Case Title: Sogg v. Zurz

Citation: 2009-Ohio-1526

Docket Number: 20071452

State: ohio

Court: Ohio Supreme Court

Date: 2009-04-08T00:00:00Z

Document:
[Cite as Sogg v. Zurz, 121 Ohio St.3d 449, 2009-Ohio-1526.] 
 
 
 
SOGG, EXR., APPELLANT, v. ZURZ, DIR., APPELLEE. 
[Cite as Sogg v. Zurz, 121 Ohio St.3d 449, 2009-Ohio-1526.] 
Unclaimed funds — R.C. 169.08(D) — Denial of interest unconstitutional. 
(No. 2007-1452 — Submitted September 16, 2008 — Decided April 8, 2009.) 
APPEAL from the Court of Appeals for Franklin County,  
No. 06AP-883, 2007-Ohio-3219. 
__________________ 
PFEIFER, J. 
{¶ 1} The issue before this court is whether the first sentence of R.C. 
169.08(D), which provides that “[i]nterest is not payable to claimants of 
unclaimed funds held by the state,” is constitutional.  We conclude that it is not. 
Background 
{¶ 2} Appellee, the director of commerce of the state of Ohio, now 
Kimberly Zurz, supervises and administers the Division of Unclaimed Funds, 
pursuant to R.C. Chapter 169, the Unclaimed Funds Act (“UFA”).  Property 
becomes “unclaimed funds” when the owner has not generated any specified 
activity for a prescribed period.  R.C. 169.02.  A holder of unclaimed property is 
required to report the property to the division, R.C. 169.03(A), which sets up an 
account for the reported property and credits the property to that account.  Enough 
of the property is held in the Unclaimed Funds Trust Fund to pay anticipated 
claims of owners, R.C. 169.08(D), and the unclaimed funds never become the 
property of the holder or the state of Ohio. 
{¶ 3} Appellant, Wilton S. Sogg, the executor of his mother’s estate, 
filed a claim with the division for the return of two separate amounts:  an 
insurance policy claim payment reported by Blue Cross & Blue Shield Mutual and 
SUPREME COURT OF OHIO 
2 
dividends reported by the Bank of New York.  Sogg received a check from the 
division for $320.72, which represented the total of the two amounts, including 
interest earned through July 26, 1991, minus a five percent administrative fee.  
R.C. 169.08.  The amount that Sogg received did not include interest earned after 
July 26, 1991, because R.C. 169.08(D) was amended effective July 26, 1991, to 
provide, “Interest is not payable to claimants of unclaimed funds held by the 
state.”  1991 Am.Sub.S.B. No. 298, 144 Ohio Laws, Part III, 4038. 
{¶ 4} Sogg was certified as the representative for the class of “[a]ll 
persons or entities who filed, or will file, claims for unclaimed funds with the 
Defendant (that is, with the Division of Unclaimed Funds of the Ohio Department 
of Commerce), and who have recovered unclaimed funds but not been paid 
interest on such funds for any period after July 26, 1991.”  Sogg’s amended 
complaint alleged that R.C. 169.08(D) “is unconstitutional and void because it 
denies the protection of the property owner’s private property rights afforded by 
Art. I, § 19 of the Ohio Constitution and the Fifth and Fourteenth Amendments to 
the United States Constitution.”  Sogg moved for summary judgment, which the 
trial court granted, ruling that when the state retains interest earned on unclaimed 
funds, it engages in a taking.  Sogg v. White, 139 Ohio Misc.2d 58, 2006-Ohio-
4223, 860 N.E.2d 163.  The court of appeals reversed, concluding that unclaimed 
