§ 339-C — Action by department of state

New York § 339-C

• Jurisdiction: New York
• Law RPP: Real Property
• Art. 9-A: Subdivided Lands

Text

§ 339-c. Action by department of state. 1. Whenever the department of\nstate shall believe from evidence satisfactory to it that a subdivider\nhas engaged in, is engaged or is about to engage in any of the practices\nor transactions heretofore referred to as fraudulent practices, it may\nhave an action brought in the manner hereinafter provided in the name\nand on behalf of the people of the state of New York against such\nsubdivider and any other person or persons theretofore concerned in or\nin any way participating in or about to participate in such fraudulent\npractices, to enjoin such subdivider and such other person or persons\nfrom continuing such fraudulent practices or engaging therein or doing\nany act or acts in furtherance thereof or, if the department of state\nshould believe from such evidence that such subdivider has or is engaged\nin any such fraudulent practice, it may have included in such action an\napplication to enjoin permanently such subdivider and such other person\nor persons as may have been or may be concerned with or in any way\nparticipating in such fraudulent practice, from selling or offering for\nsale to the public within this state, as principal, owner, subdivider,\nbroker or agent or otherwise, any vacant land or lands. In said action\nan order or a judgment may be entered awarding the relief applied for or\nso much thereof as the court may deem proper. Upon a showing by the\ndepartment of state in the application brought in its behalf for a\npreliminary injunction hereunder that the defendant named in the action\nor an officer thereof has refused to be sworn or to be examined or to\nanswer a material question or to produce a book or paper relevant to the\ninquiry when duly ordered so to do by the officer or judge duly\nconducting an inquiry into the subject matter forming the basis of the\napplication for such preliminary injunction, such refusal shall be prima\nfacie proof that such defendant is or has been engaged in fraudulent\npractices as set forth in such application and a preliminary injunction\nmay issue from the supreme court without any further showing by the\ndepartment of state.\n 2. If the vacant land or lands of a foreign corporation, company,\nassociation or non-resident individual are offered or advertised for\nsale within the state of New York and such corporation, company,\nassociation or non-resident individual has not filed pursuant to laws\nheretofore or hereafter existing the designation of a person upon whom\nprocess against him or it may be served or the designation of the\nsecretary of state as such person pursuant to section two hundred ten of\nthe general corporation law or other laws heretofore or hereafter\nexisting or in lieu thereof, an instrument in writing duly acknowledged\nand filed in the office of the secretary of state designating the\nsecretary of state as the person upon whom may be served any subpoena,\nsubpoena duces tecum or other process directed to such foreign\ncorporation, company, association or non-resident individual and issued\nin any investigation, examination or proceeding pending or about to be\ninstituted under and pursuant to the provisions of this article, a\nnotice may be served upon such foreign corporation, company or\nassociation, or upon any non-resident officer thereof, or upon a\nnon-resident individual, by mailing the same in a securely sealed\npostpaid wrapper addressed to such foreign corporation, company or\nassociation, or officer thereof, or non-resident individual, at its or\nhis last known place of business or residence, and may in such notice\nrequire that such foreign corporation, company or association, or such\nofficer thereof, or non-resident individual, furnish a written\nstatement, verified as required in said notice, giving the information\ntherein specified relating to the vacant land or lands offered or to be\noffered in the state of New York by such foreign corporation, company,\nassociation or non-resident individual or, in the alternative, that such\nforeign corporation, company or association, by its proper officer or\nofficers, or such non-resident individual, shall appear within a\nreasonable time from the date of mailing such notice at a designated\nplace within this state for examination and shall produce at the time\nand place of such examination such books and papers of such foreign\ncorporation, company, association or non-resident individual, as may be\ndesignated in such notice.\n If such foreign corporation, company, association, or such officer\nthereof, or non-resident individual, shall fail to furnish the statement\ncalled for by such notice, or shall fail to appear pursuant thereto or\nto produce the books and papers required thereby to be produced, or\nrefuse to submit to examination or to answer any proper question, the\nproof of such failure or refusal shall constitute prima facie evidence\nthat the sale or offering for sale or advertisement of vacant land or\nlands of such foreign corporation, company, association or non-resident\nindividual constitutes a fraudulent practice within the meaning of this\nact and may in the discretion of the court be treated as a sufficient\nbasis for a permanent injunction against the continuance of such\nfraudulent practice.