N.Y. Real Property Law § 339-c: Action by department of state

§ 339-c. Action by department of state. 1. Whenever the department of

state shall believe from evidence satisfactory to it that a subdivider

has engaged in, is engaged or is about to engage in any of the practices

or transactions heretofore referred to as fraudulent practices, it may

have an action brought in the manner hereinafter provided in the name

and on behalf of the people of the state of New York against such

subdivider and any other person or persons theretofore concerned in or

in any way participating in or about to participate in such fraudulent

practices, to enjoin such subdivider and such other person or persons

from continuing such fraudulent practices or engaging therein or doing

any act or acts in furtherance thereof or, if the department of state

should believe from such evidence that such subdivider has or is engaged

in any such fraudulent practice, it may have included in such action an

application to enjoin permanently such subdivider and such other person

or persons as may have been or may be concerned with or in any way

participating in such fraudulent practice, from selling or offering for

sale to the public within this state, as principal, owner, subdivider,

broker or agent or otherwise, any vacant land or lands. In said action

an order or a judgment may be entered awarding the relief applied for or

so much thereof as the court may deem proper. Upon a showing by the

department of state in the application brought in its behalf for a

preliminary injunction hereunder that the defendant named in the action

or an officer thereof has refused to be sworn or to be examined or to

answer a material question or to produce a book or paper relevant to the

inquiry when duly ordered so to do by the officer or judge duly

conducting an inquiry into the subject matter forming the basis of the

application for such preliminary injunction, such refusal shall be prima

facie proof that such defendant is or has been engaged in fraudulent

practices as set forth in such application and a preliminary injunction

may issue from the supreme court without any further showing by the

department of state.

2. If the vacant land or lands of a foreign corporation, company,

association or non-resident individual are offered or advertised for

sale within the state of New York and such corporation, company,

association or non-resident individual has not filed pursuant to laws

heretofore or hereafter existing the designation of a person upon whom

process against him or it may be served or the designation of the

secretary of state as such person pursuant to section two hundred ten of

the general corporation law or other laws heretofore or hereafter

existing or in lieu thereof, an instrument in writing duly acknowledged

and filed in the office of the secretary of state designating the

secretary of state as the person upon whom may be served any subpoena,

subpoena duces tecum or other process directed to such foreign

corporation, company, association or non-resident individual and issued

in any investigation, examination or proceeding pending or about to be

instituted under and pursuant to the provisions of this article, a

notice may be served upon such foreign corporation, company or

association, or upon any non-resident officer thereof, or upon a

non-resident individual, by mailing the same in a securely sealed

postpaid wrapper addressed to such foreign corporation, company or

association, or officer thereof, or non-resident individual, at its or

his last known place of business or residence, and may in such notice

require that such foreign corporation, company or association, or such

officer thereof, or non-resident individual, furnish a written

statement, verified as required in said notice, giving the information

therein specified relating to the vacant land or lands offered or to be

offered in the state of New York by such foreign corporation, company,

association or non-resident individual or, in the alternative, that such

foreign corporation, company or association, by its proper officer or

officers, or such non-resident individual, shall appear within a

reasonable time from the date of mailing such notice at a designated

place within this state for examination and shall produce at the time

and place of such examination such books and papers of such foreign

corporation, company, association or non-resident individual, as may be

designated in such notice.

If such foreign corporation, company, association, or such officer

thereof, or non-resident individual, shall fail to furnish the statement

called for by such notice, or shall fail to appear pursuant thereto or

to produce the books and papers required thereby to be produced, or

refuse to submit to examination or to answer any proper question, the

proof of such failure or refusal shall constitute prima facie evidence

that the sale or offering for sale or advertisement of vacant land or

lands of such foreign corporation, company, association or non-resident

individual constitutes a fraudulent practice within the meaning of this

act and may in the discretion of the court be treated as a sufficient

basis for a permanent injunction against the continuance of such

fraudulent practice.

