Provident Institution for Savings v. Malone

Background

A savings bank challenged a Massachusetts law that applies when an account owner cannot be found. The Probate Court ordered long-unused savings turned over to the State treasurer after required notices. The bank argued that taking those deposits without the owner’s consent violated property rights and due process and that its internal rules should prevent the transfer.

Reasoning

The Court considered whether the statute unlawfully took property and whether the bank could raise the complaint. The Court explained the law applies only after very long inactivity—thirty years with no deposit, no interest entry, and no check—and only if no claimant is known and the depositor cannot be found. Probate Court proceedings, personal notice to the bank, and published notice are required before transfer. The funds are not permanently forfeited but are deposited with the treasurer to hold as trustee until an owner or legal representative proves a right. The Court rejected the bank’s claim that its by-laws could force a forever-held status and said a legal representative may be appointed at any time to protect the funds. The classification of savings accounts as more likely to be forgotten was reasonable.

Real world impact

The decision upholds the State’s process for taking custody of very old, inactive savings accounts while preserving owners’ and heirs’ ability to reclaim money. Banks will face court notice and publication steps before transfers occur. Owners or heirs can recover funds by proving their right in Probate Court.