Appeals Court upholds state control of people’s ‘missing money’

The Minnesota Court of Appeals today overturned a lower court ruling that refused to dismiss a class action lawsuit that contends Minnesota’s unclaimed property law is an illegal seizure under the Constitution.

The court ruled in an appeal from the state which argued that the state’s control of unclaimed money and property is consumer protection.

The suit was brought by several individuals, including a woman whose $138,000 was taken from a bank after she failed to respond to letters from the financial institution; a man who didn’t claim his last paycheck from an employer; and a man whose property was turned in to the state by an insurance company.

All of them said they didn’t get any notice from the institutions which held their property or from the state which took control of it. They also complained that the state wasn’t paying any interest on their money.

A judge said today the state hasn’t taken the money; they had simply abandoned it.

Many of them found out about their forfeited property by searching

“The money is being taken,” Dan Hedlund, their attorney, told MinnPost last year. “We don’t think this is their property. There should be more of an effort made to reunite it to the true owner of the money or the items.”

At issue is almost $700 million that the state is holding.

Today, the Court of Appeals rejected the notion that the state’s role constitutes seizing property, citing a U.S. Supreme Court ruling in an Indiana law where mineral rights held by a corporation revert back to the property owner after a period of inaction.

” [The people whose money was transferred to the state] allege that because the state uses the property, the owners essentially become lenders and the state a borrower and as such the owners are entitled to the equitable interest the state did not have to pay to borrow from another source,” Judge Renee Worke wrote in today’s decision that said under the Minnesota Unclaimed Property Act (MUPA), they’re not entitled to interest.

She also rejected the claim that the state’s commerce commissioner, who is in charge of the unclaimed money, has failed to take enough measures to reunite people with their money and property.

“Although respondents claim that the commissioner’s actual attempts to provide notice are inadequate, each respondent received notice that the state held their property,” she said, citing each of the people bringing the suit against the state.

“(Timothy) Hall was informed by his father that his name and address were on the state list of individuals whose property it was holding,” she said. “(Michael) Undlin learned from his attorneys that his name and address were on the state’s list. (Mary) Wingfield received a letter from her bank, but ignored it. (Beverly) Herron’s daughter discovered Herron’s name on”

And Worke noted the people don’t lose their money. “The property was just transferred from one holder to another (the state).”

And even if they had lost their money, their due process was not violated, again citing the U.S. Supreme Court’s Indiana decision.

The state’s unclaimed property fund has nearly doubled in the last 10 years as the state has increased efforts to find abandoned money and property. And while the Commerce Department has also increased efforts to find the rightful owners, some lawmakers have claimed the effort is nowhere near enough.