Escheating Scandal:
OK, this Ninth Circuit case is not terribly exciting legally, but it's practically useful, and it lets me say "escheating scandal." (No google references for that until now; a poor gag, but mine own.) An excerpt from an earlier, more detailed decision in this litigation:
[The case is filed] by two individuals against the state controller. One,
Chris Taylor, a former Intel employee, lives in England and
owns 52,224 shares of Intel stock. The other, Nancy Pepple-
Gonsalves, a former TWA flight attendant, lives in California,
in Riverside County, and owns 7,000 shares of TWA stock. Or at least they did own the stock, before the state took it
away.
The state controller took Mr. Taylor's and Ms. Pepple-
Gonsalves's stock as "unclaimed property." But these individuals
do, in this lawsuit, claim it. The property was treated as
unclaimed because for three years these two individuals did
not cash dividend checks, respond to proxy notices, or otherwise
communicate to the companies in which they owned stock.
Intel and TWA provided the State of California with lists of
shareholders who were "lost" or "unknown" by these three
criteria, as required by law, and issued "duplicate shareholder
certificates" to the state. The Controller then sold the stock
and deposited the money received in exchange into the state's
general fund.
This case is about escheat. Escheat, at common law in
England, formerly terminated a tenancy so that on the death
of a tenant without heirs, or as a result of a tenant's felony
that worked a corruption of the blood, the land escheated to
the lord of the fee. Title by escheat "was one of the fruits of
and consequences of feudal tenure." "But, as the feudal tenures
do not exist in this country, there are no private persons
who succeed to the inheritance by escheat; and the state steps
in the place of the feudal lord, by virtue of its sovereignty, as
the original and ultimate proprietor of all the lands within its
jurisdiction." Escheat of tangible or intangible personal property
arises from the same conceptual scheme....
The escheat problem, in this case, arises from a new
approach used by some state governments, greatly shortening
the time before which untouched property is treated as though
it had been abandoned, greatly reducing or eliminating notice
to the true owner, and ignoring the true owner's pleas. For
example, California is taking the flight attendant's stock in
her airline on the basis, basically, that she cannot be found,
even while she is standing in court shouting, "Here I am! Here
I am! Give me my money!" And the State of California turns
a deaf ear, pretending it cannot hear her.
The latest decision reverses the district court's denial of an injunction, and suggests, "because the
Supreme Court spoke so clearly in Jones v. Flowers, and because we spoke on the
precise issues in this case twice -- first in Taylor I and again in Suever v.
Connell -- without California taking any action to remedy the constitutional problem
with its escheat statute, the district court may wish to consider whether some sort of
supervision, such as requirement of court approval of new regulations, is necessary."