United States District Court, Northern District of Illinois, E.D
May 31, 1972
WILLIAM L. SCOTT, AND LULA J. SCOTT, INDIVIDUALLY AND ON BEHALF OF ALL OTHER PERSONS SIMILARLY SITUATED, PLAINTIFFS,
MATTHEW J. DANAHER, CLERK OF THE CIRCUIT COURT OF COOK COUNTY, ON BEHALF OF HIMSELF INDIVIDUALLY AND IN HIS OFFICIAL CAPACITY, AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, ET AL., DEFENDANTS.
Before Swygert, Chief Judge and Parsons and Lynch, District
The opinion of the court was delivered by: Per Curiam.
MEMORANDUM OF DECISION
The above cause comes before this three-judge district court
for determination of whether or not the operation of Section 1 of
the Illinois Garnishment Act, Ch. 62, Ill.Rev.Stat. § 33 (1969)
in conjunction with judgments obtained by confession in
accordance with Ch. 110, Ill.Rev.Stat. Sec. 50(3) (1969) violates
the due process and equal protection clauses of the 14th
Amendment of the United States Constitution. Jurisdiction of the
above cause is grounded upon 28 U.S.C. § 1343 and 42 U.S.C.
Sec. 1983. See Lynch v. Household Finance Corp.,
405 U.S. 538, 92 S.Ct. 1113, 31 L.Ed.2d 424 (1972).
The named plaintiffs have filed suit on their own behalf and
seek a declaration of this Court pursuant to Rule 23, Federal
Rules of Civil Procedure, to proceed on behalf of all persons who
have executed notes or other forms of indebtedness which contain
a clause which authorizes the entry of judgment by confession and
who are, therefore, subject to garnishment on their non-wage
assets without notice.
In 1968 William L. Scott and Lula J. Scott, executed an
installment sales contract and judgment note for the purchase of
a vacuum cleaner from Custom King System. The contract and note
contained a "cognovit" clause which purported to authorize the
holder of the note to confess and enter judgment against the
obligor without service of process. After the plaintiffs ceased
payment on the note, the defendant here, Puritan Thrift Plan,
Inc., which subsequently obtained possession of the "paper",
confessed judgment against the plaintiffs in the Circuit Court of
Cook County. The judgment, in accordance with the applicable
state statute, was obtained without notice to the plaintiffs.
On September 25, 1970, the defendant, Puritan Thrift, on the
basis of the cognovit judgment directed defendant Danaher to
issue a non-wage garnishment summons against the plaintiffs'
bank. The first notice plaintiffs received of the garnishment
action against them occurred when their bank advised them that a
garnishment summons had been served upon the bank and that the
funds of their account would be "frozen" pending disposition by
Subsequently plaintiffs filed the complaint in the instant
cause of action seeking various forms of relief on behalf of
themselves and all other persons similarly situated. The
plaintiffs successfully moved that a three-judge district court
be convened in accordance with 28 U.S.C. § 2281 et. seq.
The crux of plaintiffs' contention is that the invocation of
Section 1 of the Illinois Garnishment Act, Ch. 62, Ill.Rev.Stat.
§ 33 et seq. (1969) to satisfy judgments obtained by confession
in accordance with Ch. 110, Ill.Rev.Stat. Sec. 50(3) (1969)
violates both the due process and the equal protection clauses of
the 14th Amendment. The gravamen of plaintiffs' argument is that
the procedure encompassed by the Illinois garnishment procedure
permits expropriation of property from a debtor without prior
notice or an opportunity to be heard on the merits of the claim
either at the time that judgment is confessed or at the time that
the garnishment summons is issued.
For reasons set forth below we hold that the Illinois
garnishment statute when invoked to satisfy a judgment obtained
by confession pursuant to Ch. 110, Ill.Rev.Stat. § 50(3) violates
the due process clause of the 14th Amendment because of the
failure of the statute to provide a means of determining whether
or not the debtor has "knowingly and voluntarily" waived his
right to notice and hearing at the time that the garnishment
summons issued. Accordingly, we do not reach the issues raised by
defendants' equal protection argument.
A cursory sketch of the theory which supports this conclusion
is as follows. The statutory plan here involves the State of
Illinois in a procedure which results in the deprivation of a
debtor's property. The procedural safeguards of the due process
clause are thereby invoked. A fundamental principle of procedural
due process mandates notice and hearing before a person may be
deprived of property. The right to notice and hearing may be
waived. However, where as here the rights in question flow from
a constitutional base there arises a presumption against waiver
which must be overcome before such waiver is valid. Failure of
the statutory scheme to provide a means of judicially determining
whether or not the
debtor has executed a "voluntary and understanding" waiver
violates the due process clause.
