The state's habitual seizure of supposedly unclaimed property in bank and stock brokerage accounts, safety deposit boxes and other repositories of wealth has always been more than a little questionable.The theory of "escheat," as it's called, is faintly medieval, assuming that idle property can be taken by a king for his personal use by divine right, a distant cousin of the doctrine of "eminent domain" under which property may be taken for public use.
California, however, refined it into a lucrative source of income, even making it easier to seize property when the state's budget was, as it often is, out of balance.
Banks and other holders of property have been required to transfer the assumed unclaimed assets to the State Controller's Office (although they often held onto it as long as possible for their own reasons). The controller would then make a token effort at finding the rightful owner, often nothing more than a fine-print newspaper ad, before depositing the property -- sold if necessary -- into the state treasury. So far, the state has seized $5.1 billion in property from 8.2 million accounts over the last half-century.
Last week, a federal judge ordered the state to stop seizures until it had vastly improved its efforts to find the rightful owners -- rejecting the state's rather unseemly claims that it would lose a lucrative source of income, about $400 million a year currently. His ruling followed a federal appellate court ruling that seizing property and giving faint notice to owners was unconstitutional.
"If the purpose of the law is, as the controller has reportedly said, to reunite owners with their lost or forgotten property, its ultimate goal should be to generate little or no revenue at all for the state," Judge William Shubb observed. He hinted that he would seize control of the system if he was not satisfied that the revised system was workable...
Theft by government bureaucrats (besides, of course, the usual methods of excessive and discriminatory taxation) is an important, growing and yet terribly overlooked problem. (Don't you love California's reasoning here -- we should get this money because we need the money?) Anyhow, I was quite pleased to see Judge Shubb's action and I hope it motivates others to slap government's grasping fingers away from stuff that isn't theirs.
The rest of this Sacramento Bee column (ably written by Dan Walters) is here.
