Legislature(2003 - 2004)
03/19/2004 08:01 AM House STA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HB 439-OATHS; NOTARIES PUBLIC; STATE SEAL [Contains brief discussion of SB 203.] Number 0042 CHAIR WEYHRAUCH announced that the first order of business was HOUSE BILL NO. 439, "An Act relating to the authority to take oaths, affirmations, and acknowledgments in the state; relating to notaries public; relating to fees for issuing certificates with the seal of the state affixed; and providing for an effective date." Number 0059 REPRESENTATIVE LYNN moved to adopt the committee substitute (CS) for HB 439, Version 23-GH2022\Q, Bannister, 3/18/04, as a work draft. Number 0068 CHAIR WEYHRAUCH objected "for discussion purposes." Number 0135 ANNETTE KREITZER, Chief of Staff, Office of the Lieutenant Governor, directed the committee's attention to a sectional analysis [in the committee packet] that is labeled as a companion to Version H, but, as Ms. Kreitzer explained, is actually "to Version I." She said, "These are the changes that are also incorporated in Representative Gruenberg's Version Q, but it's important to point out some of the additional changes after you first saw this bill." MS. KREITZER noted that regarding "what was Section 8" - which lists the qualifications to be a commissioned notary public - there had been a question [during a previous hearing on the bill] about a lifetime ban on felons being able to act as notaries. She indicated that her office worked with Representative Gruenberg and the Department of Corrections to formulate a compromise [regarding a former felon applying to be commissioned as a notary public], which she noted is found on page 8, lines 6-7, of Version Q, which read as follows: (5) may not have been incarcerated in a correctional facility for a felony conviction within 10 years before the commission takes effect; MS. KREITZER revealed that the Department of Correction's advice was that people who "stay clean" for 10 years generally don't reoffend - particularly with a felony. She indicated that the aforementioned language is also reflected again in Section 9, regarding the application requirements, and in "the applicability section about what happens to current commissions, which was Section 15." MS. KREITZER noted that the second major change in setting out what a notary public cannot do occurs in Section 11. For example, she indicated that Section 11 clarifies that a notary cannot notarize documents which benefit the notary. She also mentioned [that Section 11] "picks up an amendment that we had requested that the $5 name-change fee is not in addition to the cost of a new certificate, under [AS] 44.19.024." In response to a question from Chair Weyhrauch, she clarified that a notary cannot notarize his/her own signature. In response to a follow- up question from Chair Weyhrauch regarding benefits to notaries, she pointed to page 12, lines 19-25, which [is a continuation of the language on page 11, line 25, "A notary public may not"]. It read as follows: (6) perform a notorial act if the notary public (A) is a signer of or named in the document that is to be notarized; or (B) will receive directly from a transaction connected with the notorial act a commission, fee, advantage, right, title, interest, cash, property, or other consideration exceeding in value the normal fee charged by the notary of the notorial act. MS. KREITZER, in response to another question from Chair Weyhrauch, confirmed that that is a new provision, which was in Version I [never before the committee as a work draft]. Number 0399 REPRESENTATIVE SEATON suggested that saying the notary is not allowed to receive a "fee" - [page 12, line 23] - "almost means that a notary has to perform the service for free, otherwise they're going to receive a fee." He asked if he misread that language. MS. KREITZER reemphasized that the language read, "will receive directly from a transaction connected with the notorial act". She said, "I think that it's an arms-length transaction; I don't believe it's speaking of the ... notorial fee itself." She deferred to Representative Gruenberg. Number 0436 REPRESENTATIVE GRUENBERG noted that he had introduced a bill in 1990. He continued as follows: We took some provisions from that bill, and this was one of them. And what the language means - and this [provision] was taken from a model Act ... - it prohibits a notary from notarizing a document if the notary will receive money from the transaction itself, not the notorial fee. Number 0496 REPRESENTATIVE SEATON