The state has power to legislate in regard to the preservation
and disposition of abandoned property and to establish presumption
of abandonment after lapse of reasonable period.
Cunnius v.
Reading, 198 U. S.
454.
A statute directing that saving banks turn over to the proper
state officer money in accounts inactive for thirty years and where
the
Page 221 U. S. 661
depositor cannot be found, with provisions for the payment over
to the depositor or his heirs on establishment of right, does not
deprive savings banks of their property without due process of law
and is not a denial of equal protection of the law because it
applies only to savings banks, the classification not being
unreasonable, and so
held as to the statute of
Massachusetts to that effect.
The question of whether a statute allows a depositor or his
heirs a lower rate of interest on a deposit turned over to the
state as abandoned than allowed by the bank amounts to a
deprivation of property without due process of law within the
Fourteenth Amendment cannot be raised by the bank as against the
state.
There is a special reason for protecting depositors of savings
banks, and there is a difference between them and deposits in other
banks that affords a reasonable basis for classification in
legislation.
Whether the state can require payment of accounts in savings
banks without production of the passbook and the rights and
relations of parties arising out of the charter and contract of
deposit are to be determined by local law and do not present
federal questions giving this Court jurisdiction under § 709,
Rev.Stat.
In 1907, the General Court of the Commonwealth of Massachusetts
passed an act providing that deposits in savings banks which had
remained inactive and unclaimed for thirty years, and where the
claimant was unknown or the depositor could not be found, should be
paid to the treasurer and receiver general.
Under this statute, which is copied in the margin,
* the
Page 221 U. S. 662
attorney general, on May 5th, 1908, filed in the Probate Court
of Suffolk County a petition, setting out the names and last known
addresses of 226 persons who had deposit accounts ranging from $1
to $4,284 in the "Provident Institution for Savings in the Town of
Boston." He alleged that, for more than thirty years, no part of
the principal or interest had been withdrawn, no interest had been
added upon any of the passbooks, and no additional deposits had
been made on any of the accounts; that no claimant for any of said
deposits was known, and that the depositors could not be found. He
thereupon prayed that the court would order the said sums of money,
with the increases thereof, to be paid over to the treasurer and
receiver general of the commonwealth. A copy of the petition was
served on the bank and a citation, addressed to the depositors, was
published once in each week for three successive weeks in two
newspapers in Boston, requiring them each to show cause on July 16,
1908, why the prayer of the petition should not be granted.
The savings bank alone answered. It admitted the allegations of
the petition. It averred, however, that when each deposit was made,
an agreement was signed by which the bylaws of the bank, made in
pursuance of the charter granted December 11, 1816, were assented
to by the depositor. These bylaws provided that regular semiannual
dividends of four percent should be declared on all deposits of $5
and over, and should be added to the principal; that no dividends
should be paid on sums above $1,600; that no money could be
withdrawn without the production of the passbook, and that, by a
vote of the
Page 221 U. S. 663
trustees, they might dissolve the institution at any time and
divide the whole property among the depositors in proportion to
their respective interests therein.
The bank contended that the act requiring deposits to be paid
over to the receiver general deprived persons of their property
without due process of law, and also impaired the obligation of
contracts. After hearing, the probate court directed the bank to
pay over and transfer to the treasurer and receiver general of the
commonwealth the amounts deposited by the persons named in the
petition. On appeal, that order was affirmed by the Supreme
Judicial Court of Massachusetts. 201 Mass. 23.
MR. JUSTICE LAMAR, after making the foregoing statement,
delivered the opinion of the Court.
The Massachusetts statute as to abandoned funds in saving banks
only applies where the owner cannot be found. In the nature of the
case, therefore, no depositor could except to the judgment of the
probate court which directed the money to be turned over to the
treasurer, and it is claimed that, as the bank does not represent
the depositors, it cannot be heard to raise the objection that
their property has been taken without due process of law.
Hatch
v. Reardon, 204 U. S. 160.
This may be true, except insofar as its rights are involved in
those of the depositor. Savings banks are maintained in the
expectation that the deposits may for years remain uncalled
Page 221 U. S. 664
for, to the mutual advantage of bank and customer. So that, if
the statute had provided that the money should be paid over to the
receiver general if the owner, after a short absence, could not be
found, or if the account remained inactive for a brief period, a
very different question would be presented from that arising under
an act which deals with absence and nonaction so long continued as
to suggest that the law of escheats or of lost property might be
enforced. This, however, is not a statute of escheats, since it
does not proceed on the theory that the depositor is dead, leaving
no heirs. It does not purport to dispose of lost property, but
deals with a deposit the owner of which, though known, cannot be
found. The act is like those which provide for the appointment of
custodians for the real and personal property of an absentee.
