BILL ANALYSIS Ó
AB 355
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Date of Hearing: March 24, 2015
ASSEMBLY COMMITTEE ON JUDICIARY
Mark Stone, Chair
AB 355
(Eduardo Garcia) - As Amended March 17, 2015
SUBJECT: UNCLAIMED PROPERTY: SAFE DEPOSIT BOXES
KEY ISSUE: IN ORDER TO FURTHER THE GOAL OF REUNITING OWNERS
WITH THEIR UNCLAIMED PROPERTY, SHOULD A NAME ATTACHED TO A U.S.
SAVINGS BOND OR MILITARY AWARD FOUND IN A SAFE DEPOSIT BOX BE
REPORTED TO THE STATE CONTROLLER SO THAT THE BOND OR AWARD can
be listed UNDER A SEARCH OF THAT NAME IN THE STATE'S UNCLAIMED
PROPERTY DATABASE?
SYNOPSIS
Existing law requires the holder of escheated property to report
to the State Controller a description of the property, the place
where it is held and may be inspected, and any amounts owing to
the holder for unpaid rent, storage charges, or the cost of
opening the safe deposit box, but not any name attached to or
appearing on particular items found in the safe deposit box that
may indicate different ownership of that item. This bill,
sponsored by the State Controller's Office, seeks to require any
business association escheating the contents of a safe deposit
box to additionally include in its report to the Controller any
name attached to a U.S. Savings Bond or military award inside
the safe deposit box that is different from the name of the
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owner of the box's contents. According to the author, this new
requirement would only apply to U.S. savings bonds and military
awards because these are two types of property that are often
found in escheated safety deposit boxes and whose owner is
readily identifiable by the name attached to or appearing on the
item itself. Proponents contend this modest bill will help
further one of the main objectives of the Unclaimed Property
Law, which is to restore property to its rightful owner. There
is no known opposition to the bill.
SUMMARY: Revises information that holders of property contained
in safe deposit boxes must report to the Controller upon escheat
of the contents. Specifically, this bill requires the business
association holding the contents of the safe deposit box to
additionally include in its report to the Controller any name
attached to a U.S. Savings Bond or military award inside the
safe deposit box that is different from the name of the owner.
EXISTING LAW:
1)Provides that the contents of a safe-deposit box held by a
business association shall escheat to the state if unclaimed
by the property owner for more than three years. (Code of
Civil Procedure Section 1514(a). All further references are
to this code unless otherwise stated.)
2)Requires the business association that holds the property to
notify the apparent owner, if known, that the owner's
contents, or the proceeds of the sale of the contents, will
escheat to the state if unclaimed, and requires this notice to
be provided not less than 6 months and not more than 12 months
before the time the contents, or the proceeds of the sale of
the contents, become reportable to the Controller. (Section
1514(b).)
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3)Prescribes the content of the above notice, including, among
other things: an identification of the safe deposit box by
number or identifier; a statement that the contents of, or the
proceeds of sale of the contents of, the safe deposit box will
escheat to the state unless the owner requests the contents or
their proceeds; and advice to the owner to make arrangements
with the business association to either obtain possession of
the contents of, or the proceeds of sale of the contents of,
the safe deposit box or other safekeeping repository, or enter
into a new agreement with the business association to
establish a leasing or rental arrangement. (Section 1514(c).)
4)Provides that every person holding the contents of any safety
deposit box that has escheated to the state shall report
annually to the Controller a description of the escheated
property and the place where it is held and may be inspected
by the Controller. Further requires the report to set forth
any amounts owing to the holder for unpaid rent or storage
charges and the cost of opening the safe deposit box, if any,
in which the property was contained. (Section 1530(b)(4).)
FISCAL EFFECT: As currently in print this bill is keyed
non-fiscal.
COMMENTS: According to the author, this bill, sponsored by the
State Controller's Office (SCO), will help the SCO reunite
owners of savings bonds or military awards with their property
when that property was contained in a safe deposit box belonging
to a different person that escheated to the state. The author
explains:
The State Controller can only list the owner of the
property that has reverted to the state, not an owner
of a separate piece of property that is a subset of
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the larger piece of property. This becomes a problem
in the case of a safe deposit box, where the box
itself may be in one person's name, but some of the
contents - for example, military awards or U.S.
Savings Bonds - may clearly be in another person's
name. The State Controller is currently holding about
70,000 U.S. Savings Bonds, the majority of which have
reached maturity and are no longer earning interest.
Institutions that must escheat safe deposit boxes to
the State Controller currently have report to the
Controller a description of the items in the box and a
place where the items can be inspected, the name of
the owner of the safe deposit box, but they do not
report any other name associated with the items inside
the safe deposit box.
