Delaware v. Pennsylvania

Background

Delaware and several other States (including Pennsylvania, Wisconsin, and Arkansas) disputed who may take custody of abandoned prepaid financial instruments that MoneyGram sells through banks and retail locations. The products at issue are MoneyGram’s Agent Checks and Teller’s Checks. These instruments are prepaid written drafts used to send a specified amount of money to a named payee. MoneyGram does not, as a regular business practice, keep records of purchasers’ or payees’ addresses. Under the Court’s older common-law rules, that record gap meant abandoned proceeds normally went to the company’s State of incorporation, Delaware, which led other States to seek review under a federal statute called the Disposition of Abandoned Money Orders and Traveler’s Checks Act (FDA).

Reasoning

The central question was whether these Disputed Instruments fall within the FDA’s coverage of “money orders, traveler’s checks, or other similar written instruments (other than a third party bank check).” The Court concluded the instruments are sufficiently similar to money orders because they are prepaid instruments used to transmit money and they raise the same inequitable escheatment problem when the holder does not keep address records. The Court rejected arguments that the instruments should be excluded as “third party bank checks,” finding that the statute does not clearly define that phrase, that bank liability is not a sensible limiting principle, and that the legislative history shows the phrase was a minor clarification rather than a broad carve-out.

Real world impact

Because the FDA applies, abandoned proceeds of these MoneyGram products generally go to the State of purchase rather than automatically to Delaware. The case returns to the Special Master for further proceedings consistent with the Court’s ruling.