After a corporation (Overmyer) had defaulted in its payments for
equipment manufactured and being installed by respondent company
(Frick), and Overmyer, under a post-contract arrangement, had made
a partial cash payment and issued an installment note for the
balance, Frick completed the work, which Overmyer accepted as
satisfactory. Thereafter Overmyer again asked for relief and, with
counsel for both corporations participating in the negotiations,
the first note was replaced with a second, which contained a
"cognovit" provision in conformity with Ohio law at that time
whereby Overmyer consented in advance, should it default in
interest or principal payments, to Frick's obtaining a judgment
without notice or hearing, and issued certain second mortgages in
Frick's favor, Frick agreeing to release three mechanic's liens, to
reduce the monthly payment amounts and interest rate, and to extend
the time for final payment. When Overmyer, claiming a contract
breach, stopped making payments on the new note, Frick, under the
cognovit provision, through an attorney unknown to, but on behalf
of, Overmyer, and without personal service on or prior notice to
Overmyer, caused judgment to be entered on the note. Overmyer's
motion to vacate the judgment was overruled after a post-judgment
hearing, and the judgment court's decision was affirmed on appeal
against Overmyer's contention that the cognovit procedure violated
due process requirements.
Held: Overmyer, for consideration and with full
awareness of the legal consequences, waived its rights to
prejudgment notice and hearing, and, on the facts of this case,
which involved contractual arrangements between two corporations
acting with advice of counsel, the procedure under the cognovit
clause (which is not unconstitutional
per se) did not
violate Overmyer's Fourteenth Amendment rights. Pp.
405 U. S.
182-188.
Affirmed.
BLACKMUN, J., delivered the opinion of the Court, in which all
Members joined except POWELL and REHNQUIST, JJ., who took no part
in the consideration or decision of the case. DOUGLAS, J.,
Page 405 U. S. 175
filed a concurring opinion, in which MARSHALL, J., joined,
post, p.
405 U. S.
188.
MR. JUSTICE BLACKMUN delivered the opinion of the Court.
This case presents the issue of the constitutionality, under the
Due Process Clause of the Fourteenth Amendment, of the cognovit
note authorized by Ohio Rev.Code § 2323.13. [
Footnote 1]
Page 405 U. S. 176
The cognovit is the ancient legal device by which the debtor
consents in advance to the holder's obtaining a judgment without
notice or hearing, and possibly even with the appearance, on the
debtor's behalf, of an attorney designated by the holder. [
Footnote 2] It was known at least as
far back as Blackstone's time. 3 W. Blackstone, Commentaries *397.
[
Footnote 3] In a case applying
Ohio law, it was
Page 405 U. S. 177
said that the purpose of the cognovit is "to permit the note
holder to obtain judgment without a trial of possible defenses
which the signers of the notes might assert."
Hadden v. Rumsey
Products, Inc., 196 F.2d 92, 96 (CA2 1952). And, long ago, the
cognovit method was described by the Chief Justice of New Jersey as
"the loosest way of binding a man's property that ever was devised
in any civilized country."
Alderman v. Diament, 7 N.J.L.
197, 198 (1824). Mr. Dickens noted it with obvious disfavor.
Pickwick Papers, c. 47. The cognovit has been the subject of
comment, much of it critical. [
Footnote 4]
Statutory treatment varies widely. Some States specifically
authorize the cognovit. [
Footnote
5] Others disallow it. [
Footnote 6]
Page 405 U. S. 178
Some go so far as to make its employment a misdemeanor.
[
Footnote 7] The majority,
however, regulate its use, and many prohibit the device in small
loans and consumer sales. [
Footnote
8]
In Ohio, the cognovit has long been recognized by both statute
and court decision. 1 Chase's Statutes, c. 243, § 34 (1810);
Osborn v. Hawley, 19 Ohio 130 (1850);
Marsden v.
