Opinion 85-6

JIM JONES ATTORNEY GENERAL S T A T E O F I D A H O OFFICE OF THE ATTORNEY GENERAL B O I S E 8 3 7 2 0 ATTORNEY GENR4L OPINION NO. TELEPHONE 12081 334-2COO TO: M r . Ton D. McEldowney, D i r e c t o r S t a t e Department o f Finance STATEHOUSE MAIL Per Request f o r A t t o r n e y General Opinion QUESTIONS PRESENTED 1. We have r e c o r d s f o r two banks which were l i q u i d a t e d by t h e FDIC i n 1955 and whose r e c o r d s were r e t u r n e d t o u s by FDIC. We a l s o have r e c o r d s f o r a bank closed i n 1923 a s w e l l a s f i l e s c o n t a i n i n g c h a r t e r s , a r t i c l e s o f i n c o r p o r a t i o n , and o t h e r documents f o r i n s t i t u t i o n s t h a t were c l o s e d , bought-out - o r converted t o f e d e r a l c h a r t e r s . We would l i k e t o g e t r i d o f t h e s e r e c o r d s . Are t h e s e r e c o r d s s u b j e c t o n l y t o Idaho Code § 67-5751, and t h e r e g u l a t i o n s o f C e n t r a l Records Manageroent o r a r e we r e q u i r e d t o r e t a i n t h e s e r e c o r d s i n d e f i n i t e l y ? 2. I n connection w i t h t h e c l o s u r e o f a s a v i n g s and loan a s s o c i a t i o n , t h e D i r e c t o r was ordered by t h e F i f t h D i s t r i c t Court i n 1970 t o d e s t r o y l e d g e r s and o t h e r r e c o r d s o f t h e a s s o c i a t i o n i n 1975. The Department f a i l e d t o d e s t r o y t h e ' . M r . om D. McEldowney, D i r e c t o r S t a t e Department o f Finance Page 2 r e c o r d s a t t h a t time. Should t h e r e c o r d s b e d e s t r o y e d now p u r s u a n t t o t h e c o u r t o r d e r o r must d e s t r u c t i o n b e p u r s u a n t t o r u l e s o f t h e Department o f A d m i n i s t r a t i o n ? 3. I n c o n n e c t i o n w i t h this s a n e c l o s u r e i n 1970, t h e c o u r t o r d e r e d unclaimed funds t o b e t r a n s f e r r e d t o t h e S t a t e T r e a s u r e r p u r s u a n t t o I d a h o Code § 26-919, nov superseded. T h i s t r a n s f e r w a s made. The A u d i t o r s a i d t h a t t h i s money must now b e s e n t t o t h e Tax Comnission under t h e Unclaimed P r o p e r t y Law (ch. 5 , t i t l e 1 4 ) . Must that money be t r a n s f e r r e d t o t h e T a s Commission? If s o , i s i t t h e r e s p o n s i b i l i t y o f t h i s Department o r t h e T r e a s u r e r t o make t h a t t r a n s f e r ? If s o , i s t h e t r a n s f e r t o b e made u n d e r t h e c u r r e n t o r p r i o r Unclaimed P r o p e r t y Law? 4. What i s t h e r e l a t i o n s h i p between t h e Unclaimed P r o p e r t y Law and l i q u i d a t i o n p r o c e d u r e s i n t h e Bank Act (ch. L O , t i t l e 26)? Is t h e Bank Act procedure superseded b y t h e Unclaimed P r o p e r t y Law? To w h a t e x t e n t does t h e new Unclaimed P r o p e r t y Law s u p e r s e d e t h e time l i m i t s o f t h e p r i o r Unclaimed P r o p e r t y Law? CONCLUSION 1. With t h e e x c e p t i o n o f r e c o r d s o r d e r e d d e s t r o y e d by c o u r t o r d e r , bank r e c o r d s which t h e Department o f Finance no l o n g e r needs may b e d e s t r o y e d o r t r a n s f e r r e d t o t h e S t a t e H i s t o r i c a l S o c i e t y p u r s u a n t t o t h e procedures provided b y Idaho Code § § 67-5751 through 67-5753. 2. Records p r e v i o u s l y o r d e r e d destroyed b y c o u r t o r d e r should b e d e s t r o y e d p u r s u a n t t o that o r d e r . 3. The Unclaimed P r o p e r t y Act a p p l i e s t o unclaimed funds t r a n s f e r r e d t o t h e S t a t e T r e a s u r e r . The r e s p o n s i b i l i t y f o r compliance i s on t h e h o l d e r o f t h e funds, which i s t h e S t a t e T r e a s u r e r i n this i n s t a n c e . Tne c u r r e n t Unclaimed P r o p e r t y Act governs t h e p r o c e d u r e t o b e f o l l o w e d . 