{ "id": 4155229, "name": "KEVIN PATRICK ROWLETTE, JANITH MARTIN, MARCHELLA THOMAS and WANDA ADAMS, individually and on behalf of a class of all others similarly situated, Plaintiffs v. STATE OF NORTH CAROLINA, and RICHARD H. MOORE, in his official capacity as the Treasurer for the State of North Carolina, Defendants", "name_abbreviation": "Rowlette v. State", "decision_date": "2008-02-19", "docket_number": "No. COA06-1036", "first_page": "712", "last_page": "723", "citations": [ { "type": "official", "cite": "188 N.C. App. 712" } ], "court": { "name_abbreviation": "N.C. Ct. App.", "id": 14983, "name": "North Carolina Court of Appeals" }, "jurisdiction": { "id": 5, "name_long": "North Carolina", "name": "N.C." }, "cites_to": [ { "cite": "622 S.E.2d 691", "category": "reporters:state_regional", "reporter": "S.E.2d", "case_ids": [ 12634559 ], "weight": 2, "year": 2005, "pin_cites": [ { "page": "694" } ], "opinion_index": 0, "case_paths": [ "/se2d/622/0691-01" ] }, { "cite": "637 S.E.2d 885", "category": "reporters:state_regional", "reporter": "S.E.2d", "case_ids": [ 12637333 ], "year": 2006, "pin_cites": [ { "page": "889", "parenthetical": "quoting John V. Orth, The North Carolina State Constitution 58 (paperback ed. 1995)" } ], "opinion_index": 0, "case_paths": [ "/se2d/637/0885-01" ] }, { "cite": "58 L. Ed. 2d 198", "category": "reporters:federal", "reporter": "L. Ed. 2d", "year": 1978, "opinion_index": 0 }, { "cite": "439 U.S. 883", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 11394763, 11394800, 11394641, 11394713, 11394684 ], "year": 1978, "opinion_index": 0, "case_paths": [ "/us/439/0883-04", "/us/439/0883-05", "/us/439/0883-01", "/us/439/0883-03", "/us/439/0883-02" ] }, { "cite": "166 U.S. 226", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 3592880 ], "weight": 2, "year": 1897, "opinion_index": 0, "case_paths": [ "/us/166/0226-01" ] }, { "cite": "876 N.E.2d 968", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 2007, "opinion_index": 0 }, { "cite": "2007 WL 1821306", "category": "reporters:specialty_west", "reporter": "WL", "year": 2007, "opinion_index": 0 }, { "cite": "561 So. 2d 712", "category": "reporters:state_regional", "reporter": "So. 2d", "case_ids": [ 7532716 ], "year": 1990, "pin_cites": [ { "page": "716" } ], "opinion_index": 0, "case_paths": [ "/so2d/561/0712-01" ] }, { "cite": "967 So. 2d 507", "category": "reporters:state_regional", "reporter": "So. 2d", "case_ids": [ 8375475, 8375427, 8375455 ], "year": 2007, "opinion_index": 0, "case_paths": [ "/so2d/967/0507-03", "/so2d/967/0507-01", "/so2d/967/0507-02" ] }, { "cite": "961 So. 2d 425", "category": "reporters:state_regional", "reporter": "So. 2d", "case_ids": [ 8357059 ], "opinion_index": 0, "case_paths": [ "/so2d/961/0425-01" ] }, { "cite": "166 L. Ed. 2d 996", "category": "reporters:federal", "reporter": "L. Ed. 2d", "year": 2007, "opinion_index": 0 }, { "cite": "549 U.S. 1181", "category": "reporters:federal", "reporter": "U.S.", "year": 2007, "opinion_index": 0 }, { "cite": "860 N.E.2d 588", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 2006, "opinion_index": 0 }, { "cite": "845 N.E.2d 219", "category": "reporters:state_regional", "reporter": "N.E.2d", "case_ids": [ 8421849 ], "opinion_index": 0, "case_paths": [ "/ne2d/845/0219-01" ] }, { "cite": "867 A.2d 767", "category": "reporters:state_regional", "reporter": "A.2d", "case_ids": [ 9027532 ], "weight": 3, "year": 2005, "pin_cites": [ { "page": "775" } ], "opinion_index": 0, "case_paths": [ "/a2d/867/0767-01" ] }, { "cite": "454 U.S. 516", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 6189832 ], "weight": 10, "year": 1982, "pin_cites": [ { "page": "518" }, { "page": "744" }, { "page": "526" }, { "page": "749", "parenthetical": "emphasis added" }, { "page": "530" }, { "page": "751-52" }, { "page": "530" }, { "page": "751-52" } ], "opinion_index": 0, "case_paths": [ "/us/454/0516-01" ] }, { "cite": "137 S.E.2d 105", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 5, "year": 1964, "pin_cites": [ { "page": "107" }, { "page": "108" }, { "page": "109" } ], "opinion_index": 0 }, { "cite": "262 N.C. 413", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8567905 ], "year": 1964, "opinion_index": 0, "case_paths": [ "/nc/262/0413-01" ] }, { "cite": "538 U.S. 216", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 9030620 ], "weight": 6, "year": 2003, "pin_cites": [ { "page": "237" }, { "page": "395" }, { "page": "240" }, { "page": "397" } ], "opinion_index": 0, "case_paths": [ "/us/538/0216-01" ] }, { "cite": "524 U.S. 156", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 11181825 ], "weight": 6, "year": 1998, "pin_cites": [ { "page": "166" }, { "page": "185" }, { "page": "188" } ], "opinion_index": 0, "case_paths": [ "/us/524/0156-01" ] }, { "cite": "57 L. 