STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

MARTIN YOUNG PRIVATE ) INVESTIGATIVE AGENCY, INC., ) ET AL., )

)

Petitioner, )

)

vs. ) CASE NO. 93-0242RP

) DEPARTMENT OF BANKING AND ) FINANCE, DIVISION OF FINANCE, )

)

Respondent, )

and )

) INTERSTATE ASSET LOCATORS, ) INC., )

)

Intervenor. )

)

FINAL ORDER

A hearing was held pursuant to notice in the above-styled case by Stephen

1. Dean, assigned Hearing Officer of the Division of Administrative Hearing, on February 15, 1993, in Tallahassee, Florida. In this case, the Petitioner challenges a proposed rule of the Department of Banking and Finance, Division of Finance.

   
   

   APPEARANCES

   
   

   For Petitioner: Will J. Richardson, Esquire

   Richardson Law Offices, P.A. Post Office Box 12669 Tallahassee, Florida 32317-2669

   
   

   For Respondent: Paul C. Stadler, Jr., Esquire

   Assistant General Counsel Office of the Comptroller The Capitol, Suite 1302 Tallahassee, Florida 32399

   
   

   For Intervenor: W. Douglas Moody, Jr., Esquire

   Taylor, Brion, Buker & Greene

   116 South Monroe Street, 3rd Floor Tallahassee, Florida 32301

   
   

   STATEMENT OF THE ISSUES

   
   

   Whether the Department exceeded its grant of rule making authority in its proposed rule 3D-20.0023 or, alternatively, whether the proposed rule is arbitrary and capricious.

   PRELIMINARY STATEMENT

   
   

   The Department gave notice of proposed rule making, and the Petitioner timely challenged the proposed rule. Prior to hearing, the Intervenor filed a petition to intervene, which was granted. At the formal hearing, the parties submitted a stipulation regarding the operative facts, together with exhibits. In addition, the depositions of Harry B. Carson, Randall Holland, and Rex Pearce were received into evidence over the objections of the Department. The Petitioner and Respondent filed posthearing pleadings which were read and considered. The Appendix to this Final Order states which of the proposed findings were adopted, and which were rejected and why.

   
   

   FINDINGS OF FACT

   
   

   1. Martin Young Private Investigative Agency, Inc. (Martin-Young) is a private investigative agency actively participating in recovering unclaimed property for apparent owners who have assigned their claims to Martin-Young on a contingency basis.

      
      

   2. Interstate Asset Locators, Inc. (Interstate) is a competing private investigative agency engaged in the same business as the Petitioner, Martin- Young.

      
      

   3. The Department of Banking and Finance, Division of Finance (Department) is charged by Chapter 717, Florida Statutes, to receive unclaimed intangible property, to include monies, checks, drafts, deposits, interest, dividends, income, credit balances, customer overpayments, gift certificates, security deposits, refunds, credit memos, unpaid wages, unused airline tickets, unidentified remittances, amounts due and payable under the terms of insurance policies, and amounts distributable from trusts or custodial funds.

      
      

   4. On December 31, 1992, the Department gave notice of proposed rule making in the Florida Administrative Weekly, Volume 18, No. 53, proposing a rule governing competing claims between creditors and apparent owners of unclaimed property. This rule was adopted pursuant to Section 717.138, Florida Statutes, and cites Sections 717.101(11), 717.124, and 717.126, Florida Statutes, as implementing sections of law.

      
      

   5. The proposed rule was the Department's response to a claim by Martin- Young for unclaimed property under an assignment from a named beneficiary of a life insurance policy, the proceeds of which have been delivered to the Department. Subsequent to the approval of Martin-Young's claim, Interstate filed a claim asserting competing claims of alleged judgment creditors to the same unclaimed property. The competing claims were referred to Paul C. Stadler, Jr., Assistant General Counsel of the Department, who suggested the need for a rule concerning competing claims of creditors to Randall Holland, the Director of the Division of Finance.

      
      

   6. Mr. Holland instructed Mr. Stadler to research Chapter 717, Florida Statutes, and to draft a rule. The draft rule was reviewed by Rex Pearce, Chief of the Bureau of Financial Staff Programs of the Division of Finance. Mr. Pearce reviewed the rule and made minor changes to its form, as presented by Mr. Stadler.

   7. Mr. Stadler drafted and promulgated a statement of facts and circumstances to support promulgation of the rule referencing Chapter 717, Florida Statutes, and case law.

      
      

      CONCLUSIONS OF LAW

      
      

   8. The Division of Administrative Hearings has jurisdiction over the subject matter and parties of this dispute pursuant to Section 120.57, Florida Statutes.