reported discovering that his previous question is answered [on line 24], which read: "exceeding in value the normal fee charged". Number 00438 CHAIR WEYHRAUCH asked for clarification of an example as follows: Say Representative Lynn and I are entering into a transaction, and I'm a notary. And I notarize Representative Lynn's signature and I don't charge a fee as a notary - I just have a notary stamp and I can do it. And Representative Lynn agrees to give me cash, because it's a contract, and I notarize Representative Lynn's signature. Is that a -- am I prohibited as a notary from notarizing Representative Lynn's [signature], because I'm going to receive cash from Representative Lynn? ... Is that the intent here, Ms. Kreitzer? MS. KREITZER said she believes so. REPRESENTATIVE GRUENBERG responded that the answer is definitely yes. He added: Now, that doesn't apply to -- let's say you're a lawyer, and you've got two clients involved. Because you're not getting money from the transaction, you're getting money from representing the client. This means if you're [a] participant in the deal itself. CHAIR WEYHRAUCH opined that that's tenuous, at best, because many times in that situation, the money goes into the lawyers trust account and the lawyer takes a percentage of that as a payment, or "it goes to their fee." He concluded that "they directly benefit from that." REPRESENTATIVE GRUENBERG emphasized that that is not the intent. He clarified, "The intent is if you're a participant in the deal itself, because otherwise, no lawyer could ever notarize any documents for the client." He indicated the same would apply for a realtor. Number 0692 CHAIR WEYHRAUCH asked what the public policy purpose is of having a notary prohibited from receiving money on a transaction such as his aforementioned example using himself and Representative Lynn. He asked, "What is wrong with a notary receiving money if they notarize Representative Lynn's signature on a contract?" REPRESENTATIVE GRUENBERG responded that the issue is not receiving money "because of that." He clarified with an example as follows: There's a business deal between the two of you. And there's a key document that is notarized. And that document could later be utilized as evidence of whether you "fenokeed" up Representative Lynn's signature or not. And you're a direct participant in the deal itself. They want somebody who has no participation or stake in the deal - and no stake in the outcome of that deal - to be the neutral third witness. If that's not the case - if you're a lawyer representing one of the clients, if you're a realtor who's a buyer's agent or a seller's agent (indisc. - coughing). Number 0719 MS. KREITZER noted that the last major change would be to repeal AS 44.50.180 (c). She said, "We found out after the bill was introduced that our state law is inconsistent with our federal law, regarding post masters being able to charge fees for notarizing." MS. KREITZER directed the committee's attention to a [two-page] document she prepared this morning [available in the committee packet] that shows amendments, their purpose, and the lieutenant governor's position on them. She stated her belief that this handout covers most of the changes that are in Version Q. She pointed out that [in the top-left] column, the number "13" should be changed to "12". She noted that most of the changes on the first page of the handout are drafting considerations. She explained that "Drafter decision" means that the lieutenant governor has accepted the [Legislative Legal and Research Services] drafter's opinion. The [first block on the] second page, she noted, deals with new sections of unauthorized practice. She said Representative Gruenberg would explain that amendment, but indicated that the lieutenant governor, although fine with the change, doesn't think the issue is a problem. The last amendment [on page two of the handout] has to do with a handbook and a new section dealing with regulations, and she explained that this simply codifies what is currently being done. In response to a question from Representative Gruenberg, she indicated that she doesn't know where in Version Q the amendment regarding unauthorized practice was inserted. Number 0923 REPRESENTATIVE GRUENBERG thanked Ms. Kreitzer and her staff. Number 0955 REPRESENTATIVE GRUENBERG noted SB 203, regarding "the administrative law judge," was reported out of the House Judiciary Standing Committee on March 18, 2004. He stated that Ms. Kreitzer had said she would like to have the procedure for