George Wilson Morgan.

Banking law of New York, chapter 2 of Consolidated laws, chapter 369, laws of 1914 online

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issued by the United States government for war purposes, if the
market value of such liberty bonds or other securities exceeds by
ten per centum the amount of any such loan, discount or other
extension of credit. Every person knowingly violating any pro-
vision of this subdivision shall, for each offense, forfeit to the
people of the state twice the amount which he shall have borrowed.

Source.— The first paragraph is from former | 27, subd. 6. The second
paragraph is former § 27, subd. 7.

The prohibition against borrowing by any officer of a bank located in a
city of the first class ia new.

Amended by L. 1920, chap. 66. In effect March 23, 1920.

CROSS-REFERENCES. — Prohibition against loans by banks to officers, etc.,
see § 108, subd. 8.
Similar provision as to trust companies, see § 222.

§ 140. Prohibitions against encroaohmenti upon certain powen of

No person unauthorized by law shall subscribe to or become a
member of, or be in any way interested in any association, institu-
tion or company formed or to be formed for the purpose of issuing
notes or other evidences of debt to be loaned or put in circulation
as money; nor shall any such persons subscribe to or become in
any way interested in any bank or fund created or to be created
for the like purposes or either of them. No corporation, domestic
or foreign, other than a national bank or a federal reserve bank,
unless expressly authorized by the laws of this state, shall employ
any part of its property, or be in any way interested in any rund
which shall be employed for the purpose of receiving deposits,
making discounts, or issuing notes or other evidences of debt to
be loaned or put into circulation as money. All notes and other
securities for the payment of any money or the delivery of any
property, made or given to any such association, institution or
company, or made or given to secure the payment of any money

Digitized by


§ 140. Banks. 137

loaned or discounted by any corporation or its officers, contrary to
the provisions of this section shall be void.

No person, association of persons or corporation, unless ex-
pressly authorized by law, shall keep any office for the purpose of
issuing any evidences of debt, to be loaned or put in circulation
as money; nor shall they issue any bills or promissory notes or
other evidences of debt for the purpose of loaning them or putting
them in circulation as money, unless thereto specially authorized
by law.

Every person, and every corporation, director, agent, officer or
member thereof, who shall violate any provision of this section,
directly or indirectly or assent to such violation shall forfeit one
thousand dollars to the people of the- state.

Source.— Former §| 107, 108.

CROSS-REFERENCES.— Prohibition against granting of special diajters to
banking corporations, see Const., art. 8, § 4.

Prohibition against exercise by corporations of power not given by kiw, see
Gen. Corp. iLaw, § 10.

Use of words '' bank " and *' banking " in name of foreign corporation^ see
Gen. Corp. Law, § 16.

Prohibition against exercise of banking powers by corporations not or-
ganized under the Banking Law, see Gen. Corp. Law, f 22, post,

Tracy v. Talmadge, 18 Barb. 466; Pratt v. Short, 79 N. Y. 437.

porations organized under the Business Corporations Law violate this section
if they accept weekly deposits to be returned upon the happening of a con-
tingencjr with interest after they amount to ^100; or if they deduct interest
at the time loans are made upon leases of personal property. Atty.-Gen. Rep.
(1913) 188; Atty-Gen. Rep. (1913) 194.

A business corporation organized for the nurpose of advertising and increas-
ing the sales of retail merchaAts and selling them printed matter is not
authorized to issue checks, trading stamps or other evidence of debt which
can be circulated as money, or to create or be interested in a fund for the
purpose of receiving deposits, making discounts or issuing notes or other
evidence of debt to l>e loaned or put mto circulation as money. Atty.-Gen.
Rep., Oct. 14, 1915.

Advancing of moneys as a business and discoimting of notes or choses in
action is confined to corporations, which have received a certificate to do
business from the Banking Department.

Atty.-Gen. Rep., Oct. 4, 1918.

A proposed corporation, one of whose objects is '' to receive from customers^
for safe-keeping only, moneys or other property, said moneys not being sub-
ject to be dra'wn upon by check or draft, but solely on demand, and not sub-
ject to the payment of interest thereon/' is not entitled to incorporate under
the Business Corporations Law. Atty.-Gen. Rep. (1910) 419.

