A statute of Kentucky sets up a comprehensive scheme for the
administration of abandoned bank deposits. Upon a report by the
bank and notice to the depositor, and with an opportunity for
either to be heard, the State takes into its protective custody
bank accounts which, having been inactive for at least ten years if
demand accounts or for at least twenty-five years if nondemand, the
statute declares to be presumptively abandoned. The bank is
relieved of its liability to the depositor, who receives instead a
claim against the State, enforceable at any time until the deposit
is judicially found to be abandoned and for five years thereafter.
Refusal by the designated state officer to make payment is
reviewable by the state courts. In an action by a national bank to
enjoin the enforcement of the statute, held:
1. In requiring payment of the deposit accounts to the State on
the prescribed notice, without recourse to judicial proceedings or
any court order or judgment, the statute does not deprive the
depositor or the bank of property without due process of law. Pp.
321 U. S. 240
321 U. S.
(a) Apart from questions which may arise under the national
banking laws in the case of national banks, a State, by a procedure
satisfying constitutional requirements, may compel surrender to it
of deposit balances when there is substantial ground for belief
that they have been abandoned or forgotten, especially where the
State acquires them subject to all lawful demands of depositors. P.
321 U. S.
(b) The statutory rebuttable presumption of abandonment of
demand deposits after inactivity of ten years, and of nondemand
deposits after inactivity of twenty-five years, is sustained. P.
321 U. S.
(c) Subject to the requirements of procedural due process,
Page 321 U. S. 234
depositors, prior to a judicial decree of actual abandonment,
will not be deprived of their property by the surrender of their
presumptively abandoned bank accounts into the custody of the
State. P. 321 U. S.
(d) The requirement that a depositor without actual notice of a
proceeding for the judicial determination of abandonment must make
claim within five years after the decree does not infringe
constitutional rights. P. 321 U. S.
(e) Notice to the depositors of the statutory proceedings, by
the sheriff's posting on the courthouse door or bulletin board, for
a period of six weeks, a copy of the bank's report of deposits
presumed abandoned, in conjunction with the notice provided by the
statute itself and by the taking of possession of the bank balances
by the State, is sufficient notice to the depositors to satisfy the
requirements of due process. P. 321 U. S.
(f) The fundamental requirement of due process is an opportunity
to be heard upon such notice and proceedings as are adequate to
safeguard the right for which the constitutional protection is
invoked. P. 321 U. S.
(g) It is not an indispensable requirement of due process that
every procedure affecting the ownership or disposition of property
be exclusively by judicial proceeding. Statutory proceedings
affecting property rights which, by later resort to the courts,
secure to adverse parties an opportunity to be heard suitable to
the occasion do not deny due process. P. 321 U. S.
(h) The mere fact that the State or its authorities acquire
possession or control of property as a preliminary step to the
judicial determination of asserted rights in the property is not a
denial of due process. P. 247.
2. The statute does not infringe the national banking laws, and
does not unconstitutionally interfere with a national bank as an
instrumentality of the federal government. Pp. 321 U. S. 247
321 U. S.
(a) The statute does not discriminate against national banks in
directing payment to the State, pursuant to the statute, of
presumptively abandoned accounts by state and national banks. P.
321 U. S.
(b) The statute is not in conflict with any provision of the
national banking laws. P. 321 U. S.
Page 321 U. S. 235
(c) First National Bank v. California, 262 U.
, distinguished. P. 321 U. S.
3. As an appropriate incident to the exercise of its owner to
require the surrender to it of presumptively abandoned accounts in
national as well as state banks, the State may require the bank to
file reports of inactive account. P. 321 U. S.
294 Ky. 674, 172 S.W.2d 575, affirmed.
Appeal from the affirmance of a judgment which, upon a remand
(293 Ky. 735, 170 S.W.2d 350), dismissed the bill in a suit to
enjoin the enforcement of a state statute.
Page 321 U. S. 236
MR. CHIEF JUSTICE STONE delivered the opinion of the court.
