How should Idaho's Department of Finance handle records and unclaimed funds from long-defunct banks and savings and loans, given the interplay between the state records management law, the Bank Act, and the Unclaimed Property Act?

Opinion 85-6: Disposing of bank records and unclaimed property

Plain-English summary

The Department of Finance asked four practical questions about old bank records and unclaimed funds. The Department was holding records from two banks liquidated by the FDIC in 1955, a bank closed in 1923, and various charter and incorporation files for institutions that had closed, been bought out, or converted to federal charters. It also held records from a 1970 savings and loan closure that a court had ordered destroyed in 1975, and unclaimed funds from that same closure that had been transferred to the State Treasurer.

The AG concluded:

1. Old bank records. With the exception of records previously ordered destroyed by court order, bank records the Department no longer needs may be destroyed or transferred to the State Historical Society under Idaho Code §§ 67-5751 through 67-5753 (general records management framework).

2. Court-ordered destructions. Records previously ordered destroyed by district court order should be destroyed pursuant to that order, even though the destruction date set by the court (1975) had long passed.

3. Unclaimed funds already with the State Treasurer. The current Unclaimed Property Act applies. The Treasurer is the "holder" under § 14-501 and is responsible for compliance.

4. Bank Act and Unclaimed Property Act interplay. The two acts do not conflict. The Bank Act governs treatment of unclaimed funds during liquidation. Once the bank's liquidator transfers unclaimed property to the State Treasurer (under § 26-1023), the Treasurer reports and transfers the property to the Unclaimed Property Administrator under §§ 14-517 and 14-519.

Currency note

This opinion was issued in 1985. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Background and statutory framework

Idaho's general records management framework lives at Idaho Code §§ 67-5751 through 67-5753, adopted in 1974 and 1975. Section 67-5751 broadly defines "state records" as "any document, book, paper or other material regardless of physical form or characteristics, made or received pursuant to law or in connection with the transaction of official state business."

The Idaho Unclaimed Property Act, Idaho Code §§ 14-501 et seq., governs treatment of unclaimed intangible property. Section 14-502 sets a seven-year presumption of abandonment as the general rule. Section 14-511 addresses property distributable in business dissolution; § 14-513 addresses intangible property held by a court, government, governmental subdivision, agency, public corporation, or public authority that remains unclaimed for more than one year. Section 14-517 sets the reporting requirements; § 14-519 sets the six-month transfer window after the report.

Idaho's Bank Act, Idaho Code §§ 26-1001 et seq., governs liquidation procedures. Section 26-1023 deals with distribution of unclaimed property after liquidation completes.

What the AG concluded at the time

Old bank records may be destroyed under the records management framework

No specific banking statute governs destruction or retention of these records. The general statutes in §§ 67-5751 through 67-5753 apply. The Director of the Department of Administration sets the rules and procedures.

Court-ordered destructions are controlling

The Department had submitted the savings and loan closure to the district court in 1970, and the court had ordered destruction of certain records in 1975. The Department failed to destroy them. The AG concluded the court order remained controlling. Under article 5 of the Idaho Constitution, judicial power includes the power to finally determine controversies and provide adequate remedies (Electors of Big Butte Area). The records should be destroyed now, even though the destruction is some 10 years late.

Unclaimed funds at the State Treasurer

The funds transferred to the State Treasurer in 1970 were unquestionably unclaimed property under § 14-502 (and as held for more than one year by a state agency under § 14-513). Section 14-517 places the burden of compliance on the holder, and § 14-501 defines the holder as the person in possession of the unclaimed property. That makes the State Treasurer the holder. Section 14-538 makes the current Unclaimed Property Law the proper law to apply, while preserving the prior law's enforcement and penalty provisions.

Bank Act and Unclaimed Property Act work in tandem

When a bank fails, the Administrator should be notified pursuant to § 26-1016. Claims for unclaimed property should be treated like all other claims under § 26-1017 et seq. After liquidation, § 26-1023 governs distribution of unclaimed property to the State Treasurer. The Treasurer then reports the property to the Administrator under § 14-517, in the report due after the one-year holding period in § 14-513 has run, and has six months to transfer physical possession to the Administrator under § 14-519.

