NOTICE: This opinion is subject to
formal revision before publication in the preliminary print of the
United States Reports. Readers are requested to notify the Reporter
of Decisions, Supreme Court of the United States, Washington,
D. C. 20543, of any typographical or other formal errors, in
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SUPREME COURT OF THE UNITED STATES
_________________
Nos. 145, Orig. and 146, Orig.
_________________
DELAWARE, PLAINTIFF
145, Orig.
v.
PENNSYLVANIA AND WISCONSIN
ARKANSAS, et al., PLAINTIFFS
146, Orig.
v.
DELAWARE
on exceptions to reports of special master
[February 28, 2023]
Justice Jackson delivered the opinion of the
Court.[
1]*
“Escheatment” is the power of a State, as a
sovereign, to take custody of property deemed abandoned.
Texas v.
New Jersey,
379 U.S.
674, 675 (1965). In the context of tangible property, the
escheatment rule is straightforward: The State in which the
abandoned property is located has the power to take custody of it.
Id., at 677. But determining which State has the power to
escheat intangible property, which has no physical location, can be
complicated, as multiple States may have arguable claims. See
ibid.
These original jurisdiction cases require us to
decide which States have the power to escheat the proceeds of
certain abandoned financial products that MoneyGram Payment
Systems, Inc. (MoneyGram) possesses. Delaware argues that this
Court’s common-law rules of escheatment apply, which means that the
abandoned proceeds should go to Delaware as MoneyGram’s State of
incorporation. A collective of other States (the Defendant States)
argues that a federal statute—the Disposition of Abandoned Money
Orders and Traveler’s Checks Act (Federal Disposition Act or FDA),
88 Stat. 1525, 12 U. S. C. §2501
et seq.—governs
the products at issue, and therefore, as a general matter, the
abandoned proceeds should escheat to the State where the products
were purchased. We hold that the FDA covers the instruments in
question and thus that they should generally escheat to the State
of purchase, pursuant to §2503.
I
To decide which escheatment rules apply, we
must interpret a federal statute that abrogates our precedent.
Thus, we begin with a discussion of this Court’s common-law rules
for escheatment, followed by a description of the statute that
partially displaced those rules.
A
Our first case to address the escheatment of
intangible property involved Western Union money orders.
Western
Union Telegraph Co. v.
Pennsylvania,
368 U.S.
71, 72 (1961). At the time, if an individual wanted to safely
send money to another person, she could go to a Western Union
office and purchase a money order.
Ibid. Such a purchaser
would give Western Union the value of the money order plus a fee.
Ibid. Then, Western Union would send a telegraph message to
the company office closest to the intended recipient (or “intended
payee”).
Ibid. Upon notification, the intended payee could
come to his local Western Union office to collect a negotiable
draft, which he could cash immediately or keep to cash in the
future.
Ibid.
Sometimes, however, the prepaid draft was never
collected or cashed.
Id., at 72–73. At that point, Western
Union would endeavor to issue a refund to the purchaser.
Ibid. But if neither the purchaser nor the payee ever
collected the prepayment, Western Union would hold on to the funds
until they were deemed abandoned under state law, at which point
the property could become eligible for escheatment.
Ibid.;
see also
Pennsylvania v.
New York,
407 U.S.
206, 209 (1972).
Texas outlined the rules that this Court
established for determining which State has the right to take
custody of such abandoned property. 379 U. S., at 680–682.
That case involved various small debts held by Sun Oil Company, and
multiple States asserted the right to escheat the funds.
Id., at 675–676. To resolve the competing claims, we
established that, as the primary (default) rule, the proceeds of
abandoned financial products should escheat “to the State of the
creditor’s last known address as shown by the debtor’s books and
records.”
Id., at 680–681.[
2]
We further acknowledged that there would be
times in which that primary rule would not resolve the escheatment
question, either because the creditors’ addresses were unknown or
because the State that is entitled to escheatment under the primary
rule did not have a law empowering it to take custody of the
proceeds.
Id., at 682. So we also adopted a secondary rule
to apply in those circumstances; namely, that the proceeds should
escheat to the debtor’s State of incorporation.
Ibid.
These rules were designed, at least in part, to
distribute escheats equitably. We selected escheatment to the State
of the creditor’s last known address as the default principle
because it “tend[ed] to distribute escheats among the States in the
proportion of the commercial activities of their residents.”