      
      

   9. The Legislature enacted Chapter 717, Florida Statutes, which addresses disposition of unclaimed intangible property. Section 717.101, Florida Statutes, defines an owner as a depositor, beneficiary, creditor, claimant, or a payee. Section 717.1201, Florida Statutes, provides that upon payment or delivery of unclaimed intangible property to the State, the person delivering or paying in good faith is relieved of all existing and future liability. Section 717.124, Florida Statutes, provides that any person claiming an interest in the property may file a verified claim with the Department on a form prescribed by the Department. This section further provides that the Department shall determine each claim within 90 days and shall give the person notice of his or her rights under Section 120.57, Florida Statutes, to controvert the agency's determination. Section 717.126, Florida Statutes, provides that any person aggrieved by the decision of the Department may petition for a 120.57 hearing. This section further provides that the person asserting a claim of ownership shall have the burden of proof by a preponderance of the evidence. In summary, Chapter 717, Florida Statutes, addresses fully and completely the matter of unclaimed property and claims to its ownership; however, the chapter is absolutely silent on the matter of competing claims.

      
      

   10. The Department has adopted proposed rule 3D-20.0023. The text of the proposed rule is as follows:

       
       

       3D-20.0023 Competing Claims Between Creditors and Apparent Owners or Their Successors in Interest. In the event that an apparent owner or the apparent owner's successor in interest files a claim for unclaimed property and a creditor of the apparent owner or the apparent owner's successor in interest files a competing claim for the same property, distribution shall be in accordance with the following priorities:

       1. First, to judgment creditors who have filed a claim in the order that each judgment was recorded in the venue where the civil proceeding was litigated.

       2. Second, to creditors who have not reduced their claims to judgments. The claims of creditors in this category shall be prorated based on the ratio that the creditor's unclaimed property claim bears to the total claims filed if the total claims exceed the amount to be disbursed.

       3. Third, to the apparent owner or the apparent owner's successor in interest who has filed a claim.

   11. The Petitioner challenges the proposed rule as an invalid exercise of delegated legislative authority in that the rule goes beyond the powers, functions, and duties delegated to the Department by the Legislature and enlarges specific provisions of the law implemented.

       
       

   12. Chapter 717, Florida Statutes, did not address the matter of competing claims because it was unnecessary. The Legislature has already enacted Chapters 76, 77 and 78, Florida Statutes, which provide respectively for the attachment of, garnishment of, and replevin of property by a creditor, or one holding a valid judgment, or one whose property has been wrongfully detained by another.

       
       

   13. Most specifically, concerning persons who have sued to recover a debt and have recovered judgment against a person, Section 77.01, Florida Statutes, provides for the garnishment of any tangible or intangible personal property of a defendant which is in the possession or control of a third person. Section 77.031, Florida Statutes, provides for issuance of a writ of garnishment before judgment has been obtained by the plaintiff (claimant) against the defendant (putative owner). Section 77.04, Florida Statutes, provides that the writ shall require the garnishee (Department) to serve an answer to the writ on the plaintiff (claimant) within 20 days after service stating whether he (it) is indebted to the defendant (putative owner) at the time of the answer or was indebted at the time of service of the writ. The answer must also state what sum and what tangible or intangible property of the defendant (putative owner) the garnishee (Department) has in his (its) possession or control at the time of his (its) answer. Section 77.055, Florida Statutes, provides that the plaintiff (claimant) shall provide a copy of the writ and the garnishee's (Department's) answer to the writ to the defendant (putative owner) within five days after service of the garnishee's answer.

       
       

   14. Section 77.06, Florida Statutes, provides that the garnishee (Department) shall be liable for all debts due by him (it) to the defendant (putative owner) for any tangible or intangible property of the defendant in his (the Department's) possession or control at the time of the service of the writ or anytime between the service and the time of his (the Department's) answer. This section further provides that service of the writ on the garnishee (Department) shall render him (the Department) liable, as provided in this chapter, in any fiduciary or representative capacity held by him (it) if the fiduciary or representative capacity is specified in the writ.

       
       

   15. Section 77.061, Florida Statutes, provides that if the plaintiff (claimant) is not satisfied with the garnishee's (Department's) answer, the plaintiff shall serve a reply within 20 days; and if the plaintiff fails to file a reply, the answer of the garnishee shall be taken as true and proper.

       
       

   16. Section 77.07, Florida Statutes, provides that the defendant (putative owner), by motion, may obtain the dissolution of the writ of garnishment unless the plaintiff (claimant) provides the grounds upon which the writ was issued and unless, in the case of a prejudgment writ, there is a reasonable probability that the final judgment in the underlying cause will be rendered in his (claimant's) favor. The defendant (putative owner) and any other person having an ownership interest in the property, as disclosed by the garnishee's (Department's) answer, shall file and serve a motion to dissolve the garnishment within 20 days after the date indicated in the certificate of service on the defendant and on such other person of the plaintiff's notice required by Section 77.055, Florida Statutes, stating that any allegation in the plaintiff's motion for the writ is untrue.

