That notary seal in your desk drawer may be more dangerous than you thought it was. By verifying an individual’s signature, the law is becoming increasingly more clear, a notary public can end up a party to the most complex of lawsuits. It doesn’t matter if the signature was affixed to a deed, a promissory note or a verified pleading in a small claim. Once someone denies that he or she signed a particular document, the notary’s greatest hope may be getting called as a witness. In the worst case scenario, a scenario that is likely to arise more often now that the Notary Public Act has been amended and new precedent has been established in the courts, the notary is named as an additional defendant. By verifying a signature is what it purports to be, a notary public (and his or her employer) may be liable for the damages stemming from plaintiff’s reliance on the document in which that signature appears.
One of the earliest cases to involve a finding that a notary public could be held liable for millions in damages caused by a defective guarantee was Superior Bank FSB v. Golding1 In Golding, the bank sought to recover under a guarantee supposedly signed by three partners. One of the supposed guarantors, however, claimed he had never signed the document. The Illinois Supreme Court found that this supported a cause of action as against both the notary and the law firm for which she worked:
"Here, the Bank relied upon its ability to hold the partners of Gash Associates personally liable for repayment of the loan in the event Gash Associates defaulted. One of the partners against whom the Bank expected to recover in the event of a default was Horwitz. According to the Bank’s complaint, the Bank had in its possession a document purportedly signed by Horwitz which guaranteed repayment of the loan. The Bank had no reason to question the genuineness of the Horwitz signature, as it was notarized by Williams....It would be inequitable to summarily dismiss the Bank’s action against defendants Lord, Bissell & Brook and Williams with prejudice at this time. If Horwitz’s guaranty turns out to be a forgery, the Bank would be left without a remedy."
As the Court concluded in Bank of America, N.A. v. Bird,2 liability such as that found in Golding is premised on the fundamental idea that a notary should exercise reasonable care in the performance of his or her duties. His or her employer may in turn be liable for any breach of that duty if the notarization was conducted in the performance of the employee’s duties:
"The duty of care owed by a notary public is one of common tort law.... A notary undertakes to use a reasonable amount of skill and ordinary care and diligence as is usually employed by persons of ordinary capacity engaged in his profession and that amount of care and diligence as persons of common prudence are in the habit of using in their own business.... Stated differently, a notary must exercise the skill and care that can reasonably be required of a skillful and careful person under similar circumstances.... [A] notary must be loyal to his clients and ... must act in good faith. A notary who is guilty of fraud or dishonorable conduct is amenable to having his authority revoked, and a notary who is guilty of negligence or breach of duty is subject to liability to persons with regard to whom he owed a duty....
"At common law, an employer was subject to vicarious liability for his employees under the doctrine of respondeat superior.... In order to show that an employee’s actions are within the scope of his employment, the conduct must be of the kind the employee is employed to perform, must occur substantially within the authorized time and space limits, and must be actuated at least in part to serve the employer, rather than be for the employee’s personal ends...."
In Bank of America, the Court held that common law liability could be found in such circumstances and also considered whether the Illinois Notary Act,3 which had been repeatedly amended since Golding, served to preempt the common law. The Court found it did not:
"Bank of America argues that in rewriting the Notary Act, the legislature adopted a specific standard for employer liability [5 ILCS 312/7-102] that supercedes and replaces the common law on this subject matter.... In our view, the Notary Act is not a comprehensive remedial statutory scheme. The statutory liability of an employer under the Notary Act does not preempt other common law theories of liability and recovery. The Notary Act provides a cumulative remedy rather than an exclusive remedy. Accordingly, the answer to the question whether the Notary Act exclusively governs the liability of the employer of a notary public and preempts common law theories of recovery against the employer is no."4
The Court in Vancura v. Katris, held that:
"[A] reasonably careful employer would have ensured that supervisory personnel at the Oak Lawn store understood Albear’s responsibilities such that they never took possession of his seal at the 24-hour store, that they provided a secure storage place that only Albear could access, and that they refused possession of the seal on a permanent basis when Albear transferred to a Peoria store. Kinko’s exercised no supervision and could not be considered ‘reasonably careful.’ Thus, the manifest weight of the evidence indicates Kinko’s had no regard for whether Albear understood his responsibilities and adhered to them. This is negligence."5
In Vancura, however, the court also found that, even though the employer could be held liable at common law, no statutory damages were available because the employer had not been aware of any prior problems in notarization, as required under the Act:
"[E]mployer liability arises under subparagraph (a) of [5 ILCS 312/7-102] only when the notary was ‘acting within the scope of the notary’s employment at the time [he] engaged in official misconduct....’ Kinkos argues the trial judge misapplied the model act’s ‘implied consent’ provision in this instance because there was no demonstrated pattern prior to December 1995 of improper notarizations which Kinko’s failed to correct. The comment to the model act indicates there must be at least one known prior improper notarization before it can be said the notary’s employer gave implied consent to the improper notarization before the court. Unless there has been ‘past action or inaction by the employer concerning a particular improper notarization’ , the employer has not revealed its attitude toward misconduct and cannot impliedly consent to additional misconduct and the imposition of liability for the harm that results. The record does not indicate Kinko’s knew of at least one prior improper notarization.... We conclude, therefore, that the trial judge’s finding of implied consent cannot stand."6
These recent decisions make clear that the statutory requirements of the Illinois Notary Act are only one starting point in determining whether a given employer should be liable for the misconduct of a notary working for that employer. The common law duties imposed upon a notary and his or her employer remain important concerns, as do those duties imposed by the Model Notary Act (an act which has never been specifically adopted in Illinois but which the court in Vancura identified as a "common law" standard which notaries and their employers should look to for guidance in instances where state law provides no direction).7 It should thus come as no surprise, perhaps, that the Illinois Notary Act and other related statutes were amended this last year to impose more stringent obligations on notaries, particularly those involved in notarizing deeds and other documents in real estate transactions.
