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Peo. Ex Rel. Fahner v. Chi. Trans. Auth.

OPINION FILED SEPTEMBER 5, 1984.

THE PEOPLE EX REL. TYRONE C. FAHNER, ATTORNEY GENERAL, ET AL., PLAINTIFFS-APPELLEES,

v.

THE CHICAGO TRANSIT AUTHORITY, DEFENDANT-APPELLANT.



Appeal from the Circuit Court of Cook County; the Hon. James C. Murray, Judge, presiding.

JUSTICE MCGILLICUDDY DELIVERED THE OPINION OF THE COURT:

This action was brought on behalf of the people of the State of Illinois by Attorney General Tyrone C. Fahner and Edward F. Callahan, Director of the Department of Financial Institutions (the State), against the Chicago Transit Authority (CTA), for recovery of abandoned property in the CTA's possession, pursuant to the Uniform Disposition of Unclaimed Property Act (Ill. Rev. Stat. 1981, ch. 141, par. 101 et seq.) (the Act).

In the ordinary course of its business, the CTA has accumulated in its general fund payroll, vacation, sick leave and bonus checks which have remained unclaimed by employees and former employees. To resolve this problem, the CTA on November 7, 1979, enacted Ordinance No. 79-131, which provides:

"WHEREAS, from time to time the Authority is obligated to pay monies and benefits to employees and to former employees who cannot be located; and

WHEREAS, it is now necessary to prescribe the steps to be taken in regard to the disposition of said monies; now therefore:

BE IT ORDAINED BY CHICAGO TRANSIT BOARD OF CHICAGO TRANSIT AUTHORITY:

SECTION 1. In the event that an employee, former employee or beneficiary designated by an employee does not claim any monies and benefits due from the Authority to said employee, former employee and beneficiary within a period of three years after the date the monies or benefits became due and payable, said employee, former employee or beneficiary so designated shall have no further claim to said benefits and the Authority shall distribute said benefits to the heirs at law, if any, of said employee or former employee. If the heirs at law of said employee or former employee do not claim said monies or benefits within a period of four years after the monies or benefits first became due and payable to the employee or former employee or designated beneficiary, the monies and benefits shall remain assets of the Authority without being subject to further claim by the employee, former employee, designated beneficiary, heirs at law of the former employee or any governmental body.

SECTION 2. This ordinance shall be in force and effect from and after its passage." (Emphasis added.) Chicago Transit Authority Ordinance No. 79-131 (November 7, 1979).

The State filed this action, alleging that the unclaimed property covered by CTA's Ordinance No. 79-131 is abandoned personal property covered by the Act. Counts I and II of the complaint sought judgment declaring the CTA subject to the Act and declaring Ordinance No. 79-131 void, as well as a mandatory injunction requiring the CTA to comply with the Act. Counts III and IV, which prayed for interest on the funds subject to the Act, and a penalty, are not at issue in this appeal.

The CTA made a motion to dismiss the complaint, alleging that the property in question belonged to the CTA in accordance with its Ordinance No. 79-131. On March 17, 1982, the trial court denied the motion as to counts I and II, finding that the Act applied to unclaimed property held by the CTA and that Ordinance No. 79-131 was invalid and unenforceable as being in direct conflict with the Act. The trial court granted the motion as to counts III and IV. The CTA appeals. The issues presented for review are: (1) whether the property in the custody of the CTA representing unclaimed wages owed by the CTA to its employees, former employees and/or their beneficiaries is subject to the provisions of the Act, and (2) whether CTA Ordinance No. 79-131 is valid.

• 1 The CTA contends that the property in its custody does not fall within the purview of the Act. The Act provides generally that certain property be presumed abandoned after seven years and that the holder thereof must follow a procedure which ultimately places such property in the custody of the State. (People ex rel. Callahan v. Marshall Field & Co. (1980), 83 Ill. App.3d 811, 404 N.E.2d 368.) The Act protects the rights of unknown owners and gives the benefit of the use of the unclaimed property, most of which experience shows will never be claimed, to the State rather than the holders. (See People ex rel. Callahan v. Marshall Field & Co. (1980), 83 Ill. App.3d 811, 404 N.E.2d 368; Douglas Aircraft Co. v. Cranston (1962), 58 Cal.2d 462, 374 P.2d 819, 24 Cal.Rptr. 851.) The Act provides, in pertinent part, as follows:

"Sec. 1. As used in this Act, unless the context otherwise requires:

(b) `Business association' means any corporation (other than a public corporation), * * *."

"Sec. 2a. Business associations shall report all property and any earnings thereon which has [sic] remained unclaimed for 7 years and is [sic] therefore presumed abandoned. This property shall consist ...


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