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Ed. 2d", "case_ids": [ 1769262 ], "weight": 3, "opinion_index": 0, "case_paths": [ "/us/438/0104-01" ] }, { "cite": "444 U.S. 51", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 11304710 ], "weight": 2, "year": 1979, "pin_cites": [ { "page": "64-68" } ], "opinion_index": 0, "case_paths": [ "/us/444/0051-01" ] }, { "cite": "374 So. 2d 951", "category": "reporters:state_regional", "reporter": "So. 2d", "case_ids": [ 9627173 ], "year": 1979, "pin_cites": [ { "page": "952-53" } ], "opinion_index": 0, "case_paths": [ "/so2d/374/0951-01" ] }, { "cite": "449 U.S. 155", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 11715631 ], "weight": 11, "year": 1980, "pin_cites": [ { "page": "163" }, { "page": "367" }, { "page": "162" }, { "page": "365" }, { "page": "172" }, { "page": "164" }, { "page": "367" } ], "opinion_index": 0, "case_paths": [ "/us/449/0155-01" ] }, { "cite": "421 S.E.2d 356", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1992, "opinion_index": 0 }, { "cite": "332 N.C. 484", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 2504293, 2506054, 2504775, 2504473, 2505021 ], "year": 1992, "opinion_index": 0, "case_paths": [ "/nc/332/0484-03", "/nc/332/0484-04", "/nc/332/0484-01", "/nc/332/0484-05", "/nc/332/0484-02" ] }, { "cite": "416 S.E.2d 200", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1992, "pin_cites": [ { "page": "201" } ], "opinion_index": 0 }, { "cite": "106 N.C. App. 263", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 5314308 ], "year": 1992, "pin_cites": [ { "page": "265" } ], "opinion_index": 0, "case_paths": [ "/nc-app/106/0263-01" ] }, { "cite": "424 S.E.2d 905", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1992, "opinion_index": 0 }, { "cite": "333 N.C. 168", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 2546032, 2546066, 2547899 ], "year": 1992, "opinion_index": 0, "case_paths": [ "/nc/333/0168-03", "/nc/333/0168-01", "/nc/333/0168-02" ] }, { "cite": "420 S.E.2d 682", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1992, "opinion_index": 0 }, { "cite": "107 N.C. App. 448", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8527684 ], "year": 1992, "opinion_index": 0, "case_paths": [ "/nc-app/107/0448-01" ] }, { "cite": "410 S.E.2d 887", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1991, "opinion_index": 0 }, { "cite": "330 N.C. 331", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 2508874 ], "year": 1991, "opinion_index": 0, "case_paths": [ "/nc/330/0331-01" ] }, { "cite": "244 S.E.2d 386", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1978, "opinion_index": 0 }, { "cite": "295 N.C. 236", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8562180 ], "year": 1978, "opinion_index": 0, "case_paths": [ "/nc/295/0236-01" ] }, { "cite": "296 S.E.2d 281", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1982, "opinion_index": 0 }, { "cite": "307 N.C. 52", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8560568 ], "year": 1982, "opinion_index": 0, "case_paths": [ "/nc/307/0052-01" ] }, { "cite": "326 S.E.2d 303", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1985, "pin_cites": [ { "page": "306", "parenthetical": "citing In re Hous. Bonds, 307 N.C. 52, 296 S.E.2d 281 (1982); In re Banks, 295 N.C. 236, 244 S.E.2d 386 (1978)" } ], "opinion_index": 0 }, { "cite": "73 N.C. App. 214", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8522944 ], "year": 1985, "pin_cites": [ { "page": "217", "parenthetical": "citing In re Hous. Bonds, 307 N.C. 52, 296 S.E.2d 281 (1982); In re Banks, 295 N.C. 236, 244 S.E.2d 386 (1978)" } ], "opinion_index": 0, "case_paths": [ "/nc-app/73/0214-01" ] }, { "cite": "101 S.E.2d 413", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1958, "opinion_index": 0 }, { "cite": "247 N.C. 516", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8627639 ], "year": 1958, "opinion_index": 0, "case_paths": [ "/nc/247/0516-01" ] }, { "cite": "430 S.E.2d 681", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 3, "year": 1993, "pin_cites": [ { "page": "684", "parenthetical": "citing Greensboro v. Wall, 247 N.C. 516, 101 S.E.2d 413 (1958)" }, { "page": "684" } ], "opinion_index": 0 }, { "cite": "110 N.C. App. 506", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8525941 ], "weight": 3, "year": 1993, "pin_cites": [ { "page": "511", "parenthetical": "citing Greensboro v. Wall, 247 N.C. 516, 101 S.E.2d 413 (1958)" }, { "page": "511" }, { "page": "511" } ], "opinion_index": 0, "case_paths": [ "/nc-app/110/0506-01" ] }, { "cite": "574 S.E.2d 76", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 2002, "pin_cites": [ { "page": "83" } ], "opinion_index": 0 }, { "cite": "155 N.C. App. 462", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 9250748 ], "year": 2002, "pin_cites": [ { "page": "468" } ], "opinion_index": 0, "case_paths": [ "/nc-app/155/0462-01" ] }, { "cite": "175 N.C. App. 45", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8349876 ], "year": 2005, "opinion_index": 0, "case_paths": [ "/nc-app/175/0045-01" ] }, { "cite": "361 N.C. 1", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 3747132 ], "year": 2006, "pin_cites": [ { "page": "4-5", "parenthetical": "quoting John V. Orth, The North Carolina State Constitution 58 (paperback ed. 1995)" } ], "opinion_index": 