On appeal from Superior Court of New Jersey, Chancery Division, Mercer County.
Judges Brody, Gruccio and D'Annunzio.
We now hold that gambling casino funds in the amount of unredeemed gaming chips and slot machine tokens are abandoned intangible property subject to the Uniform Unclaimed Property Act (the Act), N.J.S.A. 30B-1 et seq., and must therefore be paid to the State Treasurer for protective custody.
The Casino Control Commission (Commission) ordered that on May 22, 1989, defendant close the casino at its Atlantis Casino Hotel in Atlantic City. The Commission also ordered that defendant hold in trust $875,000 for the payment of unredeemed gaming chips and tokens issued by defendant and its predecessor Playboy Elsinore Associates. About two weeks later, on June 8, the Commission ordered a conservator, whom it had previously appointed pursuant to N.J.S.A. 5:12-130.1 et seq., to take exclusive possession of all of defendant's property relating to the casino and hotel operation, including the funds being held for unredeemed chips and tokens. However, the funds remained where they had been invested and defendant continued to receive the interest they earned and use it in its other corporate activities.
On August 30, 1989, defendant petitioned the Commission to release the funds for its general use on the assurance, which it still maintains, that it will cash any outstanding chips and tokens whenever they are offered for redemption. In November 1989 the Commission denied defendant's petition on the ground that the issue of whether the funds are subject to the Act is justiciable exclusively in court. The Commission took possession of the funds in December 1989 and invested them in the State Cash Management Fund, pending resolution of the issue. In April 1990 the State commenced the present summary
action in the Chancery Division, pursuant to N.J.S.A. 46:30B-97, to resolve the issue.
The Uniform Unclaimed Property Act became effective April 14, 1989. Like the 1951 Act, N.J.S.A 2A:37-29 et seq. (repealed), the present Act provides for custodial escheat as distinguished from absolute escheat, which had prevailed under the 1946 Act, N.J.S.A. 2A:37-11 et seq. (repealed). The distinction was explained in Commonwealth of Penna. v. Kervick, 114 N.J. Super. 1, 8 (Ch. Div. 1971), rev'd on other grounds 60 N.J. 289 (1972):
Escheat in New Jersey derives from the right of the 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 1951 amended the prior Absolute Escheat Act of 1946 to add an alternative method of escheat, using an intermediate custodial procedure.
This distinction affects our approach when interpreting the Act. The question is no longer whether the owner shall forfeit the property to the State as it had been when there was an absolute escheat, but rather whether the State or the holder shall have use of the property until the owner claims it and whether the State or the holder shall enjoy the windfall if the owner never claims it. Because a custodial escheat does not forfeit the owner's claim, there is no need to interpret the Act narrowly as there had been when the escheat was absolute. State v. Sperry & Hutchinson Co., 23 N.J. 38, 43-44 (1956).
The starting point in the Act is N.J.S.A. 46:30B-9 (Section 9), which describes in general terms property that is subject to the State's custody;
Unless otherwise provided in this chapter or by other statute of this State, intangible property is subject to the custody of this State as unclaimed property if the conditions raising a presumption of abandonment under Articles 2 and 5 through 16 of this chapter are satisfied and the conditions under R.S. 46:30B-10 [Section 10] are satisfied. The common law doctrine of bona vacantia shall
remain viable with respect to unclaimed property not covered by this chapter or ...