Security Trust & Savings Bank v. Matson

Plaintiff appeals from a judgment denying recovery in an action instituted by it to recover damages from a notary public and the surety on her official bond. The record discloses the following pertinent facts:

For approximately two and one-half years prior to December 27, 1928, one Lewis H. Homer was an attorney-in-fact for respondent Indemnity Insurance Company of North America in the city of San Diego. During the month of December, 1928, the said Lewis H. Homer sought to procure from appellant the loan of $15,000 and offered to secure repayment of the loan by depositing with appellant a bond executed by the Indemnity Insurance Company of North America guaranteeing repayment of the loan. The deal was consummated and the loan made. The bond which was thus given purported to have been executed by Gordon L. Eby, also an authorized agent and attorney-in-fact of the respondent Insurance Company. The bond was not in fact executed by Gordon L. Eby and his signature appearing thereon was forged. Attached to the bond was a notarial certificate in the usual form reciting that Gordon L. Eby, known to the notary to be the person whose name is subscribed to the within instrument as attorney-in-fact of the Indemnity Insurance Company of North America, had personally appeared before the notary and acknowledged that he had subscribed the name of the company as principal and his own name as attorney-in-fact. The certificate bore the seal of a notary public. The signature of the notary is a genuine signature. The evidence discloses that the notary who had been employed as a stenographer in the office of Gordon L. Eby in San Diego, was not so employed

The answer of respondents denies that the notary took the acknowledgment of Gordon L. Eby; that Eby had subscribed the name of the Indemnity Insurance Company of North America to the bond and his own name as attorney-in-fact or that the notary had prepared the certificate or impressed the notarial seal upon it or that she had attached the certificate to the bond or that she had known of the .bond or the attachment of the certificate to the bond until "many months after the transaction had taken place. It is alleged that the nature of the transaction was so unusual as to put appellant upon notice of its irregularity and that by the exercise of ordinary prudence it could have ascertained that the signature of the attorney-in-fact was forged and the bond spurious. The answer also contains allegations that appellant had in its possession signature cards of Gordon L. Eby and that for a number of years Gordon L. Eby had been a customer of appellant and a depositor in appellant’s bank and had engaged in numerous transactions with said bank whereby his signature had become known to appellant’s officers and employees so that appellant by the exercise of ordinary care could have ascertained the forgery and that the acceptance of the spurious bond under the circumstances was gross negligence and any damage resulting therefrom was caused by the negligence of appellant.

The trial court found that the bond was not in fact executed by Gordon L. Eby, but that the name of Gordon L. Eby was wrongfully signed to the bond by Lewis H. Homer without authority and was a forgery. The court further found that the signature of the notary was genuine, but that she did not take the acknowledgment of Gordon L. Eby and that she did not impress the notarial seal upon the certificate nor attach the separate slip of paper containing the purported acknowledgment to the bond and that the notary did not know of the execution of the bond or the attachment of the purported certificate of acknowledgment to the bond until more than two months after the loan was made. The court also found that the notary was negligent in signing certificates of acknowledgment in blank and allowing them to remain in the office where she

Appellant contends that the judgment of the trial court is not sustained by the evidence; that the judgment is contrary to law; that the bank was not required as a matter of law to investigate the validity of the signature of respondent, Indemnity Insurance Company of North America because, it is said, the notary’s certificate is a guarantee of the authenticity of such signature.

Appellant’s first contention may be disposed of readily. The record discloses the production of ample evidence to support every finding of fact which the trial court made.

With respect to the second contention, appellant urges that the trial court erred in permitting the notary to impeach her certificate of acknowledgment upon which appellant was entitled to rely and did rely. The logical effect of appellant’s contention is therefore that a notary, who has negligently rendered it possible for a wrongdoer to misuse a certificate of acknowledgment, is liable although the person who dealt with such wrongdoer was himself guilty of negligence which was the proximate cause of the damage sustained. It is true that appellant’s complaint was not based on the negligence of the notary, but the answer of respondents alleged contributory negligence on the part of appellant and it was an important issue in the case. The defense of contributory negligence necessarily assumed negli

Appellant’s third contention is that no legal duty was imposed upon appellant to investigate the genuineness of the signature of respondent Indemnity Insurance Company of North America by its attorney-in-fact because the notary’s certificate guaranteed the authenticity of such signature. This contention is closely related to appellant’s second contention hereinbefore discussed and amounts to a declaration that a notary is a guarantor of the genuineness of the signature of the individual who acknowledges that it is his signature although the person who takes the instrument bearing the notary’s certificate may be grossly negligent and his negligence be the proximate cause of the loss suffered. There is no rule of law that imposes so severe a burden upon a notary. Section 801 of the Political Code of California imposes a liability upon a notary and the sureties on his bond for damages sustained through official misconduct or neglect. The action was tried on the theory that the notary was negligent in leaving about her desk blank forms of acknowledgment bearing her signature which made possible the misuse of such forms in the manner in which one such form was here used to the damage of an innocent third party. To such an action the contributory negligence of the third party is a defense and if made out by the production of competent evidence is a complete answer. (Bank of Savings v. Murfey, supra.) The evidence produced at the trial showed that Gordon L. Eby, the attorney-in-fact of the Insurance Company, had been a customer of and depositor in the appellant bank for a number of years; that the bank had cards bearing his signature; that the forged signature appearing on the bond differed radically from the genuine signature; that the bank, although it questioned his

The judgment is affirmed.

Barnard, P. J., and Marks, J., concurred.