4. The Bank Act i s i n e f f e c t and governs t r e a t m e n t o f - unclaimed funds d u r i n g l i q u i d a t i o n . Upon completion of l i q u i d a t i o n and t r a n s f e r o f unclaimed p r o p e r t y t o t h e S t a t e ~ r e a s u r e r p u r s u a n t t o t h e Bank A c t , t h e - s t a t e T r e a s u r e r should f i l e a n unclaimed p r o p e r t y r e p o r t and t r a n s f e r funds t o t h e Plr. Tom D. McEldowney, D i r e c t o r S t a t e Department o f Finance Page 3 unclaimed p r o p e r t y account as provided i n t h e Unclaimed P r o p e r t y Act. Question No. 1 The bank r e c o r d s d e s c r i b e d i n q u e s t i o n 1 may b e d e s t r o y e d p u r s u a n t t o t h e p r o v i s i o n s o f Idaho Code $5 67-5751 through 67-5753. These s t a t u t e s empower t h e D i r e c t o r o f t h e Department o f A d m i n i s t r a t i o n t o provide r u l e s and procedures f o r t h e r e t e n t i o n o f s t a t e r e c o r d s and t h e d e s t r u c t i o n o f s t a t e r e c o r d s . Idaho Code 5 67-5751 d e f i n e s s t a t e r e c o r d s a s : Any document, book, paper . . . o r o t h e r m a t e r i a l r e g a r d l e s s o f p h y s i c a l form o r c h a r a c t e r i s ti c s , made o r r e c e i v e d pursuant t o l a w o r i n connection w i t h t h e t r a n s a c t i o n o f o f f i c i a l s t a t e b u s i n e s s . It a p p e a r s from t h e q u e s t i o n presented t h a t t h e r e c o r d s were r e c e i v e d purs'uant t o law and i n connection w i t h t h e -.- t r a n s a c t i o n o f o f f i c i a 1 s t a t e b u s i n e s s . Therefore, t h e g e n e r a l p r o v i s i o n s o f Idaho Code 67-5751 apply u n l e s s s t a t u t e s s p e c i f i c a l l y r e l a t i n g t o bank r e c o r d s provide a d i f f e r e n t r e s u l t . Our r e s e a r c h d i s c l o s e s no such s p e c i f i c banking s t a t u t e s which govern d e s t r u c t i o n o r r e t e n t i o n o f bank r e c o r d s b y t h e Department o f Finance. T h e r e f o r e , t h e g e n e r a l s t a t u t e s , Idaho Code $ 5 67-5751 through 67-5753 a p p l y . Q u e s t i o n No. 2 The r e c o r d s p r e v i o u s l y o r d e r e d destroyed by t h e d i s t r i c t c o u r t should b e destroyed p u r s u a n t t o t h e c o u r t ' s o r d e r . Idaho Code $5 67-5751 t h r o u g h , 67-5753 discussed above, whi ch govern d e s t r u c t i o n o f r e c o r d s , were adopted i n 1974 and 1975. P r i o r t o t h i s time t h e r e were no laws governing r e t e n t i o n o r d e s t r u c t i o n o f g e n e r a l r e c o r d s h e l d by s t a t e a g e n c i e s . Accordingly, p r i o r t o a d o p t i n g t h e r e c o r d s d e s t r u c t i o n s t a t u t e s , c o n t r o l , r e t e n t i o n and d e s t r u c t i o n o f bank r e c o r d s would have been l e f t t o t h e d i s c r e t i o n o f t h e Department o f Finance a f t e r c o n s i d e r a t i o n o f adminis t r a t i v e , r e g u l a t o r y and p u b l i c n e e d s . - ~ r . Tom D. McEldowney, D i r e c t o r S t a t e Department o f Finance Page 4 However, i n t h i s i n s t a n c e , t h e m a t t e r was s u b m i t t e d t o t h e d i s t r i c t c o u r t and t h e r e s u l t i n g o r d e r s o f the c o u r t must b e obeyed. The S t a t e C o n s t i t u t i o n v e s t s j u d i c i a l power i n t h e c o u r t s . I d a h o C o n s t i t u t i o n , a r t . 