Under Kentucky Revised Statutes of 1942, ch. 393, § 393.060
every bank or trust company in the state is
required to turn over to the state deposits which have remained
inactive and unclaimed for specified periods. The questions for
decision are: (1) whether the statute under which the state
purports to acquire the right to demand custody of the deposits
affords due process of law, even though the depositors may not
receive personal notice of the pending transfer and there may be no
prior judicial proceedings, and (2) whether the statute, as applied
to deposits in a national bank, conflicts with the national banking
laws or is an unconstitutional interference by the state with
appellant's operations as a banking instrumentality of the United
So far as here relevant, the provisions of the statute may be
summarily stated as follows. Demand deposits held by a bank, with
accrued interest, are presumed abandoned unless the owner has,
within ten years preceding the date for making the report required
by § 393.110, negotiated in writing with the bank, or been credited
with interest on his passbook at his request, or had a transaction
noted upon the books of the bank, or increased or decreased the
amount of his deposit (§ 393.060). Non-demand deposits, with
accrued interest, are likewise presumed abandoned unless the owner,
within the twenty-five years preceding the report, has taken one or
more of such enumerated actions (§ 393.070).
Page 321 U. S. 237
The holder of property presumed abandoned, including any
national bank, is required to file with the state Department of
Revenue, annually before September 1, a report in duplicate of such
property as of the preceding July 1; the copy is sent to the
sheriff of the county in which the property is located, and he is
under the statutory duty of posting the copy on the courthouse door
or bulletin board, before the following October 1 (§ 393.110(1)).
The holder is required to turn over to the Department of Revenue,
before November 15, the property so reported unless the holder or
owner certifies facts to rebut the presumption of abandonment or
unless the statute of limitations has run as between the owner and
the holder. In neither such case need the holder turn over the
property except upon an order of court. If a claimant has filed an
action with respect to any such property, the holder is required to
notify the Department of the pendency of the action, but is not
required to turn over the property during its pendency. (§
393.110(2)). In any case, the holder of such property is entitled
to a judicial determination of his rights, under § 393.160,
providing for appeals from the decisions of the Commissioner of
Revenue, or under § 393.230, providing for an equitable action by
the Commissioner to compel the surrender of such property (§
A person refusing to turn over property under this statute is
subject to a penalty of 10% of its amount, but not to exceed $500;
he is subject to no penalty, however, if he posts a compliance bond
(§ 393.290). Any person who transfers property to the State under
this statute is relieved of liability to the owner, and the State
is required to reimburse the holder for any such liability (§
The Commissioner may institute judicial proceedings to establish
conclusively that property in his hands because
Page 321 U. S. 238
presumed abandoned is actually abandoned, or that the owner of
the property has died and that there is no person entitled to it (§
393.230(2)). In such an action, the procedure is governed by the
Kentucky Civil Code of Practice (§ 393.240(2)).
A claim to property surrendered to the state may be made at any
time, unless the property has been judicially determined, under §
393.230, to have been actually abandoned, in which case any claim
to the property by a person not actually served with notice and who
did not appear and whose claim was not considered during the
proceeding must be made within five years of the judicial
determination (§ 393.140(1) and (2), and see Anderson National
Bank v. Reeves,
293 Ky. 735, 738, 741, 170 S.W.2d 350). The
claimant is required to make publication of his claim in a
newspaper of general circulation in the county or, if there is
none, he is required to post his claim at the courthouse door and
at three other conspicuous places in the county (§ 393.140(3)). The
Commissioner of Revenue is directed to consider and determine the
validity of any claim and any defense; if he approves the claim, he
must authorize its payment (§ 393.150). Judicial review of his
determination in the appropriate state courts is provided (§
The statute thus sets up a comprehensive scheme for the
administration of abandoned bank deposits. Upon a report by the
bank and notice to the depositors, and with an opportunity to be
heard, if either wish it, the state takes into its protective
custody bank accounts which, having been inactive for at least ten
years if demand accounts or at least twenty-five years if
nondemand, the statute declares to be presumptively abandoned. The
bank is relieved of its liability to the depositors, who receive
instead a claim against the state, enforceable at any time until
the deposits are judicially found to be abandoned in fact and
Page 321 U. S. 239
for five years thereafter. Refusal by the designated state
officer to make payment is reviewable by the state courts.
