ISBELL v. COUNTY OF SONOMA (1977)

Appellants brought suit for declaratory relief in the Sonoma County Superior Court challenging the statutory procedure for confessions of judgment in California Code of Civil Procedure sections 1132 through 1135. They alleged that the procedure failed to comply with the due process clauses of the Fourteenth Amendment of the Constitution of the United States, and article I, section 13 of the California Constitution. Named as defendants were the County of Sonoma and certain county officials. The action was submitted for decision on stipulated facts and briefs by opposing counsel. This appeal is from a judgment holding, in effect, that the California confession of judgment procedure is not, on its face, unconstitutional and void as a denial of due process, and that judgments obtained in conformance with Code of Civil Procedure sections 1132 through 1135 are not per se invalid. We concur in this holding, but find it necessary to modify the judgment for reasons hereinafter discussed.

STIPULATED FACTS

On November 15, 1966, the District Attorney of Sonoma County filed a criminal complaint against plaintiff Isbell alleging violation of Welfare and Institutions Code section 11482 (false representation to obtain aid). On December 12, 1966, plaintiff entered a plea of guilty to the charge and was sentenced to a 30-day concurrent term in the county jail. No fine or restitution was ordered.

On January 17, 1967, while plaintiff was in the county jail, defendant Eugene, Williams, acting through Deputy County Clerk Barbara Alspaugh, requested plaintiff to execute a confession of judgment in favor of defendant Sonoma County. Said judgment was then filed in the Municipal Court of the County of Sonoma by defendant Mabel Tonkin, acting through Deputy Clerk Eleanor Shaff.

On January 27, 1967, defendant Tonkin issued an abstract of judgment against plaintiff Isbell which was subsequently recorded in the office of the County Recorder, Herb Snyder. Since that time, defendant Victor Martinez, as head of the Sonoma County Collections Department, has attempted collection of the judgment.

In July of 1974 plaintiff Isbell purchased a house with the assistance of the Farmers Home Administration. The judgment then attached as a lien on plaintiff's house.

On January 17, 1967, plaintiff Isbell did not consult an attorney prior to signing the confession of judgment.

Prior to February 1966 the Sonoma County Welfare Department alleged that an overpayment of benefits had been made to plaintiffs Clevie Pearson and Omega Pearson.

On February 8, 1966, at plaintiffs' home, defendant Williams, acting through Deputy Clerk Alspaugh, requested plaintiffs to execute a confession of judgment in favor of defendant Sonoma County. Said judgment was then filed in the Municipal Court of the County of Sonoma by defendant Tonkin, acting through Deputy Cleark Edith Bosworth.

On February 16, 1966, defendant Tonkin issued an abstract of the judgment against plaintiffs which was subsequently recorded in the office of the County Recorder, Snyder. Since that time defendant Martinez, as head of the Sonoma County Collections Department, has attempted collection of the judgment.

On February 8, 1966, the Pearson plaintiffs did not consult an attorney prior to signing the confession of judgment.

All plaintiffs are laypersons with no training or background in matters of law and have only a layperson's understanding of the legal consequences of a confession of judgment.

DISCUSSION

The stipulated facts raise but one issue for the trial court's and our consideration: Are Code of Civil Procedure sections 1132 through 1135, authorizing entry of confession judgments, on their face unconstitutional as violative of procedural due process? Specifically appellants contend that due process requires notice and a meaningful opportunity for hearing, which protections were denied appellants under California's confession of judgment provisions.

