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The ideas and conclusions herein set forth, including drafts of proposed legislation, have not been passed upon by the National Conference of Commissioners on Uniform State Laws. They do not necessarily reflect the views of the Committee, Reporters or Commissioners. Proposed statutory language, if any, may not be used to ascertain legislative meaning of any promulgated final law.

WILLIS E. SULLIVAN, III, P.O. Box 359, 1423 Tyrell Lane, Boise, ID 83701, Chair

OWEN L. ANDERSON, University of Oklahoma, College of Law, 300 Timberdell Road,

Norman, OK 73019

DAVID D. BIKLEN, Law Revision Commission, Room 509A, State Capitol, Hartford,

CT 06106

FRED C. CORNISH, Suite 917, 321 South Boston, Tulsa, OK 74103

EDWARD I. CUTLER, P.O. Box 3239, Tampa, FL 33601

STANLEY M. FISHER, 1100 Huntington Building, Cleveland, OH 44115

PATRICK C. GUILLOT, Suite 900, 8080 North Central Expressway, Dallas, TX 75206

JOHN F. HAYES, Suite 260, 335 North Washington, Hutchinson, KS 67504

RAYMOND P. PEPE, 11th Floor, 240 North Third Street, Harrisburg, PA 17101

ROBERT E. SULLIVAN, 112 Hillcrest Loop, Missoula, MT 59803

ROBERT WILLIAMS, Suite 800, 770 L Street, Sacramento, CA 95814

CURTIS D. FORSLUND, 5555 Via Entrada, Tucson, AZ 85718, Reporter

RICHARD C. HITE, Suite 630, 200 West Douglas Avenue, Wichita, KS 67202, President

W. JACKSON WILLOUGHBY, Placer County Municipal Court, 300 Taylor Street,

Roseville, CA 95678, Chair, Division B

FRED H. MILLER, University of Oklahoma, College of Law, 300 Timberdell Road,

Norman, OK 73019, Executive Director

WILLIAM J. PIERCE, 1505 Roxbury Road, Ann Arbor, MI 48104,

Executive Director Emeritus

Nineteen States have enacted versions of the 1981 Uniform Unclaimed Property Act. Seventeen states retain the 1954 Uniform Disposition of Unclaimed Property Act or its 1966 Revision. Six states have adopted many provisions of the 1981 Act, but have not adopted the Act in its entirety. Eight states have other unclaimed property laws, some of them containing provisions adopted from the uniform acts. The Virgin Islands has adopted the 1981 Act, the District of Columbia has enacted several provisions from the 1981 Act, and Puerto Rico has a law that is not substantially similar to any of the uniform provisions. The states adopting the 1981 Act are Alaska, Arizona, Florida, Georgia, Hawaii, Idaho, Louisiana, Maine, New Hampshire, New Jersey, New Mexico, North Dakota, Rhode Island, South Carolina, South Dakota, Utah, Washington, Wisconsin and Wyoming. Colorado, Iowa, Massachusetts, Montana, Nevada, and Oklahoma have adopted many of the provisions of the Act. Alabama, Arkansas, Connecticut, Illinois, Indiana, Kansas, Maryland, Minnesota, Mississippi, Montana, Nebraska, Oregon, Pennsylvania, Tennessee, Vermont, Virginia and West Virginia have versions of the 1954 or 1966 Acts. California, Delaware, Kentucky, Michigan, New York, North Carolina, Ohio and Texas have other unclaimed property acts, some of them containing provisions drawn from the uniform acts.

The 1954 Uniform Act was drafted during a period of conflicting legislation among the various states and several Supreme Court decisions in the late 1940's and early 1950's. The later decision in Texas v. New Jersey, 379 U.S. 674 (1965), established a set of priorities for claimant states which were then adopted in the 1981 Act. The priorities set out in Texas v. New Jersey were re-examined in Delaware v. New York, U.S. , 113 S.Ct. 1550, 123 L.Ed.2d 211 (1993). The Court made no change in the rules of priority, but clarified the issue of how to determine the identity of the "debtor" when payments by intermediaries are at stake. The "debtor" will be defined by reference to the state law that creates the property interest; an intermediary which holds property in its own name will generally be the debtor, and not the original obligor which has satisfied its obligation by transmitting payment to the intermediary. Delaware v. New York also makes it clear that no state may supersede the Court's priority rules by seeking to establish different priorities under state law.

Since the preparation of the 1981 Act, the states have become evermore aware of the opportunities open to them in collecting and returning to their residents unclaimed money and using the "windfall" of unreturned funds as general fund receipts for the benefit of all citizens of the state. Many states which have adopted the 1981 Act or earlier unclaimed property legislation have subsequently and repeatedly amended their laws to further enhance their collections. Many amendments have advanced the time at which unclaimed property is presumed to be abandoned, and other amendments have sought to reach property that was not clearly classified as presumptively abandoned under existing legislation. The most frequently heard criticism of the states' unclaimed property laws is lack of uniformity; lack of uniformity as to dates of reporting and remitting payment, as to the forms of the reports, and as to the "never-ending" battle to keep up with continuing legislative and administrative changes.

Most of these changes have been initiated by the states, although a few have been at the behest of holders. Thus, some state legislatures have created exemptions for certain classes of property, e.g., property held by public utilities and cooperatives, or certain holders and certain small businesses.

In 1989 the National Association of Unclaimed Property Administrators, an organization which includes representatives of states, formed a study committee to review the 1981 Act and developed proposed revisions for consideration by the Conference of Commissioners on Uniform State Laws. A drafting committee was formed by NAUPA, and a number of proposed revisions were prepared and circulated.

The 1981 Uniform Act, and the prior 1954 and 1966 Uniform Acts, responded to the need for symmetry in the law for the benefit of persons doing business in more than one state. Widespread enactment of the Uniform Acts by the States indicates their recognition of the need for uniformity, which in too many instances is not now being met.

Section 3 of this Act provides a statutory response which is consistent with the Supreme Court's pronouncements in Texas v. New Jersey and Delaware v. New York. Basically, the Act provides that unclaimed intangible property is payable to the state in which the last known address of the owner was located. In those instances in which that information is unknown or the state of the owner's last known address does not assert a claim to the property, it is payable to the state of the holder's domicile.

The state acts as a conservator of the lost owner's property and the Act is akin to a succession statute.1 The Texas v. New Jersey rule, as the Supreme Court noted, is a variation of the common law concept of mobilia sequuntur personam, according to which the law of the state of domicile of the intestate owner determines the right of succession to personal property. The state in which the owner last resided is a rough indicator of domicile, and that state is entitled to provide by legislation for succession. The state of last known address, succeeding to the right of the owner, is entitled to compel a holder to disclose the existence of property which belongs to the owner in the same manner that a conservator of an estate of an incompetent or the administrator of the estate of a missing person or decedent can compel the holder of that person's property to account for it.2 That the state may not be able to assert its claim in its own courts, but would be required to use the courts of another jurisdiction, is not determinative of its power to act as a custodian.3 Hence any suggestion that corporate holders not "doing business" in a state might escape their obligation to pay unclaimed property owing to persons with last known addresses in that state is incorrect.

1 The Court's decision in Connecticut Mutual Life Insurance Co. v. Moore, 333 U.S. 541, 546-47 (1947), described the state as a "conservator" when claiming property under a custodial unclaimed property law. The Court in Standard Oil Co. v. New Jersey, 347 U.S. 428, 437 (1951), characterized the Moore case as involving a "conservation statute". See generally Epstein, McThenia and Forslund, "Unclaimed Property Law and Reporting Forms," sections 2.01, 3.02, 4.01 (Matt. Bend. 1984).

2 As the United States Supreme Court noted in upholding the constitutionality of the Massachusetts custodial unclaimed property laws: "[i]f the facts warrant it, a legal representative can be appointed at any time with all the rights incident to such appointment, including that of withdrawing the funds and holding them for the true owner when he shall establish his claim." Provident Institution for Savings v. Malone, 221 U.S. 660, 666 (1911).

3 In this connection, see Commonwealth of Pennsylvania v. Kervick, 60 N.J. 289, 288 A.2d 289 (1972) (Pennsylvania held entitled to sue in New Jersey state courts for property owing to Pennsylvania residents.)

Changes in the Act

This Act clarifies the definition of intangible "property," removes ambiguities over the meaning of "last known address," and adds new definitions of "mineral," "mineral proceeds," and "money order." (Section 1.) It also consolidates several sections that dealt with various presumptions of abandonment for different classifications of property into one unified treatment of presumptions of abandonment. (Section 2.)

The Act adds an express provision to cover proceeds of class actions (Section 2(7)), and also adds limitations on dormancy charges. (Section 4.) It clarifies the limited nature of the states' burden of proof when the unclaimed obligation is evidenced by negotiable instruments. (Section 5.) The Act increases penalties for non-compliance (Section 24), and it adds a provision for attorneys fees in litigated enforcement actions. (Section 22.) Rules of confidentiality are added (Section 23), and contracts entered into by heir finders are limited. (Section 25.)

The periods of time after which abandonment will be presumed have been reduced in some instances: corporate stock, from seven to five years; gift certificates, from five years to three years. Certain life insurance obligations had five year and two year periods of abandonment; they have been unified at three years.

As to the rights of the parties under the Act, the Administrator is entitled to have duplicate certificates issued in the state's name. The issuer of the duplicate certificate is relieved of all liability respecting the property delivered. (Section 10.)

Section 19, a statute of limitations, has been clarified, following cases in several jurisdictions, and paralleling the federal income tax laws, to make it clear that the statute of limitations does not run in favor of a holder who makes no report or whose report is false or fraudulent.

Under the 1981 Act, the Administrator could require any person who had not filed a report to file a verified statement disclosing any unclaimed and reportable property. The Act is amended to provide that the Administrator may also require a further report from a person believed to have filed a false or incomplete report. The administrator has a right to audit records whether or not there is reason to believe a person is not complying with the Act. (Section 20.

UNIFORM UNCLAIMED PROPERTY ACT (199_)

SECTION

1. DEFINITIONS.

2. PRESUMPTIONS OF ABANDONMENT.

3. CONTENTS OF SAFE DEPOSIT BOX OR OTHER SAFEKEEPING DEPOSITORY.

4. RULES FOR TAKING CUSTODY.

5. DORMANCY CHARGES.

6. BURDEN OF PROOF AS TO PROPERTY EVIDENCED BY CHECKS AND

DRAFTS.

7. REPORT OF ABANDONED PROPERTY.

8. PAYMENT OR DELIVERY OF ABANDONED PROPERTY.

9. NOTICE AND PUBLICATION OF LISTS OF ABANDONED PROPERTY.

10. CUSTODY BY STATE; HOLDER RELIEVED FROM LIABILITY;

REIMBURSEMENT OF HOLDER PAYING CLAIM; RECLAIMING FOR OWNER;

DEFENSE OF HOLDER; PAYMENT OF SAFE DEPOSIT BOX OR REPOSITORY

CHARGES.

