State Ex Rel. Brant v. Bank of America

31 P.3d 952, 272 Kan. 182, 2001 Kan. LEXIS 599
CourtSupreme Court of Kansas
DecidedSeptember 28, 2001
Docket86,280
StatusPublished
Cited by6 cases

This text of 31 P.3d 952 (State Ex Rel. Brant v. Bank of America) is published on Counsel Stack Legal Research, covering Supreme Court of Kansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
State Ex Rel. Brant v. Bank of America, 31 P.3d 952, 272 Kan. 182, 2001 Kan. LEXIS 599 (kan 2001).

Opinions

The opinion of fhe court was delivered by

Six, J.:

This first impression case arises from the defendant Bank of America’s (Bank) refusal to comply with subpoenas seeking customer records issued by David R. Brant, Securities Commissioner of Kansas (Commissioner). Each subpoena specifically ordered the [183]*183Bank not to notify the customer of the subpoena. The Bank refused to honor the subpoenas and to comply with the confidentiality requirement. The Commissioner filed an application under K.S.A. 17-I265(d) (refusal to obey a subpoena) and K.S.A. 50-1009(b) (application for court order) for an order to enforce the subpoenas and to prohibit the Bank from notifying its customers.

The district court held that: (1) the Bank’s customers have no reasonable expectation of privacy in their bank records and (2) the Commissioner, under his statutory power to conduct private investigations, had the authority to prohibit the Bank from notifying its customers of the subpoenas. The district court granted the Commissioner’s application and restrained the Bank from notifying its customers of the subpoenas. The Bank now appeals.

Our jurisdiction is under K.S.A. 20-3018(c) (a transfer from the Court of Appeals on our own motion).

The issues are whether the district court erred in ruling that: (1) the Commissioner has the authority under K.S.A. 17-1265(a)(l) to issue a subpoena that prohibits the Bank from informing its customers of the subpoena, and (2) the Bank’s customers have no reasonable expectation of privacy in their bank records and, thus, were not entitled to receive notice that their bank records were subpoenaed.

The Bank also contends that the district court’s application of K.S.A. 17-1265(a)(l) is unconstitutional because the Commissioner’s conduct imposed a prior restraint on speech (an alleged violation of the Bank’s rights under the First Amendment and § 11 of the Kansas Constitution Bill of Rights). We do not reach the contention. The prior restraint argument was not presented to the district court. Generally, where constitutional grounds for reversal are asserted for the first time on appeal, they are not properly before us for review. Ruddick v. Boeing Co., 263 Kan. 494, 498, 949 P.2d 1132 (1997).

Finding no error, we affirm.

FACTS

The Commissioner issued and served on the Bank subpoenas duces tecum for records of three different bank accounts. The first [184]*184subpoena requested originals or authenticated copies of specified checks and wire transfers, and copies of the account application and signature card for the purchasers or issuers of the specified transactions. Each subpoena included the following confidentiality clause:

“This subpoena is issued in connection with a law enforcement investigation. Therefore, tire existence of this subpoena and any testimony or documents produced pursuant to it are to remain confidential and shall not be disclosed to any third party, including the account holder or customer who is die subject of die subpoena, unless prior written approval is obtained from the Kansas Securities Commissioner or the issuer of diis subpoena.”

The second subpoena requested copies of the signature card and all monthly statements from May 1998 through August 1999 for that account. The third subpoena, issued under K.S.A. 50-1009(a)(13) of tire Kansas Loan Broker’s Act, requested originals and authenticated copies of a specified check.

The Bank has a privacy policy that it provides to its customers and publishes on its internet web site. The policy says, in part:

“If we receive a subpoena or similar legal process demanding release of any information about you, we will generally attempt to notify you (unless we believe we are prohibited from doing so). Except as required by law or as described above, we do not share information with other parties, including government agencies.” (Emphasis added.)

There was no evidence presented to the district court suggesting that the customers whose accounts were the subject of the three subpoenas ever saw the text or relied upon it when opening an account with the Bank.

The Bank explained its privacy policy regarding subpoenas in a letter to the Commissioner:

“We recognize that state law does not mandate that a financial institution notify its customers when served with a subpoena seeking the customer s bank records. However, we are not aware of any prohibition under state law against notifying the customer. If you are aware of court cases, attorney general opinions, or other authority specifically prohibiting disclosure of subpoenas, please share them with us.”

The Commissioner did not respond to the Bank’s letter. The Bank informed the Commissioner that within 20 days it intended [185]*185to forward copies of the subpoenas to its customers whose records were subpoenaed. The Commissioner filed an unsealed application in the district court listing the accounts by name and applied for an order requiring production of the documents. The Bank informed the district court that it had no objection to honoring the subpoenas, but it insisted on notifying its customers. The district court said: “The exact nature of the investigation, the manner in which the records are needed for the investigation, whether the records relate to targets of the investigation and other information about the investigation are not known.”

The Commissioner admitted that the sole authority for imposing confidentiality requirements on the Bank was the use of the term “private investigations” in K.S.A. 17-1265(a)(l).

DISCUSSION

Our task is to decide, based on the facts here, whether the legislature intended the Commissioner, under K.S.A. 17-1265(a)(l), to have the authority to tell the Bank that it cannot inform its customer that the Commissioner has subpoenaed the customer’s bank records. Stated another way, may a K.S.A. 17-1265(a)(l) private investigation be considered a confidential investigation so that the customer is not informed by the Bank of the subpoena?

We first consider the Bank’s contention that the district court erred in finding that the Commissioner had the authority to conduct confidential investigations. At issue here is the meaning of K.S.A. 17-1265(a)(l).

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Kansas Governmental Ethics Comm'n v. Shepard
Court of Appeals of Kansas, 2024
State v. Pepper
539 P.3d 203 (Supreme Court of Kansas, 2023)
State v. Dawson
Court of Appeals of Kansas, 2016
Attorney General Opinion No.
Kansas Attorney General Reports, 2009
Alpha Medical Clinic v. Anderson
128 P.3d 364 (Supreme Court of Kansas, 2006)
Bland v. Scott
112 P.3d 941 (Supreme Court of Kansas, 2005)
State Ex Rel. Brant v. Bank of America
31 P.3d 952 (Supreme Court of Kansas, 2001)

Cite This Page — Counsel Stack

Bluebook (online)
31 P.3d 952, 272 Kan. 182, 2001 Kan. LEXIS 599, Counsel Stack Legal Research, https://law.counselstack.com/opinion/state-ex-rel-brant-v-bank-of-america-kan-2001.