Where a corporation organized under the Business Corporations Law re*
ceived annual payments of money for which it issued certificates whereby
it agreed to repay the holder a specified sum at the expiration of ten years,
it was held that, in the absence of any showing that such moneys were not

Digitized by


138 Banking Law. § 140.

borrowed for a lawful purpose of the corporation, this did not constitute a
transaction of business in violation of the Banking Law. Jacobs v. Monaton
Realty Inv. Corp., 212 N. Y. 48, reVg 160 App. Div. 449, which aflf'd 80 Miac

A contract whereby a domestic business corporation holding certfldn leases,
calling for installment payments on articles sold to its customers, secured
from another corporation certain sums of money on the leases as collateral
security, was held to be void because in violation of the prohibition against
unauthorized banking. Const v. Terminal Clearing House Assoc., 86 Misc. 295.

DEPARTMENT STORE BANKS.— Opinion that this section and section 22
of Gen. Corp. Law are violated by the " Department Store bank " — that is,
an arrangement by a business corporation whereby money is deposited with
it, at interest, which deposit may be used in payment of purchases or may
be withdrawn in cash at any time. Atty.-Gen. Rep. (1912) 185.

EFFECT OP VIOLATION.— A note discounted in violation of this section
is void. New York State L. & T. Co. v. Helmer, 77 N. Y. 64; New York Fire-
men Ins. Co. V. Ely, 2 Cow. 678; Utica Ins. Co. v. Scott, 19 Johns. 1.

be void under this section, recovery may be had on the original consideration.
Duncomb v. New York, etc., R. Co., 84 N. Y. 190; Pratt v. Short, 79 N. Y. 437;
Pratt V. Eaton, 79 N. Y. 449; Utica Ins. Co. v. Caldwell, 3 Wend. 296; Utica
Ins. Co. V. Hunt, 1 Wend. 66; Utica Ins. Co. v. Kip, 8 Cow. 20.

It seems that a promissory note which is void because discounted in viola-
tion of this section, is nevertheless competent evidence in an action to re-
cover the money loaned. Utica Ins. Co. v. Bloodgood, 4 Wend. 662.

WHAT NOT A VIOLATION.— Collecting in advance the interest on a single
note taken to secure a pre-existing debt is not a violation of the section. New
York Firemen Ins. Co. v. Sturges, 2 Cow. 664.

" This is a penal act and is to be constructed strictly. It was not intended
to prohibit individuals or corporations from lending their own proper funds
upon promissory notes by way of discount or otherwise." People v. Brewster,
4 Wend. 498.

This does not prohibit the issuance of non-negotiable bonds for the pur-
pose of borrowing money. Barry v. Merchants' Exch. Co., 1 Sandf. Ch. 280,

The issuance of an interest-bearing certificate of deposit for money actually
deposited by a corporation having authority to receive deposits of money is
not a "discounting" within the intent of this section. Pardee v. Fish, 60
N. Y. 265.

of Niagara, 1 Hopk. 364.

FOREIGN CORPORATIONS. — By this section a national bank, organized
and doing business in another state, is prohibited from keeping an oflBce of
discount or deposit in this state, and cannot maintain an action upon any
note discounted by it at such office. National Bank v. Phoenix Warehousing
Co., 6 Hun 71; New Hope, etc. Bridge Co. v. Poughkeepsie Silk Co., 26 Wend.

Where a foreign corporation, maintaining an office in violation of this sec-
tion, made a contract with a New York broker to receive of him all its notes
wh}(^ be should procure in his business as a broker, and pay him tlie amount

Digitized by


§ 141. Banks. 139

thereof in easily less a discount of % of 1 per cent., it was held that such con-
tract was void.. De Groot v. Van Duzer, 20 Wend. 390, reversing 17 Wend. 170.

tion authorizes one of its officers to attend from time to time at certain places
in this State for the purpose of receiving deposits or of discounting paper
with the funds of the corporation, such places of attendance are to be con-
sidered as offices of discount and deposit. Taylor v. Bruen, 2 Barb. Ch. 301.

prevent a foreign trust company from acting as trustee under a mortgage
given to secure an issue of bonds of a domestic corporation without procur-
ing a license from the State. Atty.-Gen. Rep. (1002) 255.