   17. The issue of ownership is tried upon the motion to dissolve the writ, and if the allegation in the plaintiff's (claimant's) motion is not proven to be true, the garnishment is dissolved. Section 77.08, Florida Statutes, provides that upon demand of either party, a jury shall be impaneled to try the issues. Section 77.082, Florida Statutes, provides that if no reply to the garnishee's (Department's) answer is served, the garnishee may surrender any goods, chattels, or effects of the defendant (putative owner) in his possession to the sheriff and may pay any money or debt into the registry of the court. In such event or if the garnishee (Department) prevails in the trial of any reply and after proper disposition of any property disclosed by his answer, the court shall discharge him (the Department) from further liability under the writ.

       
       

   18. Section 77.083, Florida Statutes, provides that judgment against the garnishee (the Department) on his (its) answer or after trial of a reply to his (its) answer shall be entered for the amount which the Department holds or the amount of the judgment. Section 77.13, Florida Statutes, provides that if the garnishee (the Department) will not surrender the personal property belonging to the defendant (putative owner), provided that he (the Department) has the power to do so, and which he (the Department) has admitted is in his (its) possession, the court may order execution issued against the garnishee (the Department) for the unpaid amount of the plaintiff's (claimant's) judgment against the defendant (putative owner).

       
       

   19. Section 77.15, Florida Statutes, provides that if the answer of the garnishee (the Department) shows that there is any of the defendant's (putative owner's) personal property in the possession or control of any person who has not been garnished, on the motion of plaintiff (claimant), a writ of garnishment shall issue against that person and that person shall answer and be liable as other garnishees.

       
       

   20. Finally, Section 77.16, Florida Statutes, provides that if any person (third party) other than the defendant (putative owner) claims that the debt due by the garnishee (the Department) is due to him (third party) and not to the defendant (putative owner), or that the property in the hands or possession of the garnishee is his (the third party's) property and shall make an affidavit to the effect, the court shall impanel a jury to determine the right of property between the third party and the plaintiff (claimant) unless a jury is waived.

       If the verdict is against the third party, the claimant shall recover costs. If the verdict is in favor of the third party, he shall recover costs against the claimant.

       
       

   21. Most importantly as it relates to the proposed rule, if the third party's claim is interposed after a levy on the property, Section 77.16,(3), Florida Statutes, provides a mechanism by which the conflicting orders of differing courts shall be handled. This mechanism does not recognize rights in persons who have not yet reduced their claim to judgment, as does the proposed rule. As the Petitioner correctly points out, a judgment creditor has no legal right or equitable interest in a debtor's property until the judgment creditor proceeds to execution and levies on the property. Evans v. Gainesville National Bank, 80 Fla. 84, 85 So. 659, 660, (1920); Love v. Williams, 4 Fla. 126, (1951). However, contrary to the Petitioner's assertion, the Department does not have the authority to adjudicate the claims of competing judgment creditors.

   22. Both the Petitioner and the Department read Section 717.124, Florida Statutes, which states that the Department "shall determine each claim within 90 days after it is filed," together with Section 717.101,(11), Florida Statutes, which includes creditors and claimant (among others) within the definition of an owner, to reach the conclusion that the Department may "adjudicate" claims between competing claimants. However, there are practical and legal differences between a person who claims an interest in property retained by the Department pursuant to Chapter 717, Florida Statutes, and a person who has a valid judgment and seeks execution on that property. The former merely asserts an ownership interest. The latter has a legally recognized interest. The Department cannot "adjudicate" a writ of garnishment or writ of execution on the property which it holds. The underlying claim has already been adjudicated by a court which retains jurisdiction in the matter to determine the priority of competing claims.

       
       

   23. Section 717.124, Florida Statutes, authorizes the Department to administratively determine whether a claim asserted by a person is sufficient to establish an ownership interest in the property. This differs from "adjudicating" conflicting claims which is not mentioned in Chapter 717, Florida Statutes. If a claim is supported by a judgment and writ of garnishment or similar writ, the Department must respond as the defendant. If there is a competing claim, Section 77.16, Florida Statutes, states what the Department must do and what the other persons seeking to levy must do. If a claim is not supported by a writ of garnishment or similar writ or execution, the claim is insufficient to warrant an administrative determination by the Department because by its very nature it presents a claim in derogation of the rights of the putative owner. Chapter 717, Florida Statutes, does not address competing claims because such claims are completely controlled by Chapters 56, 76, 77, and 78, Florida Statues.

       
       

   24. As can be seen by the foregoing provisions in Florida law, the Legislature has already provided a full and complete remedy for resolving (1) claims by a judgment creditor and (2) adjudicating conflicting claims. The Department need only require by rule that judgment creditors who are claimants attach their writ of garnishment or similar writ to the form already in use by the Department.