The United States Supreme Court has clearly established that statutes authorizing entry of confession judgments are not per se invalid as violative of the Due Process Clause of the Fourteenth Amendment. In D. H. Overmyer Co. v. Frick Co. (1972) 405 U.S. 174, 92 S.Ct. 775, 31 L.Ed.2d 124, the court held that, inasmuch as due process rights to notice and hearing prior to civil judgment are subject to waiver (id., at p. 185, 92 S.Ct. 775, citing National Equipment Rental, Ltd. v. Szukhent (1964) 375 U.S. 311, 315–316, 84 S.Ct. 411, 11 L.Ed.2d 354, and Boddie v. Connecticut (1971) 401 U.S. 371, 378–379, 91 S.Ct. 780, 28 L.Ed.2d 113), an individual may constitutionally waive in advance the right to present a defense on a note. This holding was reaffirmed in the companion case of Swarb v. Lennox (1972) 405 U.S. 191, 92 S.Ct. 767, 31 L.Ed.2d 138. The court therein declared at page 200, 92 S.Ct. at page 772 that ‘under appropriate circumstances, a cognovit debtor may be held effectively and legally to have waived those rights he would possess if the document he signed had contained no cognovit provision.’ Whether there has been an effective waiver of due process must turn on the facts and circumstances of each case. (D. H. Overmyer Co. v. Frick Co., supra, 405 U.S. at pp. 187–188, 92 S.Ct. 775; Swarb v. Lennox, supra, 405 U.S. at p. 200, 92 S.Ct. 767). In Overmyer, the factual context of the case compelled the conclusion that constitutional minimums for effective waiver had been met. Overmyer, a corporation, clearly understood the significance of the cognovit provision and accepted it in return for substantial benefits and consideration. The court therefore concluded that Overmyer ‘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.’ (D H. Overmyer Co. v. Frick Co., supra, at p. 187, 92 S.Ct. at p. 783.) Nevertheless the court expressly distinguished other fact patterns such as adhesion contracts, situations involving great disparity in bargaining power, and instances in which the debtor received nothing in return for the cognovit provisions. In such cases, the court noted, other legal consequences may ensue. (D. H. Overmyer Co. v. Frick Co., supra, at p. 188, 92 S.Ct. 775.)

Although the standard of inquiry governing waiver of due process rights has not been defined by the Supreme Court,¹ it appears to be settled that a waiver of fundamental constitutional rights is ineffective unless knowingly, intelligently and voluntarily made. In the civil, no less than the criminal area, courts ‘indulge every reasonable presumption against waiver’ (Aetna Ins. Co. v. Kennedy (1937) 301 U.S. 389, 393, 57 S.Ct. 809, 812, 81 L.Ed. 1177) and ‘do not presume acquiescence in the loss of fundamental rights.’ (Ohio Bell Tel. Co. v. Comm'n (1937) 301 U.S. 292, 307, 57 S.Ct. 724, 731, 81 L.Ed. 1093.) In Johnson v. Zerbst (1938) 304 U.S. 458, 464, 58 S.Ct. 1019, 1023, 82 L.Ed. 1461, the Supreme Court explained, ‘A waiver is ordinarily an intentional relinquishment or abandonment of a known right or privilegg.’ (See Blair v. Pitchess (1971) 5 Cal.3d 258, 274, 96 Cal.Rptr. 42, 53, 486 P.2d 1242, 1253.) The presumption against waiver grows stronger as the rights become more important, and as the party alleged to have waived them becomes less sophisticated and less apt to have understood the significance of his actions. (Virgin Islands National Bank v. Tropical Ventures, Inc. (D.C.1973) 358 F.Supp. 1203, 1206.) Thus an apparent waiver of due process rights must be disregarded if made without understanding of its legal significance.

The facts in the present case do not compel a finding that appellants did not knowingly, intelligently and voluntarily waive their due process rights. Appellants are laypersons with no training in the law. They were unassisted by counsel. But there is not a scintilla of evidence that they did not knowingly, intelligently and voluntarily waive their due process rights.

In Irmco Hotels Corp. v. Solomon (Ill.App.1975) 27 Ill.App.3d 225, 326 N.E.2d 542, involving the constitutionality of the Illinois confession of judgment procedure the appellate court noted that there was nothing in the record to support defendant's claim that his waiver was not effectively executed. Nor did defendant argue facts on appeal in support of his claim; instead he relied upon general statements about the typical consumers against whom judgment may be confessed. The court held that, since it had no factual basis upon which to determine that this defendant did not effectively waive his rights to notice and hearing, the trial court's denial of motion to vacate must be presumed to be supported by the evidence. (Id., at p. 545.) In the instant case there is no evidence that the appellants did or did not sign the confessions of judgment voluntarily and knowingly. The stipulated facts contain no support whatsoever for appellants' allegation that appellant Isbell signed a confession of judgment ‘whose consequences she never understood.’ It does not follow that a layperson unrepresented by a lawyer may not under any circumstances knowingly, intelligently and voluntarily sign a confession of judgment whose consequences he understands.

