BILL ANALYSIS Ó
SENATE JUDICIARY COMMITTEE
Senator Hannah-Beth Jackson, Chair
2015-2016 Regular Session
AB 355 (Eduardo Garcia)
Version: May 26, 2015
Hearing Date: June 16, 2015
Fiscal: Yes
Urgency: No
TH
SUBJECT
Unclaimed Property: Safe Deposit Boxes
DESCRIPTION
Existing law, the Unclaimed Property Law, governs the
disposition of unclaimed property, including the escheat of
certain property to the state, and requires the State Controller
to mail a notice to each person who appears to be entitled to
escheated property, as specified. This bill would authorize the
State Controller to mail a separate notice to an apparent owner
of a United States savings bond, war bond, or military award
inside a safe deposit box or other safekeeping repository whose
name is shown on or can be associated with the contents of a
safe deposit box or other safekeeping repository and is
different from the name of the reported owner.
BACKGROUND
The Unclaimed Property Law (UPL), enacted in 1958, establishes
procedures for the escheat of unclaimed personal property.
Under the UPL, unclaimed property "escheats" to the state, which
means the state has custody of the property in perpetuity, until
the owner claims the property. The UPL assigns rights and
responsibilities for the owners and holders of unclaimed
property, as well as the state. The "owner" is the person to
whom the property actually belongs. The "holder" is the person
who has possession of the property. A holder might be a bank or
other money depositary (e.g. one that holds deposits of owner's
money or holds property in a safe deposit box), a business that
has issued a check to an individual or other business, or the
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issuer of a life insurance policy or an annuity. The holders of
unclaimed property have no interest in that property. (See Bank
of America v. Cory (1985) 164 Cal.App.3d 66, 74.) A holder acts
rather as a trustee of the property while it is in the holder's
possession.
The UPL has dual objectives: (1) to reunite owners with
unclaimed funds or property; and (2) to give the state, rather
than the holder, the benefit of the use of unclaimed funds or
property. (Bank of America v. Cory, 164 Cal.App.3d at 74;
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 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. (Code Civ. Proc. Secs. 1530 and 1532.) The
Controller is then required to mail a notice to each person who
appears to be entitled to unclaimed property according to the
report filed by the holder, and must publish notice to apparent
owners of the property in newspapers of general circulation.
(Code of Civ. Proc. Secs. 1531, 1531.5.) The UPL also
delineates the procedure by which a person with an interest in
escheated property may file a claim to recover the property from
the state. The Controller maintains a public web site where
individuals may discover whether or not the state is holding any
of their funds or property, and may submit claims to recover the
funds or property. (See https://ucpi.sco.ca.gov/ucp/)
This bill would authorize the State Controller to send a notice
to the apparent owner of a United States savings bond, war bond,
or military award whose name is shown on or can be associated
with the contents of a safe deposit box or other safekeeping
repository, in addition to sending a notice to the reported
owner of the safe deposit box or other safekeeping repository.
This bill would also authorize the State Controller to, at his
or her discretion, have all escheated property consisting of
military awards, decorations, equipment, artifacts, memorabilia,
documents, photographs, films, literature, and any other item
relating to the military history of California held in trust for
the Controller at the California State Military Museum and
Resource Center, or successor entity.
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CHANGES TO EXISTING LAW
Existing law , the Unclaimed Property Law (UPL), requires
property held or owing by a business association that is
unclaimed for more than three years, as specified, to file a
report with the State Controller and to turn over that property
to the state. (Code Civ. Proc. Secs. 1513, 1513.5, 1530-1532.)
Existing law provides that the contents of, or the proceeds of
sale of the contents of, any safe deposit box or any other
safekeeping repository, held in this state by a business
association, escheat to this state if unclaimed by the owner for
more than three years from the date on which the lease or rental
period on the box or other repository expired, or from the date
of termination of any agreement because of which the box or
other repository was furnished to the owner without cost,
whichever last occurs. (Code Civ. Proc. Sec. 1514.)
Existing law provides that, except as provided, when the holder
of unclaimed property has in its records an address for the
apparent owner of property valued at fifty dollars ($50) or
more, the holder shall make reasonable efforts to notify the
owner that the owner's property will escheat to the state on a
specified date. The notice shall be mailed not less than 6 nor
more than 12 months before the time when the owner's property
would escheat and become reportable to the Controller. (Code
Civ. Proc. Sec. 1520.)
