N.Y. Banking Law § 131: Prohibitions against encroachments upon certain powers of banks and trust companies

§ 131. Prohibitions against encroachments upon certain powers of banks

and trust companies. 1. No person unauthorized by law shall subscribe to

or become a member of, or be in any way interested in any association,

institution 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 person subscribe to or become in any way

interested in any bank or trust company 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 fund which shall be

employed for the purpose of receiving deposits, making discounts,

receiving for transmission or transmitting money in any manner

whatsoever, or issuing notes or other evidences of debt to be loaned or

put into circulation as money, except that a small business investment

company as defined in and operating pursuant to the provisions of an act

of congress entitled "Small Business Investment Act of 1958," may act as

depository or fiscal agent of the United States when so designated by

the secretary of the treasury without violating the provisions of this

section, except that a corporation duly licensed by the superintendent

under article thirteen-B of this chapter or therein expressly excepted

from the application of said article may engage in the business of

selling or issuing checks or the business of receiving money for

transmission or transmitting the same and except that services of an

agent or representative may be performed in connection with the

obligations of issuers where each such marketable obligation has a face

value of not less than one hundred thousand dollars. The discounting of

bills, notes or evidences of debt by a corporation organized solely for

the purpose of enabling producers of farm, dairy, horticultural or other

agricultural products or cooperative corporations of such producers to

avail themselves of the provisions of an act of congress approved March

fourth, nineteen hundred and twenty-three, known as the agricultural

credits act of nineteen hundred and twenty-three, same being subchapter

three of chapter seven of title twelve of the code of laws of the United

States as adopted by congress January third, nineteen hundred

thirty-five, and amendments thereto, where such discounting is solely in

connection with the rediscount of such bills, notes or evidences of debt

under the provisions of said act of congress shall not be deemed or

construed to be a form of banking, nor shall the making of such

discounts be deemed to violate any provisions of law pertaining to

banking. Except as otherwise provided in article twelve-D of this

chapter, engaging in the business of loaning money in this state on

bonds, notes or other evidences of indebtedness, secured by deeds of

trust or mortgages upon real property or personal property situated in,

upon or appurtenant thereto, and/or purchasing of or otherwise acquiring

existing bonds, notes or other evidences of indebtedness, deeds of trust

or mortgages of or upon such properties, or any interest therein, and

the holding of the same, or the endorsing, selling, assigning,

transferring or disposing of the same to another corporation, by a

domestic business corporation, or by a foreign corporation which is

authorized to transact business in this state, shall not be deemed or

construed to violate any of the provisions of this chapter. The purchase

or other acquisition on original issue or subsequent transfer for less

than the principal amount thereof or otherwise at a discount of any

evidences of indebtedness or other obligations for the payment of money

shall not by reason of such discount be or be deemed to be a violation

of the provisions of this section.

2. No person, association of persons or corporation, unless expressly

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.

