New York Banking Law

ARTICLE XIII-C
STATE TRANSMITTER
OF MONEY INSURANCE FUND

       Section 
        653. Definitions.
        654. Purpose of the fund.
        655. Maximum amount of insurance.
        656. Claims against the fund.
        657. Payments to the fund.
        658. General powers of the fund; administration of the fund.
        659. Rules and regulations.

  S 653. Definitions. 1. "Claimant", when used in this article, means a
purchaser or holder of a New York instrument.
  2. "Federal insuring agency", when used in this article, means the
Federal Deposit Insurance Corporation or the National Credit Union
Administration.
  3. "Fund", when used in this article, means the state transmitter of
money insurance fund as provided for in this article.
  4. "Holder", when used in this article, means a person, other than a
purchaser, who is either (i) in possession of a New York instrument and
is the named payee thereon, or (ii) in possession of a New York
instrument issued or endorsed to him or bearer or in blank; provided,
however, that no person who is in possession of a lost, stolen or forged
New York instrument or who is in possession of a New York instrument by
virtue of the fact that he is the surety on a bond required by
subdivision one of section six hundred forty-three of this chapter or is
a receiver or trustee, whether in bankruptcy or otherwise, for an
uninsured transmitter of money shall be deemed a "holder" thereof.
  5. "Insured transmitter of money" means a transmitter of money whose
New York instruments are insured by a federal insuring agency.
  6. "New York instrument" means a money order, check, draft or other
instrument or document for the transmission or payment of money, or
which evidences an obligation for the transmission or payment of money,
or which evidences the purchase or deposit of funds for the purchase of
any such instrument or document, sold in New York, but shall not include
a New York traveler`s check.
  7. "Purchaser" means a person who buys or has bought a New York
instrument from an uninsured transmitter of money or agent thereof.
  8. "Transmitter of money" means a licensee, as such term is defined in
subdivision two of section six hundred forty of this chapter, a bank,
trust company, private banker, savings bank and savings and loan
association, the savings and loan bank of the state of New York, a
credit union and any investment company which either directly or through
agents or sub-agents transacts the business in this state of selling or
issuing New York instruments.
  9. "New York traveler`s check" means an instrument identified as a
traveler`s check on its face or commonly recognized as such, issued in a
whole multiple of ten dollars if under one hundred dollars, or in a
whole multiple of one hundred dollars, with a provision for a specimen
signature of the purchaser to be completed at the time of purchase and a
counter-signature of the purchaser to be completed at the time of
negotiation, sold in New York.
  10. "Uninsured transmitter of money" means a transmitter of money
other than a banking organization, whose New York instruments are
uninsured by a federal insuring agency.

  S 654. Purpose of the fund. There is hereby created a fund to be known
as the "state transmitter of money insurance fund". The purpose of the
fund shall be to insure the New York instruments of uninsured
transmitters of money which, by reason of insolvency, bankruptcy or
other inability to pay, have defaulted in making payment on their New
York instruments, whether such default has occurred prior to or after
the effective date of this act.

  S 655. Maximum amount of insurance. 1. Subject to the provisions of
subdivisions two and three of this section, the maximum amount of
insurance that any claimant shall be entitled to shall be determined by
the superintendent after taking into account the amount of claims, the
amount of the fund, including the authority of the fund to make
assessments pursuant to section six hundred fifty-seven of this article,
and any claim for recovery which the fund would have pursuant to the
provisions of section six hundred forty-three of this chapter.
  2. No insurance shall be paid on any New York instrument payable for
an amount in excess of one thousand dollars, other than those New York
instruments issued for the purpose of paying utility bills.
  3. The maximum amount of insurance which any claimant shall be
entitled to shall be determined as follows:
  a. If the claimant is a purchaser, the maximum amount of insurance
which such purchaser shall be entitled to on all insured New York
instruments purchased by said purchaser shall be five thousand dollars.
  b. If the claimant is a holder, the maximum amount of insurance which
such holder shall be entitled to shall be the aggregate of the amounts
which would have been due to the purchasers of the insured New York
instruments held by the holder, had the instruments remained in the
possession of the purchasers, rather than the holder.

S 656. Claims against the fund. 1. If an uninsured transmitter of
money has defaulted in making payment on any of its New York
instruments, the superintendent shall give notice of such default to
purchasers and holders of such instruments.  Such notice may be given by
means of publication in such newspaper or newspapers as the
superintendent may direct and by such other means, if any, as the
superintendent may determine to be reasonable and necessary under the
circumstances.  The determination of the superintendent as to the means
of notice shall be conclusively presumed reasonable if notice is
published in such newspaper or newspapers for five consecutive days.
Such notices shall request purchasers and holders of such instruments
who wish to file claims against the fund to present such claims to the
superintendent and to file proper proof thereof within the period of
time set forth in the notice and at a place specified therein. Such
notice may limit the period of time within which claims may be filed to
a period of time no less than ten business days from the final date of
notice.  Claimants shall file their claims in the form and manner
prescribed by the superintendent and shall make proof thereof and of the
loss actually suffered by such claimants to the satisfaction of the
superintendent. The superintendent shall examine the claims so filed,
determine the amount due upon such claims and certify, in writing, the
amount due each claimant, whereupon payment by the fund to the claimant
shall be made as provided for in this article. In any case where the
superintendent is not satisfied as to the allowability of a claim or if
he has notice of an adverse claim with respect to such New York
instrument, he may require the final determination of a court of
competent jurisdiction before certifying such claim. Whoever, for the
purpose of obtaining payment on any insured New York instrument, or the
payment of any claim, makes any statement knowing it to be false, or
willfully overvalues any claim, shall be guilty of a Class A
misdemeanor.