5. The j u d i c i a l power i n c l u d e s the Dower t o f i n a l l v determine c o n t r o v e r s i e s and p r o v i d e a n a d e i u a t e remedy. see, e . g . , E l e c t o r s o f Big B u t t e Area v. S t . Bd. o f Educ., 7 8 I d a h o 602, 308 P.2d 225 (1957). W e n t h e D i r e c t o r o f t h e Department 'submitted t h e c l o s u r e o f the s a v i n g s and l o a n t o a c o u r t , h e became s u b j e c t t o t h e o r d e r s o f t h e c o u r t i n t h a t m a t t e r . - I d . As the c o u r t ordered d e s t r u c t i o n o f t h e r e c o r d s , t h e y should b e d e s t r o y e d -- r e g a r d l e s s o f t h e f a c t t h a t d e s t r u c t i o n i s now some 10 y e a r s later t h a n o r d e r e d . Q u e s t i o n No. 3 The t h i r d q u e s t i o n a d d r e s s e s t h e s t a t u s o f unclaimed funds t r a n s f e r r e d t o the S t a t e T r e a s u r e r a f t e r l i a u i d a t i o n o f a s a v i n g s and l o a n a s s o c i a t i o n . The transfer;ed funds a r e unques t i o n a b l y unclaimed p r o p e r t y . Idaho ' s Unclaimed P r o p e r t y -I. Act i s found a t Idaho Code $ 5 14-501 e t seq. Idaho Code - - Fj 14-502 i s the b a s i c s t a t u t e i n I d a h o ' s Uncfaimed P r o p e r t y Act. That s e c t i o n p r o v i d s s i n p e r t i n e n t p a r t : P r o p e r t y presumed abandoned -- General r u l e . - - (1) Except as o t h e r w i s e p r o v i d e d b y this c h a p t e r , a l l i n t a n g i b l e p r o p e r t y , i n c l u d i n g any income o r increment d e r i v e d t h e r e f r o m , l e s s any l a w f u l charges, that i s h e l d , i s s u e d , o r owing i n t h e o r d i n a r y c o u r s e o f a h o l d e r ' s b u s i n e s s and h a s remained unclaimed b y t h e owner f o r more t h a n seven y e a r s a f t e r it became p a y a b l e o r d i s t r i b u t a b l e i s presumed abandoned. I d a h o Code 14-51'1 makes t h e Unclaimed P r o p e r t y Act a p p l i c a b l e t o p r o p e r t i e s d i s t r i b u t a b l e i n l i q u i d a t i o n o f b u s i n e s s a s s o c i a t i o n s . That s t a t u t e p r o v i d e s : P r o p e r t y o f b u s i n e s s a s s o c i a t i o n s h e l d i n c o u r s e o f d i s s o l u t i o n . - - I n t a n g i b l e p r o p e r t y d i s t r i b u t a b l e i n t h e c o u r s e o f a d i s s o l u t i o n o f a b u s i n e s s a s s o c i a t i o n which M r . Tom D. McEldowney, D i r e c t o r (- S t a t e Department o f Finance Page 5 remains unclaimed b y t h e owner f o r more than one y e a r a f t e r t h e d a t e s p e c i f i e d f o r f i n a l d i s t r i b u t i o n i s presumed abandoned. Idaho Code 14-513 makes t h e Unclaimed Property Act a p p l i c a b l e t o government a g e n c i e s , i n c l u d i n g t h e S t a t e T r e a s u r e r , p r o v i d i n g : I n t a n g i b l e p r o p e r t y h e l d f o r t h e owner by a c o u r t , s t a t e o r o t h e r government, governmental s u b d i v i s i o n o r agency, p u b l i c c o r p o r a t i o n , o r p u b l i c a u t h o r i t y which remains unclaimed by t h e owner f o r more than one y e a r a f t e r becoming payable o r d i s t r i b u t a b l e i s presumed abandoned. The burden o f compliance w i t h I d a h o ' s Unclaimed P r o p e r t y Law f a l l s on t h e h o l d e r o f t h e p r o p e r t y i n q u e s t i o n pursuant t o Idaho Code fj 14-517. " ~ o l d e r " i s d e f i n e d i n Idaho Code fj 14-501 as t h e person i n p o s s e s s i o n o f t h e unclaimed p r o p e r t y . The burden o f compliance w i t h t h e Unclaimed P r o p e r t y Law i n t h i s .case t h e n i s on t h e S t a t e T r e a s u r e r . Pursuant t o - Idaho Code 14-538, t h e c u r r e n t