On certification to the Superior Court, Appellate Division, whose opinion is reported at 334 N.J. Super. 252 (2000).
(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized).
This appeal requires the Court to interpret certain provisions of the Uniform Unclaimed Property Act, N.J.S.A. 46:30B-1 to -109 (the Act) to determine whether principal and interest arising from bonds issued by various governmental entities must lay unclaimed or dormant for five years pursuant to N.J.S.A. 46:30B-7 before it is turned over to the State, or whether the dormancy period is one year as set forth under N.J.S.A. 46:30B-41.2.
Summit Bank, formerly United Jersey Bank (the Bank), has served as trustee and paying agent in connection with numerous bonds, all issued by various governmental entities. This case arises because certain payments due and owing to the bondholders have gone unclaimed because a bond has not been presented for redemption, an interest coupon has not been presented for payment, a remittance issued has not been negotiated, or a remittance has been returned as undeliverable by the post office.
As a result of an audit completed in 1994, then-Treasurer Brian W. Clymer demanded that the Bank turn over unclaimed funds arising out of bond principal and interest payable on various dates in 1992 and 1993. The State based that demand on its view that the applicable dormancy period under the Act for unclaimed governmental-bond funds was one year. Although the Bank initially took a contrary position (maintaining that the abandonment period for such property was five years), it acquiesced to the State's demand, turning over to the Treasurer an amount in excess of $3,000,000.
Thereafter, the State conducted a follow-up audit in 1995. That audit indicated that the Bank was holding unclaimed property representing outstanding unredeemed bearer and registered governmental bond principal and interest that had become payable between July 1, 1993, and June 30, 1994. According to the Treasurer, those funds would have to be paid to the State before November 1, 1995. Unlike its response to the earlier audit, the Bank refused the Treasurer's demand based on its initial interpretation that the Act did not entitle the State to take custody of the funds until the expiration of the longer dormancy period.
In 1996, the State filed an action seeking an immediate turnover of the disputed funds. The Bank then filed a counterclaim to recover the property it had forwarded to the Treasurer in 1994, claiming that it had mistakenly turned over those funds. Both parties moved for summary judgment based on their respective positions regarding the Act's abandonment periods.
In a reported opinion, the trial court granted partial summary judgment in favor of the State, finding that the Bank's "overly strict" interpretation of the various provisions of the Act contravened well settled rules of statutory construction and contradicted the important public policy sought to be achieved by the Act. The trial court directed the Bank to remit $531,195.47 to the custody of the Treasurer, in addition to interest in the amount of $259,516.03.
The Appellate Division set aside the trial court's determination and interpreted the Statute consistent with the Bank's position. While agreeing with the trial court that there appeared to be strong public policy favoring the result it reached, the panel noted that "[a] court's view of public policy cannot be used to trump the plain language of the statute itself or the clearly expressed intendment of the drafters."
The Supreme Court granted the State's petition for certification.
HELD: The one-year dormancy period set forth in Section 41.2 of the Uniform Unclaimed Property Act applies to the transfer to the State by the trustee bank of unclaimed principal and interest arising from bonds issued by various governmental entities.
1. Under the statute adopted in New Jersey, title to the unclaimed property covered in the Act does not vest in the State, but rather remains in the owner. Thus, the State takes custody of the property and has full use of it until the rightful owner comes forward to claim it. (pp. 7-9)
2. Under the Act, the Legislature has determined that property would be presumed abandoned after the expiration of various dormancy periods, depending on the nature of the property in a given case. Although the property in this case constitutes "intangible property" within the statutory definition of that term, the Act sets forth competing abandonment provisions, depending on whether the unclaimed funds have been "held by" the Bank or by the various governmental entities. (pp. 9-12)
3. Although the passage of time has mooted the issue to be resolved in this case, the State's appeal presents a question that is both important to the public and likely to recur. (pp. 12-13)
4. Because the Act's definition of holder would apply equally to both governmental issuers and to the Bank, the Court must resolve the ambiguity within the framework of the competing abandonment periods, which requires reference to sources other than the literal words of the statute. (pp. 13-14)
5. Based on the legislative history and the overall structure of the Act, the Legislature intended a broad interpretation in favor of the State. Courts normally defer to the interpretation ascribed to a statute by an administrative agency charged with responsibility for assisting in the implementation of the legislative design. (pp. 14-15)
6. The one-year dormancy period found at Section 41.2 governs the disputed property, as that property should be viewed as being "held by" the various governmental entities for the narrow purpose of determining the applicable abandonment period. (pp. 15-16)
7. There is nothing in the text or history of the current Act to demonstrate convincingly that the Legislature intended the longer dormancy period to apply in these circumstances, and there is no indication that the Legislature intended the applicable dormancy period for payments on government bonds to randomly depend on a strict interpretation of bond documents variously defining the fiduciary's contractual responsibilities. (pp. 16-21)
Judgment of the Appellate Division is REVERSED.
JUSTICES STEIN and LONG filed a separate dissenting opinion and would have affirmed the judgment of the Appellate Division for the reasons set forth in its opinion.
CHIEF JUSTICE PORITZ and JUSTICES COLEMAN, LaVECCHIA, and ZAZZALI join in JUSTICE VERNIERO's opinion. JUSTICES STEIN and LONG have filed a separate dissenting opinion.
The opinion of the court was delivered by: Verniero, J.
Argued September 25, 2001
This is a case of first impression. We are called on to interpret certain provisions of the Uniform Unclaimed Property Act, N.J.S.A. 46:30B-1 to -109 (the Act). The unclaimed property at stake consists of principal and interest in excess of $500,000, arising from bonds issued by various governmental entities. We must determine whether that property must lay unclaimed or dormant for five years pursuant to N.J.S.A. 46:30B-7 before it is turned over to the State, or whether the dormancy period is one year as set forth under N.J.S.A. 46:30B-41.2. The trial court concluded that the ...