Alva State Bank and Trust Co. v. Dayton, 70097
| Decision Date | 26 April 1988 |
| Docket Number | No. 70097,70097 |
| Citation | 755 P.2d 635,1988 OK 44 |
| Parties | , 1988 OK 44 ALVA STATE BANK AND TRUST COMPANY, Petitioner, v. The Honorable Michael R. DAYTON, Associate District Judge, Respondent. |
| Court | Oklahoma Supreme Court |
Alva State Bank seeks to prohibit the trial judge from enforcing his discovery order compelling Bank to produce and disclose loan records of customers who are not parties to the underlying lawsuit. We assume original jurisdiction and, for reasons set forth below, issue writ of prohibition preventing any further proceeding under this discovery order.
This action arose out of a suit on promissory notes and mortgage by petitioner against Beulah Sperry and others to foreclose the mortgage and set aside an allegedly fraudulent conveyance. The defendants argued that Sperry was only an accomodation maker and that the notes and mortgage were obtained by fraud and misrepresentation. Defendants filed a counterclaim against the bank sounding in fraud.
To obtain proof of a common scheme or design in support of their claim of fraud, defendants sought to compel Bank to produce records of other customers who had been required to secure additional capital for existing loans. These customers are not parties to this action. The disclosure of their personal financial records would be without notice to them and without their consent.
The order challenged here provided that the bank should produce for in camera inspection by the court, loan files of non-party borrowers covering real property where the bank required additional collateral after January 1, 1985. At the time of inspection, the trial court will determine the relevancy of any inFormation therein and then release the relevant documents to the attorneys for their use and information.
These records are clearly confidential and Bank's customers have a reasonable expectation of privacy in them.
Our Financial Privacy Act, 6 O.S.1981, §§ 2201, et seq., sets out the exclusive lawful means of obtaining records such as these. The legislatively announced public policy of that Act, found in the short title, § 2201, is to "maintain the privacy and confidentiality of the records of customers of financial institutions."
A financial institution, such as this petitioner, is restricted as to the circumstances under which it may release records. Section 2203 provides:
Defendants contend that because the underlying litigation involves private parties, the Financial Privacy Act is inapplicable as there is no "government authority" attempting to obtain the records. For this same reason, respondents argue that no expectations of privacy exist here or are protected by the constitution.
In so arguing, defendants misconstrue the reality of these circumstances, for it is precisely a government authority--a trial judge--whose order places these records in jeopardy. As elsewhere, "government authority" in this act, § 2202(c), means:
"... any agency, board, commission or department of the State of Oklahoma, or any officer, employee, representative, or agent thereof." (Emphasis added)
See, Art. 4, Okla. Const. § 1. See also, Lugar v. Edmondson Oil Co., 457 U.S. 922, 102 S.Ct. 2744, 73 L.Ed.2d 482 (1982); Sniadach v. Family Finance Corp., 395 U.S. 337, 89 S.Ct. 1820, 23 L.Ed.2d 349 (1969).
Section 2204 sets forth the proper, lawful and exclusive procedure for obtaining a customer's bank records. Compliance with that procedure requires properly issuing subpoenas, giving notice to customers and affording them an opportunity to be heard to protest the disclosure of their records.
In ordering the production of records in a manner other than that provided by statute, the trial court acted in a manner not authorized by, and contrary to, law. Respondent is attempting to exercise judicial power not granted by law and lacks the authority to enter the challenged order.
ORIGINAL JURISDICTION ASSUMED. WRIT ISSUE.
DOOLIN, C.J., disqualified.
The Oklahoma Financial Privacy Act, 6 O.S.1981 § 2201, et. seq., provides the procedure by which a governmental authority, in this case a judge, may require production of bank records. I agree with the majority that these records are clearly confidential, and that bank customers who are not parties to the lawsuit have a reasonable expectation of privacy in them. (These are private citizens whose records have been requested for inspection solely on the basis that they chose to do business with Alva State Bank and Trust Company.)
Congress has specifically proscribed governmental access to a person's financial records except under limited circumstances. 1 The Right to Financial Privacy Act limits government access to financial records of any customer from a financial institution unless: (1) the customer authorizes the disclosure; (2) the records are disclosed in response to an administrative subpoena or summons; (3) the records are disclosed in response to a search warrant; (4) disclosed in a judicial subpoena; or (5) in response to a formal written request. 2 Even records subject to a judicial subpoena are limited to subpoenas authorized by law where the records are part of a legitimate law enforcement inquiry, and the subpoena has been served upon the customer. 3
The Oklahoma Legislature has similarly limited the disclosure or release of financial records through the Oklahoma Financial Privacy Act. 4 However, there is a more fundamental source of protection than the Financial Privacy Act--the Okla. Const. art. 2, § 30. 5
Historically, the power to search was used to restrict the power of the English press, and in 1538, broad search powers were bestowed by the Star Chamber, and later Parliament, to seize published materials. It was not until an English justice was impeached for issuing general warrants, that Parliament, in 1695, recognized that the public had the right to be protected. However, judicial recognition of this limitation on the abuse of general warrants, was not forthcoming until Wilkes v. Wood, 19 Howell's State Trials 1153 (1763) and Entick v. Carrington, 19 Howell's State Trials 1029 (1765). In Carrington, the victim of such a search brought a trespass action. The court, refusing to find in favor of the Crown, held that to do so would subject every secret cabinet and bureau in the kingdom to arbitrary search and seizure. 6
Traditionally, Oklahomans have zealously guarded their right to privacy and their protection against unreasonable searches or seizures. 7 The Honorable J.K. King of Newkirk, President Protempore of the Oklahoma Constitutional Convention acknowledged that the reason for inserting a bill of rights into the constitution was: "to protect the individual in the enjoyment of his life, his liberty and his property." 8 Thereafter, the Convention adopted art. 2, § 30 guaranteeing to the people of Oklahoma the right to be secure in their papers. It is precisely the type of invasion at issue here that this provision was intended to prohibit.
Before being named to the United States Supreme Court, Justice Field described the importance of the right to be free from the unwarranted invasion into one's personal papers:
9
States, in the exercise of their sovereign power, may afford more expansive individual rights and liberties than those conferred by the United States Constitution. 10 State statutes or state constitutions which afford greater rights than the federal constitution must be determined by following state law. It is only when state law provides less protection that the question must be determined by federal law. The people of this state are governed by the Oklahoma Constitution, and when it grants a right or provides a principle of law or procedure beyond the protections supplied by the federal constitution, it is the final authority. 11 This is so even if the state constitutional provision is similar to the federal constitution. The United States Constitution provides a floor of constitutional rights--state constitutions provide the ceiling. 12
In Peterson v. Idaho First Nat'l Bank, 83 Idaho 578, 367 P.2d 284, 92 A.L.R.2d 891 (1961), the Idaho Supreme Court recognized the right of a customer to be secure in his/her business papers as one of the inherent and fundamental precepts of the banking relationship. In reviewing decisions by various courts, the Court recognized the Fourth Amendment's guarantee of "the right of the people to be secure in their ... papers ..." and that this right extended to the inviolate status of bank accounts against unreasonable search. 13
The Idaho opinion cites a number of cases which have come to the same result relying either upon: constitutional guarantees; 14 the existence of a fiduciary relationship; 15 15 the existence of an implied contract between a...
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