11. CREDITING OF DIVIDENDS, INTEREST, OR INCREMENTS TO OWNER'S

ACCOUNT.

12. PUBLIC SALE OF ABANDONED PROPERTY.

13. DEPOSIT OF FUNDS.

14. FILING OF CLAIM WITH ADMINISTRATOR.

15. CLAIM OF ANOTHER STATE TO RECOVER PROPERTY; PROCEDURE.

16. ACTION TO ESTABLISH CLAIM.

17. ELECTION TO TAKE PAYMENT OR DELIVERY.

18. DESTRUCTION OR DISPOSITION OF PROPERTY HAVING INSUBSTANTIAL

COMMERCIAL VALUE; IMMUNITY FROM LIABILITY.

19. PERIODS OF LIMITATION.

20. REQUESTS FOR REPORTS AND EXAMINATION OF RECORDS.

21. RETENTION OF RECORDS.

22. ENFORCEMENT.

23. INTERSTATE AGREEMENTS AND COOPERATION; JOINT AND RECIPROCAL

ACTIONS WITH OTHER STATES; CONFIDENTIALITY.

24. INTEREST AND PENALTIES.

25. AGREEMENT TO LOCATE REPORTED PROPERTY.

26. FOREIGN TRANSACTIONS.

27. TRANSITION PROVISION.

28. SAVINGS CLAUSE.

29. RULES.

30. SEVERABILITY.

31. UNIFORMITY OF APPLICATION AND CONSTRUCTION.

32. SHORT TITLE.

33. REPEAL.

34. TIME OF TAKING EFFECT.

SECTION 1. DEFINITIONS. In this [Act]:

(1) "Administrator" means [insert name of appropriate officer].

(2) "Apparent owner" means a person whose name appears on the records of a holder as the person entitled to property held, issued, or owing by the holder.

(3) "Business association" means a corporation, joint stock company, investment company, partnership, limited liability company, business trust, trust company, savings and loan association [building and loan association, savings bank, industrial bank, land bank], safe deposit company [safekeeping depository], bank, banking organization, financial organization, insurance company, mutual fund, credit union, utility, or other business entity consisting of one or more persons, whether or not for profit.

(4) "Consumer credits" means money or credits owed to a consumer as the result of a retail business transaction.

(5) "Domicile" means the State of incorporation of a corporation and the State of the principal place of business of a holder other than a corporation.

(6) "Holder" means a person obligated to deliver, or pay to the owner property that is subject to this [Act].

(7) "Insurance company" means an association, corporation, fraternal or mutual benefit organization, whether or not for profit, that is engaged in the business of providing insurance, including accident, burial, casualty, credit life, contract performance, dental, fidelity, fire, health, hospitalization, illness, life (including endowments and annuities), malpractice, marine, mortgage, surety, and wage protection insurance.

(8) "Last known address" for purposes of Sections 7, 9, 13, and 21 means a description of the location of the apparent owner sufficient for the purpose of the delivery of mail or the receipt of a communication by other means agreed upon between the holder and the owner. For purposes of Sections 3 and 15, the term means a description indicating that the apparent owner was located within the borders of this State, whether or not the description is sufficient to direct the delivery of mail.

(9) "Mineral" means gas, oil, coal, and other gaseous, liquid, and solid hydrocarbons, oil shale, cement material, sand and gravel, road material, building stone, chemical substance, gemstone, metallic, fissionable and nonfissionable ores, colloidal and other clay, steam and other geothermal resource, and any other substance defined as a mineral by the law of this State.

(10) "Mineral proceeds" means payments that are currently unclaimed for the extraction, production or sale of minerals and, upon the abandonment of these proceeds, all proceeds that become payable thereafter, and includes:

(i) payments for the acquisition and retention of a mineral lease, including bonuses, royalties, shut-in royalties, minimum royalties and delay rentals;

(ii) payments for the extraction, production or sale of minerals, including net revenue interests, royalties, overriding royalties, extraction payments and production payments; and

(iii) payments resulting from any agreement or option, including joint operating agreement, unit agreement, pooling agreement and farm-out agreement.

(11) "Money order" includes an express money order and a personal money order, on which the remitter is the purchaser. The term does not include a bank money order or any other instrument sold by a banking or financial organization if the seller has obtained the name and address of the payee.

(12) "Owner" means a person who has a legal or equitable interest in property subject to this [Act], or the person's legal representative, including a depositor in the case of a deposit, a beneficiary in the case of a trust other than a deposit in trust, and a creditor, claimant, or payee in the case of other property.

(13) "Person" means an individual, corporation, business association, estate, trust, partnership, joint venture, government, governmental subdivision, agency or instrumentality, public corporation, or any other legal or commercial entity.

(14) "Property," except as the term is used in Section 6 to include tangibles, means a fixed and certain interest in or right in an intangible that is held, issued or owed in the course of a holder's business, or by a government or governmental entity, and all income or increment therefrom, including that which is referred to as or evidenced by:

(i) money, check, draft, deposit, interest, or dividend;

(ii) credit balance, customer overpayment, gift certificate, security deposit, refund, credit memorandum, unpaid wage, unused ticket, mineral proceeds, and unidentified remittance;

(iii) stock or other evidence of ownership interest in a business association;

(iv) bond, debenture, note or other evidence of indebtedness;

(v) money deposited to redeem stocks, bonds, coupons, and other securities, or to make distributions;

(vi) an amount due and payable under the terms of an insurance policy, including policies providing life insurance, property and casualty insurance, workers' compensation insurance, or health and disability benefits insurance; and

(vii) an amount distributable from a trust or custodial fund established under a plan to provide health, welfare, pension, vacation, severance, retirement, death, stock purchase, profit sharing, employee savings, supplemental unemployment insurance, or similar benefits.

(15) "State" means a State of the United States, the District of Columbia, the Commonwealth of Puerto Rico, or any territory or insular possession subject to the jurisdiction of the United States.

(16) "Unclaimed property" means property that is presumed abandoned under this Act.

(17) "Utility" means a person who owns or operates for public use any plant, equipment, property, franchise, or license for the transmission of communications or the production, storage, transmission, sale, delivery, or furnishing of electricity, water, steam, or gas.

The definitions reflect, pursuant to Texas v. New Jersey, 379 U.S. 674, 85 S.Ct. 626, 13 L.Ed. 2d 596 (1965), the fact that the Act applies to persons in other states who are holding property, eliminating any requirement that those persons be engaged in business in the enacting state. The obligation of a holder to report to all states in which a creditor had an address, or in which a transaction took place, or which is the holder's domicile, is now well established in the abandoned property statutes of the states and in the decisions of the Supreme Court. The holder's obligation to report is not confined to situations where the holder is authorized to do business or actually transacts business in a state. These jurisdictional rules are spelled out in detail in Section 3.

Paragraph (2) defines "apparent owner" in terms of reference to the person who appears on the holder's records to be the person entitled to the property. The right of a state to claim abandoned property depends on the information in the holder's records concerning the apparent owner's identification. It is of no consequence that without notice to the holder, he may have transferred his interest to another person. In Nellius v. Tampax, Inc., 394 A.2d 333 (Del. Ch. Ct. 1978), the court held that the address of the apparent, not the actual, owner controlled. The holder is not required to ascertain the name of the current owner or resolve a dispute between the owner of record and a successor contesting ownership. However, nothing in this Act prohibits the actual owner from recovering the property, pursuant to Sections 10 and 14, from the holder or the administrator. Similarly, the state of last known address of the actual owner can recover the property, pursuant to Section 15, from the state which initially receives custody.

The definition of "business association" in paragraph (3), has been broadened to include bank and financial organizations, which had been given separate definitions in the 1981 Act. It also expressly includes mutual funds, which previously were covered in general terms.

The definition of "consumer credits" is new and is a clarification from the 1981 Act. The term covers credits owed on consumer transactions such as returns of merchandise, cancellation of layaways, and various kinds of deposits. The existence and amounts of such credits will of course be dependent on the terms of the contract between the holder and the consumer.

The definition of "holder" in paragraph 7 is a clarification. There had been some confusion in the past over the identity of the holder of an obligation that had been transferred by the original obligor. An example is the payment of dividends on corporate stock. This of course is what led to the case of Delaware v. New York. As the Supreme Court has now made clear, the holder is the person indebted under the applicable state law. Thus, if the original debtor, the dividend-paying corporation, has satisfied its debt under its share contract and under state law by transmitting payment to an intermediary, which has undertaken to make the payment, the intermediary becomes the debtor. The holder thus is "a person obligated," or in other words a person who could be sued successfully by the owner for refusing to make payment.

The Act provides exclusively for the disposition of unclaimed intangible property and does not apply to tangible property, with one exception: Section 6 applies to tangible property contained in safe deposit boxes.

"Last known address" was not defined in the 1954 Act, and the definition now adopted in paragraph (9) harmonizes the definition contained in the 1981 Act, that it meant a mailing address, with a Comment to Section 3 of the Act, that a computer code identifying the apparent owner's address simply as being within the state might suffice for purposes of that state's jurisdictional claim. The present refinement of the term recognizes that "last known address" has two different meanings. First, for purposes of supporting a state's primary jurisdictional claim under Texas v. New Jersey, 379 U.S. 674, 85 S.Ct. 626, 13 L.Ed. 2d 596 (1965), it means an address "within" the state, even though the exact mailing address may remain unknown. It is only where the holder has "no record of any address at all" that the state of domicile may take the property. Id. at 682, 85 S.Ct. at , 13 L.Ed. 2d at 601.

Although the 1981 Act defined "last known address" as "a description of the location of the apparent owner sufficient for the purpose of the delivery of mail," that Act indicated some uncertainty over whether this was an accurate interpretation of Texas v. New Jersey, since this definition was accompanied by a Commissioners' Comment that appeared to be at odds with the definition itself. Thus, the Comment stated that "Where a holder originally had the address of the owner and it has been subsequently destroyed, a computer code may be one way of establishing an address within the state."

The touchstone of the several Supreme Court opinions is Texas v. New Jersey, 379 U.S. 674, 85 S.Ct. 626, 13 L.Ed. 2d 596 (1965). There, New Jersey contended that the domicile of the debtor should take the property. The Court agreed that this standard was recommended by "ease of application," but to adopt it "would too greatly exalt a minor factor to permit escheat of obligations incurred all over the country by the State in which the debtor happened to incorporate itself." 379 U.S. at 680, 85 S.Ct. at , 13 L.Ed. 2d at 600. The Court concluded that it would be fairer, and more in proportion to the relevant "commercial activities," for the primary rule of escheat to be that it goes to the state "in which they [the creditors] lived . . . ," that being "the State of the last known address of the creditor, as shown by the debtor's books and records." Id. at 681-82, 85 S.Ct. at , 13 L.Ed. 2d at 601. Where the debtor has "no record of any address at all," the state of corporate domicile could take, id. at 682, 85 S.Ct. at , 13 L.Ed. 2d at 601, subject to proof by another state "that the last known address of the creditor was within its borders." Id., 13 L.Ed. 2d at 602.

