Norton v. Title Guaranty & Surety Co.

MELVIN, J.

Defendant appeals from the judgment against it and from an order denying its motion for a new trial.

The" action was upon the bond of a notary public executed by defendant as a surety for the faithful performance of official duty by the said notary public, one Frank L. Dreischmeyer.

It appears from the evidence that Dreischmeyer was not only a notary public, but that he also acted as an agent in matters relating to property and that he was a practitioner at the bar. In November, 1909, plaintiff delivered to Dreischmeyer six hundred dollars to be used in making an investment for her in a mortgage on real property. A few days later, Dreischmeyer informed her that he had loaned the money and had "taken a mortgage upon a piece of real property in San Jose owned by G. A. and Josephine Mancuso. As a matter of fact, he had appropriated his client’s money, and, in the furtherance of the fraud, he exhibited to her certain forged papers including a purported mortgage to which he had, as notary public, affixed a false certificate, that Mr- and Mrs. Mancuso had appeared before him and had duly acknowledged their respective signatures. A fabricated note accompanying the forged mortgage provided for the quarterly payment of interest upon the loan and Dreischmeyer undertook to collect the interest for plaintiff. To avoid discovery of his crime by his victim Dreischmeyer regularly paid her the amounts apparently due on the note as interest. Finally, however, she learned of his crime and this action was commenced, more than three years after the breach by Dreischmeyer of his

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official duty as a notary public in making the false certificate o£ acknowledgment, but within four years of that date, and likewise within three years of plaintiff’s discovery of the fraud practiced by her agent. Both the discovery of the crime and the inauguration of the suit occurred after the expiration of Dreischmeyer’s term as notary public.

Among the many defenses urged by demurrer and otherwise the Surety Company presented the contention that the period of three years provided by subdivision 1 of section 338 of the Code of Civil Procedure ran from the date of the malfeasance and not from the time of the discovery by plaintiff of the crimes which Dreischmeyer had committed. Respondent insists that while, ordinarily, a suit upon a bond of a public officer for breach of official duty is “upon a liability created by statute,” and therefore is governed by the first subdivision of section 338 of the Code of Civil Procedure, this is an action based upon the fraud of the public officer, and that therefore the fourth subdivision of the section, giving to plaintiff three years after the discovery of the fraud for the commencement of the action, is the only statute of limitations which may be applied in such a litigation. Both theories seem to be supported by adjudications in different jurisdictions, but in California, under the reasoning in