Id., at 681. By contrast, escheatment to the State of
incorporation of the debtor (our secondary rule) “would too greatly
exhalt a minor factor”—
i.e., where the debtor chose to
incorporate—when the underlying “obligations [were] incurred all
over the country.”
Id., at 680. However, we believed the
secondary rule was likely to apply “with comparative infrequency.”
Id., at 682.
It soon became clear that our primary and
secondary escheatment rules were resulting in inequitable
distributions, at least with respect to particular instruments,
because Western Union largely did not keep records of the addresses
of the purchasers or payees of the money orders that the company
sold, as a matter of business practice.
Pennsylvania, 407
U. S., at 211–212, 214. The default rule thus rarely applied
in practice, such that proceeds from abandoned Western Union money
orders largely escheated to New York, Western Union’s State of
incorporation, pursuant to the secondary rule.
Id., at 212,
214.
Characterizing this “windfall” as unfair,
Pennsylvania filed an action that asked us to reconsider
Texas’s escheatment rules. 407 U. S., at 213–215.
Pennsylvania argued that the proceeds from an abandoned money order
should escheat to the State where the money order was purchased
rather than the State of the creditor’s last known address.
Id., at 212, 214. This proposal approximated our primary
rule under the commonsense assumption that a money order is usually
purchased in the State where the creditor lives, but it obviated
the need to require additional recordkeeping by the debtor. See
id., at 214. While we recognized that Pennsylvania’s
proposed escheatment rule had “some surface appeal,” we declined to
modify the primary and secondary rules established in
Texas,
noting that States could solve the problem of inequitable
escheatment by requiring Western Union to keep sufficient records.
407 U. S., at 214–215.
B
Congress passed the FDA two years after our
decision in
Pennsylvania to abrogate this Court’s common-law
escheatment practices and adopt a more equitable rule, at least for
some products. 12 U. S. C. §2501;
Delaware v.
New York,
507 U.S.
490, 510 (1993); S. Rep. No. 93–505, pp. 1–3 (1973).
In the text of the statute, Congress declared
that, “as a matter of equity among the several States,” the States
“wherein the purchasers of money orders and traveler’s checks
reside should . . . be entitled to the proceeds of such
instruments in the event of abandonment.” §2501(3). Yet, the
statute further recognized that such an equitable distribution was
not happening under the common-law rules, to the detriment of
interstate commerce, because “the books and records of banking and
financial organizations and business associations engaged in
issuing and selling money orders and traveler’s checks do not, as a
matter of business practice, show the last known addresses of
purchasers of such instruments.” §2501(1); see §2501(4).
Notably, instead of keeping our
Texas
default rule and mandating recordkeeping requirements for debtors,
as we had suggested in
Pennsylvania, the FDA addressed the
inequitable escheatment problem by establishing a different set of
escheatment rules that displaces this Court’s primary and secondary
escheatment rules whenever applicable. See §2503. It states that
“[w]here any sum is payable on a money order, traveler’s check, or
other similar written instrument (other than a third party bank
check) on which a banking or financial organization or a business
association is directly liable,” the primary escheatment rule is
the place-of-purchase rule that Pennsylvania had proposed in the
Pennsylvania case. §2503(1).
Thus, per the FDA, the proceeds of the listed
financial instruments escheat to the State of purchase upon
abandonment, so long as purchase-location information is known and
that State has enacted laws empowering it to take custody of those
proceeds.
Ibid.[
3] The
text of the FDA also explains why the inequitable escheatment
problem was handled in this fashion rather than by adopting a
recordkeeping requirement for debtors holding on to abandoned
funds. See §2501(5) (observing that “the cost of maintaining and
retrieving addresses of purchasers of money orders and traveler’s
checks is an additional burden on interstate commerce” that is
unnecessary “since it has been determined that most purchasers
reside in the State of purchase of such instruments”).
II
A
Although the telegraphic aspect of Western
Union’s money order business has fallen into disuse, money orders
are still sold today for the same purpose: to safely transmit funds
to an intended payee.[
4] Many
banks have outsourced the issuance and handling of these kinds of
prepaid financial instruments to businesses such as MoneyGram.
The parties have identified four MoneyGram
products as relevant to this litigation. MoneyGram calls these
financial instruments “Retail Money Orders,” “Agent Check Money
Orders,” “Agent Checks,” and “Teller’s Checks.” All of these
instruments are products that MoneyGram creates and markets but
that are sold to customers by another entity (either a retail
location or bank) on behalf of MoneyGram.