MAY PURCHASE PROMISSORY NOTES.— A foreign corporation is not
prohibited from purchasing promissory notes. American Life Ins. Co. v. Dob-
bin, Lalor 252.

Section not violated by foreign corporation sending an agent into the State
to secure a doubtful debt and, while here, doing a single act of drawing a bill
of exchange and paying out its own circulating notes in pursuance of its lead-
ing object. Western Reserve Bank v. Potter, Clarke'^ Ch- 439,

LOAN ON MORTGAGE. — The fact that a foreign corporation was main-
taining an office here in violation of the statute was held not to invalidate a
loan made in this State by the corporation, secured by a mortgage on land
situated here, it not being shown that the loan or security was part of or in
any way in aid of the illegal business or necessarily connected with it. Bard
▼. Poole, 12 N. Y. 496.

§ 141. Use of dgn, or words indicating bank by unanfborized per-
sons prohibited.

No person, except a national bank^ a federal reserve bank, an
individual banker or a corporation duly authorized by the super-
intendent of banks to transact business in this state, shall make
use of any office sign at the place where such business is trans-
acted having thereon any artificial or corporate name, or other
words indicating that such place or office is the place or office of
a bank; nor shall any such person or persons make use of or
circulate any letterheads, bill-heads, blank forms, notes, receipts,
certificates, circulars, or any written or printed or partly written
and partly printed paper whatever, having thereon any artificial
or corporate name, or other word or words^ indicating that such
business is the business of a bank.

Every person violating this provision shall forfeit tl\e sum of
one thousand dollars, but this section shall not apply to any indi- •
vidual, partnership or unincorporated association engaged in the
business of banking prior to May twenty-sevenfli, eighte^i hun-
dred and eighty-five.

Source. — Former § 112.

Digitized by


140 Banking Law. §§ 142, 143.

CROSS-REFERENCES. — Penal provisions as lo unauthorized use of words
"bank," "banker" etc., see Penal Law, §§ 002, 6(56.

EFFECT ON PRIVATE BANKERS.— Since the word " bank" is defined in
§ 2 as meaning a corporation, it would seem clear that private bankersy
whether or not subject to the supervision of the superintendent, are not pro-
hibited by this section from using the words "banker," "banking," etc., on
their stationery provided they do not give the impression that the business
is that of an incorporated bank. See Atty.-Gen. Rep. (1899) 381; Atty.-Oen.
Rep. (1901) 219; Atty.-Gen. Rep. (1906) 423.

AN "INDIVIDUAL" BANKER can properly advertise himself as
"transacting a general banking business." Atty.-Gen. Rep. (1905) 423.

in this section and in Sec 302 of the Penal Law in favor of persons engaged
in banking prior to May 27, 1885, is a personal privilege. One who subse-
quent to that date purchased the business of a private banker did not thereby
obtain the right to continue the use of a name containing prohibited words.
Such right is not transferable. Atty.-Gen. Rep. (1912) 255.

The exemption is a personal privilege and does not pass to a purchaser or
survive death. Atty.-Gen. Rep. (1912) 491.

§ 142. Bills payable otherwise than in money prohibited.

No person shall give, pay or receive in payment, or in any way
circulate, or attempt to circulate, any bank bill, or any promissory
note, bill, check, draft or other evidence of debt issued by any
bank, individual banker or private banker, which shall be made
payable otherwise than in lawful money of the United States.

Every person violating this provision shall forfeit to the people
of the state the face amount or value of such bill, note or other
evidence of debt so given, paid, received, circulated, or offered, to
any person who will sue for the same within sixty days after the
commission of the offense.

Sonice.— Former | 110, with insertion of words "or private banker.''
§ 143. Bights of existing individual bankers preserved.

Every individual, partnership or unincorporated association
which on the date on which this act takes effect is lawfully «i-
gaged in the business of a bank of discount and deposit under
due authorization from the superintendent of banks is hereby
authorized to continue in such business subject to sections one hun-
dred five, one hundred ten, one hundred twelve, one hundred four-
teen, one hundred fifteen, one hundred thirty-three, one hundred
thirty-four, one hundred thirty-five and one hundred thirty-six of
this article and to the sections of article two of this chapter relating
to individual bankers.

