Insurance Co. of North America v. Knight

• Decision Date: 29 November 1972
• Docket Number: No. 11535,11535
• Parties: INSURANCE COMPANY OF NORTH AMERICA, Plaintiff-Appellant, v. Joseph H. KNIGHT, Director, Department of Financial Institutions (C. Austin Montgomery, Successor), Defendant-Appellee.
• Court: United States Appellate Court of Illinois

Page 40

291 N.E.2d 40

8 Ill.App.3d 871

INSURANCE COMPANY OF NORTH AMERICA, Plaintiff-Appellant, v. Joseph H. KNIGHT, Director, Department of Financial

Institutions (C. Austin Montgomery, Successor),

Defendant-Appellee.

No. 11535.

Appellate Court of Illinois, Fourth District.

Nov. 29, 1972.

Rehearing Denied Jan. 12, 1973.

Gillespie, Burke & Gillespie, Springfield, for plaintiff-appellant; George B. Gillespie, Springfield, and Robert B. Ely, III, Media, of counsel.

William J. Scott, Atty. Gen. of State of Illinois Chicago, Francis T. Crowe, Samuel E. Hirsch, Asst. Attys. Gen., for defendant-appellee.

TRAPP, Presiding Justice:

Plaintiff sought a declaratory judgment determining that the Uniform Disposition of Unclaimed Property Act, (Ill.Rev.Stat.1963, ch. 141, par. 101 et seq.), was unconstitutional in so far as par. 109 of the Act required the plaintiff to report certain checks, drafts and credit memoranda to the Director of the Department of Financial Institutions, and to declare that plaintiff was not required under the statute to report or pay such items. Plaintiff's motion for summary judgment upon the complaint and answer was denied. Plaintiff's appeal to the Supreme Court was transferred to this Court.

An issue raised in plaintiff's original complaint has been determined in Country Mutual Ins. Co. v. Knight, 40 Ill.2d 423, 240 N.E.2d 612.

It is first argued that par. 109 of the statute denies constitutional due process in that there is no statutory definition of 'intangible personal property', and leaves the definition of such to the Department thus creating an unconstitutional delegation of legislative power. It provides:

'All intangible personal property, not otherwise covered by this Act, including any income or increment thereon and deducting any lawful charges, that is held or owing in this State in the ordinary course of the holder's business and has remained unclaimed by the owner for more than 15 years after it became payable or distributable is presumed abandoned.'

Upon consideration of the statute as a whole, the argument is not persuasive. Ill.Rev.Stat.1965, ch. 141, par. 101(d), defines a 'holder' as follows:

'(d) 'Holder' means any person in possession of property subject to this Act belonging to another, or who is trustee in case of a trust, or is indebted to another on an obligation subject to this Act.'

Sub-par. (f) defines an 'owner' as follows:

'(f) 'Owner' means a depositor in case of a deposit, a beneficiary in case of a trust, a creditor, claimant, or payee in case of other choses in action, or any person having a legal or equitable interest in property subject to this Act, or his legal representative.'

Throughout the statute it is made clear that such applies to sums or obligations due and owing by the holder to another who is termed the owner, viz: par. 102 refers to deposits in financial institutions or other amounts for which such institution is directly liable; par. 103 concerns money owing by life insurance companies after a policy becomes due and payable; par. 104 concerns deposits owing by a utility company after services are terminated to the depositor or refunds are ordered, and there are several categories concerning money who is termed the owner, viz: par. 102 refers

Par. 109 is explicit that the 'intangible personal property' referred to is that which is held and owing and is payable or distributable. Such section, except for the period of time prescribed, is in the identical language found in Sec. 9 of Uniform Laws Annotated, Vol. 9A. Editorially, the Illinois statute is related to the Uniform Act and we are directed to the notes of the Commissioners prepared for the Uniform Act in considering the interpretation of the statute. S.H.A., ch. 141, p. 345. The content and the purpose of par. 109 may be considered in the light of the note to Sec. 9 of the Uniform Act, which says:

'Section 9 is the omnibus section covering all other intangible personal property not otherwise covered by the more specific provisions of the Act. It should be noted that to be subject to the section the property must be held or owing in the 'ordinary course of the holder's business in this state.' A wide variety of items will be embraced under this section, including, by way of illustration, money, stocks, bonds, certificates of membership in corporations, securities, bills of exchange, deposits, interest, dividends, income, amounts due and payable under the terms of insurance policies not covered by Section 4, pension trust agreements, profit-sharing plans, credit balances on paid wages, security deposits, refunds, funds deposited to redeem stocks, bonds, coupons and other securities, or to make a distribution thereof, together with any interest or increment thereon. If desired, these specific items could readily be written into Section 9 itself, thus perhaps adding to the clarity and ready understanding of the coverage of the section, although necessarily at the expense of brevity.'

Within the entire statutory scheme, it cannot be said that there is such want of statutory definition of intangible personal property as to deny due process or to establish an unconstitutional delegation of legislative power.

The complaint states several categories of specific situations and claims that, as to such, the statute is inapplicable, viz: (1) certain 'outstanding drafts' which were offers of settlement of alleged claims under policies of liability insurance and that the drafts have not been cashed and no damages imposed upon the policy holder; (2) drafts 'issued' to policy holders under policies of property insurance containing the provision that no action may be brought on the policy after one year after the date of the loss and such drafts have not been presented; (3) drafts 'issued' in advance for services but such services were never furnished and 'therefore said checks or drafts were destroyed'; (4) drafts or checks 'issued' representing commissions or returned premiums paid to agents where credit was taken in subsequent accountings and the instruments 'remain uncashed or have been destroyed'; (5) drafts 'issued' in settlement of claims where the claimant obtained judgment in a different amount and did not return the draft, and drafts 'issued' in error as to amount or payee and correcting drafts were issued.

Plaintiff argues that the application of the statute to the several factual categories deprives plaintiff of constitutional due process and results in the unconstitutional taking of private property without compensation in that the statute creates a conclusive presumption of abandonment. It is also said that the legislature had infringed upon the judiciary in creating an irrebuttable presumption of abandonment.

Such propositions are bottomed upon the argument that the 'mere issuance' of checks or drafts does not establish a binding obligation for the instrument may be conditionally delivered. As a naked principle, such are supported by the statutory intent as stated in the annotating comment to par. 109, which in a slightly different context includes the language:

'But the obligation characterized as intangible...