Court Opinion

ID: 7165588
Source: CourtListenerOpinion
Date Created: 2022-07-24 16:20:46.055554+00
Date Added: 2024-06-11T16:15:32.035701
License: Public Domain

On Rehearing.
MONROE, J.
The cause of action in this case is set forth, substantially, as follows:
That the defendant Labatut is a notary public, and that the defendant the Fidelity & Deposit Company of Maryland is the surety on his official bond:
“That, at various and sundry times, * * * petitioner employed the said Labatut, as a notary, to procure the execution of acts of mortgage on real estate and notes secured thereby which petitioner desired to purchase as a means of investing her money; that said Labatut would inform petitioner when persons would come to him desiring to obtain loans on the security of mortgages of real estate in this city; and that (petitioner) would instruct the said Labatut to procure the execution of the act of mortgage offered and of the note secured thereby, and would give him the money to pay the exact amount of the said note to which the mortgagee, under the contract of mortgage, would be entitled, except in one or two cases, where the said Labatut had some money which he had collected for petitioner, and, in those cases, the petitioner added the money required to cover the difference between what the said Labatut had and the exact amount required to pay for the note, and the said Labatut would bring to petitioner the said notes duly paraphed by him and purporting to be secured by mortgage or vendor’s privilege on real estate in this city, and petitioner accepted said notes on the faith of said paraph, believing the said notes were, in fact, secured by mortgage and vendor’s privilege, as stated by said paraph, and as she had instructed that they should be secured. Now your petitioner shows that, in a number *439of instances, to be given hereafter, said notes were mere forgeries and were not secured by an act of mortgage or vendor’s privilege, and that the paraph on the face of said notes, purporting to’ show that they were so secured, was false, and that petitioner was misled by said paraph and by the statements of said Labatut and lost the money which was paid for the said notes in consequence. Your petitioner shows that the said Labatut violated the duties which he owed as notary to your petitioner, to procure genuine and valid acts of mortgage and notes secured thereby, and that he deceived and defrauded your petitioner by affixing his official paraph as a notary on the face of the notes declaring that the same were secured by mortgage or vendor’s privilege, when, in fact, they were not so secured, and that, for the said acts, both the said notary and the said surety are liable, in solido, to your petitioner for the money so paid out by petitioner in the purchase of the said forged notes bearing the false paraph and certificate of the said Labatut, as above stated. Your petitioner further shows that, in purchasing mortgage notes, secured by the acts of mort- ■ gage before a notary in this city, it is customary for the lender to deliver the money or check purchasing the mortgage note to the notary to deliver to the mortgagor, and that, in that Way, petitioner paid for all the notes hereinafter described, of the aggregate value of $4,275, all of which petitioner took and paid for in reliance upon the paraph of the said notary on the face of the said notes. This paraph is customarily and invariably affixed upon the face of the notes secured by mortgage in this city by the notary before whom the act of mortgage is passed, and is universally relied upon as showing that the said note is secured by mortgage. Petitioner shows that the notes so purchased by her were as follows, to wit: [I-Iere follows a descriptive list of the eight notes.] Petitioner shows that the said Labatut is insolvent and unable to pay anything on the said notes; that all of his acts and doings in the premises were fraudulent, and were violative of his duty as a notary and of the duties which he owed to petitioner, who had employed him, as a notary, to procure the acts of mortgage and the notes secured thereby as above mentioned; and that, for his said violation of his duties as notary, the said Labatut and the said surety on his official bond as notary are liable, in solido, to your petitioner for the amount of money that she has lost in the purchase of the said notes.” (Italics by the court.)
The Fidelity & Deposit Company, for answer—
“Denies that plaintiff’s transactions with said Henry P. Labatut were in his notarial capacity or in the performance of any of the duties required of him by law, but avers, on the contrary, that said I-Ienry P. Labatut was, for a long time, the trusted agent of the plaintiff for the investment of funds for her, and, at times, had and retained money belonging to her for investment, and also had the key to her bank box. Respondent denies that the plaintiff was misled by the paraph on the notes referred to, and avers, on the contrary, that she deposited funds with the said Labatut or paid said Labatut money with which to buy said notes referred to, and relied on his individual honesty and integrity, and that if she sustained any loss it was through embezzlement of those funds,” etc.