On the other hand, a confession of judgment which complies with California's statutory requirements does not, as respondents contend, on its face constitute effective waiver of notice and hearing.² Although strict compliance with statutory safeguards is required (Barnes v. Hilton (1953) 118 Cal.App.2d 108, 111, 257 P.2d 98), the mere signature of a debtor beneath the statements required by Code of Civil Procedire section 1133 cannot guarantee a knowing, intelligent and voluntary waiver. As the California Supreme Court has noted, a layman debtor's ‘ignorance of legal matters makes it unlikely that he will understand the character and effect of the instrument.’³ (Hulland v. State Bar (1972) 8 Cal.3d 440, 450, 105 Cal.Rptr. 152, 158, 503 P.2d 608, 614 [attorney's use of confession of judgment to collect a fee as grounds for discipline].) In Blair v. Pitchess, supra, 5 Cal.3d 258 at page 274, 96 Cal.Rptr. 42, at page 53, 486 P.2d 1242, at page 1253, the Supreme Court held that ‘Where government officials rely on consent to justify the lawfulness of a search, the burden is on them to show by clear and positive evidence that the consent was freely, voluntarily and knowledgeably given.’ The court then concluded that defendants had failed to establish effective consent to the search. In dicta, the court observed that where a clause in a contract of adhesion purport to give a seller or creditor authority to enter any premises and repossess goods sold, such consent is ineffective to waive constitutional protections against unreasonable search and seizure. (Blair v. Pitchess, supra, at pp. 275–276, 96 Cal.Rptr. 42, 486 P.2d 1242.) Although Blair involved the waiver of Fourth Amendment rights, its rationale is nevertheless controlling here. Due process rights are no less fundamental than the Fourth Amendment protection against unreasonable searches and seizures, and the presumption against waiver is equally applicable to the constitutional guarantee of notice and hearing. Thus where a creditor relies upon waiver of due process rights, he should be charged with proving that the waiver was valid.

Appellants contend that an evidentiary hearing must be offered to determine whether the waiver was knowingly, voluntarily and intelligently made before a confession judgment may be entered, and that failure to provide such a hearing violates due process. This precise issue has not been determined by the Supreme Court, but has been raised in a series of federal district court cases. In Osmond v. Spence (D.C. 1971) 327 F.Supp. 1349, the Delaware cognovit scheme was held unconstitutional on the ground that ‘There is no method of judicially determining whether or nor a particular debtor knowingly and intelligently signed the judgment note thereby waiving his 14th amendment rights.’ (Id., at p. 1359.) On appeal to the Supreme Court, the judgment was vacated and the case remanded for reconsideration in light of Overmyer and Swarb. (405 U.S. 971, 92 S.Ct. 1189, 31 L.Ed. 245.) On remand, the district court adhered to its original opinion. (Osmond v. Spence (D.C.1972) 359 F.Supp. 124.) Subsequently federal district courts in Illinois and the Virgin Islands likewise held that a prejudgment hearing on the issue of waiver is required by due process. (Scott v. Danaher (D.C.1972) 343 F.Supp. 1272; Virgin Islands National Bank v. Tropical Ventures, supra, 358 F.Supp. 1203.)

The Osmond line of cases was criticized by the United States District Court for Nevada in Tunheim v. Bowman (1973) 366 F.Supp. 1392, on the ground that the Overmyer holding forecloses the issue of facial unconstitutionality of confessed judgment procedures, a view with which we agree. The Tunheim court observed: ‘The Overmyer case did not leave the question open. It specifically held that a statutory scheme which did not provide for notice and hearing prior to entry of a confessed judgment did not run afoul of due process requirements.’ (Id., at p. 1394.)

The Maryland Court of Appeal expresses a similar view of Overmyer: ‘In any event, Overmyer cannot be read to mandate a ‘waiver hearing’ prior to entry of a confessed judgment and, insofar as one may be required thereafter, it was clearly available to appellants at the hearing on their motion to vacate. No more is required.' (Billingsley v. Lincoln National Bank (1974) 271 Md. 683, 320 A.2d 34, 39.)