the disciplining of the notary public be, essentially, subsumed under [SB 203], so that the judge would be the central panel of administrative law judges. He suggested that if [SB 203] passes, then "we can ultimately remove part of these." Number 1017 MS. KREITZER confirmed that it has been advised by [Legislative Legal and Research Services] and the Department of Law that it is premature to offer those amendments that deal with "that issue." Number 1059 REPRESENTATIVE SEATON, regarding the bonding issue, asked what the purpose of the bond is. MS. KREITZER answered that the purpose of the bond is to protect "the public who engages in notary." She revealed that there is some debate about whether $1,000 is a sufficient amount for that purpose. She said Alaska has "self surety," which she explained means that a person can provide surety for someone and post a thousand-dollar bond. She suggested that if the bond amount is increased, it might mean that self-surety would "go away." She said this issue was discussed with Representative Gruenberg. She revealed that the notary administrator had reported that there have been no complaints over the last several years regarding the amount of the bond. REPRESENTATIVE SEATON clarified that he is trying to figure out what protection a bond provides the public, and what that bond is to cover. MS. KREITZER deferred to Representative Gruenberg. Number 1159 REPRESENTATIVE GRUENBERG brought attention to page 9, line 26, which he said is the part of the bill regarding the bond. He mentioned a [handwritten, one-page] "chart" of the [bond amounts of the] 50 states [included in the committee packet]. CHAIR WEYHRAUCH suggested that Representative Gruenberg offer his amendment. Number 1200 REPRESENTATIVE GRUENBERG [moved to adopt] Amendment 1, which read as follows [original punctuation provided, some formatting changed]: Page 9, line 26: strike "1,000" and insert "$5,000." Comment: The $1,000 bond has been in effect since 1961. The amount is so small now, 43 years later, that it provides virtually no protection at all against a notary's malpractice (forgeries, collusions, etc.). $1,000 would not pay much towards the cost of a lawsuit today. The bond should be at least [sic] $5,000. I would support a higher requirement if the members desire it. According to the All-State Notary Public Guide published by the American Society of Notaries, states require bonds as set forth on the attached sheet. Section 3-3 of the Model Notary Act recommends a $25,000 bond. Bonds need not be corporate surety bonds, but can be personal surety bonds, which do not cost anything. REPRESENTATIVE GRUENBERG explained that a corporate bond is backed up by a corporate surety, whereas a personal bond means that someone other than the notary has guaranteed that he/she is worth the amount of the bond and will pay that amount of money if the action against the bond is successful. He stated, "It's not just dealing with the seal, but it's anything that's illegal that the notary public does in connection with that notarization ...." Number 1238 CHAIR WEYHRAUCH remarked that this would be a fee increase and asked Ms. Kreitzer what the lieutenant governor's position is on the issue. MS. KREITZER replied, "We've advised Representative Gruenberg of the lieutenant governor's position and we just oppose the amendment." Number 1260 REPRESENTATIVE COGHILL said he would like to know if there has ever been a point where the bond has been required through some misuse of "this seal." Number 1300 REPRESENTATIVE GRUENBERG referred again to the aforementioned handwritten chart that shows bond amounts of the 50 states. He noted that there are  states in the left-hand column that don't require any bond, while Kentucky varies its bond by county. He pointed to the bond amounts shown for the other states; those amounts vary from $500 to $15,000. Representative Gruenberg opined that $1,000 is too small to be meaningful - it won't even pay the cost of the court if an attorney is involved, for example. Number 1377 REPRESENTATIVE COGHILL indicated that he would like to know if there has ever been a case in which a [notary public's] seal was "pulled." CHAIR WEYHRAUCH observed that the person from the lieutenant governor's office who could testify to that question was not available. MS. KREITZER noted that that person - [Scott Clark, Notary Commission Administrator] - had testified previously [during the March 8 hearing on HB 439] that in the four years he has held his job, he has not seen action on a bond. Number 1377 