RIGGS NAT. BANK v. DISTRICT OF COLUMBIA

• Decision Date: 26 October 1990
• Docket Number: No. 88-1129,No. 88-1150,No. 88-1016,88-1016,88-1129,88-1150
• Citation: 581 A.2d 1229
• Court: D.C. Court of Appeals
• Parties: RIGGS NATIONAL BANK OF WASHINGTON, D.C., Appellant, v. DISTRICT OF COLUMBIA, Appellee. DISTRICT OF COLUMBIA, Cross-Appellant, v. RIGGS NATIONAL BANK OF WASHINGTON, D.C., Cross-Appellee.

581 A.2d 1229

RIGGS NATIONAL BANK OF WASHINGTON, D.C., Appellant, v. DISTRICT OFCOLUMBIA, Appellee.DISTRICT OF COLUMBIA, Cross-Appellant, v. RIGGS NATIONAL BANK OFWASHINGTON, D.C., Cross-Appellee.

Nos. 88-1016, 88-1129 and 88-1150.

District of Columbia Court of Appeals.

Argued March 2, 1990.

Decided October 26, 1990.

Appeal from the Superior Court, Henry F. Greene, J.

THIS PAGE CONTAINED HEADNOTES AND HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.

Steven M. Umin, with whom Jefferson M. Gray, Washington, D.C., was on the brief, for appellant/cross-appellee Riggs Nat. Bank.

Lutz Alexander Prager, Asst. Deputy Corp. Counsel, with whom Herbert O. Reid, Sr., Corp. Counsel, and Charles L. Reischel, Deputy Corp. Counsel, Washington, D.C., were on the brief for appellee/cross-appellant District of Columbia.

Brice M. Clagett and Steven G. Bradbury, Washington, D.C., filed a brief for Washington Area Bankers Ass'n, as amicus curiae.

Before TERRY, SCHWELB and FARRELL, Associate Judges.

SCHWELB, Associate Judge:

Remarkable as it may seem to those who must make ends meet and worry about the next mortgage payment and the price of widgets, there are actually people who neglect to cash cashier's checks. Others leave savings and checking accounts dormant at the bank. What happens to such funds when they are not claimed by their rightful owners? This case requires us to interpret for the first time various provisions of the Uniform Disposition of Unclaimed Property Act (hereinafter "the UPA" or the Act), D.C.Code §§ 42-201 to -242 (1990), which addresses that very question and attempts to resolve it in a manner favorable to the beleaguered taxpayers of our beautiful but financially strapped capital city.

The property at issue, which has a value of approximately $1.7 million, consists ofdormant deposits which have no known owners or which belong to non-residents of the District, as well as funds deposited by customers to cover official checks which have not been presented for payment.¹ Appellant Riggs National Bank of Washington, D.C. (Riggs) holds certain funds alleged by the District of Columbia to be subject to the provisions of the Act and has declined to report and deliver them to the District despite a demand that Riggs do so. Following that refusal, the District filed this action in the Superior Court and prayed for an order directing Riggs to report and deliver the property and to pay pre-judgment interest and civil penalties. Riggs maintained below, and now contends in this court, that the disputed funds are not subject to the provisions of the Act.²

Following a hearing on cross-motions for summary judgment, the trial judge held that the UPA requires Riggs to report and deliver all of the disputed funds to the District. The judge denied the District's request for pre-judgment interest and civil penalties. Both sides have appealed. We affirm in part, reverse in part, and remand the case for further proceedings.

I THE DISPUTE

The basic facts are not in dispute. Following an audit authorized by Section 42-234(c)(1),³ the District advised Riggs that Riggs was in possession of unclaimed property worth approximately 2.2 million dollars subject to reporting and delivery pursuant to the UPA. Riggs delivered a portion of the unclaimed property to the District, but withheld three categories of funds worth approximately 1.7 million dollars.⁴

The first disputed category of assets has a value of approximately $880,000. It consists of roughly $780,000 in stale official checks issued by Riggs which have never been presented for payment, and approximately $100,000 in miscellaneous dormant funds belonging to unknown depositors. In the 1970's, before the UPA was enacted, Riggs closed out long-dormant items, converted them on its books to income, and used the money as its own.⁵ Riggs contends that it has commingled these funds with its other assets and has paid taxes on them. Nevertheless, as a matter of good public relations, Riggs "absolutely" honors any occasional stale official check that may be presented for payment, and would not resist any attempt by the owner of a dormant deposit account to withdraw funds from it.

