Submitted: September 8, 1992
Filed: October 23, 1992
William E. Galloway
Weirton, West Virginia
Rose Ann Cinello
Weirton, West Virginia
JUSTICE MILLER delivered the Opinion of the Court.
1. W. Va. Code, 29C-3-102 (1985), states that a notary
with a disqualifying interest may not legally perform any notarial
act in connection with the transaction. It does not address the
validity of a document acknowledged before a notary with a
2. A notary's disqualifying interest can result in
voiding an instrument that has been notarized by him. In deciding
whether to void the instrument, a court should consider whether an
improper benefit was obtained by the notary or any party to the
instrument, as well as whether any harm flowed from the
transaction. To the extent that Tavenner v. Barrett, 21 W. Va. 656
(1883), and related cases state or imply the contrary, they are
3. Once it is shown that a notary has a disqualifying
interest in an instrument which he acknowledged, and a suggestion
of actual prejudice, unfair dealing, or undue advantage is raised
by an adverse party, then the burden shifts to the notary or any
party seeking to support the challenged document to demonstrate
that no improper benefit was obtained and no harm occurred as a
result of the disqualified act.
4. W. Va. Code, 29C-6-101 (1985), states that a notary
public is liable to the persons involved for all damages
proximately caused by the notary's official misconduct.
5. W. Va. Code, 29C-6-201, provides that the term "official misconduct" means the wrongful exercise of a power or the wrongful performance of a duty. The term "wrongful" as used in the definition of official misconduct means unauthorized, unlawful, abusive, negligent, reckless, or injurious.
This case comes before us through a certified question
from the Circuit Court of Brooke County pursuant to W. Va. Code,
58-5-2 (1967),See footnote 1 and Rule 13 of the West Virginia Rules of Appellate
Procedure.See footnote 2 We are asked to decide whether an attorney may be held
liable to the beneficiary of a deed of trust where the attorney
acted as the notary and as the trustee of the deed of trust. In
the case at bar, this dual role resulted in the underlying debt
losing its secured status in bankruptcy court.See footnote 3
The petitioner, William Galloway, is an attorney at law. On January 3, 1990, Clarence and Heddy Rochinich, husband and wife, and the respondent, Rose Ann Cinello, hired Mr. Galloway to prepare a deed, a promissory note, and a deed of trust in order to consummate the sale of real property. Ms. Cinello wanted to sell the Rochinichs a residence in Weirton for $22,000. The Rochinichs made a downpayment of $1,500, and the balance, which was owner-financed by Ms. Cinello, was to be repaid in installments pursuant to a promissory note. The promissory note was secured by a deed of trust on the real property. The deed of trust was a first lien on the property, and Ms. Cinello was, therefore, a secured creditor.
The deed, promissory note, and deed of trust were signed
on April 25, 1990. In the deed of trust, Mr. Galloway was named as
the trustee and Ms. Cinello as the beneficiary. Mr. Galloway
notarized both the deed and the deed of trust. On May 7, 1990, the
deed and deed of trust were recorded in the office of the Clerk of
the County Commission of Brooke County.
On December 3, 1990, the Rochinichs filed a Chapter Seven
bankruptcy petition in the United States Bankruptcy Court for the
Northern District of West Virginia. The assets listed in the
Rochinichs' bankruptcy petition included the property they had
purchased from Ms. Cinello. The Rochinichs also listed Ms. Cinello
as a secured creditor to whom they owed approximately $19,000.
On April 15, 1991, the bankruptcy trustee filed a
complaint in the bankruptcy courtSee footnote 4 alleging that Ms. Cinello did
not have a perfected lien on the real estate because Mr. Galloway,
as the trustee in the deed of trust, had also acknowledged the
signatures of the Rochinichs.See footnote 5 The Rochinichs filed an answer to
the complaint admitting the authenticity of the deed of trust and
asserting that they wanted to reaffirm the debt.