Unclaimed Property Law i s t h e p r o p e r law o f a p p l i c a t i o n t o this problem. However, t h e p r i o r l a w ' s enforcement and p e n a l t y p r o v i s i o n s a r e s p e c i f i c a l l y p r e s e r v e d . Ouestion No. 4 The f o u r t h q u e s t i o n r e q u e s t s c l a r i f i c a t i o n o f t h e r e l a t i o n between t h e Bank A c t , Idaho Code fj 26-1001 e t seq., and t h e Unclaimed P r o p e r t y Act, Idaho Code 14-501 e t seq. The two Acts do n o t a p p e a r t o c o n f l i c t a s t o p r o p e r t y which i s r e p o r t a b l e b y t h e bank t o t h e Unclaimed P r o p e r t y Administrator. The Idaho Unclaimed P r o p e r t y A d m i n i s t r a t o r [''Administrator"] becomes a c r e d i t o r o f t h e bank and succeeds t o t h e p r i o r i t y and s t a t u s o f t h e t r u e owners o f t h e unclaimed funds. In E p s t e i n , McTnenia & Forslund, Unclaimed Prop. L. and Rept. Forns, § 3.02, pp. 3-5 atth thew-~ender l 9 8 4 ) , t h e r e i s a d i s c u s s i o n o f t h i s i s s u e a s f o l l o w s : The r i g h t o f t h e s t a t e s t o e s c h e a t o r t a k e custody o f unclaimed p r o p e r t y i s g e n e r a l l y c o n s i d e r e d t o b e d e r i v a t i v e . I n o t h e r M r . Tom D. McEldowney, D i r e c t o r S t a t e Department o f Finance Page 6 words, t h e s t a t e t a k e s the i n t e r e s t o f t h e unknown o r a b s e n t e e owner. Thus, t h e A d m i n i s t r a t o r should b e n o t i f i e d o f bank insolvency p u r s u a n t t o I d a h o Code 5 26-1016. The A d m i n i s t r a t o r ' s claims f o r such unclaimed p r o e r t y s h o u l d b e t r e a t e d as a l l o t h e r claims under I d a h o Code ! I $ 26-1017 e t s e q . We r e a d Idaho Code 5 26-1023 (which d e a l s w i t h d i s t r i b u t i o n o f unclaimed p r o p e r t y a f t e r t h e 1iquLdation i s completed) as b e i n g c o n s i s t e n t w i t h I d a h o ' s Unclaimed Property Act. There i s no e x p r e s s c o n f l i c t between t h e s t a t u t e s . A t r a n s f e r o f t h e unclaimed p r o p e r t y should b e made t o t h e S t a t e T r e a s u r e r p u r s u a n t t o Idaho Code $ 26-1023. The Treasurer then h a s a d u t y t o comply w i t h t h e Unclaimed P r o p e r t y Act. The S t a t e T r e a s u r e r should r e p o r t t h e unclaimed p r o p e r t y t o t h e A d m i n i s t r a t o r . T n i s r e p o r t should b e made pursuant t o Idaho Code 5 14-517 i n t h e r e p o r t due n e x t a f t e r t h e one-year holding p e r i o d s p e c i f i e d i n Idaho Code 14-513 h a s run. The T r e a s u r e r h a s s i x months a f e r f i l i n g t h e r e p o r t t o t r a n s f e r p h y s i c a l p o s s e s s i o n o f t h e unclaimed p r o p e r t y t o t h e Administrator p u r s u a n t t o I d a h o Code $ 14-519. AUTHORITIES CONS IDERED : Idaho C o n s t i t u t i o n a r t . 4, 5 2 Idaho Code $5 14-501, 14-502, 14-511, 14-513, 14-517, 14-519, 14-538 (Unclaimed P r o p e r t y Act, ch. 5, t i t l e 14) Idaho Code 5 26-919 Idaho Code $5 26-1001, 26-1016, 26-1017, 26-1023 ( ~ a n k A c t , ch. 1 0 , t i t l e 26) Idaho Code $ 5 67-5751 t h r o u g h 67-5753 E p s t e i n , McThenia Ir F o r s l u n d , Unclaimed Prop. L. and Rept. Forms, 3.02, PP* 3-5 (Matthew Bender 1984) Plr. Tom D. McEldowney, D i r e c t o r S t a t e Department of Finance Page 7 DATED t h i s / q %y o f November, 1985. ATTORNEY GENERAL S t a t e o f Idaho ANALYSIS BY: C. A. DAI? - 3eputy A t t o r n e y General STEVE PARRY Deputy A t t o r n e y General WAYNE KLEIN Deputy A t t o r n e y General c c : Idaho Supreae Court S u ~ r e m e Court L i b r a r y 1d;ho S t a t e L i b r a r y -