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ANNOTATION.

Liability of notary public on his bond.

I. In general, 920.

[.No later decisions herein.) II. Wilful misconduct:

a. In general, 920.
b. Certifying acknowledgment

known to be fraudulent, 920. III. False certificate of acknowledgment,

921. IV. Effect of contributory negligence, 921.

[No later decisions herein.)

The cases herein are supplementary to those found in the annotation following Lacour v. National Surety Co. 18 A.L.R. 1302.

I. In general. No later decisions herein. See annotation in 18 A.L.R. 1302.

II. Wilful misconduct.

a. In general. (Supplementing annotation in 18 A.L.R. 1302.)

In the reported case (SAEVOFF V. STEFFEN, ante, 918) the court holds that a notary public is not liable on his official bond for signing a jurat to an affidavit under the Sales in Bulk Act, wherein to his knowledge the affiants who made the sale swore falsely that there were no unpaid creditors, thus placing the property beyond reach of an execution debtor. The court bases its decision on the ground that the notary, in signing a jurat such as the one on the affidavit in question, fulfilled his duty when he swore the affiants, and in such a jurat, he, the notary, did not swear to the truth of the statements made in the affidavit, nor even to the identity of the persons signing same. b. Certifying acknowledgment known to

be fraudulent. (Supplementing annotation in 18 A.L.R. 1302.)

A notary public, in affixing his certificate of acknowledgment to a bill of sale, does not certify to the ownership in the person executing such an instrument. Ross v. New Amsterdam Casualty Co. (1922) 56 Cal. App. 254,

205 Pac. 43. And the court held in the instant case that, even assuming that a notary committed a breach of his official duty in falsely identifying by his certificate of acknowledgment R. as an actual person and the person executing a bill of sale, for which he (the notary) and his surety would be liable to a party injured thereby, the plaintiff was not damaged any more than he would have been had it been in all respects true, as the bill of sale from R. to S., the holder of the purported bill of sale from R. and the vendor of plaintiff, would not have passed any title, the title being in a third party. The court says: "Neither John Reed nor Gladys Steele was, nor had either ever been, the owner of said property, and hence a bill of sale from both or either could not have been effectual to transfer any title to or interest in the same to the plaintiff. Therefore the plaintiff could have received no title to the automobile had John Reed been an actual person, and had the bill of sale from himself to Gladys Steele been actually made and properly executed and certified; how can he be said to have sustained any damage from the alleged fact that John Reed was a fictitious person, and that his purported bill of sale was falsely acknowledged and certified to by the notary public?Therefore, neither the notary nor his surety was liable on the official bond of the former. The court was further of the opinion that, even if there was a conspiracy between the notary in his personal capacity and S. to defraud the plaintiff, the surety would not be a proper party to such an action, as the surety, under the terms of its undertaking, would not be liable for conspiracy or other forms of wrongdoing engaged in by its principal in his personal capacity and beyond the line of his official duty. In Brown v. Graves (1923) Kan.

220 Pac. 247, the court held that

where a notary public knowingly or short of it is that the false certificate negligently made a false certification of Crone, the notary, was necessary of the acknowledgment of a mortgage, to the accomplishment of the loss, and the mortgage was thereafter re- and for which act of the notary the corded, and it and the promissory surety is liable." It appearing in this notes which it secured were assigned case that the notary was insolvent, to an innocent holder for value, such and the property was rendered pracfalse certification of acknowledgment tically worthless by a fire, the relator constituted an actionable wrong for was not required to institute a futile which the notary and her bondsmen action against the notary because of were liable in damages to the parties the latter's equitable title in the land thereby injured.

mentioned in the trust deed, but, inIn State ex rel. Meinholtz v, Amer- stead, the relator could proceed to ican Surety Co. (1923) Mo. App. enforce his rights against the surety -, 254 S. W. 561, the court held that on the notarial bond. a surety on a notary public's bond

III. False certificate of acknowledgment. was liable to one who sustained a loss by purchasing a recorded spurious

(Supplementing annotation in 18

A.L.R. 1302.) deed of trust forged by the notary, to whom the land had been conveyed by

