Escheat – Abandoned Property – Full Faith and Credit as a Bar to Multiple Escheat of Intangibles
Escheat of abandoned or unclaimed property by the sovereign is as old as the common law. Recast in constitutional form, this ancient right of kings has become a significant source of revenue in an increasing number of American states. While the right of escheat is inherent in the power of a sovereign, its exercise requires specific legislative authority. Until recently this authority was sparingly given and escheat was generally limited to the administration of estates and abandoned tangible property. However, in this past decade, state legislatures have greatly expanded the scope and extent of escheat by authorizing the escheat of abandoned intangible property. Spurred by the urgent demands of public finance and the successes of other states, few legislatures will be able to resist for long this scent of unclaimed millions in non-tax revenue.
Unfortunately, the escheat of intangible property raises serious problems not presented when tangible property is involved. The major problem is that of multiple escheat – the possibility that a holder of abandoned intangible property may be required by successive escheat proceedings in different states to disgorge the full value of the property to each. This problem arises primarily because of present jurisdictional theory. Under present theories, any state having sufficient “contact” with the transaction creating the intangible, and thereby able to serve the holder ·with process, is held to have jurisdiction for the purposes of escheat. Where the holder is an interstate corporation it is clear that at least two states could have jurisdiction: the state of incorporation, and the state where the corporation conducts a significant amount of business relating to that intangible. In its decision in Standard Oil Co. v. New Jersey, a majority of the Supreme Court stated that the full faith and credit clause would prevent multiple escheat. It is the purpose of this comment to examine and evaluate this theory in the setting of escheat of intangible property.