0, "case_paths": [ "/nc/361/0001-01" ] } ], "analysis": { "cardinality": 1153, "char_count": 27789, "ocr_confidence": 0.733, "pagerank": { "raw": 1.0934406435996968e-07, "percentile": 0.5661918899518852 }, "sha256": "3f590ad4371a6f46aceeb73c611693fe251b75dc785e1a5fdc3a0a548bba83a7", "simhash": "1:c74c6d581bce0ed2", "word_count": 4603 }, "last_updated": "2023-07-14T21:34:30.605877+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "Chief Judge MARTIN and Judge ELMORE concur." ], "parties": [ "KEVIN PATRICK ROWLETTE, JANITH MARTIN, MARCHELLA THOMAS and WANDA ADAMS, individually and on behalf of a class of all others similarly situated, Plaintiffs v. STATE OF NORTH CAROLINA, and RICHARD H. MOORE, in his official capacity as the Treasurer for the State of North Carolina, Defendants" ], "opinions": [ { "text": "STEPHENS, Judge.\n\u201c[T]he security of Property[,]\u201d Alexander Hamilton informed the Philadelphia Convention in May of 1787, is one of the \u201cgreat obj[ects] of Government.]\u201d 1 The Records of the Federal Convention of 1787 302 (Max Farrand ed. 1911). Accordingly, the United States Constitution provides that \u201cprivate property [shall not] be taken for public use, without just compensation.\u201d U.S. Const, amend. V. Although North Carolina\u2019s Constitution does not expressly prohibit private property from being taken for public use without compensation, \u201c \u2018the principle is so grounded in natural equity that it has never been denied to be a part of the law of North Carolina!,]\u2019 \u201d Department of Transp. v. M.M. Fowler, Inc., 361 N.C. 1, 4-5, 637 S.E.2d 885, 889 (2006) (quoting John V. Orth, The North Carolina State Constitution 58 (paperback ed. 1995)), and North Carolina\u2019s Constitution expressly provides that \u201c[njo person shall be ... deprived of... property, but by the law of the land.\u201d N.C. Const, art I, \u00a7 19. In this case, we are called upon to determine whether the North Carolina Unclaimed Property Act, N.C. Gen. Stat. \u00a7 116B-51 et seq. (2003), violates these governmental guarantees which operate for the security of property. We hold that it does not.\nFACTS\nPlaintiffs Kevin Patrick Rowlette (\u201cRowlette\u201d), Janith Martin (\u201cMartin\u201d), Marchella Thomas (\u201cThomas\u201d), and Wanda Adams (\u201cAdams\u201d) commenced this action by filing a complaint on 23 November 2004. According to the complaint, each Plaintiff owned property \u201cwhich was delivered to and held by [] Defendants\u201d pursuant to the Unclaimed Property Act. As to Rowlette, the complaint alleged Defendants held \u201cdividends in the amount of $236.00[.]\u201d As to Martin, Thomas, and Adams, respectively, the complaint alleged Defendants held $118.20, $71.95, and $84.01 worth of \u201cfunds[.]\u201d Over the course of 2004, Defendants returned Plaintiffs\u2019 property to them, \u201cbut retained any interest or other income that had accrued on the property while in Defendants\u2019 custody.\u201d Plaintiffs alleged that Defendants\u2019 retention of the interest or income violated Article I, \u00a7 19 of the North Carolina Constitution and the Fifth and Fourteenth Amendments of the United States Constitution. Plaintiffs further alleged that Defendants\u2019 actions violated Section 1983 of the federal Civil Rights Act. Finally, Plaintiffs sought a determination that the action could be maintained as a class action on behalf of all other similarly situated persons or entities.\nOn 21 November 2005, Defendants filed a motion to dismiss Plaintiffs\u2019 complaint pursuant to Rules 12(b)(1), (2) and (6) of North Carolina\u2019s Rules of Civil Procedure. By the same pleading, Defendants moved the trial court to \u201cstrike [Plaintiffs\u2019 class action motion\u201d pursuant to Rules 12(f) and 23 of the Rules of Civil Procedure. The matter came on for hearing before the Honorable Robert F. Hobgood in Wake County Superior Court on 30 May 2006. By order filed 8 June 2006, Judge Hobgood dismissed Plaintiffs\u2019 action \u201cagainst all Defendants pursuant to Rule 12(b)(1) and Rule 12(b)(6).\u201d Plaintiffs timely appealed to this Court.\nSTANDARD OF REVIEW\nThe standard of review on a motion to dismiss under Rule 12(b)(1) is de novo. Welch Contr\u2019g, Inc. v. N.C. Dep\u2019t of Transp., 175 N.C. App. 45, 622 S.E.2d 691 (2005). \u201cThe standard of review on a motion to dismiss under Rule 12(b)(6) is \u2018whether, if all the plaintiff\u2019s allegations are taken as true, the plaintiff is entitled to recover under some legal theory.\u2019 \u201d Id. at 50, 622 S.E.2d at 694 (quoting Toomer v. Garrett, 155 N.C. App. 462, 468, 574 S.E.2d 76, 83 (2002)).\n\u201c[T]he judicial duty of passing upon the constitutionality of an act of the General Assembly is one of great gravity and delicacy.\u201d Guilford Cty. Bd. of Educ. v. Guilford Cty. Bd. of Elections, 110 N.C. App. 506, 511, 430 S.E.2d 681, 684 (1993) (citing Greensboro v. Wall, 247 N.C. 516, 101 S.E.2d 413 (1958)). Widen examining the constitutional propriety of legislation, \u201c[w]e presume that the statutes are constitutional, and resolve all doubts in favor of their constitutionality.