It appears from the evidence that Labatut would write to the plaintiff that he had in view an investment in mortgage paper, and that she would send him, or take him, her check, and, some days later, get from him what purported to be a mortgage note. Labatut, however, collected (or professed to collect), for her, the notes and interest on the notes, in which her money was thus invested, and, at times, would render her statements showing the reinvestment, in other paper, of moneys collected for her account, and, for these services, or for such services as he might be considered to have rendered, he, now and then, with the consent of the plaintiff, deducted smail sums from the balances in his hands. In regard to the note of W. Westerhouse, for $550, plaintiff testifies that she received a communication, as above described, in response to which she gave Labatut her check, dated October 25, 1900, for $328 (which check was paid to Labatut on the day of its date). The remaining amount necessary for the purposes of the promised investment was to have been taken from a balance, which Labatut already had in his hands, resulting from collections which he had made for plaintiff’s account; but at what time those collections were made does not appear. Some time after the check had been delivered and cashed, plaintiff received from Labatut what purported to be the note of W. Westerhouse, for $550, payable to his order and by him indorsed and bearing, also, an inscription in the following terms, to. wit: “Paraph: Ne Varietur. Secured by mortgage — by act passed before me this day. New Orleans Oct. 27, 1900.” This inscription¿ as may be obi *441served, does not bear the signature of the notary.
We produce, in this connection, part of plaintiff’s examination as a witness:
“Q. I ask you if you don’t admit that you handed Mr. Labatut this check for $328 prior to being shown any note or act of mortgage? A. Tes, sir; but he said it was pending; that he was examining the title. * * * Q. Haven’t 3Tou been investing your money in that way for seven or eight years? A. Tes, sir. Q. Then, in this purchase of this Westerhouse note, if you say you relied on the paraph, why is it you accepted the note when no paraph was there? A. Well, I knew that was his writing, and I knew he was the notary that had executed that. * * * It is paraphed, but not signed. I knew he had done it, and gave it to him, but, in fact, it was an oversight. I didn’t notice it until after he was gone. Q. Now, on this Westerhouse note, the only amount of money which you gave Mr. Labatut was $328, isn’t that a fact, because he had for your account the balance of the money? A. Tes, sir. Q. How long had he had the balance of the money? A. I couldn’t say. I would have to refer to my notes and find out. I suppose I could hunt it up. * * * Q. And he never accounted to you for that $269 other than by what you say — the delivery of this note? A. I gave him permission to do that, with my check and the amount he had for me to buy the mortgage note.”
The story of the J. O. West note, for $400, is told as follows:
“New Orleans, La., Oct. 28, 1901.
“Miss Jennie Nolan — Dear Miss: I have a safe investment for $400 for which you can send me your check. I had another application for a much larger amount, but, as you have not the amount, give you privilege of this one. When you call, on Monday following, All Saints’ Dai' — when I hope to have the Ilowat note settled — we can see what may be done with that amount. The investment I offer may not be closed for a couple of days, but wish to be in position to accommodate when he calls. Trusting that you are well, I beg to remain,
“Sincerely, [Signed] H. P. Labatut.”
In reply to this communication, plaintiff gave Labatut her check, of even date therewith, for $400, and on November 5th, following, or, possibly, later than that, he gave her what purported to be the note of J. O. West, for that amount, secured by mortgage, being one of the notes sued on in this ease.
Concerning the Owen note, for $650, of date January 10, 1902, plaintiff gives this, with other, testimony:
“Q. Now, I find that, on January 9th, Mr. Labatut wrote you a note stating that he had collected the Janson note for you and had another investment for $650, and I find that, on January 9th, you gave your check to him for $611. Do you recollect whether you came to the office with your check or with his letter on that date or sent this? A. Whether I sent the check? Q. Tes. A. I don’t know. I think I sent one check. I don’t know now which one it is. Q. Tou have no positive recollection of this? A. I have no positive recollection as to whether that is the one I sent — that check; that is the check I sent him, I sent him that check. Q. Then, at that time that you sent it to him, you were not exhibited any notarial act in connection with this investment, were you? In other words, if you sent the check on Januaiy 9th, you never saw any notarial act exhibited to you by him? A. Well, I went down later and got my note. Q. What note is that? By Counsel: The Owens note. A. I didn’t see anything for the Owens. I think he didn’t read the act of mortgage to me. Q. So, then, in this particular case, you handed Mr. Labatut $611, without, contemporaneously, receiving any note or being shown any act of mortgage? A. I didn’t give him any money. Q. I mean handed him the check? A. I sent him the check, and he examined the title and passed the act of mortgage, and I got my mortgage note when I called, and he showed me the paraph on the note as security.”
Concerning the Harris note, for $650, dated April 4, 1902, plaintiff received a communication from Labatut reading as follows:
“Henry P. Labatut, Notary Public. Hennen
Building. Mortgage Loans Negotiated.
