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SCOTT v. DANAHER

May 31, 1972

WILLIAM L. SCOTT, AND LULA J. SCOTT, INDIVIDUALLY AND ON BEHALF OF ALL OTHER PERSONS SIMILARLY SITUATED, PLAINTIFFS,
v.
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 Judges.

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 court order.

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 procedural issue.

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 ...

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