Appellant, a national banking association organized under the
laws of the United States, brought the present suit in the Circuit
Court of Kentucky for Franklin County. The bill of complaint, filed
by appellant on behalf of itself and all others similarly situated,
sought to enjoin appellees, the state Commissioner of Revenue and
other state officers, from enforcing the statute here in question.
The Circuit Court held invalid so much of the challenged statute as
requires the payment of deposits to the state merely on the
prescribed notice, and without the order or judgment of a court of
competent jurisdiction. It gave judgment perpetually enjoining
appellees from enforcing such parts of the statute. The Kentucky
Court of Appeals sustained the Act in its entirety, holding that it
affords due process and that it neither infringes the national
banking laws nor is a prohibited interference with a banking
instrumentality of the United States. It accordingly reversed the
judgment of the Circuit Court and instructed it to deny an
injunction. 293 Ky. 735, 170 S.W.2d 350. On remand, the Circuit
Court entered its judgment dismissing the bill. The Court of
Appeals affirmed. 294 Ky. 674, 172 S.W.2d 575. The case comes here
on appeal under § 237(a) of the Judicial Code, 28 U.S.C. §
Appellant contends here: (1) that the statute, in requiring
payment of the deposit accounts to the state on the prescribed
notice, without recourse to judicial proceedings or any court order
or judgment, deprives the depositors and appellant of property
without due process of law, and (2) that such withdrawal of
accounts from a national bank infringes the national banking laws,
particularly R.S. § 5136, 12 U.S.C. § 24, which authorize national
banks to accept deposits and to do a banking business, and is an
unconstitutional interference with the
Page 321 U. S. 240
federally authorized function of national banks as
instrumentalities of the Federal Government.
Appellant argues that the statute deprives both the bank and the
depositors of their property rights in the bank accounts, and
contends that the procedure by which the state acquires its
asserted right to demand payment of the accounts is so lacking in
notice to depositors and in an opportunity for them to be heard as
to deny the state the right to assert the depositors' claims and
afford to the bank no protection if it responds to the state's
demand for payment of the accounts.
While the Kentucky statute is entitled "Escheats," its
provisions, so far as applicable to bank deposits, are concerned
only with personal property deemed abandoned. At common law,
abandoned personal property was not the subject of escheat, but was
subject only to the right of appropriation by the sovereign as
bona vacantia. See
7 Holdsworth, A History of
English Law (2d Ed.) 495, 496. Like rights of appropriation, except
so far as limited by state law and the Fourteenth Amendment, exist
in the several states of the United States. Hamilton v.
Brown, 161 U. S. 256
Christianson v. King County, 239 U.
; Security Bank v. California,
263 U. S. 282
United States v. Klein, 303 U. S. 276
Apart from questions which may arise under the national banking
laws in the case of national banks, it is no longer open to doubt
that a state, by a procedure satisfying constitutional
requirements, may compel surrender to it of deposit balances when
there is substantial ground for belief that they have been
abandoned or forgotten, Security Bank v. California,
certainly when the state acquires them subject to all
lawful demands of the depositors. Provident Savings Institution
v. Malone, 221 U. S. 660
Page 321 U. S. 241
The deposits are debtor obligations of the bank, incurred and to
be performed in the state where the bank is located, and hence are
subject to the state's dominion. See Security Bank v.
California, supra, 263 U. S. 285
and cases cited; Irving Trust Co. v. Day, 314 U.
, 314 U. S. 562
And it is within the constitutional power of the state to protect
the interests of depositors from the risks which attend long
neglected accounts, by taking them into custody when they have been
inactive so long as to be presumptively abandoned, see
Provident Savings Institution v. Malone, supra,
664, just as
it may provide for the administration of the property of a missing
person. Cunnius v. Reading School Dist., 198 U.