“Miss Jennie Nolan — Dear Miss: Having an investment of $650, which I submit you, I would be pleased if you would hand bearer check for same. I expect to close the matter during this week and suggest that you call on Saturday morning, about 10 a. m., so that the note can be placed in your box. If this is not convenient you can call at your convenience. I trust that you are well, and with best wishes, beg to remain
“Tours sincerely, [Signed] IT. P. Labatut.”
Plaintiff says that she sent the check as requested (and the check, which is in evidence, bears date April 2,“1902, whilst the note hears date April 4, 1902), and that she saw no note or mortgage until later when she obtained the note by going to the office for it. Plaintiff’s check for $675, given for the Howat note, hears date May 22, *4431902. The note is dated May 24, 1902, and there is in the record a communication from Labatut, of date May 27th, in which he says:
“I have your investment for $075 duly executed, and have note for same. I will wish- you to call tomorrow by 9 or 10 a. m., so that I can place same in box and also withdraw note of Miss Ducvos, for $75, secured by gas stock which must be transferred to the new company assuming the same. I. will explain same to you.”
Speaking of the Andrews note for $250, dated September 19, 1901, plaintiff says:
“Q. How did you pay for the note? A. With the money that he had for my account. Q. In other words, then, Mr. Labatut bought this note for you of William Andrews out of money received by him for your account on payments of other notes held by you? A. Yes.”
Concerning the Kaupp note for $600, dated November 15, 1899, there appears in the record a communication from Labatut to the pdaintiff of date March 19, 1900, in which he says:
“I have a note for $600 dated November 15, 1899, payable two years after date, with 7 per cent, interest, drawn by G. W. Kaupp, secured by mortgage on good real estate. The note is now worth $614 being int. accrued for 4 months. If agreeable to you, you can send me your check for the amount and I will retain the note for your account. The act of sale by which the note is secured was made by me. Trusting that you are well,
“Sincerely, [Signed] II. P. Labatut.”
Plaintiff testifies that she bought the note in question, but was unable to say at what time she had given her check for the price.
It may be here remarked that the checks by which plaintiff parted with her money were made payable to the order of Henry P. Labatut; that the communications upon the faith of which the checks were given all bore that signature; and that the accounts which were furnished by Labatut, from time to time, were signed in the same way and without the addition of his official character. Thus, he, at one time, probably in September, 1901, rendered an account reading as follows:
H. P. Labatut in Account with Miss Jennie Nolan.
By note of J. Faibvre & int........ $510 85
By note of J. A. Weinans and int. ... 206 00
By interest, note of Mrs. Korndorf-
fer ............................. 48 00
Total credit..................$764 85
To purchase note of Mrs. Edw.
Durrive, $500 less 6 per cent. $470 00 To city taxes 1904.......... 33 00 503 00
Balance ..................... $261 85
E. & O. E. Note of Wm. Andrews
($250) .......................... 235 00
[Signed] H. P. Labatut....... $ 26 85
So that, it was merely by crediting this account, and not by parting with her money, at the time, that plaintiff acquired the Andrews note.
Opinion,
The question here presented for decision is one of considerable importance to the public at large, who are interested in knowing upon what basis their transactions with notaries public rest; to the notaries, since those of them who are content to confine themselves to the discharge of the functions which the law assigns to the notarial office are interested in not being charged a commission, in order to obtain the bonds which they are required to give, which will be out of proportion to the risk ;■ and to the sureties on the bonds, who are interested in not being held liable beyond their contracts.
Act No. 42, p. 34, of 1890 (amended and reenacted by Acts No. 138, p. 217, of 1896, and Act No. 187, p. 367, of 1902), provides that a notary public in the parish of Orleans shall give bond in the sum of $10,000, “conditioned as the law directs, for the faithful performance and discharge of his duties as notary public.” If therefore there was, at any time, a question as to whether (considering Rev. St. § 2503, and Act No. 40, p. 53, of 1S86) the obligation of his bond should not be confined to those by whom he may have been employed, that question no longer exists, and *445the bond, required not to be subscribed in favor of the Governor of the state (Act No. 187, p. 367, of 1902), inures to benefit of anyone who may sustain loss by reason of the failure of the notary faithfully to perform and discharge his duties as notary public, or, by reason of his wrongful acts, committed by virtue, or under color, or by means, of his officd. Rochereau v. Jones, 29 La. Ann, 82; Schmitt et al. v. Wid. O. Drouet, 42 La. Ann. 1064, 8 South. 396, 21 Am. St. Rep. 408; Weintz et al. v. Kramer et al., 44 La. Ann. 35, 10 South. 416. It would be tedious and useless to undertake to enumerate the acts which a notary may legally do, or which he may do, by virtue, or color, or means of his office. This court has said:
“A notary is defined to be an officer whose duty it is to attest the genuineness of any deids or writings in order to render them available as evidence of the facts therein contained. Abbott’s Digest, vol. 2, p. 182, v. ‘Notary.’ Also, a notary is a public functionary, authorized to receive all acts and contracts to which parties wish to give the character of authenticity, attached to the act of public authority, to secure their date, their preservation and the delivery of copies. Dict. Droit Civil, vol. 5, p. 27, v. ‘Notaire.’ ”
Although section 2492, Rev. St., provides that notaries public shall “have certain powers. it does not undertake to enumerate them all. It does not mention, for instance, that of receiving the renunciation of married women of their rights over the property of their husbands ; the duty imposed upon notaries to attend to the registry of acts of sale in the conveyance book of the proper office; to paraph notes secured by privileges or mortgage with acts before them, Rev. Civ. Code, art. 3384, and various other acts authorized by law.” Schmitt et al. v. Widow O. Drouet et al., supra.