\u201d State v. Evans, 73 N.C. App. 214, 217, 326 S.E.2d 303, 306 (1985) (citing In re Hous. Bonds, 307 N.C. 52, 296 S.E.2d 281 (1982); In re Banks, 295 N.C. 236, 244 S.E.2d 386 (1978)). \u201cIn challenging the constitutionality of a statute, the burden of proof is on the challenger, and the statute must be upheld unless its unconstitutionality clearly, positively, and unmistakably appears beyond a reasonable doubt or it cannot be upheld on any reasonable ground.\u201d Guilford Cty. Bd. of Educ., 110 N.C. App. at 511, 430 S.E.2d at 684-85 (citing Baker v. Martin, 330 N.C. 331, 410 S.E.2d 887 (1991); In re Belk, 107 N.C. App. 448, 420 S.E.2d 682, appeal dismissed and disc. review denied, 333 N.C. 168, 424 S.E.2d 905 (1992)).\nANALYSIS\nThe North Carolina Unclaimed Property Act provides the framework by which our State locates, collects, and \u201cassumes custody and responsibility for the safekeeping\u201d of \u201ctangible personal property\u201d which has gone unclaimed by its owner. N.C. Gen. Stat. \u00a7\u00a7 116B-63, 116B-52(11) (2003). Such property includes, but is not limited to, cash, checks, deposits, interest, dividends, credit balances, customers\u2019 overpayments, unpaid wages, stocks, bonds, amounts due under insurance policies, amounts distributable from trusts, and the contents of safe deposit boxes. N.C. Gen. Stat. \u00a7\u00a7 116B-52(11), 116B-55 (2003).\nProperty is unclaimed if the apparent owner has not communicated in writing or by other means reflected in a contemporaneous record prepared by or on behalf of the [property\u2019s] holder, with the holder concerning the property or the account in which the property is held, and has not otherwise indicated an interest in the property.\nN.C. Gen. Stat. \u00a7 116B-53(a) (2003); see also N.C. Gen. Stat. \u00a7 116B-52(5) (2003) (defining \u201cholder\u201d as \u201ca person obligated to hold for the account of or deliver or pay to the owner property[.]\u201d). Depending on the type of property at issue, the property is \u201cpresumed abandoned\u201d after a prescribed period of time, and the holder is then required to deliver the property to the State Treasurer. N.C. Gen. Stat. \u00a7\u00a7 116B-53(c), 116B-61(a) (2003). Within three years of receiving the property, the Treasurer is required to sell the property at a public sale and to deposit the proceeds into the State\u2019s Escheat Fund. N.C. Gen. Stat. \u00a7 116B-65 (2003). The income derived from the investment of funds deposited into the Escheat Fund is distributed annually \u201cto the State Education Assistance Authority for grants and loans to aid worthy and needy students who are residents of this State and are enrolled in public institutions of higher education in this State.\u201d N.C. Gen. Stat. \u00a7 116B-7(a) (2003).\nAt any time after unclaimed property is delivered to the Treasurer, a holder or owner may subsequently reclaim the property, or the amount received by the Treasurer from the sale of the property, by filing a claim with the Treasurer. N.C. Gen. Stat. \u00a7\u00a7 116B-63, 116B-67 (2003).\nIf property other than money is delivered to the Treasurer under this Chapter, the owner is entitled to receive from the Treasurer any income or gain realized or accruing on the property at or before liquidation or conversion of the property into money. If the property is interest-bearing or pays dividends, the interest or dividends shall be paid until the date on which the amount of the deposits, accounts, or funds, or the shares must be remitted or delivered to the Treasurer under G.S. 116B-61. Otherwise, when property is delivered or paid to the Treasurer, the Treasurer shall hold the property without liability for income or gain.\nN.C. Gen. Stat. \u00a7 116B-64 (2003) (emphasis added). The dispositive issue on appeal is whether this directive \u2014 that the Treasurer, when returning property to its owner after a claim is made, shall not surrender income the State earned on the property or its proceeds \u2014 is unconstitutional. Citing the common law rule that \u201cinterest follows principal,\u201d Plaintiffs contend that because the State is a \u201cmere custodian\u201d of unclaimed property, Rose\u2019s Stores, Inc. v. Boyles, 106 N.C. App. 263, 265, 416 S.E.2d 200, 201, disc. review allowed, 332 N.C. 484, 421 S.E.2d 356 (1992), the State\u2019s retention of earned interest is an unconstitutional taking.\nWe are not aware of any decisions of the United States or North Carolina Supreme Courts which squarely address the issue presented. Plaintiffs, however, present authority from those Courts which they contend supports their position that the State\u2019s action in this case violates the constitutional guarantees.