As a general matter, these four MoneyGram
products operate in the same manner. The purchaser prepays the face
value of the instrument, plus any fee, and MoneyGram holds the
proceeds (which have been sent to them by the seller entity) until
the intended payee presents the instrument for payment. In
addition, as a matter of business practice, MoneyGram keeps only
limited records about transactions concerning these products. The
seller entity transmits information to MoneyGram that identifies
where the product was sold, among other things, but the seller does
not include in the information given to MoneyGram the identity or
address of the purchaser or payee (even if the seller collects that
information).
The heart of the instant dispute relates to how
MoneyGram handles the abandoned proceeds of these products.
MoneyGram considers two of the four products—Retail Money Orders
and Agent Check Money Orders—as falling within the scope of the
FDA, so it gives the abandoned proceeds of those particular
instruments to the States of purchase in accordance with §2503. But
MoneyGram treats Agent Checks and Teller’s Checks (collectively,
the Disputed Instruments) as governed by the common law instead of
the FDA. Because MoneyGram does not keep records of creditor
addresses for these products, MoneyGram applies the secondary rule
of
Texas and gives the abandoned proceeds of those
particular instruments to its State of incorporation, Delaware.
B
After an audit of MoneyGram’s escheatment
policies, Pennsylvania and Wisconsin filed separate lawsuits
challenging Delaware’s escheatment of the abandoned proceeds of
Agent Checks and Teller’s Checks. Invoking this Court’s original
jurisdiction to decide controversies between States, Delaware moved
to file a bill of complaint against Pennsylvania and Wisconsin.
Arkansas, acting on behalf of itself and several other States,
filed a separate motion for leave to file a bill of complaint. We
consolidated the actions and appointed a Special Master.
The Special Master bifurcated the proceedings
into liability and damages phases. The first phase (to which the
current dispute pertains) focuses solely on which State or States
have priority to take custody of the proceeds from MoneyGram Agent
Checks and Teller’s Checks upon abandonment. At the second phase,
the Special Master will analyze any damages. The parties filed
cross-motions for summary judgment on the issue of liability.
In July 2021, the Special Master issued a First
Interim Report that concluded that the Disputed Instruments were
covered by the FDA. Delaware filed exceptions to that report. Then,
after we had considered the parties’ briefs and held oral argument,
the Special Master announced that our proceedings had caused him to
reassess his conclusions. He subsequently issued a Second Interim
Report that concluded that many of the Disputed Instruments were or
could be “third party bank checks” and would thereby be excluded
from the FDA, which means that, when abandoned, they would
generally escheat to Delaware under the common law. Both parties
submitted exceptions to the Special Master’s Second Interim
Report.
III
The parties are at odds over whether the
Disputed Instruments qualify as “money order[s]” or “other similar
written instrument[s] (other than a third party bank check)” within
the meaning of the FDA, §2503—a determination that, for present
purposes, establishes whether the FDA or the common law governs
their escheatment when abandoned. We conclude that the Disputed
Instruments are covered by the FDA because they are “other similar
written instrument[s],” and neither Delaware nor the Special Master
has convinced us that they are “third party bank check[s].”
Ibid.
A
Because the plain text of the FDA applies to
not only money orders and traveler’s checks but also written
instruments that are “similar” to those financial products,
ibid., we need not determine whether the Disputed
Instruments
are money orders; a finding that they are
similar to money orders is sufficient to bring them within
the reach of the statute (so long as they are not third party bank
checks).[
5] We determine what
“similar” entails in light of the FDA’s “text and context,”
Southwest Airlines Co. v.
Saxon, 596 U. S. ___,
___ (2022) (slip op., at 7), not in the abstract. And in these
particular cases, the Disputed Instruments share two relevant
similarities with money orders. Those instruments operate in the
same manner as money orders do (as defined by contemporaneous
dictionaries and our prior escheatment cases), and they also
implicate the one feature of money orders that the text of the FDA
explicitly identifies, insofar as the Disputed Instruments escheat
inequitably solely to one State under our common-law rules due to
the business practices of the company holding the funds.
First, the Disputed Instruments are similar to
money orders in function and operation. The FDA does not define a
“money order,” so the core features of that instrument are gleaned
from a consideration of the “ ‘ordinary, contemporary, common
meaning’ ” of the term.
Sandifer v.