The liability of a notary public is an unrecorded deed from the pur

not that of an insurer, and if he is

to be held liable at all, it must be on ported mortgagor, the relator purchasing the spurious deed of trust in

the ground of negligence, malice, or

corruption. reliance on a false certificate of ac

So, in Clapp v. Miller knowledgment affixed to the deed of

(1923) 89 Okla, 38, 213 Pac. 854, the trust by the notary; nor is the surety

court held that it was a question for relieved from liability because the

the jury as to whether a notary was sale of the deed of trust took place

guilty of negligence in identifying after the expiration of the notary's

persons whose acknowledgments he

had taken, where the latter, who falseterm of office. In answer to the cbjection that the recording of the

ly swore that they were the parties deed of trust by the notary, and the

whose names appeared as mortgagors furnishing of the certificate of title

in the mortgage, had been introduced

as such to the notary by a lawyer to the relator (purchaser of the spurious trust deed) showing the re

in good standing, whom the notary

had intimately known for several corded spurious deed of trust, and showing the record title in the pur

years, and who he believed was tell

ing the truth. The court was of the ported mortgagors, were not official notarial acts for which the surety on

opinion that the evidence presented the notary's bond would be liable, the

a very fair question for the jury as court says, after mentioning the above

to whether the notary exercised the

diligence and care of a reasonably objections: "Further, appellant [surety on notary's bond] says there

prudent man in certifying to the iden

tity of the men whose acknowledgis no evidence that the false acknowl

ments he had taken. Generally, as edgment on the deed of trust induced

to proof of identity upon which an Meinholtz [relator] to buy same. This whole argument may be an

officer certifying to an acknowledg

ment is justified in acting, see note swered, we think, by the assertion

in 10 A.L.R. 871. that without such false acknowledgment, this relator, and indeed no one IV. Effect of contributory negligence. else, would or could have bought this No later decisions herein. For eardeed of trust and have been defrauded lier cases, see annotation in 18 A.L.R. as was this relator. The long and 1309.

R. P. D.

BANKERS' TRUST COMPANY et al., Exrs., etc., of John Glackner,

Deceased, Appts.,

V. FRANK K. BOWERS, Collector of Internal Revenue for the Second Dis

trict of New York.

United States Circuit Court of Appeals, Second Circuit - December 10, 1923.

(295 Fed. 89.)

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Internal revenue tax in case of death pending year method of com

putation. 1. Section 226 (c) of the Revenue Act of 1921, providing the method of computing the tax in case the return is for a period of less than a year, does not apply to the computation of the tax against a person dying pending a taxable year and his estate, but the actual income received by each should be returned and the tax computed on the amount so returned as the whole yearly income, and the aggregate of the amount so computed is the amount to be paid by the personal representative of the estate.

[See note on this question beginning on page 930.] Appeal — form of remedy — writ of tion and the other sections of the law

with which it is in pari materia. 2. Writ of error is the proper rem- [See 25 R. C. L. 1022, 1060; 3 R. C. edy to correct errors in the trial of an L. Supp. 1439; 4 R. C. L. Supp. 1619.] action at law in a Federal court.

construction of tax law. Statute construction avoiding 4. The interpretation of statutes unjust results.

levying taxes must not extend beyond 3. In interpreting a statute, the con

their provisions by implication, nor

must they be interpreted beyond the struction placed thereon should avoid

clear import of the language used, and unjust consequences unless the lan

all doubt should be resolved against guage compels such a result, and a

the government. construction should be had with refer- [See 25 R. C. L. 1092; 4 R. C. L. ence both to the history of the legisla- Supp. 1621.]

error.

APPEAL by plaintiffs from a judgment of the District Court of the United States for the Southern District of New York in favor of defendant in an action brought to recover taxes alleged to have been wrongfully and unlawfully exacted and collected from plaintiffs by defendant. Reversed.

The facts are stated in the opinion of the court.

Argued before Rogers, Manton, and S. 103, 42 L. ed. 398, 18 Sup. Ct. Rep. Mayer, Circuit Judges.

3; Swigart v. Baker, 229 U. S. 187, 57 Messrs. White & Case, Joseph M. L. ed. 1143, 33 Sup. Ct. Rep. 645; New Hartfield, and Russell D. Morrill for York, N. H. & H. R. Co. v. Interstate appellants.

