RESPONDENT: New York
LOCATION: Mississippi Chemical Corporation
DOCKET NO.: 40 ORIG
DECIDED BY: Burger Court (1972-1975)
CITATION: 407 US 206 (1972)
ARGUED: Mar 29, 1972
DECIDED: Jun 19, 1972
F. Michael Ahern - for intervenor plaintiff State of Conn
Hermann Rosenberger II - for plaintiff
Herman Rosenberger II -
Julius Greenfield - for defendant State of New York
Winifred L. Wentworth - for defendant State of Fla
Facts of the case
Media for Pennsylvania v. New York
Audio Transcription for Oral Argument - March 29, 1972 in Pennsylvania v. New York
Warren E. Burger:
We'll hear arguments next in number 40-Original.
Commonwealth of Pennsylvania against the State of New York and others.
Mr. Rosenberger, you may proceed when you are ready.
Herman Rosenberger II:
Mr. Chief Justice, members of the of the Court.
This is an original action initiated by the Commonwealth of Pennsylvania between the states to determine a controversy as to the application of the law set down in Texas versus New Jersey to instances of intangible obligations, whether the debtors records with varying degrees of frequency do not indicate the identity or street address of the creditor.
With specific respect to Western Union, this action requests a declaratory judgment, as to which state should be assigned priority for purposes of escheating, or taking custody between one, and one-and-a-half of millions of dollars of unclaimed debts arising from the sale of intangible, telegraph money orders on or before December 31, 1962.
Inferentially, this action will govern instruments unclaimed issued before and after that date, with respect to money orders sold by Western Union and other companies over-the-counters and traveler's checks issued by the American Express Company and other species of bearer instruments sold to the public.
Pennsylvania and the other states, excepting New York, supported a rule which like that in Texas versus New Jersey, will give preference to the State where the creditor is deemed to have last resided and the debt was payable as shown by the debtor's records.
This would be the state where the creditor's right accrued, the state of purchase where a draft has not been issued to the sendee, or the state of destination where a draft was so issued, but not negotiated.
Such a rule would not only reflect the underlying realties of the transaction involved, but would be equitable to escheating states and would distribute escheats among the states in proportion to the commercial activities of its citizens.
New York supports a rule which on the facts of the present case would give present preference to the state of corporate domicile where the creditor's identity or street address did not appear on the debtor's records, or where it was not feasible to determine the same.
This rule as applied to the facts of this case would result in most of the escheatable claims flowing into New York's treasury due to the accident of the Western Union's incorporation.
And with respect to traveler's checks and over-the-counter money orders, would give New York exclusively the millions of dollars of escheatable funds involved.
The differing positions of the parties to this action are reflected in their statutes.
The statutes of all parties to the case, excepting New York, are basically patterned after the Uniform Disposition of Unclaimed Property Act, which allows for the custodial taking of property held or owing in the particular jurisdiction.
The statute of the state of New York is divided into escheatable occurrences, occurring before and after 1958.
Before 1958, New York maintains that it is entitled to take all obligations regardless as to where the rights were accrued of the holder which is incorporated in the state of New York.
With respect to items after 1958, New York statute provides for custody of New York, where the creditor's address is not on the debtor's records.
However, with respect to corporations incorporated outside of New York, Section C of that particular statute provides that New York would take where the obligation was incurred in the state of New York.
In other words, New York essentially has it both ways.
The states of Pennsylvania, California, North Carolina, and Indiana have explicitly provided in their statutes for a presumption that where the creditor's address does not appear on the records of the debtor with respect to money orders and traveler's checks, that, that address will be deemed to be in the state of sale.
16 states, including the four that I just mentioned, implicitly provide for the same presumption by adopting a state of sale test with respect to money orders and traveler's checks.
And the Revised Uniform Disposition of Unclaimed Property Act which was passed in 1966 and adopted or approved by the American Bar Association in the same year also provides for a state of sale test with respect to this particular class of property.
A further reason for the institution of this action is that Western Union's records reflect two possible creditors.
The sender and the sendee of a telegraph money order, but do not to denominate either as such.
The Special Master found that the creditor in all instances save where a draft is issued to sendee is the purchaser and with this finding all parties agree.
The Master further found that any rule should be applicable to all involved transactions regardless of their date of origin before 1958 or after 1958 and with this no party has taken as exception.
Insofar as the rule proposed by the Special Master and supported by New York fails to take into accounts the characteristics which distinguished the transactions involved in the present case from those considered in Texas versus New Jersey.
All the states to this litigation, save New York, vigorously take exception to his report.
In deciding this case, the Court is bound by neither statute or precedent save its decision in Texas versus New Jersey which was the first which involved such a controversy between the states.