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State v. New Jersey National Bank and Trust Co.

Decided: October 27, 1971.

STATE OF NEW JERSEY, PLAINTIFF,
v.
NEW JERSEY NATIONAL BANK AND TRUST CO., A CORPORATION ORGANIZED UNDER THE LAWS OF THE UNITED STATES, DEFENDANT



Seidman, J.c.c. (temporarily assigned).

Seidman

[117 NJSuper Page 40] This is an escheat action under N.J.S. 2A:37-11 et seq. , the subject matter of which is unclaimed personal property held by the corporate defendant, consisting of shares of stock (including stock splits and stock dividends), ordinary cash dividends, and cash in lieu of stock dividends. During the

course of these proceedings petitions were filed by claimants to portions of the property in question, and subsequently an order was entered by Judge Fritz adjudging the persons named therein to be the rightful and lawful owners of some of the shares of stock and cash in the hands of defendant.

What is left for determination is the escheatable status of the remaining unclaimed property. The parties have stipulated all pertinent facts and the issues have been submitted to the court for resolution. As framed by the State the questions are these:

"Is there any impediment existing to prevent the State from escheating each of the various types of property claimed in this litigation, and is there any limitation to the State's right of escheat imposed by the fact that the defendant's records show the last known address of the beneficial owner of the abandoned property to be in States other than New Jersey?"

The State contends that it can escheat all the property involved except where the last known address of the owner is in a state having an escheat law covering the type of property involved. The defendant concurs. In spite of the absence of apparent controversy between the parties, the court is obliged to determine the issues on the basis of existing law.

From the stipulated facts it appears that defendant institution was originally the Asbury Park and Ocean Grove Bank. Between October 1963 and April 1964 its name was New Jersey Trust Company; since then, except for a further change which occurred after the filing of this suit, it has been known as the New Jersey National Bank and Trust Company.

In 1961, as the result of a corporate reorganization, shares of new stock replaced existing shares at an exchange ratio of 5.1 to 1. Two years later, following a merger with the New Jersey Trust Company, the Asbury Park and Ocean Grove Bank stock was exchanged on a 1 for 1 basis for

stock of the New Jersey Trust Company. The merger also provided for the 4 for 1 exchange of New Jersey Trust Company of Long Branch stock. New shares of stock were issued in the name of the New Jersey National Bank and Trust Company in 1964. This, however, was a name change only and did not affect the proprietary rights of the shareholders. A 4 for 1 stock split occurred in 1967.

After the institution of these proceedings defendant corporation merged with the First Trenton National Bank, and its name was changed to the New Jersey National Bank. For every three shares formerly held, each shareholder received one share of stock in the new institution.

Three percent stock dividends were declared annually from 1963 through 1969. A 5% stock dividend was declared in 1969, payable January 2, 1970. Cash was paid in lieu of fractional shares in each instance. Regular cash dividends were paid from 1954 onward.

The parties agree that all original shares of stock sought to be escheated have remained unclaimed for 14 successive years next preceding the institution of this suit, and that the dividends (stock and cash) and cash in lieu of fractional shares have been declared or paid within that 14-year period.

Defendant's records reveal that the last known addresses of some of the stockholders involved are outside New Jersey, specifically, in California, Connecticut, Delaware, Florida, New York, Pennsylvania, Rhode Island, Virginia, District of Columbia and the United Kingdom.

N.J.S. 2A:37-13 provides that

Whenever the owner, beneficial owner, or person entitled to any personal property within this state, has been or shall be and remain unknown for the period of 14 successive years, or whenever the whereabouts of such owner, beneficial owner or person, has been or shall be and remain unknown for the period of 14 successive years, or whenever any personal property wherever situate has been or shall be and remain unclaimed for the period of 14 successive years, then, in any such event, such personal property shall escheat to the state.

Whether the State's right of escheat is limited by the fact that the last known addresses of some of the beneficial owners of the unclaimed property are in states other than New Jersey presents no real problem. It is conceded that the controlling case is Texas v. New Jersey , 379 U.S. 674, 85 S. Ct. 626, 13 L. Ed. 2d 596 (1965), in which these principles were established:

1. Intangible personal property, such as a debt which a person is entitled to collect, is subject to escheat only by the state of the last known address of the creditor, ...


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