       
       

   25. The proposed rule creates rights in judgment creditors and creditors who have not yet reduced their claims to judgment which are contrary to and in derogation of the rights created by other statutes. As pointed out above, the priorities established for creditors in the proposed rule differ from the priorities established in Chapter 77, Florida Statutes.

       
       

   26. Having determined that the proposed rule is inconsistent with the existing statutes of the State of Florida and is, therefore, an invalid exercise of duly delegated legislative authority, the proposed rule is adjudged to be invalid and void.

DONE AND ENTERED this 4th day of March, 1993, in Tallahassee, Florida.

STEPHEN F. DEAN

Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 4th day of March, 1993.

APPENDIX TO FINAL ORDER, CASE NO. 93-242RP

The Petitioner and the Respondent filed posthearing pleadings which were read and considered. The following findings were adopted, or rejected for the reasons stated:

Petitioner's Proposed Findings:

Paragraphs 1-5 Paragraphs 1-4 renumbered.

Paragraph 6-9 Paragraphs 5-6 condensed. Respondent did not file any proposed findings.

COPIES FURNISHED:

Honorable Gerald Lewis Comptroller, State of Florida The Capitol, Plaza Level Tallahassee, Florida 32399-0350

William G. Reeves, Esquire General Counsel

Department of Banking and Finance The Capitol, Room 1302 Tallahassee, Florida 32399-0350

Liz Cloud, Chief

Bureau of Administrative Code The Capitol, Room 1802 Tallahassee, Florida 32399-0250

Carroll Webb, Executive Director Administrative Procedures Committee Holland Building, Room 120 Tallahassee, Florida 32399-1300

Will J. Richardson, Esquire Richardson Law Offices, P.A. Post Office Box 12669 Tallahassee, Florida 32317-2669

Paul C. Stadler, Jr., Esquire Assistant General Counsel Office of the Comptroller

The Capitol, Suite 1302 Tallahassee, Florida 32399

W. Douglas Moody, Jr., Esquire Taylor, Brion, Buker & Greene

116 South Monroe Street, 3rd Floor Tallahassee, Florida 32301

NOTICE OF RIGHT TO JUDICIAL REVIEW

A PARTY WHO IS ADVERSELY AFFECTED BY THIS FINAL ORDER IS ENTITLED TO JUDICIAL REVIEW PURSUANT TO SECTION 120.68, FLORIDA STATUTES. REVIEW PROCEEDINGS ARE GOVERNED BY THE FLORIDA RULES OF APPELLATE PROCEDURE. SUCH PROCEEDINGS ARE COMMENCED BY FILING ONE COPY OF A NOTICE OF APPEAL WITH THE AGENCY CLERK OF THE DIVISION OF ADMINISTRATIVE HEARINGS AND A SECOND COPY, ACCOMPANIED BY FILING FEES PRESCRIBED BY LAW, WITH THE DISTRICT COURT OF APPEAL, FIRST DISTRICT, OR WITH THE DISTRICT COURT OF APPEAL IN THE APPELLATE DISTRICT WHERE THE PARTY RESIDES. THE NOTICE OF APPEAL MUST BE FILED WITHIN 30 DAYS OF RENDITION OF THE ORDER TO BE REVIEWED.

=================================================================

DISTRICT COURT OPINION

=================================================================

IN THE DISTRICT COURT OF APPEAL FIRST DISTRICT, STATE OF FLORIDA

DEPARTMENT OF BANKING AND NOT FINAL UNTIL TIME EXPIRES TO FINANCE, DIVISION OF FINANCING, FILE FOR REHEARING AND

DISPOSITION THEREOF IF FILED

Appellant,

CASE NO. 93-730

vs. DOAH CASE NO. 93-0242RP

MARTIN YOUNG PRIVATE INVESTIGATING AGENCY, INC.,

APPELLEE,

and

INTERSTATE ASSET LOCATORS,

Inc.,

Intervenor.

/ Opinion filed April 19, 1994.

An appeal from an order of the Division of Administrative Hearings.

Paul C. Stadler, Jr., Assistant General Counsel, Tallahassee, for Apellant. Will J. Richardson, Richardson Law Offices, P.A., Tallahassee, for Appellee.

PER CURIAM

We affirm the hearing officer's determination that the Department of Banking and Finance's proposed rule is invalid. We affirm on the ground that there was no statutory authority for the rule. 1/

BOOTH, ALLEN AND WEBSTER, JJ. concur.

ENDNOTE

1/ The parties are in agreement that the hearing officer's discussion of the law of garnishment in this context is incorrect since that remedy is not available against the state absence specific legislative authority. G & J Investments vs. Florida Department of Health and Rehabilitative Services.

Docket for Case No: 93-000242RP

Orders for Case No: 93-000242RP