State v. Otis Elevator Co.

Heher, J.

(dissenting). The statutory proceeding for the “escheat” of the enumerated tangible and intangible personal property (L. 1946, c. 155, as amended; N. J. S: A. 2:53-15 ei seq.) is sui generis; and the rights and interests of the parties necessarily depend upon the provisions of the act itself.

At common law, abandoned personal property was not escheatable, but was subject only to the right of appropriation by the sovereign as bona vacantia. The State has the same right of appropriation except as limited by the State’s Constitution and laws and the due process provision of the Fourteenth Amendment to the Federal Constitution. “Escheat” in modern usage’ signifies the falling of property to the sovereign for want of an owner; the term comprehends not only property which has no other owner, but also property whose owner or whose owner’s whereabouts is unknown. The common law of England classifies escheat as “another branch of the king’s ordinary revenue.” Blaclcstone’s Comm. 302. The right to take that which belonged to no one appertained to the Crown, as jura regalia. Property described as bona vacantia is taken or assumed by the State, as its own. Property of this class “falls to the Crown as a matter of right in the exercise of its sovereign power;” it escheats to the State as part of the common ownership. State v. Standard Oil Co., 5 N. J. 281 (1950), affirmed sub nom. Standard Oil Co. v. New Jersey, 341 U. S. 428, 71 S. Ct. 822, 95 L. Ed. 1078 (1951); Roth v. Delano, 338 U. S. 226, 70 S. Ct. 22, 94 L. Ed. 13 (1949); Connecticut Mutual Life Insurance Co. v. Moore, 333 U. S. 541, 68 S. Ct. 682, 92 L. Ed. 863 (1948); Anderson National Bank v. Luckett, 321 U. S. 233, 64 S. Ct. 599, 88 L. Ed. 692 (1944); Security Savings Bank v. California, 263 U. S. 282, *3244 S. Ct. 108, 68 L. Ed. 301 (1923). The policy of the State’s superior right under the doctrine of bona vacantia was described by Blackstone as the avoidance of “that strife and contention, which the mere title of occupancy is apt to create and continue, and to provide for the support of public authority in a manner the least burthensome to individuals.” Blackstone’s Comm. 298.

The State may proceed administratively to take property of this class into its protective custody, subject to eventual escheat; but where, as here, the property is subjected to escheat through the judicial process, there must needs be compliance with the requirements of due process. And it may be conceded that the exercise of the sovereign right of protective custody of property apparently abandoned or unclaimed is dependent upon due process where the property is adversely held, although some form of proceeding on notice would ordinarily be necessary to bring the abandoned property to possession. Here, the act is designed to effect an escheat by the judicial process; and the provision of procedural due process in the subjection of property bona vacantia to escheat is in essence a legislative function; it is the course of proceedings by which such property is reduced to possession and the title of the unknown or missing owner foreclosed, and therefore an integral part of the escheat process itself. State v. Standard Oil Co., cited supra; Provident Institution for Savings v. Malone, 221 U. S. 660, 31 S. Ct. 661, 55 L. Ed. 899 (1911); Security Savings Bank v. California, cited supra; Connecticut Mutual Life Insurance Co. v. Moore, supra; Anderson National Bank v. Luckett, supra; Roth v. Delano, supra; Mullane v. Central Hanover Bank & Trust Co., 339 U. S. 306, 70 S. Ct. 652, 94 L. Ed. 865 (1950).

By its very nature, such procedural due process is not within the exclusive rule-making function conferred upon the Supreme Court by Article VI, Section II, paragraph 3 of the Constitution of 1947, as interpreted in Winberry v. Salisbury, 5 N. J. 240 (1950); nor does the statutory denial of a counsel fee to the custodian of the property liable to *33escheat infringe the constitutional .authority of the Supreme Court to regulate practice and procedure.