Soper, 11 Ohio St. 503 (1860);
Watson v. Paine, 25
Ohio St. 340 (1874);
Clements v. Hull, 35 Ohio St. 141
(1878). The State's courts, however, give the instrument a strict
and limited construction.
See Peoples Banking Co. v. Brumfield
Hay & Grain Co., 172 Ohio St. 545, 548, 179 N.E.2d 53, 55
(1961).
This Court apparently has decided only two cases concerning
cognovit notes, and both have come here in a full faith and credit
context.
National Exchange Bank v. Wiley, 195 U.
S. 257 (1904);
Grover & Baker Sewing Machine Co.
v. Radcliffe, 137 U. S. 287
(1890).
See American Surety Co. v. Baldwin, 287 U.
S. 156 (1932).
I
The argument that a provision of this kind is offensive to
current notions of Fourteenth Amendment due process is, at first
glance, an appealing one. However, here, as in nearly every case,
facts are important. We state them chronologically:
1. Petitioners D. H. Overmyer Co., Inc., of Ohio, and D. H.
Overmyer Co., Inc., of Kentucky, are segments of a warehousing
enterprise that counsel at one point in
Page 405 U. S. 179
the litigation described as having built "in three years . . .
180 warehouses in thirty states." The corporate structure is
complex. Because the identity and individuality of the respective
corporate entities are not relevant here, we refer to the
enterprise in the aggregate as "Overmyer."
2. In 1966, a corporation, which then was or at a later date
became an Overmyer affiliate, executed a contract with the
respondent Frick Co. for the manufacture and installation by Frick,
at a cost of $223,000, of an automatic refrigeration system in a
warehouse under construction in Toledo, Ohio.
3. Overmyer fell behind in the progress payments due from it
under the contract. By the end of September, 1966, approximately
$120,000 was overdue. Because of this delinquency, Frick stopped
its work on October 10. Frick indicated to Overmyer, however, by
letter on that date, its willingness to accept an offer from
Overmyer to pay $35,000 in cash "provided the balance can be
evidenced by interest-bearing judgment notes."
4. On November 3, Frick filed three mechanic's liens against the
Toledo property for a total of $194,031, the amount of the contract
price allegedly unpaid at that time.
5. The parties continued to negotiate. In January, 1967, Frick,
in accommodation, agreed to complete the work upon an immediate
cash payment of 10% ($19,403.10) and payment of the balance of
$174,627.90 in 12 equal monthly installments with 6 1/2% interest
per annum. On February 17, Overmyer made the 10% payment and
executed an installment note calling for 12 monthly payments of
$15,498.23 each beginning March 1, 1967. This note contained no
confession of judgment provision. It recited that it did not
operate as a waiver of the mechanic's liens, but it also stated
that Frick would forgo enforcement of those lien rights so long as
there was no default under the note.
Page 405 U. S. 180
6. Frick resumed its work, completed it, and sent Overmyer a
notice of completion. On March 17, Overmyer's vice-president
acknowledged in writing that the system had been "completed in a
satisfactory manner," and that it was "accepted as per the contract
conditions."
7. Subsequently, Overmyer requested additional time to make the
installment payments. It also asked that Frick release the
mechanic's liens against the Toledo property. Negotiations between
the parties at that time finally resulted in an agreement in June,
1967, that (a) Overmyer would execute a new note for the
then-outstanding balance of $130,997 and calling for payment of
that amount in 21 equal monthly installments of $6,891.85 each,
beginning June 1, 1967, and ending in February, 1969, two years
after Frick's completion of the work, as contrasted with the
$15,498.23 monthly installments ending February, 1968, specified by
the first note; (b) the interest rate would be 6%, rather than 6
1/2%; (c) Frick would release the three mechanic's liens; (d)
Overmyer would execute second mortgages, with Frick as mortgagee,
on property in Tampa and Louisville; and (e) Overmyer's new note
would contain a confession of judgment clause. The new note, signed
in Ohio by the two petitioners here, was delivered to Frick some
months later by letter dated October 2, 1967, accompanied by five
checks for the June through October payments. This letter was from
Overmyer's general counsel to Frick's counsel. The second mortgages
were executed and recorded, and the mechanic's liens were released.