The state's right to escheat or take custody is derivative; the state takes the interest of the unknown or absentee owner (Epstein, McThenia & Forslund, Unclaimed Property Law and Reporting Forms, § 3.02).

Common questions

Could the Department transfer historical bank records to the State Historical Society instead of destroying them?

Yes. Sections 67-5751 through 67-5753 contemplate both destruction and historical preservation as appropriate dispositions.

What if the bank's depositors cannot be located decades after the closure?

The unclaimed property framework exists for exactly that situation. The state holds the property in custody (not as an outright owner) and an owner who later appears can file a claim with the Administrator.

Did the prior Unclaimed Property Law differ on the destruction or holding period for these records?

The opinion preserved the prior law's enforcement and penalty provisions while applying the current law's procedural rules under § 14-538. Substantive obligations follow the current law.

Citations

• Idaho Code § 14-501 et seq. — Unclaimed Property Act framework.
• Idaho Code § 14-502 — seven-year general presumption of abandonment.
• Idaho Code § 14-513 — one-year holding rule for property held by government agencies.
• Idaho Code § 14-517 — reporting requirements.
• Idaho Code § 14-519 — six-month transfer to Administrator after report.
• Idaho Code § 14-538 — current law applies; prior law's enforcement and penalty provisions preserved.
• Idaho Code §§ 26-1001 et seq. — Bank Act, including liquidation distribution under § 26-1023.
• Idaho Code §§ 67-5751 through 67-5753 — state records management.

Source

• Landing page: https://www.ag.idaho.gov/office-resources/opinions/
• Original PDF: https://ag.idaho.gov/content/uploads/2018/01/OP85-06.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain; the linked PDF is authoritative.

STATE OF IDAHO
OFFICE OF THE ATTORNEY GENERAL

JIM JONES
ATTORNEY GENERAL
BOISE 83720
TELEPHONE (208) 334-2400

ATTORNEY GENERAL OPINION NO. 85-6

TO: Mr. Tom D. McEldowney, Director
State Department of Finance
STATEHOUSE MAIL

Per Request for Attorney General Opinion

QUESTIONS PRESENTED:

1. We have records for two banks which were liquidated by the FDIC in 1955 and whose records were returned to us by FDIC. We also have records for a bank closed in 1923 as well as files containing charters, articles of incorporation, and other documents for institutions that were closed, bought-out or converted to federal charters. We would like to get rid of these records. Are these records subject only to Idaho Code § 67-5751, and the regulations of Central Records Management or are we required to retain these records indefinitely?

2. In connection with the closure of a savings and loan association, the Director was ordered by the Fifth District Court in 1970 to destroy ledgers and other records of the association in 1975. The Department failed to destroy the records at that time. Should the records be destroyed now pursuant to the court order or must destruction be pursuant to rules of the Department of Administration?

3. In connection with this same closure in 1970, the court ordered unclaimed funds to be transferred to the State Treasurer pursuant to Idaho Code § 26-919, now superseded. This transfer was made. The Auditor said that this money must now be sent to the Tax Commission under the Unclaimed Property Law (ch. 5, title 14). Must that money be transferred to the Tax Commission? If so, is it the responsibility of this Department or the Treasurer to make that transfer? If so, is the transfer to be made under the current or prior Unclaimed Property Law?

4. What is the relationship between the Unclaimed Property Law and liquidation procedures in the Bank Act (ch. 10, title 26)? Is the Bank Act procedure superseded by the Unclaimed Property Law? To what extent does the new Unclaimed Property Law supersede the time limits of the prior Unclaimed Property Law?

CONCLUSION:

1. With the exception of records ordered destroyed by court order, bank records which the Department of Finance no longer needs may be destroyed or transferred to the State Historical Society pursuant to the procedures provided by Idaho Code §§ 67-5751 through 67-5753.

2. Records previously ordered destroyed by court order should be destroyed pursuant to that order.

3. The Unclaimed Property Act applies to unclaimed funds transferred to the State Treasurer. The responsibility for compliance is on the holder of the funds, which is the State Treasurer in this instance. The current Unclaimed Property Act governs the procedure to be followed.

4. The Bank Act is in effect and governs treatment of unclaimed funds during liquidation. Upon completion of liquidation and transfer of unclaimed property to the State Treasurer pursuant to the Bank Act, the State Treasurer should file an unclaimed property report and transfer funds to the unclaimed property account as provided in the Unclaimed Property Act.

