Read v. Toledo Loan Co. (68 Ohio St. 280, 1903)

Crew, J.

On the trial of this cause in the court of common pleas, at the request of the plaintiff, the court made and stated its finding of facts separate from its conclusions of law, and the facts so found and stated by said court of common pleas, are admitted to be correct, and they are not here in dispute. The sole controversy in this case arises upon the statement of facts contained in paragraphs four and five of its findings of fact so made by said court of common pleas. Said paragraphs are as follows:

“4. That prior to and upon February 19, 1896, said assignor, Cary D. Lindsay, was a member of said The Toledo Loan Co., and on said date subscribed for ten shares of the capital stock of said company; that thereupon, on the representation of said Cary D. Lindsay to said company, and upon agreement between said Cary D. Lindsay and said company, that said loan should become and be secured by a first lien upon said lots numbers 116 and 117 in Shaw’s Monroe Street Addition to Toledo, Ohio, said The Toledo Loan Co., on February 19, 1896, loaned and advanced to said Cary D. Lindsay, the sum of forty-eight hundred dollars ($4,800), of and from the moneys theretofore raised by said company for said purpose of loaning to its members, said Cary D. Lindsay agreeing to repay said loan with interest, in weekly installments, in accordance with the constitution and by-laws of said company; that in pursuance of said representations and agreement, and to secure the payment of said money so loaned, with interest, and simultaneously Avith the loaning thereof, said Cary D. Lindsay executed, acknowledged and delivered to said defendant, The Toledo Loan Co., his certain mortgage for said sum of $4,800 upon said lots numbers 116 and 117 in Shaw’s Monroe Street Addition, aforesaid.

“5. That said mortgage was executed by said Cary D. Lindsay in the presence of Eva M. Ely and Grant Williams, and was acknoAvledged by said Cary D. Lindsay before Grant Williams, a notary public within and for Lucas county, Ohio; that at the time of the execution and acknowledgment of said mortgage, said Cary D. Lindsay was a stockholder in said The Toledo Loan Co., and Eva M. Ely and Grant Williams were each owners of two shares of the stock of said company, and said Eva M. Ely and Grant Williams were not otherwise related to said The Toledo Loan Co., or in any wise employed by it; and said Cary D. Lindsay then knew that said witnesses and notary respectively, were stockholders • in said company.”

Upon the foregoing facts, it is claimed by plaintiff in error:

“First — That inasmuch as Eva M. Ely and Grant Williams were both stockholders of the defendant company, the mortgage given to it by Cary D. Lindsay was never witnessed.

“Second — That inasmuch as Grant Williams, the notary before whom said mortgage purports to have been acknowledged by Cary D. Lindsay, was a stockholder in said company, that said mortgage was never duly acknowledged.

“Third — That never having been acknowledged and never having been witnessed as to its signature, said mortgage was not entitled to record in Lucas county, and the recording of the same was a nullity.

“Fourth — That the plaintiff as assignee holds the legal title to said real estate free from all incumbrances or liens growing out of said mortgage.”

It will thus be seen that the question here presented is: Whether a mortgage made to a corporation as grantee, is invalid and of no effect by reason of the fact that the witnesses to such mortgage and the officer taking the acknowledgment thereof, are stockholders in said corporation. The requisites as to the manner and form of the execution of instruments for the conveyance or incumbrance of real property is matter of statutory regulation, and the statute providing for and governing the execution and acknowledgment of deeds, mortgages, etc., in this state, is Section 4106, Revised Statutes, which section, so far as it has relation to the present inquiry, and application to the question here involved, provides as follows:

“A * * * mortgage * * * of any estate or interest in real property shall be signed by the *' * * mortgagor * * * and such signing shall be acknowledged by the * * * mortgagor * * * in the'presence of two witnesses, who shall attest the signing and subscribe their names to the attestation, and such signing shall also be acknowledged by the * * * mortgagor * * * before a judge of a court of record in this state, or a clerk thereof, a county auditor, county surveyor, notary public, mayor or justice of the peace, who shall certify the acknowledgment on the same sheet on which the instrument is written or printed, and subscribe his name thereto.”