\nIn Webb\u2019s Fabulous Pharmacies, Inc. v. Beckwith, 449 U.S. 155, 66 L. Ed. 2d 358 (1980), Eckerd\u2019s of College Park, Inc. (\u201cEckerd\u2019s\u201d) entered into an agreement to purchase substantially all of Webb\u2019s assets. When it appeared at closing that Webb\u2019s debts were greater than the purchase price, Eckerd\u2019s filed a complaint of interpleader in a Florida Circuit Court to protect itself, as permitted by Florida law. Pursuant to Florida law, the Circuit Court ordered the amount tendered at closing paid to the court\u2019s clerk, who was required to deposit the money in an interest bearing account. When the tendered amount was eventually ordered paid to Webb\u2019s receiver, the clerk did not surrender the interest which had accrued on the account because a Florida statute dictated that all accruing interest was deemed income of the clerk. The Florida Supreme Court held this statute was constitutional and that the clerk\u2019s retention of the interest was not a taking because: (1) the deposited funds were considered \u201cpublic money\u201d from the date of deposit until the funds left the account; (2) the statute \u201ctakes only what it creates\u201d; and (3) the interest earned on the account was not private property. Beckwith v. Webb\u2019s Fabulous Pharmacies, Inc., 374 So. 2d 951, 952-53 (Fla. 1979).\nThe United States Supreme Court reversed, holding that the statute violated the Fifth and Fourteenth Amendments. While the Court acknowledged that it \u201chas been permissive in upholding governmental action that may deny the property owner of some beneficial use of his property or that may restrict the owner\u2019s full exploitation of the property, if such public action is justified as promoting the general welfare[,]\u201d Webb\u2019s, 449 U.S. at 163, 66 L. Ed. 2d at 366 (citing Andrus v. Allard, 444 U.S. 51, 64-68, 62 L. Ed. 2d 210 (1979); Penn Central, 438 U.S. at 125-29, 57 L. Ed. 2d 631), the Court held\na State, by ipse dixit, may not transform private property into public property without compensation, even for the limited duration of the deposit in court. This is the very kind of thing that the Taking Clause of the Fifth Amendment was meant to prevent. That Clause stands as a shield against the arbitrary use of governmental power.\nId. at 164, 66 L. Ed. 2d at 367.\nThe facts of Webb\u2019s are easily distinguishable from the facts of the case at bar and Plaintiff\u2019s reliance on Webb\u2019s is misplaced. The nature of the property at issue in Webb\u2019s is quite distinct from the property at issue in this case. In that case, the property was paid into court by a known entity and was due to Webb\u2019s known creditors. In the case at bar, the property at issue was unclaimed and presumed abandoned. Furthermore, the Supreme Court specifically limited its holding to the \u201cnarrow circumstances\u201d of that case and \u201cexpress[ed] no view as to the constitutionality of a statute that prescribes a county\u2019s retention of interest earned, where the interest would be the only return to the county for services it renders.\u201d Id. Webb\u2019s does not control the resolution of this case.\nIn Phillips v. Washington Legal Found., 524 U.S. 156, 141 L. Ed. 2d 174 (1998) and Brown v. Legal Found. of Washington, 538 U.S. 216, 155 L. Ed. 2d 376 (2003), the Supreme Court evaluated the constitutionality of two states\u2019 use of interest earned on the property of private individuals being held in attorneys\u2019 trust accounts (\u201cIOLTA\u201d accounts) to fund legal services for low income individuals. In Phillips, the Supreme Court acknowledged \u201cthe general rale that \u2018any interest... follows the principal.\u2019 \u201d Phillips, 524 U.S. at 166, 141 L. Ed. 2d at 185 (quoting Webb\u2019s, 449 U.S. at 162, 66 L. Ed. 2d at 365). The Court then held that \u201cinterest income generated by funds held in IOLTA accounts is the \u2018private property\u2019 of the owner of the principal.\u201d Id. at 172, 141 L. Ed. 2d at 188. However, the Court expressed \u201cno view as to whether these funds have been \u2018taken\u2019 by the State[.]\u201d Id.\nIn Brown, the Court addressed the question left unresolved by Phillips. Citing Phillips, the Court again recognized an owner\u2019s property interest in accrued earnings of IOLTA accounts. The Court further held that the appropriation of those earnings by the state constituted a \u201ctaking\u201d and triggered the protections of the Fifth Amendment. Finally, however, the Court reasoned that \u201cpecuniary compensation must be measured by [an owner\u2019s] net losses rather than the value of the public\u2019s gain,\u201d Brown, 538 U.S. at 237, 155 L. Ed. 2d at 395, and that since funds deposited into IOLTA accounts would otherwise not earn any interest, the owners of the funds had not suffered any compensable loss. The Court held that because \u201cthe owner\u2019s pecuniary loss ... is zero . . . there has been no violation of the Just Compensation Clause of the Fifth Amendment in this case.\u201d Id. at 240, 155 L. Ed. 2d at 397.