It needs no extended discussion to establish that in the
instant case the debtor is deprived of the use of his property.
The fact that the judgment may be reopened and the property
returned to the plaintiffs does not mitigate against the fact
that the plaintiffs here are precluded from the use of their
property for some length of time. Sniadach v. Family Finance
Corp., 395 U.S. 337, 89 S.Ct. 1820, 23 L.Ed.2d 349 (1969);
Goldberg v. Kelly, 397 U.S. 254, 90 S.Ct. 1011, 25 L.Ed.2d 287
(1970); Boddie v. Connecticut, 401 U.S. 371, 91 S.Ct. 780, 28
L.Ed.2d 113 (1971); Osmond v. Spence, 327 F. Supp. 1349, 1356
(D.C. 1971). Having established that a deprivation of property is
implemented by the state statute, it becomes clear that the
protection afforded by the due process clause attaches to the
A rudimentary principle of procedural due process requires that
before a person may be deprived of his property he must first be
notified of the proceeding instituted against him and further be
provided with an opportunity to be heard on his own behalf.
Boddie v. Connecticut, 401 U.S. 371, 378, 91 S.Ct. 780, 28
L.Ed.2d 113 (1971); Sniadach v. Family Finance Corp.,
395 U.S. 337, 339-340, 89 S.Ct. 1820, 23 L.Ed.2d 349 (1969); Armstrong v.
Manzo, 380 U.S. 545, 550, 85 S.Ct. 1187, 14 L.Ed.2d 62 (1965);
Coe v. Armour Fertilizer Works, 237 U.S. 413, 422-426, 35 S.Ct.
625, 59 L.Ed. 1027 (1915).
A succinct statement of this principle is found in the case of
Mullane v. Central Hanover Bank & Trust Company, where Mr.
Justice Jackson, speaking for the Court, stated:
"Many controversies have raged about the cryptic and
abstract words of the Due Process Clause but there
can be no doubt that at a minimum they require that
deprivation of life, liberty or property by
adjudication be preceded by notice and opportunity
for hearing appropriate to the nature of the case."
339 U.S. 306, 313, 70 S.Ct. 652, 656, 94 L.Ed. 865
In the same opinion, at 314, 70 S.Ct. at 657, the Court further
"An elementary and fundamental requirement of due
process in any proceeding which is to be accorded
finality is notice reasonably calculated, under all
the circumstances, to apprise interested parties of
the pendency of the action and afford them an
opportunity to present their objections."
Absent other considerations (viz. waiver), it is clear that the
due process clause requires notice and hearing prior to the
deprivation of a property right.
It is equally clear that the statutory scheme before this court
fails to provide the fundamental safeguards of notice and hearing
at two distinct stages of the proceedings. First, notice and
hearing are not required by statute at the time that the
confession of judgment is entered by the creditor. The pertinent
provision of Ch. 110, Ill.Rev.Stat. § 50(3) (1969) provides that:
"Any person for a debt bona fide due may confess judgment by
himself or attorney duly authorized, without process." Secondly,
the judgment creditor, having obtained judgment against the
debtor without notice and without opportunity for the debtor to
be heard, may then, in accordance with Sec. 1 of the Illinois
Garnishment Act, Ch. 62, Ill.Rev.Stat. § 33, (1969), petition the
Clerk of the Court in which the confession of judgment was
entered to "issue summons against [any person having non-wage
assets of the debtor in his possession] commanding him to appear
before the court as garnishee . . ."
Again, upon issuance of the summons against the garnishee there
is neither notice nor an opportunity to be heard afforded to the
judgment debtor. An example of the result of such a statutory
scheme is provided by the named plaintiffs in the instant case.
The first notice that the Scotts received that a judgment had
been entered against them
and that their funds had been garnisheed was provided by the
Pullman Bank and Trust Company when it informed them that their
account had been frozen in accordance with a Court order.
The garnishment statute at issue before this Court is derived
from a former section of the Illinois Garnishment Act, Ch. 62,
Ill.Rev.Stat. § 1 et seq. (1937). Provisions for the issuance of
notice to the judgment debtor at the time of garnishment are
absent from both the old and new statute, and they are identical
for our purposes. In Zimek v. Illinois National Casualty Company,
370 Ill. 572, 19 N.E.2d 620 (1939), the predecessor garnishment
provision was attacked on the grounds that its failure to provide
notice to the judgment debtor of pending garnishment proceedings
rendered the statute violative of the due process clause.