[Question 1: bank records may be destroyed under §§ 67-5751 through 67-5753.]

The bank records described in question 1 may be destroyed pursuant to the provisions of Idaho Code §§ 67-5751 through 67-5753. These statutes empower the Director of the Department of Administration to provide rules and procedures for the retention of state records and the destruction of state records. Idaho Code § 67-5751 defines state records as: ". . . Any document, book, paper or other material regardless of physical form or characteristics, made or received pursuant to law or in connection with the transaction of official state business."

It appears from the question presented that the records were received pursuant to law and in connection with the transaction of official state business. Therefore, the general provisions of Idaho Code § 67-5751 apply unless statutes specifically relating to bank records provide a different result. Our research discloses no such specific banking statutes which govern destruction or retention of bank records by the Department of Finance. Therefore, the general statutes, Idaho Code §§ 67-5751 through 67-5753 apply.

[Question 2: court-ordered destructions are controlling.]

The records previously ordered destroyed by the district court should be destroyed pursuant to the court's order. Idaho Code §§ 67-5751 through 67-5753 discussed above, which govern destruction of records, were adopted in 1974 and 1975. Prior to this time there were no laws governing retention or destruction of general records held by state agencies. Accordingly, prior to adopting the records destruction statutes, control, retention and destruction of bank records would have been left to the discretion of the Department of Finance after consideration of administrative, regulatory and public needs.

However, in this instance, the matter was submitted to the district court and the resulting orders of the court must be obeyed. The State Constitution vests judicial power in the courts. Idaho Constitution, art. 5. The judicial power includes the power to finally determine controversies and provide an adequate remedy. See, e.g., Electors of Big Butte Area v. St. Bd. of Educ., 78 Idaho 602, 308 P.2d 225 (1957).

When the Director of the Department submitted the closure of the savings and loan to a court, he became subject to the orders of the court in that matter. Id. As the court ordered destruction of the records, they should be destroyed regardless of the fact that destruction is now some 10 years later than ordered.

[Question 3: unclaimed funds at the State Treasurer fall under the current Unclaimed Property Act, with the Treasurer as holder.]

The third question addresses the status of unclaimed funds transferred to the State Treasurer after liquidation of a savings and loan association. The transferred funds are unquestionably unclaimed property. Idaho's Unclaimed Property Act is found at Idaho Code §§ 14-501 et seq.

[The opinion analyzes §§ 14-502, 14-511, 14-513, 14-517, and 14-538, concluding that the State Treasurer is the holder under § 14-501 and is responsible for compliance, and that the current Unclaimed Property Law applies (with prior law's enforcement and penalty provisions preserved).]

[Question 4: Bank Act and Unclaimed Property Act work together.]

The two Acts do not appear to conflict as to property which is reportable by the bank to the Unclaimed Property Administrator. The Idaho Unclaimed Property Administrator becomes a creditor of the bank and succeeds to the priority and status of the true owners of the unclaimed funds. The Administrator should be notified of bank insolvency pursuant to Idaho Code § 26-1016. The Administrator's claims for such unclaimed property should be treated as all other claims under Idaho Code §§ 26-1017 et seq.

We read Idaho Code § 26-1023 (which deals with distribution of unclaimed property after the liquidation is completed) as being consistent with Idaho's Unclaimed Property Act. There is no express conflict between the statutes. A transfer of the unclaimed property should be made to the State Treasurer pursuant to Idaho Code § 26-1023. The Treasurer then has a duty to comply with the Unclaimed Property Act. The State Treasurer should report the unclaimed property to the Administrator. This report should be made pursuant to Idaho Code § 14-517 in the report due next after the one-year holding period specified in Idaho Code § 14-513 has run. The Treasurer has six months after filing the report to transfer physical possession of the unclaimed property to the Administrator pursuant to Idaho Code § 14-519.

DATED this 19th day of November, 1985.
ATTORNEY GENERAL
State of Idaho

ANALYSIS BY:
C. A. DAW
Deputy Attorney General

STEVE PARRY
Deputy Attorney General

WAYNE KLEIN
Deputy Attorney General