\nAs with Webb\u2019s, neither Phillips nor Brown leads us inevitably to the conclusion that the State\u2019s action in the case at bar is unconstitutional. We again emphasize the unique nature of the property at issue in this case as compared to the property at issue in Phillips and Brown. Both of those cases dealt with property that unquestionably belonged to identified owners. Here, we are dealing with property that is presumed abandoned until a holder or owner makes a claim to the Treasurer. The holdings of Phillips and Brown are, thus, distinguishable.\nFinally, Plaintiffs direct our attention to the North Carolina Supreme Court\u2019s decision in McMillan v. Robeson Cty., 262 N.C. 413, 137 S.E.2d 105 (1964). In that case, the Court evaluated a statute that permitted county clerks of court \u201cto invest or reinvest any moneys representing unclaimed court costs, fees received, and judgment payments and all moneys received and held by him by color of his officef.]\u201d Id. at 415, 137 S.E.2d at 107. The statute provided further that \u201c[t]he interest and revenues received upon such securities and any profit from the sale thereof shall be deposited in and become a part of the general fund of the county[.]\u201d Id. When the Robeson County Board of Commissioners instructed the County\u2019s clerk to deposit into the County\u2019s general fund the interest which had accumulated on such invested funds, the clerk sought a declaratory judgment to determine the constitutionality of the statute. The trial court held the statute valid and directed the clerk to deposit the accumulated interest into the general fund. The Supreme Court reversed, stating that \u201cearnings on the fund are a mere incident of ownership of the fund itself[,]\u201d and \u201c[t]he constitutional provision . . . that no person shall be deprived of his property \u2018but by the law of the land,\u2019 applies to the earnings in the same manner, and with the same force, it applies to the principal.\u201d Id. at 417, 137 S.E.2d at 108. Noting that no one with an interest in the funds had been afforded an opportunity to challenge the right of the County to take the earnings on the funds, the Court remanded the case to the trial court for compliance with the statutory mandate that \u201c \u2018[w]hen declaratory relief is sought, all persons shall be made parties who have, or claim, any interest which would be affected by the declaration, and no declaration shall prejudice the rights of persons not parties to the proceedings.\u2019 G.S. s 1-260.\u201d Id. at 418, 137 S.E.2d at 109.\nWhile the Court in McMillan reaffirmed the long-standing common law rule that \u201cinterest follows principal,\u201d the Court\u2019s ruling did not address or rely on the constitutional provisions at issue in the case at bar. The Court merely remanded the action to the trial court so that all interested parties could fully develop their claims.\nPlaintiff\u2019s contention to the contrary notwithstanding, we find guidance in the United States Supreme Court\u2019s decision in Texaco, Inc. v. Short, 454 U.S. 516, 70 L. Ed. 2d 738 (1982). In that case, the Court reviewed the constitutionality of Indiana\u2019s Mineral Lapse Act. That statute provided that \u201ca severed mineral interest that is not used for a period of 20 years automatically lapses and reverts to the current surface owner of the property, unless the mineral owner files a statement of claim in the local county recorder\u2019s office.\u201d Id. at 518, 70 L. Ed. 2d at 744. When the owners of severed mineral interests did not use the interests for twenty years and did not file a statement of claim, the surface owner of the tract brought an action seeking declaratory judgment that the mineral owners\u2019 rights had lapsed and were extinguished. The Indiana Supreme Court held that the statute was constitutional as a permissible exercise of the state\u2019s police power.\nThe United States Supreme Court affirmed, stating, \u201c[f]rom an early time, this Court has recognized that States have the power to permit unused or abandoned interests in property to revert to another after the passage of time.\u201d Id. at 526, 70 L. Ed. 2d at 749 (emphasis added). The Supreme Court \u201chas never required the State to compensate the owner for the consequences of his own neglect. ... It is the owner\u2019s failure to make any use of the property \u2014 and not the action of the State \u2014 that causes the lapse of the property right; there is no \u2018taking\u2019 that requires compensation.\u201d Id. at 530, 70 L. Ed. 2d at 751-52. The courts of several other states have cited Texaco in upholding the constitutionality of their states\u2019 unclaimed property acts.\nIn Smolow v. Hafer, 867 A.2d 767 (Pa. Commw. Ct. 2005), the Commonwealth Court of Pennsylvania examined Pennsylvania\u2019s Unclaimed Property Law when a suit was brought against the state for refusing to remit interest accrued on unclaimed property while it was in the state\u2019s possession. As with North Carolina\u2019s Act, Pennsylvania\u2019s Unclaimed Property Law provided that unclaimed property is presumed abandoned. Pennsylvania\u2019s statute further provided that upon a claim made by an owner, the state was required to return the property or the proceeds therefrom, but was not required to remit any interest earned on the property or its proceeds to the owner. Relying on Texaco, the Pennsylvania court determined that it was \u201cSmolow\u2019s abandonment of his property, not the action of the Treasurer, which caused his pecuniary loss.