What's Yours Is Theirs

Here's a rather significant victory for private property.

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.

Politicians, almost always Democrats oddly enough, who are beating the bushes to find more revenue to fund their pet projects love this unclaimed property scam.  Recently there have even been efforts in some states to force retailers to turn over the value of unredeemed gift certificates to the government.  And whenever some solon somewhere claims to want to help the environment by expanding the deposit laws to juice and water bottles, but directs that the unredeemed deposits flow quickly to the state capital, well, you know what he's really after.