New York Banking Law
Article 4
Private bankers
Section
160. Verified certificate.
161. Authorization certificate.
162. Permanent capital; increase or decrease.
163. Restrictions as to place of business.
164. Change of location.
165. Segregation of investments; title to be taken in
descriptive name.
166. Depositors preferred in case of failure or suspension.
167. Reserves against deposits.
168. Restrictions on acceptance of deposits and payment of
interest.
171. Repayment of deposits standing in the names of minors,
trustees or joint depositors; repayment where adverse
claim is asserted; interpleader in certain actions;
effect of claims or advices originating in, and
statutes, rules or regulations purporting to be inforce
in occupied territory.
172. Restrictions on investments.
173. Rate of interest; effect of usury.
174. Restrictions on purchases of, and loans on real estate.
175. Books and records.
176. Reports required by superintendent; penalty for failure to
make.
177. Official communications from superintendent.
178. Business of deceased private banker; continuation;
liquidation.
179. Effect of revocation of authorization certificate.
180. Prohibitions against encroachment upon certain powers of
private bankers, savings banks and savings and loan
associations.
181. Exemptions of certain private bankers.
S 160. Verified certificate. Any individual or partnership desiring to
engage in business as a private banker shall submit to the
superintendent a verified certificate in duplicate which shall state:
1. The full name, residence and post office address of such individual
or of each member of such partnership.
2. The state or country of which each individual named in such
certificate is a citizen.
3. The amount of permanent capital such individual or partnership will
invest in his business as a private banker which shall be not less than
one million dollars.
4. The place where his office is to be located.
S 161. Authorization certificate. If the superintendent shall issue an
authorization certificate as provided in article two of this chapter,
such individual or partnership may engage in the business of banking
including receiving deposits subject to check or for repayment upon the
presentation of a pass book, certificate of deposit or other evidence of
debt, or upon the request of the depositor, or in the discretion of such
individual, or partnership; receiving money for transmission;
discounting or negotiating promissory notes, drafts, bills of exchange
or other evidences of debt; and buying or selling exchange, coin or
bullion at the location specified in such authorization certificate,
subject to all the restrictions and limitations contained in this
chapter. In conducting such business a private banker may make use of
the words "bank," "banker" or "banking" or their equivalent or any
derivative or compound thereof.
S 162. Permanent capital; increase or decrease. Every private banker
shall keep unimpaired in his banking business the amount of permanent
capital specified in his verified certificate. From time to time, with
the written approval of the superintendent and upon good cause shown,
such permanent capital may be increased or decreased.
S 163. Restrictions as to place of business. The office of a private
banker shall not be located in the same room with, or in a room
connecting with, any bank, trust company, savings bank, or national
bank.
S 164. Change of location. Any private banker may make a written
application to the superintendent to change the location of his office
to another place in the same city or village. The application shall
state the reason for such proposed change and shall be verified by such
private banker, or if such private banker is a partnership, by a
majority of the members thereof. Such change may be made upon the
written approval of the superintendent.
S 165. Segregation of investments; title to be taken in descriptive
name. 1. Every private banker shall segregate and keep separate and
apart from all other property and assets of the individual or
partnership all securities and property, and the evidences of title
thereto, in which funds held by him as a private banker and the surplus
used by him in his private banking business have been invested. The
phrase "funds held by him as a private banker" shall for the purpose of
this chapter mean such private banker`s permanent capital and moneys
received by him on deposit.
2. All conveyances, deeds, mortgages, assignments, contracts and
agreements received, taken, or entered into by any private banker, in
connection with his banking business, shall be received, taken, or
entered into in the firm name if such private banker is a partnership or
in the name of such private banker with the addition of the descriptive
name "private banker" if such private banker is not a partnership.
S 166. Depositors preferred in case of failure or suspension. In case
of the failure or suspension of any private banker, the claims of
persons for money on deposit or delivered for transmission shall be
preferred against such assets as shall be shown by the books of such
private banker, or by other legal evidence, to have been derived from
the investment of such moneys, or from the investment of permanent
capital, such claimants shall also share pro rata with other creditors
in any other assets of such individual or of such partnership and of the
individual members thereof.
S 167. Reserves against deposits. Every private banker shall maintain
total reserves against his deposits of the same amount and kind and on
hand or on deposit to the same extent as is at the time required by or
pursuant to the provisions of this chapter of a bank doing business in
the same place.
If any private banker shall fail to maintain the reserves required by
this section, he shall be liable for and shall pay any assessments
levied by the superintendent as provided in article two of this chapter.
S 168. Restrictions on acceptance of deposits and payment of interest.
