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Banking Interpretations

NYSBL 332

Memorandum


To: Catie Marshall, Deputy Superintendent, Communications and Media Relations
Edward B. Kramer, Deputy Superintendent – Consumer Services Division

From: Rosanne Notaro Harry C. Goberdhan

Date: March 15, 2005

Subject: Safe Deposit Boxes


Issue

 Is there a legal requirement that bank safe deposit boxes be constructed of metal?

Recommendation

We have found no requirement in statutes and accompanying legislative history, prior Legal Division opinions, nor case law that safe deposit boxes be constructed of metal. However, the use of metal or another highly durable material may be most prudent, considering generally: (i) Banking Law §332; (ii) opinion dated August 15, 1973 issued by the Department; and ruling in Goncalves v. Regent Intl. Hotels, 58 NY2d 206.

Background

The Department received an inquiry regarding whether there is a legal requirement, or whether there has been any prior legal guidance, concerning whether safe deposit boxes must be constructed of metal. It is alleged that a certain New York State-chartered bank rents safe deposit boxes that are constructed of a material other than metal.

The issue was never addressed by the Department before.

Reasoning

Safe deposit box is defined by Banking Law §332 as a "vault, safe deposit box or other receptacle." Note that under the statute there is no requirement that a safe deposit box be made of metal. Nor does the legislative history provide any guidance in this regard.

Nonetheless, in. an attempt to address the issue, one can ask the following question: "Would a bank be held liable to a safe deposit box holder if it did not use a metal deposit box and the contents of the box were destroyed by fire or stolen?"

In an opinion by the Department, dealing with a bank's liability to the holder of a safe deposit box, dated August 15, 1973, Assistant Counsel Sandra S. Stern concluded there exists a relationship of "bailor and bailee for hire between the customer and the bank." Assistant Counsel Stern continued "a bank could be held liable for ordinary negligence in the event of a loss." Counsel Sandra did not however, provide a test or explanation as to what constitutes "ordinary negligence" under these circumstances.

For a possible answer, we will turn to the ruling in Goncalves v. Regent Intl. Hotels, 58 NY2d 206 where the court, in determining an appropriate definition for "safe," held that "there must be taken into account the risks that commonly threaten the type of property ... Fire and theft, of course, come immediately to mind." The court further reasoned that "a 'safe' should be a receptacle that, under the circumstances, provides adequate protection against fire, theft, and other reasonably foreseeable risks."

Although the defendant in Goncalves was a hotel, a parallel could be drawn to the issue at hand because the plaintiff in that case had placed valuables for safe keeping in a safe deposit box, provided by the hotel, and they were stolen.

Note that, in light of today's technology, a bank might be able to provide a safe deposit box, not made of metal, which could possibly guard against reasonably foreseeable risks such as fire or theft. In the event the bank is able to provide such an alternative, then such alternative should be acceptable.

In light of the question raised, it would be prudent for the Department to follow up with the bank in question, in order to ascertain further details about the construction of their safe deposit boxes.

Noted:_______
SAK

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