first case in our call this morning is agenda number twelve case number one zero eight three one three david swick versus alexi g pink up there are three questions before the court all certified by the trial court the first question has to do with whether or not the retention of interest on unclaimed funds is a taking that requires compensation the second question is how is that just compensation to be measured and the third is whether the trial court properly certified class i'll take the second second question first the because that was the basis of the ella court's decision in this case the appellate court here said that even measure just compensation and is on the use of the unclaimed property prior to the time it came into the state's custody and he court said that because the plane of sin this case failed to plead that they were receiving interest or expected to receive interest on that money prior to the time the state took it into custody they were do  nothing as just compensation when the when the state kept the interest that was earned while it was in custody as a result they said that the plaintiff said no cause of action and therefore they also did certify the class they may have gained interest they failed to plead that they were expecting interest in i don't believe there is anything in the in the complaint that talks about whether or not they were getting i'm money that was being held by the government or and interest that the interest itself was private property and the retention of that was a taking which required compensation and constitution the constitution requires however that if the government does invest it turning xp because the principle is private property so too are the earnings that's what the united states supreme court held in the web's fabulous pharmacy case that's what this  kept the interest when the principle was returned what the court said in that case is that because the money is pooled just as it is in this case you take the average rate earned on that pooled money and you apply that to the money that was retained for each for each particular person now to be a simple thing to do that i mean a computer could calculate that by determining the the date that the property was taken in the date it was given back and well it doesn't it takes an afterthought in that sense in figuring out how much there has it doesn't take an afterthought to know that the money was was earning interest while the state's custody of the statements that they take they make productive use of it but it's a formulaic  you can use a formula basically to figure out how much is is due each person it's not a it's not a difficult thing it's done all the time and you know banks do it all the time there's no reason why the state couldn't do  what amount of plies to draw the interest from well you would after what once if i had property in there and i made a claim for it the state would return my principle to me just as they do and they did here in all cases can but whether they could or not is really irrelevant in this case remains private property the government is using private property to gain interest and the interest therefore should be private property as well the properties title never rests in the state now texaco also itself recognise that there are limits on the state's power to redefine interest even in abandoned property one it has to be a proper exercise of the police power and to you have to give due process there was no due process here there's certainly no no hearing the loss of the right to the interest is automatic and irrevocable there is no means to challenge that so that that would be a violation right there of the constitution as well the police power the state has a traditional right to define rights and property either wanted to bandon or there  is some reason for the state to exercise that power for the public health safety well for morals and so forth there's that is really not an issue in this case or certainly nothing immoral about having on plain property there's no safety issue  and so on and so forth and that's really what this court held in camel also it didn't address texaco directly but it also said that there is no common law basis to sever the interest or sees me the the earnings on property held  property act from the owner's right to that property so i think that that question's been answered texaco has in my view irrelevant because this is not abandoned property and second even if it was it was merely a state gain once they started to get interest of the same movies well that that is correct that's what is that that's what the public court held but what that does is imports the owners idiosyncratic valuation of the property is not a market based approach to just compensation which for well over a century the united states supreme court in this court and every other court that i've ever seen has is used to determine just compensation for your response then is market value of the property that is the laws regardless of those moneys that earn or in any interest or in the period that they were in the owners because of that's correct it doesn't matter it looks like there was one hundred dollars of interest earned by while the state held in custody the value of one hundred dollars is not penned in upon whether the owner of the principal had been investing the property before the state took custody hundred dollars of interest is worth one hundred dollars given back as well as this in addition to value of the use of the of the private property while the state's hands that's what the fifth amendment demands would you agree though that there's a certain logical appeal that  honor i don't think that that follows because of the definition of just compensation and we look at the supreme court's approach to this united states versus general motors this year in the war the government came in and took over where i think was a warehouse that the the general motors own they were not using it at all but the government came in occupied that property and they were required to pay a fair market rental value for that property general motors  had no had no expectation of earning anything