; Blinn v. Nelson, 222 U. S.
With respect to the statutory rebuttable presumption of
abandonment of demand deposits after inactivity of ten years and of
nondemand deposits after inactivity of twenty-five years, we are
unable to say that the legislative determination is without support
in experience. We have sustained like statutory presumptions that
shorter periods of inactivity furnish the basis for state
administration of unasserted claims or demands. See Security
Bank v. California, supra; Cunnius v. Reading School Dist., supra;
Blinn v. Nelson, supra; cf. Provident Savings Institution v.
In the present posture of the case, we conclude, subject to the
requirements of procedural due process, that, prior to a judicial
decree of actual abandonment, the depositors will not be deprived
of their property by the surrender of their bank accounts to the
state. We need not decide whether the procedure for determining
abandonment in fact conforms to due process, for appellant has not
attacked this procedure here, and no such proceeding is before us.
Prior to such a decree, the present statute merely compels the
summary substitution of the state for the bank, as the debtor of
the depositors. It deprives
Page 321 U. S. 242
the depositors of none of their rights as creditors, preserving
their right to demand from the state payment of the deposits, and
their right to resort to the courts if payment is refused. True,
payment over of the deposits to the state may be the precursor of a
decree of abandonment and the shortening of the period within which
a claimant may demand payment of his deposit. But, if the notice to
depositors is adequate, we cannot say that the period of five years
allowed for that purpose after the decree is an infringement of
constitutional rights. Terry v. Anderson, 95 U. S.
, 95 U. S.
-633, and cases cited; United States v.
Morena, 245 U. S. 392
245 U. S.
Appellant and the Comptroller of the Currency, as amicus
point to the formalities with which the depositors
must comply before they will be able to recover their deposits, and
argue that the state may be less solvent or less willing to pay
than the bank. In the absence of some persuasive showing, which is
lacking here, that these formalities will be more onerous than
those which would or could be properly required by the bank, or
that the state will in fact be less able or less willing to pay, it
cannot be assumed that the mere substitution of the state as the
debtor will deprive the depositors of their property, or impose on
them an unconstitutional burden. See Dohany v. Rogers,
281 U. S. 362
281 U. S.
-368; cf. Blinn v. Nelson, supra,
222 U. S. 7
Corn Exchange Bank v. Coler, 280 U.
, 280 U. S. 223
In the absence of a showing of injury, actual or threatened, there
can be no constitutional argument. In re 620 Church Street
Corp., 299 U. S. 24
299 U. S. 27
and cases cited.
Since the bank is a debtor to its depositors, it can interpose
no due process or contract clause objection to payment of the
claimed deposits to the state if the state is lawfully entitled to
demand payment, for, in that case, payment of the debt to the
state, under the statute, relieves the bank of its liability to the
depositors. Security Bank v. California, supra,
263 U. S.
-286. But if the statute
Page 321 U. S. 243
is deficient in its provisions for notice and opportunity for
hearing, so that the depositors would not be bound by any
proceedings taken under it, the bank would be entitled to raise the
question whether its obligation to the depositors would be
discharged by payment of the deposits to the state. Hence, our
inquiry must be directed to the question whether the procedure by
which the state undertakes to acquire the depositors' right to
demand payment of the deposits was upon adequate notice to them and
opportunity for them to be heard.
As we have said, the statute provides for notice to the
depositors by requiring the sheriff to post on the courthouse door
or bulletin board a copy of the bank's report of deposits presumed
abandoned. We think that this, in conjunction with the notice
provided by the statute itself and by the taking of possession of
the bank balances by the state, is sufficient notice to the
depositors to satisfy all requirements of due process.
The statute itself is notice to all depositors of banks within
the state of the conditions on which the balances of inactive
accounts will be deemed presumptively abandoned, and their
surrender to the state compelled. All persons having property
located within a state and subject to its dominion must take note
of its statutes affecting the control or disposition of such
property and of the procedure which they set up for those purposes.
