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State can’t keep interest earned on unclaimed property

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The 7th Circuit Court of Appeals agreed Thursday with an Indiana woman acting as guardian for a relative that the state can’t retain the interest earned on unclaimed property once the owner files a valid claim to the property. Katherine Cerajeski argued that action by the state is a taking that violates the takings clause in the Constitution because the owner is paid nothing for his lost interest.

Cerajeski’s ward had a small, interest-bearing bank account, of which the value is considered property in Indiana. She learned about the bank account in 2011; it had been considered abandoned in 2006. She filed this lawsuit, seeking a declaration that she is entitled on behalf of her ward to the interest. The District Court dismissed her lawsuit, Katherine Cerajeski, guardian for Walter Cerajeski v. Greg Zoeller, Attorney General of the State of Indiana, et al., 12-3766, that challenged part of the Indiana Unclaimed Property Act.

Under Indiana statute, property owners have 25 years to claim property.

Judge Richard Posner, writing for the court, held that interest on interest-bearing unclaimed property is unclaimed property too, so the owner can claim it upon proving title.

“There is no basis for the state’s confiscating the interest in Cerajeski’s account. There is no articulated basis for fixing a 25-year term for escheat of principal and only 3 years for escheat of interest—a period so short as to present a serious question whether it is consistent with the requirement in the Fourteenth Amendment that property not be taken without due process of law, implying adequate notice and opportunity to contest.”

“And so if before then the state takes either principal or interest it must render just compensation to the owner if as in this case the owner’s identity is known. The state can charge a fee for custodianship and for searching for the owner, but the interest on the principal in a bank account is not a fee for those services.”

The case is remanded for further proceedings, including a determination of the compensation to Cerajeski when she files her claim.

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  1. Just an aside, but regardless of the outcome, I 'm proud of Judge William Hughes. He was the original magistrate on the Home place issue. He ruled for Home Place, and was primaried by Brainard for it. Their tool Poindexter failed to unseat Hughes, who won support for his honesty and courage throughout the county, and he was reelected Judge of Hamilton County's Superior Court. You can still stand for something and survive. Thanks, Judge Hughes!

  2. CCHP's real accomplishment is the 2015 law signed by Gov Pence that basically outlaws any annexation that is forced where a 65% majority of landowners in the affected area disagree. Regardless of whether HP wins or loses, the citizens of Indiana will not have another fiasco like this. The law Gov Pence signed is a direct result of this malgovernance.

  3. I gave tempparry guardship to a friend of my granddaughter in 2012. I went to prison. I had custody. My daughter went to prison to. We are out. My daughter gave me custody but can get her back. She was not order to give me custody . but now we want granddaughter back from friend. She's 14 now. What rights do we have

  4. This sure is not what most who value good governance consider the Rule of Law to entail: "In a letter dated March 2, which Brizzi forwarded to IBJ, the commission dismissed the grievance “on grounds that there is not reasonable cause to believe that you are guilty of misconduct.”" Yet two month later reasonable cause does exist? (Or is the commission forging ahead, the need for reasonable belief be damned? -- A seeming violation of the Rules of Profession Ethics on the part of the commission) Could the rule of law theory cause one to believe that an explanation is in order? Could it be that Hoosier attorneys live under Imperial Law (which is also a t-word that rhymes with infamy) in which the Platonic guardians can do no wrong and never owe the plebeian class any explanation for their powerful actions. (Might makes it right?) Could this be a case of politics directing the commission, as celebrated IU Mauer Professor (the late) Patrick Baude warned was happening 20 years ago in his controversial (whisteblowing) ethics lecture on a quite similar topic: http://www.repository.law.indiana.edu/cgi/viewcontent.cgi?article=1498&context=ilj

  5. I have a case presently pending cert review before the SCOTUS that reveals just how Indiana regulates the bar. I have been denied licensure for life for holding the wrong views and questioning the grand inquisitors as to their duties as to state and federal constitutional due process. True story: https://www.scribd.com/doc/299040839/2016Petitionforcert-to-SCOTUS Shorter, Amici brief serving to frame issue as misuse of govt licensure: https://www.scribd.com/doc/312841269/Thomas-More-Society-Amicus-Brown-v-Ind-Bd-of-Law-Examiners

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