 years from the date of such notice, an action will be instituted to escheat such moneys to the state in conformity with this article. The state treasurer shall also mail a similar notice to the attorney general of the state where such person had his last known address, if such address is without the state of New Jersey, advising him to present any claim that such state might have to such money. If a claim is made to the state treasurer within such period of 2 years, and he shall determine that the claim is valid, he shall pay the moneys so claimed to the person entitled thereto. If the state treasurer shall determine that the claim is not valid, he shall reject the claim. The claimant may thereupon apply to the superior court, chancery division, for a review of his determination, and the claim shall thereupon be heard and determined, de novo."

N.J.S. 2 A:37-33 provides:

"The payment of the said moneys by the corporation or other person to the state treasurer pursuant to the provisions of this article shall, as respects such moneys, automatically operate as a full, absolute and unconditional release and discharge of the corporation or other person from any and all claims, demands or liability to the person whose moneys have been paid to the treasurer, and such payment may be pleaded as an absolute bar to any action brought against such corporation or other person by any person whatsoever. Any right to such moneys which any claimant may have shall thereby be transferred against, and shall become the obligation of, the state."

N.J.S. 2 A:37-34 provides:

"If moneys so deposited with the treasurer shall remain unclaimed for the period of 2 years from the date of the mailing of the letter or post card to the person listed as the owner (after the 5-year period such moneys were in the custody or possession of the corporation or of its agent or trustee), the said moneys shall escheat to the state and the treasurer shall inform the attorney general thereof."

N.J.S. 2 A:37-36 provides the Attorney-General, or his designee, "shall thereupon" bring a summary action "for the escheat of the said moneys to the state of New Jersey." N.J.S. 2 A:37-37 and 38 provide for notice of the action, and N.J.S. 2 A:37-39 reads:

"If no person shall file a claim or appear at the hearing to substantiate a claim, or where the court shall determine that a claimant is not entitled to the moneys claimed by him, then, in

either event, the court shall enter a judgment that the personal property described in the complaint has escheated to the state."

The court may reopen the judgment within seven years for the repayment to a claimant who did not have actual knowledge of the action for escheat, with 2% interest from the date of the original judgment. N.J.S. 2 A:37-40. The State Treasurer is authorized to repay a claim of less than $50 without reopening the judgment. N.J.S. 2 A:37-43.

The State Treasurer is authorized to invest the moneys upon his initial receipt thereof and to make temporary loans up to 90% therefrom for the use of any department of the State. N.J.S. 2 A:37-41.

I.

It is asserted that the custodial provisions are unconstitutional for want of procedural due process. It is not disputed that due process in its procedural aspect is afforded the corporate defendants themselves, but it is urged such due process is denied the owner of the unclaimed property and that this denial will leave defendants amenable to judgment in favor of such owner in a later proceeding notwithstanding the judgment for custody and the immunity from further suit which the statute purports to give defendants upon payment to the State Treasurer pursuant to the judgment. N.J.S. 2 A:37-33 quoted supra.

It is pointed out that the statute makes no provision for notice to the owner prior to the entry of the custodial judgment. It is urged that due process requires notice which will afford an opportunity to be heard before judgment and that the provision for notice contained in N.J.S. 2 A:37-32, quoted supra , and the cited provisions for notice in connection with the later action for escheat, cannot remedy the constitutional failure. Defendants say the custodial judgment affects the rights of the owner in substantial aspects, to wit, the owner is deprived of his remedy against the defendant and is relegated to a ...


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