The second disputed group of funds consists of approximately $665,000 in unclaimed accounts which were deposited with Riggs by persons who do not live in the District. At the time this litigation began, the District had reciprocity agreementswith eleven states⁶ for the mutual exchange of abandoned property. See § 42-234. Riggs reported and delivered to the District all unclaimed property abandoned by any person whose last known address was in one of the eleven "reciprocity" States. The bank refused, however, to deliver abandoned funds deposited by anyone whose last known address was in one of the "non-reciprocity" States, including Maryland. Riggs acknowledges that it has no legal right to retain these funds for its own use and has not transferred them on its books to income. Riggs maintains, however, that before it can be required to deliver the property to the District pursuant to the Act, the District must satisfy a statutory condition precedent, namely that the non-reciprocity State does not have a superior claim to the funds. Riggs contends that no such showing has been made, and that if the condition precedent is not enforced, Riggs could be subject to multiple liability.

The third issue between the parties relates to service charges on inactive accounts. In March 1980, Riggs adopted a policy of imposing a semi-annual charge of eight dollars on each account under $50 which had remained dormant for a minimum of three years. During the next two years, Riggs collected a total of more than $117,000.⁷ These collections completely depleted the funds in a number of the accounts. The District alleges that the imposition of these charges violated the UPA, and seeks to recover the amounts charged, as well as over $27,000 in additional interest which would have accrued on the affected accounts if Riggs had not imposed the disputed service charges.

II THE STATUTE

Before the enactment of the UPA, depositary institutions in the District of Columbia enjoyed the use of, and often appropriated as their own, many millions of dollars in unclaimed deposits, stale official checks and other unclaimed property under a process which the trial judge in this case aptly described as a "private escheat." In 1981, concluding that this state of affairs provided a "windfall" for these institutions, COUNCIL OF THE DISTRICT OF COLUMBIA, COMMITTEE OF THE JUDICIARY, REPORT ON BILL No. 3-267, UNIFORM DISPOSITION OF UNCLAIMED PROPERTY ACT OF 1980 (hereinafter COMMITTEE REPORT) at 2, the Council of the District of Columbia enacted legislation designed to put an end to the unearned and fortuitous enrichment of the holders of abandoned property and to provide instead for the interests of the citizens of the District and ensure that any such escheat would be for public benefit rather than for private gain.⁸ In the first section of the Act, the Council stated that the purpose of the UPA was to

mandate the report and delivery by holders and to authorize the receipt for safekeeping and fiscal growth by the District of Columbia of any and all personal property which is abandoned, without regard either to any maximum length of time for which such property was abandoned or to any statute limiting the right to sue to claim such property.

§ 42-201.

The sweeping language of this opening statutory salvo, which would embrace funds abandoned on the first day Riggswent into the banking business, bespeaks a remedial enactment designed to correct what the Council plainly viewed as an unjust status quo. The trial judge recognized, and so do we, that courts are obligated to accord a generous construction to legislation of this kind. "Remedial statutes are liberally construed to suppress the evil and advance the remedy." 3 N. SINGER, SUTHERLAND, STATUTORY CONSTRUCTION § 60.01, at 55 (4th ed. 1986) (hereinafter SUTHERLAND); Tenants of 738 Longfellow St., N.W. v. District of Columbia Rental Hous. Comm'n, 575 A.2d 1205, 1211 (D.C. 1990).

Although its prime purpose was the one identified in the statutory declaration which we have quoted above, the UPA was also designed to protect the interests and rights of the true owners of abandoned property and to relieve holders of such property, such as banks, of the annoyance, administrative expense and liability incident to caring for it. COMMITTEE REPORT, supra, at 2. Property subject to the Act does not escheat to the District upon delivery. Rather, the District acts as a "conservator" and "assumes custody and responsibility for the safekeeping of the property" until the true owner makes a claim. §§ 42-201, -220; 9 DCMR § 3000.6 (1986).

The UPA requires private holders to report and deliver to the District all property which is "presumed abandoned." §§ 42-203, -217. The circumstances which give rise to a presumption of abandonment differ depending on the type of unclaimed property. See §§ 42-206 through -216. In general, property is presumed to be abandoned if it has remained unclaimed for a specified time period. With respect to the funds at issue in this case, that period is ten years. See § 42-206(a) and (d), discussed at page 1235, infra.

Abandoned accounts may have significant connections with more than one jurisdiction, and the Supreme Court has considered the question of priorities between state-claimants. See Texas v. New Jersey, 379 U.S. 674, 85 S.Ct. 626, 13 L.Ed.2d 596 (1965). Contemplating the possibility of such competing claims, the UPA has created certain "conditions precedent" to the presumption of abandonment. § 42-204. These conditions precedent are discussed in some detail at pages 1243-1248, infra, for they are central to one of the major issues disputed by the parties.

Finally, the UPA deals with abandoned property no matter how long ago it...