3. Except as otherwise provided in article five or article five-C of

this chapter or subdivision four of this section, no corporation other

than a trust company shall have or exercise in this state the power of

receiving deposits of money, securities or other personal property from

any person or corporation in trust, or have or exercise in this state

any of the powers specified in section one hundred of this article, or

have or maintain an office in this state for the transaction of, or

transact, directly or indirectly, any such or similar business, except

that a federal reserve bank may exercise the powers conferred by

subdivision one of such section if authorized so to do by the laws of

the United States and any domestic corporation legally exercising any of

the powers conferred by such subdivision at the time this act takes

effect may continue to exercise such powers, and a foreign banking

corporation or trust company incorporated under the laws of another

state, which by the law of the state of its incorporation may act as

trustee, guardian, executor, administrator, or in any other fiduciary

capacity under any last will and testament or codicil thereto or other

testamentary writing or under any deed of trust inter vivos or other

written instrument establishing a trust, or by the appointment of any

court of said state, may act in this state in any such fiduciary

capacity, provided similar domestic corporations which have the power

under the law of this state to act herein in any such fiduciary

capacity, are permitted to act in like fiduciary capacity in the state

where such foreign corporation has its domicile, provided that if such

foreign corporation proposes to act in any fiduciary capacity in this

state and to do so is required to file its qualification in the

surrogate's court of this state, it shall file in the office of the

clerk of the surrogate's court of the county in which application for

such appointment is pending (a) a duly executed instrument in writing,

by its terms of indefinite duration and irrevocable, appointing such

clerk and his or her successors its true and lawful attorney, upon whom

all process in any action or proceeding against such fiduciary,

affecting or relating to the state, trust or fund represented or held by

such fiduciary or the acts of defaults of such corporation in reference

to such estate, trust or fund may be served with the same force and

effect as if it were a domestic corporation and had been lawfully served

with process within the state, and (b) a copy of its charter certified

by its secretary under its corporate seal, together with the post office

address of its principal office; provided further that if such foreign

corporation proposes to act in any other fiduciary capacity in the

state, it shall file in the office of the superintendent (a) a duly

executed instrument in writing, by its terms of indefinite duration and

irrevocable, appointing the superintendent and his or her successors its

true and lawful attorney, upon whom all process in any action or

proceeding against such fiduciary affecting or relating to the estate,

trust or fund held or represented by such fiduciary or the acts or

defaults of such corporation in reference to such estate, trust or fund

may be served with the same force and effect as if it were a domestic

corporation and had been lawfully served with process within the state,

(b) a written certificate of designation, which may be changed from time

to time thereafter by the filing of a new certificate of designation,

specifying the name and address of the officer, agent, or other person

to whom such process shall be forwarded by the superintendent, and (c) a

copy of its charter certified by its secretary under its corporate seal,

together with the post office address of its principal office.

4. (a) Except as otherwise provided in article five or article five-C

of this chapter, no foreign corporation, having authority to act in this

state as trustee, guardian, executor, administrator, or in any other

fiduciary capacity shall establish or maintain, directly or indirectly,

any branch office or agency in this state.

(b) Notwithstanding any other provisions of this chapter, a bank or

trust company incorporated under the laws of another state, which is

authorized by its charter and by the laws of the state of its

incorporation to exercise in such state any or all of the fiduciary

powers that trust companies are authorized to exercise in this state

pursuant to sections one hundred, one hundred-a, one hundred-b, one

hundred-c and one hundred-d of this article, may establish and maintain

a trust office in this state for purposes of exercising any or all of

the fiduciary powers authorized by the laws of the state of its

incorporation; provided, however, that (i) such trust office is not its

principal office; (ii) such exercise does not exceed the powers

authorized under sections one hundred, one hundred-a, one hundred-b, one

hundred-c and one hundred-d of this article; and (iii) a bank or trust

company organized under the laws of this state and authorized to

exercise any or all fiduciary powers under sections one hundred, one

hundred-a, one hundred-b, one hundred-c and one hundred-d of this

article is permitted to establish a trust office and exercise

substantially similar fiduciary powers on substantially the same basis

as permitted an out-of-state state bank or trust company pursuant to

this subdivision, in the state where such out-of-state state bank or

trust company is so incorporated. A trust office established or

maintained by such an out-of-state state bank or trust company pursuant

to this subdivision shall not be considered to be a branch office

pursuant to any other provisions of this chapter.

(c) An out-of-state state bank or trust company seeking to establish

and maintain a trust office or open any additional trust offices in this

state shall file a notice with the superintendent in the form prescribed

by the superintendent describing the proposed activities of the office

and such other information as the superintendent shall request. The

trust office may commence operation thirty days after the superintendent

receives such notice, unless the superintendent notifies the

out-of-state state bank or trust company in writing within such time

period that such office may not commence operation or that additional

information or time is required for the superintendent to consider such

notice.

(d) Such out-of-state state bank or trust company may establish and

maintain additional trust offices in this state pursuant to and

consistent with the provisions of this subdivision, provided that the

superintendent finds that the establishment and maintenance of any and

all trust offices by such out-of-state state bank or trust company is

and continues to be consistent with the goals set forth in the

declaration of policy contained in section ten of this chapter. The

superintendent shall have the power at any time in his or her discretion

to examine any trust office established pursuant to this section to the

same extent as is provided for in the case of banking organizations

pursuant to the provisions of this chapter. If any such foreign

corporation or out-of-state state bank or trust company violates this

provision, such foreign corporation or out-of-state state bank or trust

company shall not thereafter be appointed or act in any such fiduciary

capacity in this state. The validity of any mortgage heretofore given by

a foreign corporation to a trust company doing business within a foreign

domicile of such mortgagor to secure the payment of an issue of bonds

shall not be affected by any of the provisions of this section and such

mortgage shall be enforceable in accordance with the laws of this state

against property covered thereby within the state of New York.

5. Any out-of-state state bank or trust company subject to the

provision of subdivision three or four of this section may be either in

corporate form or organized as a limited liability company.

6. 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 an

amount as determined pursuant to section forty-four of this chapter to

the people of the state.