REPRESENTATIVE GRUENBERG indicated that an increase in the amount of the bond would add some protection in the rare case that there is something fraudulent that a notary has done. He said, "I chose the $5,000 because that is something that a personal surety would be able to afford, and it would provide some real protection." Number 1400 CHAIR WEYHRAUCH maintained his objection [to Amendment 1]. He said he needs more evidence that this issue has been a problem. He also declared a conflict, because he has to buy notary bonds for his [law] office. Number 1425 REPRESENTATIVE SEATON asked what the cost of notary bonds is. REPRESENTATIVE GRUENBERG answered that it's usually nothing, because it just takes an individual to sign and say he/she is worth the amount of the bond and is willing to stand as a surety. CHAIR WEYHRAUCH said he has paid $50. Number 1438 A roll call vote was taken. Representative Gruenberg voted in favor of Amendment 1. Representatives Coghill, Lynn, Seaton, and Weyhrauch voted against it. Therefore, Amendment 1 failed by a vote of 1-4. Number 1500 REPRESENTATIVE GRUENBERG moved to adopt [Conceptual] Amendment 2, which read as follows [original punctuation provided]: Insert in bill, where drafter determines appropriate, the proposed AS 44.50.078 from CSHB 394(L&C), Seventeenth Legislature. A copy of the proposed statue is attached. Renumber and reorder bill as appropriate. Number 1519 CHAIR WEYHRAUCH objected for discussion purposes. Number 1528 MS. KREITZER, in response to a question from Representative Gruenberg, told the committee that although the lieutenant governor's office does not see [Conceptual Amendment 2] as necessary, it takes a neutral stance regarding it. REPRESENTATIVE GRUENBERG explained that [Conceptual Amendment 2] clarifies that a person who is a notary and not an attorney may help complete the notorial certificate, but may not select the certificate, which means they may not give legal advice. Number 1585 REPRESENTATIVE SEATON asked if Representative Gruenberg was talking about a blank will form, for example. REPRESENTATIVE GRUENBERG explained that he is talking about the form of the acknowledgment, not the forms themselves. He gave an example of a statute that requires that the document specifically be "acknowledged." Number 1630 CHAIR WEYHRAUCH maintained his objection. He stated that this is a legal issue that he would rather have the House Judiciary Standing Committee address. Number 1655 REPRESENTATIVE GRUENBERG withdrew [Conceptual] Amendment 2. Number 1665 REPRESENTATIVE GRUENBERG [moved to adopt] Amendment 3, regarding mandatory journals, which read as follows [original punctuation provided]: Add the following text from CSHB 394(L&C), 17th Legislature, to be inserted where the drafter determines is appropriate (See attached bill): 1. Page 1, lines 10-11 2. Page 2, lines 23-24 (underlined language only) 3. Page 3, lines 12-15 4. Page 4, lines 4 to 27 (Section 10 of that bill) CHAIR WEYHRAUCH objected for discussion purposes. REPRESENTATIVE GRUENBERG explained that the language he is seeking [from CSHB 394(L&C)] is the language that is indicated on the attachment [stapled behind Amendment 3, in the committee packet]. He said about half of the states require a notary to maintain a journal. CHAIR WEYHRAUCH maintained his objection for [three] reasons: First, he stated that he is not certain whether this would subject somebody who doesn't keep a journal to criminal penalties, and he said he would like Representative Gruenberg to bring up the issue to the House Judiciary Standing Committee. Second, he said he doesn't want to encumber notaries to keep something that they don't think is mandatory. Third, he said he knows that the lieutenant governor's office always admonishes notaries to maintain a journal. He said every time he has had a signature notarized, there has always been a journal there. He explained that he doesn't want transactions to be encumbered by a mandatory journal requirement that otherwise "may flow" when there's not such a requirement. Number 1729 REPRESENTATIVE GRUENBERG said, "Well, I see that's the committee's desire, so I won't press this." [Amendment 3 was treated as withdrawn.] CHAIR WEYHRAUCH told Representative Gruenberg that he appreciates the work that he has done. Number 1800 REPRESENTATIVE SEATON moved to report the committee substitute (CS), Version 23-GH2022\Q, Bannister, 3/18/04, out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, CSHB 439(STA) was reported out of the House State Affairs Standing Committee.