By order entered November 14, 1991, the bankruptcy court ruled that Ms. Cinello had no security interest in the property.
The principal legal authority relied upon by the bankruptcy court
was Tavenner v. Barrett, 21 W. Va. 656 (1883), where we invalidated
a deed of trust because its trustee had also notarized the
instrument. Ms. Cinello appealed this decision to the United
States District Court. Mr. Galloway then filed a petition for
declaratory judgment in the Circuit Court of Brooke County. In
addition, Mr. Galloway and Ms. Cinello filed a joint motion
requesting the circuit court to certify the question to this Court.
The circuit court granted the motion.
An acknowledgment is a formal declaration before an authorized public official, i.e., a notary public, by a person who has executed an instrument that the instrument is his free act or deed.See footnote 6 See generally 1A C.J.S.
Acknowledgments § 2 (1985); 1 Am. Jur. 2d Acknowledgments § 1 (1962 & Supp. 1992). An acknowledgment has three functions: to authenticate the instrument; to permit the instrument to be introduced into evidence without proof of execution; and to entitle the instrument to be recorded. See generally 1 Am. Jur. 2d Acknowledgments at § 4. An acknowledgment is a prerequisite to recording an instrument in this State. See W. Va. Code, 39-1-2 (1933).See footnote 7
As earlier noted, the bankruptcy court relied on Tavenner
v. Barrett, supra, where we held that the acknowledgment of the
deed of trust by the trustee made the deed of trust invalid. In
Tavenner, we followed the rationale advanced by other courts that
an acknowledgment is a quasi-judicial act, and, as a consequence,
"'[t]he objection to the trustee taking such acknowledgment is
analogous to the one forbidding a judge to pass upon his own case.
Though this act may not be strictly judicial, it is of a judicial
nature and requires disinterested fidelity.'" 21 W. Va. at 688,
quoting Stevens v. Hampton, 46 Mo. 404, 407 (____).See footnote 8
Several cases follow Tavenner, but provide no analysis of
its rule. For example, in Central Trust Co. v. Cook, 111 W. Va.
637, 163 S.E. 60 (1932), which involved another acknowledgment of
a deed of trust by the trustee-notary, we merely cited Tavenner and
concluded in Syllabus Point 2: "An acknowledgment of a trust deed
by the grantors before the trustee as a notary public is invalid."
Similarly, in Dixon v. Hesper Coal & Coke Co., 100 W. Va.
422, 130 S.E. 663 (1925), a mortgage company had its deed of trust
declared invalid because the trustee acknowledged the instrument.
Again, there was only a brief reference to Tavenner.
In some jurisdictions, courts have focused on the notary's interest and have held that if the notary has a financial or beneficial interest in the transaction other than receipt of the ordinary notarial fee, the instrument is invalid. See Loucks v. Carl Foster & Wards Used Cars, 334 F.2d 86 (6th Cir. 1964); Southern Iron & Equip. Co. v. Voyles, 138 Ga. 258, 75 S.E. 248 (1912); Lugue v. Von Almen, 379 Ill. 208, 40 N.E.2d 73 (1941); Bartlett v. Bolte, 193 Iowa 1063, 188 N.W. 814 (1922); Pearl v. Interstate Secs. Co., 357 Mo. 160, 206 S.W.2d 975 (1947); Musselshell Valley Farming & Livestock Co. v. Cooley, 86 Mont. 276, 283 P. 213 (1929); Loyal's Auto Exch., Inc. v. Munch, 153 Neb. 628, 45 N.W.2d 913 (1951); Armstrong v. Jonas, 204 N.C. 153, 167 S.E. 562 (1933); Phillips v. Brazosport Sav. & Loan Ass'n, 366 S.W.2d 929 (Tex. 1963), appeal dismissed, 375 U.S. 438, 84 S. Ct. 506, 11
L. Ed. 2d 471 (1964); First Nat'l Bank v. Citizens' State Bank, 11
Wyo. 32, 70 P. 726 (1902). See generally 1 Am. Jur. 2d
Acknowledgments § 16; 1A C.J.S. Acknowledgments § 40.