No private banker shall:
(1) Accept any amount for deposit if after the acceptance of such
amount the average amount of the deposits received from all depositors
during the twelve month period ending upon the day upon which such
deposit is tendered, or during such period, if less than twelve months,
that such private banker has been engaged in business, would be less
than one thousand dollars. The term "deposit" as used in this paragraph
shall mean coin or currency of the United States or of any foreign
country, and checks, drafts and other funds credited by such private
banker to the account of any one depositor on any one day, but shall not
include dividend checks, coupons, or other similar items collected by
such private banker for the account of a depositor, or remittances made
by a depositor for the purpose of repaying, in whole or in part, any
existing indebtedness due to such private banker, or interest credited
by such private banker to the account of a depositor, or amounts
delivered for transmission; or
(2) Pay or credit interest, or pay, credit or give any bonus or
gratuity or thing of value, on any deposit balance, if the average of
the daily credit balances in such deposit account during the period for
which interest is paid or credited is less than seven thousand five
hundred dollars.
S 171. Repayment of deposits standing in the names of minors, trustees
or joint depositors; repayment where adverse claim is asserted;
interpleader in certain actions; effect of claims or advices originating
in, and statutes, rules or regulations purporting to be in force in
occupied territory. 1. 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 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 deposit or any part thereof to the
private banker.
4. A private banker need not recognize or give any effect to a claim
of authority to order the payment or delivery of any funds or other
property standing on his books to the credit of, or held by him for the
account of, any person, corporation, unincorporated association or
partnership, which claim conflicts with a claim of authority of which
the private banker had prior notice, unless the person or persons
asserting such subsequent claim shall procure a restraining order,
injunction or other appropriate process against said private banker from
a court of competent jurisdiction in the United States, or, in lieu
thereof, with the consent of said private banker, shall execute to said
private banker, in form and with sureties acceptable to him, a bond,
indemnifying him for any and all liability, loss, damage, costs and
expenses for or on account of any payment or delivery of such property
by him pursuant to such subsequent claim of authority or for or on
account of the dishonor of any check or other order of any person or
persons asserting the claim of authority of which such private banker
already had notice at the time the subsequent conflicting claim of
authority is asserted by the person or persons furnishing such bond.
5. Notice to any private banker of an adverse claim to any property,
or to a deposit of cash or securities standing on his books to the
credit of, or held for the account of, any person shall not be effectual
to cause said private banker to recognize said adverse claimant unless
said adverse claimant shall also either procure a restraining order,
injunction or other appropriate process against said private banker from
a court of competent jurisdiction in the United States in a cause
therein instituted by him wherein the person to whose credit the deposit
stands, or for whose account the property or deposit is held, or his
executor or administrator is made a party and served with summons, or
shall execute to said private banker, in form and with sureties
acceptable to him a bond, indemnifying said private banker from any and
all liability, loss, damage, costs and expenses, for and on account of
the payment of or delivery pursuant to such adverse claim or the
dishonor of the check or other order of the person to whose credit the
deposit stands, or for whose account the property or deposit is held, on
the books of said private banker.
6. (a) In all actions against any private banker to recover for moneys
on deposit therewith, if there be any person or persons, not parties to
the action who claim the same fund, the court in which the action is
pending, may, on the petition of such private banker, and upon eight
days` notice to the plaintiff and such claimants, and without proof as
to the merits of the claim, make an order amending the proceedings in
the action by making such claimants parties defendant thereto; and the
court shall thereupon proceed to determine the rights and interests of
the several parties to the action in and to such funds. The remedy
provided in this section shall be in addition to and not exclusive of
that provided in any other interpleader provision.
(b) The funds on deposit which are the subject of such an action may
remain with such private banker to the credit of the action until final
judgment therein, and be entitled to the same interest as other deposits
of the same class, and shall be paid by such private banker in
accordance with the final judgment of the court; or the deposit in
controversy may be paid into court to await the final determination of
the action, and when the deposit is so paid into court such private
banker shall be struck out as a party to the action, and its liability
for such deposit shall cease.
(c) The costs in all actions against a private banker to recover
deposits shall be in the discretion of the court, and may be charged
upon the fund affected by the action.