Existing law provides that tangible personal property may be
excluded from the notices required by the UPL, shall not be
delivered to the State Controller, and shall not escheat to the
state, if the State Controller, in his discretion, determines
that it is not in the interest of the state to take custody of
the property and notifies the holder in writing of his
determination not to take custody of the property. (Code Civ.
Proc. Sec. 1533.)
Existing law provides that within one year after payment or
delivery of escheated property, the Controller shall cause a
notice to be published, in a newspaper of general circulation
which the Controller determines is most likely to give notice to
the apparent owner of the property, that information concerning
the amount or description of the property may be obtained by any
persons possessing an interest in the property by addressing an
inquiry to the Controller. (Code Civ. Proc. Sec. 1531.)
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Existing law provides that the Controller shall also mail a
notice to each person having an address listed in the report
from the holder who appears to be entitled to property of the
value of fifty dollars ($50) or more that has escheated under
the UPL. The Controller shall mail the notice to the apparent
owner for whom a current address is obtained if the address is
different from the address previously reported to the
Controller. (Code Civ. Proc. Sec. 1531.)
Existing law provides that all escheated property consisting of
military awards, decorations, equipment, artifacts, memorabilia,
documents, photographs, films, literature, and any other item
relating to the military history of California and Californians
that is delivered to the Controller shall be held in trust for
the Controller at the California State Military Museum and
Resource Center. Existing law states that the California State
Military Museum and Resource Center shall be responsible for the
costs of storage and maintenance of escheated property delivered
by the Controller. (Code Civ. Proc. Sec. 1563.)
Existing law authorizes the Controller to bring an action to
enforce provisions of the UPL and provides for the imposition of
penalties and interest against holders who willfully fail to
comply with its provisions. (Code Civ. Proc. Sec. 1576.)
Existing law authorizes any person, except another state, who
claims an interest in property paid or delivered to the
Controller to file a claim to the property. (Code Civ. Proc.
Sec. 1540(a).)
This bill would authorize the Controller to mail a separate
notice to an apparent owner of a United States savings bond, war
bond, or military award whose name is shown on or can be
associated with the contents of a safe deposit box or other
safekeeping repository and is different from the reported owner
of the safe deposit box or other safekeeping repository.
This bill would provide that all escheated property consisting
of military awards, decorations, equipment, artifacts,
memorabilia, documents, photographs, films, literature, and any
other item relating to the military history of California and
Californians that is delivered to the Controller may be held in
trust for the Controller at the California State Military Museum
and Resource Center or successor entity, and that the California
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State Military Museum and Resource Center or successor entity
shall be responsible for the costs of storage and maintenance of
escheated property delivered by the Controller.
COMMENT
1.Stated need for the bill
The author writes:
As a general rule, property that goes unclaimed or is
untouched for three years escheats, or reverts to, the State
Controller's Office. The State Controller's Office attempts
to contact people and maintains a list of everyone whose
property has reverted to the state. People can go to
www.claimit.ca.gov to see if there is any unclaimed property
being held in their name.
Often the owner forgets that the account exists, or moves and
does not leave a forwarding address or the forwarding order
expires. In some cases, the owner dies and the heirs have no
knowledge of the property.
Currently, the State Controller may 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 the larger
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 [to] 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.
This bill will allow the Controller to contact not only the
safe deposit box owner, but an apparent owner whose name is
listed on a U.S. Saving[s] Bond, War Bond or Military Award
and is different than the owner of the safe deposit box or
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other safe keeping repository. This bill will also give the
Controller flexibility to make provisions for military items
and memorabilia from the California State Military Museum and
Resource Center, since the museum has been closed.