The analysis in these cases is somewhat different than in
Tavenner, but the same result is generally achieved, i.e., voiding
the instrument. Typical of the reasoning of this approach is the
principle articulated in Loucks v. Carl Foster & Wards Used Cars,
334 F.2d at 88, where the court quoted from 1 Am. Jur. 2d
Acknowledgments § 16 at 458:
"'[A]n officer or a person otherwise legally authorized to take acknowledgments is not qualified to act where he has a financial or beneficial interest in the proceedings or will acquire such an interest under the instrument to be acknowledged.
"Frequently it is said that this
rule rests upon grounds of public policy, the
purpose being to close the door to temptation
to fraud.'" (Emphasis added in Loucks).
The rule regarding the disqualifying interest of a notary
is presently contained in our Uniform Notary Act, which the
legislature adopted in 1984.See footnote 9 See generally W. Va. Code, 29C-1-101, et seq. The particular language regarding disqualification is
contained in W. Va. Code, 29C-3-102 (1985):
"(a) A notary public who has a disqualifying interest, as hereinafter defined, in a transaction may not legally perform any notarial act in connection with the transaction.
"(b) For the purposes of this
chapter, a notary public has a disqualifying
interest in a transaction in connection with
which notarial services are requested if he:
"(1) May receive directly, and as a
proximate result of the notarization, any
advantage, right, title, interest, cash or
property, exceeding in value the sum of any
fee properly received in accordance with
section three hundred one [§ 29C-4-301],
article four of this chapter, or exceeding his
regular compensation and benefits as an
employee whose duties include performing
notarial acts for and in behalf of his
"(2) Is named, individually, as a
party to the transaction."
While this section states that a notary with a
disqualifying interest "may not legally perform any notarial act in
connection with the transaction," it does not address the validity
of a document acknowledged before a notary with a disqualifying
interest. No provision in the Act deals with this question.
The first step in any analysis of this issue is to
determine whether the notary has a disqualifying interest. Here,
there is no disagreement that the notary had a disqualifying
interest because he was a party to the deed of trust that he
notarized. We addressed the interests of the parties in a deed of
trust in Lilly v. Duke, 180 W. Va. 228, 231, 376 S.E.2d 122, 125
"[T]he beneficiary of a deed of trust enjoys a protectible interest in the property subject to the trust. We have recognized the substantial property interests involved in a deed of trust -- the trustee holding legal title for the beneficiary and the grantor holding an equitable title. Rollyson v. Bourn, 85 W. Va. 15, 100 S.E. 682 (1919)."
Where the notary has a disqualifying interest, the next
question is the bearing this defect has on the validity of the
instrument. We decline to follow the per se rule of Tavenner and
its progeny, which automatically voids a deed of trust because the
trustee has acted as its notary. Such a rule can be unduly harsh,
as illustrated by the facts of this case. The beneficiary of the
deed of trust loses her security interest not because of any claim
of wrongdoing, bad faith, or other improper conduct on her part,
but solely on the basis that the notary was the trustee on the
If the primary purpose of the rule is to shield the
parties from potential wrongdoing or fraud, then the focus of the
inquiry should be shifted in this direction. Other jurisdictions
have recognized the harshness of a per se rule, as evidenced by
this summary from 1 Am. Jur. 2d Acknowledgments § 16 at 458-59:
"To hold that every interest renders the act ipso facto void is repugnant to sound principles of the law of evidence and in many cases must be productive of great hardship and injury. A more salutary rule declares that where there is no imputation or charge of improper conduct, bad faith, or undue advantage, the mere fact that the acknowledgment was taken before an interested officer will not vitiate the ceremony or render it void if it is otherwise free from objection or criticism. The fact of interest, however, ought to be regarded with suspicion and should provoke vigilance to detect the presence of unfair dealing, the slightest appearance of which the party seeking to uphold the acknowledgment should be required to clear away." (Footnote omitted).
