(dissenting). For many years the Atlantic City Electric Company required that certain consumers (presumably transient residents) furnish security deposits in order to obtain service. Having no other choice they did so and in many instances later moved away without ever demanding the return of their deposits or so much thereof as remained after their final bills were marked paid. It would seem quite apparent that the consumers never thought of themselves as having made loans which would be barred by the running of the statutory period of limitations applicable to ordinary creditors. Indeed, the company itself never dealt with them as ordinary creditors. Thus, it maintained a segregated bookkeeping account to which it credited all consumers’ deposits and carried them as outstanding liabilities without regard to time. If con*272sumers appeared (no matter how belatedly) and claimed the balances due on their deposits, they were invariably returned; and although the deposits were not physically segregated but went into the general funds of the company, those funds always exceeded the total amount of the deposits. In 1949 deposits which had remained unclaimed for 14 or more years aggregated over $18,000 and the State sought escheat under the terms of N. J. S. 2A :37-ll et seq. The court no longer views escheat proceedings with hostility; on the contrary in State by Van Riper v. American Sugar Refining Co., 20 N. J. 286, 297 (1956), it recently pointed out that New Jersey’s quest for legitimate revenues to be used for the good of all of its citizens is not to be condemned and that its right to escheat abandoned property must be recognized as superior to that of a corporation which has custody but no moral or legal right to its retention. See also State by Parsons v. United States Steel Corp., 22 N. J. 341, 355 (1956); State by Richman v. Sperry & Hutchinson Co., 23 N. J. 38, 43 (1956).
The Electric Company contends that its obligations to repay the security deposits constituted nothing more than ordinary debts which had been legally barred by limitations before the State instituted its action; if so, the State had nothing to escheat and the lower court’s judgment was correct. See State v. Western Union Telegraph Co., 17 N. J. 149 (1954). The State contends that the obligations were more in the nature of trusts (or pledges) which had not been legally barred by limitations; if so, the State was entitled to judgment below. See State v. United States Steel Co., 12 N. J. 51 (1953). Cf. Rusling v. Rusling, 42 N. J. Eq. 594, 599 (Ch. 1887). The majority opinion properly sets forth that “whether a trust or a debt is created when one party pays money to another primarily depends upon their intentions.” See 1 Scott, Trusts (2d ed. 1956), 104. But it then proceeds to find — despite the special and compulsory nature of the deposit and the actual conduct of the parties— that they intended simple loans which created debtor-creditor relations rather than something akin to trusts. It relies *273on two facts: (1) that the deposits were never physically segregated but were mingled with the company’s general funds, and (2) that the company had agreed to pay interest. As to the lack of physical segregation we need but refer to State v. United States Steel Co., supra, where Justice Wachenfeld soundly noted that “segregation of funds is only one of many factors to be weighed and considered in ascertaining the true intent of the parties” and that “failure to segregate the funds is not determinative of the conclusion that the relationship was debtor and creditor.” In the instant matter a segregated bookkeeping account to which the deposits were credited was maintained by the company and the general funds into which the deposits were actually placed were always in excess of the aggregate deposits; these circumstances largely remove any weight which might otherwise attach to the lack of physical segregation. Cf. Colantuoni v. Balene, 95 N. J. Eq. 748 (E. & A. 1923); Gutch v. Fosdick, 48 N. J. Eq. 353 (Ch. 1891).