Reetz v. Michigan, 188 U. S. 505
188 U. S. 509
North Laramie Land Co. v. Hoffman, 268 U.
, 268 U. S. 283
Proceedings for the assessment of taxes, the condemnation of land,
the establishment of highways and public improvements affecting
landowners, are familiar examples. Huling v. Kaw Valley R.
& Imp. Co., 130 U. S. 559
130 U. S.
-564; Ballard v. Hunter, 204 U.
, 204 U. S.
-257, 204 U. S.
The report of the bank required to be posted on the courthouse
door or bulletin board lists the abandoned accounts as defined by
the statute, and thus gives notice
Page 321 U. S. 244
to the owners of all those accounts which, because of their
inactivity for the periods and in the ways specified by the
statute, are deemed abandoned and required to be paid to the state.
This notice, when read in the light of the knowledge of the
statute, with which all persons having such bank accounts within
the state are chargeable, is sufficient to advise that the listed
accounts are deemed presumptively abandoned and will, at the end of
six weeks from the date of filing, be paid over to the state, and
that, both before and after that event, the depositors will be
afforded opportunity to present their claims and to have them
judicially determined, if rejected.
Posting on the courthouse door as a method of giving notice of
proceedings affecting property within the county is an ancient one,
and is time-honored in Kentucky. The Act of the Kentucky
legislature of December 19, 1796, provided in § 2 for the use of
this method of warning absent defendants in equity proceedings that
a decree would be entered against them if they did not appear. This
means of giving notice was employed in the escheat statutes of
Kentucky at least as early as 1852. Kentucky Revised Statutes of
1852, p. 308, c. 34, Art. IV, § 3(1). The fact that a procedure is
so old as to have become customary and well known in the community
is of great weight in determining whether it conforms to due
process, for "Not lightly vacated is the verdict of quiescent
years." Coler v. Corn Exchange Bank,
250 N.Y. 136, 141,
164 N.E. 882, 884, aff'd sub nom. Corn Exchange Bank v. Coler,
To that effect, see Otis Co. v. Ludlow Mfg.
Co., 201 U. S. 140
201 U. S. 154
Ownbey v. Morgan, 256 U. S. 94
256 U. S.
-109, 256 U. S. 112
Jackman v. Rosenbaum Co., 260 U. S.
, 260 U. S. 31
Corn Exchange Bank v. Coler, supra, 280 U. S.
-223; Snyder v. Massachusetts, 291 U. S.
, 291 U. S.
We cannot say that the posting of a notice on the door of the
courthouse in a Kentucky county is a less efficacious method of
giving notice to depositors in banks of the
Page 321 U. S. 245
county than publication in a local newspaper, or that, in the
circumstances of this case, it is an inadequate means of giving
notice of the summary taking into custody of the designated bank
accounts by the state. This is the more so because, in this case,
the notice is the immediate prelude to and accompanies the
compulsory surrender of the bank balances to the state, unless the
depositors in the meantime intervene as claimants. The statutory
procedure, so far as it affects depositors, is in the nature of a
proceeding in rem,
in the course of which property,
against which a claim is asserted, is seized or sequestered, and
held subject to the appearance and presentation of claims by all
those who assert an adverse interest in it. In all such
proceedings, the seizure of the property is, in itself, a form of
notice of the claim asserted, to those who may claim an interest in
the property. See Corn Exchange Bank v. Coler, supra,
holding constitutional a statute providing for no notice to the
owner of a bank deposit other than its seizure.
Security Bank v. California, supra,
was a proceeding to
compel the bank to pay over to the state inactive bank accounts as
the first step in their sequestration, and, if unclaimed, their
possible ultimate escheat. The Court held, 263 U.S. at 263 U. S.
