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Enerlex, Inc. v. New Jersey Department of Treasury, Unclaimed Property Administration

A-4015-01T3 (N.J. Super. App. Div. 2003) (Unpublished)

ESCHEAT—Royalties for minerals removed are not real property interests for purposes of New Jersey’s abandoned property laws.

In Oklahoma, certain property and mineral rights were apparently abandoned. The owners could not be located, creating an escheat of the real property to the State of Oklahoma. The property rights were sold at a sheriff’s sale. At the same time, an oil producer continued to pay for minerals taken from the real estate prior to the escheat. Because the property’s record owners could not be found, the oil company, as a New Jersey corporation, deposited the royalty payments into custodial escheat in New Jersey. “Once the minerals were removed from below the surface land, they became personal property and the payment of the royalties for those minerals became subject to the laws of personal property.” The new owner claimed the “funds on the basis of its Oklahoma judgment and sheriff’s deed.” The New Jersey Unclaimed Property Administration (UPA) denied the claim on the basis that Oklahoma had no jurisdiction over the personal property of last known owners who had no last known address in Oklahoma or any other state. Under “federal doctrine governing which state’s law applies in personal property escheat situations, New Jersey’s law was paramount to Oklahoma law.” Consequently, the Court held that the UPA correctly concluded that Oklahoma law did not apply because the last known owner’s address was not in Oklahoma and the Oklahoma judgment did “not apply to royalties for minerals already severed from the property prior to the sale.”

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