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Commonwealth of Pennsylvania v. Kervick

Decided: March 1, 1971.

COMMONWEALTH OF PENNSYLVANIA, PLAINTIFF,
v.
JOHN A. KERVICK, STATE TREASURER OF NEW JERSEY, DEFENDANT



Wick, J.s.c.

Wick

Pennsylvania is suing for payment of monies held by the State Treasurer of New Jersey under the Custodial Escheat Act (N.J.S.A. 2A:37-29 to 44, inclusive; approved July 13, 1951). Defendant's counterclaim seeks discovery of the identity of all persons who have a claim to abandoned property now held or escheated to Pennsylvania where, according to the records of the various obligors, the last known address of such owners was in New Jersey. Defendant also wants protective custody or a judgment of escheat for abandoned property now in possession of plaintiff.

The facts are undisputed and the case was submitted on briefs. During the 1950's the New Jersey Attorney General began four suits against U.S. Steel Corp. for delivery and custody of personal property unclaimed for five years and still held by the corporate debtor. The docket numbers of these suits were C-1137-52, C-669-53, C-268-55 and C-2553-58.

In compliance with N.J.S.A. 2A:37-30, 31, judgments for custody were entered and the corporation delivered the monies representing unclaimed debts, along with a list of the last known address of the record owners "to the state treasurer for safekeeping." In these cases the State did not proceed under N.J.S.A. 2A:37-11 to 28, inclusive (the Absolute Escheat Act for personal property generally), but under N.J.S.A. 2A:37-29 to 44, inclusive (the Custodial Escheat Act, an alternate method).

After receiving these funds the State Treasurer mailed notices to the persons listed and to the attorney general of the state designated by the last known address. N.J.S.A. 2A:37-32 specifies that the notice to last known owners requires a written claim to be made within two years from date of notice or else "an action will be instituted to escheat such moneys to the state in conformity with this article." The notice to attorneys general ouside of New Jersey advised them to "present any claim that such state might have to such money."

In 1966 Pennsylvania sought a consent judgment from U.S. Steel Corp. to escheat the monies due to persons having last known addresses in Pennsylvania. The judgment relieved the corporation from any obligation to pay over any monies. It was apparently recognized that under N.J.S.A. 2A:37-33 payment by the corporation to the State Treasurer of New Jersey released the corporation from "any and all claims * * * by any person whatsoever," and that the obligation to pay any claims became the obligation of New Jersey.

On October 26, 1966 a letter from the Secretary of Revenue of the Commonwealth of Pennsylvania requested New Jersey to pay over monies held in custody and due to creditors having the last known address in Pennsylvania. The amount claimed was $186,541.76 but presently would be reduced by any payments made to the actual creditors with a last known Pennsylvania address. On October 1, 1968 the New Jersey Attorney General on behalf of the State Treasurer refused the claim. On May 26, 1969 this action was filed according to N.J.S.A. 2A:37-32 (L. 1951, c. 304) as it read before amendment on June 28, 1967 (L. 1967, c. 135).

Plaintiff's position is that the Custodial Escheat Act or the rule of Texas v. New Jersey , 379 U.S. 674, 85 S. Ct. 626, 13 L. Ed. 2d 596 (1965), entitles the Commonwealth to the monies held in custody by New Jersey.

Defendant raises several defenses and arguments in his answer and brief:

1. This court has no jurisdiction because the United States Supreme Court has original jurisdiction.

2. Plaintiff did not make timely appeal from the administrative decision by the State Treasurer.

3. The statute of limitations, laches and estoppel are proper defenses.

4. The Pennsylvania judgment against U.S. Steel Corp. was not binding on New Jersey.

5. Texas v. New Jersey should not be applied retroactively.

6. The Constitutionality of the 1967 amendments to the Custodial Escheat Law need not be decided.

7. Conflicts of law must be determined.

8. The amount claimed by plaintiff is disputed.

These arguments will be discussed in relation to the court's resolution of the legal issues.

Escheat in New Jersey derives from the right of sovereignty of the State "as the original and ultimate proprietor" of all property within its jurisdiction. The purpose of all escheat laws is not only to enrich the State but to put into active use funds that are unclaimed and lying dormant. Yet, escheat statutes should be distinguished from custodial statutes which make the State a custodian of the abandoned property, subject to delivery to those who prove ownership or a right to possession. The Custodial Escheat Act of ...


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