United States
Steel Corp.,
571 U.S.
220, 227 (2014) (quoting
Perrin v.
United States,
444 U.S.
37, 42 (1979)). The parties cite a variety of contemporaneous
dictionary definitions and encyclopedia descriptions for the term,
and, at the most basic level, a money order is universally defined
as a prepaid (or “purchased”) financial instrument used to transmit
money to a named payee.[
6] Some
of the dictionaries further indicate that a money order involves a
“specified sum of money.” Webster’s Seventh New Collegiate
Dictionary 547 (1972); see also American Heritage Dictionary 847
(1969) (“a specified amount of money”).
These features—
i.e., prepayment of a
specified amount of money to be transmitted to a named
payee—generally accord with how we described the Western Union
money orders at issue in our prior escheatment cases. See
Pennsylvania, 407 U. S., at 208;
Western Union
Telegraph Co., 368 U. S., at 72. And the FDA was enacted
against the backdrop of the common law as set forth in those cases;
indeed, it abrogates the common-law escheatment rules that we
adopted in those cases. The statute is naturally read to reflect
the same basic conception of the term “money order” that we
addressed in those precedents.
The operation of the FDA further confirms the
relevance of the prepayment feature of a money order for the
purpose of assessing the similarity of the Disputed Instruments.
The FDA plainly regulates the escheatment of abandoned financial
products, and when financial instruments are prepaid, the
likelihood of their abandonment (and thus the potential for
escheatment) increases, as the holder of the proceeds of such
instruments has possession of the prepaid sums of money if the
instruments are never collected or presented for payment. See
Pennsylvania, 407 U. S., at 208. Thus, the FDA
naturally applies to prepaid instruments, such as money orders,
given that those instruments are of a type likely to implicate the
FDA’s escheatment rules. And Delaware does not dispute that, just
like money orders, the Disputed Instruments are prepaid written
financial instruments used to transmit money to intended
payees.
Second, the Disputed Instruments are similar to
the “money orders” that the FDA targets because they inequitably
escheat in the manner that the text of the FDA specifically
identifies as warranting statutory intervention. Just as with the
money orders in
Pennsylvania, the company holding the
proceeds of the Disputed Instruments (MoneyGram) does not keep
adequate records of creditor addresses as a matter of business
practice. And the FDA abrogates this Court’s escheatment precedents
on this very basis. See §§2501, 2503. Consequently, the inherent
characteristics of money orders are not the only relevant point of
similarity between money orders and the Disputed Instruments; in
addition, they both would otherwise escheat inequitably under the
secondary common-law rule due to the business practices of the
company holding the funds.
The context in which the FDA arises underscores
the meaningfulness of this similarity. Our common-law rules were
permitting inequitable escheatment (insofar as our primary rule
mistakenly relied on the assumption that the holders of such
instruments regularly collected creditors’ address information),
and the statute that Congress enacted in the wake of our
Pennsylvania ruling details the inequitable escheatment
problem. Thus, the FDA regulates “money orders” (however that term
is ordinarily defined) not just for the sake of regulating those
particular financial instruments, but because inequitable
escheatment occurs under our common-law rules if financial
instruments do not have address information that can facilitate
distribution to the State of entitlement when they are abandoned,
and the entities issuing and selling money orders often do not keep
adequate records. The lack of related creditor address information
was a key feature of the money orders that we evaluated when we
were asked to revisit our common-law escheatment rules in
Pennsylvania, 407 U. S., at 214. So it should come as
no surprise that it is likewise a key feature of the statute that
Congress enacted to displace our common-law rules.
The inadequate-recordkeeping feature of money
orders is also derived from the text of the FDA itself. The statute
references both our observation in
Texas that, “as a matter
of equity,” the proceeds of abandoned intangible property should be
spread “among the several States,” §2501(3), and
Pennsylvania’s subsequent recognition that “the proceeds of
such instruments are not being distributed to the States entitled
thereto,” §2501(4). The FDA explains that this inequity was
occurring
because “the books and records of banking and
financial organizations and business associations engaged in
issuing and selling money orders and traveler’s checks do not, as a
matter of business practice, show the last known addresses of
purchasers of such instruments.” §2501(1). The operative provision
of the statute (§2503) then adopts the precise alternative rule of
escheatment that Pennsylvania suggested in the face of inequitable
escheatment caused by a company’s business practices.
