Separate Entity Rule & Restraining Notices | NY Debt Collection Lawyer

New York State Courts have made many recent pronouncements confirming the vitality of the Separate Entity Rule as it applies to restraining notices served upon banks. The Separate Entity Rule provides that each bank is a separate entity and that in order to reach a particular bank account of the judgment debtor, the branch of the bank where the account is maintained must be served. There is an exception to the separate entity rule where the service of a restraining notice is upon a bank's main branch. In such a case, serving a restraining notice upon a bank's main branch is adequate to reach all bank accounts in New York State no matter where the account is located in the state. In other words, in limited circumstances, all bank accounts of a judgment debtor will be restrained where the restraining notice is served on the bank's main office in New York State. The bank branches are considered connected to the main office by high-speed computers and/or under a centralized control, and in that case, the restraining notice will be effective against all branches of that bank in that jurisdiction.

Contrariwise, branches of a domestic New York bank located in other states or in foreign countries would not be subject to a restraint served upon a main office of a bank in New York State or other branches in New York State.

A lesson to learn when enforcing a judgment through the use of a restraining notice served upon banks is to serve the main office of the bank in the jurisdiction where the judgment debtor has his/her/its account or the actual branch where the account is located.