RESPONDENT: New Jersey
LOCATION: Criminal District Court, Parish of New Orleans
DOCKET NO.: 13 ORIG
DECIDED BY: Warren Court (1962-1965)
CITATION: 379 US 674 (1965)
ARGUED: Nov 09, 1964
DECIDED: Feb 01, 1965
Facts of the case
Media for Texas v. New Jersey
Audio Transcription for Oral Argument - November 09, 1964 in Texas v. New Jersey
Number 13 Original, State of Texas, plaintiff, versus the State of the New Jersey et al.
W. O. Shultz II:
Mr. Chief Justice and May it please the Court.
This case is before the Court as a controversy between Texas, New Jersey, Pennsylvania, and Florida over certain intangible obligations which were incurred in the course of business of Sun Oil Company, which of course is a state which is involved in operations throughout all the states or rather, they have permit to do business in all the states and do business in many of them.
The particular obligations which we are concerned with in this case arose out of the operations of two district offices located in Texas and --
W. O. Shultz II:
District or division offices.
Their home office is in Philadelphia but they maintain throughout the United States certain division offices and the record, according to the stipulation, shows that the two offices in Texas were more or less, autonomous in the scope of their operations there in Texas.
They conducted placing agreements, drilling.
They operated for oil and gas in Texas as well as neighboring states.
They contracted for their own labor hiring and firing, and handled their own payroll, and so on.
New Jersey is claiming that, as a domiciliary state of the corporation, that it is entitled to take all of these obligations.
Florida contends that, as the state of the last known address, contend for a theory that the last known address should govern as to which state has the power to take possession of these unclaimed obligations.
We, as an alternative to the position which was adopted by the special master which concluded that all of these obligations had a status with the creditor, therefore, only the state wherein the last known address, they had the power to deal with these obligations, well, it seemed to us, in taking this approach, that you ignore many of the equities concerning the transaction out of which these obligations arose.
And, that you take a rather arbitrary single factor surrounding a particular obligation when you know other circumstances surrounding the same obligation which might enact with the injustice, in fairness to everyone, give some other state a better claim to these intangibles under their state actions.
We, in addition, feel very strongly about the fact that such a roué would allow the accretion, so to speak, of the oil in -- proceeds from oil and gas of the State of Texas and allow them to be trickled out a piece of meal to other states when, under the law of Texas, oil and gas in place is a real estate and, also, that the rights to delay rentals have been considered as a real property right in Texas.
Now, we admit that, under Texas law, once these minerals have been produced and once the delay rentals are due that they're considered to be personal realty.
But, there are cases which recognize, and I think it's an established principle in the law, that even though you may have personal realty that it may be so connected with the real estate or real property interest that it may be considered immovable by the state within which the property from which is located was derived.
And, we have approached the problem as to oil and gas proceeds and the delay rentals in Texas from that stand point.
We cited in our brief, in that respect, the Toledo Society for Crippled Children versus Hickok which does not directly reach that point but, to me, it gives an indication that the Texas Courts would be and are very reluctant to allow the laws of another state to determine title to anything which is very closely related to the realty in Texas.
Now, in that case, there was oil and gas property involved, and the testator residing in Ohio, at his death, by his will, set up trust for his property, the residual part of his property, whereby part of it would go to -- the proceeds from it would go income to his wife and children for 20 years and, thereafter, that the corpus would be divided up among certain charitable organizations.
Under Ohio law, such a bequest was invalid and it was so held by the Ohio Supreme Court.
Well, the Society came down to Texas and filed a suit in Texas to declare their interest in the real property in Texas valid under that will.
If we look a little at the operations of Mr. Hickok, he was in partnership with a Texas oil operator here and they had agreed, shortly before his death, that they would transfer all of their partnership assets which consisted of certain Oil and Gas properties to a corporation and, in turn, receive stock in this corporations for the assets which they transferred the real property they transferred.
The corporation has been formed at the death of Mr. Hickok, but the actual transfer had not been carried out and his will specifically directed that his executors and administrators go ahead and carry out that provision, which they did.
And, actually, the case went off on the theory of whether or not equitable conversion applied in a situation such as this where you have a conflict of laws question determining the validity of title to real estate or the proceeds from real estate.
The Texas Court held that even though this realty had been directed by the will to be converted into personal realty that, in determining which law, whether Ohio or Texas, applied to determine whether these charitable organizations were to receive the benefits of the trust that the testator intended, the Court held that -- the Texas Supreme Court held that the Doctrine of Equitable Conversion had no place in the rules pertaining to conflicts of law in saying which law of which state applied.
And, they applied the law of Texas and upheld the validity of this bequest in the will.
In the course of that opinion, the Court stated that the interest in question were personal realty for distribution purposes.
They were yet immovable for purposes of determining whether the laws of England or Hungry applied.