As suggested in the foregoing excerpt, the duty is expressly imposed, by Rev. Civ. Code, art. 3384, upon “every notary before whom an act shall have been passed, by which notes to order have been given for the payment of a debt bearing a privilege or mortgage, of attesting each of the notes by putting his name on it,” mentioning the date of the act from which the privilege or “mortgagé is derived, under penalty of damages.” But, although notaries are authorized to prepare, and to authenticate, and to record, acts of sale and of mortgage, and, although they are required, under penalty, to paraph notes, to order, given in connection with such acts and secured by privilege or mortgage, they aro neither authorized nor required to receive, or to act as the custodians of, any money which is to pass between the parties to those acts. In the case of a sale, the cash portion of the price goes from the vendee to the vendor, and, in the case of a mortgage, the money goes from the mortgagee to the mortgagor, unless, in either ease, the parties, by agreement, constitute the notary their agent or depository, in which event he acts as an individual and not in the discharge of any duty of his office. More than 50 years ago, Mr. Roselius, in arguing the question before our predecessors, said:
“The functions and authority of a notary public are defined by law, and, surely, no one ever supposed that the public officer whose duty it is to draw up, in the form and with the solemnities pointed out by law, a deed or authentic evidence of a contract of sale, was authorized to receive the price, and that such payment discharged the purchaser. * * * Now, as the notary is not the mandatory of the vendor for whom he draws up and passes a deed of sale, it would seem to follow, as a necSssary consequence, that the purchaser cannot make a valid payment of the price to-him.”
And Eustis, O. J., as the organ of the court, said:
“We concur with the counsel in the opinion that the delivery of the money to the notary’s clerk did not constitute a payment.”
The case was decided in favor of the plaintiff, on the ground that he had consented that the money should be deposited with the notary. Breen v. Schmidt, 6 La. Ann. 13. In the following year, a similar case was presented, against the same defendant, and Rost, J., as the organ of the court, said:
*447“This case differs from that of Breen against the same defendant (6 La. Ann. 13), in this, that it is not shown that, as in that case, the defendant had authorized the plaintiff to deposit with the unfaithful notary the cash portion of the price, etc. The notary having absconded without accounting for the amount deposited, we are of opinion that the plaintiff must bear the loss.” Brown v. Schmidt, 7 La. Ann. 349.
And the doctrine thus applied was affirmed in the Succession of O’Keefe, 12 La. Ann. 246. In a case where suit was brought against a notary and his sureties for the recovery of money which had been deposited with the notary to enable him to cancel certain mortgages, it was said:
“The securities of a notary public are only liable on its failure to discharge the duties of his office. The law has not made it the official duty of a notary to receive money to erase mortgages.” Lescouzeve & Abry v. Ducatel et al., 18 La. Ann. 470.
In another ease, where the purchaser of a slave, which, as it turned out, the vendor was unable to deliver, deposited the price with the notary by whom the act of sale had been prepared, and sued the notary and his surety for its recovery, it was held:
“There is no authority given by law to a notary, when parties intend to pass acts of sale before him, for him to receive moneys or checks from one party to deliver to the other. Such an act forms no part of his duty as a notary. The security which he gives for the faithful performance of his duties as a notary is only bound for such acts of his as the law authorizes or requires him to do in his official capacity.” Monrose v. Brocard et al., 20 La. Ann. 78.
