Court Opinion

ID: 9747772
Source: CourtListenerOpinion
Date Created: 2023-08-27 15:33:10.650309+00
Date Added: 2024-06-11T07:25:26.902450
License: Public Domain

*512Vanderbilt, C. J.,
(dissenting). I am constrained to dissent because in my judgment the effect of the prevailing opinion is to deprive innocent creditors of J. B. Skehan & Co. of assets that are rightfully theirs.
Ehodes, in whose name the stock was registered on the books of the company, wrote the company the letter that is in evidence stating that he had endorsed the certificate for the shares of its stock and had delivered it to the receiver of J. B. Skehan & Co. Ehodes’ letter is not only clear and unambiguous as to his endorsement of the certificate and its delivery to the receiver but also as to the termination of any claim thereto on his part: “The certificate for the shares * * * was endorsed by me and delivered to A. H. Vanderpool, Esq., as Eeceiver of J. B. Skehan & Co., * * * and I have no further interest therein.” In the absence of any proof to the contrary it necessarily follows that the title to the stock passed to the receiver and that the stock is an asset of J. B. Skehan & Co. to be administered for the benefit of its creditors. As between a transferor and a transferee of a share of stock, the transferee obtains complete title to the stock even though the transfer is not recorded on the books of the corporation. Fidelity Trust Company v. Newark Milk & Cream Company, 89 N. J. Eq. 224 (E. & A. 1918).
True, the receiver never administered the stock and the receivership action was subsequently discharged on his motion. Equity, however, will not permit a trust to fail for want of a trustee, and here we now have a trustee in the substituted receiver of J. B. Skehan & Co. Having title to the stock, the receiver or his successor, the substituted receiver, may not abandon it without an order of the court directing him so to do: “A receiver is a mere custodian without power to abandon any claim or asset of the bankrupt,” Solomon v. Federal Trust Company, 123 N. J. Eq. 265 (E. & A. 1938). There being no evidence in the case to indicate that the receiver transferred the stock to another, it must necessarily be presumed that the receiver and his successor *513retained the title thereto. Since the substituted receiver has here made claim to the stock and established his ownership thereof, he is entitled to the stock under the provisions of the Escheat Act itself. N. J. S. A. 2:53-22 (now N. J. S. 2A :37—20).
The majority opinion approves the factual findings of the trial court that the substituted receiver had not established his claim, but like the trial-court based its findings on the premise that the receiver’s claim must be established by clear and convincing proof, citing in support Maddock v. Connolly, 82 N. J. Eq. 533 (Ch. 1913), and Zuckermandel v. Zuckermandel, 135 N. J. Eq. 598 (Ch. 1944). In my opinion, however, the burden placed upon the receiver is too great and the cases cited are not pertinent to the facts at hand. In both these cases the plaintiffs were seeking to establish claims against the defendants based on lost instruments, in the one instance a mortgage and in the other a written contract. In the instant case the stock certificate has apparently been lost, but there is no question as to the existence, extent or nature of the right of ownership of the stock of the defendant corporation which the lost certificate once evidenced. The sole question is whether the substituted receiver has established his ownership of the shares in the defendant corporation so as to defeat the State’s right of escheat based on the presumption of abandonment arising out of the fact that the shares have remained unclaimed or the identity or whereabouts of their owner unknown for 14 consecutive years, N. J. S. A. 2:53-17 (now N. J. S. 2A :37—13); State v. Standard Oil Co., 5 N. J. 281, 309 (1950). The resolution of this question of ownership does' not depend on proof of the terms of a lost instrument. There is no reason, therefore, why the substituted TeceiveT as a claimant to the shares sought to be escheated should be required to prove his claim by other than a preponderance of the evidence according to the rule applicable in civil cases generally, see Jaeger v. Elizabethtown Consolidated Gas Co., 124 N. J. L. 420, 423 (Sup. Ct. 1940); 9 Wigmore on Evidence (3rd *514ed. 1940), § 2498. In other jurisdictions in escheat proceedings the courts have required merely that a claimant establish his claim by a “fair preponderance of the proof,” Watterson v. Tremaine, 24 N. Y. S. 2d 830 (Sup. Ct. 1941); Morgan v. State, 31 A. 2d 429 (Sup. Ct. R. I. 1943). Indeed, it would seem especially inappropriate to require a claimant to establish his claim by clear and convincing proof in eases such as this where the State is seeking to take onto itself by escheat property belonging to private persons. Escheat and forfeitures are not favored by the law and any doubts should be resolved against the State, 19 Am. Jur., Escheat, §§ 14, 41; 30 C. J. S., Escheat, § 2. Admittedly the substituted receiver’s claim must rest upon the strength of his own title, but he should be required to establish his claim only by a preponderance of the evidence and not by clear and convincing proof.
I would reverse the judgment below.
Mr. Justice Heher and Mr. Justice Oliphant authorize me to say that they concur in this opinion.
For affirmance — Justices Waoheneeld, Burling, Jacobs and Brennan — 4.
For reversal — Chief Justice Vanderbilt, and Justices Heher and Oliphant — 3.