Neglectful notary not liable for attorney fees.

Byline: David Ziemer

Section 137.01(8), which holds a notary public liable for "all the damages thereby sustained" as a result of the notary's neglect of duty, does not incorporate attorney fees as damages, the Wisconsin Court of Appeals held on June 5.

Donald Stair and his half-brother, Gregg A. Koch, were co-owners as tenants-in-common of real estate located in Waukesha. Behind Stair's back, Koch executed a home equity line of credit agreement with Bank One, in the amount of $75,000.

To secure the agreement, Koch executed a mortgage with Bank One on his undivided one-half interest in the real property. The mortgage contained a notarized signature purporting to be that of Stair. The forgery was notarized by an employee of Bank One, who testified that it was not his practice to ask for identification before notarizing documents.

Koch defaulted on the credit line, and Bank One commenced foreclosure proceedings. Stair filed an answer and counterclaims against Bank One, alleging that his signature was forged.

Stair's only damages were the attorney fees and costs incurred in defending the action. Stair sought these expenses from Bank One, asserting that the notary's conduct constituted neglect of duty under sec. 137.01(8).

Bank One conceded the forgery, amended its complaint, and moved for default judgment for the foreclosure and sale of the undivided one-half interest of Koch, and for summary judgment dismissing Stair's counterclaims.

Waukesha County Circuit Court Donald J. Hassin granted the motion, and denied Stair's request for attorney fees. Stair appealed the order denying attorney fees, but the court of appeals affirmed in a decision by Judge Richard S. Brown.

"All the damages"

The court rejected Stair's argument that the phrase "all the damages thereby sustained" includes attorney fees.

Stair contended that the statute, which dates to 1848, predates the American Rule, which requires parties to bear the costs of their own attorney fees unless expressly authorized by statute or contract, and thus allows for the award of fees.

However, the court noted that the American Rule dates to at least as early as 1796, when the U.S. Supreme Court overturned an award of attorney fees as damages on the ground that "[t]he general practice of the United States is in opposition to it; and even if that practice were not strictly correct in principle, it is entitled to the respect of the court, till it is changed, or modified, by statute." Arcambel v...