2.Returning Unclaimed Property
As noted above, the Unclaimed Property Law (UPL) has two
parallel objectives: (1) to reunite owners with unclaimed funds
or property; and (2) to give the state, rather than the holder,
the beneficial use of unclaimed funds or property. (Bank of
America v. Cory (1985) 164 Cal.App.3d 66, 74.) This bill
arguably advances the UPL's first objective of reuniting owners
with their unclaimed property by authorizing the Controller to
provide an additional notice to apparent owners of United States
savings bonds and war bonds. These bonds typically display the
name of the apparent owner on their face, and tend to be
non-transferrable, creating a strong inference that the named
owner of the bond is the apparent owner. (See EE/E Savings
Bonds FAQs, U.S. Treasury
[as of June 2, 2015], noting that a savings
bond is a registered security, that ownership is
non-transferable, and that the United States Treasury has a
contractual relationship with the owner or co-owners named on
the bond.) As the State Controller notes, the names associated
with unclaimed safe deposit boxes containing bonds that are
reported by a repository may differ from the names displayed on
the bonds themselves. Under existing law the Controller is
limited to contacting just the apparent owner of the safe
deposit box. This bill would give the Controller added
flexibility to send an additional notice to the apparent owner
of an unclaimed bond as well.
This bill would also authorize the Controller to send an
additional notice to the apparent owner of a military award
whose name is shown on or can be associated with the contents of
an escheated safe deposit box, but differs from the name of the
apparent owner of the safe deposit box. Military awards
occasionally include the name of the recipient on the award
itself, such as when a name is etched into the back of a medal.
While military awards - unlike savings and war bonds - are
transferrable, this bill would not give the apparent owner of
the award any preferential claim to the property. Any claimant
of property under the UPL, including those who receive
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additional notices pursuant to this bill, would have to file a
claim to the property with the Controller. The UPL requires the
Controller to consider each claim and determine whether the
claimant is the true owner of the claimed property. Thus, in
the event the Controller received competing claims of ownership
to military awards contained within an escheated safe deposit
box, the Controller would have to determine which claimant has
the superior claim, which may require the Controller to hold a
hearing and receive evidence. (See Code Civ. Proc. Sec.
1540(b).) This bill would not modify the existing process for
determining ownership to unclaimed property held by the
Controller. Rather, it would expand the universe of potential
claimants who receive notice that the subject property has
escheated to, and is being held by, the state.
3.Successor to California State Military Museum and Resource
Center
This bill would also modify existing law concerning escheated
military awards, decorations, equipment, artifacts, memorabilia,
documents, photographs, films, literature, and any other item
relating to the military history of California. Existing law
requires these items to be held in trust for the Controller at
the California State Military Museum and Resource Center.
However, following the loss of certain items in the collection
and a dispute concerning the museum's management, the California
National Guard closed the museum in March of 2014. (See Kevin
Oliver, Missing Artifacts Prompt Military to Close Old Sac
Museum (Sep. 27, 2014)
[as of June 2, 2014].) This bill
would provide that the Controller may deposit such items in
trust with the museum or its successor entity, thus giving the
Controller some flexibility to make arrangements for the
safekeeping of items that would have previously gone to the
museum.
4.Technical Amendments
The author offers the following technical amendments which would
codify the authority for the Controller to send an additional
notice to the apparent owner of a United States savings bond,
war bond, or military award whose name is shown on or can be
associated with the contents of an escheated safe deposit box in
a new section of the Unclaimed Property Law. Mirroring
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safeguards provided in other sections of the Unclaimed Property
Law pertaining to notices, these amendments would repeat
prohibitions on including photographs of elected officials on
notices sent under this new section, as well as authorize the
controller to request information from other state or local
government agencies for the limited purpose of locating owners
of unclaimed property. These amendments would also clarify that
the costs for sending additional notices pursuant to this
section shall be subject to the level of appropriation in the
annual Budget Act.
Author's Amendments :
Strike page 2 in its entirety, strike lines 1 through 19 on
page 3, and insert:
SECTION 1. Section 1531.6 is added to the Code of Civil
Procedure, to read:
1531.6 (a) In addition to other notices required pursuant to
this Chapter, the Controller may mail a separate notice to an
apparent owner of a United States savings bond, war bond, or
military award whose name is shown on or can be associated
with the contents of a safe deposit box or other safekeeping
repository and is different from the reported owner of the
safe deposit box or other safekeeping repository.
(b) Any notice sent pursuant to this section shall not contain
a photograph or likeness of an elected official.
(c) (1) Notwithstanding any other law, upon the request of the
Controller, a state or local governmental agency may furnish
to the Controller from its records the address or other
identification or location information that could reasonably
be used to locate an owner of unclaimed property.