-290, that publication of notice of the proceeding in
a newspaper at the state capital was sufficient notice to absent
depositors to meet due process requirements. It supported this
conclusion by reference to the proceeding against the bank by which
it was required to pay over the deposits to the state "as in
so far as concerns the bank; as quasi in
so far as concerns the depositors," 263 U.S. at
263 U. S. 287
Since the service of process on the bank personally was equivalent
to a seizure of the accounts, it was deemed to supplement the
publication as an independent notice, in itself, to the depositors
of the seizure, and of their opportunity given by the statute to
appear and assert their claims against the state.
Page 321 U. S. 246
Like procedure, begun by the seizure or acquisition of control
of a res,
including, in some cases, choses in actions, has
been sustained as affording adequate notice to absent claimants in
escheat proceedings, Hamilton v. Brown, supra; Christianson v.
King County, supra, 239 U. S. 373
in garnishment proceedings, Harris v. Balk, 198 U.
, 198 U. S. 223
in proceedings for the administration of a debt due an absentee,
Cunnius v. Reading School District, supra;
begun by attachment, Cooper v.
10 Wall. 308, and in admiralty
proceedings, The Mary,
Cranch 126, 13 U. S.
We cannot say, nor does appellant seriously urge, that the
length of notice by posting -- six weeks -- is inadequate. Three
weeks' notice by publication of the condemnation of the land for a
public highway was held sufficient by this Court in North
Laramie Land Co. v. Hoffman, supra,
and thirty days was deemed
sufficient in a like proceeding in Huling v. Kaw Valley R.
& Imp. Co., supra.
What is due process in a procedure affecting property interests
must be determined by taking into account the purposes of the
procedure and its effect upon the rights asserted and all other
circumstances which may render the proceeding appropriate to the
nature of the case. Davidson v. New Orleans, 96 U. S.
, 96 U. S.
-108; Ballard v. Hunter, supra, 204 U. S. 255
North Laramie Land Co. v. Hoffman, supra, 268 U. S.
-283; Dohany v. Rogers, supra, 281 U. S. 369
and cases cited. The fundamental requirement of due process is an
opportunity to be heard upon such notice and proceedings as are
adequate to safeguard the right for which the constitutional
protection is invoked. If that is preserved, the demands of due
process are fulfilled. Measured by this standard, we cannot say
that the present notice is insufficient.
For this reason also, it is not an indispensable requirement of
due process that every procedure affecting the ownership or
disposition of property be exclusively by judicial proceeding.
Statutory proceedings affecting
Page 321 U. S. 247
property rights, which, by later resort to the courts, secure to
adverse parties an opportunity to be heard suitable to the
occasion, do not deny due process. Familiar examples are the
decisions and orders of administrative agencies which determine
rights subject to a subsequent judicial review. And such is
obviously the case here, where there is full opportunity to the
depositors to be heard by the State Commissioner, whose decision is
subject to court review. It is difficult to see what right here
asserted would have been better preserved by a court procedure
whose end was the compulsory surrender of the deposit balances by
the bank to the state, which takes subject to the claims of the
The mere fact that the state or its authorities acquire
possession or control of property as a preliminary step to the
judicial determination of asserted rights in the property is not a
denial of due process. Samuels v. McCurdy, 267 U.
, 267 U. S. 200
North Laramie Land Co. v. Hoffman, supra; Corn Exchange Bank v.
Coler, supra; Phillips v. Commissioner, 283 U.
, 283 U. S.
We conclude that the procedural provisions of the Kentucky
statute are adequate to meet all constitutional requirements, and
that it does not deprive appellant or its depositors of property
without due process of law.
We come now to appellant's second contention -- that the
Kentucky statute infringes the national banking laws and
unconstitutionally interferes with appellant as an instrumentality
of the federal government. But the statute does not discriminate
against national banks, cf. 17 U. S.
4 Wheat. 316, by directing payment to the state by
state and national banks alike of presumptively abandoned accounts.
Nor do we find any word in the national banking laws which
expressly or by implication conflicts with the provisions of the
Page 321 U. S. 248
statutes. Cf. Davis v. Elmira Sav. Bank, 161 U.
This Court has often pointed out that national banks are subject
to state laws unless those laws infringe the national banking laws
or impose an undue burden on the performance of the banks'
functions. Waite v. Dowley, 94 U. S.