Commerce Commission, 200 U. S. 361, Messrs. William Hayward, Victor 50 L. ed. 515, 26 Sup. Ct. Rep. 272; DolHouse, Nelson T. Hartson, and A. lar Sav. Bank v. United States, 19 Calder Mackay, for appellee:

Wall. 227, 22 L. ed. 80; United States The tax upon the income of a dece- v. First Nat. Bank, 234 U, S. 245, 58 L. dent and the tax upon the income of ed. 1298, 34 Sup. Ct. Rep. 846. his estate for the year in which he The application of $ 226 (c) of the dies must each be computed in the Revenue Act of 1921 to the income of manner prescribed by $ 226 (c) of the a decedent and the income of his esRevenue Act of 1921.

tate for the year in which he dies does United States v. Goldenberg, 168 U. not render it unconstitutional.

(295 Fed. 89.) Hylton v. United States, 3 Dall. 174, alleges that the correct tax liability 1 L. ed. 557; United States v. Singer, of the decedent for the calendar year 15 Wall. 111, 21 L. ed. 49; Brushaber 1921 was $269.44, and that the dev. Union P. R. Co. 240 U. S. 1, 60 L. ed. fendant demanded and was paid on 493, L.R.A.1917D, 414, 36 Sup. Ct. Rep.

account of this tax $1,560.04; that 236, Ann. Cas. 1917B, 713; La Belle

$1,290.60 of said tax was paid unIron Works v. United States, 256 U. S. 392, 65 L. ed. 1008, 41 Sup. Ct. Rep.

der protest and duress, and a claim 528; Towne v. McElligott, 274 Fed. for the refund thereof was subse960; McCray v. United States, 19) U. quently rejected by the CommissionS. 27, 49 L. ed. 78, 24 Sup. Ct. Rep. 769, er of Internal Revenue. The second 1 Ann. Cas. 561; Billings v. United cause of action set forth a tax paid States, 232 U. S. 261, 58 L. ed. 596, 34

upon a basis of the return, reportSup. Ct. Rep. 421; United States v.

ing the net income received by the Bennett, 232 U. S. 299, 58 L. ed. 612,

executors in 1921. The correct tax 34 Sup. Ct. Rep. 433; Magoun v. Illinois Trust & Sav. Bank, 170 U. S. 283,

is alleged as $2,050.27, whereas 42 L. ed. 1037, 18 Sup. Ct. Rep. 594;

there was demanded and paid $2,Spencer v. Merchant, 125 U. S. 345, 31 633.85; of this amount $583.58 was L. ed. 763, 8 Sup. Ct. Rep. 921; Stanton paid under protest, and a claim for v. Baltic Min. Co. 240 U. S. 103, 60 L. refund was denied by the Commised. 546, 36 Sup. Ct. Rep. 278; Flint v. sioner of Internal Revenue. The Stone Tracy Co. 220 U. S. 107, 55 L. ed. tax collected and paid was computed 389, 31 Sup. Ct. Rep. 342, Ann. Cas.

by the Internal Revenue Commis1912B, 1312: New York, N. H. & H. R. Co. v. United States, 269 Fed. 907.

sioner under a construction of g 226 Messrs. Van Doren, Conklin, & Mc

(c) of the Revenue Act of 1921 Nevin for executors of another estate.

(Comp. Stat. $ 6336m, Fed. Stat.

Anno. Supp. 1921, p. 148). On moManton, Circuit Judge, delivered

tion made by the defendant that the the opinion of the court:

complaint did not state a cause of We shall refer to the parties as action, the

action, the complaint was

disbelow, plaintiffs and defendant.

missed; the court delivering an The plaintiffs have opinion which supported the claim Appeal-form of remedy-writ of appealed from a

of the government as to the amount judgment at law.

of the taxes. Their remedy on appeal is by writ

The question raised on this review of error, and we shall treat their ap

is whether the taxes in question peal as a writ of error, pursuant to should have been determined in the the Act of September 6, 1916, chap.

manner descril ed in § 226 (c) of 448, $ 4, 39 Stat. at L. 727 (Comp.