In that case, Mabel Fieldcamp secured a judgment against
Theodore Zimek in the amount of $5,000.00 for injuries received
when a vehicle driven by Zimek collided with the car in which
plaintiff was a passenger. After a writ of execution was returned
unsatisfied, plaintiff brought garnishment proceedings against
the Illinois National Casualty Company. The Cook County Superior
Court entered judgment for plaintiff and the Casualty Company
appealed. The Illinois Supreme Court affirmed the holding of the
lower court and upheld the constitutionality of the garnishment
statute. The rationale employed by the Illinois Supreme Court to
uphold the constitutionality of the statute sheds considerable
light on the issue before us. The Court reasoned that:
"The garnishment process is remedial in nature,
designed to reach property belonging to the judgment
debtor after ordinary execution has failed. [Cite] It
is not a distinct and separate suit, but an
additional step in the original action for judgment.
[Cite]. So long as Zimek was personally served with
process or entered his appearance in the damage suit,
he is not entitled to notice of garnishment, which is
in aid of that suit. His knowledge of the principal
action against him is sufficient warning that his
adversary may be expected to take all available steps
to obtain satisfaction of any judgment rendered. We,
therefore, hold that the due process requirements in
garnishment proceedings are satisfied by proper
notice to the principal debtor of the original suit
brought by the creditor." 19 N.E.2d 620, 622.
The rationale of the Zimek case (viz. that there is no due
process deprivation caused by a failure to notify the judgment
debtor of the garnishment proceedings because he has already had
notice of the underlying judgment) follows closely the theory
propounded by the United States Supreme Court in Endicott Johnson
Corp. v. Encyclopedia Press, Inc., 266 U.S. 285, 45 S.Ct. 61, 69
L.Ed. 288 (1924).
At issue in the Endicott case was the constitutional validity
of the New York Code of Civil Procedure section which provided
for the garnishment of the assets of a judgment debtor. The
statute in pertinent part provided for the issuance of a
garnishment summons without notice to the judgment debtor. On
appeal to the United States Supreme Court, the garnishee
corporation contended, inter alia, that the relevant statutory
section was in conflict with the 14th Amendment due process
clause insofar as it authorized the issuance of a garnishment
execution with neither notice to the judgment debtor nor an
opportunity for a hearing.
The Court held that the New York Statute was not in conflict
with the due process clause. In so holding the Court noted that:
"The established rules of our system of jurisprudence
do not require that a defendant who has been granted
an opportunity to be heard and has had his day in
court, should, after a judgment has been rendered
against him, have a further notice and hearing before
supplemental proceedings are taken
to reach his property in satisfaction of the
judgment." 266 U.S. 285, 288, 45 S.Ct. 61, 62, 69
L.Ed. 288 (1924).
It should be noted that there are intimations that the rule
found in the Endicott case may become limited by future Supreme
Court decisions. In Hanner v. DeMarcus, 390 U.S. 736
, 88 S.Ct.
1437, 20 L.Ed.2d 270 (1968), the issue before the Supreme Court
was "the propriety of overruling Endicott-Johnson Corp. v.
Encyclopedia Press, supra." The writ of certiorari was dismissed
as improvidently granted. 390 U.S. 736
, 740, 88 S.Ct. 1437, 20
A lengthy dissent was filed by Mr. Justice Douglas with whom
Mr. Justice Black and Chief Justice Warren concurred. Their basic
position was that the rule found in Endicott-Johnson that notice
of the underlying debt was sufficient for due process purposes
should be rejected and that case overruled. In adopting this
posture, the minority noted that:
"Significantly, the Court in Endicott did not hold
that absence of any notice at all was permissible,
but rather that the judgment debtor, having had his
day in court and being aware of the judgment against
him, is expected to know that execution may follow."