\n 3. In any action brought in behalf of the department of state as\nprovided in this article, the court at any stage of the proceedings may\nappoint a receiver of any and all property derived by the defendant or\ndefendants or any of them by means of any such fraudulent practices,\nincluding also all property with which such property has been mingled if\nsuch property can not be identified in kind because of such commingling,\ntogether with any or all books of account and papers relating to the\nsame. The judgment entered in such action may provide that such\nreceiver shall take title to any or all such property and books of\naccount and papers relating to the same and liquidate such property or\nany part thereof for the benefit of all persons intervening in the said\naction and establishing an interest in such property. The judgment may\nalso provide that all such property, the title to or interest in which\nhas not been established in such action by intervenors or otherwise by\ndue process to be in a person or persons other than defendant or\ndefendants, shall be returned to the defendant or defendants as their\ninterest may appear. Such receiver shall be subject to all the duties of\nreceivers appointed in civil actions as far as practicable except that\nsuch provisions relating to commissions or compensation of receivers\nshall not be applicable to receivers appointed pursuant to this section,\nbut such commissions or compensation shall be fixed by the court in any\namount which it may determine to be just and equitable. In any action\nbrought in behalf of the department of state as provided in this article\nthe court may grant such other and further relief as may be proper.\n 4. Whenever the department of state has determined to commence an\naction under this article, it may have the attorney-general present to\nany justice of the supreme court, before beginning such action, an\napplication in writing for an order directing the person or persons\nmentioned in the application to appear before the justice of the supreme\ncourt or referee designated in such order and answer such questions as\nmay be put to them or to any of them, or to produce such papers,\ndocuments and books concerning the alleged fraudulent practices to which\nthe action which the department of state has determined to bring\nrelates, and it shall be the duty of the justice of the supreme court to\nwhom such application for the order is made to grant such application.\nThe application for such order may simply show upon information and\nbelief that the testimony of such person or persons is material and\nnecessary. The provisions of the civil practice law and rules, relating\nto an application for an order for the examination of witnesses before\nthe commencement of an action and the method of proceeding on such\nexamination shall not apply except as herein prescribed. The order shall\nbe granted by the justice of the supreme court to whom the application\nhas been made with such preliminary injunction or stay as may appear to\nsuch justice to be proper and expedient and shall specify the time when\nand place where the witnesses are required to appear. The justice or\nreferee may adjourn such examination from time to time and witnesses\nmust attend accordingly. The testimony of each witness must be\nsubscribed by him and all must be filed in the office of the clerk of\nthe county in which such order for examination is filed.\n 5. The order for such examination must be signed by the justice making\nit and service of a copy thereof with an endorsement by the department\nof state or the attorney-general, to the effect that the person named\ntherein is required to appear and be examined at the time and place and\nbefore the justice and referee specified in such endorsement, shall be\nsufficient notice for the attendance of witnesses, such endorsement may\ncontain a clause requiring such person to produce at such examination\nall books, papers and documents in his possession or under his control\nrelating to the subject of such examination. The order shall be served\nupon the person named in the endorsement aforesaid by showing him the\noriginal order and delivering to and leaving with him at the same time a\ncopy thereof, endorsed as above provided, and by paying or tendering to\nhim the fee allowed by law to witnesses subpoenaed to attend trials of\ncivil actions in any court of record in this state.\n 6. The referee appointed as provided in this article possesses all the\npowers and is subject to all the duties of a referee appointed in a\ncivil action, so far as practicable, and may punish for contempt a\nwitness duly served with the papers as prescribed in this article for\nnon-attendance or refusal to be sworn or to testify or to produce books,\npapers and documents according to the direction of the endorsement\naforesaid, in the same manner and to the same extent as a referee to\nhear, try and determine an issue of fact or of law.\n 7. The provisions of the civil practice law and rules shall apply to\nall actions brought under this article except as herein otherwise\nprovided.\n 8. If any person shall ask to be excused from testifying or producing\nany book, paper or other document before the department of state or the\nattorney-general or his deputy, or other officer designated by it or him\nor before any court, or magistrate, or referee, upon any trial,\ninvestigation or proceeding initiated by the department of state, the\nattorney-general, district attorney, grand jury or court pursuant to the\nprovisions of this article upon the ground or for the reason that the\ntestimony or evidence, documentary or otherwise, required of him may\ntend to incriminate him or convict him of crime or to subject him to a\npenalty or forfeiture, and shall notwithstanding be directed by the\ncourt, referee, magistrate or officer conducting the inquiry to testify\nor to produce such book, paper or document, he must none the less comply\nwith such direction but in such event he shall not thereafter be\nprosecuted or subjected to any penalty or forfeiture for or on account\nof any transaction, matter or thing concerning which he was ordered to\ntestify or produce evidence, documentary or otherwise, pursuant thereto\nand no testimony so given or produced shall be received against him upon\nany criminal action, suit or proceeding, investigation, inquisition or\ninquiry.\n Provided, however, no person so testifying shall be exempt from\nprosecution or punishment for any perjury committed by him in his\ntestimony given as herein provided for, nor shall immunity apply to\ncorporations or to the officers as such.\n