The opinion
O’CONNELL, J.,
dissenting.
The parties and the trial court apparently proceeded on the assumption that the securities issued as Series I “Profit Sharing Bonds” were in fact bonds. We now treat these “bonds” as stock and apply a theory of distribution with respect to which the parties to this proceeding have not had an opportunity to present argument.
It should 'be noted that our holding in this case produces the unusual result of postponing bondholders (the debenture holders) to the stockholders ('Series I “bondholders”) of the corporation upon dissolution and liquidation. This result may perhaps be explained on the ground that the findings of fact recite that there was a separate fund solely for the benefit of the Series I bonds and that the fund was free and clear of the claims of any persons other than the holders of Series I bonds.
I have some doubt as to whether the findings in this case are conclusive on the question of whether the debenture holders are excluded from sharing in the assets set aside for the holders of the Series I bonds, but since the question was not argued I shall treat it as resolved in accordance with the findings.
*509 My disagreement with the majority is on another point. The present case holds that the unclaimed interest of a bondholder is available for distribution to the other bondholders who have presented their claims, but that the unclaimed interest of a stockholder is not available to the diligent stockholders. Why should there be this difference in treatment of the two types of security holders? The majority opinion states that it is the “recognized rule” that an unclaimed share of a stockholder in a liquidation fund is not available to other stockholders. The support for this rule is very meager, there being three adjudicated cases applying it. In re Hull Copper Co., 46 Ariz 270, 50 P2d 560 , 101 ALR 664 (1935); State v. Fidelity Union Trust Co., 25 NJ 387, 136 A2d 636 (1957); In re Central N. J. Land Etc. Co., 113 NJ Eq 332, 166 A 705 (1933). See, Note, Disposition of Unclaimed Distributive Shares of a Dissolved Corporation, 45 Yale L J 720 (1936).
These cases are worthy of our notice only to the extent that they contain an acceptable rationale. The rationale is stated in the quotation from Central N. J. Land Etc. Co., supra, which is set out in the majority opinion. In essence it is that upon dissolution the assets of a corporation become a “trust fund” and that “the title of the stockholder becomes an equitable right to a distributive share therein.” That is simply the statement of a conclusion. The negative of that proposition is equally valid unless some reason can be advanced for depriving diligent stockholders of a right •to the unclaimed part of the liquidation fund. I am concerned here only with the situation where the diligent stockholder has not been made whole by the initial distribution of the dissolved corporation assets. That is the situation in the case before us. It raises *510 this question: Upon the liquidation of a corporation should the state receive a part of the assets of the corporation when the diligent stockholders have not been fully paid? Or, put in another way: Why should the court permit the diligent bondholders to share in the unclaimed assets available to bondholders but deny to diligent stockholders the right to share in the assets available to shareholders?
We do not answer these questions by stating that the assets of the corporation are held in trust for the stockholders individually or that the stockholders have a pro rata proprietary interest in the assets of the corporation. The question in this case is: What is a fair and equitable method of disposing of the unclaimed liquidation fund? That question is not answered by interjecting the question-begging concept of a trust or by relying upon the conclusion of a few poorly reasoned cases.
The choice of rules is not clearly dictated by strong considerations of policy either way. Favoring the rule which gives the state custody of the fund is the consideration that the stockholders who fail to present their claims initially have a further .opportunity to do so under statutes such as ours. But, these stockholders must be assumed to have received notice of the liquidation and it is not likely that they will later appear to make their claim against the state.
The real question is whether such contingent interests should prevail over .the interests of diligent stockholders who have not been repaid in full for their investment. I believe that the latter interest should be preferred. The rule should be the same for both bondholders and stockholders. There is no reason for making a distinction between the two types of claimants. In each case the claimants who have failed to *511 present their claims in accordance with the procedure provided for in the decree should be barred.
This method of treating nondiligent claimants is not novel. It comports with the method of distribution provided for in various statutes under which the diligent creditors are entitled to share in the surplus resulting from the failure of other creditors to present their claims. 3 Bancroft’s Probate Practice (2d ed 1950) §§ 829-832; see, e.g., Cal Prob Code § 707; Model Probate Code (1946) § 135 (a); ORS 116.505-116.510; Wash Rev Code § 11.40.010. At least one state has provided that dividends declared pursuant to an assignment for creditors will, if unclaimed for one year, be distributed among diligent creditors. N Y Debt & Cred Law § 198. Because the solution in such cases is provided by statute, the analogy is' not perfect (see Mayer v. Chase National Bank of City of New York, 233 F2d 468, 470-471 (2nd Cir 1956)), but in my opinion the principle which prompted such legislation is sound and a court of equity has the power, without the aid of a statute, to apply it. ①
The majority opinion, in dealing with the fund available to the debenture holders, adopts the principle of distribution which is applied in the administration of decedents estates.. It is not explained why this same principle should not be applicable in distributing the fund available to the stockholders. Admittedly, in the usual case the interest of bondholders and stockholders differ with respect to their respective rights to the *512 corporation assets upon dissolution. But, their bargain with the corporation establishing the priority of the bondholders over the stockholders upon liquidation has nothing to do with the rights of the stockholders inter se or the rights of the bondholders inter se with respect to the distribution of an unclaimed fund resulting from the f ailure of some members of these groups to present their claims. Unfortunately, there is no express agreement between the corporation and the purchasers of the securities, or between the latter inter se with respect to such an unclaimed fund. I would venture the speculation however that, if the stockholders in the present case had bargained on the matter amongst themselves, they would have preferred to have the surplus fund divided among the diligent and unsatisfied claimants up to the amount of their investment. Assuming reasonable notice and the expiration of a reasonable time for the presentation of claims, it seems fair to conclude that such a result would have been preferred over the alternative of giving the remainder of the fund to the state to be held for the nonappearing stockholders, few if any of whom are likely to be located.
I would affirm the decree of the lower court.
Sloan, J., concurs in this dissent.
Louisville & N.R. Co. v. Robin, 135 F2d 704, 706 (5th Cir 1943). See, Note, The Lost Shareholder, 62 Harv L Rev 295, 300 (1948); Comment, Unclaimed Dividends and Shares of Stock, 46 Ill L Rev 82, 86 (1951); Note, Disposition of Unclaimed Distributive Shares of A Dissolved Corporation, 45 Yale L J 720, 721 (1936). See also the authority cited for this proposition in the majority opinion.