Vancura v. Katris
| Decision Date | 26 December 2008 |
| Docket Number | No. 1-06-2750.,1-06-2750. |
| Citation | 907 N.E.2d 814 |
| Parties | Richard P. VANCURA, Plaintiff/Appellee and Cross-Defendant and Cross-Appellant, v. Peter KATRIS, et al, Defendants/Appellants and Cross-Plaintiffs and Cross-Appellees. |
| Court | United States Appellate Court of Illinois |
Ruth A. Bahe-Jachna and Paul A. Del Aguila of Greenberg Traurig, LLP, Chicago, and Elliot H. Scherker of Greenberg Traurig, P.A., for Appellant Kinko's.
Martin F. Hauselman and Elizabeth Monkus of Hauselman, Rappin & Olswang, Ltd., for Appellee Richard P. Vancura.
Mitchell H. Miller, Hinsdale, for Appellee Peter Katris.
MODIFIED OPINION UPON DENIAL OF PETITION FOR REHEARING
After a bench trial, the circuit court found defendant Kinko's, Inc. (Kinko's) liable for damages resulting from its employee's notarization of a forged signature on a mortgage assignment. Kinko's1 seeks reversal, contending the court misconstrued section 7-102 of the Illinois Notary Public Act (5 ILCS 312/7-102 (West 1996)) (Act) regarding employer liability and further erred by imposing liability under the common law for negligent training and supervision. This is a case of first impression regarding an employer's liability under the Act for a notary's "official misconduct." 5 ILCS 312/7-102 (West 1996). Defendant Peter Katris, who stood to profit from the real estate transaction involving the forged mortgage assignment, has filed a brief in support of the statutory and common law judgments against Kinko's. Plaintiff Richard P. Vancura, whose signature was forged, cross-appeals, seeking the full amount of his court reporter and expert witness fees.
The following relevant facts were established through discovery and a bench trial. Portions of the Act put these facts into context. 5 ILCS 312/7-102 et seq. (West 1996).
"6-102. Notarial Acts. * * *
* * *
(c) In witnessing or attesting a signature, the notary public must determine, either from personal knowledge or from satisfactory evidence, that the signature is that of the person appearing before the notary and named therein.
(d) 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 on the oath or affirmation of a credible witness personally known to the notary; or
(3) is identified on the basis of identification documents." (Emphasis added.) 5 ILCS 312/6-102(c), (d) (West 1996).
"7-101. Liability of Notary and Surety. A notary public and the surety on the notary's bond are liable to the persons involved for all damages caused by the notary's official misconduct.
7-102. Liability of Employer of Notary. The employer of a notary public is also liable to the persons involved for all damages caused by the notary's official misconduct, if:
(a) the notary public was acting within the scope of the notary's employment at the time the notary engaged in the official misconduct; and
(b) the employer consented to the notary public's official misconduct.
7-103. Cause of Damages. It is not essential to a recovery of damages that a notary's official misconduct be the only cause of the damages.
7-104. Official Misconduct Defined. The term `official misconduct' generally means the wrongful exercise of a power or the wrongful performance of a duty and is fully defined in Section 33-3 of the Criminal Code of 1961. The term `wrongful' as used in the definition of official misconduct means unauthorized, unlawful, abusive, negligent, reckless, or injurious." 5 ILCS 312/7-101 through 7-104 (West 1996).
Sections of the Illinois Notary Public Handbook (Handbook) are also pertinent. The Handbook is a 36-page publication of the Secretary of State which includes general information, sample forms, frequently asked questions and their answers, and the entire Act. On the handbook's opening page, the Secretary of State describes five basic rules of proper notarization, including: "1) Keep your notary seal in a safe place; 2) Do not notarize a signature unless the signer is present at the time of notarization; [and] 3) Do not lend your stamp to anyone, including your employer." The document continues:
"GENERAL INFORMATION
* * *
The purpose of notarization is to prevent fraud and forgery. The notary acts as an official and unbiased witness to the identity of the person who comes before the notary for specific purposes. This places a great deal of responsibility upon the notary.
