## Facts

- Joyce A. Rakestraw owned separate real property.
- Joyce discussed with her husband, William Rakestraw, using her property as collateral to fund a supermarket venture.
- William forged Joyce’s signature on a $75,000 promissory note and a deed of trust encumbering her property.
- A notary acknowledged the deed of trust after relying on Sherwood T. Rodrigues’s assurance that Joyce had signed it.
- The lender disbursed proceeds by check payable to Joyce and William; Joyce endorsed the check, enabling William to use the funds.
- Joyce soon learned her signature had been forged and that her property was encumbered without her execution of the documents.
- After consulting counsel and being advised to notify the trustee and disaffirm the transaction, Joyce took no steps to repudiate or restore consideration.
- About three years after discovery, the lender and title company sued to enforce the note and deed of trust after default.
- Joyce entered a stipulated judgment with the lender-side plaintiffs agreeing to be bound by the note and deed of trust, then proceeded at trial only on her cross-claims against Rodrigues and William.
- A jury awarded Joyce $30,000 against Rodrigues and William; Rodrigues’s post-trial motions were denied, and he appealed.

## Issues

1. Whether Joyce’s conduct after learning of the forgeries constituted ratification of the forged loan transaction and related acts as a matter of law.
2. Whether such ratification barred Joyce from recovering tort damages from Rodrigues for alleged fraudulent participation in the transaction.

## Decision

- The court reversed the judgment against Rodrigues.
- It held Joyce, with knowledge of the material facts, ratified the forged transaction through acceptance and retention of benefits and failure to repudiate within a reasonable time.
- Because Joyce ratified the transaction and associated conduct, Rodrigues was absolved of liability to her on her cross-complaint.

## Legal Principles

- A forged signature and the unauthorized transaction it purports to effect may be ratified by the person whose name was forged.
- Ratification may be implied from objective conduct, including retaining benefits with knowledge of the material facts and failing to repudiate within a reasonable time.
- Ratification binds the ratifying party as if the act had been authorized from the outset.
- When a party ratifies a forged transaction, the party may also be barred from recovering damages from an alleged participant in the fraud to the extent the claim depends on disaffirming the ratified conduct.

## Conclusion

The court held that Joyce’s informed retention of loan benefits and extended inaction operated as ratification of the forged loan and security instruments, which foreclosed her damages recovery against Rodrigues for his role in facilitating the transaction.


Rakestraw v. Rodrigues, 500 P.2d 1401 (Cal. 1972)