3. In any action brought in behalf of the department of state as

provided in this article, the court at any stage of the proceedings may

appoint a receiver of any and all property derived by the defendant or

defendants or any of them by means of any such fraudulent practices,

including also all property with which such property has been mingled if

such property can not be identified in kind because of such commingling,

together with any or all books of account and papers relating to the

same. The judgment entered in such action may provide that such

receiver shall take title to any or all such property and books of

account and papers relating to the same and liquidate such property or

any part thereof for the benefit of all persons intervening in the said

action and establishing an interest in such property. The judgment may

also provide that all such property, the title to or interest in which

has not been established in such action by intervenors or otherwise by

due process to be in a person or persons other than defendant or

defendants, shall be returned to the defendant or defendants as their

interest may appear. Such receiver shall be subject to all the duties of

receivers appointed in civil actions as far as practicable except that

such provisions relating to commissions or compensation of receivers

shall not be applicable to receivers appointed pursuant to this section,

but such commissions or compensation shall be fixed by the court in any

amount which it may determine to be just and equitable. In any action

brought in behalf of the department of state as provided in this article

the court may grant such other and further relief as may be proper.

4. Whenever the department of state has determined to commence an

action under this article, it may have the attorney-general present to

any justice of the supreme court, before beginning such action, an

application in writing for an order directing the person or persons

mentioned in the application to appear before the justice of the supreme

court or referee designated in such order and answer such questions as

may be put to them or to any of them, or to produce such papers,

documents and books concerning the alleged fraudulent practices to which

the action which the department of state has determined to bring

relates, and it shall be the duty of the justice of the supreme court to

whom such application for the order is made to grant such application.

The application for such order may simply show upon information and

belief that the testimony of such person or persons is material and

necessary. The provisions of the civil practice law and rules, relating

to an application for an order for the examination of witnesses before

the commencement of an action and the method of proceeding on such

examination shall not apply except as herein prescribed. The order shall

be granted by the justice of the supreme court to whom the application

has been made with such preliminary injunction or stay as may appear to

such justice to be proper and expedient and shall specify the time when

and place where the witnesses are required to appear. The justice or

referee may adjourn such examination from time to time and witnesses

must attend accordingly. The testimony of each witness must be

subscribed by him and all must be filed in the office of the clerk of

the county in which such order for examination is filed.

5. The order for such examination must be signed by the justice making

it and service of a copy thereof with an endorsement by the department

of state or the attorney-general, to the effect that the person named

therein is required to appear and be examined at the time and place and

before the justice and referee specified in such endorsement, shall be

sufficient notice for the attendance of witnesses, such endorsement may

contain a clause requiring such person to produce at such examination

all books, papers and documents in his possession or under his control

relating to the subject of such examination. The order shall be served

upon the person named in the endorsement aforesaid by showing him the

original order and delivering to and leaving with him at the same time a

copy thereof, endorsed as above provided, and by paying or tendering to

him the fee allowed by law to witnesses subpoenaed to attend trials of

civil actions in any court of record in this state.

6. The referee appointed as provided in this article possesses all the

powers and is subject to all the duties of a referee appointed in a

civil action, so far as practicable, and may punish for contempt a

witness duly served with the papers as prescribed in this article for

non-attendance or refusal to be sworn or to testify or to produce books,

papers and documents according to the direction of the endorsement

aforesaid, in the same manner and to the same extent as a referee to

hear, try and determine an issue of fact or of law.

7. The provisions of the civil practice law and rules shall apply to

all actions brought under this article except as herein otherwise

provided.

8. If any person shall ask to be excused from testifying or producing

any book, paper or other document before the department of state or the

attorney-general or his deputy, or other officer designated by it or him

or before any court, or magistrate, or referee, upon any trial,

investigation or proceeding initiated by the department of state, the

attorney-general, district attorney, grand jury or court pursuant to the

provisions of this article upon the ground or for the reason that the

testimony or evidence, documentary or otherwise, required of him may

tend to incriminate him or convict him of crime or to subject him to a

penalty or forfeiture, and shall notwithstanding be directed by the

court, referee, magistrate or officer conducting the inquiry to testify

or to produce such book, paper or document, he must none the less comply

with such direction but in such event he shall not thereafter be

prosecuted or subjected to any penalty or forfeiture for or on account

of any transaction, matter or thing concerning which he was ordered to

testify or produce evidence, documentary or otherwise, pursuant thereto

and no testimony so given or produced shall be received against him upon

any criminal action, suit or proceeding, investigation, inquisition or

inquiry.

Provided, however, no person so testifying shall be exempt from

prosecution or punishment for any perjury committed by him in his

testimony given as herein provided for, nor shall immunity apply to

corporations or to the officers as such.