As just said, abandoned personal property falls to the sovereign for want of an owner; and the corollary is that the right of escheat is exclusively the State’s, enforceable only at the instance of the State, and upon such conditions as the State by the legislative authority shall ordain. . It would seem to be fundamental that the Legislature, in the exercise of its sole province to provide for the escheat of abandoned property, must also, as an inseparable incident or facet of the power, condition the judicial declaration of escheat upon such notice and hearing as it may deem politic and appropriate to the nature of the proceeding and in keeping with the reasonable demands of due process. Not only that; the Legislature may also provide, as was done here, for a claim of property by the unknown or missing owner before and after the judgment of escheat, reasonably conditioned as to time and otherwise, and the procedure for the prosecution and establishment of the claim. The line that separates the substantive from the procedural is not always distinguishable; and where the adjective blends into the substantive, there is substantive unity which precludes separation in assessing the rule-making jurisdiction. A rule of court cannot enlarge or diminish jurisdiction, nor can it modify, abridge or enlarge the substantive rights of litigants. United States v. Sherwood, 313 U.S. 584, 61 S. Ct. 767, 85 L. Ed. 1058 (1941); Washington Southern Navigation Co. v. Baltimore & Philadelphia Steamboat Co., 263 U. S. 629, 44 S. Ct. 220, 68 L. Ed. 480 (1924). The mode of acquiring jurisdiction in this field and the substantive rights of the parties litigant and their enforcement are within the legislative province. The statute defines the court’s jurisdiction to entertain the suit; the exercise of the jurisdiction is subject to the terms of the grant. Compare United States v. Sherwood, cited supra.

Such, I submit, is the principle of Wuchter v. Pizzutti, 276 U. S. 13, 48 S. Ct. 259, 73 L. Ed. 446 (1928), applying the Fourteenth Amendment. And see Standard Oil Co. v. *34New Jersey, cited supra, where Mr. Justice Reed for the Eederal Supreme Court said that the case there in hand differed from Wuchter v. Pizzutti, “since it is not here attempted to validate a defective statutory provision for notice by recourse to the sufficiency of the notice which, although not required by statute, was in fact given. Here it is the statute itself, as interpreted by the state court, which requires what we think is adequate notice.” [341 U. S. 428, 71 S. Ct. 826.]

In a word, the conditions attending the enforcement of the sovereign's right of escheat and the proceedings to perfect the escheat are so intimately related to the substantive process as to be inseparable from it. It is a special statutory proceeding for the declaration of escheat, conditioned as provided by the State itself; the conditions are of the substance, and not procedural within the concept of the cited constitutional grant of authority to the Supreme Court touching matters of practice and procedure.

It is within the province of the Legislature, in the protection of its own revenue, to provide for disclosure and transfer of property subject to escheat without the benefit of a counsel fee to the custodian of the property or the record of its ownership. And this is what the Legislature has done here.

This is not a suit between private parties alone, but a proceeding by the State to take over abandoned property, for its care and protection at the outset, and ultimately its appropriation as the State's own. The Legislature has plenary power to enforce the sovereign right of property; and to this end it may provide the mode and method of exercising the State's right of escheat, subject to the requirements of due process, and take all reasonable measures against its undue diminishment. It is well within the legislative authority to lay upon the custodian of personal property Iona vacantia the duty of' disclosure and surrender without fee or compensation for the act.

The State is not subject to the rules of court relating to the exercise of jurisdiction in invitum or the imposition of costs or counsel fees.

*35The sovereign is not suable, directly or indirectly, without its consent, manifested by legislative action or by waiver. Gallena v. Scott, 11 N. J. 231 (1953). And the principle also precludes the assessment of a counsel fee against the State in favor of the custodian of abandoned property.

There is sovereign immunity from costs. The State as a party litigant in its own courts is not liable for costs, absent a statute expressly giving rise to such liability. Deneen v. Unverzagt, 225 Ill. 378, 80 N. E. 321 (Sup. Ct. 1907); State v. Williams, 101 Md. 529, 61 A. 297, 1 L. R. A., N. S., 254 (Ct. App. 1905). By the common law, the public pays no costs. “In England, the King does not, and the State stands in place of the King.” United States ex rel. Phillips v. Gaines, 131 U. S. Appendix clxix, 25 L. Ed. 733 (1880). The principle is recognized by the United States. The Congress alone may waive or qualify the immunity of the national government from a judgment for costs. Reeside v. Walker, 11 How. 272, 13 L. Ed. 693 (1850); United States v. Worley, 281 U. S. 339, 50 S. Ct. 291, 74 L. Ed. 887 (1930); United States v. Cress, 243 U. S. 316, 37 S. Ct. 380, 61 L. Ed. 746 (1917); United States v. Chemical Foundation, 272 U. S. 1, 47 S. Ct. 1, 71 L. Ed. 131 (1926).

