Source: https://supreme.justia.com/cases/federal/us/263/282/
Timestamp: 2019-04-22 00:23:25+00:00

Document:
1. Savings deposits, in a state banking corporation having its place of business within the its creation, are intangible property subject, like tangible property, to the dominion of the state. P. 263 U. S. 285.
2. A state law requiring a bank, through appropriate procedure, to pay over such deposits, when long unclaimed, to the state as depositary or by way of escheat, violates no right of the bank under the contract clause of the Constitution or the due process clause of the Fourteenth Amendment, since the bank's contracts with the depositors merely give it the use of the money until called for by proper authority, and payment to the state in obedience to a valid law discharges its obligation to them. Id.
3. The two essentials of jurisdiction in a proceeding by the state to effect an escheat of such unclaimed deposits, in order that the depositors may be bound and the bank protected, are seizure of the res at the beginning of the suit and reasonable notice and opportunity to be heard accorded the depositors. P. 263 U. S. 287.
4. Under the California statutes here involved, seizure of the res is accomplished by personal service on the bank, in a suit brought by the Attorney General in Sacramento County, and due notice is given the depositors by publication in that county of a summons, with a notice also to all other persons to appear and show cause why the money should not be deposited with the State Treasurer. Id.
upon for twenty years, and who have not filed with the bank, within that time, any notice or claim giving their then residences. P. 263 U. S. 288.
6. In view of other statutes requiring savings banks in California to publish at their several locations annual notices of deposits not added to or drawn upon during the preceding ten years, with the name, last known residence, and other particulars concerning the depositor, this Court cannot say that the escheat statute, in providing for publication of summons in escheat proceedings at Sacramento County only, was unreasonable. P. 263 U. S. 289.
Error to a judgment of the Supreme Court of California affirming a judgment of escheat of bank deposits in suit of the state against the savings bank and the depositors.
bank is a California corporation, and has its only place of business there. The last known residences of the depositors are not stated. All the proceedings were in conformity with § 1273 of the California Code of Civil Procedure and § 15 of its Bank Act, Stat. 1915, c. 608, p. 1106. A judgment for the plaintiff was affirmed by the highest court of the state. State v. Security Savings Bank, 186 Cal. 419. The case is here on writ of error under § 237 of the Judicial Code as amended. The question for decision is whether the statutes violate rights guaranteed a state bank by the federal Constitution. [Footnote 2] It is claimed that they are obnoxious to both the contract clause and the due process clause.
The substantive provision of the legislation is this: if a bank account has not been added to or drawn upon by the depositor for more than 20 years, and no one claiming the money has, within that period, filed with the bank any notice showing his present residence, and the president or managing officer of the bank does not know that the depositor is alive, then the bank shall, upon entry of a judgment establishing these facts, deposit with the state treasurer the amount of the deposit and accumulations. The suit cannot be begun until after the expiration of the 20 years. The statute does not effect an immediate escheat upon the lapse of the 20 years. It provides for taking over the deposit when so adjudged in the action. A valid claim to a deposit duly made at any time prior to entry of the judgment prevents its transfer to the state. Mathews v. Savings Union Bank & Trust Co., 43 Cal.App. 45, 48; State v. Savings Union Bank & Trust Co., 186 Cal. 294, 298.
"banks to forthwith deposit all such moneys with the state treasurer, to be received, invested, accounted for, and paid out in the same manner and by the same officers as is provided in the case of other escheated property."
For a period of five years after entry of the judgment, any person not a "party or privy" to it may sue the state to recover the moneys so received. In the case of infants and persons of unsound mind, the period is extended for one year after removal of the disability. Code of Civil Procedure, § 1272.
state as depositary savings deposits which have long remained unclaimed. Compare Cunnius v. Reading School District, 198 U. S. 458; Blinn v. Nelson, 222 U. S. 1. The contract of deposit does not give the banks a tontine right to retain the money in the event that it is not called for by the depositor. It gives the bank merely the right to use the depositor's money until called for by him or some other person duly authorized. If the deposit is turned over to the state in obedience to a valid law, the obligation of the bank to the depositor is discharged. Louisville & Nashville R. Co. v. Deer, 200 U. S. 176. It is no concern of the bank's whether the state receives the money merely as depositary or takes it as an escheat.