Digitized by


§ 144. Banks. 141

Source. — New. Under the present law no provision is made for the author*
ization in future of individual bankers. At the time the act became efifective
only one individual banker was transacting business in the state.

CROSS-REFERENCES.— Definition of "individual banker," see § 2.

filed a certificate of partnership with the superintendent is not relieved from
liability for deposits made after he has retired from the firm by one who had
been a depositor before such retirement, if the depositor had no actual notice
of the retirement. And this is true even though the depositor never knew
that the retiring partner was a member of the firm. Howell v. Adams, 68
N Y. 314.

PLACE OF RESIDENCE FOR TAXATION.— For the purpose of taxing his
banking capital, the residence of an individual banker is in the town or ward
specified in the certificate as the location of his banking office. Miner v. Fre-
donia, 27 N. Y. 155.

of business by an individual banker, if the superintendent is satisfied that
he has incurred no penalties and has discharged all his obligation, the $1,000
deposit should be returned to him. Atty.-Qen. Rep. (1889) 316.

§ 144. Conditions to be complied with by foreign banking corpora^
tions applying for license.

Every foreign banking corporation before being licensed by the
superintendent of banks to transact in this state the business of
buying, selling, paying or collecting bills of exchange, or of issu-
ing letters of credit or of receiving money for transmission or
transmitting the same by draft, check, cable or otherwise, or of
making sterling or other loans, or any part of such business, or
before maintaining in this state any agency for carrying on such
business or any part thereof, shall subscribe and acknowledge and
submit to the superintendent of banks at his office, a separate ap-
plication certificate in duplicate for each agency which such for-
eign corporation proposes to establish in this state, which shall
specifically state:

1. The name of such foreign banking corporation.

2. The place where its business is to be transacted in this
state; and the name of the agent or agents through whom such
business is to be transacted.

8. The amount of its capital actually paid in cash and the
amount subscribed for and unpaid.

4. The actual value of the assets of such corporation, which
must be at least two hundred and fifty thousand dollars in excess

Digitized by


142 Banking Law. § 145.

of its liabilities; and a complete and detailed statement of its
financial condition as of a date within sixty days prior to the date
of such application.

At the time such application certificate is submitted to the
superintendent, such corporation shall also submit a duly exempli-
fied copy of its charter and a verified copy of its by-laws^ or the
equivalent thereof.

Source. — Foimer Si 33-a, 33-b, rewritten. The requirement of a statement
of the ftppUcant's financial condition as of a date within sixty days prior to
the date of the application^ is new.

0R09S REFERENCES. — Powers and duties of superintendent with regard
to licensing of foreign corporations^ see §§ 27-29.

Similar provision as to foreign investment companies, see | 303w

A bank organized under tlie laws of Great Britain with head office in London
which maintains in this State an age|icy for the transaction of its business in
the United States and which is duly licensed to do business in the United
States under sections 146 and 146 of the Banking Law and which hitherto has
been engaged in issuing commercial letters of credit in favor of seUers of
merchandise in various foreign countries, who are authorized by the letter
of credit to draw drafts on the bank, payable at the head office of the bank
in London on ninety days* sight, may issue this letter of credit through its
New York agency, authorizing the sellers of merchandise in whose favor the
credit is issued, to draw ninety days' sight drafts upon its New York agency
which will be authorized by the bank to accept said drafts on presentation
and pay them at maturity. Atty.-Gen. Rep., Sept. 29, 1915.

A foreign corporation, clothed in its home state with banking power, may
be licensed by the superintendent to make and deal in acceptances. Atty.-
Gen., June 11, 1918.

§ 145. When foreign banking corporation may transact business in
this state.

No foreign banking corporation, other than a bank organized
under the laws of the United States, shall transact in this state
the business of buying, selling or collecting bills of exchange, or
of issuing letters of credit or of receiving moneys for transmission
or transmitting the same by draft, check, cable or otherwise, or
of making sterling or other loans or transacting any part of such
business, or maintaining in this state any agency for carrying on
such business, or any part thereof, unless such corporation shall

1. Been authorized by its charter to carry on such business and
shall have complied with the laws of the state or country under
which it is incorporated;

2. Furnish to the superintendent such proof as to the nature
and character of its business and as to its financial condition as
he may require;