Background of the UPL: The Unclaimed Property Law, enacted in
1958, establishes procedures for the escheat of unclaimed
personal property. Property escheated to the state means the
state has custody of the property in perpetuity, until the owner
claims the property. Under the UPL, there are three significant
parties: the owner, the holder, and the state. The "owner" is
the person to whom the property actually belongs. The "holder"
is the person or entity who has possession of the property. The
holder might be a bank or other money depositary (e.g., holds
deposits of owner's money, holds property in a safe deposit
box), or a business that has issued a check to an individual or
other business, or a life insurance or annuity. Holders of
unclaimed property have no interest in the unclaimed property.
(Bank of America v. Cory (1985) 164 Cal.App.3d 66, 74.) A
holder is simply a trustee of the property while the property is
in the possession of the holder. However, while the property is
in the custody of the holder, the holder generally uses the
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funds or the property as an asset.
The UPL has dual objectives: (1) to protect unknown owners by
locating them and restoring their property to them; and (2) to
give the state, rather than the holders of unclaimed property,
the benefit of its retention, since experience shows that most
abandoned property will never be claimed. (State v. Pacific Far
East Line, Inc. (1962) 261 Cal.App.2d 609, 611; Douglas Aircraft
Co. v. Cranston (1962) 58 Cal.2d 462, 463.) The state, through
the Controller, acts as the protector of the rights of the true
owner. (Bank of America v. Cory, supra, at 74.)
The UPL establishes procedures to be followed when property goes
unclaimed, generally for a period of three years, and escheats
to the state. Under existing law, the holder must annually
report on unclaimed property and turn the property over to the
Controller. (Sections 1530 and 1532.) In turn, the Controller
is required to mail a notice to each person who appears to be
entitled to unclaimed property according to the report filed by
a holder, as well as publish a notice to unclaimed property
owners in a newspaper of general circulation. (Sections 1531
and 1531.5.) A person with an interest in escheated property
may file a claim to recover the property from the state.
(Sections 1540 to 1542.) The Controller maintains a web site
( http://www.sco.ca.gov ) where members of the public may search a
database to discover if the state is holding any of their
property, and may submit claims to recover the funds or
property.
Limited name reporting requirement for U.S. savings bonds and
military awards. Existing law requires the holder of escheated
property to report to the Controller the name and last known
address of each person appearing from the records of the holder
to be the owner of the escheated property. In the case of a
safe deposit box or other safekeeping repository, the holder's
records generally indicate the name of the person who had opened
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the safe deposit account and was responsible for making rent
payments on the box. With respect to the contents of a safe
deposit box, however, existing law only requires the holder of
the escheated property to report to the Controller a description
of the property, the place where it is held and may be
inspected, and any amounts owing to the holder for unpaid rent,
storage charges, or the cost of opening the safe deposit box.
As the author and sponsor point out, existing law does not
require the report to the Controller to include any name
attached to or appearing on a particular item found in the safe
deposit box that may indicate ownership of that item. For
example, a U.S. Savings Bond issued to Mary Smith that was
discovered in a savings deposit box rented by her father John
Brown among other contents belonging to him would not itself be
searchable in the Controller's database as unclaimed property
belonging to Mary Smith.
To address instances such as these, this bill would require any
name "attached to" a U.S. Savings Bond or military award inside
the safe deposit box that is different from the name of the
owner of the box to also be reported to the Controller. Recent
amendments to the bill limit this rule to U.S. savings bonds and
military awards, which, according to the author, are two types
of property that are often found in escheated safety deposit
boxes and whose owner is readily identifiable by the name
attached to or appearing on the item itself. In the case of
U.S. savings bonds, the name of the holder of the bond appears
on the bond itself, indicating its ownership and possibly
distinguishing it from the deposit box owner. In the case of
military awards or medals, however, the name of the recipient
may or may not be inscribed on the award itself. For example,
it may be housed in a small display carrying case with an
accompanying certificate issued by the U.S. government naming
the recipient. According to proponents, the term "attached to"
is not meant to require literal attachment, for example, of a
certificate to a medal, but rather, a clear indication that the
"attached" name is the name of the individual to whom the
savings bond or military award was issued or awarded.
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Because the name of the owner of the safe deposit box's contents
must already be reported on the form prescribed by the
Controller, this bill would only result in a modest, occasional
obligation upon holders to report an additional name in cases
where a savings bond or military award is found inside and
indicates a different name than the owner of the box's contents.
Previous legislation. AB 1291 (Niello) Ch. 522, Stats. 2009,
provides that contents of safety deposit boxes will not escheat
to the state if the owner has maintained other active accounts,
as specified, with the business association holding the safety
deposit box.
REGISTERED SUPPORT / OPPOSITION:
Support
State Controller's Office
Opposition
None on file
Analysis Prepared by:Anthony Lew / JUD. / (916) 319-2334
AB 355
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