This is a case under the Escheat Act, N.J.S. 2 A:37-11 et seq. , and under the Alternative Custody Act, N.J.S. 2 A:37-29 et seq. The case has been submitted on stipulation of facts, memoranda of law and oral argument.
Defendant Vincent L. Gallaher, a substitute indenture trustee appointed June 24, 1946 by the United States District Court for the District of New Jersey, has in his custody the sum of $728.51, representing principal and interest due unknown bondholders of the St. Charles Hotel Company, a domestic corporation, adjudicated a bankrupt in the United States District Court by virtue of an involuntary petition in bankruptcy. Due to the vast amount of work, 12 years have been required for the Bankruptcy Court to complete its work. Defendant has through the Bankruptcy Court exhausted all remedies under the Bankruptcy Act, 11 U.S.C.A. § 1 et seq. , to notify and communicate with all creditors, with due notice and opportunity afforded the bankrupt for the protection of its interests. He collected $101,400 and distributed that amount less $728.51.
Defendant trustee and the Federal Bankruptcy Court have completed all proceedings relating to the bankruptcy of which the Federal Court admittedly has sole jurisdiction. Having done so, the plaintiff, State of New Jersey, applied before the United States District Court for the District of New Jersey, laying claim to this fund under its escheat laws and was granted permission to prosecute this claim in the Superior Court of New Jersey and report back to the federal court on this court's findings and determination.
The issues presented are: (1) Does the State of New Jersey have a right to escheat or take into protective custody
the unclaimed funds remaining in the custody or possession of a trustee appointed by the United States District Court in a bankruptcy proceeding involving a bankrupt New Jersey corporation, which unclaimed funds represent moneys due bondholders of the said corporation who are unknown or their whereabouts remain unknown for a period of five years; (2) are funds in the custody of the federal court included or excluded by statutory definition from escheat by N.J.S. 2 A:37-11?
ARE FUNDS IN THE CUSTODY OF THE FEDERAL COURT INCLUDED OR EXCLUDED FROM ESCHEAT BY N.J.S. 2 A:37-11 et seq. (OR CUSTODY BY N.J.S. 2 A:37-29 et seq.)
N.J.S. 2 A:37-11 provides, inter alia ,
"The term 'personal property' as used in this article shall mean and include moneys, negotiable instruments, choses in action, interest, * * * but shall not mean and include real property or property in the custody of any court in this state, nor any personal property covered by chapter 199 of the laws of 1945 [ N.J.S.A. 17:9-18 to 26]; nor any personal property covered by chapter 154 of the laws of 1946 [ N.J.S.A. 17:34-49 to 58]."
The question is raised as to whether or not "personal property in the custody of any court in this state" is intended to exclude funds under the jurisdiction of the Federal Bankruptcy Court.
In the case State of New Jersey by Richman v. Sperry & Hutchinson Co. , 23 N.J. 38 (1956), Mr. Justice Jacobs comprehensively summarized the legislative history of escheat and custody of abandoned property:
"We may freely refer to the history of this legislation for whatever aid it may furnish in ascertaining its true purpose and meaning. Lloyd v. Vermeulen , 22 N.J. 200, 206 (1956); Deaney v. Linen Thread Co. , 19 N.J. 578, 583 (1955); Abbotts Dairies, Inc., v. Armstrong , 14 N.J. 319, 323 (1954); State v. McCall , ...