February 28, 2011
Dear Mr. [---]:
This letter responds to your service on the Banking Department of two copies of a summons and complaint (together with a check in the amount of two dollars), in an attempt to serve defendant, [---] Bank, pursuant to New York Banking Law ("NYBL") sections 34 and 200.
[---] Bank is a California state-chartered FDIC-insured bank that maintains several branches in New York City, including a branch located at [---] in Manhattan, at which I understand you also have served the summons and complaint.
As you are aware, NYBL 34 addresses the authority of the Superintendent of Banks ("Superintendent") to accept service of process.1 It provides, in relevant part:
"Whenever, pursuant to any provision of this Chapter, the superintendent shall have been duly appointed attorney to receive service of process for any individual, partnership, unincorporated association or corporation, such service shall be made by personally delivering duplicate copies of the process to and leaving them with the superintendent or any deputy superintendent."
In actuality, the Banking Law provides in very few places for the Superintendent to be designated by banking institutions (or other entities) as agent to accept service of process. In addition to NYBL 131 (3), which requires certain out-of-state trust companies to appoint the Superintendent as agent for service of process, the Banking Law requires foreign country banks, in connection with the establishment of branches, agencies or representative offices, to execute an appointment certificate "appointing the Superintendent as attorney upon whom all process in any action or proceeding against it in a cause of action arising out of a transaction had with such foreign bank's New York office 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." (See NYBL 200(3); 221-c).
When we spoke, you suggested that NYBL Section 200 (and Article V, generally, of which it is a part) as written can be interpreted to apply to both foreign "out-of-country" banks as well as foreign "out-of-state" banks, such as [---] Bank. You therefore suggested that the Superintendent should be obligated to accept service of process on behalf of [---] Bank.
This letter will confirm in writing as the Department's position the oral opinion I expressed during our conversation -i.e. that the Superintendent does not have authority to accept service of process on behalf of out-of-state domestic banks, such as [---] Bank. As an initial matter, the Department is not in fact in receipt of an appointment certificate from [---] Bank appointing the Superintendent as its attorney-in-fact. Secondly, and more fundamentally, we do not believe that the Banking Law provides for out-of-state domestically-chartered banks maintaining branches in New York to appoint the Superintendent as agent for service of process.
Article V-C of the Banking Law, which addresses the establishment of branches in New York by out-of-state domestic banks, was added in the early 1990s. An out-of-state domestically-chartered bank seeking to branch into New York follows the procedures set forth in Article V-C, rather than obtaining a license pursuant to Article V (i.e. NYBL sections 200 et. seq). In short, Article V as a practical matter is only made applicable to out-of-country foreign banks.2 In fact, a provision of Article V-C, Section 225-b, addresses the potential overlap, and makes clear that, except for a few enumerated provisions, the provisions of Article V do not apply to domestic out-of-state banks governed by Article V-C. BL 225-b provides, in relevant part:
"Except as otherwise provided in this section, nothing in article five or five-B [Foreign Banking Corporation Representatives] shall apply to an out-of-state bank authorized to open, occupy and maintain a branch pursuant to the provisions of this article. Any reference in this chapter (other than in article five or article five-B) to a foreign bank, foreign corporation or foreign banking corporation shall be deemed to be a reference to an out-of-state bank authorized to open, occupy and maintain a branch pursuant to the provisions of this article. Notwithstanding the foregoing, (a) the provisions of sections [202-h]…...and ...of this chapter shall apply with equal force and effect to out-of-state banks authorized to open, occupy or maintain branches pursuant to the provisions of this article... "
Notably, BL 225-b, which expressly provides for those sections of Article V which are deemed to apply to out-of-state "foreign" banks, does not include NYBL 200(3), which is the section that requires foreign banks to appoint the Superintendent as attorney to receive service of process. Therefore, respectfully, we do not concur with your reading that Article V should (should compel the superintendent to receive process for out-of-state banks (or that it should have compelled [---] Bank to have appointed the Superintendent as its attorney-in-fact).
I am returning herewith the copies of the summons and complaint, as well as the check, delivered to the Banking Department.I trust that the foregoing is helpful.
- "Process" for purposes of NYBL 34 includes any writ, summons, petition or order where by any suit, action or proceeding shall be commenced.
- The older reference to the term "foreign bank", covering in theory both out-of-state domestic banks as well as out-of-state foreign banks, remains in Article V. While in theory there might be a unique domestically-chartered entity that could obtain a license under the provisions and conditions of Article V, in practice this has rarely if ever occurred; and Article V certainly does not govern those domestically-chartered entities governed by the more recently-enacted Article V-C.