See generally Davis v. Hale, 114 Ark. 426, 170 S.W. 99 (1914);
Bartlett v. Bolte, supra; J.W. Dillon & Son Co. v. Oliver, 106 S.C.
410, 91 S.E. 304 (1917); Weidman v. Templeton, 61 S.W. 102 (Tenn.
Ch. App. 1900); Haile v. Holtzclaw, 400 S.W.2d 603 (Tex. Civ. App.
1966), rev'd on other grounds, 414 S.W.2d 916 (Tex. 1967).
Accordingly, we hold that a notary's disqualifying
interest can result in voiding an instrument that has been
notarized by him. In deciding whether to void the instrument, a
court should consider whether an improper benefit was obtained by
the notary or any party to the instrument, as well as whether any
harm flowed from the transaction. To the extent that Tavenner v.
Barrett, supra, and related cases state or imply the contrary, they
Inasmuch as our statute forbids a notary with a
disqualifying interest in an instrument to acknowledge it, we
believe it is appropriate to place the burden of proof on the
notary or any party supporting the instrument to uphold its
validity. This rule is analogous to the principle we explained in
Kanawha Valley Bank v. Friend, 162 W. Va. 925, 929, 253 S.E.2d 528,
"A corollary to the fiduciary principle is the rule that a presumption of fraud arises where the fiduciary is shown to have obtained any benefit from the fiduciary relationship, as stated in 37 Am. Jur. 2d Fraud and Deceit § 441:
"'. . . if he seeks to support the
transaction, he must assume the
burden of proof that he has taken no
advantage of his influence or
knowledge and that the arrangement
is fair and conscientious[.]'"
See also Yaromey v. King, 182 W. Va. 128, 386 S.E.2d 493 (1989);
Work v. Rogerson, 152 W. Va. 169, 160 S.E.2d 159 (1968).
Thus, we conclude that once it is shown that a notary has
a disqualifying interest in an instrument which he acknowledged,
and a suggestion of actual prejudice, unfair dealing, or undue
advantage is raised by an adverse party, then the burden shifts to
the notary or any party seeking to support the challenged document
to demonstrate that no improper benefit was obtained and no harm
occurred as a result of the disqualified act.
Ms. Cinello lost the benefit of being a secured creditor on the deed of trust in the bankruptcy proceeding because the bankruptcy court relied on our substantive law in Tavenner. Consequently, we must address whether the trustee-notary can be held liable to Ms. Cinello, the beneficiary of the deed of trust in this case, because the deed has been rendered ineffective.See footnote 10
Should the federal district court uphold the bankruptcy
court's ruling, Ms. Cinello will suffer a harm through the notary's
action. Even though the trustee-notary did not gain any improper
advantage, his failure to properly follow Tavenner resulted in the
invalidation of the deed of trust by the bankruptcy court. Thus,
Ms. Cinello's status as a secured creditor under the deed of trust
will have been destroyed. Her secured interest of some $19,000
will have been lost, and she will share only with the common
Our Uniform Notary Act addresses a notary's liability.
W. Va. Code, 29C-6-101 (1985), states: "A notary public is liable
to the persons involved for all damages proximately caused by the
notary's official misconduct." "The term 'official misconduct'
means the wrongful exercise of a power or the wrongful performance
of a duty. The term 'wrongful' as used in the definition of
official misconduct means unauthorized, unlawful, abusive,
negligent, reckless or injurious." W. Va. Code, 29C-6-201. The
term "proximately caused" used in W. Va. Code, 29C-6-101, is
further refined in Section 103: "It is not essential to a recovery
of damages that a notary's official misconduct be the only
proximate cause of the damages."
In other jurisdictions, even in the absence of any
specific statutory language, courts have held a notary and his
official surety civilly liable for negligence in the performance of
notarial duties. The most frequent cases are those where the
notary has acknowledged a deed or other instrument without ensuring
that the person whose signature he acknowledged was in fact the
person he or she was represented to be.
