Treasurer and Receiver General v. John Hancock Mut. Life Ins. Co.

• Decision Date: 11 March 1983
• Citation: 446 N.E.2d 1376,388 Mass. 410
• Parties: TREASURER AND RECEIVER GENERAL v. JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 1376

446 N.E.2d 1376

388 Mass. 410

TREASURER AND RECEIVER GENERAL v. JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY.

Supreme Judicial Court of Massachusetts Suffolk.

Argued Nov. 4, 1982.

Decided March 11, 1983.

Morris M. Goldings, Sp. Asst. Atty. Gen. (H. Glenn Alberich, Boston, and Paul E. Shanley, Everett, with him), for plaintiff.

Edward J. Duggan, Boston (Joseph F. Ryan, Boston, with him), for defendant.

Before HENNESSEY, C.J., and LIACOS, ABRAMS, LYNCH and O'CONNOR, JJ.

ABRAMS, Justice.

At issue is a dispute between John Hancock Mutual Life Insurance Company (John Hancock) and the Treasurer and Receiver General of the Commonwealth (Treasurer) over John Hancock's duty to report and remit certain monies to the Treasurer under the abandoned property law, G.L. c. 200A, and the unclaimed funds law, G.L. c. 175, §§ 149A-149D.

The Treasurer is claiming funds represented by uncashed checks issued by John Hancock, covering its obligations for such items as accident and health insurance payments, life insurance proceeds, agent commissions, salaries, and vendor payments. ¹ If a check remained uncashed for six years after its issuance, John Hancock transferred the sum to its general funds as income for the benefit of its policyholders. John Hancock continued to maintain a separate computer record, however, containing information about the transactions for which the checks were written, and continued to honor those checks presented for payment. ²

Both the Treasurer and John Hancock moved for partial summary judgment on the issue of John Hancock's obligation to report and remit specified funds, amounting to $2,975,816.67, under G.L. c. 200A, § 7, for the years 1969 [388 Mass. 412] through 1979, and under G.L. c. 175, §§ 149A-149D, for the years 1963 to 1980.

The Treasurer asserts that instead of retaining the funds, John Hancock should have turned them over to the Commonwealth, accompanied by descriptive reports, as required by G.L. c. 200A, and G.L. c. 175, §§ 149A-149D. ³ John Hancock denies the Treasurer's allegations and raises several defenses, including a claim that the Treasurer lacked standing to bring this action, and that this action is barred by the statute of limitations.

The judge ruled that under both statutes the Treasurer has standing to bring the action, and no statute of limitations bars his ability to recover funds from John Hancock. The judge also ruled that John Hancock is not required to report and remit funds under G.L. c. 200A, because, prior to 1980, § 5 of that statute did not apply to John Hancock. The judge reported the correctness of his rulings on the motions to the Appeals Court. Mass.R.Civ.P. 64, 365 Mass. 831 (1974). Both parties applied for direct appellate review, and we granted their applications.

We affirm the judge's rulings on standing and on the statutes of limitations for both G.L. c. 200A, and G.L. c. 175, §§ 149A-149D. However, we conclude that since G.L. c. 200A, § 5, is applicable to John Hancock, it is subject to the reporting and payment requirements of G.L. c. 200A, § 7. Therefore, the Treasurer's motion for partial summary judgment should have been granted.

1. Background of G.L. c. 200A and G.L. c. 175, §§ 149A-149D. The abandoned property law was first enacted in St.1950, c. 801, and codified as G.L. c. 200A. Abandoned property is property whose owner is unknown or had neglected to claim it during a specific number of years known as a "dormancy" period. ⁴ Section 7 requires persons and most other entities holding abandoned property to report and remit it to the Treasurer. ⁵ Sections 1 through 6 of G.L. c. 200A define the various types of property presumed abandoned. The remaining sections provide for procedures to reunite missing owners with the surrendered property, and provide for interpretation and enforcement of the law.

The unclaimed funds law, codified as G.L. c. 175, §§ 149A-149D, inserted by St.1946, c. 455, and amended by St.1950, c. 523, applies only to life insurance companies and, until 1980, was enforced by the Commissioner of Insurance. See St.1980, c. 130, § 15. Unclaimed funds are also property whose owner is unknown or had neglected to claim it for a specified dormancy period. ⁶ Section 149A specifies the types of unclaimed funds governed by the act; § 149B requires reports of unclaimed funds; § 149C requires surrender of reported funds to the Commonwealth; and § 149D gives custody of those funds to the Commonwealth, while indemnifying the insurance companies. During the years in question, the Commissioner of Insurance made triennial examinations of John Hancock's books to ensure its compliance with this and other laws.