on the property until the government took custody of it the same thing was true in the other cases which side of boom company and so forth whether ate a landowner lets the property lie fallow doesn't use it at all to gain anything as no expectation of using it to gain anything if the government comes in and takes that property they own compensation for it that's what the fifth amendment well we're the ones who created this interest that was an argument that was made in the webspace as well and then both cases the supreme court said no it's not the government's action that is causing the interest to be earned here it's the principle itself which is earning the interest and so they rejected that argument to follow up on that question or target and there i think the basic problem i have it's can there be a taking of something that would not have existed but for the action of the government yes your honor because the takings clause for tax private property from the government's use without compensation wouldn't investment simply not invest anymore and that would take care of them if they're not going to get the benefit of it why would they invest and have a problem going to be the net result of your action no i don't think it is because it for two reasons first there historically about a third of this property has ever claimed back and so the government will have actual use of all of that money second if the government has to pay for the use of it it's like it's like a borrowing the government borrows money all the time and repays it and pays it back with interest that's in essence what what is happening here so i don't think that the government is going to forego the the right and the power to use this property during the time it's holding it this is not can be the end of the unclaimed property act if they have to pay for it other states pay for it  ohio supreme court in addressing the excuse me in addressing the ohio unclaimed property act so the same thing look if you're using private property you're gaining interest on it you have to pay for that interest it's not a free ride isn't the know a farmer has a piece of land that may have may have a highest and best use for commercial real estate for example but hasn't put it to that use and you're saying well still if there's a take in there entitled to  the highest and best use rate right there right the fair the fair market value of the property in that still looking forward i mean i'm thinking of your example of the state doesn't go in and that taking and saying oh by the way ten years ago they could have been converted this to commercial real estate and made x amount of dollars and therefore were not only going to pay them what the fair market value is now the highest and best use is now going forward we're also going to give them ten years of monies where they right that the when the property is claimed and the property is not given back the interest is not given back that's when we claim a taking takes place and you value property that is taken on the date of the taking in morton gro court said while the government is holding this property deserving interest when it doesn't give it back that's a take and there is the owner is entitle to whatever was earned in that period while it was being helped so i think that answers your question directly the taking takes place on the date that the principle is returned without the interest that's the date you value the interest so i think that that i hope that answers your question  it would you be in here asking or telling us that the state has a duty to invest if they did nothing no we do not assert that there was any duty to invest the government can and we have no we have no problem whatsoever with the government taking this property and i think anything and doing nothing with it if they want to hide it in a cannon out on the across the street in the yard we don't have quite the fact that the government uses the private property though that's exactly what the fifth amendment and article one section nineteen of the own constitution say requires  use of that private property ate a piece of jewelry obviously can earn any interest cash can and it does and it is that interest which is actually earned which is the which is what is taken within the meaning of the takings clause of the us constitution or the illinois constitution in the alternative and as an independent ground to dismiss the claim this court should dismiss the action because the plaintiffs fail to allege that they were deprived of any that they suffered any peculiarity was that they were deprived of anything by any state action in the alternative if this court finds that there was an allegation of a argument stands for the radical proposition that this court should find a bedroom constitutional entitlement to interest earned on an abandoned presumed abandoned the texaco case does not apply i do think it does absolutely the texaco the texaco case is absolutely on point as has been recognized by virtually every other court to analyze the substantively same statute  case in the third circuit the ninth circuit the state courts in indiana north carolina texas california and louisiana have all applied the texaco principle to be term in whether the retention of or in finding that texaco did not apply inside vs serves the ohio court distinguished texaco and the cases following it in a way that distinguishes that he's from this case the ohio court said texaco does not apply and the case is found if you do not apply because under the ohio state you unclean property is not presumed abandoned that was the court's word presumed abandoned and in fact that phrase never appears in never never appears in ohio unclaimed property ad right it never presumes abandon i'm playing property illinois act to the contrary consistently and repeatedly presumes abandoned  organization these presumed abandoned illinois is a presumed of a presumed abandonment statute same as the all the other ones that have been analyzed by state and federal courts all of  applied texaco and found that there was no taking and that's why plaintiff proposition is so radical plaintiffs ask this court to