The note contained the following judgment clause:
"The undersigned hereby authorize any attorney designated by the
Holder hereof to appear in any court of record in the State of
Ohio, and waive this issuance and service of process, and confess a
judgment
Page 405 U. S. 181
against the undersigned in favor of the Holder of this Note, for
the principal of this Note plus interest if the undersigned
defaults in any payment of principal and interest and if said
default shall continue for the period of fifteen(15) days."
8. On June 1, 1968, Overmyer ceased making the monthly payments
under the new note and, asserting a breach by Frick of the original
contract, proceeded to institute a diversity action against Frick
in the United States District Court for the Southern District of
New York. Overmyer sought damages in excess of $170,000 and a stay
of all proceedings by Frick under the note. On July 5, Judge
Frankel vacated an
ex parte stay he had theretofore
granted. On August 7, Judge Mansfield denied Overmyer's motion for
reinstatement of the stay. He concluded,
"Plaintiff has failed to show any likelihood that it will
prevail upon the merits. On the contrary, extensive documentary
evidence furnished by defendant indicates that the plaintiff's
action lacks merit."
9. On July 12, without prior notice to Overmyer, Frick caused
judgment to be entered against Overmyer (specifically against the
two petitioners here) in the Common Pleas Court of Lucas County.
Ohio. The judgment amount was the balance then remaining on the
note, namely, $62,370, plus interest from May 1, 1968, and costs.
This judgment was effected through the appearance of an Ohio
attorney on behalf of the defendants (petitioners here) in that
Ohio action. His appearance was "by virtue of the warrant of
attorney" in the second note. The lawyer waived the issuance and
service of process and confessed the judgment. This attorney was
not known to Overmyer, had not been retained by Overmyer, and had
not communicated with the petitioners prior to the entry of the
judgment.
Page 405 U. S. 182
10. As required by Ohio Rev.Code § 2323.13(C), the clerk of the
state court, on July 16, mailed notices of the entry of the
judgment on the cognovit note to Overmyer at addresses in New York,
Ohio, and Kentucky.
11. On July 22, Overmyer, by counsel, filed in the Ohio court
motions to stay execution and for a new trial. The latter motion
referred to "[i]rregularity in the proceedings of the prevailing
party and of the court. . . ." On August 6, Overmyer filed a motion
to vacate judgment and tendered an answer and counterclaim alleging
breach of contract by Frick, and damages. A hearing was held. Both
sides submitted affidavits. Those submitted by Overmyer asserted
lack of notice before judgment and alleged a breach of contract by
Frick. A copy of Judge Mansfield's findings, conclusions, and
opinion was placed in the record. On November 16, the court
overruled each motion.
12. Overmyer appealed to the Court of Appeals for Lucas County,
Ohio, specifically asserting deprivation of due process violative
of the Ohio and Federal Constitutions. That court affirmed with a
brief journal entry.
13. The Supreme Court of Ohio "
sua sponte dismisse[d]
the appeal for the reason that no substantial constitutional
question exists herein."
We granted certiorari. 401 U.S. 992 (1971).
II
This chronology clearly reveals that Overmyer's situation, of
which it now complains, is one brought about largely by its own
misfortune and failure or inability to pay. The initial agreement
between Overmyer and Frick was a routine construction subcontract.
Frick agreed to do the work and Overmyer agreed to pay a designated
amount for that work by progress payments at specified times. This
contract was not accompanied by any promissory note.
Page 405 U. S. 183
Overmyer then became delinquent in its payments. Frick naturally
refrained from further work. This impasse was resolved by the
February, 1967, post-contract arrangement, pursuant to which
Overmyer made an immediate partial payment in cash and issued its
installment note for the balance. Although Frick had suggested a
confession of judgment clause, the note, as executed and delivered,
contained no provision of that kind.
