Reply #205: It is called the "Full Faith and Credit" Clause of the US Constitution

[happyslug]

Under the Common Law, Notaries were NOT needed or even used. The problem was the Civil Law Jurisdictions of the Old Roman Empire (and later Germany) always required certain documents to be kept by a Notary. Thus in the Civil Law Jurisdiction a Notary is a type of lawyer.

The problem was during the Renaissance Europe reviled the Notary and started to demand documents to have Notary seals. The English, not being a Civil Law Jurisdiction, did NOT have notaries of the Civil Law type and thus invented what we call Notaries, i.e. Simple Oath takers.

Now since that invention (sometime before 1600) Parliament and later Colonial and State Legislature have demanded that certain paperwork have such notary seals. As a practice in derogation of the Common Law, such laws are strictly construed (i.e. if there is a way around the requirement, such way around the requirement is legal). On the other hand these laws are very old, dating to Colonial times (and in those states formed AFTER Colonial times, those states tended to adopt the laws and custom of some earlier State as their State law except as changed by legislature since they became a state).

Anyway, in addition to the above, we have the "Full Faith and Credit" Clause of the US Constitution which requires each state to give the laws of every other state "Full faith and Credit". A classic situation was Common Law Marriage. New York State NEVER recognized them, but Pennsylvania did. Thus you have a huge number of New York State Court Cases involving the validity of various Pennsylvania Common Law Marriages. i.e. did the couple fulfill all of the requirements of a Pennsylvania Common Law Marriage in Pennsylvania during a weekend getaway to the Poconos of Pennsylvania? If the answer was yes (and all that was needed was an exchanged of vows, no sex or even touching was needed) then it was a Valid Pennsylvania Common Law Marriage AND the New York Court would recognize it as such (generally in a divorce action, you do NOT end a Common Law Marriage by breaking up, it is a valid marriage and can only be dissolved by a Divorce action).

Notice these are New York STATE Cases interpreting Pennsylvania Law. Last time I check they were more Reported New York State Cases when it came to Pennsylvania Common Law Marriages then Pennsylvania Cases (Pennsylvania abolished Common Law Marriage on January 1st, 2005, Common Law Marriages entered into prior to that date are still valid, but after January 1st, 2005 you can no longer enter into Common law marriages in Pennsylvania).

New York Courts had to follow Pennsylvania law under the Full Faith and Credit Clause of the US Constitution. The issue when it comes to the Full Faith and Credit Clause is what is covered and what is not. Generally something that occurs in one state is subject to the laws of that state and thus the laws of other states do NOT come into play (notice Pennsylvania Common Law only came into play when the Couple made a trip to Pennsylvania and stayed overnight together in Pennsylvania).

The problem we have today is not only do people move, their enter into contracts for credit with people from other states. Thus which state laws apply to the contract? When it comes to the Sale of Real Property, that generally must follow the laws of the state the property is in, but what of the Mortgage is entered into in another state? To be valid it has to be registered in the County Courthouse of the County the Real Property is in, but if the person holding the mortgage lives and has an office only in a separate state which laws covers the Mortgage? Every state requires anything to do with real property to be Notarized, but they has been a growing tendency to permit electronic signature and even electronic notarization. If the state the person holding the mortgage lives in permits such electronic notarization but the state where the actual real property does not, which laws affect the mortgage that goes from one person to another, both living in states different from where the property is located? IT is kind of Stupid to require someone from New York State and a Person from Delaware to travel to California to have a California Notary notarized the transfer from one to the other for a mortgage on land in California. AS a rule, up till the time of electronic Notarization, no one required such a move, it could be notarized in Delaware of New York.

Now, I suspect Delaware may be the problem here. A large number of banks have Corporate Charters from Delaware for it is a very friendly to management incorporation laws. In the 1990s the Pennsylvania Attorney General tried to enforce a State Law restricting Interest on Credit Cards to 18% if the bank was located within the state of Pennsylvania (The Federal Government had previously said the Federal Restriction was 21%). What the banks did was claim they were Delaware Corporations and as such the mere fact that they did all of their business in Pennsylvania did NOT make them subject to the 18% state limit, but being incorporated out of Delaware only the higher 21% limit applied. The Federal Courts accepted this, saying the mere fact you are in the state did NOT make you an in state business. The few remaining Pennsylvania banks then re-incorporated in Delaware so they could also charge 21% interest for Delaware had no restrictions as to interest rates.

Delaware and New York have always been much more pro bank then any other state in the union (and that is an achievement, given the rest of the state are also pro-bank).

Now, as you can see in the Credit Card Interest rate case, the "court" that determines what is interstate commerce is Congress. That has been the rule since the 1930s. This act, in effect says that anyone can have any documentation notarized in the state they are in and what ever that State calls a valid Notary MUST be recognized as such by every other state. Thus if Delaware permits electronic notarization, then Pennsylvania must accept that as a valid Notary (In fact, if Delaware would say any signature on any contract is the Notarization of that Contract, every other state MUST accept a signature made in that state as if it was notarized, no state has gone that far, but this act is that broad).

Now, it does NOT permit the laws of one state to overrule the laws of another as to requirements other then the Notary seal. For example, Pennsylvania requires any deeds to be WITNESSED by Two people in addition to being notarized. In my above example of a state that makes it the law in that state that any signature is also its Notarization, then no notary is required if the paper is signed in that state, but the two wittinesses requirements MUST still be followed.

Just some comments on what this law means. It just makes every state required to accept whatever is the notary requirement in whatever state any deed or mortgage is entered into OR transferred, even if those requirements are different from the state where the real property is located. It can even force a State to accept non-notarized deeds and mortgages from a state that no longer requires such deeds and mortgages from being notarized (As I said above NO state has done this).

Congress has the power to say the ability to transfer property across state lines is interstate commerce and as such it is best for interstate commerce if every state accept the notarization done in the state the transfer of real property is made in NOT the notarization requirements of the State the Real Property is located in. This seems to be the purpose of this law, nothing more.