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.
5. Proof by affidavit that personal service on depositors is
impossible or impracticable is not a constitutional prerequisite to
service by publication in such an escheat proceeding where the
depositors impleaded are only those who are not known to the bank
officials to be alive, whose accounts have not been added to or
drawn
Page 263 U. S. 283
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.
186 Cal. 419 affirmed.
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.
MR. JUSTICE BRANDEIS delivered the opinion of the Court.
This suit was brought by the State of California to have
transferred to it certain deposits in the Security Savings Bank
which had been unclaimed for more than 20 years, and to have these
declared escheat. The bank and the depositors were named as
defendants. The bank was served personally, and defended. The
depositors were served by publication, but none of them appeared.
[
Footnote 1] The
Page 263 U. S. 284
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.
The procedural provision is this: the suit is brought by the
Attorney General in Sacramento County. Upon the bank, personal
service must be made. Upon the depositors,
Page 263 U. S. 285
service is to be made by publication of the summons for four
weeks in a newspaper of general circulation published in that
county. With the summons, a notice must also be published,
requiring all persons other than the named defendants to appear and
show cause why the moneys involved in the suit shall not be
deposited with the state treasurer. Any person interested may
become a party to the suit. The judgment to be entered requires
the
"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.
The unclaimed deposits are debts due by a California corporation
with its place of business there.
State v. Anglo & London
Paris National Bank, 186 Cal. 746;
State v. Security
Savings Bank, 186 Cal. 419, 423. The debts arose out of
contracts made and to be performed there.
Farmers' &
Merchants' Bank v. Federal Reserve Bank, 262 U.
S. 649,
262 U. S. 660.
Thus, the deposits are clearly intangible property within the
state. [
Footnote 3] Over this
intangible property the state has the same dominion that it has
over tangible property.
Pennington v. Fourth National
Bank, 243 U. S. 269;
Bank of Jasper v. First National Bank, 258 U.
S. 112,
258 U. S. 119.
It was settled in
Provident Institution for Savings v.
Malone, 221 U. S. 660,
that where the procedure is appropriate, neither the due process
clause nor any right of the bank under the contract clause is
violated by a law requiring it to pay over to the
Page 263 U. S. 286
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.
The proceeding is not one
in personam -- at least not
so far as concerns the depositor. The state does not seek to
enforce any claim against him. It seeks to have the deposit
transferred. The suit determines the custody
Page 263 U. S. 287
(and perhaps the ownership) of the deposit. The state court
likened the proceeding to garnishment, and thought that it should
be described as
quasi in rem. In form, it resembles
garnishment. In substance, it is like proceedings in escheat,
Hamilton v. Brown, 161 U. S. 256,
161 U. S. 263;
Christianson v. King County, 239 U.
S. 356,
239 U. S. 373;
for confiscation,
The Confiscation
Cases, 20 Wall. 92,
87 U. S. 104;
for forfeiture,
Friedenstein v. United States,
125 U. S. 224,
125 U. S.
230-231; for condemnation,
Huling v. Kaw Valley
Railway, etc., Co., 130 U. S. 559; for
registry of titles,
American Land Co. v. Zeiss,
219 U. S. 47, and
libels for possession brought by the Alien Property Custodian,
Central Trust Co. v. Garvan, 254 U.
S. 554. These are generally considered proceedings
strictly
in rem. But whether the proceeding should be
described as being
in rem or as being
quasi in
rem is not of legal significance in this connection. In either
case, the essentials of jurisdiction over the deposits are that
there be seizure of the
res at the commencement of the
suit and reasonable notice and opportunity to be heard.
Compare
Pennoyer v. Neff, 95 U. S. 714,
95 U. S. 724;
Freeman v. Alderson, 119 U. S. 185,
119 U. S. 187;
Arndt v. Griggs, 134 U. S. 316;
Overby v. Gordon, 177 U. S. 214,
177 U. S. 231.
These requirements are satisfied by the procedure prescribed in the
statutes of California. There is a seizure or its equivalent. And
the published summons to the depositors named as parties defendant
is supplemented by the notice directed to all claimants whomsoever.
Moreover, there is no constitutional objection to considering the
proceeding as
in personam so far as concerns the bank, as
quasi in rem, so far as concerns the depositors, and as
strictly
in rem so far as concerns other claimants.
[
Footnote 4]
Seizure of the deposit is effected by the personal service made
upon the bank.
Provident Institution for Savings v.
Malone, 221 U. S. 660.
Thereby the
res is subjected
Page 263 U. S. 288
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.
Page 263 U. S. 289
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.
It is further argued that the publication prescribed is not
reasonable notice, because it is made in Sacramento County, instead
of in the county in which the bank is located. The legislature
apparently assumed that publication in Sacramento County would be
more likely to attract the attention of the depositor, or of those
claiming under him, than publication in the city in which the bank
was located. Support for that opinion may be found in the statutes
which have required savings banks (and later all banks) to publish
annually in a newspaper of the city in which it is located a
statement showing the amount of each deposit therein, the name and
last known residence of each depositor, and the fact of his death,
if known, in all cases where the depositor has not made a deposit
or withdrawal for 10 years next preceding, unless the depositor is
known to be living or the deposit is less than $50. Stats. 1893, p.
183; Stats. 1897, p. 27; Civil Code, § 583b. Such annual
publications,
Page 263 U. S. 290
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.
Affirmed.
[
Footnote 1]
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.
[
Footnote 2]
That the statutes are invalid as applied to national banks was
settled in
First National Bank v. California, 262 U.
S. 366.
[
Footnote 3]
See Charles E. Carpenter, "Jurisdiction over Debts,
etc.," 31 Harv.Law Rev. 905.
[
Footnote 4]
Compare 70 U. S.
Norton, 3 Wall. 257;
The Sabine, 101 U.
S. 384; Waples, Proceedings
in Rem (1882) pp.
758-768.