IMO November 8, 1996 Determination of the State of New Jersey, Department of the Treasury, Unclaimed Property Office

SYLLABUS
 

(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).

In the Matter of the November 8, 1996 Determination of the State of New Jersey, Department of the Treasury, Unclaimed Property Office (A-194-97)

(NOTE: The Court wrote no full opinion in this case. Rather, the Court's affirmance is based substantially for the reasons expressed in Judge Brochin's opinion below.)
 
Argued January 5, 1999 -- Decided January 28, 1999

PER CURIAM

The issue before the Court is whether unredeemed gift certificates are subject to reporting under the Uniform Unclaimed Property Act (the Act).

The Act establishes a procedure by which intangible property that is presumed abandoned is transferred to the State as custodian for the absent owner. In accordance with that procedure, a person holding property subject to the Act that is presumed abandoned is required to report that property to the State.

The Hilton at Short Hills (the Hilton) issued gift certificates that were good for one year and were redeemable only for services or merchandise. Hilton sought a determination from the Department of Treasury (Treasury) whether the unredeemed gift certificates were among the kinds of intangible property that are subject to the Act and must be reported to the State when presumed abandoned. In accordance with advice from the Attorney General, Treasury informed the Hilton, by letter dated November 8, 1996, that the gift certificates are subject to the Act.

The Hilton appealed to the Appellate Division from the Treasury determination. The Appellate Division reversed the decision of Treasury, finding that gift certificates are not covered by the Act.

The Appellate Division noted that the Act as codified in New Jersey deviates from the Uniform Unclaimed Property Act (1981 Model Act) by certain significant omissions. Specifically, the words "gift certificates," are included in the 1981 Model Act but are expressly omitted from the New Jersey Act. The court found that the legislative history of the Act demonstrates that this omission was intentional.

The Appellate Division reasoned that all of the categories of intangible personal property expressly covered by the Act or the 1981 Model Act are, as a practical matter, claims for payment of money. Furthermore, intangible property not expressly listed in the Act that have been held to fall within its coverage have also been claims dischargeable by the payment of money. Gift certificates, however, frequently are not bound by the payment of money. The State cannot obtain funds by escheating obligations that do not bind the obligor to pay money.

According to the Appellate Division, case law demonstrates that the Act was not intended to impose an obligation different from the obligation given to the original owner of the intangible property that it covers. The Hilton gift certificates were redeemable for services or merchandise only. Thus, the Hilton gift certificates were not intended by the Legislature to be included among the "intangible personal property" that must be reported and transferred to the State to be converted to cash for the State's use under the Act. This conclusion is supported by other states that treat gift certificates differently from other intangible property for escheat purposes.

Treasury argued that it could otherwise collect the unclaimed funds under the common law doctrine of bona vacantia, defined as personal property that escheats to the State because no owner, heir or next of kin claims it. The Appellate Division found it unnecessary to determine what, if any, intangible personal property might pass to the State under the doctrine of bona vacantia and under what circumstances it might be applicable.
 
HELD: Judgment of the Appellate Division is AFFIRMED substantially for the reasons expressed in Judge Brochin's written opinion. Unredeemed gift certificates redeemable only for services and merchandise are not subject to the Uniform Unclaimed Property Act.

Judgment of the Appellate Division is AFFIRMED.

CHIEF JUSTICE PORITZ and JUSTICES HANDLER, POLLOCK, O'HERN, GARIBALDI, STEIN and COLEMAN join in this PER CURIAM opinion.

SUPREME COURT OF NEW JERSEY
A- 194 September Term 1997
 

IN THE MATTER OF NOVEMBER 8, 1996, DETERMINATION OF THE STATE OF NEW JERSEY, DEPARTMENT OF THE TREASURY, UNCLAIMED PROPERTY OFFICE.

Argued January 5, 1999 -- Decided January 28, 1999

On certification to the Superior Court, Appellate Division, whose opinion is reported at 309 N.J. Super. 272 (1998).

Michael J. Haas, Assistant Attorney General, argued the cause for appellant, State of New Jersey Department of the Treasury (Peter Verniero, Attorney General of New Jersey, attorney; Kevin M. Wolfe and Peter M. Ullman Deputy Attorneys General, on the briefs).

Michael O'B. Boldt argued the cause for respondent, The Hilton at Short Hills (Bourne, Noll & Kenyon, attorneys).

Martin S. Ettin submitted a brief on behalf of amici curiae New Jersey Retail Merchants Association and The International Mass Retail Association (Katz, Ettin, Levine, Kurzweil, Werber & Scialabba, attorneys; Mr. Ettin, James B. Evans, Jr., and Robert P. Saltzman, on the brief).

PER CURIAM

The judgment is affirmed, substantially for the reasons expressed in Judge Brochin's opinion of the Appellate Division, reported at 309 N.J. Super. 272 (1998).

CHIEF JUSTICE PORITZ and JUSTICES HANDLER, POLLOCK, O'HERN, GARIBALDI, STEIN, and COLEMAN join in this opinion.

SUPREME COURT OF NEW JERSEY
 

NO. A-194

SEPTEMBER TERM 1997
ON APPEAL FROM
ON CERTIFICATION TO Appellate Division, Superior Court

IN THE MATTER OF NOVEMBER 8, 1996,
DETERMINATION OF THE STATE OF
NEW JERSEY, DEPARTMENT OF THE
TREASURY, UNCLAIMED PROPERTY OFFICE.

DECIDED

January 28, 1999
Chief Justice Poritz PRESIDING
OPINION BY PER CURIAM
CONCURRING OPINION BY DISSENTING OPINION BY
CHECKLIST
AFFIRM CHIEF JUSTICE PORITZ X JUSTICE HANDLER X JUSTICE POLLOCK X JUSTICE O'HERN X JUSTICE GARIBALDI X JUSTICE STEIN X JUSTICE COLEMAN X TOTALS
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