Frick completed its work, and Overmyer accepted the work as
satisfactory. Thereafter, Overmyer again asked for relief. At this
time, counsel for each side participated in the negotiations. The
first note was replaced by the second. The latter contained the
confession of judgment provision Overmyer now finds so offensive.
However, in exchange for that provision and for its execution of
the second mortgages, Overmyer received benefit and consideration
in the form of (a) Frick's release of the three mechanic's liens,
(b) reduction in the amount of the monthly payment, (c) further
time in which the total amount was to be paid, and (d) reduction of
a half point in the interest rate.
Were we concerned here only with the validity of the June, 1967,
agreement under principles of contract law, that issue would be
readily resolved. Obviously and undeniably, Overmyer's execution
and delivery of the second note were for an adequate consideration
and were the product of negotiations carried on by corporate
parties with the advice of competent counsel.
More than mere contract law, however, is involved here.
III
Petitioner Overmyer first asserts that the Ohio judgment is
invalid because there was no personal service upon it, no voluntary
appearance by it in Ohio, and no genuine appearance by an attorney
on its behalf. Thus,
Page 405 U. S. 184
it is said, there was no personal jurisdiction over Overmyer in
the Ohio proceeding. The petitioner invokes
Pennoyer v.
Neff, 95 U. S. 714,
95 U. S. 732
(1878), and other cases decided here and by the Ohio courts
enunciating accepted and long-established principles for
in
personam jurisdiction.
McDonald v. Mabee,
243 U. S. 90,
243 U. S. 91
(1917);
Vanderbilt v. Vanderbilt, 354 U.
S. 416,
354 U. S. 418
(1957);
Sears v. Weimer, 143 Ohio St. 312, 55 N.E.2d 413
(1944);
Railroad Co. v. Goodman, 57 Ohio St. 641, 50 N.E.
1132 (1897);
Cleveland Leader Printing Co. v. Green, 52
Ohio St. 487, 491, 40 N.E. 201, 203 (1895).
It is further said that whether a defendant's appearance is
voluntary is to be determined at the time of the court proceeding,
not at a much earlier date when an agreement was signed; that an
unauthorized appearance by an attorney on a defendant's behalf
cannot confer jurisdiction; and that the lawyer who appeared in
Ohio was not Overmyer's attorney in any sense of the word, but was
only an agent of Frick.
The argument then proceeds to constitutional grounds. It is said
that due process requires reasonable notice and an opportunity to
be heard, citing
Boddie v. Connecticut, 401 U.
S. 371,
401 U. S. 378
(1971). It is acknowledged, however, that the question here is in a
context of "contract waiver, before suit has been filed, before any
dispute has arisen," and
"whereby a party gives up in advance his constitutional right to
defend any suit by the other, to notice and an opportunity to be
heard, no matter what defenses he may have, and to be represented
by counsel of his own choice. [
Footnote 9]"
In other words, Overmyer's position here specifically is that it
is "unconstitutional to waive in advance the right to present a
defense in an action on the note." [
Footnote 10] It is conceded that, in Ohio, a court has
the
Page 405 U. S. 185
power to open the judgment upon a proper showing.
Bellows v.
Bowlus, 83 Ohio App. 90, 93, 82 N.E.2d 429, 432 (1948). But it
is claimed that such a move is discretionary, and ordinarily will
not be disturbed on appeal, and that it may not prevent execution
before the debtor has notice,
Griffin v. Griffin,
327 U. S. 220,
327 U. S.
231-232 (1946).
Goldberg v. Kelly, 397 U.
S. 254 (1970), and
Sniadach v. Family Finance
Corp., 395 U. S. 337
(1969), are cited.
The due process rights to notice and hearing prior to a civil
judgment are subject to waiver. In
National Equipment Rental,
Ltd. . v. Szukhent, 375 U. S. 311
(1964), the Court observed:
"[I]t is settled . . . that parties to a contract may agree in
advance to submit to the jurisdiction of a given court, to permit
notice to be served by the opposing party, or even to waive notice
altogether."