For example, in City Consumer Services, Inc. v. Metcalf,
161 Ariz. 1, 775 P.2d 1065 (1989), the defendant went to the office
of an attorney-notary with a woman he represented to be his wife.
The defendant presented the notary with a quit claim deed
purporting to transfer his wife's interest in the couple's family
residence exclusively to him. The deed was dated and already bore
his wife's supposed signature. Based only on the defendant's
representation that the woman accompanying him was his wife, the
notary notarized the deed. Subsequently, City Consumer Services
loaned money to the defendant on the ground that he had complete
title to the property. Upon his default, the company tried to sell
the property under its deed of trust, but discovered that the
defendant had title to only a one-half interest. The lender then
sued the notary for its losses and received a judgment. The
Arizona Supreme Court affirmed:
"Metcalf claims his conduct was not
negligent. Notaries public must conform their
conduct to a defined statutory duty of care.
See A.R.S. §§ 33-503 et seq. This statute
requires, first, that the person whose
signature is being acknowledged have
'appeared' before the notary and 'acknowledged
he executed the instrument.' A.R.S. § 33-503(1). It also requires that the notary
either have 'known' the person whose signature
is being acknowledged 'or that the [notary
have] satisfactory evidence that the person
acknowledging was the person described in and
who executed the instrument.' A.R.S. § 33-503(2) (emphasis added)." 161 Ariz. at ___,
775 P.2d at 1068.See footnote 11
See also Bernd v. Fong Eu, 100 Cal. App. 3d 511, 161 Cal. Rptr. 58
(1979); Osborn v. Ahrens, 116 Idaho 14, 773 P.2d 282 (1989); Webb
v. Pioneer Bank & Trust Co., 530 So. 2d 115 (La. App. 1988);
McWilliams v. Clem, 228 Mont. 297, 743 P.2d 577 (1987); Keck v.
Keck, 54 Ohio App. 2d 128, 375 N.E.2d 1256 (1977); Meyers v.
Meyers, 81 Wash. 2d 533, 503 P.2d 59 (1972).
We have found only one case in our jurisdiction, Henderson v. Smith, 26 W. Va. 829 (1885), where a notary was sued.
There the notary had taken a defective acknowledgment from a
married woman. As a result, the beneficial owner of a deed of
trust lost his lien. The acknowledgment had been prepared by an
attorney, and the notary handled its execution. We held the notary
had not acted corruptly or maliciously and was, therefore, not
The standard of conduct is no longer limited to corrupt
or malicious acts on the part of a notary. It has been
strengthened by our Uniform Notary Act, under which negligence will
suffice to create liability. To this extent, Henderson has been
superseded by statute.
Having in mind that our Uniform Notary Act prohibits a notary with a disqualifying interest from acknowledging an instrument, and inasmuch as the notary in this case is an attorney, we conclude that he was negligent in making the acknowledgment. Moreover, under Tavenner and its related cases, it should have been apparent that this defect would void the instrument if it were challenged, which is exactly what occurred in the bankruptcy court. Thus, the notary's negligent act proximately caused Ms. Cinello to lose her status as a secured creditor.
In summary, while we have altered our law under Tavenner, we decline to give it any effect in this case, as the loss has already occurred. Accordingly, the certified question is answered in the affirmative, and Ms. Cinello does have a cause of action should the federal district court affirm the bankruptcy court's ruling.
The certified question having been answered, this case is
Answered and dismissed.
