New York State Bankers Ass'n v. Albright

• Decision Date: 29 December 1975
• Citation: 343 N.E.2d 735,38 N.Y.2d 430,381 N.Y.S.2d 17
• Parties: , 343 N.E.2d 735 NEW YORK STATE BANKERS ASSOCIATION by Kenneth E. Buhrmaster, as President, et al., Respondents, v. Harry W. ALBRIGHT, Jr., as Superintendent of Banks, et al., Appellants.
• Court: New York Court of Appeals Court of Appeals

Page 17

381 N.Y.S.2d 17

38 N.Y.2d 430, 343 N.E.2d 735

NEW YORK STATE BANKERS ASSOCIATION by Kenneth E. Buhrmaster as President, et al., Respondents, v. Harry W. ALBRIGHT, Jr., as Superintendent of Banks, et al Appellants.

Court of Appeals of New York.

Dec. 29, 1975.

Louis J. Lefkowitz, Atty. Gen. (Grace K. Banoff and Ruth Kessler Toch, Albany, of counsel), for Harry W. Albright, Jr., appellant.

Amalya L. Kearse, Martin E. Lowy, Philip A. Lacovara, Washington, D.C., and Howard F. Hart, New York City, for Erie County Savings Bank and another, appellants.

Stephen H. Kelly, George W. Myers, Jr., and Christian G. Koelbl, III, Buffalo, for respondents.

Jacquelin A. Swords, Stuart D. Root and Earl H. Nemser, New York City, for the Savings Banks Ass'n of New York State, amicus curiae.

BREITEL, Chief Judge.

In this action representative commercial banks seek declaratory and injunctive relief against competing representative savings banks and the Superintendent of Banks. Plaintiff commercial banks challenge the legality under the State Banking Law of the so-called 'NOW' (Negotiable Order of Withdrawal) account, a form of checking account service offered by many savings banks under regulations of defenda Superintendent of Banks. Upon an agreed statement of facts submitted directly to the Appellate Division (CPLR 3222), judgment was unanimously rendered in favor of the commercial banks declaring that savings banks had no power to offer NOW accounts and that the superintendent's regulations were null and void, and enjoining the savings banks from offering such accounts.

The issue is whether under the Banking Law, or otherwise, savings banks may offer to their customers so-called NOW accounts.

There should be an affirmance. Nothing in the Banking Law authorizes savings banks to provide checking account services. Indeed, the Legislature has repeatedly rejected proposed legislation to empower savings banks to offer checking account services. True, the Banking Law authorizes savings banks to provide passbook-less accounts and, by unquestioned practice, to permit depositors to make withdrawal orders payable to, or to the order of, third parties (§ 238, subd. 6; § 234, subd. 1). While the statutes may appear literally 'unambiguous' on their face, the absence of ambiguity facially is never conclusive. Sound principles of statutory interpretation generally require examination of a statute's legislative history and context to determine its meaning and scope.

The legislative history of the applicable statutes in context establishes that the Legislature did not intend to authorize savings banks to offer checking account services, a traditional function of commercial banks. Although now largely attenuated but still relevant, there have been public and banking policies separating the functions of commercial and savings banks. That savings banks ought to be permitted to offer checking account services, for which there is considerable local and national support, should be addressed to the Legislature and not to the courts.

The facts have been fully stated in the opinion by Mr. Justice Mahoney at the Appellate Division and therefore are restated only briefly.

Since 1974 New York savings banks have offered NOW accounts to their customers. A NOW account is a noninterest or nondividend bearing account in which the savings bank depositor, periodically and for that purpose, makes deposits against which the depositor draws negotiable drafts payable to a third party. No passbook is issued to the customer in connection with the NOW account (for a discussion of NOW accounts see Comment, The Negotiable Order of Withdrawal (NOW) Account: 'Checking Accounts' for Savings Banks?, 14 Boston Coll.Ind. & Comm.L.Rev. 471).

Manifestly and unabashedly, the NOW account is intended to be the savings bank equivalent of a commercial bank checking account. Indeed, widespread advertising by the savings banks enlarges on the similarity between NOW accounts and commercial checking accounts. There is, however, a difference which might in unusual financial circumstances be significant. Unlike a check drawn on a commercial bank, which is unconditionally payable on demand, payment of a negotiable order of withdrawal, in form a draft payable on demand, may be delayed by a savings bank for 60 days (Banking Law, § 238, subd. 2).

Negotiable orders of withdrawal are generally deposited for collection by the payee or transferee in his own bank, and are presented, through a commercial bank by arrangement with the drawee savings bank, to the drawee savings bank for payment. The savings bank then charges the depositor's NOW account to pay the order. A monthly statement, much like a commercial bank's checking account statement, is furnished to its NOW depositor by the savings bank.