It will be observed- that within the provisions of this section the only requirements are that the mortgage shall be signed by the mortgagor, that such signing shall be acknowledged by him in the presence of two witnesses who shall attest the same, and that such signing shall be acknowledged by the mortgagor before one of the several officers therein named, whose duty it shall be to make certificate thereon of said acknowledgment. But the qualifications of the witnesses so attesting,' and the officer so certifying, are not attempted to-be prescribed by said section, nor is there in said statute any provision or even suggestion that a witness or officer shall be disqualified or rendered incompetent as such, by reason of being interested in the conveyance so witnessed and certified. In the absence then of any express provision in the statute forbidding it, the precise question here presented is, whether a stockholder in a corporation, not otherwise interested therein, may be a witness to, and as notary public may take the acknowledgment of a mortgage executed by another to such corporation; and the proper determination of this inquiry involves, to some extent at least, a consideration both of the purpose of the legislation requiring the observance of these formalities in the execution of a mortgage, and also of the capacity in which a notary acts in taking and certifying the acknowledgment of the grantor, whether such act on his part is judicial or ministerial in character. At common law attestation was not necessary to the validity of a deed or mortgage and is not now necessary, except when required by statute. The purpose of the legislature in requiring that an instrument for the conveyánce or incumbrance of real property shall be witnessed by two witnesses doubtless was that there might be on record, in a matter so important as that of the conveyance or incumbrance of real property, the names of two persons who certify or attest the fact, that they saw the grantor sign the instrument or heard him acknowledge the same, and thereby to furnish an easy and effectual mode of proof of its execution, and thus provide an additional protection or security against the making of a fraudulent or forged conveyance or incumbrance. The certificate of acknowledgment by a notary public, or other authorized officer, is simply an additional solemnity in the execution of a deed or mortgage and is required by statute chiefly for the purpose of affording proof of the due execution of the instrument by the grantor, sufficient to authorize the recorder to make the same matter of public record. Section 4134, Revised Statutes. Jones on the Law of Real Property in Conveyanting, at section 1126, in discussing the subject of “acknowledgment” says: “The chief use of an acknowledgment, as already noticed, is to perfect the deed for record. The grantor can select such authorized officer before whom to acknowledge his deed as he chooses. He may refuse to make his acknowledgment before an interested officer. Having voluntarily acknowledged the deed, the grantor is presumed to have voluntarily consented to its record. ‘If his deed is found on record, apparently executed according to the forms of law, and without any circumstances of suspicion against it, the plainest principle of equity would hold him estopped from setting up an undisclosed interest of the officer before whom he made his acknowledgment, to defeat his conveyance, as against an innocent purchaser relying upon the record as the evidence of his title.’ * * * “An interest under a deed not apparent on its face does not disqualify an officer to take and certify an ordinary acknowledgment. Thus, if he is one of the beneficiaries in a deed of trust, he may take the grantor’s acknowledgment, when his interest under the deed does not appear on the face of it. The fact that he acted as the agent of the mortgagor in obtaining the money does not disqualify him to take the mortgagor’s acknowledgment.”

What is here said by the author would seem to apply equally as well to the witnesses attesting the signature of the grantor as to the officer taking his acknowledgment. In an early case in this state (that of Johnson v. Turner, 7 Ohio [pt. 2], 216) it was decided by this court that a witness to a trust deed, given to secure an indebtedness to a bank, who at the time of the execution of such deed was a stockholder in said bank, was not thereby disqualified to act as a subscribing witness to said deed, and that such deed was not thereby rendered invalid nor could it, on that ground, be impeached for want of sufficient attestation. The question there decided, arose and was presented on the following agreed statement of facts:

“Walter Turner was indebted to the Bank of Zanesville in the amount .stated in the trust deed under which the plaintiffs, claimed, and on the application of C. B. Goddard, Esq., the attorney for the bank, executed the deed which was prepared and signed by said Goddard, as one of the subscribing witnesses, he (Goddard) being a stockholder in the corporation.”

In the opinion in that case the court say:

“The first question for the consideration of the court is the objection to the trust deed, because, at the time of its execution, General Goddard, one of the subscribing witnesses, was a stockholder in the Bank of Zanesville. If this objection is sustainable,, the deed is invalid to pass the legal title of the lands intending to be conveyed to the trustee for the security of the bank, and ought not to be received in evidence in support of a legal title in the plaintiff’s lessors. * * *

“But is not this deed in conformity with the statute? This is admitted, in all respects, excepting that General Goddard was interested in the corporation for whose benefit it was made, when he subscribed it as a witness, and it was executed by Turner. '* * *

