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Commercial Union Insurance Co. v. Burt Thomasaitken Construction Co.

Decided: June 5, 1967.


For reversal -- Chief Justice Weintraub and Justices Jacobs, Hall, Schettino and Haneman. For affirmance -- Justice Francis. The opinion of the court was delivered by Weintraub, C.J. Francis, J. (dissenting).


Plaintiff, a surety company, sues on an indemnity agreement to recoup a loss on a performance bond. One of the indemnitors having asserted that his signature on the indemnity agreement was forged, plaintiff joined the notary public who took the acknowledgment on that agreement and joined also the bank by whom the notary was employed. The bank denied the notary acted as its employee and on that basis it prevailed upon a motion for summary judgment. 87 N.J. Super. 287 (Law Div. 1965). The Appellate Division reversed, 91 N.J. Super. 13 (App. Div. 1966). We granted the bank's petition for certification, 47 N.J. 566 (1966). The sole issue before us is whether there is a basis to pursue the bank.

On deposition the notary testified he was an assistant cashier and also a stockholder of the bank; that he became a notary public about eight years ago on his own accord and not at the bank's request but that the bank paid the fees incidental to his reappointment; that he notarized some 30

papers a year at the request of customers of the bank for their accommodation and without charge. The Appellate Division held that upon a finding, which the evidence would permit, that the assistant cashier was actuated in part by a purpose to improve customer relations, the bank could be charged as employer with his neglect in his role of notary public. In reaching that conclusion, the Appellate Division applied conventional agency provisions summarized in 1 Restatement, Agency 2 d, § 228, p. 504.*fn1

This situation differs, however, from the conventional one in two respects. The first is that a notary public is a public officer and as such exercises an authority the bank itself could not receive and does an act the bank itself could not do. The second is that plaintiff did not know of and hence did not rely upon a connection between the notary and the bank, plaintiff having sought only an acknowledgment by some notary.

That the bank itself could not exercise the functions of a notary public is clear. Notaries public, at one time appointed by the Governor and now by the Secretary of State, are commissioned by the Governor. N.J.S.A. 52:7-1, 1.1. The notary holds a public office, 39 Am. Jur., Notary Public, § 6, p. 214; annotation, 79 A.L.R. 449 (1932), which the bank itself could not hold, Kip v. Peoples Bank and Trust Co., 110 N.J.L. 178, 183 (E. & A. 1933). In Kip (p. 181) the court accepted the general description

of a notary formulated in 46 C.J., Notaries, § 1, p. 501, and restated in 66 C.J.S. Notaries § 1, p. 609:

"A notary or notary public is a public officer whose function it is to attest and certify, by his hand and official seal, certain classes of documents, in order to give them credit and authenticity in foreign jurisdictions, to take acknowledgments of deeds and other conveyances, and certify them; and to perform certain official acts, chiefly in commercial matters, such as the protesting of notes and bills, the noting of foreign drafts, and marine protests in cases of loss or damage."

Thus the notary public exercises a power he receives from government rather than from someone who happens to be his private employer. The bank could not itself take an official acknowledgment or empower an employee to do so.

We know of no comparable case in which the private employer of one who is also a notary public has been charged vicariously with the notary's neglect in public office. The common situation in which a bank is sought to be held for a notary's neglect involves a failure to present or to protest paper the bank receives for collection. The cases divide upon the bank's liability, but those States which, like New Jersey, hold the bank, do so upon the thesis that the notary's failure is with respect to a duty required of the bank so that the notary failed, not as a public officer, but as an employee or agent selected by the bank to perform the bank's own obligation. 9 C.J.S. Banks and Banking § 235(c), p. 493; Titus & Scudder v. Mechanics' National Bank, 35 N.J.L. 588 (E. & A. 1871); Davey v. Jones, 42 N.J.L. 28 (Sup. Ct. 1880); Simon v. Peoples Bank & Trust Co., 115 N.J.L. 521, 525 (Sup. Ct. 1935), reversed on other grounds, 116 N.J.L. 390 (E. & A. 1936).

One who requires the official act of a notary public ordinarily looks to the notary alone, and although we speak of a notary's "negligence" for the reason that his obligation is phrased in terms of due care, his obligation really rises consensually from his undertaking to furnish the service requested. In many jurisdictions ...

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