Id. at
375 U. S.
315-316. And in
Boddie v. Connecticut, supra,
the Court acknowledged that "the hearing required by due process is
subject to waiver." 401 U.S. at
401 U. S.
378-379.
This, of course, parallels the recognition of waiver in the
criminal context where personal liberty, rather than a property
right, is involved.
Illinois v. Allen, 397 U.
S. 337,
397 U. S.
342-343 (1970) (right to be present at trial);
Miranda v. Arizona, 384 U. S. 436,
384 U. S. 444
(1966) (rights to counsel and against compulsory
self-incrimination);
Fay v. Noia, .
372
U.S. 391,
372 U. S. 439
(1963) (habeas corpus);
Rogers v. United States,
340 U. S. 367,
340 U. S. 371
(1951) (right against compulsory self-incrimination).
Even if, for present purposes, we assume that the standard for
waiver in a corporate property right case of this kind is the same
standard applicable to waiver in a criminal proceeding, that is,
that it be voluntary, knowing, and intelligently made,
Brady v. United
States, 397
Page 405 U. S. 186
U.S. 742,
397 U. S. 748
(1970);
Miranda v. Arizona, 384 U.S. at
384 U. S. 444,
or "an intentional relinquishment or abandonment of a known right
or privilege,"
Johnson v. Zerbst, 304 U.
S. 458,
304 U. S. 464
(1938);
Fay v. Noia, 372 U.S. at
372 U. S. 439,
and even if, as the Court has said in the civil area, "[w]e do not
presume acquiescence in the loss of fundamental rights,"
Ohio
Bell Tel. Co. v. Public Utilities Comm'n, 301 U.
S. 292,
301 U. S. 307
(1937), that standard was fully satisfied here.
Overmyer is a corporation. Its corporate structure is
complicated. Its activities are widespread. As its counsel in the
Ohio post-judgment proceeding stated, it has built many warehouses
in many States, and has been party to "tens of thousands of
contracts with many contractors." This is not a case of unequal
bargaining power or overreaching. The Overmyer-Frick agreement,
from the start, was not a contract of adhesion. There was no
refusal on Frick's part to deal with Overmyer unless Overmyer
agreed to a cognovit. The initial contract between the two
corporations contained no confession of judgment clause. When,
later, the first installment note from Overmyer came into being,
it, too, contained no provision of that kind. It was only after
Frick's work was completed and accepted by Overmyer, and when
Overmyer again became delinquent in its payments on the matured
claim and asked for further relief, that the second note containing
the clause was executed.
Overmyer does not contend here that it or its counsel was not
aware of the significance of the note and of the cognovit
provision. Indeed, it could not do so in the light of the facts.
Frick had suggested the provision in October, 1966, but the first
note, readjusting the progress payments, was executed without it.
It appeared in the second note delivered by Overmyer's own counsel
in return for substantial benefits and consideration to Overmyer.
Particularly important, it would seem, was the
Page 405 U. S. 187
release of Frick's mechanic's liens, but there were, in
addition, the monetary relief as to amount, time, and interest
rate.
Overmyer may not have been able to predict with accuracy just
how or when Frick would proceed under the confession clause if
further default by Overmyer occurred, as it did, but this inability
does not, in itself, militate against effective waiver.
See
Brady v. United States, 397 U.S. at
397 U. S. 757;
McMann v. Richardson, 397 U. S. 759,
397 U. S.
772-773 (1970).
We therefore hold that Overmyer, in its execution and delivery
to Frick of the second installment note containing the cognovit
provision, voluntarily, intelligently, and knowingly waived the
rights it otherwise possessed to prejudgment notice and hearing,
and that it did so with full awareness of the legal
consequences.
Insurance Co. v.