“In England,, the grantee must prepare the conveyance and present it to the grantor for execution. We know of no such rule here. The grantor prepares his own deed. He calls his witnesses; they are selected by himself. He must then acknowledge its execution, and not until thus acknowledged, does he part with its possession by a delivery to the grantee. Every act, therefore, is the act of the grantor while the deed remains in his possession, and the first act of the grantee is the acceptance when finally delivered to him. The grantor, then, should not, it appears to us, be permitted to object to a witness selected by himself, and in whose integrity he had reposed confidence, to bear witness to his own acts. But aside from this course of reasoning, is this deed invalid? The statute, Vol XXXI, 346, Sec. 1, requires the deed to be executed fin the presence of two witnesses, who shall attest such signing and sealing and subscribe their names to such attestation.’ Unless the express provisions of this- statute or its plain inference, lead to the conclusion that the witnesses to a deed must be credible and competent to prove its execution at the time of their attestation, and that such was the intention of the legislature, reluctantly indeed, Avould this court adopt such an opinion. If such be the law, it is time to look around us and ascertain by whom our deeds bear witness.”

As above stated, the court in this case held that the trust deed was sufficiently attested, was valid and could not be impeached by showing that Goddard, one of the attesting witnesses, was interested in the corporation. But it is here insisted, by counsel for plaintiff in error, that the doctrine of this case is modified and the authority of the case destroyed by the decision of this court in the later case of Amick v. Woodworth et al., 58 Ohio St., 86, where it is held by this court that the grantee in an instrument for the conveyance or incumbrance of real property is disqualified to be an attesting witness to its execution or to act in an official character in taking and certifying the acknowledgment of the grantor. In the case of Amick v. Woodworth, the instrument, the validity of which was in controversy, was acknowledged before, and was witnessed by, the person named therein as grantee, which fact readily distinguishes it from the case we are here considering. And that this distinction was not overlooked, but was clearly recognized by the court, affirmatively appears from the language of Williams, J., who prepared the opinion in that case, when he says : “It is probably unnecessary to notice that this question was not involved in Johnson v. Turner, 1 Ohio (pt. 2), 216, and that case is unaffected.”

The decision in Johnson v. Turner having been made by this court as early as the December term, 1836, and not having since been questioned or overruled by this court, has become a law of property in this state, and for that reason, if for no other, should now be followed and upheld. This decision in Johnson v. Turner must, therefore, be held to conclusively determine the question in this state that an instrument, conveying or incumbering real estate cannot be impeached and will not be held invalid on the sole ground that the witnesses to such instrument are interested to the extent of being stockholders in the corporation named therein as grantee.

This leaves then only the question: Is the mortgage here in controversy invalid, because the notary public before whom the same was acknowledged, was at the time of taking such acknowledgment, a stockholder in The Toledo Loan Co., grantee in skid mortgage? Counsel in this case upon both sides, as evidenced by their briefs, have been diligent in the collection and citation of authorities dealing with this question, and the cases cited show quite a conflict of authority and diversity of holding by the courts in the different states, upon this question. There would seem to be two lines of authorities upon this proposition, the one holding that the act of a notary in taking and certifying an acknowledgment is a judicial act, the other holding it to be ministerial only. In those states holding the former doctrine, the notary is held to be incompetent and the instrument, therefore, invalid. While in those states holding the latter doctrine, exactly the contrary decision is reached, and in most of the authorities cited by counsel the decision in each particular case seems to have turned upon or been controlled by the fact of whether the court rendering the decision regarded the act of the officer in taking the acknowledgment as judicial or ministerial in character. This distinction is noticed and discussed in the case of Bank v. Conway, 17 Fed. Cases, 1202. Judge Hughes, announcing the opinion of the U. S. District Court in that case, among other things, says:

“The question whether this writing was properly acknowledged or not, which was so ably and elaborately argued at bar, is only a secondary one in the case. The primary question is, when did this writing become a deed as between the grantor and grantee? The acknowledgment of the writing by the grantor had reference only to its being recorded, and thereby made valid as against his creditors. If the question were only as to acknowledgment, I should decide, without hesitation, that it was properly acknowledged ; for the teaching of the cases cited at bar seems to me plainly to be, that an interested person may take the acknowledgment of a deed when the act is merely ministerial; although if the act be judicial, such as taking the acknowledgment, after privy examination, of a married woman, an interested person cannot take it. Harkins v. Forsyth, 11 Leigh, 294; Carper v. McDowell, 5 Gratt., 212; Horsley v. Garth, 2 Gratt., 471; Taliaferro v. Pryor, 12 Gratt., 277; Johnston v. Slater, 11 Gratt., 321; Turner v. Stip, 1 Wash., 319; Hampton v. Stevens, 10 Am. L. Reg., 107 (1971); Boswell v. Flockheart, 8 Leigh, 364; Dimes v. Grand Junction Canal Co., 16 Eng. Law & Eq., 63.