funds are abandoned property and, therefore, that the state’s retention of interest 
“does not constitute a taking that requires compensation.”  Sogg v. Dir., Ohio 
Dept. of Commerce, Franklin App. No. 06AP-883, 2007-Ohio-3219, ¶ 34.  We 
accepted Sogg’s discretionary appeal. 
Analysis 
{¶ 5} We review the granting of summary judgment de novo.  Comer v. 
Risko, 106 Ohio St.3d 185, 2005-Ohio-4559, 833 N.E.2d 712, ¶ 8. 
January Term, 2009 
3 
{¶ 6} The first sentence of R.C. 169.08(D) states, “Interest is not payable 
to claimants of unclaimed funds held by the state.”  This declaration is 
breathtakingly bold and strikes at the core of the concept of private property 
because, at a stroke, the General Assembly severed the link between the owner of 
an asset and the income produced by that asset.  Nevertheless, “the General 
Assembly may pass any law unless it is specifically prohibited by the state or 
federal Constitutions.”  State v. Warner (1990), 55 Ohio St.3d 31, 43, 564 N.E.2d 
18, citing State ex rel. Jackman v. Cuyahoga Cty. Court of Common Pleas (1967), 
9 Ohio St.2d 159, 162, 38 O.O.2d 404, 224 N.E.2d 906. 
{¶ 7} Much is written in the briefs and lower court opinions about the 
common-law trust principle that the “[i]nterest follows the principal.” Ohio City v. 
Cleveland & Toledo RR. Co. (1856), 6 Ohio St. 489, paragraph three of the 
syllabus.  We need not consider it here because that venerable principle applies 
only “in the absence of a statute or stipulation to the contrary.”  Eshelby v. 
Cincinnati Bd. of Edn. (1902), 66 Ohio St. 71, 74, 63 N.E. 586.  See Thompson v. 
Indus. Comm. (1982), 1 Ohio St.3d 244, 249, 1 OBR 265, 438 N.E.2d 1167.  R.C. 
169.08(D) is plainly a statute to the contrary. 
Unclaimed Funds Are Not Abandoned 
{¶ 8} Even if the General Assembly may exercise its plenary powers to 
declare that “[i]nterest is not payable to claimants of unclaimed funds held by the 
state,” it is an entirely different matter for the state to assume ownership of the 
interest earned.  Nothing in the UFA states that the interest earned on the property 
held by the state becomes the property of the state.  In her brief, Zurz states that 
the UFA “benefits the public by allowing the State to use the unclaimed funds in 
its possession and draw interest on those assets for public purposes,” though she 
does not cite a specific provision of the UFA.  Zurz is apparently relying on the 
state’s “inherent sovereign authority to assume ownership of unclaimed property.”  
SUPREME COURT OF OHIO 
4 
See Connecticut Mut. Life Ins. Co. v. Moore (1948), 333 U.S. 541, 547, 68 S.Ct. 
682, 92 L.Ed. 863 (“The right of appropriation by the state of abandoned property 
has existed for centuries in the common law”).  Zurz also states that “the UFA 
properly treats an owner’s interests in unclaimed funds as forfeited by the owner’s 
inaction.”  No authority for this statement is provided.  The UFA does not use any 
form of the words “forfeited,” “abandoned,” or “escheated” except in referring to 
the laws of other states.  R.C. 169.041.  Nothing in the UFA indicates that the 
General Assembly intended to treat unclaimed funds as if they had been 
abandoned, forfeited, or escheated. 
{¶ 9} The court of appeals relied extensively on three cases in other 
states to conclude that pursuant to the UFA, “unclaimed property is essentially 
abandoned 
property.” 
 