7. (a) A private banker need not recognize or give any effect to (1)
any claim to a deposit of cash, securities, or other property standing
on his books to the credit of, or held by him for the account of, any
corporation, firm or association in occupied territory, or (2) any
advice, statute, rule or regulation purporting to cancel or to give
notice of the cancellation of the authority of any person at the time
appearing on the books of such private banker as authorized to withdraw
or otherwise dispose of cash, securities, or other property of such
corporation, firm or association, unless such private banker is required
so to do by appropriate process procured against him in a court of
competent jurisdiction in the United States in a cause therein
instituted by or in the name of such corporation, firm or association,
or unless the person making such claim or giving such advice or invoking
such statute, rule or regulation, as the case may be, shall execute to
such private banker, in form and with sureties acceptable to him, a bond
indemnifying him from any and all liability, loss, damage, costs and
expenses for and on account of recognizing or giving any effect to such
claim, advice, statute, rule or regulation.
(b) For the purposes of this subdivision (1) the term "occupied
territory" shall mean territory occupied by a dominant authority
asserting governmental, military or police powers of any kind in such
territory, but not recognized by the United States as the de jure
government of such territory, and (2) the term "corporation, firm or
association in occupied territory" shall mean a corporation, firm or
association which has, or at any time has had, a place of business in
territory which has at any time been occupied territory.
(c) The foregoing provisions of this subdivision shall be effective
only in cases where (1) such claim or advice purports or appears to have
been sent from, or is reasonably believed to have been sent pursuant to
orders originating in, such occupied territory during the period of
occupation, or (2) such statute, rule or regulation appears to have
emanated from such dominant authority and purports to be or to have been
in force in such occupied territory during the period of occupation.
(d) The foregoing provisions of this subdivision shall apply to
claims, advices, statutes, rules or regulations made, given or invoked
either prior to, or on or subsequent to the effective date of this act.
S 172. Restrictions on investments. 1. Every private banker may,
subject to the limitations and restrictions contained in this article,
make such investments of funds held by him as a private banker in real
or personal securities, or personal property, as are consistent with
safety and prudence of management.
2. No private banker shall appropriate to his own use or lend to any
person with whom he is associated as a partner, or invest in any
business conducted by a partnership of which he is a member, any funds
held by him as a private banker.
Article 4, Continued . . .
3. No private banker shall, after June thirtieth, nineteen hundred
thirty-eight, make with funds held by him as a private banker any loan
to, or investment in the capital stock of, any corporation of which
fifty per centum of the capital stock is owned or controlled directly or
indirectly, or as a result of any such investment would be so owned or
controlled by such private banker, as a private banker and as an
individual, or if such private banker is a partnership, by such
partnership and the individual members thereof, if as a result thereof
the total amount of outstanding loans and investments so made after such
date will exceed ten per centum of his permanent capital with respect to
any one such corporation, or will exceed twenty-five per centum of his
permanent capital with respect to all such corporations.
S 173. Rate of interest; effect of usury. 1. No private banker shall
take, receive, reserve or charge on any loan or discount made, or upon
any note, bill of exchange or other evidence of debt, interest as
computed pursuant to this section, at a rate greater than the rate
prescribed by the banking board pursuant to section fourteen-a of this
chapter, or, if no rate has been so prescribed, six per centum per
annum, or two dollars if the interest so computed is less than that
amount. Such interest may be taken in advance, reckoning the days for
which the note, bill or evidence of debt has to run. The knowingly
taking, receiving, reserving or charging a greater rate of interest
shall be held and adjudged a forfeiture of the entire interest which the
note, bill of exchange or other evidence of debt carries with it, or
which has been agreed to be paid thereon. If a greater rate of interest
has been paid, the person paying the same or his legal representatives
may recover twice the entire amount of the interest thus paid from the
private banker. The purchase, discount or sale of a bona fide bill of
exchange, note or other evidence of debt payable at another place than
the place of such purchase, discount or sale at not more than the
current rate of exchange for sight draft, or a reasonable charge for the
collection of the same, in addition to the interest, shall not be
considered interest for the purpose of any law regulating the maximum
rate of interest which may be charged, taken or received.
Anything contained in this subdivision to the contrary
notwithstanding, the charging of interest or discount on a loan or
discount at an office of a private banker located outside of the states
of the United States of America and the District of Columbia at a rate
allowed by the laws of the country, territory, dependency, province,
dominion, insular possession or other political subdivision where such
office is located, or the acquisition by a private banker of a part
interest or the entire interest in any loan or discount heretofore or
hereafter made by a bank or trust company or any other banking
institution at an office located outside of the states of the United
States of America and the District of Columbia, shall not be a violation
of this section.