Nowhere in Texas v. New Jersey did the Court mention "mailing address." Rather, its emphasis seems to have been on the creditors having an address somewhere within the state; i.e., the Court referred to the state "in which they lived" and an address "within its borders."

Such a reading is supported also by the language of the next case before the Supreme Court on the issue, Pennsylvania v. New York, 407 U.S. 206, 32 L.Ed. 2d 693, 92 S.Ct. 2075 (1972). That case dealt with conflicting state claims to Western Union money orders. Pennsylvania urged a modification of Texas v. New Jersey as to money orders, and argued that the state where the money orders are purchased should be presumed to be the state of the sender's address. The Special Master concluded that the rule of Texas v. New Jersey was that the state of primary custody was "the State in which the records of Western Union placed the address of the creditor," and this result was quoted and adopted by the Court. Id. at 213, 92 S.Ct. at 2079, 32 L.Ed. 2d at 699. Again, a mailing address was not mentioned or required; it sufficed that the creditor's address--whatever it might be--was placed somewhere within the state by the holder's records. Only if "no address" is contained in the holder's records may the state of domicile claim. Id.

In Delaware v. New York, the Court reaffirmed the rules of Texas v. New Jersey, once again without reference to a "mailing address." The Court stated:

On remand, if New York can establish by reference to debtors' records that the creditors who were owed particular securities distributions had last known addresses in New York, New York's right to escheat under the primary rule will supersede Delaware's right under the secondary rule. As we noted in Texas, "the State of corporate domicile should be allowed to . . . retai[n] the property for itself only until some other State comes forward with proof that it has a superior right to escheat." 379 U.S., at 682. Accord, Pennsylvania, 407 U.S., at 210-211. If New York or any other claimant State fails to offer such proof on a transaction-by-transaction basis or to provide some other proper mechanism for ascertaining creditors' last known addresses, the creditor's State will not prevail under the primary rule, and the secondary rule will control.

Id. at , 113 S.Ct. at 1561-62, 123 L.Ed. 2d at 227-28. (Deletions in original.)

This most recent restatement of the jurisdictional rules refers not to mailing addresses, but "addresses [even if not ascertained with particularity] in New York"; the state of domicile is subject to proof that another state has a "superior right"; "some other proper mechanism" will defeat application of the secondary rule.

Thus, the Court appears not to favor the secondary rule. To insist on the showing of a mailing address as a pre-requisite to application of the primary rule does not coincide with the Court's apparent intent. In sum, Delaware v. New York requires only that some "proper mechanism" show that the owner had an address within the state that asserts a primary claim. A computer code would appear to be such a means of proof. On the other hand, showing that the transaction took place in the state would not be sufficient proof of an owner's address. Pennsylvania v. New York, 407 U.S. 206, 92 S.Ct. 2075, 32 L.Ed. 2d 693 (1972).

For purposes other than these jurisdictional rules, such "last known address" continues to mean a mailing address, or, if the holder and owner have agreed, it also includes, for example, an "E mail" address.

Paragraph (14), defining property, is not intended as a substantive addition to the coverage of Section 9 of the 1954 Act. It is, however, intended to be all-inclusive; the descriptions of property interests that are set forth as examples are not limiting, but are stated to help holders identify kinds of property interests which otherwise may be overlooked. Thus, "property" is not the check, note, certificate or other document that evidences the property interest, but the underlying right or obligation. See Blue Cross of Northern California v. Cory, 120 Cal. App. 3d 723, 174 Cal. Rptr. 901 (1981) ("right to be paid" is the "'intangible personal property' (or 'chose in action') . . . which is recognized in the UPL"). The requirement that the right be "fixed and certain" excludes unliquidated claims from the coverage of the Act, such as disputed tort claims. For purposes of Section 6, dealing with safe deposit boxes, "property" also includes tangible property.

Unclaimed deposits on bottles or other containers, frequently mandated by environmental legislation, are not property covered by this [Act]; such deposits are owned by the bottlers and distributors who received them, rather than by the purchasers of the goods and containers. See Massachusetts Wholesalers of Malt Beverages, Inc. v. Attorney General, 409 Mass. 336, 567 N.E.2d 183 (1991). Environmental legislation on this subject varies widely, and if a State wishes to take possession of any portion of such unclaimed deposits, it is deemed preferable that such legislation be in the context of the statutes mandating the deposits, rather than be included in this [Act]. See Maine Beer & Wine Wholesalers Ass'n v. State of Maine, 619 A.2d 94 (Maine 1993).

SECTION 2. PRESUMPTIONS OF ABANDONMENT.

(a) Property is presumed abandoned if the apparent owner has neither communicated in writing with the holder concerning the property nor has otherwise indicated an interest in the property during the time set forth below for the particular property:

(1) travelers checks, 15 years after issuance;

(2) money orders, seven years after issuance;

(3) stock or other interest in a business association, five years after the date of the most recent dividend or other distribution unclaimed by the apparent owner with respect to the stock or other interest, or, if a dividend or other distribution has not been paid on the stock or other interest for five consecutive years, or the stock or other interest is held pursuant to a plan that provides for the automatic reinvestment of dividends or other distributions, five years after the date of the second mailing of a statement of account or other notification or communication that was returned as undeliverable, or after the date the holder discontinued the mailings to the apparent owner, whichever is earlier;

(4) any demand, savings or matured time deposit, including a deposit that is automatically renewable, five years after maturity or the date of the last indication by the owner of interest in the property. Property that is automatically renewable is deemed matured for purposes of this section upon the expiration of its initial time period, unless the owner has consented to a renewal at or about the time of the renewal and the consent is in writing or is evidenced by a memorandum or other record on file with the holder;

(5) consumer credits, three years after the credit accrued;

(6) gift certificates, three years after December 31 of the year in which the gift certificate was sold. If redeemable in merchandise only, the amount deemed abandoned shall be [60] percent of the certificate's face value;

(7) amounts owed by an insurer on a life or endowment insurance policy or annuity contract that has matured or terminated, three years after the obligation to pay arose, or, in the case of a policy or contract payable upon proof of death, three years after the insured has attained, or would have attained if living, the limiting age under the mortality table on which the reserve is based;

(8) property distributable by a business association in a course of dissolution, one year after the property became distributable;

(9) property received by a court as proceeds of a class action, and not distributed to members of the class, one year after the distribution date;

(10) property held by a court, state or other government, governmental subdivision or agency, public corporation or other public authority, one year after the property became distributable;

(11) wages or other compensation for personal services, one year after the compensation became payable;

(12) deposits and refunds owed to subscribers by utilities, one year after the deposits or refunds became payable;

(13) property in an individual retirement account or other account or plan that is qualified for tax deferral pursuant to the income tax laws of the United States, one year after the earliest of the following: the actual date of the distribution or attempted distribution of the property, the date of the required distribution as stated in the plan or trust agreement governing the plan, or the date specified in the income tax laws of the United States by which distribution of the property must begin in order to avoid a tax penalty, except that if, during the four years preceding the commencement of the one year abandonment period the apparent owner has communicated in writing with the holder concerning the property or otherwise indicated an interest in the property, or at least two consecutive mailings of an account statement or other official notice by the holder have not been returned as undeliverable, then the date of presumed abandonment shall be one additional year after the property would otherwise have been presumed abandoned.

(14) all other property, five years after the obligation to pay or distribute the property arose.

(b) For purposes of subsection (a), a communication with an owner by an agent of the holder who has not in writing identified the property to the owner is not an indication of interest in the property by the owner. An indication of an interest in property includes the presentment of a dividend check or other instrument of payment received with respect to an account or underlying shares of stock, a deposit to or withdrawal from a bank account, and the payment of a premium with respect to a property interest in an insurance policy. However, the application of an automatic premium loan provision or other nonforfeiture provision contained in an insurance policy does not prevent a policy from maturing or terminating if the insured has died or the insured or the beneficiary of the policy otherwise has become entitled to the proceeds before the depletion of the cash surrender value of a policy by the application of those provisions.

(c) Property is payable or distributable for purposes of this [Act] notwithstanding the owner's failure to make demand or present an instrument or document otherwise required to receive payment.

Section 2 continues the general proposition that all intangible property held or owing in the ordinary course of the holder's business is within the coverage of this Act. It provides in a single section for all the various periods of abandonment that were separately stated in several sections of the 1981 Act. With limited exceptions this reorganization does not alter the bases for presuming abandonment of the property from that established in the 1981 Act, but merely restates those standards in a unified section, more easily applied, with less repetition. One exception is that whereas the 1981 Act exempted from the presumption of abandonment certain property held by a bank if the bank held other property of the depositor not presumptively abandoned, the present Act does not. It was the conclusion of the Commissioners that an owner's knowledge of some property does not necessarily imply knowledge of all his or her property held by the bank, and that the owner is entitled to the protection of this Act as to all the owner's property.

The general dormancy period of the 1954 Uniform Act was 7 years. Some legislatures have shortened that time period. Given the increased mobility of the population as compared with that when the 7-year dormancy period was first established, a reduction of the general dormancy period to 5 years was made in the 1981 Act. Certain exceptions continue to be appropriate. For instance, statistical evidence indicates that a period of 15 years continues to be appropriate in the case of travelers checks, and seven years in the case of personal money orders and money orders issued by express companies. Also, in certain instances shorter periods are appropriate. For instance, the likelihood of finding the owner of a payroll check is materially decreased after one year. Hence, there is a one year dormancy period for unclaimed wages.

The dormancy period for unpaid distributions from retirement accounts and plans has been modified to shorten the period of presumed abandonment from five to one or two years, depending on the existence of certain facts. The date of presumed abandonment is tied to the distribution dates of the plan and the internal revenue laws, and recognizes the owner's probable retirement from employment. Income from the plan is also likely to replace earlier earned wages. Since statistics from various state offices indicate that a shorter period of abandonment facilitates a higher percentage of owners being located, an earlier date of presumed abandonment should be of assistance in assuring that the assets of the plan are ultimately claimed by their owner.

It has been held that because the unclaimed property laws are matters of traditional state powers, are laws of general application, and have only a tenuous, remote and peripheral impact on ERISA plans, they are not pre-empted by federal law. Aetna Life Ins. Co. v. Borges, 869 F.2d 142 (2nd Cir. 1989); Attorney General v. Blue Cross and Blue Shield of Michigan, 168 Mich. App. 372, 424 N.W.2d 54 (Ct. App. 1988), appeal denied, No. 83788 (March 31, 1989).

Intangible property held by a utility other than subscribers' deposits and refunds are subject to the five year rule of subsection (a)(14).

