Bank of America Nat. Trust & Sav. Ass'n v. Cranston

• Decision Date: 30 June 1967
• Citation: 60 Cal.Rptr. 336,252 Cal.App.2d 208
• Court: California Court of Appeals Court of Appeals
• Parties: BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, a national banking association, Plaintiff and Appellant, v. Alan CRANSTON, State Controller of the State of California, Defendant and Respondent. Civ. 23894.

Page 336

60 Cal.Rptr. 336

252 Cal.App.2d 208

BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, a national banking association, Plaintiff and Appellant, v. Alan CRANSTON, State Controller of the State of California, Defendant and Respondent.

Civ. 23894.

Court of Appeal, First District, Division 1, California.

June 30, 1967.

Hearing Denied Sept. 27, 1967.

Samuel B. Stewart, Charles E. Cooper, Theodore Sachsman, Thomas E. Montgomery, San Francisco, for appellant.

Thomas C. Lynch, Atty. Gen., John E. Barsell, Jr., Deputy Atty. Gen., San Francisco, for respondent.

ELKINGTON, Associate Justice.

Bank of America National Trust and Savings Association, plaintiff below, which we shall call the Bank, appeals from a declaratory judgment in favor of respondent Controller of California.

The judgment relates to the rights of the parties under the Uniform Disposition of Unclaimed Property Act, herein called the act. The act, which was enacted as sections 1500--1527, Code of Civil Procedure, ¹ became effective September 18, 1959. Its nature and purpose were succinctly set forth in Douglas Aircraft Co. v. Cranston (1962), 58 Cal.2d 462, 463, 24 Cal.Rptr. 851, 852, 374 P.2d 819, 820, 98 A.L.R.2d 298, as: 'The act defines abandoned property (§§ 1502--1508) and requires that its holder shall report (§ 1510), and pay or deliver it to the State Controller (§ 1512). The statute of limitations is not a defense to such reporting and payment or delivery (§ 1515), and the act applies to property that was abandoned before it took effect (§ 1510, subd. (g)). It provides for notice to the owner by publication and otherwise (§§ 1510, subd. (e), 1511). The owner may appear at any time and claim the property from the Controller after it has been delivered to him (§§ 1517--1520). Delivery to the Controller is a defense to any action by the owner against the holder. (§ 1513.) The objectives of the act are to protect unknown owners by locating them and restoring their property to them and to give the state rather than the holders of unclaimed property the benefit of the use of it, most of which experience shows will never be claimed.'

The Controller's rights under the act are derivative. He succeeds, subject to the act's provisions, to whatever rights the owners of the abandoned property may have. In State, by Parsons v. Standard Oil Co. (1950), 5 N.J. 281, 298, 74 A.2d 565, 573 (cited in Douglas Aircraft Co. v. Cranston, supra) where a similar statute was concerned, it is stated: 'The State's right is purely derivative; it takes only the interest of the unknown or absentee owner.' (See also Barker v. Leggett, D.C., 102 F.Supp. 642, 644--645; Application of People of the State of New York, D.C., 138 F.Supp. 661, 666; Southern Pacific Transport Company v. State, Tex.Civ.App., 380 S.W.2d 123, 126.)

Sections 1502 and 1504 presume to be abandoned property, sums payable by banks on bank drafts, cashier's checks, certified checks, money orders and Christmas club checks that have been outstanding for more than seven years, any corporate dividends remaining unclaimed after seven years, and sums payable on traveler's checks that have been outstanding for more than 15 years. Collectively, we shall call these obligations 'Items.' ²

The Bank did not report or pay over to the Controller the amount payable on any of the Items as to which it had become obligated before September 18, 1955. Instead in 1960, it filed the instant declaratory relief action urging that the act, insofar as it purported to deny to the Bank the benefit of the four-year statute of limitations (§ 337, subd. 1) as to the Items in question, was invalid.

On pretrial proceedings, the Bank relied upon Douglas Aircraft Co. v. Cranston, supra, 58 Cal.2d 462, 24 Cal.Rptr. 851, 374 P.2d 819, 98 A.L.R.2d 298. That case holds squarely that the act does not apply to presumed abandoned property on which the statute of limitations had run on the effective date of the act.

At the start of the trial the Bank withdrew its statute of limitations contention insofar as it related to traveler's checks. Counsel indicated recent information had disclosed Bank advertising in several languages, to the effect that there was no time limitation within which its traveler's checks must be presented.