The bank's main contention is that it is denied due process because, owing to defects in the prescribed procedure, depositors will not be bound by the judgment, and hence that payment to the state will not discharge the bank from its liability to them. The argument that there is no proper provision for service upon depositors or other claimants is this: if the proceeding is in personam, the law is invalid as to nonresidents of the state since they are served only by publication, and it is invalid as to residents because they are served by publication without a prior showing of the necessity for such service. If the proceeding is quasi in rem, the law is invalid as to all depositors and claimants because there is no seizure of the res, or its equivalent, because the notice provided for is inadequate and unreasonable, and because it is binding only on parties to the action. If the proceeding is strictly in rem, the law is invalid because it does not provide for such seizure of the res nor give reasonable notice to depositors and claimants.
to the jurisdiction of the court. Compare 78 U. S. United States, 11 Wall. 268, 78 U. S. 297-298. Alexandria v. Fairfax, 95 U. S. 774, 95 U. S. 779. The service upon the bank has the same effect as had service of the injunction in Pennington v. Fourth National Bank, 243 U. S. 269, or the service upon the garnishee in Harris v. Balk, 198 U. S. 215, 198 U. S. 223, or the application for administration of the debt due an absentee in Cunnius v. Reading School District, 198 U. S. 458, or the levy of the writ and return of the fact to the court on attachment of the real estate in Cooper v. Reynolds, 10 Wall. 308. The fact that the claim of the state to the deposit may be defeated by the appearance of the depositor or other claimant does not, as argued, prove that the deposit was not seized. An attachment of real estate is a seizure although it may be dissolved by bankruptcy or otherwise.
The statutory service is reasonable, and the court is required to hear anyone who may appear in the suit. The objections urged to the notice are not that insufficient time is allowed for entering an appearance, as in Roller v. Holly, 176 U. S. 398, and Goodrich v. Ferris, 214 U. S. 71, or that the contents of the notice fail to convey the required information, as in Grannis v. Ordean, 234 U. S. 385. The objections taken are to the order and the place of publication. It is urged that the notice is insufficient because service may not be made by publication until it has been shown by affidavit that personal service is impossible or impractical. Such an affidavit is a common requirement in statutes providing for service by publication on absent defendants. Compare Romig v. Gillett, 187 U. S. 111; Jacob v. Roberts, 223 U. S. 261. But it is not constitutionally indispensable. The reason for requiring the affidavit is that ordinarily personal service would be more likely to acquaint a defendant with the pendency of the suit. But here, the general facts which underlie the legislation establish the futility of such a requirement.
It may be that, in California, banks usually endeavor to ascertain the whereabouts of depositors whose accounts have remained dormant for many years. The statute applies only to deposits in the name of a person who is not known to the president or managing officer of the bank to be alive, whose account has not been added to or drawn upon for 20 years, and who has not filed within that time any notice or claim giving his then residence. The legislature evidently assumed that it would be impossible to serve such depositors personally. The supreme court of the state held that the legislature was warranted in this assumption. The owners of the deposits were therefore treated like persons unknown. Compare Leigh v. Green, 193 U. S. 79. We cannot say that the view entertained by the legislature and the state courts was so unreasonable as to constitute a denial of due process.
if seen, would be apt to remind a depositor of his account even if he were not named therein. And if he had died, it might serve as a reminder, or as a suggestion, to his next of kin. The fact that, after nine or more such publications in the local newspaper, a deposit remains unclaimed affords the legislature some basis for thinking that the further publication provided for in these proceedings would be more apt to accomplish the purpose of actual service if made in the county in which the state capital is located. The highest court of the state deemed the prescribed publication in Sacramento County reasonable notice. We have no ground for saying that it was not. Obviously the question "is one of local experience, on which this Court ought to be very slow to declare that the state legislature was wrong in its facts" or abused its discretion. Patsone v. Pennsylvania, 232 U. S. 138, 232 U. S. 144; Adams v. Milwaukee, 228 U. S. 572, 228 U. S. 583.
In the opinion below, it was suggested that the statute may be construed as permitting a depositor, although named as defendant in the Attorney General's suit, to make claim as against the state, under § 1272 at any time within the five years (or the extended period) after final judgment if he did not appear in the suit. As no depositor had appeared, the point was not passed upon, and the state court expressly left open the rights of depositors and their privies in respect to escheat. State v. Security Savings Bank, 186 Cal. 419, 431. We have no occasion to consider them.
As to two depositors originally named as defendants, a dismissal was entered by stipulation, as to one because it appeared that the deposit had not been unclaimed for the 20 years; as to the other, because a claim had been made by an administrator since the expiration of the 20 years.
That the statutes are invalid as applied to national banks was settled in First National Bank v. California, 262 U. S. 366.
See Charles E. Carpenter, "Jurisdiction over Debts, etc.," 31 Harv.Law Rev. 905.
Compare 70 U. S. Norton, 3 Wall. 257; The Sabine, 101 U. S. 384; Waples, Proceedings in Rem (1882) pp. 758-768.

References: § 1273
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 § 1272
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