Subsection (c) is intended to make clear that property is reportable notwithstanding that the owner, who has lost or otherwise forgotten his or her entitlement to property, fails to present to the holder evidence of ownership or to make a demand for payment. See Connecticut Mutual Life Insurance Co. v. Moore, 333 U.S. 541 (1948), in which the Court stated: "When the state undertakes the protection of abandoned claims, it would be beyond a reasonable requirement to compel the state to comply with conditions that may be quite proper as between the contracting parties." See also Provident Institution for Savings v. Malone, 221 U.S.. 660 (1911), involving savings account; Insurance Co. of North America v. Knight, 8 Ill. App. 3d 871, 291 N.E.2d 40 (1972), involving negotiable instruments, and People v. Marshall Field & Co., 83 Ill. App. 3d 811, 404 N.E.2d 368 (1980), involving gift certificates. With respect to gift certificates, see also Section 19(a), which invalidates private periods of limitation. Thus, gift certificates will be reportable notwithstanding language on the certificate purporting to create an expiration date prior to the time of presumed abandonment. Section (c) also obviates the result reached in Oregon Racing Comm. v. Multonamah Kennel Club, 242 Or. 572, 411 P.2d 63 (1963), involving unpresented winning parimutuel tickets.

Since the holder is indemnified against any loss resulting from the delivery of the property to the administrator, no possible harm can result in requiring that holders turn over the property, even though the owner has not presented proof of death or surrendered the insurance policy, savings account passbook, the gift certificate, winning racing ticket, or other memorandum of ownership.

As indicated in a Comment to section 2 of the 1981 Act, a draft issued by a property or casualty insurance company in the absence of any agreement or obligation, but solely as an offer of settlement of a claim for property damage or personal injury, is not subject to the presumption of abandonment if the offer was not accepted by the payee. Experience has shown that some insurance companies have misread the intent of the Comment, and have claimed broadly that all their checks and drafts are issued only as offers of settlement. Section 6 of this Act clarifies the burden of proof in such a situation, and codifies the holdings of several cases: issuance of a check or draft is prima facie evidence of liquidated intangible property.

SECTION 3. CONTENTS OF SAFE DEPOSIT BOX OR OTHER SAFEKEEPING DEPOSITORY. All tangible and intangible property held in a safe deposit box or any other safekeeping depository in this State in the ordinary course of the holder's business and proceeds resulting from the sale of the property permitted by other law, which remains unclaimed by the owner for more than five years after expiration of the lease or rental period on the box or other depository, is presumed abandoned.

Section 3 parallels Section 2(d) of the 1966 Act and Section 16 of the 1981 Act. This Section is not intended to cover property left in places other than safekeeping depositories, for example, airport lockers or field warehouses. Its coverage is limited to safe deposit boxes in banks and financial organizations. Most states have statutory provisions apart from the unclaimed property law for the disposition of property abandoned in places such as airport lockers.

SECTION 4. RULES FOR TAKING CUSTODY. Unless otherwise provided in this [Act] or by other statute of this State, property, whether located in this State or another State, is subject to the custody of this State as unclaimed property if the property is presumed abandoned and:

(1) the last known address of the apparent owner, as shown on the records of the holder, is in this State;

(2) the records of the holder do not reflect the identity of the person entitled to the property and it is established that the last known address of the person entitled to the property is in this State;

(3) the records of the holder do not reflect the last known address of the apparent owner and it is established that:

(i) the last known address of the person entitled to the property is in this State; or

(ii) the holder is a domiciliary or a government or governmental subdivision or agency of this State and has not previously paid or delivered the property to the State of the last known address of the apparent owner or other person entitled to the property;

(4) the last known address of the apparent owner, as shown on the records of the holder, is in a State that does not provide for the escheat or custodial taking of the property and the holder is a domiciliary or a government or governmental subdivision or agency of this State;

(5) the last known address of the apparent owner, as shown on the records of the holder, is in a foreign country and the holder is a domiciliary or a government or governmental subdivision or agency of this State;

(6) the transaction out of which the property arose occurred in this State, the holder is a domiciliary of a State that does not provide for the escheat or custodial taking of the property, and

(i) the last known address of the apparent owner or other person entitled to the property is unknown; or

(ii) the last known address of the apparent owner or other person entitled to the property is in a State that does not provide for the escheat or custodial taking of the property; or

(7) the property is a travelers check or money order purchased in this State, or the issuer of the travelers check or money order has its principal place of business in this State and the issuer's records do not show the State in which the instrument was purchased or show that the instrument was purchased in a State that does not provide for the escheat or custodial taking of the property.

Section 4 describes the general circumstances under which a state may claim abandoned intangible property. This section closely follows the language of Texas v. New Jersey, in which the court reasoned that unclaimed property is an asset of the creditor and should generally be paid to the creditor state, i.e., the state of residence of the apparent owner. Consistent with that reasoning it held that unclaimed intangible property is subject to escheat or custody as unclaimed property first by the state of the owner's last known address. (See Section 1(7) and the Comment with regard to "last known address.") If that state cannot claim the property, the state of the holder's domicile is entitled to custody. Consistent with the court's concern for a simple rule which would avoid the complexities of proving domicile and residence the court established the priority on the basis of information contained in the holder's records. Recognizing that the holder's records might be incomplete, the court's ruling permits a claimant state to prove by other means that the last known address of the owner is within its borders. Where the holder's records do not show that the owner had an address within the state, the second priority claimant, the state of domicile of the holder, is entitled to claim the property. The state of the owner's last known address can later assume custody from the state of the holder's domicile by showing that the last known address of the owner was within its borders. Likewise, if the state of last known address does not have an unclaimed property law which applies to the property, the state of the holder's domicile can take the property, again subject to the right of the state of last known address to recover the property if and when it enacts an unclaimed property or escheat law.

Paragraph (1) restates the factual situation in Texas v. New Jersey. As the court there said ". . . the address on the records of a debtor, which in most cases will be the only one available, should be the only relevant last known address." If the holder's records are erroneous and the actual last known address of the owner is in another state, that other state can reclaim the property pursuant to Section 15.

Paragraph (2) covers the situation in which the identity of the person entitled to the property is unknown, but it is established, either through the holder's records or by some other means, that the property was owned by or payable to a person whose last known address was within the claiming state. This is a rational extension of Texas v. New Jersey. Reunification of the owner with his or her property in this circumstance is impossible, and insofar as that issue is concerned, it makes no difference whether the property is delivered to the state of the holder's domicile or the state of the owner's last known address. However, following the equitable concept of distributing unclaimed property among creditor states articulated by the Supreme Court in Texas v. New Jersey, and reaffirmed in Delaware v. New York, the subsection directs that, where there is no record of a name but there is a record that the last known address was within the state, that state where the owner had an address can claim the property.

Paragraph (3) is the secondary rule of Texas v. New Jersey. The Supreme Court ruled that when property is owed to persons for whom there are no addresses, the property will be subject to escheat by the state of the holder's domicile, provided that another state may later claim upon proof that the last known address of the person entitled to the property was within its borders.

Paragraph (4) provides that, if the law of the state of the owner's last known address does not provide for escheat or taking custody of the unclaimed property or if that state's escheat or unclaimed property law is not applicable to the property in question, the property is subject to claim by the state in which the holder is domiciled. In that instance, the state of the owner's last known address may thereafter claim the property if it enacts an applicable unclaimed property law. The holder state will act as custodian and pay or deliver the property to the owner or the state which has priority under Texas v. New Jersey upon request; see also State v. Liquidating Trustees of Republic Petroleum Co., 510 S.W.2d 311 (Texas 1974).

Paragraph (5) provides that, when the last known address of the apparent owner is in a foreign nation the state in which the holder is domiciled may claim the property. This issue was not dealt with by the Supreme Court in Texas v. New Jersey, but is a rational extension of that ruling.

Paragraph (6) provides for a situation in which neither of the priority claims discussed in Texas v. New Jersey can be made, but the state has a genuine and important contact with the property. An example of the type of claim which might be made under paragraph (6) arose in O'Connor v. Sperry & Hutchinson Co., 412 A.2d 539 (Pa.1980). There Pennsylvania sought to escheat unredeemed trading stamps sold by a corporation domiciled in New Jersey to retailers located in Pennsylvania. Pennsylvania took the position that Texas v. New Jersey did not create a jurisdictional bar to escheat by other states when the states granted priority were unable to take. There was no first priority claim since there were no addresses of the trading stamp purchasers. The second priority claimant, the state of corporate domicile (New Jersey), was not permitted under its law to escheat trading stamps (see New Jersey v. Sperry & Hutchinson Co., 56 N.J.Super. 589, 153 A.2d 691 (1959), affirmed per curiam, 31 N.J. 385, 157 A.2d 505 (1960)) and hence Pennsylvania urged that in order to prohibit a corporate windfall it should be allowed to claim this property. The Pennsylvania Supreme Court affirmed a lower court decision which overruled Sperry & Hutchinson's motion to dismiss but did not reach the Texas v. New Jersey issue.

Gift certificates, unused airline tickets, and other property for which there is no last known address may be claimed by the state of purchase if the state of corporate domicile does not have an abandoned property law covering the property in question under paragraph (6).

Travelers' checks and money orders are covered under paragraph (7), which states the rule adopted by Congress in 12 U.S.C. sections 2501 et seq. The congressional action was in response to the Supreme Court decision in Pennsylvania v. New York, 407 U.S. 206 (1972), which held that the state of corporate domicile was entitled to escheat money orders when there was no last known address of the purchaser although the property had been purchased in other states. Paragraph (7), pursuant to the congressional mandate, substitutes as the test for asserting a claim to travelers checks and money orders the place of purchase rather than the state of incorporation of the issuer.

Wholly foreign transactions are excluded from the coverage of the Act. See Section 26.

SECTION 5. DORMANCY CHARGE. A holder may deduct from property presumed abandoned a charge imposed by reason of the owner's failure to claim the property within a specified time only if there is a valid and enforceable written contract between the holder and the owner pursuant to which the holder may impose the charge and the holder regularly imposes the charge, which is not regularly reversed or otherwise canceled. The amount of the deduction shall be limited to an amount that is not unconscionable as between the holder and the owner.

This section is consistent with those cases which have ruled on the issue of service charges under the 1966 Act and the 1981 Act. Section 5 is a limitation on the deduction of charges based solely on dormancy and is applicable to all intangible property presumed abandoned. Proposals to limit the charges by specifying maximum permissible amounts were considered, but were rejected as being less desireable than the existing rules of limitation including the rule against unconscionable contracts, contained in the Uniform Commercial Code, Article 2, Section 302, which by this section is made applicable to service charge contracts. This general section, which applies to all unclaimed property, replaces similar limitations that were specifically focused on various types of property in the 1981 Act.

SECTION 6. BURDEN OF PROOF AS TO PROPERTY EVIDENCED BY RECORD OF CHECK OR DRAFT. A record of the issuance of a check, draft, or similar instrument is prima facie evidence of an obligation. In claiming the property from a holder who is also the issuer, the administrator's burden of proof as to the existence and amount of the property and its abandonment is satisfied by showing issuance of the instrument and passage of the requisite period of abandonment. Defenses of payment, satisfaction, discharge, or want of consideration are affirmative defenses that must be established by the holder.