In short, the FDA’s text provides a solution for
the problem of the inequitable distribution of escheats, and that
solution expressly eschews requiring entities like Western Union to
keep adequate records. See §§2501(5), 2503. Inadequate
recordkeeping is thus highly relevant to the interpretive question
of when the FDA, rather than the common law, should apply to the
escheatment of the intangible property at issue.[
7]
It is uncontested that the Disputed Instruments
share the inadequate recordkeeping feature of money orders that the
FDA identifies. See §2501(1). Therefore, if the common law were to
apply to the Disputed Instruments, then the abandoned proceeds
would escheat inequitably solely to the State of incorporation,
just like the money orders expressly referenced in the
statute.[
8]
B
Delaware’s various arguments as to why the
Disputed Instruments should not qualify as “other similar written
instrument[s]” within the meaning of §2503 are unpersuasive.
First up in Delaware’s attempt to distinguish
the Disputed Instruments from money orders for FDA purposes is its
contention that the term “money order” in the FDA refers to a
specific commercial product that is labeled “money order” by the
seller and is generally sold in low values to low-income
individuals as a substitute for ordinary personal checks. Delaware
does not point to any dictionary that includes those additional
attributes in its definition of “money order,” nor do any of our
prior cases that describe Western Union money orders mention such
features. See
Pennsylvania, 407 U. S., at 208–209;
Western Union Telegraph Co., 368 U. S., at 72–73.
Moreover, while Delaware offers two encyclopedia entries that
suggest money orders are “especially helpful to persons who do not
have checking accounts,”[
9]
neither source says that the typical or intended user is, itself,
an attribute of a money order.
Delaware also tries to highlight various ways in
which the Disputed Instruments can be said to differ from money
orders, as Delaware describes them, including differences with
respect to face values and customer use. But Delaware never
explains why those purported differences are relevant to our
assessment of similarity for FDA purposes. Since money orders and
the Disputed Instruments are comparators that are not identical,
they are likely to be different in
some respect. The real
question is which differences and similarities matter. And none of
the differences Delaware identifies relates to the statutory text
or ordinary meaning of a money order, nor do they otherwise
undermine the analysis of similarity we outlined above.
Undaunted, Delaware attempts to make the
differences it identifies seem more material by proffering an
alternative vision of the FDA. In this regard, Delaware asserts
that the FDA was
really an effort to dissuade States from
adopting costly recordkeeping requirements, the costs of which
might then be passed along to low-income consumers. Its argument is
that, because the Disputed Instruments are, when compared to money
orders, generally larger-value instruments that are typically
purchased by consumers who can more easily absorb any additional
recordkeeping-related costs, those products simply do not implicate
the FDA’s core (cost-related) concerns and are thus not “similar”
to money orders.
But the text of the FDA bears no relationship to
Delaware’s cost argument. Indeed, the statute says absolutely
nothing about the rising costs of money orders for low-income
individuals. See §2501. “[T]he cost of maintaining and retrieving
addresses of purchasers of money orders and traveler’s checks” is
only mentioned to explain why a mandatory recordkeeping option
(which we had suggested in
Pennsylvania, 407 U. S., at
215) was not selected as the statutory solution to the inequitable
escheatment problem that the FDA plainly addresses. §2501(5).
Nor does it matter that there would be no
inequitable escheatment with respect to the Disputed Instruments if
MoneyGram did not factor into the equation, as Delaware maintains.
In this regard, Delaware argues that the Disputed Instruments do
not implicate the concerns underlying the FDA because the banks
that sell the Disputed Instruments generally
do keep
adequate records, and therefore States can avoid the escheatment
problem by passing laws requiring those banks to transmit their
records to MoneyGram and requiring MoneyGram to keep those records.
But the FDA regulates escheatment, so it is the recordkeeping
practices of the entity holding the funds that is relevant. Here,
that entity is MoneyGram, not the banks. MoneyGram has the
recordkeeping practices identified as warranting intervention
through the FDA, see §2501(1), and the statute contains a solution
to the escheatment problem that MoneyGram’s ordinary business
practices cause, see §2503.