\u201d Id. at 775. Therefore, the court held that \u201cwhere an owner\u2019s interest in property is transferred to another pursuant to the Unclaimed Property Law and due to the original owner\u2019s abandonment, the delivery of the property to the Treasurer does not constitute a taking.\u201d Id.\nIn Smyth v. Carter, 845 N.E.2d 219 (Ind. Ct. App.), transfer denied, 860 N.E.2d 588 (Ind. 2006), cert. denied, 549 U.S. 1181, 166 L. Ed. 2d 996 (2007), the Indiana Court of Appeals determined that the refusal of the state to remit interest earned on property held pursuant to Indiana\u2019s Unclaimed Property Act did not violate the Taking Clause. Like Pennsylvania\u2019s and North Carolina\u2019s unclaimed property statutes, Indiana\u2019s law provided that the state may take custody of unclaimed property that is \u201cpresumed abandoned if the owner has not shown any interest in the property for a statutorily prescribed period of time.\u201d Id. at 222 (citation omitted). As in the case sub judice, the plaintiff in Smyth premised his \u201ccontention ... on his belief that the State\u2019s possession of property ... is \u2018purely\u2019 custodi\u00e1is]\u201d and on \u201cthe common law maxim that \u2018interest follows principal.\u2019 \u201d Id. at 223. Relying on Texaco, the Indiana court rejected Plaintiff\u2019s argument and held that \u201c[b]ecause it is the owner\u2019s failure to act, and not the State\u2019s exercise of its sovereign power, that causes the deprivation, there is no \u2018taking\u2019 that requires compensation.\u201d Id. at 224.\nIn Hooks v. Kennedy, 961 So. 2d 425 (La. Ct. App.), cert. denied, 967 So. 2d 507 (La. 2007), the Louisiana Court of Appeal upheld the constitutionality of that state\u2019s unclaimed property act. Like North Carolina\u2019s Act, Louisiana\u2019s law provided\na custodial scheme for handling certain types of abandoned property, rather than one in which the title to the abandoned property reverts to the sovereign. Under Louisiana law, after a specified passage of time, holders of property abandoned by missing owners must report the possession of the abandoned property and relinquish custody to the state. Upon transfer from the holder, the state assumes custody and responsibility for the safekeeping of the property.\nId. at 430-31 (quotation marks, footnote, and citations omitted). \u201c \u2018Pending a claim by a missing owner, the [s]tate receives the use of the property as well as any income that it may provide.\u2019 \u201d Id. at 431 (quoting Louisiana Health Servs. & Indem. Co. v. McNamara, 561 So. 2d 712, 716 (La. 1990)). In holding that the state\u2019s capture of interest under Louisiana\u2019s unclaimed property law did not violate the Taking Clause, the Louisiana Court of Appeal recognized that\n[t]he triggering event in the exercise of the state\u2019s power of eminent domain is the state\u2019s overt act of taking private property from an owner. The triggering event in an unclaimed property case is the owner\u2019s act of abandonment over a period of several years. After abandonment, the unclaimed property law requires the holder of the abandoned property to transfer \u201ccustody,\u201d not title, to the state.\nId. at 432 (citations omitted). Like the Supreme Court in Texaco, and the appellate courts of Indiana and Pennsylvania, the Louisiana court recognized that there can be no actionable taking when it is the neglect of the property owner that causes the state to assume custody of the property, and not an overt action on the part of the state to take private property from an owner.\nFinally, in Sogg v. Ohio Dep\u2019t of Commerce, No. 06AP-883, 2007 WL 1821306 (Ohio Ct. App. 2007), appeal allowed, 876 N.E.2d 968 (Ohio Nov. 21, 2007), the Court of Appeals of Ohio distinguished Webb\u2019s, Phillips, and Brown on the basis of the \u201cunique nature\u201d of the property at issue in unclaimed property cases. Id. at *10. The court stated that although \u201ctitle to unclaimed funds remains with the owner, there is unquestionably a property lapse that occurs because of the owner\u2019s failure to act with respect to said property within a statutorily prescribed period of time.\u201d Id. at *5 (emphasis added). The court continued:\nBecause of the unique nature of the property, the state\u2019s retention of the interest earned on unclaimed funds while those funds are in the custody and control of the state, due to the owner\u2019s failure to take any action with respect to the property for the statutorily prescribed period of time, does not constitute a taking that requires compensation. It is the owner\u2019s conduct, and not that of the state that causes the lapse of the property right.