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BILL COLE, TREASURER OF THE STATE OF MISSISSIPPI v. NATIONAL LIFE INSURANCE COMPANY

SEPTEMBER 13, 1989

BILL COLE, TREASURER OF THE STATE OF MISSISSIPPI
v.
NATIONAL LIFE INSURANCE COMPANY, LIFE & CASUALTY COMPANY OF TENNESSEE AND AMERICAN GENERAL LIFE INSURANCE COMPANY OF DELEWARE



BEFORE DAN LEE, PRATHER AND ROBERTSON.

DAN LEE, PRESIDING JUSTICE, FOR THE COURT:,

Appellees, National Life and Accident Insurance Company, Life and Casualty Insurance Company of Tennessee, and American General Life Insurance Company of Delaware (hereinafter" the Companies ") sought and obtained an adjudication in the Chancery Court of the First Judicial District of Hinds County, Mississippi, that certain funds they are holding are not subject to the reporting and payment provisions of Mississippi's Uniform Disposition of Unclaimed Property Act, 89-12-1, et seq., Miss. Code

Ann. (1972) (hereinafter the" Mississippi Act "). As reflected in the Order of the Chancellor dated February 6, 1987, the case was submitted to the Chancellor on briefs and written stipulation of facts and evidence.

 The Mississippi Act had an effective date of July 1, 1982, and the claims of the owners and payees to the funds in question apparently became time-barred by Mississippi's statute of limitations prior to the effective date. Appellant Bill Cole, Treasurer of the State of Mississippi (hereinafter the" Treasurer "), had contended that the State of Mississippi succeeded the owners' and payees' claims to the funds, and that the State of Mississippi could not be time-barred. Finding no provision in Mississippi's Act to retroactively remove the bar of the statute of limitations, the chancellor rendered his opinion on June 11, 1987, that the particular funds in question are not subject to the reporting and payment provisions of Mississippi's Act. The chancellor further found that the Treasurer should be permanently and perpetually enjoined from enforcing Mississippi's Act regarding the particular funds in issue. In accordance with his opinion, the chancellor entered a final decree, declaratory judgment, and injunction on June 22, 1987. It is from the final decree, declaratory judgment, and injunction that the Treasurer has perfected his appeal and assigns as error:

 I. The Chancellor was Manifestly Wrong and Erred in Rendering a Judgment that the Items and Amounts in Issue are Not Subject to Mississippi's Uniform Disposition of Unclaimed Property Act, 89-12-1, et seq.

 STATEMENT OF THE FACTS

 Mississippi's Uniform Disposition of Unclaimed Property Act (the" Mississippi Act ") was enacted by the State of Mississippi effective July 1, 1982. It is a codification of the Revised 1966 Uniform Disposition of Unclaimed Property Act (the" Uniform Act ") approved by the National Conference of Commissioners on Uniform State Laws and the American Bar Association. The purpose of the Uniform Act is stated in Douglas Aircraft Co. v. Cranston, 58 Cal. 2d 462, 374 P.2d 819, 24 Cal. Rptr. 851 (1962):

 The objectives of the Act are to protect unknown owners by locating them and restoring their property to them and to give the State rather than the holders of unclaimed property the benefit of the use of it, most of which experience shows will never be claimed.

 Mississippi's Act, like the 1966 Revised Uniform Act, is" custodial "in nature - that is to say, it does not result in

 the loss of the owner's property rights. The State takes custody and remains the custodian in perpetuity. Although the actual possibility of his/her presenting a claim in the distant future is not great, the owner retains his/her right of presenting a claim at any time, no matter how remote. State records have to be kept on a permanent basis. In this respect, the measure differs from the" escheat "type of statute, pursuant to which the right of the owner is foreclosed and the title to the property passes to the state.

 The Mississippi Legislature joined other enacting states in the desire for uniformity in this area of the law, and this mandate is expressed in 89-12-55 of Mississippi's Act:" This chapter shall be so construed as to effectuate its general purpose to make uniform the laws of those states which enact it. "

 The Companies are deemed to be" insurance corporations "under Mississippi's Act. The Treasurer is charged with the administration and enforcement of Mississippi's Act.