Finally, Delaware suggests that §2503
must be read narrowly in order to avoid both creating
surplusage and sweeping in all sorts of financial products that
Congress did not intend to cover. This goes too far. Although
Delaware argues, with some merit, that broadly defining a “money
order” as a prepaid instrument used to transmit money to a named
payee would render the statute’s separate references to “traveler’s
checks” and “other similar written instruments” superfluous, we
need not define “money order” in order to conclude that the FDA
applies to the Disputed Instruments, since it suffices that the
instruments in question be “similar” to a money order; they need
not share its definition. And if “other similar written instrument”
is interpreted with reference to both the inherent qualities of a
money order and also the recordkeeping concern that the FDA
expressly identifies in the text, as discussed above, then the
scope of the statute is properly cabined.[
10]
IV
Delaware argues that even if the Disputed
Instruments qualify as “other similar written instrument[s]” within
the meaning of §2503 they are also “third party bank check[s]” and,
as such, are expressly excluded from the FDA.[
11] The Special Master, too, ultimately adopted
a version of this argument; in his view, the “third party bank
check” exemption applies to any Disputed Instrument on which a bank
is liable (in addition to MoneyGram).[
12] Neither Delaware nor the Special Master has provided
a persuasive reason for concluding that the Disputed Instruments
are “third party bank check[s]” within the meaning of the FDA, and
the drafting history of the statute further confirms that the sweep
of that language is not as broad as the definitions that Delaware
and the Special Master have offered. Therefore, as explained below,
we do not accept the contention that the Disputed Instruments are
carved out of the statute per the “third party bank check”
language.
A
First, however, a caveat: We readily admit
that discerning the meaning of “third party bank check” in §2503 is
tricky, because the FDA does not define that phrase, and, as far as
we can tell, it does not have an “ordinary, contemporary, common
meaning.”
Sandifer, 571 U. S., at 227. The parties have
not pointed to any contemporary legal or financial source that
defines that precise term. And the FDA’s “third party bank check”
language confounded all three experts retained in these cases, each
of whom agreed that it has no traditional meaning in either the
legal or the financial realms. Notably, the Special Master
valiantly attempted to bring clarity to this term, adopting three
different definitions of “third party bank check” over the course
of this litigation. Ultimately, between the parties and the Special
Master, we have been offered at least six disparate definitions of
the term.[
13]
In the midst of this uncertainty, Delaware
insists that the term “third party bank check” means a check signed
by a bank officer and paid through a third party. Not surprisingly,
that definition fits the Disputed Instruments like a glove, given
that they are signed by bank employees and then ultimately paid
through MoneyGram, a nonbank third party, when presented. But
Delaware provides no support whatsoever for the conclusion that
this is what “third party bank check” means in the FDA context.
And, indeed, Delaware’s own expert disagreed with that definition
for FDA purposes. Delaware also has no theory as to why it matters
to the escheatment rules that the statute adopts whether a
financial instrument is or is not paid through a third party like
MoneyGram. Thus, we are hard pressed to agree that “third party
bank check” means what Delaware says.
The Special Master’s analysis fares no better.
In his Second Interim Report, the Special Master offered a
potential definition of “third party bank check” that relies on the
view that the phrase was intended to exclude from the FDA’s reach
certain financial instruments that were well known at the time of
the statute’s enactment but were not expressly mentioned in the
statute—specifically, cashier’s checks, certified checks, and
teller’s checks. According to the Special Master, a significant
feature of those particular financial instruments at the time of
the FDA’s enactment was that a bank was liable on those
instruments. Therefore, according to the Special Master, insofar as
a bank is directly liable on some of the Disputed Instruments (in
addition to MoneyGram), any such MoneyGram product is a “bank
check” that should be deemed to fall within the “third party bank
check” exception for purposes of the FDA.
We detect multiple problems with the Special
Master’s reasoning. For one, the Special Master did not explain why
the statute uses the amorphous phrase “third party bank check” to
capture specific financial instruments that, according to the
Special Master, were well known at the time of the enactment of the
statute. Congress called out other well-known instruments—money
orders and traveler’s checks—by their names in the text of the FDA.
One would reasonably expect it to have done the same for cashier’s
checks, certified checks, and teller’s checks.[
14]
The Special Master also failed to provide an
adequate explanation for why bank liability relates in any
meaningful way to the escheatment rules that the FDA adopts. That
explanation seems crucial because the parties appear to agree that
banks can be liable on money orders themselves, and, as previously
explained, far from being excluded, money orders are expressly
covered items in this statute. This incongruity makes it hard to
conceive of the bank-liability attribute as the tipping point for
whether a financial instrument qualifies as a “third party bank
check” for FDA purposes. Similarly, if we were to agree with the
Special Master that bank liability is dispositive of a “third party
bank check” designation, then presumably
any draft on which
a bank is liable would fall outside of the FDA—a result that reads
the term “third party” out of the statute.
