Case Digest: Delaware v. Pennsylvania et al.

This Supreme Court case addressed the escheatment of certain financial products sold by MoneyGram, namely Agent Checks and Teller’s Checks. The key legal principle established is that these disputed instruments are similar enough to money orders to fall within the scope of the Disposition of Abandoned Money Orders and Traveler’s Checks Act (FDA), rather than being governed by common law escheatment principles​​.

Introduction:

The case involves a complex dispute over the escheatment rights (i.e., rights of a state to take custody of abandoned property) of financial products sold by MoneyGram. It raised significant questions about the application of the FDA versus common law principles in determining which state is entitled to the proceeds of these abandoned financial products.

Facts of the Case:

MoneyGram, without keeping adequate records of creditor addresses, applied the common-law secondary rule, transmitting the proceeds of abandoned Agent Checks and Teller’s Checks to Delaware, its state of incorporation​​. Several states, led by Pennsylvania and Wisconsin, challenged Delaware's practice, arguing that the FDA should govern the escheatment of these financial products​​.

Issue of the Case:

The Supreme Court was asked to determine whether the Disputed Instruments fell under the FDA or were governed by common law escheatment rules​​.

Ruling of the Case:

The Court held that the Disputed Instruments were sufficiently similar to money orders to fall within the scope of the FDA. Therefore, their escheatment should generally be to the state of purchase, as per the FDA, rather than to the state of the company’s incorporation under common law principles​​.

Impact on the Legal System:

This decision clarified the application of the FDA over common law in cases involving the escheatment of certain financial products. It established a precedent for how similar financial instruments should be treated in terms of escheatment, emphasizing the importance of the FDA in ensuring equitable distribution among states.

Conclusion:

DELAWARE v. PENNSYLVANIA et al. is significant for its clarification of escheatment rights under the FDA versus common law. It underscores the role of statutory law in addressing inequities arising from outdated common law practices, particularly in the context of financial instruments like those issued by MoneyGram.