Morse, 20 Wall. 445 (1874), affords no comfort to
the petitioners. That case concerned the constitutional validity of
a state statute that required a foreign insurance company, desiring
to qualify in the State, to agree not to remove any suit against it
to a federal court. The Court quite naturally struck down the
statute, for it thwarted the authority vested by Congress in the
federal courts and violated the Privileges and Immunities
Clause.
Myers v. Jenkins, 63 Ohio St. 101, 120, 57 N.E. 1089,
1093 (1900), involving an insurance contract that called for
adjustment of claims through the company alone and without resort
to the courts, is similarly unhelpful.
IV
Some concluding comments are in order:
1. Our holding necessarily means that a cognovit clause is not,
per se, violative of Fourteenth Amendment due process.
Overmyer could prevail here only if the clause were
constitutionally invalid. The facts of this case, as
Page 405 U. S. 188
we observed above, are important, and those facts amply
demonstrate that a cognovit provision may well serve a proper and
useful purpose in the commercial world, and at the same time not be
vulnerable to constitutional attack.
2. Our holding, of course, is not controlling precedent for
other facts of other cases. For example, where the contract is one
of adhesion, where there is great disparity in bargaining power,
and where the debtor receives nothing for the cognovit provision,
other legal consequences may ensue.
3. Overmyer, merely because of its execution of the cognovit
note, is not rendered defenseless. It concedes that, in Ohio, the
judgment court may vacate its judgment upon a showing of a valid
defense, and, indeed, Overmyer had a post-judgment hearing in the
Ohio court. If there were defenses such as prior payment or
mistaken identity, those defenses could be asserted. And there is
nothing we see that prevented Overmyer from pursuing its breach of
contract claim against Frick in a proper forum. Here, again, that
is precisely what Overmyer has attempted to do, thus far
unsuccessfully, in the Southern District of New York.
The judgment is
Affirmed.
MR. JUSTICE POWELL and MR. JUSTICE REHNQUIST took no part in the
consideration or decision of this case.
[
Footnote 1]
When the judgment challenged here was entered in 1968, the
statute read:
"Sec. 2323.13. (A) An attorney who confesses judgment in a case,
at the time of making such confession, must produce the warrant of
attorney for making it to the court before which he makes the
confession, which shall be in the county where the maker or any one
of several makers resides or in the county where the maker or any
one of several makers signed the warrant of attorney authorizing
confession of judgment, any agreement to the contrary
notwithstanding; and the original or a copy of the warrant shall be
filed with the clerk."
"(B) The attorney who represents the judgment creditor shall
include in the petition a statement setting forth to the best of
his knowledge the last known address of the defendant."
"(C) Immediately upon entering any such judgment the court shall
notify the defendant of the entry of the judgment by personal
service or by registered or certified mail mailed to him at the
address set forth in the petition."
Senate Bill No. 85, 133 Ohio Laws 196-198 (1969-1970), effective
Sept. 16, 1970, amended paragraphs (A) and (C), in ways not
pertinent here, and added paragraph (D):
"(D) A warrant of attorney to confess judgment contained in any
promissory note, bond, security agreement, lease, contract, or
other evidence of indebtedness executed on or after January l,
1971, is invalid and the courts are without authority to render a
judgment based upon such a warrant unless there appears on the
instrument evidencing the indebtedness, directly above or below the
signature of each maker, or other person authorizing the
confession, in such type size or distinctive marking that it
appears more clearly and conspicuously than anything else on the
document: "
" Warning -- By signing this paper you give up your right to
notice and court trial. If you do not pay on time a court judgment
may be taken against you without your prior knowledge and the
powers of a court can be used to collect from you or your employer
regardless of any claims you may have against the creditor whether
for returned goods, faulty goods, failure on his part to comply
with the agreement, or any other cause."
[
Footnote 2]
The Iowa Supreme Court succinctly has defined a cognovit as "the
written authority of the debtor and his direction . . . to enter
judgment against him as stated therein."
Blott v. Blott,
227 Iowa 1108, 1111-1112, 290 N.W. 74, 76 (1940).
In
Jones v. John Hancock Mutual Life Insurance
Co., 289 F.
