The language defines it this way.
Instance variables of object type default to being initialized to null.
Local variables of object type are not initialized by default and it’s a compile time error to access an undefined variable.
See section 4.12.5 for SE7 (same section still as of SE14)
http://docs.oracle.com/javase/specs/jls/se7/html/jls-4.html#jls-4.12.5