5 ILCS 312/6-102 has long required that a notary "determine, either from personal knowledge or from satisfactory evidence, that the person appearing before the notary and making the acknowledgment is the person whose true signature is on the instrument."8 Section 6-102 still requires that "A notary public has satisfactory evidence that a person is the person whose true signature is on a document if that person: (1) is personally known to the notary; (2) is identified upon the oath or affirmation of a credible witness personally known to the notary; or(3) is identified on the basis of identification documents."9 But the law now specifically provides that, at least until July 1, 2013, the "identification documents" required under the Act "are documents that are valid at the time of the notarial act, issued by a state or federal government agency, and bearing the photographic image of the individual’s face and signature of the individual."
There is thus now specific cause for notaries to want to keep record of what "identification documents" they relied upon in confirming the veracity of a given signature. A notary may not be able to show that he or she exercised due care, or complied with the Act, unless he or she can show that the documents relied upon were documents which qualify as "identification documents" under Section 6-102. That’s a particularly difficult problem for notaries signing deeds and other documents in a real estate transaction.
Under the new statutory scheme applicable to notaries, a notary public who verifies the signature of parties to a real estate transaction is required to create a "Notarial Record" to be submitted to the Recorder of Deeds and kept by the Recorder’s office for seven years after the transaction.10 The Notarial Record includes much of the same information one would find in the deed itself, including the names of the grantor and grantee, addresses, PIN numbers, and the like.11 But it also requires that the signor provide a thumbprint (or a fingerprint if a thumbprint isn’t possible)12 and that information is required to kept confidential. The Freedom of Information Act was thus amended, with this new law, so that the information included in the Notarial Record is not readily available to the public.13 The notary public, in the meantime, is not permitted to keep copies of the record (although his or her employer may). Section 3-102(g) thus provides: "No copies of the original Notarial Record may be made or retained by the Notary. The Notary’s employer or principal may retain copies of the Notarial Records as part of its business records, subject to applicable privacy and confidentiality standards."14
Thus, just as the precedent for establishing liability against a notary and his or her employer has gotten more difficult to navigate, the statutory requirements have changed to impose still greater burdens on notaries, particularly in real estate, while denying notaries an ability to keep copies of what could be the most important documents in their defense.
It’s always been important to make sure that, if you sign your name under oath to verify that someone else really signed theirs, you know who you’re doing it for. For notaries in Illinois, however, the importance of that action has become increasingly more pronounced over the years as it appears likely to in the years ahead. We sign a lot less documents than we used to in this electronic age, so we need to be increasingly more vigilant when we do.
1 Superior Bank FSB v. Golding, 152 Ill.2d 480, 488, 605 N.E.2d 514 (1992).
2 Bank of America, N.A. v. Bird, 392 Ill.App.3d 621, 627-28, 911 N.E.2d 1239 (5th Dist. 2009)
3 5 ILCS 312/7-101, et seq.
4 Bank of America, N.A. v. Bird, 392 Ill.App.3d 621, 625, 911 N.E.2d 1239 (5th Dist. 2009).
5 Vancura v. Katris, 391 Ill.App.3d 350, 374, 907 N.E.2d 814 (1st Dist. 2008).
6 Vancura v. Katris, 391 Ill.App.3d 350, 379-80, 907 N.E.2d 814 (1st Dist. 2008), citing Model Notary Act of 2002, § 12-1, Liability of Notary, Surety, and Employer, Comment, at 68-69.
8 5 ILCS 312/6-102(a).
9 5 ILCS 312/6-102(g).
10 5 ILCS 312/3-102, et seq.
11 5 ILCS 312/3-102(f)
12 5 ILCS 312/3-102(c)(6).
13 5 ILCS 140/7 (providing exemptions for Notarial Records from the disclosure requirements of the Freedom of Information Act).
14 5 ILCS 312/3-102(g).
Ted A. Donner is an attorney with Donner& Company Law Offices LLC, in Wheaton, Illinois. His practice is concentrated in com-mercial litigation and business consultation. Next year’s editor-in-Chief for the DCBA Brief, Ted is also the author of two treatises for Thomson-West, Jury Selection: Strategy & Science and The Attorney’s Practice Guide to Negotiations. He is an adjunct professor with Loyola University Chicago School of Law, where he teaches classes in antitrust law and jury selection. He is a member of the American Bar Foundation and a member of the Board of Directors of the American Society of Trial Consultants Foundation. An AV-rated attorney, Ted was once again named as an "Illinois Super Lawyer" for 2010.