Delaware v. Pennsylvania
The Supreme Court unanimously ruled that a federal law, not old court-made rules, governs which states can claim the abandoned proceeds of certain prepaid MoneyGram financial instruments, directing the money to the states where instruments were purchased rather than to Delaware, where MoneyGram is incorporated.
The ruling could redirect hundreds of millions of dollars away from Delaware and to the many states whose residents actually bought the instruments at local banks.
How it got here: States challenged Delaware's claim to MoneyGram's abandoned funds by invoking the Supreme Court's original jurisdiction; the Court consolidated the cases and appointed a Special Master who issued two conflicting interim reports before the Court stepped in.
The Case in Depth
What happened
MoneyGram Payment Systems creates prepaid financial instruments called Agent Checks and Teller's Checks, which banks sell to customers. When these instruments go uncashed and are legally abandoned, multiple states compete to claim the money. Under old Supreme Court-made rules, the funds defaulted to Delaware — MoneyGram's state of incorporation — because MoneyGram does not keep records of who purchased the instruments. Other states argued that a federal law, the Disposition of Abandoned Money Orders and Traveler's Checks Act, should instead send those funds to the states where the instruments were originally bought.
The question before the Court
When prepaid financial instruments sold by banks go unclaimed and are legally abandoned, does a federal law require the money to go to the states where the instruments were purchased, or does the company's home state — where it's incorporated — get to keep the funds?
The Court's answer
Yes — the federal Disposition of Abandoned Money Orders and Traveler's Checks Act covers MoneyGram's Agent Checks and Teller's Checks. The Court concluded that both instruments are sufficiently similar to money orders to fall within the law: like money orders, they are prepaid instruments used to transmit a set amount of money to a named payee. Critically, MoneyGram also does not keep records of who bought them — the exact recordkeeping gap the law was designed to address — which meant that under the old common-law rules, all abandoned proceeds flowed inequitably to Delaware as MoneyGram's state of incorporation.
Delaware argued the instruments fit a special carve-out in the law for "third party bank checks." The Court rejected this, finding that term has no established legal or financial meaning and that neither Delaware's proposed definition nor the Special Master's bank-liability theory held up to scrutiny. Because the instruments are "similar" to money orders and are not "third party bank checks," their abandoned proceeds must go to the states where they were purchased, not to Delaware.
Curious how the Court got there? See the step-by-step legal reasoning →
Why it matters
States like Pennsylvania, Wisconsin, and Arkansas that host banks selling MoneyGram's prepaid instruments are now entitled to the abandoned proceeds of those instruments. Delaware, which had collected an estimated $250 million under the old rules between 2002 and 2017, loses that revenue stream going forward. The decision also clarifies how the federal abandoned-instrument law applies when companies holding the funds do not track who bought them.
What changes now
The case returns to the Special Master for the damages phase, where he will calculate how much each state is owed and for what period. Going forward, MoneyGram must apply the FDA's state-of-purchase rule to abandoned Agent Checks and Teller's Checks rather than sending their proceeds to Delaware. The broader merits dispute over which state law governs is now resolved; only the financial accounting remains open.
What this does not decide
The Court explicitly declined to decide whether the FDA covers cashier's checks, certified checks, or teller's checks issued by entities other than MoneyGram. It also did not define precisely what a "money order" is or whether the Disputed Instruments actually qualify as money orders — only that they are similar enough to fall within the FDA.
How the Court got there
The legal reasoning, step by step
- The Court started from the common-law baseline the Supreme Court itself established in Texas v. New Jersey (1965): when intangible property like a prepaid financial instrument is abandoned, the proceeds go first to the state of the creditor's last known address, and, if those records don't exist, to the company's state of incorporation. Because MoneyGram doesn't keep buyer or payee address records as a matter of normal business practice, the secondary rule kicked in almost every time, sending all abandoned proceeds to Delaware — a 'windfall' the Court had previously called unfair.
- Congress enacted the Disposition of Abandoned Money Orders and Traveler's Checks Act (FDA) to fix this inequity for certain instruments. Rather than force companies to keep better records, the FDA adopted a simpler rule: covered instruments' abandoned proceeds go to the state where the instrument was purchased. The question here was whether MoneyGram's Agent Checks and Teller's Checks are covered instruments.
- The FDA covers 'money orders, traveler's checks, or other similar written instruments (other than a third party bank check).' The Court held it did not need to decide whether the Disputed Instruments actually are money orders — it was enough that they are 'similar' to money orders. The Court defined similarity by looking at the FDA's text and the history of the problem Congress was solving, not in the abstract.
- The Court identified two key similarities between the Disputed Instruments and money orders. First, both are prepaid written instruments used to transmit a specified amount of money to a named payee — the ordinary, dictionary-era definition of a money order. Second, and equally important, both suffer the same inequitable escheatment problem the FDA targets: because the company holding the funds (MoneyGram) does not keep creditor address records as a matter of business practice, the old common-law secondary rule sends all abandoned proceeds to the state of incorporation — exactly the 'windfall' the FDA was enacted to prevent.
- Delaware argued the instruments are carved out of the FDA as 'third party bank checks.' The Court found this argument unpersuasive: the phrase has no accepted ordinary meaning in law or finance, Delaware's own expert disagreed with Delaware's proposed definition, and the Special Master's alternative theory — that bank liability on an instrument triggers the carve-out — was undercut by the fact that banks can also be liable on money orders, which are expressly covered by the FDA. The FDA's legislative history also showed the 'third party bank check' language was described as a minor technical clarification, not a sweeping exemption.
- The Court concluded that any prepaid written instrument used to transmit money to a named payee that would also escheat inequitably to a single state of incorporation under the common-law rules — due to the holding company's recordkeeping gaps — is sufficiently 'similar' to a money order to fall within the FDA. Because the Disputed Instruments meet both criteria and are not 'third party bank checks,' the FDA's state-of-purchase rule governs their escheatment.
Doctrinal impact
Cases affected by this decision
Distinguishes Texas v. New Jersey (379 U. S. 674)
The common-law escheatment rules from Texas v. New Jersey do not apply to these instruments because the FDA governs them instead.