§ 131 — Prohibitions against encroachments upon certain powers of banks and trust companies

New York § 131

• Jurisdiction: New York
• Law BNK: Banking
• Art. 3: Banks and Trust Companies

Text

§ 131. Prohibitions against encroachments upon certain powers of banks\nand trust companies. 1. No person unauthorized by law shall subscribe to\nor become a member of, or be in any way interested in any association,\ninstitution or company formed or to be formed for the purpose of issuing\nnotes or other evidences of debt to be loaned or put in circulation as\nmoney; nor shall any such person subscribe to or become in any way\ninterested in any bank or trust company or fund created or to be created\nfor the like purposes or either of them. No corporation, domestic or\nforeign, other than a national bank or a federal reserve bank, unless\nexpressly authorized by the laws of this state, shall employ any part of\nits property, or be in any way interested in any fund which shall be\nemployed for the purpose of receiving deposits, making discounts,\nreceiving for transmission or transmitting money in any manner\nwhatsoever, or issuing notes or other evidences of debt to be loaned or\nput into circulation as money, except that a small business investment\ncompany as defined in and operating pursuant to the provisions of an act\nof congress entitled "Small Business Investment Act of 1958," may act as\ndepository or fiscal agent of the United States when so designated by\nthe secretary of the treasury without violating the provisions of this\nsection, except that a corporation duly licensed by the superintendent\nunder article thirteen-B of this chapter or therein expressly excepted\nfrom the application of said article may engage in the business of\nselling or issuing checks or the business of receiving money for\ntransmission or transmitting the same and except that services of an\nagent or representative may be performed in connection with the\nobligations of issuers where each such marketable obligation has a face\nvalue of not less than one hundred thousand dollars. The discounting of\nbills, notes or evidences of debt by a corporation organized solely for\nthe purpose of enabling producers of farm, dairy, horticultural or other\nagricultural products or cooperative corporations of such producers to\navail themselves of the provisions of an act of congress approved March\nfourth, nineteen hundred and twenty-three, known as the agricultural\ncredits act of nineteen hundred and twenty-three, same being subchapter\nthree of chapter seven of title twelve of the code of laws of the United\nStates as adopted by congress January third, nineteen hundred\nthirty-five, and amendments thereto, where such discounting is solely in\nconnection with the rediscount of such bills, notes or evidences of debt\nunder the provisions of said act of congress shall not be deemed or\nconstrued to be a form of banking, nor shall the making of such\ndiscounts be deemed to violate any provisions of law pertaining to\nbanking. Except as otherwise provided in article twelve-D of this\nchapter, engaging in the business of loaning money in this state on\nbonds, notes or other evidences of indebtedness, secured by deeds of\ntrust or mortgages upon real property or personal property situated in,\nupon or appurtenant thereto, and/or purchasing of or otherwise acquiring\nexisting bonds, notes or other evidences of indebtedness, deeds of trust\nor mortgages of or upon such properties, or any interest therein, and\nthe holding of the same, or the endorsing, selling, assigning,\ntransferring or disposing of the same to another corporation, by a\ndomestic business corporation, or by a foreign corporation which is\nauthorized to transact business in this state, shall not be deemed or\nconstrued to violate any of the provisions of this chapter. The purchase\nor other acquisition on original issue or subsequent transfer for less\nthan the principal amount thereof or otherwise at a discount of any\nevidences of indebtedness or other obligations for the payment of money\nshall not by reason of such discount be or be deemed to be a violation\nof the provisions of this section.\n 2. No person, association of persons or corporation, unless expressly\nauthorized by law, shall keep any office for the purpose of issuing any\nevidences of debt, to be loaned or put in circulation as money; nor\nshall they issue any bills or promissory notes or other evidences of\ndebt for the purpose of loaning them or putting them in circulation as\nmoney, unless thereto specially authorized by law.\n 3. Except as otherwise provided in article five or article five-C of\nthis chapter or subdivision four of this section, no corporation other\nthan a trust company shall have or exercise in this state the power of\nreceiving deposits of money, securities or other personal property from\nany person or corporation in trust, or have or exercise in this state\nany of the powers specified in section one hundred of this article, or\nhave or maintain an office in this state for the transaction of, or\ntransact, directly or indirectly, any such or similar business, except\nthat a federal reserve bank may exercise the powers conferred by\nsubdivision one of such section if authorized so to do by the laws of\nthe United States and any domestic corporation legally exercising any of\nthe powers conferred by such subdivision at the time this act takes\neffect may continue to exercise such powers, and a foreign banking\ncorporation or trust company incorporated under the laws of another\nstate, which by the law of the state of its incorporation may act as\ntrustee, guardian, executor, administrator, or in any other fiduciary\ncapacity under any last will and testament or codicil thereto or other\ntestamentary writing or under any deed of trust inter vivos or other\nwritten instrument establishing a trust, or by the appointment of any\ncourt of said state, may act in this state in any such fiduciary\ncapacity, provided similar domestic corporations which have the power\nunder the law of this state to act herein in any such fiduciary\ncapacity, are permitted to act in like fiduciary capacity in the state\nwhere such foreign corporation has its domicile, provided that if such\nforeign corporation proposes to act in any fiduciary capacity in this\nstate and to do so is required to file its qualification in the\nsurrogate's court of this state, it shall file in the office of the\nclerk of the surrogate's court of the county