If a document requires the administration of an oath, the person must personally appear before the notary, be administered the appropriate oath, and sign the document in the notary's presence. [ (Emphasis added.) ]
If the document requires an acknowledgment, the person must appear before the notary and acknowledge the document. [ (Emphasis added.) ]
* * *
Identification — A notary public must positively identify the person requesting notarization. * * * ([See] Sec 6-102 [of the Illinois Notary Act].) [(Emphasis in original.) ]
* * *
QUESTIONS ABOUT PERFORMING NOTARIZATIONS
* * *
How does a notary identify a signer?
A notary has satisfactory evidence if the person (1) is personally known to the notary; (2) is identified by a credible witness personally known to the notary; or (3) is identified on the basis of identification documents. Proper identification should include a photograph and a signature on a reliable identification card, such as a driver's license.
Must the person sign the document in my presence?
If the document requires an oath * * * then an oath or affirmation must be administered to the person, and the person must sign the document in your presence. If the document requires an acknowledgment, it is sufficient for the person to appear before you and acknowledge execution of the document. Never notarize an unsigned document. You may not take an acknowledgment because someone else assures you that the signature is genuine. You may not take an acknowledgment even when you recognize the signer's signature unless that person appears before you.
* * *
NOTARIZATION PROCEDURES/RULES
* * *
What are the most common errors or omissions made by notaries?
(1) Failing to properly identify a person; (2) failing to administer an oath or affirmation (if required); and (3) failing to affix the notary seal.
* * *
Can my employer keep my seal and certificate if I leave the company?
No. The seal and certificate are considered the property of the notary public. Also, if you lose possession of your seal, it is recommended that you resign your commission."
Plaintiff Vancura, an experienced real estate investor, agreed to help an acquaintance, defendant Glenn S. Brown, finance the purchase and rehabilitation of a single-family home as an investment. In November 1994, Vancura loaned $100,000 to a land trust Brown established with defendant Old Kent Bank so that Brown could purchase the real property commonly known as 321 North Prospect, Wheaton, DuPage County, Illinois, for $78,000, and hire a contractor to upgrade the residence. In return, the trust executed and tendered a $110,000 installment note which was secured by a first mortgage on the Wheaton property and Brown tendered his personal guarantee that the terms of the installment note would be performed. Brown intended to sell the rehabilitated property at a profit and satisfy the note within six months.
When the Wheaton property was ready for resale, Brown consulted with a real estate agent and listed the house for $160,000. However, no one offered to buy at that price and Brown lacked the funds to otherwise repay his debt to Vancura when the note matured in May 1995. Vancura began telephoning Brown about once a month regarding the overdue debt. Both Brown and Vancura sought advice from a fellow real estate investor and their mutual acquaintance, defendant Randall Boatwright. Boatwright toured the property with the borrower and made suggestions about how to improve its sale potential. Afterward, Boatwright went out of town to find additional investors for his new video transmission company, Multi Path Communications, and when he returned, his business partner told him that Vancura was willing to trade the Brown installment note at discount for a greater share of Multi Path Communications.2 Boatwright told Brown about the potential trade with Vancura and said that although Brown's repayment obligation had risen to $117,333, Boatwright was willing to discount the note to $90,000. Around the same time, Vancura stopped making monthly debt collection calls to Brown, although he would later testify that he did not call Brown after December 1995 only because he was angry about the unpaid debt. Intrigued by Boatwright's offer to discount the debt, Brown asked another business acquaintance, defendant Peter Katris, to fund the $90,000 payoff, in exchange for $90,000 and 50% of the profits whenever the Wheaton property sold. Katris accepted Brown's investment proposal.
Brown next arranged for his attorney, Karl E. Park, to conduct a real estate closing to reflect that Boatwright was buying out Vancura's interests. Attorney Park asked that the original installment note and original mortgage be available at the closing scheduled for December 20, 1995, but only so the documents could be marked "paid in full" and "cancelled" as a courtesy to the parties. He did not consider these documents or the notations to be essential to the transaction. Rather, other documents would sufficiently reflect what transpired, including an assignment of mortgage signed by Vancura, a loan discount agreement signed by Boatwright and Brown which indicated Boatwright was accepting less than the note's face value, and a release deed signed by Boatwright which indicated he was relinquishing his mortgagee's rights to the Wheaton real...
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