(2) If the address or other identification or location
information requested by the Controller is deemed confidential
under any laws or regulations of this state, it shall
nevertheless be furnished to the Controller. However, neither
the Controller nor any officer, agent, or employee of the
Controller shall use or disclose that information except as
may be necessary in attempting to locate the owner of
unclaimed property.
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(3) This subdivision shall not be construed to require
disclosure of information in violation of federal law.
(4) If a fee or charge is customarily made for the information
requested by the Controller, the Controller shall pay that
customary fee or charge.
(d) Costs for administering this section shall be subject to
the level of appropriation in the annual Budget Act.
Support : None Known
Opposition : None Known
HISTORY
Source : California State Controller
Related Pending Legislation : AB 318 (Chau, 2015) would require
a person who finds property on a vehicle of public conveyance or
on public transit property that is valued at $100 or more to
turn the property in to the public transit agency within a
reasonable time. If, after 90 days, no owner appears and proves
ownership of the property, this bill would provide that title to
the property vests in the person who found it, as specified.
This bill would provide that, in the case of lost or unclaimed
bicycles turned in to or held by a public transit agency, if the
bicycle remains unclaimed after 45 days, the public transit
agency may dispose of the unclaimed bicycle by sale at public
auction to the highest bidder, as specified. This bill is
pending in the Senate Judiciary Committee.
Prior Legislation :
AB 1275 (Chau, Ch. 128, Stats. 2013) revised the Unclaimed
Property Law (UPL) to only allow an owner of, instead of a
person with an interest in, property to file a claim with the
State Controller's Office for recovery of property that has
escheated to the state. This bill also revised the definition
of "owner" to remove a personal representative and include an
estate representative, conservator, or guardian.
AB 1011 (Salas, 2013) would have required the Controller to add
interest, at specified rates, to the amount of any claim paid by
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the Controller to an owner under the UPL. This bill died in the
Assembly Committee on Appropriations.
AB 2117 (Niello, 2010) would have eliminated the regular
transfer of unclaimed property funds from the Abandoned Property
Fund to the General Fund, would have required the Controller to
add an interest payment to any claim for unclaimed property that
the Controller pays to an owner, and would have extended the
escheatment period for most types of unclaimed property from
three years to five years. This bill failed passage in the
Assembly Committee on Judiciary.
AB 1291 (Niello, Ch. 522, Stats. 2009) made various reforms to
the UPL to strengthen property owners' rights and ensure that
property holders reasonably inform customers about risks
associated with leaving accounts dormant and the potential for
escheatment of property after a period of inactivity.
SB 1319 (Machado, 2008) would have relieved a holder of
escheated property of liability if the holder complied with
notification requirements, would have increased civil penalties
for non-compliance with the UPL, and would have revised
notification requirements for holders of unclaimed property.
This bill was vetoed by Governor Schwarzenegger.
SB 86 (Committee on Budget and Fiscal Review, Ch. 179, Stats.
2007) modified the procedures governing the disposition of
unclaimed property by, among other things, requiring the
Controller to mail a notice, as specified, to each person having
an address listed for property reported to the Controller under
the UPL who appears to be entitled to escheated property valued
at $50 or more. This bill requires the Controller to establish
and conduct a notification program designed to inform owners
about the possible existence of unclaimed property received
pursuant to the UPL, and made specified changes regarding the
duties of a holder of property that has escheated and the duties
of the Controller after receiving the property, including a
requirement that the Controller retain the property for 18
months from specified dates.
AB 378 (Steinberg, Ch. 304, Stats. 2003) reduced the escheatment
period from five years to three years for bank checks and
deposit accounts, and from three years to one year for wages and
salaries.
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AB 1772 (Harman, Ch. 813, Stats. 2002) prescribed the notice and
information that a bank or financial institution must give to
owners of financial accounts that are about to escheat to the
state, and required the same notice by other holders of tangible
and intangible property subject to the UPL.
SB 673 (Speier, 2001) would have provided for notices to be sent
by mail from the Controller to apparent owners of unclaimed
property, and for the Controller to take further steps,
including searches of other governmental records and outreach to
the general public, to alert owners that their unclaimed
property had escheated to the state. This bill was held in the
Assembly Committee on Appropriations.
Prior Vote :
Assembly Floor (Ayes 76, Noes 0)
Assembly Judiciary Committee (Ayes 10, Noes 0)
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