Digitized by


§ 146. Banks. 143

3. Designated the superintendent of banks by a duly executed
instrument in writing, its true and lawful attorney, upon whom
all process in any action or proceeding by any resident of the
state against it may be served with the same effect as if it were a
domestic corporation and had been lawfully served with process
within the state;

4. Paid to the superintendent of banks a license fee of two hun-
dred and fifty dollars;

5. Seceived a license duly issued to it by the superintendent
as provided in section twenty-seven of this chapter.

This section shall not be construed to prohibit foreign banking
corporations which do not maintain an office in this state for the
transaction of business from making loans in this state secured
by mortgages on real property, nor from accepting assignments
of mortgages covering real property situated in this state, nor
from making loans through correspondents which are engaged in
the business of banking in this state under the laws of the state.

Source.— Former H 33-a, 33-b, 34.

CROSS-REFERENCES. — Similar provision as to foreign investment com-
panies, see I 304.

As to service of process on foreign corporations, see Code Civ. Proc., § 432.

liOANS ON REAL ESTATE.— Previous to the amendment of former i 33-a
by ch. 484 of Loiws of 1913, a bank situated in another state could not make
even an isolated loan on real estate located in this state without securing a
license from the superintendent. Atty.-Gen. Rep. (1912) vol. 2, p. 495.

§ 146. Sights and priyileges of foreign banking corporation under
license; effect of revocation.

When the superintendent shall have issued a license to any
such banking corporation, it may engage in the business specified
in the immediately preceding section of this article at the location
specified in such license for a period of one year from the date of
such license; and such license may, in the discretion of
the superintendent, be re-issued from year to year upon the
payment by such foreign banking corporation of the sum of
two hundred and fifty dollars upon each date that such license
ie re-issued. No such license shall be transferaible or assignable
and shall be at all times conspicuously displayed in the place of
business specified therein. In the event tiiat such license shall

Digitized by


144 Banking Law. §§ 147, 148.

have been revoked by the superiutendent, as provide<l iu section
twenty-nine of this chapter, it shall be surrendered to the super-
intendent within twenty-four hours after such corporation has
received written notice of such revocation.

Whenever the superintendent shall have revoked any such
license and shall have taken the action to make such revocation
effective specified in section twenty-nine of this chapter, all the
rights and privileges of such foreign corporation to transact busi-
ness in this state shall forthwith cease and determine.

Source. — Former S 33-b.

CROSS-REFERENCES. — Similar provisions as to foreign investment com-
panies, see §§ 305, 308.

A foreign corporation authorized by license from the Superintendent of
Banks to transact business at a certain place, cannot appoint agents throu^-
out the State, who seU for it money orders for transmitting funds to foreign
countries. Atty.-Gen. Rep., May 11, 1915.

§ 147. Reports of foreign banking corporations; penalties.

Every foreign banking corporation licensed by the superintend-
ent to engage in business in this state, shall at such times and in
such form as the superintendent shall prescribe, make written
reports to the superintendent under the oath of one of its officers,
managers or agents transacting business in this state, showing the
amount of its assets and liabilities and containing such other mat-
ters as the superintendent shall prescribe. If any such corpora-
tion shall fail to make any such report as directed by the super-
intendent, it shall be subject to the penalties prescribed by sec-
tion one hundred and thirty-three of this article, and any false
statement contained in any such report or in any other sworn
statement made to the superintendent of banks by such corpora-
tion in pursuance of the provisions of this article shall constitute
perjury. Nothing herein contained shall be deemed to modify
the prohibition of section one hundred and forty of this chapter.

Source.— Former | SS-b.

CROSS-REFERENCES.— Reports required of other persons, see S 133 and
annotations thereto.

§ 148. Deposits of minors and trust deposits and deposits in the
names of more than one person.

When any deposit shall be made by or in the name of any
minor, the same shall be held for the exclusive right and benefit
of such minor, and free from the control or lien of all other

Digitized by


§ 148. Banks. 145

persons, except creditors, and shall be paid, together with the
interest thereon to the person in whose name the deposit shall
have been made, and the receipt or acquittance of such minor
shall be a valid and sufficient release and discharge for such

Online LibraryGeorge Wilson MorganBanking law of New York, chapter 2 of Consolidated laws, chapter 369, laws of 1914 → online text (page 15 of 54)