This provision clarifies the burden of proof in situations where the obligation evidenced by negotiable instruments is disputed by the holder, and is consistent with cases which have ruled on the matter. See Insurance Co. of North America v. Knight, 8 Ill.App.3d 871, 291 N.E.2d 40 (1972), app. dismissed 414 U.S. 804, 38 L.Ed.2d 40, 94 S.Ct. 165 (1973), Blue Cross of Northern Cal. v. Cory, 120 Cal. App.3d 723, 174 Cal. Rptr. 901 (1981), and Revenue Cabinet v. Blue Cross & Blue Shield, 702 S.W.2d 433, 435 (Ky. 1986). See also Riggs Nat'l Bank v. District of Columbia, 581 A.2d 1229 (D.C. App. 1990). It is also consistent with the cases holding that when claiming abandoned property the state steps into the shoes of the owner (see Epstein, McThenia and Forslund, "Unclaimed Property and Reporting Forms," sec. 3.02 (Matt. Bend. 1984), and Article 3-308 of the Uniform Commercial Code. Under U.C.C. section 3-308(2), "When signatures are admitted or established, production of the instrument entitles a holder to recover on it unless the defendant establishes a defense." The reason for requiring a plaintiff to produce the instrument is "to show that the plaintiff is in fact the holder, and in order to protect the defendant from double liability." 6 Anderson, Uniform Commercial Code, sec. 3-307:4, p. 158 (3rd ed., 1993). The administrator, by proving issuance of the instrument, succeeds to all rights of the payee. Because the issuer is relieved of all liability on the instrument by paying the obligation to the State as unclaimed property, and is indemnified by the state, there is no chance that the issuer would be held liable twice, and therefore the administrator is not required to produce the instrument in order to possess the same rights as a holder in due course.

SECTION 7. REPORT OF ABANDONED PROPERTY.

(a) A holder of property presumed abandoned and subject to custody as unclaimed property under this [Act] shall report to the administrator concerning the property pursuant to this section.

(b) The report must be verified and must include:

(1) except with respect to travelers checks and money orders, the name, if known, and last known address, if any, and the social security number or taxpayer identification number, if readily ascertainable, of the apparent owner of property of the value of $50 or more;

(2) an aggregated amount of items valued under $50 each;

(3) in the case of unclaimed funds amounting to $50 or more held or owing under any life or endowment insurance policy or annuity contract, the full name and last known address of the insured or annuitant and of the beneficiary;

(4) in the case of the contents of a safe deposit box or other safekeeping depository of tangible property, a description of the property and the place where it is held and may be inspected by the administrator, and any amounts owing to the holder;

(5) the date the property became payable, demandable, or returnable, and the date of the last transaction with the apparent owner with respect to the property; and

(6) other information that the administrator by rule or regulation prescribes as necessary for the administration of this [Act].

(c) If a holder of property presumed abandoned and subject to custody as unclaimed property is a successor to another person who previously held the property for the apparent owner or the holder has changed its name while holding the property, the holder shall file with the report its former names, if any, and the known names and addresses of all previous holders of the property.

(d) The report must be filed before November 1 of each year and cover the year next preceding July 1 of that year, but the report of any life insurance company must be filed before May 1 of each year for the calendar year next preceding.

(e) The holder of property presumed abandoned and subject to custody as unclaimed property under this [Act] shall send written notice to the apparent owner, not more than 120 days or less than 30 days before filing the report required by this section, stating that the holder is in possession of property subject to this [Act] if:

(i) the holder has in its records an address for the apparent owner which the holder's records do not disclose to be inaccurate;

(ii) the claim of the apparent owner is not barred by the statute of limitations; and

(iii) the value of the property is $50 or more.

The holder may deduct from the amount reported its reasonable expenses incurred in ascertaining the current addresses of owners for whom the last previous address contained in the holder's records appears to be inaccurate.

(f) Before the date for filing the report the holder may request the administrator to extend the time for filing the report. The administrator may grant the extension for good cause. The holder, upon receipt of the extension, may make an interim payment on the amount the holder estimates will ultimately be due, which will terminate the accrual of additional interest on the amount paid.

(g) The holder shall file with the report an affidavit stating that the holder has complied with paragraph (e) of this section.

The $50 minimum provided in subsection (b)(1)(2) and (3) represents an increase from $3.00 in the 1966 Act and $25 in the 1981 Act in order to minimize reporting expenses. Almost every state which enacted the prior Uniform Act now provides for a $25 minimum.

Before filing its report, the holder must send written notice to the apparent owner, if the owner's claim is not barred by the statute of limitations, the property has a value of $50 or more, and the holder's records do not disclose the address to be inaccurate. Other efforts to locate the owner are no longer required.

The provision in subsection (e) allowing the holder to deduct costs incurred to update its address lists of owners is designed to encourage the holder to perform this due diligence activity without costs to the shareholder.

Subsection (f) provides new flexibility to the holder and to the administrator in cases where the holder's timely compliance is not feasible. In the past, some administrators have felt themselves to be without authority to extend the filing deadlines, or to accept less than a final report. It is now made clear that an extension can be had for good cause, and the holder can limit its exposure to interest by making a partial payment.

SECTION 8. PAYMENT OR DELIVERY OF ABANDONED PROPERTY.

Upon filing the report required by Section 7, the holder shall therewith pay or deliver to the administrator the property described on the report as unclaimed, but in the case of an automatically renewable deposit, if at the time of delivery a penalty or forfeiture in the payment of interest would result from the delivery of the property, the time for delivery is extended until the earliest date at which a penalty or forfeiture would not result.

SECTION 9. NOTICE AND PUBLICATION OF LISTS OF ABANDONED PROPERTY.

(a) The administrator shall cause a notice to be published not later than November 30 of the year next following the year in which unclaimed property has been paid or delivered to the administrator. The notice must be published in a newspaper of general circulation in the [county] of this State in which is located the last known address of any person to be named in the notice. If the holder does not report an address for the apparent owner, or the address is outside this State, the notice must be published in the [county] in which the holder has its principal place of business within this State or such other [county] as the administrator may reasonably select. The advertisement must be in such form as, in the judgment of the administrator, will attract the attention of the apparent owner of the unclaimed property and it must contain the following information:

(1) the name of each person appearing to be the owner of property presumed abandoned, as set forth in the report filed by the holder;

(2) the last known address or location of each person appearing to be the owner of property presumed abandoned, if an address or location is set forth in the report filed by the holder;

(3) a statement explaining that property of the owner is presumed to be abandoned and has been taken into the protective custody of the administrator; and

(4) a statement that information about the abandoned property and its return to the owner is available to a person having a legal or beneficial interest in the property, upon request to the administrator.

(b) The administrator is not required to advertise the name and address or location of an owner of abandoned property having a total value less than $50, nor information concerning travelers checks, money orders, or similar written instruments.

This section sets forth the minimum requirements for advertisement. The administrator may publish more frequently or extensively. The [Act] does not establish a specific time for the publication so that the administrator can choose a time that will provide the best exposure and flexibility in scheduling the workload and personnel available.

The advertisement must contain a minimum of two items of information, one of which explains that the abandoned property has been paid into the protective custody of the administrator. Since unclaimed property is delivered with the report under the revisions of this Act, this statement is necessary to explain the whereabouts of the property and to insure that inquiries are directed to the administrator. The inquirer must have a lawful interest in the property and must be the apparent owner or a person lawfully succeeding to the interests of the apparent owner.

SECTION 10. CUSTODY BY STATE; HOLDER RELIEVED FROM LIABILITY; REIMBURSEMENT OF HOLDER PAYING CLAIM; RECLAIMING FOR OWNER; DEFENSE OF HOLDER; PAYMENT OF SAFE DEPOSIT BOX OR DEPOSITORY CHARGES.

(a) Upon the payment or delivery of property to the administrator, the State assumes custody and responsibility for the safekeeping of the property. A holder who pays or delivers property to the administrator in good faith is relieved of all liability thereafter with respect to the property.

(b) A holder who has paid money to the administrator pursuant to this [Act] may subsequently make payment to any person appearing to the holder to be entitled to payment. Upon a filing by the holder of proof of payment and proof that the payee was entitled to the payment, the administrator shall promptly reimburse the holder for the payment without imposing any fee or other charge. If reimbursement is sought for a payment made on a negotiable instrument, including a travelers check or money order, the holder must be reimbursed upon filing proof that the instrument was duly presented and that payment was made to a person who appeared to be entitled to payment. The holder must be reimbursed for payment made even if the payment was made to a person whose claim was barred under Section 19(a).

(c) A holder who has delivered property other than money to the administrator pursuant to this [Act] may reclaim the property if it is still in the possession of the administrator, without paying any fee or other charge, upon filing proof that the apparent owner has claimed the property from the holder.

(d) The administrator may accept the holder's affidavit as sufficient proof of the holder's right to recover money and property under this section.

(e) If the holder pays or delivers property to the administrator in good faith and thereafter another person claims the property from the holder or another State claims the money or property under its laws relating to escheat or abandoned or unclaimed property, the administrator, upon written notice of the claim, shall defend the holder against the claim and indemnify the holder against any liability on the claim.

(f) For the purposes of this section, payment or delivery is made in "good faith" if:

(1) payment or delivery was made in a reasonable attempt to comply with this [Act];

(2) the holder was not a fiduciary then in breach of trust with respect to the property and had a reasonable basis for believing, based on the facts then known, that the property was abandoned; and

(3) there is no showing that the records under which the delivery was made did not meet reasonable commercial standards of practice in the industry.

(g) Property removed from a safe deposit box or other safekeeping depository is received by the administrator subject to the holder's right to be reimbursed for the cost of the opening and to any valid lien or contract providing for the holder to be reimbursed for unpaid rent or storage charges. The administrator shall reimburse or pay the holder out of the proceeds remaining after deducting the administrator's cost of selling the property.

When property is turned over to the state, the holder is relieved of all liability for any turnover made in good faith. Subsection (f) sets forth a definition of good faith which inter alia allows the holder to rely on its records if they meet reasonable commercial standards of practice in the industry.

The section also permits the holder to obtain reimbursement for claims it elected to pay to owners who appeared after the property was turned over. If a state in enacting Section 14(c) provides for the payment of interest on property delivered to the administrator, then the holder will add such interest when paying the claim. See Section 14(d).

If after turnover, any person or another state makes a claim on the holder, the state, upon request, is required to defend the holder and indemnify him against any liability.

SECTION 11. CREDITING OF DIVIDENDS, INTEREST, OR INCREMENTS TO OWNER'S ACCOUNT. If property other than money is paid or delivered to the administrator under this [Act], the owner is entitled to receive from the administrator any dividends, interest, or other increments realized or accruing on the property at or before liquidation or conversion of the property into money. If the property claimed was interest-bearing to the owner on the date of surrender by the holder, the administrator shall pay interest at a rate of [ ] percent a year or any lesser rate the property earned while in the possession of the holder. Interest begins to accrue when the property is delivered to the administrator and ceases on the earlier of the expiration of 10 years after delivery or the date on which payment is made to the owner. Interest on interest-bearing property is not payable for any period before the effective date of this [Act], unless authorized by law superceded by this [Act].