2007-Ohio-3219, 
¶ 
28. 
Smolow 
v. 
Hafer 
(Pa.Commw.2005), 867 A.2d 767; Smyth v. Carter (Ind.App.2006), 845 N.E.2d 
219; Hooks v. Kennedy (La.App.2007), 961 So.2d 425.  We find this reliance 
unpersuasive because, as the court of appeals candidly acknowledged, the “UFA 
does not contain a presumption of abandonment as do the statutes at issue in 
Indiana, Louisiana, and Pennsylvania.”  2007-Ohio-3219, ¶ 28.  Zurz quotes 
Texaco, Inc. v. Short (1982), 454 U.S. 516, 526, 102 S.Ct. 781, 70 L.Ed.2d 738, 
for the proposition that “[s]tates have the power to permit unused or abandoned 
interests in property to revert to another after the passage of time.”  Although we 
do not doubt that this is a fair characterization of the law in Texaco, it is irrelevant 
for present purposes because, as noted above, nothing in the UFA indicates an 
intent to change the ownership of the unclaimed funds, whether due to the passage 
of time or any other reason.  Furthermore, “[f]orfeitures are not favored by the 
law.  The law requires that we favor individual property rights when interpreting 
forfeiture statutes.”  Ohio Dept. of Liquor Control v. Sons of Italy Lodge 0917 
(1992), 65 Ohio St.3d 532, 534, 605 N.E.2d 368; see also State v. Lilliock (1982), 
January Term, 2009 
5 
70 Ohio St.2d 23, 25, 24 O.O.3d 64, 434 N.E.2d 723 (forfeitures are not favored 
in law or equity); Kiser v. Logan Cty. Bd. of Commrs. (1911), 85 Ohio St. 129, 
131, 97 N.E. 52 (“Whether or not a proprietor has abandoned his rights or his 
property, is usually a question of fact for a jury to answer, and the answer must 
depend primarily upon an intention by the proprietor to abandon. * * *  But mere 
non-user is not ordinarily sufficient to establish the fact of abandonment”).  We 
conclude that the General Assembly has not plainly legislated that unclaimed 
funds are or can be deemed abandoned property. 
{¶ 10} The parties also agree that unclaimed funds are not abandoned 
property; otherwise they would not have stipulated the following: “[T]he 
unclaimed monies are held in trust in perpetuity for the benefit of the owners of 
the unclaimed property.  The funds never become the property of the State of 
Ohio.”  Under the UFA, the unclaimed property remains the property of the 
original owner.  What we are left with is the state’s control over and use of the 
interest earned on the property of another. 
The State’s Power to Take Private Property Is Limited by 
Section 19, Article I, Ohio Constitution 
{¶ 11} Section 19, Article I, Ohio Constitution, states: “Private property 
shall ever be held inviolate, but subservient to the public welfare.  When taken in 
time of war or other public exigency, imperatively requiring its immediate seizure 
or for the purpose of making or repairing roads, which shall be open to the public, 
without charge, a compensation shall be made to the owner, in money, and in all 
other cases, where private property shall be taken for public use, a compensation 
therefor shall first be made in money, or first secured by a deposit of money; and 
such compensation shall be assessed by a jury, without deduction for benefits to 
any property of the owner.”  See Cotter v. Doty (1832), 5 Ohio 393, 398, where 
this court stated, “No man ought to be deprived of his property by forfeiture 
SUPREME COURT OF OHIO 
6 
without having a legal investigation.”  Because “the General Assembly may pass 
any law unless it is specifically prohibited by the state or federal Constitutions,” 
Warner, 55 Ohio St.3d at 43, 564 N.E.2d 18, citing State ex rel. Jackman, 9 Ohio 
St.2d at 162, 38 O.O.2d 404, 224 N.E.2d 906, we now examine whether the first 
sentence of R.C. 169.08(D) is specifically prohibited by the Ohio Constitution.  
Because we conclude that it is, it is immaterial whether it is prohibited or 
permitted by the Constitution of the United States. 
{¶ 12} The question becomes:  Does the first sentence of R.C. 169.08(D) 
enable the state to assume ownership of interest earned on unclaimed funds that 
the state holds for the owner without violating Section 19, Article I of the Ohio 
Constitution?  The state may limit private property rights through the exercise of 
its police power when “the interests of the general public require its exercise and 