in which application for\nsuch appointment is pending (a) a duly executed instrument in writing,\nby its terms of indefinite duration and irrevocable, appointing such\nclerk and his or her successors its true and lawful attorney, upon whom\nall process in any action or proceeding against such fiduciary,\naffecting or relating to the state, trust or fund represented or held by\nsuch fiduciary or the acts of defaults of such corporation in reference\nto such estate, trust or fund may be served with the same force and\neffect as if it were a domestic corporation and had been lawfully served\nwith process within the state, and (b) a copy of its charter certified\nby its secretary under its corporate seal, together with the post office\naddress of its principal office; provided further that if such foreign\ncorporation proposes to act in any other fiduciary capacity in the\nstate, it shall file in the office of the superintendent (a) a duly\nexecuted instrument in writing, by its terms of indefinite duration and\nirrevocable, appointing the superintendent and his or her successors its\ntrue and lawful attorney, upon whom all process in any action or\nproceeding against such fiduciary affecting or relating to the estate,\ntrust or fund held or represented by such fiduciary or the acts or\ndefaults of such corporation in reference to such estate, trust or fund\nmay be served with the same force and effect as if it were a domestic\ncorporation and had been lawfully served with process within the state,\n(b) a written certificate of designation, which may be changed from time\nto time thereafter by the filing of a new certificate of designation,\nspecifying the name and address of the officer, agent, or other person\nto whom such process shall be forwarded by the superintendent, and (c) a\ncopy of its charter certified by its secretary under its corporate seal,\ntogether with the post office address of its principal office.\n 4. (a) Except as otherwise provided in article five or article five-C\nof this chapter, no foreign corporation, having authority to act in this\nstate as trustee, guardian, executor, administrator, or in any other\nfiduciary capacity shall establish or maintain, directly or indirectly,\nany branch office or agency in this state.\n (b) Notwithstanding any other provisions of this chapter, a bank or\ntrust company incorporated under the laws of another state, which is\nauthorized by its charter and by the laws of the state of its\nincorporation to exercise in such state any or all of the fiduciary\npowers that trust companies are authorized to exercise in this state\npursuant to sections one hundred, one hundred-a, one hundred-b, one\nhundred-c and one hundred-d of this article, may establish and maintain\na trust office in this state for purposes of exercising any or all of\nthe fiduciary powers authorized by the laws of the state of its\nincorporation; provided, however, that (i) such trust office is not its\nprincipal office; (ii) such exercise does not exceed the powers\nauthorized under sections one hundred, one hundred-a, one hundred-b, one\nhundred-c and one hundred-d of this article; and (iii) a bank or trust\ncompany organized under the laws of this state and authorized to\nexercise any or all fiduciary powers under sections one hundred, one\nhundred-a, one hundred-b, one hundred-c and one hundred-d of this\narticle is permitted to establish a trust office and exercise\nsubstantially similar fiduciary powers on substantially the same basis\nas permitted an out-of-state state bank or trust company pursuant to\nthis subdivision, in the state where such out-of-state state bank or\ntrust company is so incorporated. A trust office established or\nmaintained by such an out-of-state state bank or trust company pursuant\nto this subdivision shall not be considered to be a branch office\npursuant to any other provisions of this chapter.\n (c) An out-of-state state bank or trust company seeking to establish\nand maintain a trust office or open any additional trust offices in this\nstate shall file a notice with the superintendent in the form prescribed\nby the superintendent describing the proposed activities of the office\nand such other information as the superintendent shall request. The\ntrust office may commence operation thirty days after the superintendent\nreceives such notice, unless the superintendent notifies the\nout-of-state state bank or trust company in writing within such time\nperiod that such office may not commence operation or that additional\ninformation or time is required for the superintendent to consider such\nnotice.\n (d) Such out-of-state state bank or trust company may establish and\nmaintain additional trust offices in this state pursuant to and\nconsistent with the provisions of this subdivision, provided that the\nsuperintendent finds that the establishment and maintenance of any and\nall trust offices by such out-of-state state bank or trust company is\nand continues to be consistent with the goals set forth in the\ndeclaration of policy contained in section ten of this chapter. The\nsuperintendent shall have the power at any time in his or her discretion\nto examine any trust office established pursuant to this section to the\nsame extent as is provided for in the case of banking organizations\npursuant to the provisions of this chapter. If any such foreign\ncorporation or out-of-state state bank or trust company violates this\nprovision, such foreign corporation or out-of-state state bank or trust\ncompany shall not thereafter be appointed or act in any such fiduciary\ncapacity in this state. The validity of any mortgage heretofore given by\na foreign corporation to a trust company doing business within a foreign\ndomicile of such mortgagor to secure the payment of an issue of bonds\nshall not be affected by any of the provisions of this section and such\nmortgage shall be enforceable in accordance with the laws of this state\nagainst property covered thereby within the state of New York.\n 5. Any out-of-state state bank or trust company subject to the\nprovision of subdivision three or four of this section may be either in\ncorporate form or organized as a limited liability company.\n 6. Every person, and every corporation, director, agent, officer or\nmember thereof, who shall violate any provision of this section,\ndirectly or indirectly or assent to such violation, shall forfeit an\namount as determined pursuant to section forty-four of this chapter to\nthe people of the state.\n