132 N.Y.S. 905 | N.Y. Sup. Ct. | 1911
The Union Bank as a State bank is one of the corporations subject to be inspected by the Superintendent of Banks. Before August, 1908, it had been known as the Mechanics and Traders’ Bank. It was then reopened as the Union Bank, under the presidency of Mr. Grout, who remained its president on April 5, 1910, when the State Superintendent of Banks closed it and took possession of its property. In the course of examining the bank’s affairs, the Deputy Superintendent of Banks is holding public hearings at .which witnesses are called, sworn and questioned. When Mr. Grout’s presence was suggested, he first offered to appear voluntarily. Later, he asked to be informed as to the proposed line of inquiry, with an opportunity to refresh his recollection by consulting the accounts of the bank, as to details that he could not carry in mind; but when certain differences arose, it was decided that the authority of the Bank Superintendent to call on Mr. Grout to testify should be tested in court.
This application raises two points: first, the right of the Banking .Department to conduct this inquiry; and, second, the constitutionality of Code section 855, enforcing the attendance of defaulting witnesses.
The wording of section 8 of the Banking Law gives power to the Superintendent to investigate the affairs of a bank. The Superintendent and an examiner under him may put persons under oath so that the information thus to be obtained shall have the sanction of sworn testimony. It is
When the legislative intent is. considered, it must be borne in mind that the witness now summoned is not an outsider, a depositor, or merely a stockholder, but the official head of the bank. And, even though the bank books andr assets are in the custody of the Banking Department, the corporation has not been dissolved, but maintains its corporate charter existence, with its directors and president still in office. Lafayette Trust Co. v. Higginbotham, 136 App. Div. 747. Could the Legislature have intended that the exércise of a right under section 19 to take possession and temporarily assume charge of the bank’s property—a step often required in an emergency — should thereby stop and cut off the power to investigate the bank officers and employees as to the concerns of the bank and the conduct and administration of its officers up to the day of closing ? 'Such an interpretation would defeat the purpose of the law, as a .Superintendent might then naturally delay his taking possession, if that step, otherwise necessary, was at once to tie
Hence, notwithstanding the closing of the Union Bank, the Superintendent of Banks is still empowered to investigate its concerns, the connection of its officers and directors, by testimony obtained under the administration of an oath.
The affidavit of the Superintendent óf Banks that Mr. Grout’s testimony is material and necessary for the purposes of such investigation can hardly be questioned in view of Mr. Grout’s official position, from which he has not been ousted by the temporary closure of the bank. It also appears that the official reports of Mr. Grout are the subject of inquiry before the Superintendent. Hence, the Superintendent of Banks could issue a subpoena under Code section 854 to compel Mr. Grout’s appearance.
Code section 855 provides for enforcing such a subpoena where a witness is called before an officer, person or body which is not a court. It directs that in such case any judge may issue a warrant to the sheriff to compel the appearance of such defaulting witness.
I cannot discover any ground to hold this familiar provision unconstitutional. Under it, subposnas have been en
The granting of this application cannot deal with objections that might be made to questions touching the affairs of the bank before Mr. Grout became an officer or inquiries into his private affairs, which involve questions under section 856 of the Code. Hence, I think that Mr. Grout was required to obey this subpoena and that" a warrant should issue to cause his attendance. But this applies only to such . an examination as the State authorizes ■— that is, one conducted by the Superintendent of Banks under his authority.
In order, however, to afford an opportunity for a voluntary compliance with the subpoena or to review this order on appeal, the warrant will not issue for five days.
Ordered accordingly.