This Act provides for some substantial retention periods by the administrator. For instance, shares of stock will generally be held for a 3-year period prior to sale. (See Section 12.) The owner will be entitled to dividends, interest or other increment realized or accruing on the property during this 3-year period.

SECTION 12. PUBLIC SALE OF ABANDONED PROPERTY.

(a) Except as otherwise provided in subsections (b) and (c), the administrator, within three years after the receipt of abandoned property, shall sell it to the highest bidder at public sale at a location in the State that in the judgment of the administrator affords the most favorable market for the property. The administrator may decline the highest bid and re-offer the property for sale if in the judgment of the administrator the bid is insufficient. If in the judgment of the administrator the probable cost of sale exceeds the value of the property, it need not be offered for sale. A sale held under this section must be preceded by a single publication of notice, at least three weeks before sale, in a newspaper of general circulation in the [county] in which the property is to be sold.

(b) Securities listed on an established stock exchange must be sold at prices prevailing at the time of sale on the exchange. Other securities may be sold over the counter at prices prevailing at the time of sale or by any other method the administrator considers reasonable.

(c) Unless the administrator considers it to be in the best interest of the State to do otherwise, all securities delivered to the administrator must be held for at least one year before being sold, and securities constituting stock or other interest in a business association must be held for at least three years before being sold.

(d) If securities constituting stock or other interest in a business association are sold by the administrator before the expiration of three years from their delivery to the administrator, a person making a claim under this [Act] before the end of the three-year period is entitled to either the proceeds of the sale of the securities or the market value of the securities at the time the claim is made, whichever amount is greater, less any deduction for costs of sale. A person making a claim under this [Act] after the expiration of the three-year period is entitled to receive either the securities delivered to the administrator by the holder, if they still remain in the hands of the administrator, or the net proceeds received from sale, and is not entitled to receive any appreciation in the value of the property occurring after delivery by the holder to the administrator, except in a case of intentional misconduct or malfeasance by the administrator.

(e) A purchaser of property at any sale conducted by the administrator pursuant to this [Act] takes the property free of all claims of the owner or previous holder and of all persons claiming through or under them. The administrator shall execute all documents necessary to complete the transfer of ownership.

In order to give additional protection to the missing owner of a security other than stock or other intangible interest in a business association, this section directs the administrator to hold that security for at least one year.

If the security is stock or other intangible interest in a business association, the administrator is expected to hold the security for 3 years. He is permitted to sell the security within this 3-year period, but if the missing owner appears and makes claim for the security within this 3-year period after the administrator has sold it, the missing owner is entitled to receive the proceeds of the sale or the market value of the securities at the time the claim is made. Thus there is a genuine incentive for an administrator to hold this property for the requisite 3-year period.

Subsection (b) permits an administrator to sell securities at prevailing prices directly to the issuing companies.

SECTION 13. DEPOSIT OF FUNDS.

[(a)] Except as otherwise provided by this section, the administrator shall promptly deposit in the [general fund] of this State all funds received under this [Act], including the proceeds from the sale of abandoned property under Section 12. The administrator shall retain in a separate trust fund at least $[100,000] from which the administrator shall pay claims duly allowed. Before making the deposit, the administrator shall record the name and last known address of each person appearing from the holders' reports to be entitled to the property and the name and last known address of each insured person or annuitant and beneficiary and with respect to each policy or contract listed in the report of an insurance company, its number, the name of the company, and the amount due.

[(b) Before making any deposit to the credit of the [general fund], the administrator may deduct:

(1) costs of the sale of abandoned property;

(2) costs of mailing and publication in connection with any abandoned property;

(3) reasonable service charges; and

(4) costs incurred in examining records of holders of property and in collecting the property from those holders.]

This section increases from $25,000 to $100,000 the sum which is recommended to be retained in a trust account for payment of claims. It is contemplated that the amount of the trust fund which is ultimately established will reflect a state's experience in paying owners' claims.

SECTION 14. FILING CLAIM WITH ADMINISTRATOR; HANDLING OF CLAIMS BY ADMINISTRATOR.

(a) A person, excluding another State, claiming an interest in property paid or delivered to the administrator may file a claim on a form prescribed by the administrator and verified by the claimant.

(b) Within 90 days after a claim is filed the administrator shall consider the claim and give written notice to the claimant that the claim is granted or the claim is denied in whole or in part. If the claim is denied, the administrator shall state the reasons for the denial and inform the claimant as to what additional evidence is required before the claim will be allowed, and the date established under Section 16 as the last day to seek judicial review of the administrator's denial of the claim.

(c) Within 30 days after a claim is allowed, the administrator shall pay over or deliver to the claimant the property or the net proceeds of its sale if the property has been sold by the administrator, together with any additional amount to which the claimant may be entitled under Section 11.

(d) A holder who pays the owner for property that has been delivered to the State and which, if claimed from the administrator by the owner would be subject to an increment under Section 11, shall recover the amount of such increment from the administrator.

After property is delivered to the administrator and a valid claim is made, the administrator is to return the property or, if it has been sold, pay the net proceeds of sale. If the claim is for an underlying share interest in a business association and the administrator has sold the property within 3 years, the claimant is entitled to the net proceeds of sale or the market value of the property at the time claim was made, whichever is higher, together with any additional amount payable under Section 11.

Section 11 also provides for the administrator to pay interest on property which was interest bearing to the owner. The rate of interest will be fixed by each state enacting the Act and should fairly reflect prevailing rates.

SECTION 15. CLAIM OF ANOTHER STATE TO RECOVER PROPERTY; PROCEDURE.

(a) At any time after property has been paid or delivered to the administrator under this [Act] another State may recover the property if:

(1) the property was delivered to the custody of this State because the records of the holder did not reflect the last known address of the apparent owner when the property was presumed abandoned under this [Act], and the other State establishes that the last known address of the apparent owner or other person entitled to the property was in that State and under the laws of that State the property escheated to or was subject to a claim of abandonment by that State;

(2) the last known address of the apparent owner or other person entitled to the property, as reflected by the records of the holder, is in the other State and under the laws of that State the property has escheated to or become subject to a claim of abandonment by that State;

(3) the records of the holder were erroneous in that they did not accurately identify the owner of the property and the last known address of the owner is in the other State and under the laws of that State the property escheated to or was subject to a claim of abandonment by that State;

(4) the property was subjected to custody by this State under Section 3(6) and under the laws of the State of domicile of the holder the property has escheated to or become subject to a claim of abandonment by that State; or

(5) the property is a sum payable on a travelers check, money order, or similar instrument that was delivered into the custody of this State under Section 3(7), and the instrument was purchased in the other State, and under the laws of that State the property escheated to or is subject to a claim of abandonment by that State.

(b) A claim of another State to recover escheated or abandoned property must be presented in a form prescribed by the administrator, who shall decide the claim within 90 days after it is presented. The administrator shall allow the claim upon determination that the other State is entitled to the abandoned property under subsection (a).

(c) The administrator shall require another State, before recovering property under this section, to agree to indemnify this State and its officers and employees against any liability on a claim for the property.

Paragraph 2 parallels Section 3(4), which permits the state of corporate domicile to take if the state of the last known address does not provide for the escheat or custodial taking of the property. If the state of the last known address subsequently enacts an unclaimed property law which covers the property, the taking state must turn it over.

Paragraph 4, parallelling Section 3(6), provides that property initially claimed under a "contacts" test because there was no last known address and the state of domicile had no applicable unclaimed property law may be reclaimed by the state of corporate domicile if it enacts an applicable unclaimed property law.

Section 15 should be read together with Section 3. Sections 3 and 15 are designed to carry out the priority scheme enunciated in Texas v. New Jersey, 379 U.S. 674 (1965). In general the state in which the owner had his or her last known address is entitled to claim abandoned property. Where there is insufficient information to permit this assertion of custody, the state of the holder's domicile takes the property subject to a later claim by the state of the last known address.

Paragraph 1 provides that if property was paid to the state of the holder's domicile because the last known address of the owner was unknown and it is later established that the last known address of the person entitled to the property was in another state, the state of domicile should pay over to the state of last known address.

Paragraph 2 parallels Section (3) paragraph (4), which permits the state of corporate domicile to take if the state of the last known address does not provide for the escheat or custodial taking of the property. If the state of the last known address subsequently enacts an unclaimed property law which covers the property, the taking state must turn it over.

Paragraph 3 addresses the problem of Nellius v. Tampax, Inc., 394 A.2d 333 (Del. Ch. Ct. 1978) in which the holder's records did not reflect the fact that the record owner had sold the property to another. The court concluded, under Texas v. New Jersey, that the holder's records were controlling and that it could properly report and deliver the property to the state in which its records showed the owner to be resident. However, as provided in Texas v. New Jersey and in paragraph 3, the state of the owner's actual residence could then claim the property from the state to which it was initially reported.

Paragraph 4 provides that property initially claimed under a "contacts" test because there was no last known address and the state of domicile had no applicable unclaimed property law may be reclaimed by the state of corporate domicile if it enacts an applicable unclaimed property law.

Subsection (c) provides that the state that initially receives the property and is later requested to remit it to another state, may require an indemnification agreement from the claiming state.

SECTION 16. ACTION TO ESTABLISH CLAIM. A person aggrieved by a decision of the administrator or whose claim has not been acted upon within 90 days after its filing may bring an action to establish the claim in the [ ] court, naming the administrator as a defendant. The action must be brought within [90] days after the decision of the administrator or within [180] days after the filing of the claim if the administrator has failed to act on it. [If the aggrieved person establishes the claim in an action against the administrator, the court shall award the claimant costs and reasonable attorney's fees.]

After property is presumed abandoned and reported to the administrator the administrator must attempt to locate the missing owner. Thereafter, if the property has been delivered to the administrator and the owner or his representative appears, the administrator must pay the claim. The owner's rights are never cut off; under this Act, the owner's rights exist in perpetuity. Although some state administrators have urged legislation that would terminate an owner's right to the property merely by the passage of time, such enactments may be unconstitutional. In Hamilton v. Brown, 161 U.S. 256, 275, 16 S. Ct. 585, 592, 40 L. Ed. 691, 699, (1896), the Supreme Court held that any procedure by which the state seeks to cut off the owner's title through escheat must include "actual notice by service of summons to all known claimants, and constructive notice by publication to all possible claimants who are unknown . . . ." Any lesser procedure appears to fall short of due process. The history of escheat, as compared with modern unclaimed property legislation, is discussed in "Unclaimed Property and Reporting Forms," Epstein, McThenia & Forslund, ch. 1 (Matt. Bend. 1984).

SECTION 17. ELECTION TO TAKE PAYMENT OR DELIVERY.

(a) The administrator may decline to receive property reported under this [Act] which the administrator considers to have a value less than the expenses of notice and sale.

(b) A holder, with the written consent of the administrator and upon conditions and terms prescribed by the administrator, may report and deliver property before the property is presumed abandoned. Property delivered under this subsection must be held by the administrator and is not presumed abandoned until such time as it otherwise would be presumed abandoned under this [Act].