The Bank then offered an alternative theory as to traveler's checks. It presented evidence that each purchaser of such checks signed an agreement that he would in case of loss or theft immediately notify the Bank, which would not be obligated to make refund on such lost or stolen checks if such immediate notice was not given. The Bank then argued it must be presumed that any traveler's check outstanding for more than four years is lost or stolen; that the Bank under the contract is not obligated to redeem such presumed lost or stolen traveler's checks; and that if there is no obligation to the check's purchaser, there is also no obligation to comply with the act.

The trial court determined that all of the Items were entrusted funds held by the Bank in a fiduciary capacity, on which the statute of limitations did not commence running until demand for payment was made by the persons entitled thereto. ³ The court also held there was no presumption that traveler's checks outstanding for more than four years were lost or stolen, and as to the checks in question found that none had been lost or stolen.

Judgment was entered declaring that the act applied to all of the Items at issue and ordering the Bank to report, pay and deliver the amounts of such Items to the Controller.

The appeal is from the entire judgment.

The Bank's first contention is: There is a presumption that if a traveler's check has been outstanding for four years, it has been lost or stolen.

It might be pointed out that the purpose of the purchaser's agreement to make prompt report of lost or stolen traveler's checks is to protect the Bank against double liability. The act, section 1513, precludes the possibility of double payment by providing that upon payment or delivery of abandoned property to the Controller, the Bank is relieved of any further liability thereunder.

The presumption argued by the Bank is arbitrary. No authority or reasoning is offered as to why the presumption should relate to four years--rather than to some other period of time. In support of its contention the Bank urges the disputable presumptions (in effect at the time of the trial), 'That the ordinary course of business has been followed' (§ 1963, subd. 20--now repealed), and, that 'Things happen according to the ordinary course of nature and the ordinary habits of life (§ 1963, subd. 28--now Civ.Code, § 3546). It is contended, applying these presumptions, that a person who knows he holds a traveler's check will present it for payment within four years from the time he purchased it. We think a more reasonable application of these presumptions would be that a person whose traveler's checks had been lost or stolen would promptly recoup his loss by honoring his contract--and not having so reported, his traveler's checks are not presumed lost or stolen.

Here the Bank represents to prospective purchasers that there is no time limit within which its traveler's checks must be presented, and then urges the court to apply the sought for presumptions and to hold, the purchaser having failed to give prompt notice of the presumed loss or theft, that the Bank is no longer required to respect and redeem its obligation.

We believe the Bank's representation to purchasers of traveler's checks had the effect of a waiver of any right to repudiate the obligation thereunder for nontimely presentation. Particularly, this is so under the circumstances here, where the Bank can in no way be prejudiced.

A forfeiture of contractual rights for which the Bank here argues is not favored. In Haserot v. Keller, 67 Cal.App. 659, 669, 228 P. 383, 387, it is stated: '(F)orfeitures are not favored in the law; and any inconsistent acts or dealings by the party claiming a forfeiture will be regarded as a waiver thereof. * * * A simple voluntary relinquishment of a right with knowledge of all the facts--an expression of intention, by speech or conduct, not to demand a certain thing--is sufficient to constitute such a waiver.' (See also Churchill v. Kellstrom, 58 Cal.App.2d 84, 89, 136 P.2d 602; Lowe v. Copeland, 125 Cal.App. 315, 321, 13 P.2d 522; McPherson v. Empire Gas & Fuel Co., 122 Cal.App. 466, 473--474, 10 P.2d 146.)

It is probable that the Bank would never attempt such a forfeiture against a traveler's check purchaser, and that the point is now raised only as against the Controller. ⁴ If this is so the derivative nature of the Controller's rights under the act must be borne in mind. ⁵ If the owner of presumed abandoned property has any rights, those rights accrue in their entirety to the Controller. The Bank may not waive its contractual rights as to a purchaser of traveler's checks, and then enforce those same rights as against the State and the Controller.

We believe the determination of the trial court as to the nonexistence of the desired presumption was correct.

The Bank next contends: The four-year statute of limitations (§ 337, subd. 1) is applicable to bank drafts, cashier's checks, certified checks, money orders and Christmas club checks.

Contending that these obligations represent money deposited with the Bank, the Controller urges that they are not affected by any statute of limitations. He cites section 348 which provides: 'To actions brought to recover money or other property deposited with any bank * * * there is no limitation.'

The act, as to presumed abandoned property, distinguishes between a 'demand, savings or matured time deposit' which is presumed abandoned after 15 years (§ 1502(a)), and a 'sum payable on any * * * written instruments' (§ 1502(d)) which admittedly refers to the Items here at issue. Earlier abandoned property statutes made the same...