, 94 U. S. 533
First National Bank v. Missouri, 263 U.
, 263 U. S. 656
Lewis v. Fidelity & Deposit Co., 292 U.
, 292 U. S. 566
Jennings v. United States Fidelity & Guaranty Co.,
294 U. S. 216
294 U. S. 219
Thus, the mere fact that the depositor's account is in a national
bank does not render it immune to attachment by the creditors of
the depositor, as authorized by state law. Compare Earle v.
Pennsylvania, 178 U. S. 449
with Van Reed v. People's National Bank, 198 U.
As we have seen, a bank account is a chose in action of the
depositor against the bank, which the latter is obligated to pay in
accordance with the terms of the deposit. It is a part of the mass
of property within the state whose transfer and devolution is
subject to state control. Security Bank v. California,
supra, 263 U. S.
-286, and cases cited; Irving Trust Co. v. Day,
supra, 314 U. S. 562
It has never been suggested that nondiscriminatory laws of this
type are so burdensome as to be inapplicable to the accounts of
depositors in national banks.
The statute here attacked does not purport to do more than does
any other regulation of the devolution of bank accounts of missing
persons, a function which is, as we have seen, within the
competence of the state. Under the statute, the state merely
acquires the right to demand payment of the accounts in the place
of the depositors. Upon payment of the deposits to the state, the
bank's obligation is discharged. Something more than this is
required to render the statute obnoxious to the federal banking
laws. For an inseparable incident of a national bank's privilege of
receiving deposits is its obligation to pay them to the persons
entitled to demand payment according
Page 321 U. S. 249
to the law of the state where it does business. A demand for
payment of an account by one entitled to make the demand does not
infringe or interfere with any authorized function of the bank. In
fact, inability to comply with such demands is made a basis in the
national banking laws for closing the doors of the bank and winding
up its affairs.
Appellant argues that, if the present act is sustained, it will
open the door to the exertion of unlimited state discretionary
power over the deposits in national banks, and that the act imposes
a burden on appellants such as was held to be inadmissible in
First National Bank v. California, 262 U.
, which was followed in National City Bank v.
302 U.S. 651. As we have seen, the only
power sought to be exerted by the state over the depositors'
accounts is the assertion of its lawfully acquired right to collect
them, in accordance with the obligation, which was both assumed by
appellant and is to be performed in conformity with the banking
laws of the United States. In this respect, the state's power to
make such a demand cannot extend beyond its power under state law
and the Federal Constitution to acquire control of deposit accounts
from their owners. So long as it is thus limited, and the power is
exercised only to demand payment of the accounts in the same way
and to the same extent that the depositors could, we can perceive
no danger of unlimited control by the state over the operations of
national banking institutions. We need not decide whether, within
this limit, the state's power over deposits in national banks is as
simple as its like power over deposits in state banks. Compare
First National Bank v. California, supra, with Security Bank v.
We are concerned only with the question
whether the particular power here asserted is a forbidden
encroachment upon the privileges of a national bank.
Page 321 U. S. 250
The decision of this Court in First National Bank v.
did not rest on any want of power of a
state to demand of a national bank payment of deposits which the
state was lawfully entitled to receive. Decision there turned,
rather, on the effect of the state statute in altering the
contracts of deposit in a manner considered so unusual and so harsh
in its application to depositors as to deter them from placing or
keeping their funds in national banks. In that case, the state
brought a statutory proceeding in its courts to compel a national
bank to pay over to it an inactive deposit account. The statute
required "escheat to the state" of all balances in deposit accounts
remaining unclaimed and inactive for more than twenty years, where
neither the depositor nor any claimant had filed any notice with
the bank showing his present address. It authorized suit in behalf
of the state to recover such amounts, and directed that judgment
should be given for the state "if it be determined that the moneys
deposited in any defendant bank or banks are unclaimed" for the
period and in the manner specified by the statute. It will be noted
that the statute required no proof that the forfeited accounts had
been, in fact, abandoned, or that their owners were unknown or had
died without heirs or surviving kin. Upon mere proof of dormancy
for the prescribed period, the statute declared the accounts to be
escheated to the state.