390 U.S. 736, 740, 88 S.Ct. 1437, 1440, 20 L.Ed.2d
Each of these cases leads to the conclusion that a garnishment
statute which lacks provision for the issuance of notice and
hearing to the judgment debtor satisfies the due process
requirements, albeit tenuously, solely because the debtor is on
constructive notice after having received notice and an
opportunity to be heard in the primary adjudication of the
underlying obligation. It needs no extensive analysis to
demonstrate that the Endicott rationale does not extend to those
situations where judgment has been secured without notice or an
opportunity to be heard. Thus, Endicott and Zimek indicate that
where a garnishment summons is secured on the basis of an
underlying cognovit judgment the debtor must, at the time of
garnishment, either receive notice and an opportunity to be heard
or the creditor must prove a knowing and voluntary waiver of such
The sole issue which must now be resolved is whether execution
by the debtor of the cognovit clause amounts to an "understanding
and voluntary" waiver of the debtor's right to notice and
hearing. Cf. Swarb v. Lennox, 405 U.S. 191, 92 S.Ct. 767, 31
L.Ed.2d 138 (1972). It should be noted here that the
constitutional right to notice and hearing may, in certain
instances, be waived. Boddie v. Connecticut, 401 U.S. 371,
378-379, 91 S.Ct. 780, 28 L.Ed.2d 113 (1971). In National
Equipment Rental Limited v. Szukhent, 375 U.S. 311, 84 S.Ct. 411,
11 L.Ed.2d 354, the Court noted that "it 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."
375 U.S. 311, 315-316, 84 S.Ct. 411, 414, 1 L.Ed.2d 354.
Any discussion of alleged waiver of the right to notice and
hearing must be framed against the well settled presumption
against waiver of a constitutional right. Glasser v. United
States, 315 U.S. 60, 62 S.Ct. 457, 86 L.Ed. 680 (1942); Johnson
v. Zerbst, 304 U.S. 458, 58 S.Ct. 1019, 82 L.Ed. 1461 (1938);
Aetna Insurance Company v. Kennedy, 301 U.S. 389, 57 S.Ct. 809,
81 L.Ed. 1177 (1937); Ohio Bell Telephone Company v. Public
Utilities Commission, 301 U.S. 292, 57 S.Ct. 724, 81 L.Ed. 1093
In Brookhart v. Janis, Mr. Justice Black noted:
"The question of a waiver of a federally guaranteed
constitutional right is, of course, a federal
question controlled by federal law. There is a
presumption against the waiver of constitutional
rights, see e.g., Glasser v. United States,
315 U.S. 60, 70-71 [62 S.Ct. 457, 464-465, 86 L.Ed. 680], and
for a waiver to be effective it must be
clearly established that there was `an intentional
relinquishment or abandonment of a known right or
privilege.' [Cite]." 384 U.S. 1, 4, 86 S.Ct. 1245,
1247, 16 L.Ed.2d 314 (1966).
The purpose behind the creation of this presumption against
waiver of a constitutional right is accentuated by the facts of
this case. The cognovit clause which is the center of the present
controversy provides that:
"The undersigned Buyer or Buyers, jointly and
severally, hereby authorize irrevocably any Attorney
of any Court of Record to appear for the undersigned
and each or any of them in such Court, in term time
or vacation, after default hereon and to confess a
judgment without process in favor of the holder
hereof for such amount as may appear unpaid hereon,
together with the costs of suit and reasonable
attorneys fees and to release and waive all errors
that may intervene and and [sic] consent to immediate
It is quite obvious that a layman of normal intelligence may
have difficulty in comprehending both the meaning of the terms
employed and the legal ramifications which flow from the
execution of such a document. However, a determination of whether
or not the purported waiver was "understanding and voluntary" is
an issue which must be resolved by examining the factual
circumstances of each individual case. The issue will generally
turn upon several different circumstances: for example, the
debtor's intelligence, state of mind, level of education and
bargaining power at the time of execution.
The garnishment statute at issue fails to provide any means of
determining whether or not the debtor's purported waiver of his
right to notice and hearing at the time that the garnishment
summons issues was understanding and voluntary. Such an omission
amounts to a constitutional defect. The garnishment statute is
fatally defective in that, by failing to provide for notice and
hearing preceding issuance of the garnishment summons, there is
no opportunity for a judicial determination of whether or not a
particular debtor knowingly and intelligently executed the
judgment note which purports to waive the debtor's 14th Amendment
Therefore, this Court holds that the Illinois garnishment
statute Ch. 62, Ill.Rev.Stat. § 33 when invoked to satisfy a
judgment obtained by confession pursuant to Ch. 110,
Ill.Rev.Stat. Sec. 50(3) violates the due process clause of the
The final matter for determination by this Court is whether or
not plaintiffs' request for a declaration of a plaintiff and
defendant class should be granted.
The instant case has proceeded on the basis of a stipulation
entered into by respective counsel present at the time of oral
argument. The prospective members of both potential classes have
not been notified of the pendency of these proceedings and thus
were not present at the hearing. Had prospective members of
either class been present, it is possible that objections to the
agreement between counsel may have been raised.
From this perspective, it is patently inequitable to bind
potential members of either a plaintiff or defendant class to the
terms of an agreement to which they are not a party.
Accordingly, this Court declines to declare the existence of
either a plaintiff or defendant class.
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