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Article 13-C, Continued . . .

2. The payment by the fund to the claimant shall constitute an
assignment, by operation of law, of all rights which the claimant has
with respect to the New York instrument, including all rights, claims
and interests in property which the claimant could have asserted against
the transmitter of money or its property or otherwise, and all
recoveries which he would have been entitled to under the provisions of
section six hundred forty-three of this chapter, provided that if any
portion of such New York instrument is uninsured by virtue of the fact
that it exceeds the maximum amount of insurance provided for by section
six hundred fifty-five of this article or otherwise, the claimant shall
retain all of his rights with respect to the uninsured portion of such
instrument. 
	
S 657. Payments to the fund. In the event the fund has borrowed any
monies from the property and liability insurance security fund pursuant
to the provisions of section six hundred fifty-eight of this chapter,
and has any debt outstanding thereto, or in the event an uninsured
transmitter of money is declared, or declares itself, insolvent or
defaults on its New York instruments, the fund shall levy an assessment
upon each uninsured transmitter of money. The amount of such assessment
shall be determined by the superintendent provided, however, that each
uninsured transmitter of money shall be assessed ratably, in proportion
to the average of the dollar amounts of the New York instruments issued
by such uninsured transmitter of money outstanding at the end of each
calendar quarter for the calendar year preceding that in which the
assessment is made, and provided, further, that no such assessments
shall be levied once the net value of the fund shall equal such amount
as the superintendent shall have determined to be necessary to protect
the interests of the purchasers and holders of New York instruments. In
making his determination, the superintendent shall consider the scope of
the risk covered by the fund, the expenses incurred or expected to be
incurred by the fund, the amount of any loans and advances to the fund,
and the interest thereon.
  In no event shall the total amount so assessed in any one year against
any uninsured transmitter of money pursuant to this section exceed two
per centum of the New York instruments of such uninsured transmitter of
money which were outstanding at the end of the calendar year preceding
that in which such assessments are made or one hundred twenty-five
thousand dollars, whichever is less. The net value of the fund shall be
determined by deducting from the value of the assets of the fund the
aggregate actual and estimated liabilities of the fund as determined by
the superintendent.

  S 658. General powers of the fund; administration of the fund.  1. The
fund shall have the power to borrow money from the property and
liability insurance security fund created by section seven thousand six
hundred three of the insurance law on such terms and conditions as the
superintendent may authorize pursuant to section seven of chapter one of
the laws of nineteen hundred seventy-seven to the extent necessary to
protect the interests of the purchasers and holders of New York
instruments, and to pledge the assets of the fund or any portion thereof
as security for such borrowings.

  2. The fund shall have the power to accept contributions or donations
to the fund from any source. The fund shall also have the power to
pursue, realize upon, compromise and otherwise dispose of all rights and
remedies of claimants assigned to the fund pursuant to the provisions of
this article. The proceeds of all such rights and remedies and any other
amounts which the fund may receive from any source shall constitute a
part of the assets of the fund.
  3. The fund created by this article shall be separate and apart from
any other fund and from all other state monies, and the faith and credit
of the state of New York is pledged for its safekeeping. The
commissioner of taxation and finance shall be the custodian of the fund
and all disbursements from said fund shall be made by the commissioner
of taxation and finance upon vouchers signed by the superintendent or
his designated deputy. The monies of said fund may be invested by the
commissioner of taxation and finance only in obligations of the United
States or of this state and in interest-bearing certificates of deposit
for a bank or trust company located and authorized to do business in
this state, or of a national bank located in this state, secured by a
pledge of direct obligations of the United States or of the state of New
York in an amount equal to the amount of such certificate of deposit.
The commissioner of taxation and finance may sell any of the obligations
or certificates of deposit in which said fund is invested, if advisable,
for its proper administration or in the best interests of said fund.
  4. The expense of administering the fund shall be paid out of the
fund. Prior to the first days of January, April, July and October, there
shall be submitted to the director of the budget for approval an
estimated budget of expenditures for the succeeding three months. There
may not be expended for the purpose of administering the fund more than
the amounts as authorized by the director of the budget. The
superintendent shall serve as administrator of the fund without
additional compensation, but may be allowed and paid from the fund
expenses incurred in the performance of his duties in connection with
the fund.  The compensation of those persons employed by the
superintendent, within the amounts approved by the director of the
budget, shall be deemed administration expense payable from the fund.
The superintendent shall make an annual report of the receipts to and
disbursements from the fund, including the cost of administration of the
fund, which report shall be made available to each uninsured transmitter
of money who has made payments into the fund during such year and to any
other person having an interest in the fund.

  S 659. Rules and regulations. The superintendent is hereby authorized
and empowered to make such rules and regulations as may in his judgment
be necessary or appropriate for the enforcement of this article.