2023 New York Laws › BNK - Banking › Article 3 - Banks and Trust Companies › 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.