The Special Master’s reasoning further fails to
account for the nature of the Disputed Instruments, which do not
appear to qualify as “bank checks,” at least not in the traditional
sense of that word. According to the parties, a “bank check” is a
check “drawn” on a bank’s own account or
by a bank and
on a bank (either the same bank or another).[
15] That does not describe the Disputed
Instruments, which are drawn on MoneyGram’s account, not a bank’s
account.
Consequently, nothing in the reasoning provided
by Delaware or the Special Master persuades us that the Disputed
Instruments, which are otherwise “similar” to money orders for FDA
purposes, should be deemed “third party bank checks” within the
meaning of §2503.
B
Nor does the legislative history support
Delaware’s contention that the Disputed Instruments constitute
“third party bank checks.” “Those of us who make use of legislative
history believe that clear evidence of congressional intent may
illuminate ambiguous text.”
Milner v.
Department of
Navy,
562 U.S.
562, 572 (2011). In the instant situation, while the meaning of
the phrase “third party bank check” is subject to myriad
alternative definitions and is generally unknown, the phrase was
inserted into §2503 under well-documented circumstances. And those
circumstances further support the conclusion that, whatever “third
party bank check” is meant to mean, the Disputed Instruments are
not exempted from the FDA under that provision, as Delaware
maintains.
Specifically, during the time in which Congress
was mulling a draft of the FDA’s provisions, it solicited the views
of the Treasury Department, and the agency’s general counsel
responded. He wrote a letter stating that, although he did not
object to the adoption of the bill’s escheatment rules, he
“believe[d] the language of the bill [was] broader than intended by
the drafters.” S. Rep. No. 93–505, at 5 (Letter from Edward C.
Schmults). According to the letter, agency counsel was concerned,
in particular, that the phrase “ ‘money order, traveler’s
check, or similar written instrument on which a bank or financial
organization or business association is directly liable’ ”
could be interpreted to cover “ ‘third party payment bank
checks.’ ”
Ibid. Thus, he recommended excluding “third
party payment bank checks” from the FDA,
ibid., and Congress
subsequently adopted this recommendation, dropping the suggested
word “payment” in the process,
id., at 6; see also
§2503.
Reliable sources indicate that the “third party
bank check” language was not supposed to be a significant addition.
The Senate Report described it as a mere “technical” alteration.
Id., at 6; see also 120 Cong. Rec. 4528 (1974) (statement of
Com. Chairman Sen. Sparkman referring to the insertion of the
language as a “minor” change). Thus, that statutory phrase is
reasonably viewed as merely clarifying the intended initial scope
of coverage (
i.e., as an effort to better demarcate the
boundaries of a statute that regulates escheatment of “money
order[s], traveler’s check[s], [and] other similar written
instrument[s],” §2503), rather than as an express exemption that
accepts that items of this nature would otherwise qualify for
regulation under the terms of the statute and specifically
undertakes to carve them out.
In any event, given the history and text of the
FDA, it would be strange to interpret the “third party bank check”
language to exempt from the statute entire swaths of prepaid
financial instruments that are otherwise similar to money orders in
that they operate in generally the same fashion and would likewise
escheat inequitably pursuant to the common law due to the business
practices of the company holding the funds. At the very least,
reading the exemption that broadly would imbue “third party bank
check” with a meaning that far surpasses a “technical” change. And
it would also risk rendering largely ineffectual the FDA’s
framework for displacement of the common law, as necessary, to
ensure equitable escheatment.
* * *
When a financial product operates like a money
order—
i.e., when it is a prepaid written instrument used to
transmit money to a named payee—and when it would also escheat
inequitably solely to the State of incorporation of the company
holding the funds under our common-law rules due to recordkeeping
gaps, then it is sufficiently “similar” to a money order to fall
presumptively within the FDA. Such is the case with the Disputed
Instruments. And nothing in the parties’ arguments, the Special
Master’s Second Interim Report, or the record in these cases
persuades us that the Disputed Instruments should be deemed “third
party bank checks.”
Accordingly, we adopt the Special Master’s
recommendations in the First Interim Report, along with his initial
proposed order, to the extent they are consistent with this
opinion.[
16] We also
overrule Delaware’s exceptions to the First Interim Report and
remand this matter to the Special Master for further proceedings
consistent with this opinion.[
17]
It is so ordered.
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