The unclaimed funds and abandoned property laws were consolidated in 1980 by St.1980, c. 130. That statute places all enforcement responsibility for both laws in the office of the Treasurer. ⁷

2. Standing. John Hancock claims that the Treasurer lacks standing to pursue this action under both G.L. c. 175, § 149E, and G.L. c. 200A, § 12(b ). These provisions were added and amended, respectively, when the unclaimed funds and abandoned property laws were revised and consolidated by St.1980, c. 130. The issue is whether the standing sections now prevent the Treasurer from bringing actions to recover funds not properly reported prior to May 5, 1980, the effective date of the 1980 act. We conclude that the Treasurer has standing to pursue the Commonwealth's claims.

Section 149E, ⁸ which was inserted in G.L. c. 175 by St.1980, c. 130, § 2, provides that the Treasurer may bring an action to obtain reports of unclaimed funds, as required by G.L. c. 175, § 149B, and to demand the surrender of the funds detailed within those reports. John Hancock argues that § 149E has no retroactive effect and, therefore, cannot be used to give the Treasurer standing on claims arising prior to 1980. However, the Legislature provided in § 16 ⁹ of St.1980, c. 130, that the earlier § 149A governs unclaimed funds which were reportable prior to May 5, 1980. Prospective compliance with the unclaimed funds law is governed by G.L. c. 200A, § 5A. That section incorporated the unclaimed funds law into the abandoned property law, effective May 5, 1980. Thus, as we read the statute, the Legislature intended that the new § 5A would operate prospectively, while § 149E would operate retrospectively. Retroactive application of § 149E to G.L. c. 175, §§ 149A-149D, is therefore the only construction of the statute "in harmony with common sense and sound reason." Johnson's Case, 318 Mass. 741, 746, 64 N.E.2d 94 (1945), quoting Morrison v. Selectmen of Weymouth, 279 Mass. 486, 492, 181 N.E. 786 (1932). This construction is consistent with the obvious legislative intent not to permit the forfeiture of the Commonwealth's claims to unclaimed and abandoned property which should have been, but were not, reported and remitted by holders.

John Hancock also claims that prior to the 1980 enactment of G.L. c. 175, § 149E, no statute gave the Treasurer the standing to sue for violations of § 149B, and that, therefore, the Treasurer may not retroactively be given standing to enforce that provision. However, we interpret St.1980, c. 130, as merely making a housekeeping shift in enforcement responsibility from the Commissioner of Insurance to the Treasurer, through amendments to G.L. c. 175, § 149B, and insertion of § 149E. We believe that the change in the official responsible for enforcement does not create a new cause of action, but merely provides for more vigorous enforcement of existing claims. The Legislature makes clear its intention to give the Treasurer retrospective as well as prospective enforcement authority by requiring the Commissioner of Insurance to transfer the records filed pursuant to § 149B before May 5, 1980, to the Treasurer. See St.1980, c. 130, § 15. The words of the statute "are to be considered in the light of the obvious aim to be accomplished by the Legislature and as employed by the Legislature as expressing the practical means by which the legislative aim is to be attained." Sun Oil Co. v. Director of the Div. on the Necessaries of Life, 340 Mass. 235, 238, 163 N.E.2d 276 (1960).

Statute 1980, c. 130, also amended G.L. c. 200A, § 12(b), ¹⁰ giving the Treasurer standing to bring an action to collect abandoned property. John Hancock asserts that the amended § 12(b ) repeals and replaces the former version of that section, thereby preventing the use of the old section to give the Treasurer standing for actions arising before May 5, 1980. The amendment, however, merely removed the requirement that the Treasurer examine the records of the holders of abandoned property, and does not affect his standing to bring actions. ¹¹

John Hancock's argument that retroactive enforcement of § 12(b ) violates due process principles must also fail. The essence of the defendant's claim is that there is due process protection for the right to violate a prior law. The cases John Hancock cites do not support such a contention. ¹²

In addition, to the extent that St.1980, c. 130, brings new types of abandoned property within its scope, that property need only be reported retrospectively for the seven years prior to the effective date of the act. ¹³ Thus, the statute, as we read it, continues retrospective enforcement for all property which was previously within the ambit of the statute. We conclude that the Legislature intended continued enforcement of the abandoned property and unclaimed funds laws prior to the effective date of St.1980, c. 130, and that the Treasurer has standing to effectuate the policies of those statutes.

3. Statute of limitations. John Hancock claims that the Treasurer's suit is barred by statutes of limitations, based on its interpretation of G.L. c. 200A, § 7(c ), as amended through St.1969, c. 377, § 2. ¹⁴ At that time § 7(c ) read, "No person shall be required to report any property on a presumption of abandonment to the state...