Delaware v. Pennsylvania

“[N]othing in the parties’ arguments, the Special Master’s Second Interim Report, or the record in these cases [showed] that the Disputed Instruments should be deemed ‘third party bank checks.’”

MoneyGram believed that Agent Checks and Teller’s Checks (“Disputed Instruments”) were out of the scope of the FDA and abandoned the proceeds to its State of incorporation, Delaware. Pennsylvania and other states invoked the Court’s original jurisdiction. These states argued that the Disputed Instruments were “money order[s]” which fell under the Federal Disposition Act (“FDA”), which would escheat the property to those states where the products were purchased. Delaware argued the Disputed Instruments fell under the “third party bank check” and common law rules of escheatment under Texas v. New Jersey, 379 U.S. 674 applied, resulting in the abandoned proceeds escheating to Delaware.  After oral argument, the Special Master reassessed that decision and concluded that the checks were or could be “third party bank checks” and therefore were excluded from the FDA. The Court held the Disputed Instruments are sufficiently similar to a money order and fall within the FDA. The Court reasoned the checks were similar in function and operation to a money order. The checks were prepaid which would make them escheatable and bring them under the FDA. The Court found the FDA was passed to abrogate the Court’s common law precedent. When the precedent was followed, the checks would often escheat to the place of incorporation instead of the place of purchase. The goal of the FDA was to distribute escheats “as a matter of equity among the several States. Remanded to the Special Master for further proceedings consistent with this opinion.