Westly

In this consolidated appeal, Steve Westly, as state Controller (the Controller), appeals from the judgments entered after the trial court granted the defendants’, Allstate Insurance Company et al. (Allstate) and U.S. Bancorp, et al. (U.S. Bancorp), motions for summary judgment based upon Code of Civil Procedure section 1577.5.

Section 1577.5 grants amnesty from the interest charges that otherwise would be imposed on the holders of escheated property who fail to deliver the property to the state in a timely manner, if the “property [is] paid or delivered to the Controller at any time on or before December 31, 2001.” (Stats. 2000, ch. 267, § l.) The Controller argues that section 1577.5 is prospective only and that the retroactive forgiveness of interest charges would constitute a gift of public funds in violation of article XVI, section 6 of the California Constitution.

We shall conclude the statute is retroactive but its application to defendants, who delivered the property to the state prior to the enactment of section 1577.5, is unconstitutional as a gift of public funds. We shall reverse the judgments.

FACTUAL AND PROCEDURAL BACKGROUND

The Unclaimed Property Law…