The latest salvo in an ongoing battle against Delaware was fired on June 9, when 21 states, led by Texas and Arkansas, filed a motion in the U.S. Supreme Court to force Delaware to return to the States between $150 million and $400 million that Delaware had allegedly wrongfully claimed as abandoned property.1
The States claim that Delaware directed MoneyGram Payment Systems, Inc.—a holder under audit—to remit the value of unclaimed MoneyGram’s Official Checks (Official Checks) to Delaware, MoneyGram’s state of incorporation, rather than to the state where the Official Checks were issued. MoneyGram had remitted unclaimed Official Checks to Delaware based on the second priority rule, which applies if the owner’s address—the first priority rule set by the U.S. Supreme Court in Texas v. New Jersey, 379 U.S. 674 (1965)—is unknown. The States claim that under the Abandoned Money Orders and Traveler’s Checks Act, 12 U.S.C. §§ 2501-2503 (Disposition Act), the state where the Official Check was purchased has priority over the holder’s state of incorporation. Though the Disposition Act does not define “other similar written instruments,” the States maintain that its meaning is “informed by the company it keeps and legislative history,” and that the Official Checks are property covered by the Disposition Act.2 The Disposition Act was enacted to reverse the U.S. Supreme Court’s decision in Pennsylvania v. New York, 407 U.S. 206 (1972), for certain types of property, namely money orders, traveler’s checks and similar written instruments. In Pennsylvania v. New York, the Court rejected Pennsylvania’s bid to apply the place of purchase (the second priority rule) in lieu of the state of incorporation of the holder of the unclaimed property. The States seek not only a declaration of rights with respect to the Official Checks, but also pre- and post-judgment interest and attorneys’ fees from Delaware.
The States’ June 9 filing follows on the heels of Delaware’s May 26 motion, also filed in the U.S. Supreme Court, against Pennsylvania and Wisconsin, which claims that the Official Checks are not covered by the Disposition Act since they are not money orders, traveler’s checks or “other similar written instruments.”3
Delaware’s motion was triggered by cases filed in federal district courts by Pennsylvania on February 26 seeking a return of $10.3 million in property from 2000 through 2009, and by Wisconsin on April 27 seeking $13 million from Delaware beginning in...