After pointing out that the state Supreme Court, in sustaining
the judgment in the state's favor, had declined, as unnecessary to
its decision, to express an opinion whether the absent depositors
could reclaim their forfeited deposits from the state, this Court
declared that the statute
"attempts to qualify in an unusual way agreements between
national banks and their customers long understood to arise when
the former receive deposits under their plainly granted
262 U.S. at 262 U. S.
Page 321 U. S. 251
And since it was thought that such alterations might be made by
that and other states "and, instead of 20 years, varying
limitations may be prescribed -- 3 years, perhaps, or 5, or 10, or
15" -- the Court declared that the effect on the national banking
system would be incompatible with the statutory purposes of
establishing a system of national banks acting as federal
instrumentalities. That effect it specifically described as follows
(p. 262 U. S.
"The depositors of a national bank often live in many different
states and countries, and certainly it would not be an immaterial
thing if the deposits of all were subject to seizure by the state
where the bank happened to be located. The success of almost all
commercial banks depends upon their ability to obtain loans from
depositors, and these might well hesitate to subject their funds to
The unusual alteration of depositors' accounts to which the
Court referred was plainly the statutory declaration of escheat of
depositors' accounts merely because of their dormancy for the
specified period, without any determination of abandonment in fact.
This is treated as, in effect, "confiscation" of depositors'
accounts, operating as an effective deterrent to depositors'
placing their funds in national banks doing business within the
We have no occasion to reconsider this decision, as appellees
urge, for the grounds assigned for it are wholly wanting here.
While the seizure and escheat or forfeiture for mere dormancy of a
national bank account are unusual, the escheat or appropriation by
the state of property in fact abandoned or without an owner is, as
we have seen, as old as the common law itself. Here there is no
escheat or forfeiture by reason of dormancy. Dormancy, without
more, is made the statutory ground for the state's taking inactive
bank accounts into its custody, the state assuming the bank's
obligation to the depositors. And the deposits
Page 321 U. S. 252
need not be surrendered if the depositors or the bank make it
appear that abandonment has not occurred. This is not confiscation,
or even an attempted deprivation of property. Escheat or forfeiture
to the state may follow, but only on proof of abandonment in fact.
We cannot say that the protective custody of long inactive bank
accounts, for which the Kentucky statute provides, and which in
many circumstances may operate for the benefit and security of
depositors, see Provident Savings Institution v. Malone,
supra, 221 U. S. 664
will deter them from placing their funds in national banks in that
state. It cannot be said that it would have that effect more than
would the tax laws, the attachment laws, or the laws for the
administration of estates of decedents or of missing or unknown
persons, which a state may maintain and apply to depositors in
Nor are we able to discern any greater or different effect, so
far as prospective depositors in national banks are concerned, from
the application of the ancient law of escheat or forfeiture of
goods as bona vacantia,
to bank accounts found to be
without an owner, or to have been in fact abandoned by their
owners. Compare United States v. Klein, supra.
the Kentucky statute, as in the case of an attachment or the
administration of the estate of a deceased depositor, a change in
the dominion over the accounts will ensue, to which the bank must
respond by payment of them on lawful demand. But this, as we have
said, is nothing more than performance of a duty by the bank
imposed by the federal banking laws, and not a denial of its
privileges as a federal instrumentality. In all this, we can
perceive no denial of constitutional right, and no unlawful
encroachment on the rights and privileges of national banks.
Since Kentucky may enforce its statute requiring the surrender
to it of presumptively abandoned accounts in national, as well as
state, banks, it may, as an appropriate
Page 321 U. S. 253
incident to this exercise of authority, require the banks to
file reports of inactive accounts, as the statute directs.
Waite v. Dowley, supra; Colorado Bank v. Bedford,
310 U. S. 41
310 U. S. 53