Supp. 930, 935 (WD Mich.1968),
aff'd, 416 F.2d 829
(CA6 1969), Judge Fox, in applying Ohio law, pertinently
observed:
"A cognovit note is not an ordinary note. It is, indeed, an
extraordinary note which authorizes an attorney to confess judgment
against the person or persons signing it. It is written authority
of a debtor and a direction by him for the entry of a judgment
against him if the obligation set forth in the note is not paid
when due. Such a judgment may be taken by any person or any company
holding the note, and it cuts off every defense which the maker of
the note may otherwise have. It likewise cuts off all rights of
appeal from any judgment taken on it."
[
Footnote 3]
Historical references appear in
General Contract Purchase
Corp. v. Max Keil Real Estate Co., 35 Del. 531, 532-533, 170
A. 797, 798 (1933), and
First Nat. Bk. v. White, 220 Mo.
717, 728-732, 120 S.W. 36, 39-40 (1909).
[
Footnote 4]
Recent Cases, Confession of Judgments -- Refusal of New York
State to Enforce Pennsylvania Cognovit Judgments, 74 Dick.L.Rev.
750 (1970); Note, Enforcement of Sister State's Cognovit Judgments,
16 Wayne L.Rev. 1181 (1970); H. Goodrich, Conflict of Laws § 73, p.
122 (4th ed.1964); Hopson, Cognovit Judgments: An Ignored Problem
of Due Process and Full Faith and Credit, 29 U.Chi.L.Rev. 111
(1961); Hunter, The Warrant of Attorney to Confess Judgment, 8 Ohio
St.L.J. 1 (1941); Note, A Clash in Ohio?: Cognovit Notes and the
Business Ethic of the UCC, 35 U.Cin.L.Rev. 470 (1966); Comment, The
Effect of Full Faith and Credit on Cognovit Judgments; 42
U.Colo.L.Rev. 173 (1970); Comment, Confessions of Judgment: The Due
Process Defects, 43 Temp.L.Q. 279 (1970); Comment, Cognovit
Judgments and the Full Faith and Credit Clause, 50 B.U.L.Rev. 330
(1970); Comment, Cognovit Judgments: Some Constitutional
Considerations, 70 Col.L.Rev. 1118 (1970); Note, Confessions of
Judgment, 102 U.Pa.L.Rev. 524 (1954); Note, Foreign Courts May Deny
Full Faith and Credit to Cognovit Judgments and Must Do So When
Entered Pursuant to an Unlimited Warrant of Attorney, 56 Va.L.Rev.
554 (1970); Note, Should a Cognovit Judgment Validly Entered in One
State be Recognized by a Sister State?, 30 Md.L.Rev. 350
(1970).
[
Footnote 5]
Ill.L.Rev.Stat., c. 110, § 50; Mo.Rev.Stat. § 511.100; Ohio
Rev.Code § 2323.13; Pa.Stat.Ann., Tit. 12, §§ 738 and 739 and
Pa.Rules of Civil Procedure 2950-2976; S.D.Comp.Laws § 21-26-1.
[
Footnote 6]
See, for example, Ala.Code, Tit. 20, § 16, and Tit. 62,
§ 248; Ariz.Rev.Stat.Ann. §§ 6-629 and 44-143; Mass.Gen.Laws Ann.,
c. 231, § 13A.
[
Footnote 7]
Ind.Ann.Stat. §§ 2-2904 and 2-2906; N.M.Stat.Ann. §§ 219-16 and
21-9-18; R.I.Gen.Laws Ann. §§ 19-25-24 and 19-25-36.
[
Footnote 8]
See, for example, Conn.Gen.Stat.Rev. §§ 42-88 and
36-236; Mich.Comp.Laws §§ 600.2906 and 493.12, Mich.Stat.Ann. §§ 27
A. 2906 and 23.667(12); Minn.Stat. §§ 548.22, 168.71, and 56.12;
N.J.Stat.Ann. § 2A: 16-9.