the means of restriction [are not] unduly oppressive upon individuals.”  State ex 
rel. Pizza v. Rezcallah (1998), 84 Ohio St.3d 116, 131, 702 N.E.2d 81, citing 
Froelich v. Cleveland (1919), 99 Ohio St 376, 391, 124 N.E. 212, which states 
that general laws “must be impartial in operation and not unduly oppressive upon 
individuals, must have a real and substantial relation to their purpose, and must 
not interfere with private rights beyond the necessities of the situation.”  See 
Norwood v. Horney, 110 Ohio St.3d 353, 2006-Ohio-3799, 853 N.E.2d 1115, ¶ 41 
(“Section 19, Article I requires that the taking be necessary for the common 
welfare”).  We conclude that the first sentence of R.C. 169.08(D) violates Section 
19, Article I, Ohio Constitution, as to interest earned on unclaimed funds for 
which a claim is ultimately submitted. 
{¶ 13} “The argument is made that the constitution emanated from the 
people and that the welfare of the people is paramount to any private interest.  
Very true, but written constitutions have heretofore been framed chiefly to protect 
the weak from the strong and to secure to all the people ‘equal protection and 
January Term, 2009 
7 
benefit.’  They have been constructed upon the theory that majorities can and will 
take care of themselves; but that the safety and happiness of individuals and 
minorities need to be secured by guaranties and limitations in the social compact, 
called a constitution.  Hence, while it is declared in Article I., Section 19, of our 
Constitution, that private property shall be held ‘subservient to the public 
welfare,’ it is also declared that it shall ever be held inviolate and shall not be 
taken for the public use without compensation, in most cases compensation first 
to be made in money. 
{¶ 14} “It is regrettable that there should be an apparent necessity for re-
stating such familiar principles; but there seems to be a growing disposition to 
legislate, by ordinance and by general statute, regardless of constitutional 
limitations, thus imposing upon the courts the odium of declaring them to be 
unconstitutional.” (Emphasis sic.)  Kiser, 85 Ohio St. at 132-133, 97 N.E. 52. 
Statute of Limitations 
{¶ 15} R.C. 169.08(B) states, “No statute of limitations shall bar the 
allowance of a claim.”  This sentence is dispositive as to a claim for underlying 
property, but it does not speak to a claim for interest.  Sogg argues that R.C. 
169.08(B) should apply and that there should be no statute of limitations even as 
to interest.  We disagree; R.C. 169.08(B) cannot apply to a claim for interest 
because the UFA does not allow claims for interest.  Zurz argues that the two-year 
general statute of limitations for unspecified personal-injury actions should apply, 
R.C. 2305.10(A).  We disagree because this case does not involve a personal 
injury.  R.C. 2305.09 states that a claim “[f]or the recovery of personal property, 
or for taking or detaining it” must “be brought within four years after the cause 
thereof accrued.”  We consider this the appropriate statute of limitations because 
this case and the UFA are concerned with the recovery of personal property.  
SUPREME COURT OF OHIO 
8 
Accordingly, Sogg may recover interest earned on his property in the four years 
preceding the date of his claim. 
Conclusion 
{¶ 16} “Unclaimed funds” are not abandoned; they are the property of 
their owner.  Accordingly, the state may not appropriate for its own use, against 
the owner of the underlying property, interest earned on that property.  The first 
sentence of R.C. 169.08(D) is unconstitutional.  We remand to the trial court to 
determine the method to be used to determine how much interest is owed to each 
claimant. 
Judgment reversed 
and cause remanded. 
 
MOYER, C.J., and LUNDBERG STRATTON, O’CONNOR, O’DONNELL, and 
CUPP, JJ., concur. 
 
LANZINGER, J., concurs in judgment only. 
__________________ 
Thompson Hine, L.L.P., and William C. Wilkinson; Futterman, Howard, 
Watkins, Wylie & Ashley, Chtd., John R. Wylie, and Charles R. Watkins; and 
Susman, Heffner & Hurst, L.L.P., Glenn L. Hara, and Arthur T. Susman, for 
appellant. 
Richard Cordray, Attorney General, Benjamin C. Mizer, Solicitor General, 
and William J. Cole and John T. Williams, Assistant Attorneys General, for 
appellee. 
______________________