For reversal and remandment: Chief Justice Weintraub and Justices Jacobs, Francis, Hall, Schettino and Mountain. For affirmance: None.
[60 NJ Page 290] In Commonwealth of Pennsylvania v. Kervick, 114 N.J. Super. 1 (1971), the Chancery Division held that Pennsylvania is entitled to certain moneys which had been abandoned by persons with last known Pennsylvania addresses and had been turned over by the United States Steel
Corporation, a New Jersey corporation, to the defendant State Treasurer of New Jersey pursuant to the custodial escheat law (L. 1951, c. 304; N.J.S.A. 2A:37-29 et seq.); it also held that the defendant could not assert a counterclaim to recover moneys abandoned by persons having last known addresses in New Jersey and turned over by various corporations to Pennsylvania under its escheat legislation. The defendant appealed to the Appellate Division and we certified before argument there.
In 1946 New Jersey asserted its sovereign power to appropriate abandoned personal property by the adoption of an absolute escheat law (L. 1946, c. 155; N.J.S.A. 2A:37-11 et seq.). See State, by Parsons v. Standard Oil Co., 5 N.J. 281 (1950), aff'd, 341 U.S. 428, 71 S. Ct. 822, 95 L. Ed. 1078 (1951). In 1951 it adopted a custodial escheat law which set forth an alternate method for taking custody of and escheating personal property which remained unclaimed for five successive years. L. 1951, c 304; N.J.S.A. 2A:37-29 et seq. Thereafter it instituted numerous custodial escheat actions including those referred to in reported decisions of this Court. See, e.g., State v. Amsted Industries, 48 N.J. 544 (1967); State, by Hilgendorf v. American Can Co., 42 N.J. 32, cert. denied, 379 U.S. 826, 85 S. Ct. 53, 13 L. Ed. 2 d 36 (1964); State by Furman v. Jefferson Lake Sulphur Co., 36 N.J. 577, appeal dismissed, 370 U.S. 158, 82, S. Ct. 1253, 8 L. Ed. 2 d 402 (1962); State v. Union Bag-Camp Paper Corp., 35 N.J. 390 (1961); State by Richman v. Sperry & Hutchinson Co., 23 N.J. 38 (1956); State by Parsons v. United States Steel Corp., 22 N.J. 341 (1956); State by Van Riper v. American Sugar Refining Co., 20 N.J. 286 (1956). In these actions the New Jersey officials followed the then pertinent judicial holdings including State by Van Riper v. American Sugar Refining Co., supra, where we had rejected a claim by Massachusetts to abandoned dividends declared by a New Jersey corporation and payable to stockholders whose last known addresses were in Massachusetts. However, in 1965 the Supreme Court announced the rule that
in such situations the abandoned property should escheat to the State of last known address rather than the State of incorporation; it did so not as a matter of precedent or logic but as a matter "of ease of administration and of equity." Texas v. New Jersey, 379 U.S. 674, 683, 85 S. Ct. 626, 13 L. Ed. 2 d 596, 602 (1965). Custodial judgments entered in accordance with N.J.S.A. 2A:37-30 subsequent to the Supreme Court's decision have honored its ruling (cf. State v. Amsted Industries, supra, 48 N.J. 544) and recently our Legislature enacted a comprehensive revision of the custodial escheat law with Texas v. New Jersey, supra, undoubtedly in mind. L. 1967, c 135; N.J.S.A. 2A:37-29 et seq.
In 1953 New Jersey instituted an action against the United States Steel Corporation under the custodial escheat law; its complaint sought moneys such as dividends, interest, wages, etc., which had remained unclaimed during the preceding five years. Three subsequent actions of similar nature were instituted against the Corporation during the period from 1953 to 1959. In each of the actions a judgment of custody was entered in accordance with N.J.S.A. 2A:37-30; the last of these was entered on August 26, 1960. In due course the moneys were turned over by the Corporation to the State Treasurer along with lists of the individual amounts and the names and addresses of the owners as shown on the books of the Corporation. N.J.S.A. 2A:37-31. Pennsylvania alleges that the aggregate amount belonging to persons with last known Pennsylvania addresses is $181,541.76 but the defendant alleges that this amount has been substantially reduced by payments made to such persons from time to time by the State Treasurer.
After the entry of the custodial judgments under N.J.S.A. 2A:37-30 and his receipt of the moneys, the State Treasurer mailed notices to the owners whose names appeared on the lists advising them that if claim was not made within two years an escheat action would be instituted under the statute. In addition he mailed notices to the Attorney General of Pennsylvania (as the State of last known address) advising
him, in the then terms of N.J.S.A. 2A:37-32, "to present any claim that such state might have to such money." N.J.S.A. 2A:37-32 provided that if a claim is made to the State Treasurer within the statutory two-year period, he shall determine whether the claim is valid, and if he determines that it is valid he is directed to pay the money so claimed "to the person entitled thereto." If he determines that the claim is invalid he is directed to reject it and thereupon the claimant may apply to the Chancery Division "for a review of his determination, and the claim shall thereupon be heard and determined, de novo."
N.J.S.A. 2A:37-34 provided that if moneys deposited with the State Treasurer shall remain unclaimed for the period of two years from the date of the mailing of the notices to the owner, the "moneys shall escheat to the state and the treasurer shall inform the attorney general thereof." Later sections contemplated further steps including summary action (N.J.S.A. 2A:37-36), posted notice (N.J.S.A. 2A:37-37), and judgment of escheat (N.J.S.A. 2A:37-39). New Jersey did not pursue these steps after the two-year period and at oral argument it took the position that they were legally dispensable and had in actual practice been dispensed with. It apparently viewed them as ministerial and at most designed to afford a formal measure of further protection to the true owners but no one else.
Although Pennsylvania received the notices called for by N.J.S.A. 2A:37-32 it took no action within the two-year period. Indeed no action was taken by Pennsylvania claiming any right to the moneys transferred to the State Treasurer until after the 1965 decision in Texas v. New Jersey, supra. In 1966 Pennsylvania instituted an escheat action in one of its own courts against the United States Steel Corporation. New Jersey was not a party to this action nor did it have notice thereof. On October 4, 1966 a consent judgment was entered in the ...