the Revenue Act of 1921, or by other Stat. § 1649a, Fed. Stat. Anno. Supp. provisions of the act referred to 1918, p. 421), ignoring the mistake herein. Section 226 reads as foland regarding the action taken as lows: appropriate, so as to bring the cause

“(a) That if a taxpayer, with here for review.

the approval of the commissioner, John Glackner died April 4, 1921, changes the basis of computing net leaving a will, which was duly ad income from fiscal year to calendar mitted to probate, and the plaintiffs year a separate return shall be made qualified as his executors. On for the period between the close of March 15, 1922, they filed two in- the last fiscal year for which return come tax returns. One reported was made and the following Decemthe net income of decedent during ber 31. If the change is from calthe calendar year of 1921, and the endar year to fiscal year, a separate o'her the net income received by the return shall be made for the period plaintiffs as executors during the between the close of the last calsame calendar year. The first cause endar year for which return was of action set forth in the complaint made and the date designated as the is for a tax paid upon the basis of close of the fiscal year. If the the return filed for the decedent. It change is from one fiscal year to

error.

another fiscal year a separate return gains, profits, and income derived shall be made for the period between from salaries, wages, or compensathe close of the former fiscal year tion for personal service (including and the date designated as the close in the case of the President of the of the new fiscal year.

United States, the judges of the Su“(b) In all cases where a separate preme and inferior courts of the return is made for a part of a tax- United States, and all other officers able year the net income shall be and employees, whether elected or computed on the basis of such period appointed, of the United States, for which separate return is made, Alaska, Hawaii, or any political suband the tax shall be paid thereon at division thereof, or the District of the rate for the calendar year in Columbia, the

Columbia, the compensation rewhich such period is included. ceived as such), of whatever kind

"(c) In the case of a return for and in whatever form paid, or from a period of less than one year the professions, vocations, trades, businet income shall be placed on an nesses, commerce, or sales, or deal. annual basis by multiplying the ings in property, whether real or amount thereof by twelve and divid- personal, growing out of the ownering by the number of months includ- ship or use of or interest in such ed in such period; and the tax shall property; also from interest, rent, be such part of a tax computed on dividends, securities, or the transacsuch annual basis as the number of tion of any business carried on for months in such period is of twelve gain or profit, or gains or profits months."

and income derived from any source Subdivision (c) of $ 226 applied whatever. The amount of all such only to computing tax in case of a items (except as provided in subdireturn for a period of less than one vision [e] of $ 201) shall be includyear, and the district court has held ed in the gross income for the taxthat returns necessary to be filed by able year in which received by the the plaintiffs were returns for a taxpayer unless, under methods of period of less than a year, and that accounting permitted under subdithe tax liability was properly deter- vision

vision (b) of § 212, any such mined, applying the statutory for- amounts are to be properly accountmula of (1) multiplying the net ed for as of a different period." income by 12; (2) dividing the Section 212 (Comp. Stat. $ product so obtained by the number 6336}f, Fed. Stat. Anno. Supp. 1921, of months and fraction thereof in p. 133) defines net income as meanthe period covered by the return; ing the gross income as defined in (3) computing the normal and sur- $ 213 (Comp. Stat. § 6336}ff, Fed. tax on the quotient; and (4) divid- Stat. Anno. Supp. 1921, p. 133), less ing the total tax so computed by 12 the deductions allowed by $ 214 and multiplying the quotient by the (Comp. Stat. $ 6336\g, Fed. Stat. number of months and fraction Anno. Supp. 1921, p. 135), and subthereof in the period covered by the division (b) thereof provides that return. The statute and regulations the net income shall be computed of the department, apart from § 226 upon the basis of the taxpayer's (c), contain a complete scheme for annual accounting period (fiscal the filing of income-tax returns of year or calendar year, as the case decedents and their estates. We may be), in accordance with the must accept the fact that income- method of accounting regularly emtax statutes are designed and in- ployed in keeping the books of such tended to reach actual income re- taxpayer. Actual income was to be ceived by the taxpayer. Section 213 taxed,—not constructive or hypo(a), being Comp. Stat. § 6336jff, thetical. The plaintiffs argue that Fed. Stat. Anno. Supp. 1921, p. the return was not a return for a 133, defining gross income, points period of less than one year within this out in providing: "Includes S 226 (a), and that the tax should

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