I. INTRODUCTION
From time to time, questions arise as to the nature of the bank and customer relationship, contract rights, and access to safety deposit boxes located in Nebraska banks. The purpose of this brief article is to acquaint the Compliance Handbook user with the general law in Nebraska.
II. NEBRASKA STATUTE
Section 8-501 of the Nebraska statutes addresses the permissible relationships that may be created between the customer and the bank in the case of a lessor-lessee contract, certain limitations of liability and defenses. The section reads in full as follows:
8-501. Limitation of liability by contract; lease agreement; limitation of amount; assumption of risk; limitation of use; burden of proof. Any corporation, partnership or person engaged in the business of maintaining and operating safety deposit boxes for storage or deposit for safekeeping of securities or valuables within this state may, in any written lease or contract governing or regulating the use of any such box or boxes by any user or customer, create either the relationship of lessor and lessee or the relationship of bailor and bailee, and to the relationship so created the general laws of the state applicable thereto shall apply, except that where the relationship of lessor and lessee is created the liability of the lessor may be limited in any or all of the following particulars:
(1) By limitation of liability for any loss to the lessee for an on account of negligence on the part of the lessor, his or its agents or servants, to such maximum amount as may be stipulated, not less, however, than three hundred times the annual rental of such box or boxes;
(2) By limitation of the use of such safety deposit box or boxes to exclude therefrom money, currency, jewelry or securities payable to the bearer and other tangible property of value, and choses in action, are placed therein by the lessee, the lessee shall assume the entire risk of loss thereof or damage thereto without any liability on the part of the lessor for any such loss or damage in any event or for any cause whatsoever;
(3) By stipulation by the parties that evidence tending to prove that property left in any such safety deposit box upon the last entry by the lessee or his authorized agent or any part thereof was found missing upon subsequent entry shall not raise any presumption that the same was lost by any negligence or wrong doing on the part of the lessor, his or its agents or servants, or to put upon the lessor of such safety deposit box the burden of proof that such alleged loss was not the fault of the lessor.
Source: Laws 1941, c. 8, §1, p. 77; C.S.Supp., 1941, §8-801.
Section 8-502 governs applicable law in establishing the liabilities of contracting parties. The section states:
8-502. Liability; determination; law applicable. The liabilities of the parties to any such contract shall in all other respects be governed either by the law applicable to lessor and lessee or the law applicable to bailor and bailee, whichever basis is stipulated in the contract between the owner of the safety deposit box and the user or customer thereof.
Source. Laws 1941, c.8, §2, P. 78, C.S.Supp., 1941, §8-802.
III. NATURE AND RIGHTS OF RELATIONSHIP
Section 8-501 allows the bank to specify the relationship with its customer in a written contract as either bailor/bailee or lessor/lessee. If the bank chooses the lessor/lessee relationship, certain limits of liability will apply (See, § 8-501(1), (2) and (3) and § 8-502). Should the bank choose the bailor/bailee relationship a more substantial burden on the bank may arise.
Particular rights and obligations of the bank and its customer may be contracted and the specific contracts used by the bank should be occasionally reviewed. A joint contract with individual access rights allows any joint party to enjoy access to the safe deposit box without the knowledge or presence of other joint parties. In the case of contracts with corporate customers, a copy of the corporate resolution should be maintained on file with the names of those persons who have authorized access. Access, of course, is limited to those authorized, and if appointed, designated deputies. A deputy is not an owner but is permitted access under the contract’s terms, unless such authority is terminated by appropriate notice or the death of the person appointing the deputy. A “power of attorney” should be distinguished from the “deputy.”
Generally, the contract will provide for liability limitations as well as procedures to be followed in case of death or garnishment, attachment or other court order.
IV. OFAC SDN LIST IMPLICATIONS
The bank should not provide a service for an entity or individual listed on the Office of Foreign Assets Control (OFAC) SDN list. The OFAC SDN list should be checked prior to renting a safe deposit box. If the bank has already rented the box and later determines that the customer is on OFAC’s SDN list, the bank must freeze the box, deny access to the customer and file a report of blocked property with OFAC.