Footnote: 1W. Va. Code, 58-5-2, provides, in pertinent part:
"Any question arising upon the
sufficiency of a summons or return of
service, upon a challenge of the sufficiency
of a pleading or the venue of the circuit
court, upon the sufficiency of a motion for
summary judgment where such motion is denied,
or a motion for judgment on the pleadings,
upon the jurisdiction of the circuit court of
a person or subject matter, or upon failure
to join an indispensable party, in any case
within the appellate jurisdiction of the
supreme court of appeals, may, in the
discretion of the circuit court in which it
arises, and shall, on the joint application
of the parties to the suit, in beneficial
interest, be certified by it to the supreme
court of appeals for its decision, and
further proceedings in the case stayed until
such question shall have been decided and the
decision thereof certified back."
Footnote: 2Rule 13 of the Appellate Rules outlines the steps to follow when presenting a certified question.
Footnote: 3The certified question reads as follows:
"Where an attorney at law serves as
a draftsman, a notary public, and a trustee
of a subsequently recorded deed, of a
promissory note, and a subsequently recorded
deed of trust in an owner/seller financed
real estate transaction between two private
citizens to which transaction the attorney at
law is not a party, does the owner/seller
have a cause of action against said attorney
at law for not perfecting a lien in favor of
the owner/seller on the subject real estate
because the said attorney at law served both
as the trustee and notary public in the said
deed of trust?"
Footnote: 4This procedure is authorized in 11 U.S.C. § 544 (1988).
Footnote: 5A certificate of acknowledgment is a document signed by "a notary public, justice of the peace, or other authorized officer, attached to a deed, mortgage, or other instrument, setting forth that the parties thereto personally appeared before him on such a date and acknowledged the instrument to be their free and voluntary act and deed. A verification of the act of the maker of the instrument." Black's Law Dictionary 226 (6th ed. 1990). The procedure for taking an acknowledgment is provided for in W. Va. Code, 39-1A-3. See note 11, infra.
Footnote: 6An acknowledgment differs from a verification because an acknowledgment authenticates the instrument by showing it was the act of the person executing it, while a verification is a sworn statement as to the truth of the facts stated within the instrument. 1A C.J.S. Acknowledgments § 2 (1985).
Footnote: 7W. Va. Code, 39-1-2, provides, in pertinent part: "The clerk of the county court of any county in which any deed, contract, power of attorney, or other writing is to be, or may be, recorded, shall admit the same to record in his office, as to any person whose name is signed thereto, when it shall have been acknowledged by him, or proved by two witnesses as to him, before such clerk of the county court."
Footnote: 8Tavenner did hold, however, that the deed of trust would be valid between the parties inter se and to subsequent parties with actual notice: "The deed however is good between the parties, (being sui juris) and should prevail against subsequent deeds to those who had actual notice of its existence." 21 W. Va. at 688. (Citations omitted).
From a practical standpoint, this language provides little protection for the parties to the deed of trust if either the disqualified notary or one of the parties to the transaction has obtained an undue advantage over or has otherwise harmed the other party.
Footnote: 9See 1984 W. Va. Acts ch. 136. Our statute, W. Va. Code, 29C-1-101, provides: "This chapter shall be known and may be cited as the 'uniform notary act.'" However, our act is not identical to the national model as revealed by this statement from the statutory notes on the Uniform Law on Notarial Acts: " West Virginia. Has adopted a 'Uniform Notary Act' (Code 29C-1-101 to 29C-9-101) which contains some provisions similar to those of the uniform act and having to some extent the same general purpose, but which does not constitute a substantial adoption of the major provisions thereof." 14 Uniform Laws Annotated 126 (1990).
Footnote: 10Based on the record in this case, and in light of our foregoing law, had this matter originated in the Circuit Court of Brooke County, we would have answered this question in the negative because there was no improper benefit or harm occurring from the disqualified act originally.
Footnote: 11We have similar requirements for taking an acknowledgment, as set out in W. Va. Code, 39-1A-3:
"The person taking an
acknowledgment shall certify that:
"(1) The person acknowledging appeared before him and acknowledged he executed the instrument; and
"(2) The person acknowledging was known to the person taking the acknowledgment or that the person taking the acknowledgment had satisfactory evidence that the person acknowledging was the person described in and who executed the instrument."