This case was taken on appeal to the United States Circuit Court, and in that court Chief Justice Waite, announcing the opinion, said:

“A deed may be acknowledged by the grantor before a notary public, and upon the certificate of the notary to that effect in proper form, recorded. The form of the certificate in this case is correct, but it is insisted that because Garnett, the notary, was interested as one of the beneficiaries in the trust, he was incompetent in law to receive and certify the acknowledgment. This presents the principal question in the case for our consideration.

“It has been frequently decided that an acknowledgment before a grantee named in a deed was of no effect. Beaman v. Whitney, 20 Me., 413; Wilson v. Traer, 20 Ia., 232; Stevens v. Hampton, Mo., 404; Groesbeck v. Seeley, 13 Mich., 329. It has also been held that a party interested in a deed cannot take and certify the acknowledgment of a married woman requiring a privy examination. Withers v. Baird, 7 Watts, 228. The taking of such an acknowledgment is, in some respects, a judicial act, and not ministerial only, but in the case of an ordinary acknowledgment it is purely a ministerial act. Truman v. Lore, 14 Ohio St., 151; Lynch v. Livingston, 2 Seld., 434. Upon this principle it was decided in Dussaume v. Burnett, 5 Ia., 95, that an acknowledgment before one not a grantee named in the deed, but interested in the conveyance, was good. The same distinction was recognized in Stevens v. Hampton, before cited.” * * *

And further in the same opinion it is said: “A certificate of acknowledgment is required to perfect a deed for record. The grantor can select such authorized officer for that purpose as he chooses. He has full power to protect himself against frauds by interested parties as certifying officers, for he may refuse to make his acknowledgment before them.” And in this case it was held that the notary taking the acknowledgment was not disqualified, and that the deed was valid.

It has been twice held by the Supreme Court of this state that in Ohio the officer does not exercise judicial functions in taking an acknowledgment, and that his act, though official, is purely ministerial. Truman v. Lore et al., 14 Ohio St., 151; Williamson v. Carskadden, 36 Ohio St., 664. And that the legislature in the enactment of the present statute so regarded it, is, we think, clearly indicated by the fact that the power to take acknowledgments is not limited by the statute to judicial officers alone, such as the judge of a court of record, mayor, or justice of the peace, but is conferred as well upon county auditors, county surveyors,- and notaries public. It would seem that in those instances where the legislature intended to disqualify, or limit the authority of a notary public to act in his official capacity, it has done so by express and positive statutory provision, for instance by Section 111, Revised Statutes, it is provided: “No banker, broker, cashier, director, teller, or clerk of any bank, banker, or broker or other person holding any official relation to any bank, banker, or. broker, shall be competent to act as notary public in any matter to which said bank, banker, or broker is in any way interested.”

By Section 5269, Revised Statutes, a notary public is one of the officers authorized to take depositions, but it is provided by section 5271 that such notary must not be a relative or attorney of either party or otherwise interested in the event of the action or proceeding in which the deposition is taken. If, therefore, it had been the policy and purpose of the legislature to prohibit a stockholder of a corporation from acting as notáry public in the taking and certifying of an acknowledgment to an instrument in which such corporation was interested, it would doubtless have so provided in section 4106, and in the absence of any statutory inhibition the disqualification of the notary to act will not be presumed.

In the case at bar it is admitted that Cary D. Lindsay, the assignor, at the time he acknowledged this mortgage, knew of the relation the notary, Grant Williams, sustained to The Toledo Loan Co., and knew that he was then the holder of two shares of stock in said company, and there is in this case no imputation or charge of improper conduct or had faith or undue advantage arising out of such interest or relationship, nor is there any claim but that the acknowledgment was freely and fairly made in the honest belief that it was in all respects authorized and sufficient. To hold then, under such circumstances, that the mortgage here in controversy was invalid, unless impelled thereto by statutory requirement or the plainest considerations of public policy, would, it seems to us, be a subversion of justice and would be contrary to tbe plainest principles of equity and fair dealing. In affirming tbe judgment of tbe court of common pleas in this case tbe circuit court was right, and its judgment is

Affirmed.

Burket, C. J., Spear, Davis, Shauck and Price, JJ., concur.