1-a. Anything contained in this section to the contrary
notwithstanding, any private banker, in purchasing or otherwise
acquiring, any note or other evidence of debt, which has arisen out of
the sale of personal property or the performance of services on credit
and which is repayable in instalments from the payee or holder thereof,
may take, receive, reserve or charge an amount not exceeding twelve per
centum per annum, computed pursuant to this section on unpaid principal
balances, or the sum of ten dollars, whichever is the greater; provided,
however, that nothing contained in this subdivision shall authorize a
private banker to take, receive, reserve or charge upon the purchase or
other acquisition of any two or more notes or other evidences of debt,
arising out of the same transaction, an amount greater than such private
banker would be entitled to take, receive, reserve or charge if all of
such obligations constituted a single obligation. In the event that the
private banker insures, under a group insurance policy, the life of the
person primarily liable on any such obligation, or in the event that the
private banker requires insurance on personal property securing any such
obligation, the actual cost of such insurance may be added to the amount
which such private banker may take, receive, reserve or charge upon the
purchase or other acquisition of such obligation. This subdivision shall
not be in derogation of any powers, rights or privileges possessed by
any private banker prior to the effective date this subdivision.
2. Upon advances of money repayable on demand to an amount not less
than five thousand dollars made upon warehouse receipts, bills of
lading, certificates of stock, certificates of deposit, bills of
exchange, bonds or other negotiable instruments, pledged as collateral
security for such repayment, a private banker may receive or contract to
receive and collect as compensation for making such advances any sum
which may be agreed upon by the parties to such transaction.
3. Upon an advance of money, whether or not repayable on demand, to an
amount not less than five thousand dollars, made upon documents of title
within article seven of the uniform commercial code or negotiable
instruments within article three or article eight of the uniform
commercial code pledged as collateral security for such repayment, any
private banker may receive or contract to receive and collect as
compensation for making such advance any sum which may be agreed upon by
the parties to such transaction; provided that such advance is (a) to or
for any partner of a firm which is a member firm of a national
securities exchange registered with the securities and exchange
commission as a national securities exchange under the federal
securities exchange act of 1934, as amended, to enable such partner to
make a contribution of capital to such firm or to purchase stock of an
affiliated corporation of such firm, provided that such partner is
actively engaged in the business of such firm and devotes the major
portion of his time thereto, or (b) to or for any person who is or will
become a holder of stock of a corporation which is a member corporation
of such a national securities exchange to enable such person to purchase
stock of such corporation or to purchase stock of an affiliated
corporation of such corporation, provided that such person is actively
engaged in the business of such corporation and devotes the major
portion of his time thereto.
S 174. Restrictions on purchases of, and loans on real estate. 1. No
private banker shall purchase with funds held by him as private banker
any real estate except a plot upon which there is or may be erected a
building suitable for the convenient transaction of his business; nor
make a loan of such funds upon the security of real estate, if such real
estate is unimproved, in excess of two-thirds, and if such real estate
is improved by a building or buildings or is to be improved by a
building or buildings in the process of construction, the major portion
of which building or buildings is used, or in the case of a building
under construction is to be used, for residential, business,
manufacturing or agricultural purposes, in excess of three-fourths, of
the appraised value of such real estate, or in an amount which when
added to the amount unpaid upon prior mortgages, liens and encumbrances
upon such real estate exceeds the foregoing respective proportions of
such appraised value, or if such real estate is subject to a prior
mortgage, lien or encumbrance and the amount unpaid upon such prior
mortgage, lien or encumbrance or the aggregate amount unpaid upon all
prior mortgages, liens and encumbrances exceeds ten per centum of the
permanent capital of such private banker.
2. All real estate acquired by a private banker in satisfaction or
reduction of loans of funds held by him as a private banker, shall be
sold within five years from the date of its acquisition, unless the
superintendent upon application shall extend the time within which such
sale shall be made.
S 175. Books and records. 1. Every private banker shall keep separate
and complete books of account in which shall be promptly entered the
details of all business transacted by him as a private banker including
statements in detail of the liabilities incurred by him as a private
banker and of the securities or property in which funds held by him as a
private banker have been invested.
2. Every private banker shall conform his methods of keeping his books
and records to such orders in respect thereto as shall have been made
and promulgated by the superintendent pursuant to article two of this
chapter. Any private banker who refuses or neglects to obey any such
order shall be subject to a penalty of one hundred dollars for each day
that such refusal or neglect continues.
3. Every private banker shall preserve all his records of final entry,
including cards used under the card system and deposit tickets, for a
period of at least six years from the date of making the same or from
the date of the last entry thereon; provided, however, that preservation
of photographic reproduction thereof or records in photographic form
shall constitute compliance with the requirements of this section.