As to the agreement to pay interest it is, of course, a factor in determining the relationship between the parties but it is by no means dispositive. See Gutch v. Fosdick, supra; Colantuoni v. Balene, supra. Cf. In re Newark Shoe Stores, 3 F. Supp. 293 (D. C. D. Md. 1933); People v. Pierce, 110 Cal. App. 2d 598, 243 P. 2d 585, 590 (1952). In the Gutch case Chancellor McGill had no difficulty in finding a deposit to be a trust even though the defendant had agreed to pay 5% annual interest. And in the Colantuoni case the Court of Errors and Appeals unanimously approved an opinion by Vice-Chancellor Eielder which found that a deposit on which interest of 4%% per annum was being paid was a pledge which the defendant could properly mingle with his other funds but could not place beyond his power to repay. In the instant matter the defendant’s agreement to pay interest was part of the “Terms and Conditions of Service” filed by the Electric Company in accordance with the regulations of the Hew Jersey Board of Public Utility Commissioners. It provided that interest would be paid when the deposit was “held by the company for a period *274of 1 year or longer”; that “retention by the company” before final settlement was not payment or part payment of any bill for service; and that the company was to have a reasonable time to ascertain the consumer’s obligation before being “required to return” the deposit. As the court suggested in People v. Pierce, supra, the use of the foregoing expressions may be “significant and revealing”; debtors who borrow from creditors do not generally talk about the “retention” or “return” of the money “held” by them for their creditors. Cf. Gutch v. Fosdick, supra, 48 N. J. Eq., at page 356:
“Considered independently of the words ‘in trust,’ the word ‘hold’ implies a defensive possession, entirely consistent with that of a trustee. The declarant is to pay interest while he thus holds, but he is not to pay the principal sum; that he is to refund. The word ‘pay,’ importing indebtedness, is applied only to the interest which springs from the use of the fund. When disposition of the fund itself is mentioned, the word ‘refund’ is used in the sense of ‘restore.’ I fail to perceive how more apt words could be selected to express the idea of a pure deposit in trust.”
So far as the record discloses the consumers may never have seen the defendant’s agreement to pay interest; and assuming they had they certainly would not have gathered from it that they were general creditors whose claims would be barred by limitations.
In Pintsch Compressing Co. v. Buffalo Gas Co., 280 F. 830, 840 (2 Cir. 1922), the question presented was whether consumers who had made security deposits with the Buffalo Gas Company were entitled to priority on distribution in an equity receivership; the court, in holding that they were entitled to priority, justly declined to treat them as ordinary creditors. In Brooklyn Borough Gas Co v. Bennett, 154 Misc. 106, 121, 277 N. Y. S. 203, 219 (Sup. Ct. 1935), the court held that limitations would not start to run against security deposits until after the utility’s consumers had actually demanded their return. Professor Williston has cited this case, along with others in different fields, for the principle that even “though a transaction is not strictly a trust since the person entrusted with money is not expected to keejD it *275as a separate res, there may, nevertheless, be such a continuing relation of confidence where money is delivered to be Trept’ as to prevent the Statute' from beginning to run.” 6 Williston, Contracts {rev. ed. 1938), 5704. It seems to me that whenever a consumer discovers that a utility has failed to return a security deposit which it no longer has any right to retain he should, in all equity and justice, be entitled to the deposit; whether he relies on the view that the relationship was in the nature of a trust which was not subject to limitations or on the alternative view that the continuing relationship of confidence prevented limitations from beginning to run, would seem to be immaterial. If he could prevail under either approach then the State, now standing in his stead, is likewise entitled to prevail. See State v. United States Steel Corp., supra.
Since I am satisfied, on the foregoing grounds, that the lower court erred in dismissing the complaint, I find it unnecessary to comment on the State’s additional point that limitations were not at all applicable because the Electric Company’s obligations to return the deposits — now long governed by regulations of the New Jersey Board of Public Utility Commissioners — did not arise in debt or contract but were imposed by law. See Mayor, etc., of Jersey City v. Sackett, 44 N. J. L. 428 (E. & A. 1882); McFarlan v. Morris Canal and Banking Co., 44 N. J. L. 471 (Sup. Ct. 1882); Outwater v. Passaic, 51 N. J. L. 345 (Sup. Ct. 1889); Smith v. Jersey City, 52 N. J. L. 184 (E. & A. 1889); Warren County v. Harden, 95 N. J. L. 122 (E. & A. 1920). But see Miller v. Board of Chosen Freeholders of Hudson County, 10 N. J. 398 (1952). I vote to reverse.
For affirmance — Justices Heher, Oliphant, Wachenfeld, Burling and Weintraub — 5. For reversal — Chief Justice Vanderbilt and Justice Jacobs — 2.