Supreme Court of the United States

“ 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. ”

“ 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. [3] 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.” ”

“ 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. ”

“ 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. ”

“ 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. ”

“ 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. ”

“ 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. ”

“ In other words, the FDA is a statutory fix that need only kick in when, as a matter of business practice, the company holding the funds does not generally collect the relevant address information, such that inequitable escheatment occurs. ”

“ 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 order that corrections may be made before the preliminary print goes to press. ”

“ In those circumstances, the abandoned proceeds from covered instruments escheat to the State where the company holding the funds has its principal place of business. §§2503 (2) – (3) .
↑ In addition to being a safe alternative to cash for transmitting money, money orders and similar prepaid instruments have an advantage over standard checks in that, because they are prepaid, they do not depend on the purchaser having sufficient funds in her bank account (in ordinary parlance, they cannot “bounce”) . ”