depart from all of those other jurisdictions all of these your other jurisdictions they have uniformly found that the texaco rule matter what's important and what's relevant from texaco their own principles from textbook are that the state has the authority to condition an owner's retention of property rights on the continued exercise of those rights the state has the authority to condition the retention of property rights on the continued after says of those rights so for instance the state has the authority constitutional authority hugh say property owner if you don't exercise poppy rights in this property for this amount of time you lose some or all of those rights that is constitutional that the state has the authority to do that but the state then only say that the interest is forfeited but the reason for if the state could do that the state absolutely could do that and when we does not do that in fact illinois takes all the property in from all these disparate and very holders by the holders in the first place only doesn't have to do that in the constitution we could go further but the fact that illinois hasn't gone as far as it does doesn't mean that it's unconstitutional by exercising a subordinate power other as states well i don't think so you are in the sense that other illinois or other united states supreme court cases which we certainly cite stand for the proposition that when a property has been abandoned or is derelict or how we want to find it the state can take the entire the supreme court stated that the right to appropriate a derelict is one of universal long well known to the civil long the common law into all law existed in a state of nature the court was talking broadly about the state's right to appropriate the entire bundle of property rights if you will the statutes don't do that so in the sense that you know the going that far hasn't been tested in the context of an unclear poppy claim but it certainly has been approved in the other cases such that we cite dealing with the extent of the state's rights too define property rights in abandoned property and as this hawkins quote makes clear do you think that there's has to be  principles of texaco where is your honor i stated before the state does not have to compensate an owner the consequences of its own neglect there is no state action when a sta there was no taking we don't even get to the just compensation issue which brings me to then the next point which is there are two discrete independent elements to a fifth amendment takings claim first there has to be a taking  private property by the state within the meaning of the the amendment and second there has to be a failure to pay just compensation here claims do no way either burst but in a legit taking of private property under the texaco essential part of that share of stock that's absolutely not true with interest interest doesn't automatically accrue on property you have to do something you have to do something for interest to start accr retains a one of the various property rights there are multiple property rights in property under the act the state has the right to interest the state also gets the right to liquidate that property is t to possess up property the state has the right to dispose of property for instance if there is contraband or something that made me have no no value that is that it is then not required to sell under the act the only the only property right that is retain of property is the right to reap we possess certain property rights the actual principal but again if the plaintiff left for instance and seek to posit box costume jewelry in the street liquidates that the queen doesn't have a right to get costume jewelry that the state has exercise property rights its property rights to dispose of that property to liquidate their property and the indiana court in smite recognises that in fact is a very important property right first proposition of your argument there's no taking here i understand the distinction between live here or is a ship property but do we how does that how does the canal opinion impact the question about whether there is  a now just the distinction between the property that there's an automatic right of interest on stock and so forth if corporation pays it does it all in pay if in fact the calculus is there a taking or not no your honor can look at the situation in the context of dividends in recognise that for in that context the state and again before the state liquidated the stock and for the time that the state took the shares of stock and dividends accrued the state was simply acting as a custodian and it was a custodial statute at that time there were no you know property interest being exercised by the state and taking really was an addition to taking really wasn't an issue in that situation that is very different from the present situation and the other question i've got is on there your opponents say this really isn't abandoned property and you you know there's the it's clearly presumed dead it is declared abandoned under the clean language of the only constitution at that point the state's long standing rights to define property and interest in that property to make some use of that property come into play and that is the first the principle basic fundamental step that all of plaintiffs authorities ignore they never go into a situation of abandoned property or derelict pro argument raise certain problems saying well there's no due process rights or it has to be an exercise of the police power both of those propositions were explicitly in fact rejected in texaco in texaco the court found that when the state state revenue is gained from that property the state the court the u s supreme court takes also found that there is no due process violation because the statute itself if adequate notice to owners if they have to do property under the unclaimed property act is not abandoned property that's what this court held in canada in fact cannell if i may quote or this court we know of no common law rule which supports defendant position that by virtue of pla of his property the divinest declared as an incident of ownership of the