Case ID: misc_88/html/0689-01.html
Source: Caselaw Access Project
Author: {"author": "Manning, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Matter of the Application of John Kovacs, Private Banker, for an Order Cancelling and Discharging the Bond of the Illinois Surety Company.
    (Supreme Court, Kings Special Term,
    January, 1915.)
    Bonds — provisions for giving — discharge of surety — Banking Law, § Soo-
    Chapter 185 of the Laws of 1907, as amended in 1908, pro- • vided that all persons before commencing the selling of tickets for transportation to or from foreign countries should give a bond”in the sum of $15,000. Chapter 348 of the Laws of ' 1910; as amended in 1911, provided for the giving of a bond in the sum of $20,000 by any one who should engage in the business of securing deposits of money. Both of. said statutes were repealed by section 500 of the new Banking Law (Laws of - 1914, chap. 369) which, while providing for the discharge of the surety on a bond given under the statute of 1910, as amended, made no provision for the discharge of the surety on a bond .. given under the statute of 1907, as amended. Held, that a motion to cancel a bond given pursuant to the statute of 1910, as amended, and for an order discharging and releasing the ' "Surety from any and. all liability thereon, should be granted with direction to surrender a bond and mortgage assigned as collateral security, but that a motion to cancel a bond given under the statute of 1907, as amended, should be denied, as said bond is still in force and effect, both bonds having been given by the same person.
    Application for an order to cancel certain statutory bonds.
    Anton Gronich, for petitioner.
    Nelson L. Keach, for Illinois Surety Co.
   Manning, J.

On September 8, 1908, John Kovacs, a private banker, the petitioner herein, paid to the Illinois Surety Company the sum of $2,000 as collateral security upon a bond which they issued in his behalf pursuant to the Laws of 1907, chapter 185, as amended by the Laws of 1908, chapter 479, which law has been incorporated in the Consolidated Laws (General Business Law, article X, Laws 1909, chap. 25) and provides that all persons engaged in the selling oí steamship or railroad tickets for transportation to or from foreign countries shall make and deliver a bond to the state of New York in the sum of $15,000 before commencing business. It appears from the papers submitted that this bond is still in force and effect.

On September 24, 1910, the petitioner gave to the Illinois Surety Company an assignment of a bond and mortgage covering certain premises in Brooklyn* in the sum of $9,500 as collateral security upon a bond for $20,000 which they issued in his behalf pursuant to the Laws of 1910, chapter 348, as amended by the Laws of 1911, chapter 393, providing that such a bond must be filed by any person or persons who shall hereafter engage directly or indirectly in the business of receiving deposits of money.

The new Banking Law (Laws of 1914, chap. 369, § 500) repealed’both the above statutes.

John Kovacs submits proof that he has complied with the new Banking Law and is authorized to do business as a private banker, and he now makes this application under said law to cancel the bond given pursuant to the Laws of 1910, chapter 348, as amended, requesting that the said Illinois Surety Company be relieved from all liability thereunder, and that the indemnity or securities received and held by the said surety company on account of said bond be assigned and transferred to him. In this application he seeks to merge the $2,000 given as collateral security for the bond in the sum of $15,000, with the band and mortgage given as security for the $20,000 bond.

The surety company objects to returning the $2,000 collateral for the $15,000 bond, but does not object to giving up the bond and mortgage, collateral for the $20,000, given under and pursuant to the Laws of 1910, as amended, when that bond is canceled. It contends that it is still liable to depositors under the $15,000 bond, inasmuch as the law of 1908, as amended, is not recited in the new Banking Law and therefore the liability still attaches to their bond, and this court is without power to cancel its obligation or to confiscate its collateral security in this proceeding.

The Laws of 1914, chapter 396, section 161, provide: “At any time after this article takes effect any private banker, who has heretofore given a bond to the comptroller pursuant to the provisions of chapter three hundred forty-eight of the laws of nineteen hundred ten, as amended by chapter three hundred ninety-three of the laws of nineteen hundred eleven, may institute a proceeding in the supreme court in the county in which said private banker’s place of business is located for an order discharging the surety company from any liability under such bond.” This section specifically provides for the discharge of the surety and the return of the securities or indemnity to the private banker, which he deposited with the surety under the $20,000 bond.

There is no provision in the new Banking Law for the discharge of a surety under the Laws of 1908, as amended, under which the deposit of $2,000 collateral was made for the execution of the $15,000 bond. It is true that the general repealing section of the new law annuls this statute, but this surely does not of itself destroy the right of the depositors of the private banker, who were protected by the bond given pursuant to that law, to look to the surety company. The bond is still in force and effect and the surety company is liable thereupon, and, therefore, it is entitled to retain the collateral deposited. If the petitioner is entitled to have this bond canceled there is nothing in the new law or this decision to preclude him from commencing a proceeding to have the $15,000 bond canceled and thereby secure the release of his collateral, but he does not seek that relief here.

The motion to cancel the bond given pursuant to the Laws of 1910, as amended, in the sum of $20,000, is granted, and an order discharging and releasing the surety company from any and all liability on such bond and directing it to surrender to the petitioner the assignment of mortgage in the sum of $9,500, deposited as collateral security, will be signed. The motion in so far as it requests the cancellation of the bond for $15,000 and the return of the $2,000 collateral security held thereunder is denied. No costs.

Ordered accordingly.