And the recovery of counsel fees and costs from the unsuccessful adversary party, even in a suit involving the rights and interests of private parties, has no basis whatever in the common law. Unless sanctioned by statute or by contract or by a recognized equity, neither counsel fees nor costs are allowable. In the absence of a statute or contract, there can be no recovery of counsel fees, either directly by suit or indirectly as damages for a breach of his bond. Textileather Corporation v. American Mutual Liability Insurance Co., 110 N. J. L. 483 (E. & A. 1933). But in equity, while the rule is the same as between party and party, there is a recognized discretionary power to award counsel fees, “payable out of a fund, to a complainant or directly to his counsel where he has, at his own expense, either maintained a successful suit for the preservation, protection or increase of a common fund, or brought into court a fund in which others, *36similarly situated, may share. This custom or practice originated in the English courts and was based on the theory that the others who benefit should, in good conscience, bear their fair share of the burden of the litigation.” Cintas v. American Car & Foundry Co., 133 N. J. Eq. 301 (Ch. 1943), affirmed 135 N. J. Eq. 305 (E. & A. 1944). See, also, Clements v. Clements, 129 N. J. Eq. 350 (E. & A. 1941); Universal Indemnity Insurance Co. v. Caltagirone, 119 N. J. Eq. 491 (E. & A. 1936); Nobile v. Bartletta, 112 N. J. Eq. 304 (E. & A. 1933). Under this rule, a mere incidental advantage is not enough; the question is whether the litigation was in the advancement of the interest of those eventually found to be entitled to the fund. 14 Am. Jur. 48; 49 A. L. R. 1159; 107 A. L. R. 753.

Even without sovereign immunity, the “fund in court” doctrine would not entitle the custodian here to a counsel fee. The proceeding was truly adversary; the custodian asserted its own right to the abandoned property, invoked the statute, of limitations to defeat the pleaded escheat, and challenged the constitutional sufficiency of the Escheat Act itself and the jurisdiction of the court. I concur in the reasoning and conclusions of Mr. Justice Jacobs in this behalf.

There is no ground under the cited rule, were it applicable against the State, to assess a counsel fee in favor of the custodian for its unsuccessful resistance to the State’s demand, nor is a fee allowable for the mere disclosure of the property liable to escheat. Abandoned property is subject to the care and custody of the State, and finally to escheat; and there is no perceivable reason why the custodian should have a counsel fee against the State, or charged to the State’s property, which is the same thing, for its eventual recognition of the State’s right. The demand of the owner for his property, no matter how long it had lain unclaimed, would have been honored without compensation, and this is the right to which the State has succeeded.

Such is the sense and significance of the statute. Compensation is to be made to the escheator, and there is provision *37for the payment of “the fees and expenses of the attorney who shall have prosecuted the escheat.” But no mention is made of the custodian. The provision for the payment of “such other fees and costs as the ■ judgment shall direct” follows immediately the direction to pay 5% of the moneys received to the escheator “as a reward for having supplied the information and evidence” resulting in the judgment of escheat, and has reference to the provision of the next succeeding paragraph of the same section authorizing the court to fix the fees and expenses of the attorney who. prosecuted the escheat. These provisions are to be taken, and compared together, the first as having reference to the specific allowance made by the second. The mention of one implies the exclusion of the other. Expressio unius esi exclusio alierius. Co. Litt. 210a; Broom’s Maxims 607, 651. It was necessary to make provision for the prosecuting attorney who was called from the bar by the Attorney-General, and his fees quite naturally were made chargeable to the fund. A design to provide counsel fees to the custodian should- not proceed from uncertain inference or doubtful implication. It is not without significance that all proceedings in escheat .shall be “without costs to the State or to the parties defendant except that the court may impose such costs or counsel fees against a defendant” who has defended' “without reasonable cause or justification.” N. J. 8. A. 2:53-25; N. J. 8. 2A:37-23.

There being no express provision by statute for the payment of a counsel fee to the custodian of the escheated property, none is allowable. The rule of court and the practice in equity under the rule are utterly without force as against the sovereign.

I would affirm the judgment.

For reversal — -Chief Justice -Vanderbilt,- and Justices Oliphant, Wachenfeld and Burling — 4. For affirmance — Justices Heher and Jacobs — 2.