 Mississippi's Act defines" abandoned property "with regard to various entities, and it specifically provides in 89-12-7 (1) that:

 [F]unds held or owing by a life insurance corporation under any life or endowment insurance policy or annuity contract which has matured or terminated shall be presumed abandoned if unclaimed and unpaid for more than seven (7) years after the funds became due and payable as established from the records of the corporation.

 Section 89-12-23 requires the reporting of the presumed abandoned funds to the Treasurer, and after certain published notices by the Treasurer, 89-12-29 requires the abandoned property to be paid or delivered to the Treasurer if the owner has not established his right to the abandoned property.

 In addition, 89-12-35 of Mississippi's Act provides:

 The expiration of any period of time specified by statute or court order, during which an action or proceeding may be commenced or enforced to obtain payment of a claim for money or recovery of property, shall not prevent the money or property from being presumed abandoned property, nor affect any duty to file a report required by the provisions of this chapter, or to pay or deliver abandoned property to the treasurer.

 This provision corresponds exactly with 16 of the Uniform Act.

 Under 89-12-23 of Mississippi's Act, the initial report to the Treasurer from the Companies was due on May 1, 1983, and according to 89-12-23 (8), the initial report was to" include all items of property that would have been presumed abandoned if this chapter had been in effect since July 1, 1969. . . . "Since there is a seven-year dormancy period under Mississippi's Act, the initial report purportedly covered items maturing or terminating or becoming due and payable between July 1, 1962, and December 31, 1975 (i.e., therefore, presumed abandoned under the Act on or before December 31, 1982).

 The second report was due under Mississippi's Act on May 1, 1984, and that report would have required the Companies to report funds to the Treasurer which matured or terminated or became due and payable between January 1, 1976, and December 31, 1976 (i.e., therefore, presumed abandoned under the Act on or before December 31, 1983.

 The funds in issue, allegedly reportable for the two specified time periods total an amount of $413,097.26. The funds amount to the owing of $267,782.86 by National Life and Accident Insurance Company, $144,920.06 by Life and Casualty Insurance Company of Tennessee, and $394.34 by American General Life Insurance Company of Delaware. Such funds include items such as matured industrial endowments, matured ordinary endowments, death claims, outstanding checks, industrial district office pay and ordinary district office pay, all of which matured and became due, returnable, demandable and payable between July 1, 1962, and June 30, 1976, which is more than six years prior to the effective date of Mississippi's Act (July 1, 1982).

 While the litigation was pending in the chancery court, the reporting and payment to the Treasurer of the disputed funds was held in abeyance by agreement of the parties. Mississippi's Act would have otherwise purported to require the inclusion of the disputed funds in the initial report and part of the second report as" presumed abandoned. "

 ANALYSIS

 I. What is the Standard of Review for a Chancellor's Decree?

 When presented with what is essentially a question of law, the familiar manifest error/substantial evidence rules have no application to our appellate review of such questions. The principle of" manifest error "applies only to a factual situation. If the chancellor is manifestly wrong in basing his decision upon the facts, then this Court will reverse; otherwise, we will affirm. This rule does not apply on questions of law.

 Boggs v. Eaton, 379 So. 2d 520, 522; Mississippi State Highway Commission v. Dixie Contractors Inc., 375 So. 2d 1202, 1206; S & A Realty Co. v. Hilburn, 249 So. 2d 379, 382 (Miss. 1971); see also, Pullman-Standard, a Division of Pullman, Inc. v. Swint, 456 U.S. 273, 287, 102 S. Ct. 1781, 1789, 72 L.Ed.2d 66, 79 (1982).

 With regard to a pure question of law, this Court shall conduct a de novo review.

 II. MAIN ISSUE

 As the chancellor stated," The sole issue before the court is whether 89-12-35 [16] of Mississippi's Act applies retroactively to lift the bar of the statute of limitations regarding the reporting and payment of the funds in question as `abandoned property.\rquote "

 This case is one of first impression in Mississippi, and it includes significant constitutional questions under the Mississippi and United States Constitutions; therefore, in order to properly address the main issue designated above, several sub-issues warrant discussion. They are as follows:

 A. How did the Treasurer for the State of Mississippi succeed to the owners' and payees' claims to the disputed funds?

 B. Was the bar of the statute of limitations complete against claims of the owners and payees to the disputed funds prior to the ...


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