Subsection 17(b) authorizes the administrator to assume custody of property prior to the time for presuming abandonment. Administrators have expressed a need for this authority to enable them to take possession of property, such as the contents of a safe deposit box repository, when the holder is terminating business but the property is not yet reportable. Additionally, other holders which have conducted business in the state and are ceasing operations might use the provisions of this section. The property must be held by the administrator until the abandonment period runs and then the property will be subject to the other provisions of the Act.

SECTION 18. DESTRUCTION OR DISPOSITION OF PROPERTY HAVING INSUBSTANTIAL COMMERCIAL VALUE; IMMUNITY FROM LIABILITY. If the administrator determines after investigation that property delivered under this [Act] has no substantial commercial value, the administrator may destroy or otherwise dispose of the property at any time. An action or proceeding may not be maintained against the State or any officer or against the holder for or on account of any acts taken by the administrator under this section, except for acts constituting intentional misconduct or malfeasance.

This section provides for the disposition of property which has no commercial value. As an example, the contents of safety deposit boxes often include such items as rent receipts, personal correspondence and lapsed insurance policies. In such cases, these contents might have some personal significance to the owner, which the administrator would take into consideration in determining for what period of time he will hold the property awaiting a claim by the owner. However, in the usual situation there will be no interest to be preserved by maintaining this property under state custody.

Under this section the administrator would be free to retain property having no commercial value. Further, the administrator could transfer it to other agencies or institutions which might have an interest in the property because of its historical value or other independent significance.

SECTION 19. PERIODS OF LIMITATION.

(a) The expiration, before or after the effective date of this [Act], of any period of limitations on the owner's right to receive or recover property, whether specified by contract, statute, or court order, does not preclude the money or property from being presumed abandoned or affect any duty to file a report or to pay or deliver abandoned property to the administrator as required by this [Act].

(b) An action or proceeding may not be maintained by the administrator to enforce the provisions of this [Act] more than ten years after the holder either specifically reported the property to the administrator or gave express notice to the administrator of a dispute regarding the property. In the absence of a report the period of limitations is tolled. The period of limitations is also tolled by the filing of a false or fraudulent report.

Subsection (a) is consistent with cases such as People v. Marshall Field & Co., 83 Ill. App. 3d 811, 404 N.E.2d 368 (1980), Screen Actors Guild, Inc. v. Cory, 91 Cal.App.3d 111, 154 Cal.Rptr. 77 (1979), and State v. Jefferson Lake Sulphur Co., 36 N.J. 577, 178 A.2d 329 (1962). It also abrogates another contractual condition often asserted as a defense to reporting property otherwise presumed abandoned, the failure to present the evidence of indebtedness.

Subsection (a) is written to insure also that although the owner's claim against the holder may be barred by the statute of limitations prior to the effective date of the Act, the holder is not relieved of his obligation to pay abandoned property to the administrator. The comment to Section 16 of the 1966 Act noted that local law must be consulted in order to ascertain whether legislation constitutionally may be enacted reviving a cause of action barred by the statute of limitations. This issue has been litigated in several states, e.g., Country Mutual Insurance Co. v. Knight, 40 Ill.2d 523, 240 N.E.2d 612 (1968); Douglas Aircraft Co. v. Cranston, 24 Cal.Rptr. 851, 374 P.2d 819 (1962); cf. Standard Oil v. New Jersey, 5 N.J. 281, 74 A.2d 565 (1950). Even though the statute of limitations has run before the effective date of the Act, the holder may be required to report and deliver the property to the state if the holder does not regularly enforce the statute. See South Carolina Tax Commission v. Metropolitan Life Insurance Co., 266 S.C. 34, 221 S.E.2d 522 (1975). But see State of Washington v. Puget Sound Power & Light Co., 103 Wash.2d 501, 694 P.2d 7, 10 (1985).

Subsection (b) provides that an administrator must commence an action against a holder within 10 years after the time the property was first reported or specifically placed in issue. The 1994 amendment clarifies existing law and codifies the holdings of abandoned property cases that have ruled on issues of limitations. See Blue Cross of Northern California v. Cory, 174 Cal. Rptr. 901, 913, 120 Cal. App.3d 743 (App., 1981) (no statute of limitations will commence to run against the state until after the holder duly reports in compliance with the unclaimed property act); Travelers Express Co., Inc. v. Cony, 664 F.2d 763 (9th Cir. 1981) (statute of limitations commences to run only after filing of report which contains written explanation of why property is not subject to the act); Employers Insurance of Wausau v. Smith, 453 N.W.2d 856 (Wis. 1990) (filing of report essential to running of statute of limitations, since unclaimed property act depends on self-reporting); Sennet v. Insurance Co. of North America, 432 Pa. 5215, 247 A.2d 774, 777-78 (1968) (same; "INA simply has to take its stand: if it reports the holding [of funds in issue] (as a precautionary measure), the statute will run; if it does not, the Commonwealth is not precluded . . . ."); State of New Jersey v. U.S. Steel Corporation, 22 N.J. 341, 126 A.2d 168 (1956) (same); Treasurer and Rec. Gen. v. John Hancock Mut. Life Ins. Co., 388 Mass. 410, 446 N.E.2d 1376 (1983) (same). The provision also parallels the Internal Revenue Code, 26 U.S.C. sec. 6501(c). Since the Unclaimed Property Act is based on a theory of truthful self-reporting, a holder which conceals property, wilfully or otherwise, cannot expect the protection of the stated limitations period.

SECTION 20. REQUESTS FOR REPORTS AND EXAMINATION OF RECORDS.

(a) The administrator may require a person who has not filed a report, or a person who the administrator believes has filed an inaccurate, incomplete, or false report, to file a verified report in a form specified by the administrator stating whether the person is holding any unclaimed property reportable or deliverable under this [Act], describing any property not previously reported or as to which the administrator has made inquiry, and specifically identifying and stating the amounts of property that may be in issue.

(b) The administrator, at reasonable times and upon reasonable notice, may examine the records of any person to determine whether the person has complied with this [Act]. The administrator may conduct the examination even if the person believes it is not in possession of any property reportable or deliverable under this [Act]. The administrator may enter into an agreement with any other person to conduct the examination.

(c) The administrator may at reasonable times examine the records of an agent, including a dividend disbursing agent or transfer agent, of a business association which is the holder of property presumed abandoned if the administrator has given the notice required by subsection (b) to both the business association and the agent at least 90 days before the examination.

(d) If an examination of the records of a person results in the disclosure of property reportable and deliverable under this [Act], the administrator may assess the cost of the examination against the holder at the rate of $[200] a day for each examiner, or such greater amount that is reasonable and was actually incurred, but the assessment may not exceed the value of the property found to be reportable and deliverable. The cost of examination made pursuant to subsection (c) may be imposed only against the business association.

(e) If a holder fails after the effective date of this [Act] to maintain the records required by Section 21 and the records of the holder available for the periods subject to this [Act] are insufficient to permit the preparation of a report, the administrator may require the holder to report and pay such amounts as may reasonably be estimated from any available records of the holder or on the basis of any other reasonable estimating technique that the administrator may select.

This section is designed to facilitate compliance with the Act. Subsection (a) provides for the filing of a negative report if the administrator requires such a report and will minimize disruption which would otherwise be caused to the holder if an examination of records instead were conducted by the administrator. Subsection (b) is based on Section 23 of the 1966 Act. The 1966 Act authorizes examination if the administrator has reason to believe the holder has failed to report property. To require as prerequisite for an examination that a state has reason to believe information has been withheld encourages litigation and imposes an unnecessary burden on the state.

Subsection (c) is intended to provide a useful method whereby the administrator can conduct a single examination of a dividend disbursing agent or transfer agent serving in such capacity for numerous business associations.

Subsection (e) permits the use of estimates in instances where the holder has failed to report and deliver property that is abandoned and no longer has records with which to prepare such a report. Additionally, if the holder fails to maintain records of the last known address, states can assert claims based on any other records which might exist. Resort may be had to computer codes. While the holding in Texas v. New Jersey is intended to prevent multiple liability of holders, this subsection, viewed as a penalty for failure to maintain records of names and last known address, is not inconsistent with that decision. That part of subsection (e) which permits the state to make estimates was prospective only from the date of adoption of the 1981 Act. This Act, expressly stating the bases on which estimates may be made, is intended as clarification. Thus, the amendment permits the state to use estimating techniques--where a holder has not maintained records as required by statute--based on industry averages, and to draw on facts and inferences that may be based on statistics drawn from a broader basis than that of the holder in question who has failed to keep records. The argument has been made that the state, in making an estimate, must make its projections only on the holder's records; that the state's estimates can look only to the records that the holder has available, no matter how scanty they may be. This Section, together with Section 23, also clarifies the administrator's authority to enter into agreements to enforce the State's custodial powers in all states.

SECTION 21. RETENTION OF RECORDS.

(a) A holder required to file a report under Section 7, as to any property for which it has the last known address of the owner, shall maintain a record of the name and last known address of the owner for 10 years after the property becomes reportable, unless a shorter time is provided in subsection (b) or by rule of the administrator.

(b) A business association that sells in this State its travelers checks, money orders, or other similar written instruments, other than third-party bank checks on which the business association is directly liable, or that provides those instruments to others for sale in this State, shall maintain a record of the instruments while they remain outstanding, indicating the State and date of issue, for three years after the date the property is reportable.

This section does not require that the holder in the first instance obtain the address of the owner. For example, a record of the address of the purchaser or recipient of a gift certificate customarily is not obtained.

Initially, the period for which records of address must be obtained is established at 10 years from the date the property was first reportable as abandoned property. However, this section permits a state to shorten this period by rule. Because the reporting practices of holders vary, an administrator will want to consider such factors as the burden imposed on the holder in maintaining such records, the opportunity of returning the property, and the type of business of the holder. For example, in the case of property that would be reportable in the aggregate without the name and address of the apparent owner under Section 7, a state might adopt a rule providing for a relatively short record retention period on condition that the holder maintain a record sufficient to satisfy the requirements of Texas v. New Jersey that there be a last known address or that the state can prove that the last known address of the creditor was within its borders.

Subsection (b) is designed to assure that the information required for asserting a claim to travelers checks and money orders is retained by the issuers of travelers checks and money orders.

SECTION 22. ENFORCEMENT. The administrator may maintain an action in a court of competent jurisdiction to enforce this [Act]. The Court shall award reasonable attorney's fees to the prevailing party.

Although generally an action would be brought in an administrator's own state, action to enforce the Act may also be brought in the courts of another state. See Section 23. See also, Commonwealth of Pennsylvania v. Kervick, 60 N.J. 289, 288 A.2d 289 (1972).

SECTION 23. INTERSTATE AGREEMENTS AND COOPERATION; JOINT AND RECIPROCAL ACTIONS WITH OTHER STATES; CONFIDENTIALITY.