S 176. Reports required by superintendent; penalty for failure to
make. Within fifteen days after service upon any private banker of the
notice provided for by section thirty-seven of this chapter, he shall
make a written report to the superintendent of the financial condition
of his business as a private banker, which report shall be in such form
and shall contain such information as the banking board may prescribe.
Such report shall be published by such private banker in such manner as
the banking board may prescribe in a newspaper published in the place
where the office of such private banker is located or if no newspaper is
published there, in a newspaper of general circulation in such place.
Every private banker shall also make such other special reports to the
superintendent as he may from time to time require in such form and on
such dates as may be prescribed by the superintendent, which reports
shall if required by the superintendent be verified in such form as he
may prescribe.
If any private banker shall fail to make any report required by this
section on or before the date designated for the making thereof or shall
fail to include therein any prescribed matter, such private banker shall
forfeit to the people of the state the sum of one hundred dollars for
every day that such report shall be delayed or withheld and for every
day that he shall fail to report any such omitted matter, unless the
time therefor shall have been extended by the superintendent, as
provided in article two of this chapter.
S 177. Official communications from superintendent. Every official
communication, as defined in article two of this chapter, directed to
any private banker, shall, if such private banker is a partnership, be
submitted by the person receiving it to the members thereof present at
their next meeting and duly noted on the records of such private banker.
S 178. Business of deceased private banker; continuation; liquidation.
In case of the death of an individual engaged in the business of a
private banker, his executor, administrator or other legal
representative, and in case of the death of a member of a partnership so
engaged, the surviving members of the partnership, may continue such
business for a period of six months from the date of such death if such
continuation is necessary, in order to bring about the liquidation of
such business. If the liquidation shall not have been accomplished
within such period of six months, the superintendent may extend the time
for a further period not to exceed one year or may, at his option, take
over such private banking business and complete the liquidation, but the
provisions of this chapter shall be applicable to the business of such
deceased private banker while the business is being continued pursuant
to the provisions of this section. Nothing herein contained shall
prevent the surviving partner or partners of or a successor to a
deceased private banker from applying for and receiving, if otherwise
entitled thereto, an authorization certificate to engage in business as
a private banker.
S 179. Effect of revocation of authorization certificate. Whenever
the superintendent shall have revoked the authorization certificate of
any private banker, and shall have taken the action to make such
revocation effective specified in article two of this chapter, all the
rights and privileges resulting from such authorization, shall forthwith
cease and determine.
S 180. Prohibitions against encroachment upon certain powers of
private bankers, savings banks and savings and loan associations.
Except as authorized by this chapter, no individual, either for himself
or as trustee, and no partnership or unincorporated association shall:
(1) Engage in the business of receiving deposits;
(2) Make use of the words "bank, " "banker" or "banking" or any
derivative or compound of any such words or any word or words in a
foreign language having the same or similar meanings in any sign,
advertisement, circular, letterhead or in other written or printed
matter, in such manner as might indicate that such individual,
partnership or unincorporated association is authorized to engage in
business as a bank or private banker;
(3) As principal, agent or trustee engage in the business of receiving
payments of money in installments, for cooperative, mutual loan, savings
or investment purposes in sums of less than five hundred dollars each
under a declaration of trust or otherwise;
(4) Personally or by the publication or circulation of advertisements
solicit such payment of money to any unauthorized individual, trustee,
partnership or unincorporated association or the execution of a
declaration of trust to or a contract with, any unauthorized individual,
trustee, partnership or unincorporated association, under which such
payments will become due and payable;
(5) Engage in or conduct a business similar to the business of a
savings bank or of a savings and loan association, or promise to make
loans at any time, either fixed or uncertain, upon real estate security
for building, home-owning, savings or investment purposes as an
inducement for the payment of sums of money in installments of less than
five hundred dollars each to any unauthorized person, trustee,
partnership or unincorporated association;
(6) Engage in the business of transmitting money or receiving money
for transmission in any manner whatsoever; provided, however, that
nothing contained in this paragraph shall apply to an individual,
partnership or unincorporated association licensed pursuant to the
provisions of article thirteen-A of this chapter.
Any person who shall violate any provision of this section shall be
guilty of a misdemeanor.
S 181. Exemptions of certain private bankers. 1. Every individual and
partnership conducting the business of a private banker on June
thirtieth, nineteen hundred thirty-eight, pursuant to an authorization
certificate issued by the superintendent may thereafter continue to
conduct such business under the authority of such existing authorization
certificate.
2. Nothing in this article shall be construed to render unlawful the
continued ownership or holding by a private banker of any investments,
loans, or other real or personal property lawfully acquired prior to
June thirtieth, nineteen hundred thirty-eight.