Legislature(2003 - 2004)

03/19/2004 08:01 AM House STA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= 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                                                               
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                                                               
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                                                               
     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                                                               
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                                                               
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                                                               
     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                                                               
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  [20] 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                                                               
CHAIR  WEYHRAUCH observed  that  the person  from the  lieutenant                                                               
governor's  office who  could testify  to that  question was  not                                                               
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                                                               
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                                                                    
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                                                               
        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                                                                          
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.                                                                                  

Document Name Date/Time Subjects