Explicit detailed authorization for NOW accounts is found in the regulations of the Superintendent of Banking (3 NYCRR Part 301). Issued by the superintendent on May 29, 1974, these regulations govern the offering by savings institutions of 'non-interestbearing, no-pass book * * * 'NOW accounts'.' (3 NYCRR 301.1.) Among other things, the regulations prescribe operational and check-clearing details, regulate advertising of the NOW account service, and impose reserve requirements equal to those imposed with respect to demand deposit checking accounts.

The commercial banks challenge the legality of the savings banks' NOW accounts and the validity of the superintendent's regulations, for lack of statutory authorization. In the absence of such authorization, the commercial banks contend that the historical purposes of and the functional distinctions between savings banks and commercial banks, closely preserved by statute, foreclose the savings banks from providing NOW accounts.

Subdivision 1 of section 234 of the Banking Law empowers a savings bank to 'receive and pay deposits' and to exercise the incidental powers necessary to conduct its business. For many decades savings banks have permitted their depositors to make withdrawal orders payable to third parties or to bearer. The third party would, however, be required to present the depositor's passbook to collect the amount of the order. There were some exceptions, but they do not merit treatment in this discussion.

In 1965, subdivision 6 of section 238 was added to the Banking Law (L.1965, ch. 804, § 2). It provides: 'Subject to any regulations and restrictions prescribed by the superintendent of banks, a savings bank may accept deposits without the issuance of a passbook in connection therewith, and may issue such other evidences of its obligation to repay such deposits as may be appropriate to safeguard the interests of the depositors and of the savings bank.'

With the passage of subdivision 6 of section 238, the savings banks reason, the passbook requirement was eliminated and hence they could, subject to the superintendent's regulations, lawfully offer NOW accounts to their customers. Notably, the statutory change is hardly complete or embracive of its subject matter (compare the statute considered in Matter of Sigety v. Hynes, 38 N.Y.2d 260, 379 N.Y.S.2d 724, 342 N.E.2d 518, and the standards of interpretation there applied).

It has been said often, but with less than meticulous analysis, that an 'unambiguous' statute permits of no inquiry into legislative intention (see, e.g., McCluskey v. Cromwell, 11 N.Y. 593, 601; accord, e.g., Matter of Roosevelt Raceway v. Monaghan, 9 N.Y.2d 293, 304, 213 N.Y.S.2d 729, 734, 174 N.E.2d 71, 74, app. dsmd. 368 U.S. 12, 82 S.Ct. 123, 7 L.Ed.2d 75; see, generally, McKinney's Cons.Laws of N.Y., Book 1, Statutes, § 120). Absence of facial ambiguity is, however, rarely, if ever, conclusive. The words men use are never absolutely certain in meaning; the limitations of finite man and the even greater limitations of his language see to that. Inquiry into the meaning of statutes is never foreclosed at the threshold; what happens is that often the inquiry into intention results in the conclusion that either there is no ambiguity in the statute or that for policy or other reasons the prior history will be rejected in favor of the purportedly explicit statement of the statute (see, e.g., Barton v. Lavine, 38 N.Y.2d 785, 381 N.Y.S.2d 867, 345 N.E.2d 339). Then it is often said with more pious solemnity than accuracy, that the clarity of the statute precludes inquiry into the antecedent legislative history. As the Supreme Court stated in United States v. American Trucking Ass'ns, 310 U.S. 534, 543--544, 60 S.Ct. 1059, 1063, 84 L.Ed. 1345. 'There is, of course, no more persuasive evidence of the purpose of a statute than the words by which the legislature undertook to give expression to its wishes. Often these words are sufficient in and of themselves to determi the purpose of the legislation. In such cases we have followed their plain meaning. When that meaning has led to absurd or futile results, however, this Court has looked beyond the words to the purpose of the act. Frequently, however, even when the plain meaning did not produce absurd results but merely an unreasonable one 'plainly at variance with the policy of the legislation as a whole' this Court has followed that purpose, rather than the literal words. When aid to construction of the meaning of words, as used in the statute, is available, there certainly can be no 'rule of law' which forbids its use, however clear the words may appear on 'superficial examination.' The interpretation of the meaning of statutes, as applied to justiciable controversies, is exclusively a judicial function. This duty requires one body of public servants, the judges, to construe the meaning of what another body, the legislators, has said. Obviously there is danger that the courts' conclusion as to legislative purpose will be unconsciously influenced by the judges' own views or by factors not considered by the enacting body. A lively appreciation of the...