Corporate Law
507 U.S. 490 (1993)
Study notes for Delaware v. New York: professor notes, cold call prep, exam angles, and memory aids.
The state of incorporation is entitled to escheat unclaimed securities when the owner is unknown.
Delaware v. New York established a pivotal precedent regarding the escheatment of unclaimed securities. The Supreme Court underscored the principle that the state of incorporation holds paramount rights over unclaimed property when the owner's identity is unknown. Professors may emphasize the implications of this ruling on other states' unclaimed property laws and the advantages of Delaware as a corporate haven, given that many corporations choose to incorporate there. This case also raises important questions about the rights of states and the interests of unclaimed property holders vs. state administrations in managing such unclaimed assets efficiently.
InCorp - Incorporation dictates the escheat.
| Case | Distinction |
|---|---|
| Texas v. New Jersey | Texas v. New Jersey concerned the priority of claims to unclaimed property held in financial institutions, focusing on the owner's address rather than the incorporation location. |
| Pennsylvania v. New York | This case involved the interpretation of state laws on escheatment, but did not directly address the issue of incorporation as it pertains to unclaimed securities. |
Allowing the state of incorporation to escheat unclaimed property encourages corporate accountability and provides stability in corporate governance.
This rule may lead to inequities as states where intermediaries are located may have legitimate claims to the property, potentially leading to a race to the bottom in state governance.
Delaware v. New York is often examined in the context of state authority over unclaimed property and the rights of a corporation's state of incorporation versus the state where property is held. Students may be asked to analyze the implications of this ruling on corporate governance and state-power dynamics.