\nId. at *10.\nBased on a thorough review of the authority discussed above, we are persuaded by the United States Supreme Court\u2019s reasoning in Texaco to conclude that the State\u2019s retention of interest earned on unclaimed property while that property is in the State\u2019s possession is not a taking and, therefore, does not violate the United States or North Carolina Constitutions. In reaching this result, we do not conclude that Texaco, as a matter of law, bars Plaintiffs\u2019 claim. We are cognizant that the statute at issue in that case had the effect of transferring private property rights not to a state, but to another private party. Rather, we rely on the underlying reasoning of that Court\u2019s holding: \u201c[T]his Court has never required the State to compensate the owner for consequences of his own neglect. ... It is the owner\u2019s failure to make any use of the property \u2014 and not the action of the State \u2014 that causes the lapse of the property right; there is no \u2018taking\u2019 that requires compensation.\u201d Texaco, 454 U.S. at 530, 70 L. Ed. 2d at 751-52. Here, the State does not take possession of private property through any overt action on its part. Rather, the State comes into possession of the property as a result of the owner\u2019s neglect which causes the property to be unclaimed for the prescribed period of time, and thus deemed abandoned. Due to this unique nature of the property, and since it is the owner\u2019s neglect that results in the State\u2019s possession of the property, the capture of interest accruing on that property by the State is not a taking, and the State is not required to pay the owner \u201cjust compensation.\u201d'\nPlaintiffs have not met their burden of showing \u201cclearly, positively, and unmistakably . . . beyond a reasonable doubt\u201d that section 116B-64 is violative of either the United States or the North Carolina Constitutions. Guilford Cty. Bd. of Educ., 110 N.C. App. at 511, 430 S.E.2d at 684. Accordingly, the trial court properly granted Defendants\u2019 motion to dismiss pursuant to Rule 12(b)(6). Because the constitutional issue ultimately resolves the matter in Defendants\u2019 favor, we need not address Plaintiffs\u2019 remaining assignments of error. The order of the trial court is\nAFFIRMED.\nChief Judge MARTIN and Judge ELMORE concur.\n. This guarantee has been applied to the states by the Fourteenth Amendment to the United States Constitution. Chicago, B. & Q. R. Co. v. Chicago, 166 U.S. 226, 41 L. Ed. 979 (1897); Penn Cent. Transp. Co. v. New York City, 438 U.S. 104, 57 L. Ed. 2d 631, reh\u2019g denied, 439 U.S. 883, 58 L. Ed. 2d 198 (1978).\n. The complaint was originally filed in Guilford County, but was transferred to Wake County by consent.\n. The interest which had accrued totaled more than $100,000.\n. The clerk also retained a statutorily prescribed fee for services rendered in receiving the money.\n. The Court specifically listed the narrow circumstances of that case:\n[W]here there is a separate and distinct state statute authorizing a clerk\u2019s fee \u201cfor services rendered\u201d based upon the amount of principal deposited; where the deposited fund itself concededly is private; and where the deposit in the court\u2019s registry is required by state statute in order for the depositor to avail itself of statutory protection from claims of creditors and others[.]\nWebb\u2019s, 449 U.S. at 164, 66 L. Ed. 2d at 367.", "type": "majority", "author": "STEPHENS, Judge." } ], "attorneys": [ "Futterman Howard Watkins Wylie & Ashley, Chtd., by John R. Wylie, pro hac vice, for Plaintiffs-Appellants.", "Attorney General Roy Cooper, by Special Deputy Attorney General Douglas A. Johnston, for the State." ], "corrections": "", "head_matter": "KEVIN PATRICK ROWLETTE, JANITH MARTIN, MARCHELLA THOMAS and WANDA ADAMS, individually and on behalf of a class of all others similarly situated, Plaintiffs v. STATE OF NORTH CAROLINA, and RICHARD H. MOORE, in his official capacity as the Treasurer for the State of North Carolina, Defendants\nNo. COA06-1036\n(Filed 19 February 2008)\nConstitutional Law\u2014 takings \u2014 interest on unclaimed property\nThe trial court correctly granted defendant\u2019s Rule 12(b)(6) motion to dismiss an action alleging an unconstitutional taking by the State retaining the interest from unclaimed funds after they were returned to the owners. This property is unique in that the State did not take possession through its own action, but as a result of the owner\u2019s neglect. The capture of interest on the property is not a taking.\nAppeal by Plaintiffs from order entered 8 June 2006 by Judge Robert H. Hobgood in Wake County Superior Court. Heard in the Court of Appeals 15 March 2007.\nFutterman Howard Watkins Wylie & Ashley, Chtd., by John R. Wylie, pro hac vice, for Plaintiffs-Appellants.\nAttorney General Roy Cooper, by Special Deputy Attorney General Douglas A. Johnston, for the State." }, "file_name": "0712-01", "first_page_order": 742, "last_page_order": 753 }