There is no doubt that the paraphing (i. e., the writing thereon by the notary of his signature, with mention of the date of the act with which it is connected) of a mortgage note is a notarial function, for the nondischarge, or improper discharge, of which the notary and his sureties may be held liable to any one who may thereby be injured. Hence, if the plaintiff had purchased^ (whether from the notary, himself, or from any one else) the forged and'paraphed notes here sued on, believing them to be what they purport to be, she would be entitled to recover. But, our reconsideration of the case' has lead us to the conclusion that, save im the ease of the Kaupp note, she had parted with her money, not only before the notes, had been paraphed, but before they had. come into existence (the Westerhouse note, it may be remarked, is not, and never has-been, paraphed), and, in two instances, at least, the forged notes sued on were given, and received in discharge, or partial discharge, of Labatut’s indebtedness, as agent* for moneys which he had previously collected for plaintiff’s account. The legal situation is therefore correctly stated in the following excerpt from the opinion in a case, closely resembling this, in which, as in this case, the defendant, who was a notary, had, for several years, been receiving money from the plaintiff for investment, and of accounting for the same by remitting to the plaintiff" forged notes and pretended deeds of trust with false certificates of acknowledgment* to wit:
“It thus appears from the relator’s own evidence that he never parted with any value on the faith of Boughton’s official acts. Bough-ton, as the relator’s agent, sent to him a number of forged notes and forged and fraudulently acknowledged deeds of trust, and, on the faith thereof, obtained certain credits on his account with relator. It is difficult to see on what theory any liability on Boughton’s official bond is to be enforced under the circumstances. * * * As, under the admitted facts of the case, the damages are the result solely of the criminal conduct of plaintiff’s own agent, in embezzling plaintiff’s funds, the mere fact that said agent happened to be a notary cannot give the plaintiff a cause of action on the bond. The false certificates of acknowledgment are, in fact, wholly extraneous matter.” Mathews v. Boughton, 58 Mo. App. 155.
In the case at bar, the defendant Labatut appears to have solicited the plaintiff to deposit her money in his hands for investment, and she seems to have yielded to his solicitations upon his assurances (over his individual signature as it happens, though it would have been the same if he had signed as notary) that he would, at some time in the near future, furnish the securities in which *449the money was to be invested. But, if he had borrowed the money for his individual account upon such assurances, and had after-wards made the assurances good by forgeries, committed as a notary, it would hardly be contended that the plaintiff sustained no loss until the forgeries were committed, and we think that there is no difference, in that respect, between the ease of a notary who obtains money as a loan to himself and the case of one who obtains it for the purpose of investing it for the owner, and that, in either case, if the money is not accounted for, the owner must be considered to have lost it when he parted with it rather than when, at a later date, a forgery is committed by way of accounting. In the matter of the Kaupp note, the evidence, we think, justifies the conclusion that the note was actually in existence, in due form and having all the appearance of a genuine instrument, when the attention of the plaintiff was first called to it, and that she parted with her money on the faith of what Labatut, as a notary, had actually done, and not upon the faith of that which, as an individual, he promised to do as a notary, and, in that respect, the matter differs from that of the Andrews note, which Labatut delivered to the plaintiff by way of accounting for moneys which he -had previously received from her and had embezzled. Plaintiff’s counsel insist that the view which we now take of the case is at variance with that expressed in the case of Stork v. Am. Surety Co., 109 La. Ann. 713, 33 South. 742. The difference, however, lies in the facts and not in our views upon the questions of law. It was said in the case mentioned, referring to the notary’s bond there sued on:
“The bond was given for the faithful performance of the duties of his office. The liability, none the less, has been restricted as security, to the faithful performance of such acts as the law authorizes or requires him to do, in his official capacity” — citing Monrose v. Brocard, 20 La. Ann. 78.
And the court then proceeds to hold that it was within the official duties of the notary to receive mortgage notes for the cancellation of the mortgages by which they were secured, and that his sureties were liable for their diversion. The facts being different, we do not find it necessary, for the purposes of the case at bar, to review the reasoning which lead to that conclusion.
It is therefore ordered, adjudged, and decreed that the judgment appealed from be avoided and amended-, in so far as it rejects entirely the demand of the plaintiff against the defendant the Fidelity & Deposit Company of Maryland, and that plaintiff now have judgment against said company, in solido, with the defendant Henry P. Labatut, in the sum of $600, with legal interest thereon from judicial demand, and costs, and in all other respects that said judgment be affirmed.
It is further adjudged and decreed that, as between plaintiff and defendants, the defendants be condemned, in solido, for the costs of the appeal, and that, as between the two defendants, the costs be borne by defendant Henry P. Labatut.
LAND, J., dissents. PROVOSTY, J., dissents in part, adhering to the original opinion.