[
Footnote 9]
Brief for Petitioners 16.
[
Footnote 10]
Tr. of Oral Arg. 17.
MR. JUSTICE DOUGLAS, whom MR. JUSTICE MARSHALL joins,
concurring.
I agree that the heavy burden against the waiver of
constitutional rights, which applies even in civil matters,
Ohio Bell Tel. Co. v. Public Utilities Comm'n,
301 U. S. 292,
301 U. S. 307
(1937);
Aetna Ins. Co. v.
Kennedy, 301 U.S.
Page 405 U. S. 189
389,
301 U. S. 393
(1937), has been effectively rebutted by the evidence presented in
this record. Whatever procedural hardship the Ohio confession of
judgment scheme worked upon the petitioners was voluntarily and
understandingly self-inflicted through the arm's-length bargaining
of these corporate parties.
I add a word concerning the contention that opening of confessed
judgments in Ohio is merely discretionary, and requires a higher
burden of persuasion than is ordinarily imposed upon defendants. As
I read the Ohio law of cognovit notes, trial judges have
traditionally enjoyed wide discretion in vacating confessed
judgments. 32 Ohio Jur.2d Judgments § 558 (1958). In
Livingstone v. Rebman, 169 Ohio St. 109, 158 N.E.2d 366
(1959), however, the Ohio Supreme Court imposed certain safeguards
on the exercise of a judge's discretion in opening confessed
judgments. That case also involved a petition to open a confessed
judgment where, as here, the debtor alleged the affirmative defense
of failure of consideration. Using the "preponderance of the
evidence" test, the trial court had found insufficient support for
the debtor's claim, and had dismissed the motion to open. On
appeal, however, the Ohio Supreme Court reversed on the degree of
proof needed to vacate a confessed judgment. Said the court:
"[I]f there is credible evidence supporting the defense . . .
from which reasonable minds may reach different conclusions, it is
then the
duty of the court to suspend the judgment and
permit the issue raised by the pleadings to be tried by a jury or,
if a jury is waived, by the court."
Id. at 121-122, 158 N.E.2d at 375. (Emphasis supplied.)
Thus, it would appear that the Ohio confessed judgment may be
opened if the debtor poses a jury question, that
Page 405 U. S. 190
is, if his evidence would have been sufficient to prevent a
directed verdict against him. That standard is a minimal obstacle.
*
The fact that a trial judge is duty-bound to vacate judgments
obtained through cognovit clauses where debtors present jury
questions is a complete answer to the contention that unbridled
discretion governs the disposition of petitions to vacate.
See
also Goodyear v. Stone, 169 Ohio St. 124, 158 N.E.2d 376
(1959);
McMillen v. Willard Garage Inc., 14 Ohio App.2d
112, 115, 237 N.E.2d 155, 158 (1968);
Central National Bank of
Cleveland v. Standard Loan & Finance, 5 Ohio App.2d 101,
104, 195 N.E.2d 597, 600 (1964).
The record shows that the petitioners were given every
opportunity after judgment to explain their affirmative defense to
the state courts, and that the defense was rejected solely because
the evidence adduced in support thereof was too thin to warrant
further presentation to a jury.
* Thus, the Ohio system places no undue burden of proof upon the
debtor desiring to open a confessed judgment, in marked contrast to
the Pennsylvania procedure involved in
Swarb v. Lennox,
post, p.
405 U. S. 191. In
Pennsylvania, in order to vacate such a judgment, a borrower must
prove his defense by the preponderance of the evidence, rather than
by merely mustering enough evidence to present a jury question.
Once the judgment is vacated, moreover, he must again prevail by
that standard at a subsequent trial. In effect, the Pennsylvania
confessed debtor is required to win two consecutive trials, not
simply one. Given the proclivities of reasonable men to differ over
the probative value of jury questions, the Pennsylvania requirement
of twice sustaining the preponderance of the evidence imposes a
stiffer burden of persuasion.