Respondents contend that the requirements of due process are met if at some point plaintiffs have an adequate opportunity to assert the invalidity of their waiver, relying upon language from Mitchell v. W. T. Grant Co. (1974) 416 U.S. 600, 94 S.Ct. 1895, 40 L.Ed.2d 406. The court therein declared, at pages 610–611, 94 S.Ct. at page 1901: ‘The requirements of due process of law ‘are not technical, nor is any particular form of procedure necessary.’ . . . [¶] . . . The usual rule has been ‘[w]here only property rights are involved, mere postponement of the judicial enquiry is not a denial of due process, if the opportunity given for ultimate judicial determination of liability is adequate.’' Respondents urge that there is adequate opportunity for a judicial determination of waiver, in that a debtor may move to vacate the judgment pursuant to Code of Civil Procedure section 473 or to seek equitable relief, as was done here. (See 5 Witkin, Cal. Procedure (2d ed. 1971) Attack on Judgment in Trial Court, § 175, p. 3744 et seq.) Because of the time limitations contained in Code of Civil Procedure section 473 that remedy would not be available in the instant case, but declaratory relief was and is available. Appellants failed to have the waiver question determined by the court below because the stipulated facts did not furnish a basis on which such determination could rest. Whether the appellants, in signing the confession of judgment, knowingly, voluntarily and intelligently waived their procedural due process rights cannot be determined from the mere statements that appellants were laypersons unrepresented by counsel. At the very least they should have testified, if it be true, that they didn't know what they were signing when, in their own handwriting they set forth matters required to be stated in Code of Civil Procedure section 1133.

We now consider the language of the judgment from which this appeal is taken. It adjudged and decreed: ‘1. That due process standards of the Fourteenth Amendment of the United States Constitution and of Article I, Section 1 of the California Constitution are met if a confession of judgment is obtained and entered in conformance with the requirements of Code of Civil Procedure sections 1132 to 1135’; and ‘2. That the judgments obtained by defendants against plaintiffs are valid.’ It is not true that due process standards are necessarily met if a confession of judgment is obtained and entered in conformance with the statutory provisions. Likewise, the judgments obtained by respondents against appellants are not necessarily valid.

It is noteworthy that neither the judgment, nor the stipulated facts, nor the conclusions of law mention the subject of waiver, which is what this case is about. As has already been established mere conformance with statutory requirements does not per se constitute effective waiver of procedural due process. A factual basis is required upon which a determination can be made that these appellants either did or did not effectively waive their rights to a trial on the merits before having judgments entered against them. For the reason that the stipulated facts, the only facts before the trial court, are insufficient to support the implied finding that appellants effectively waived their rights to procedural due process, the judgment requires modification. (See Code Civ.Proc., § 43; 6 Witkin, Cal. Procedure (2d ed. 1971) Appeal, §§ 528–541, pp. 4474–4483.)

Accordingly, it is directed that the judgment herein be modified to provide: (1) That the confession of judgment procedure established by Code of Civil Procedure sections 1132 through 1135 is not, on its face, unconstitutional; (2) that judgments entered in conformance with said procedure are not, per se, invalid; (3) that the stipulated facts herein are insufficient to permit a determination that the plaintiffs herein did, or did not, voluntarily, intelligently and knowingly waive their procedural due process rights.

As so modified the judgment is affirmed.

FOOTNOTES

FOOTNOTE.  

1.  In Overmyer the court applied the standard governing waiver of constitutional rights in criminal cases—without holding that such standars must necessarily apply—and held that, on the particular facts of that case, the contractual waiver of due process rights was ‘voluntarily, intelligently, and knowingly’ made. (D. H. Overmyer Co. v. Frick Co., supra, 405 U.S. 174 at p. 187, 92 S.Ct. 775.)

2.  In strict compliance with the requirements of section 1133, respondents' confession of judgment forms provide in pertinent part: ‘I hereby confess judgment in favor of the County of Sonoma, the plaintiff above named, for the sum of _____, and authorize the entry of judgment thereof against me. This judgment applies to any personal and real property I now own or may acquire. [¶] This Confession of Judgment is for a debt justly due from me to the said County of Sonoma, and arises upon the following facts: to wit, _____.’

3.  In apparent recognition of this deficiency in Code of Civil Procedure section 1133, the Legislature, in 1975, amended section 1132 to provide that a judgment by confession on a debt arising out of a consumer transaction shall be entered only where it appears upon the face of the document that the debtor was advised by an independent attorney with respect to the waiver of rights and defenses. (Code Civ. Proc., § 1132, subd. (b).)

WEINBERGER, Associate Justice.* FN* Retired judge of the superior court sitting under assignment by the Chairman of the Judicial Council.

MOLINARI, P. J., and SIMS, J., concur.