(a) The administrator may enter into agreements with other States to exchange information relating to unclaimed property or its possible existence. The agreements may permit other States, or any other person acting on behalf of a State, to examine records as authorized in Section 20. The administrator by rule or regulation may require the reporting of information needed to enable compliance with agreements made under this section and prescribe the form.

(b) The administrator may join with other States to seek enforcement of this [Act] against any person who is or may be holding property reportable under this [Act].

(c) At the request of another State, the attorney general of this State may commence an action on behalf of the administrator of the other State to enforce, in this State, the unclaimed property laws of the other State against a holder of property subject to escheat or a claim of abandonment by the other State, if the other State has agreed to pay expenses incurred by the attorney general in maintaining the action.

(d) The administrator may request that the attorney general of another State or any other attorney commence an action on behalf of the administrator in the other State. With the approval of the attorney general of this State, the administrator may retain any other attorney to commence an action in this State on behalf of the administrator. This State shall pay all expenses including attorney's fees in maintaining any action under this subsection. With the administrator's approval, the expenses and attorney's fees may be paid from funds received under this [Act]. [The administrator may agree to pay to the person bringing the action attorney's fees based in whole or in part on a percentage of the value of any property recovered in the action.] Any expenses or attorney's fees paid under this subsection may not be deducted from the amount that is subject to the claim by the owner under this [Act].

(e) Documents and working papers obtained or compiled by the administrator, or the administrator's agents, employees, or designated representatives in the course of conducting an audit under Section 20 are confidential and are not public records except:

(1) when used by the administrator in the course of an action to collect unclaimed property or otherwise enforce this [Act];

(2) when used in joint audits conducted with or pursuant to agreements with other States, the federal government, or other governmental entities; or

(3) pursuant to subpoena or court order.

(f) The administrator's final completed audit reports are records open to the public. A final report may not contain confidential documentation or working papers unless an exception in subsection (e) applies.

To avoid conflicts between the administrator's procedures and the procedures of administrators in other jurisdictions that enact the Uniform Unclaimed Property Act, the administrator, before adopting, amending or repealing rules, should advise and consult with administrators in other jurisdictions that adopt this [Act] substantially and take into consideration the rules of administrators in other jurisdictions that enact the Uniform Unclaimed Property Act.

Cooperation among states is essential if abandoned property programs are to be efficiently administered. In recent years several states have joined together to audit major holders. Additionally, several states have entered into agreements to act as collection agents for each other. Interstate cooperation and the development of uniform reporting forms and uniform regulations will be of assistance to holders as well as program administrators. This Section encourages joint agreements and cooperation among the states.

In many instances holders apparently fail to report based on the assumption that individual and distant states will not go to the expense of auditing records. This section will permit spreading the very real expense of conducting audits among several collecting states and the pooling of information which should make enforcement of the Act less burdensome to the state and potentially less burdensome to major corporate holders. An agreement among the states might expressly relieve holders from reporting piecemeal to separate states. Instead, they might be able to file a single report of all abandoned property, wherever located, and regardless of the address of the owner.

Reciprocal agreements envisioned under subsection (c) do not require the consent of Congress under the Compact Clause of the Constitution, Art. I, 10, cl. 3. The Supreme Court has held that the restriction of the Compact Clause is limited to combinations or agreements that tend to increase the political power of the states to such an extent that it interferes with the supremacy of the United States. United States Steel v. Multi-State Tax Commission, 434 U.S. 452 (1978). In Multi-State Tax Commission the Court upheld a tax compact, that had not been approved by Congress creating a permanent administrative body to perform audits of multi-state taxpayer operations, and at the request of a member state, to sue to enforce the audits in the courts of the member states.

This section simply authorizes an economical approach to enforcing a state's claim under Texas v. New Jersey. Each state retains discretion to bring suit or to decide against such action, remaining free to adopt its own abandoned property policies. The position of the states will not be politically improved at the expense of the federal government although the process for claiming abandoned property will be more efficient.

Action by one state for another is expressly permitted by this section. In some cases the administrator of a state may deem it wise to seek counsel in a foreign jurisdiction. There may be small claims which would not justify individual action by the claimant state in a foreign forum, but if several states join forces and retain counsel in the holder state to sue for all of them, it might be administratively justified. This section expressly permits such joint action.

Subsections (e) and (f) are based on the North Dakota unclaimed property law, and are deemed necessary to provide fully for the joint cooperation among states promoted by other provisions of the Act.

SECTION 24. INTEREST AND PENALTIES.

(a) A holder who fails to report, pay or deliver property within the time prescribed by this [Act] shall pay to the administrator interest at the annual rate of [12 percent] [2 percentage points above the annual rate of discount, in effect on the date the property should have been paid or delivered, for the most recent issue of 52-week United States Treasury bills] on the property or value thereof from the date the property should have been paid or delivered.

(b) A holder who fails to report, pay or deliver property within the time prescribed by this [Act], or fails to perform other duties required under this [Act], shall pay to the administrator, in addition to interest as provided in subsection (a), a civil penalty of [$200] for each day the report, payment or delivery is withheld, or duty not performed, up to a maximum of [$5,000]. Upon a holder's showing of good cause the administrator may waive this penalty or any portion thereof, and shall waive this penalty if the holder acted in good faith and without negligence.

(c) A holder who willfully fails to report, pay or deliver property within the time prescribed by this [Act], or willfully fails to perform other duties required under this [Act], shall pay to the administrator, in addition to interest as provided in subsection (a), a civil penalty of [$1,000] for each day the report, payment or delivery is withheld, or the duty not performed, up to a maximum of [$25,000], plus 25 percent of the value of any property that should have been but was not reported.

(d) A holder who renders a fraudulent report shall pay to the administrator, in addition to interest as provided in subsection (a), a civil penalty of [$1,000] for each day from the date a report under this [Act] was due, up to a maximum of [$25,000], plus 25 percent of the value of any property that should have been but was not reported.

A major weakness of the 1966 Act was its ineffective penalty provision. Although the 1981 Act increased penalties for non-compliance, voluntary compliance with the Act continued to be a problem. In this [Act], compliance failures not accompanied by willfulness are dealt with by moderate increases in the applicable penalties, and the administrator simultaneously is given authority to waive both interest and penalties where the holder has attempted in good faith to comply, or where the failure has been due to excusable neglect. Where the holder's failure is willful or fraudulent, penalties are increased more substantially.

Criminal penalties, which were the sole enforcement mechanism of the 1954 Act and which were retained in the 1981 Act have been eliminated, as they were not effective and rarely, if ever, pursued.

SECTION 25. AGREEMENT TO LOCATE REPORTED PROPERTY.

(a) An agreement by an owner to pay compensation to locate, deliver, recover, or assist in the recovery of property reported under this [Act], entered into during the period commencing on the date the property was presumed abandoned and extending to a time that is 24 months after the date the property is paid or delivered to the administrator, is void and unenforceable. An agreement entered into after the 24 month period is valid only if the agreement is in a writing signed by the apparent owner and clearly sets forth the nature and value of the property and the value of the apparent owner's share after the fee or compensation has been deducted.

(b) An agreement by an owner to pay compensation to locate, deliver, recover, or assist in the recovery of property, other than an agreement subject to subsection (a), is valid only if:

(i) the agreement contains the following disclosure:

"Each state maintains an Office of Abandoned Property. Generally, if for a number of years an owner of property has not communicated in writing directly with the holder of the property and has not otherwise indicated an interest in the property, the property may be transferred to the Office of Abandoned Property which will act as custodian of the property for the owner;"

and,

(ii) the amount of the compensation agreed to be paid by the apparent owner is not unconscionable; and

(iii) the compensation to be paid under the agreement, if the agreement applies to mineral proceeds, does not include a portion of the underlying minerals or any production payment, overriding royalty, or similar payment.

(c) An owner who has paid compensation under an agreement that is void or unenforceable under this section may bring an action to recover such compensation, along with reasonable attorneys' fees, or the administrator may maintain such action on behalf of any owner or class of owners.

(d) This section does not prevent an owner from asserting at any time that an agreement to locate property is otherwise invalid.

This section is intended to enhance the likelihood that the owner of the abandoned property will be located by the efforts of the state, and will receive a return of the property without payment of a "finder's fee." In the past, it appears to have been the practice in many states for unclaimed property locators or heir finders to utilize the state's lists of names and addresses of missing owners to contact them and propose to find their property for them for a fee, before the state has had an opportunity to locate the missing owners. Some states have enacted legislation that prohibits examination of these lists by anyone except an apparent owner or other person having a legal interest in the property, but in many states that kind of provision may be in conflict with the state's public records laws.

SECTION 26. FOREIGN TRANSACTIONS. This [Act] does not apply to any property held, due and owing in a foreign country and arising out of a foreign transaction.

This provision is designed to exclude from the coverage of the Act wholly foreign transactions.

SECTION 27. TRANSITION PROVISION. The initial report filed under this [Act] for property that was not required to be reported before the effective date of this [Act] but which is subject to this [Act] must include all items of property that would have been presumed abandoned during the ten-year period next preceding the effective date of this [Act] as if this [Act] had been in effect during that period.

This section is retained from the 1981 Act and deals with the problem of how far back a holder must check its records to determine what property not subject to the prior Act must be paid to the state under this Act. Thus, property which was not covered by any unclaimed property law prior to adoption of the 1981 Act, but was covered by that Act, continues to be covered by this Act if the obligation was incurred not more than 10 years prior to adoption of the 1981 Act and the statute of limitations is not tolled under Section 19(b). For example, if a state enacts this Act effective January 1, 1996 for property not previously presumed abandoned, the holder must report it if, as of January 1, 1986, it had been unclaimed for the abandonment period. A similar provision is found in Section 11(g) of the 1966 Act.

SECTION 28. SAVINGS CLAUSE. This [Act] does not relieve a holder of a duty that arose before the effective date of this [Act] to report, pay, or deliver property. Except as otherwise provided in Section 19(b), a holder who did not comply with the law in effect before the effective date of this [Act] is subject to the applicable enforcement and penalty provisions that then existed and which are continued in effect for the purpose of this section.

Section 28 provides that if a state had an unclaimed property law prior to the adoption of this Act, a holder is not relieved of his duty to report and pay over the property abandoned under the Act then existing.

SECTION 29. RULES. The administrator may adopt necessary rules to carry out the provisions of this [Act].

SECTION 30. SEVERABILITY. If any provision of this [Act] or the application thereof to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of this [Act] which can be given effect without the invalid provision or application, and to this end the provisions of this [Act] are severable.

SECTION 31. UNIFORMITY OF APPLICATION AND CONSTRUCTION. This [Act] shall be applied and construed to effectuate its general purpose to make uniform the law with respect to the subject of this [Act] among states enacting it.

SECTION 32. SHORT TITLE. This [Act] may be cited as the Uniform Unclaimed Property Act (199 ).

SECTION 33. REPEAL. The following acts and parts of acts are hereby repealed:

(a)

(b)

(c)

SECTION 34. TIME OF TAKING EFFECT. This [Act] takes effect .....