In this case, though the money is on deposit with a bank, which
has faithfully kept its contract, yet the statute proceeds on the
general principle that corporations may become involved, or may be
dissolved, or that, after long lapses of time, changes may occur
which would require someone to look after the rights of the
depositor. The statute deals with accounts of an absent owner who
has so long failed to exercise any act of ownership as to raise the
presumption that he has abandoned his property. And if abandoned,
it should be preserved until he or his representative appear to
claim it; or, failing that, until it should be escheated to the
state. The right and power so to legislate is undoubted.
Cunnius v. Reading, 198 U. S. 458.
The statute here is reasonable in its terms, and is so framed as
to work injustice to no one. It only applies to cases where no
deposit has been made, no interest added on passbook, no check
drawn against the account, for thirty years, and where no claimant
is known, and the depositor cannot be found. Before the money can
be turned over to the receiver general, proceedings must be
Page 221 U. S. 665
instituted in the probate court, and, under the decision of the
supreme court of the state, personal notice must be given to the
bank, and citation and notice, usual in the probate court,
published, so as to give the depositor, if living, and his heirs,
if dead, opportunity to appear and be heard. Even then the property
is not escheated, but deposited with the treasurer, to hold as
trustee for the owner or his legal representatives, to whom it is
payable when they establish their right.
It is true that the rate of interest paid by the state is not
the same as that paid by the bank -- as to sums under $1,600, it is
less, and as to those over $1,600, it is more. But this is a matter
with which the plaintiff in error is not concerned, and can arise
only between the state and the claimant when he asserts a right to
property long neglected and apparently abandoned.
But the bank insists that there has been no abandonment; that
the money is in safe hands where it was originally left, under
bylaws which contemplated that the deposit might remain in the bank
without interest on sums over $1,600 until the corporation was
dissolved. It contends that to deprive it of the benefit of such
deposits is to take property without due process of law.
But while there was a possibility that the money might so
remain, the bank had no right to require that it should be so left.
Neither the charter nor the bylaws create anything in the nature of
a tontine, under which, on dissolution of the corporation, the then
depositors would receive the money of those absent and unknown. On
dissolution, the share of a depositor who could not be found would
be paid over to his legal representative, who might be an
administrator in case his death was established, or a guardian, in
case of mental incapacity, or a trustee in bankruptcy in case of
insolvency, or a representative appointed under statutes applicable
to abandoned property. But it is not necessary to wait for the
dissolution
Page 221 U. S. 666
of the bank. If the facts warrant it, a legal representative can
be appointed at any time, with all the rights incident to such
appointment, including that of withdrawing the funds and holding
them for the true owner when he shall establish his claim.
There is nothing unequal or discriminatory in making the act
applicable only to abandoned deposits in a savings bank. The
classification is reasonable. Deposits in savings banks are made in
expectation that they may remain much longer uncalled for than is
usual in deposits in other banks. This fact makes savings deposits
all the more likely to be forgotten and abandoned. And, as the
depositors are often wage earners, moving from place to place,
there is special reasons for intervening to protect their interest
in this class of property in banks as to which the state's
supervisory power is constantly exercised.
The other questions as to payment without the production of the
passbook, the rights and relations of the parties arising out of
the charter and contract of deposit, present no federal question.
The statute does not violate the Constitution of the United States.
The judgment is
Affirmed.
*
"SEC. 56. The probate court shall, upon the application of the
attorney general, and after public notice, order and decree that
all amounts of money heretofore or hereafter deposited with any
savings bank or trust company to the credit of depositors who have
not made a deposit on said account, or withdrawn any part thereof
or the interest, or on whose passbooks the interest has not been
added, which shall have remained unclaimed for more than thirty
years after the date of such last deposit, withdrawal of any part
of principal or interest, or adding of interest on the passbook,
and for which no claimant is known or the depositor of it cannot be
found, shall, with the increase and proceeds thereof, be paid to
the treasurer and receiver general, to be held and used by him
according to law, subject to be repaid to the person having and
establishing a lawful right thereto, with interest at the rate of
three percent per annum from the time when it was paid to said
treasurer to the time when it is paid over by him to such
person."
"SEC. 57. Any person claiming a right to money deposited with
the treasurer and receiver general under the provisions of either
of the two preceding sections . . . may establish the same by a
petition to the superior court. . . ."
