US Supreme Court hears arguments in $150M unclaimed property dispute between states News
US Supreme Court hears arguments in $150M unclaimed property dispute between states

The US Supreme Court Monday heard the case of Delaware v. Pennsylvania and Wisconsin, a consolidated case involving approximately $150 Million dollars in unclaimed money. The court is asked to interpret “money order” as used in 12 USC §§ 2501-03 and Disposition of Abandoned Money Orders and Travelers Checks Act of 1974.

The case, consolidated with Arkansas v. Delaware, arose over a conflict between Delaware and 30 other states. At the heart of the issue is MoneyGram, a business involved in selling “official checks.” MoneyGram’s business model involves having customers purchase “official checks” from a MoneyGram location for the price of a transaction fee and the value of the official check from the bank. The customer then can cash the check at a bank, which MoneyGram reimburses. If the check is never cashed, though, the funds held by MoneyGram become unclaimed property.

The question in this case is what should happen with that unclaimed property under the Disposition of Abandoned Money Orders and Travelers Checks Act of 1974.

MoneyGram, a Delaware corporation, has operated its business under the assumption that the act did not apply to their official checks. As a result, MoneyGram transferred funds to its base in Delaware. Pennsylvania and Wisconsin, along with 28 other states, brought suit. The 30 states argue that under the act, the unclaimed property “payable on a money order, traveler’s check, or other similar written instrument (other than a third party bank check)” comes into the possession of the state in which the unclaimed property was originally purchased.

Delaware argues that MoneyGram’s official checks are not money orders as defined by federal law because of certain differences in the labeling and treatment of the official checks. Delaware seeks to categorize the official checks as third party bank checks, which fall outside of the reach of the Disposition of Abandoned Money Orders and Travelers Checks Act of 1974.

Previously a special master, appointed by the court to conduct independent fact-finding and issue recommendations, sided with the 30 states in the dispute. While the special master found the 30 states’ argument in favor of categorizing the official checks as money orders, the special master declined to define what a “money order” is under federal law. That is the question now presented to the court.