property become the property of the state at the same time the state in their brief says and i quote illinois does not take title to unclaimed corpus under the unclaim property act if the state does not take title to how can it be abandoned abandonment means the relinquishment of title the owners of the unclaimed property at all times as this court is recognized as the ohio supreme court recognized inside retain ownership of that property and suggestion earlier justice burke also that whoever possesses the property owns the owns the interest the rule is whoever owns the property also owns the interest interest follows principal so the owner of the principal owns the  what the holding in webs was that's what the holding excuse me in morton grove was and what the holding in the phillips case was for the us supreme cork so it's not a question of who possesses it if it was simply possession then none of those cases would have come out the way they that property they keep records of its date they keep a record that if you had your bank account turned over to the state you can claim it and they know what property was taken in so they recognize that it's owned by the individual who's who won't it prior to the something that's that's correct your honor when the state uses that property using using private property is what is the language used in the fifth amendment when the state uses private property for its benefit it has to pay compensation for it is also is there any case council it says that a property title has to transfer before a property can be declared abandoned well i think title transfer is when it was that was the candle case limited to dividends they can case limited itself to dividends but the language used in that is that the unfit unclaimed property is not abandoned the court and it's later alvarez opinion said the same thing time it came into the state's custody in fact it was but that was not part of the record and so was not part of this court's decision in that case what the court said in that case is that the dividends as an incident of ownership which is by the way the same language used by the supreme webs and in philips and in this court in morton grove as an incident of ownership the dividends were private property as well of course those other three cases which use that same language don't with interest earned on private property was in fact abandoned that was the due process issue that i raised earlier the state can't simply come along and declare that it is the owner of private property it has to go through judicial channels and get a declaration that it in fact is abandoned property and in that case they would have to show that there was an intentional relinquishment of that property before the state could take title to it texaco recognized that as well but i think that counsel was incorrect when it said th texaco said that you don't need to follow due process in fact they said explicitly that before title can vast in this third party owner that the there has to be notice a hearing and so forth to make sure that you aren't taking property for want to be shot and lots of other supreme court cases deal with the same the same issue and in fact this court has held that repeatedly as well the state simply can't to clear the private property is public property and fact that's what the court said in the canon case said that there's no the court knows of no no common law standard by which the state can simply take title property given the fact that the property is private property just doesn't web's just isn't and can't hold anything it's earned i hate to keep repeating myself with just anything is earned on that is private property the owner is the one who owns the private property that  now i want to talk for one second also about these other cases other states it's not true that all states have adopted the state's position here as i said the ohio supreme court came down firmly and are on our  side with respect to the ohio supreme scuse me the ohio unclaimed property act in the texas case there was a subsequent case down there as well which said that once a play they treated it is if it the property was abandoned something we don't do in this state excuse me but after the claim has been made anything that has earned on that property is private property and should be returned as well i say only have a couple more minutes but if  if the if you treat presumed abandonment as the same thing as abandonment then this course the situation in canada would have to be reversed because that case said specifically it is not a property title does not change but once time once you recognize that it is held in custody which the state minutes then it then anything that is on that property interest dividends whatever is also private property and once you keep private property you are gauging into taking justice i'd like to address your question as well you said this can all did cannell say that there was a taking yes it did say there was a taking it said that the  the stock was privately own excuse me as a result the dividends as an incident of ownership were also private property and had to be returned and it sent the case down for a determination of just compensation so taking was a central issue in that case in fact that was the the decision in that case that there was a take just as there is a taking in this case because you've got interest is private property that is being retained as i said in my opening remarks there's really no  difference between interest and dividends earned on stock they're both private property and they're both being retained by the state the question also came up as to whether or not the state could take the take title to the principal itself again there has to be due process and that and that was recognized by  cannell they were soundly rejected those do not give the state the power to take title to either the unclaimed property itself or the earnings on that in that case it was dividends in this case obviously its interest u nless the court has other questions i think i'm through expounding thank god thank you very much case number one zero eight three one three will be take