AnalysisIn Anthony et al. v. American General Financial Services, Inc. et al., a lender charged a $350 “Notary Fee” in a refinance transaction. Note: In the settlement services industry, it has been a common practice to label as a “Notary Fee” on the settlement statement a fee paid for the services of a Notary Signing Agent or other person handling the signing of documents. In these instances, clearly the fee does not reflect the statutory maximum fee a Notary may charge, but includes compensation for the “non-notarial” duties Signing Agents perform in the transaction. In the present case, American General asserted in its brief to the Supreme Court that had the case proceeded to discovery, the evidence would show that the use of the term was an “inadvertent and isolated labeling error” and that the amount represented “other valid fees and costs” (see page 1).
The Georgia statute under review states the maximum fee that may be charged is $4 and requires that the person requesting the notarial act be informed of the statutory fee permitted before the notarization is performed. The Anthonys, who brought the suit, were not informed of this maximum fee. The Anthonys filed suit in federal district court asserting a cause of action under OCGA 45-17-11, along with claims for “breach of contract, fraud, and money had and received.” In handling the appeal of the case, the federal appeals court certified questions to the Georgia Supreme Court. The Court’s answers to these questions are provided in the opinion of June 28, 2010.
The first question to the Court was: “ ‘[i]s a corporation employing notaries public to help facilitate its lending practices: A) subject directly to [OCGA] section 45-17-11; or B) vicariously liable for violations of section 45-17-11 by its notary employees?’ ” The Court answered both parts of the question in the negative. As for the first part of the question, the court emphasized that the fee statute clearly states that the Notary charges the fee for a notarial act and that consumers were directly protected against Notaries Public, not anyone else. Thus, American General cannot be directly liable for a violation of the statute because it has no authority to charge fees for notarial acts.
The second part of the first question asks if an employer can be vicariously liable for the overcharging of fees. Vicarious liability is “the general rule that employers are liable for the tortuous acts of their employees if done in the course of their employment” (see page 5). This type of liability can be very broad. In response, the Court cited an 1891 case that said there is a “sharp dividing line between his [the Notary’s] duties as agent and his duties as public officer. When his public service comes into play, his private service is for the time suspended” (May v. Jones, 88 Ga. 308 (14 SE 552) (1891) at 312). The Court held that the duties of Notaries to the public are superior to any private duties to their employers (see page 7). Another way to put this is that when a Notary-employee performs a notarial act at work, he or she is not working for the employer.
It is interesting that on this point the Georgia Supreme Court appears to be taking the opposite view of the Court in Vancura v. Katris by putting the responsibility completely on the back of the Notary.
In explaining this principle, the Court cites the Model Notary Act of 2010 Sections 13(c) and (d) and the comment which explains, “…the drafters wanted to iterate the fact that a notary is first and foremost a public servant, whose duty to the public overrides obligations to an employer. An employer cannot control a notary’s performance of official duties. Consequently, it would be unfair always to hold the employer accountable for the employee-notary’s behavior” (see page 8).
The Court said that even though American General was not directly or vicariously liable for a violation of Georgia’s Notary fee statute, American General could be liable under other applicable tort or contract laws (see page 23). The Court expressed no opinion on these other theories of recovery.
A second certified question asked “whether, ‘[i]f a corporation employing notaries public is subject to [OCGA] section 45-17-11, does a private civil cause of action arise under that section to recover notarial fees paid in excess of, and without notice of, the statutorily-prescribed maximum notary fee?’ ” (see page 12) The Court explained that OCGA 45-17-11 is a penal statute and as such does not contain an express private cause of action and cited several cases to make its point. In other words, a civil right to sue cannot be implied based upon a penal statute. The Anthonys do not have cause under OCGA 45-17-11 to recover in a civil suit the $350 Notary fee paid, because the statute itself does not give them the right to do so.
There were further questions certified to the Court which we do not cover in this analysis because they are less directly relevant to Notaries.
There was a dissent filed by the chief justice and two other justices. Essentially, they say the corporation is responsible for the overcharged Notary fee in this case because American General itself set the fee, and the fee was paid directly to American General, not to the Notary. Interestingly, the dissent also cites the Model Notary Act in support of its position.
To read the opinion, click Download PDF below.