405 U.S. 174, 187, 92 S. Ct. 775, 783, 31 L. Ed. 2d 124 (1972)
In 1966, an affiliate of D.H. Overmyer Co., Inc., of Ohio and D.H. Overmyer Co., Inc., of Kentucky contracted with Frick Co. for the manufacture and installation of an automatic refrigeration system in a Toledo warehouse at a cost of $223,000.1 Overmyer fell behind in progress payments, with approximately $120,000 overdue by the end of September 1966.2 Frick stopped work on October 10 but indicated willingness to accept a cash payment and interest-bearing judgment notes for the balance.3
Frick filed three mechanic's liens on the Toledo property in November 1966 for a total of $194,031.4 In January 1967, Frick agreed to complete the work upon Overmyer's immediate cash payment of 10 percent and execution of an installment note for the balance in twelve monthly payments at 6 1/2 percent interest, without a confession-of-judgment provision.5 Frick completed the work, which Overmyer's vice president accepted in writing on March 17, 1967, as completed in a satisfactory manner.6
Overmyer subsequently requested additional time and release of the liens.7 The parties agreed in June 1967 to a new note for the outstanding balance of $130,997 payable in twenty-one monthly installments at 6 percent interest, along with second mortgages on properties in Tampa and Louisville.8 Overmyer delivered this note in October 1967; it contained a clause authorizing any attorney designated by the holder to appear in any Ohio court of record, waive process, and confess judgment if default continued for fifteen days.9 Frick released the mechanic's liens upon execution of the note and mortgages.10
On June 1, 1968, Overmyer ceased payments and filed suit against Frick in the United States District Court for the Southern District of New York seeking damages in excess of $170,000.11 On July 12, 1968, Frick caused judgment to be entered against Overmyer in the Common Pleas Court of Lucas County, Ohio, for the remaining balance of $62,370 plus interest through the appearance of an attorney pursuant to the warrant of attorney.12
The clerk mailed notices of the judgment on July 16.13 Overmyer filed motions to stay execution and for a new trial on July 22, followed by a motion to vacate judgment on August 6 with a tendered answer and counterclaim.14 After a hearing, the trial court overruled the motions on November 16.15 The Court of Appeals for Lucas County affirmed with a brief journal entry.16 The Supreme Court of Ohio sua sponte dismissed the appeal for the reason that no substantial constitutional question exists herein.17 The United States Supreme Court granted certiorari.18
Whether the cognovit note authorized by Ohio Rev. Code 2323.13 violates the Due Process Clause of the Fourteenth Amendment by permitting entry of judgment without prior notice or hearing?19
The due process rights to notice and hearing prior to a civil judgment are subject to waiver, and such a waiver is valid if it is voluntary, knowing, and intelligently made.20
No. Overmyer is a corporation with a complex structure and widespread activities that has been party to tens of thousands of contracts; the second note containing the cognovit clause was executed after Frick completed and Overmyer accepted the work, following negotiations by counsel, and in exchange for the release of three mechanic's liens plus reductions in monthly payment amount, total time for repayment, and interest rate from 6 1/2 percent to 6 percent.21 This sequence demonstrates an arm's-length transaction between sophisticated parties rather than adhesion or unequal bargaining power, and Overmyer does not contend it lacked awareness of the clause's significance, thereby satisfying the voluntary, knowing, and intelligent standard for waiver of prejudgment notice and hearing.22
The cognovit note does not violate the Due Process Clause of the Fourteenth Amendment because Overmyer voluntarily, intelligently, and knowingly waived its rights to prejudgment notice and hearing in exchange for substantial consideration.23
Related opinions on this issue
Joined by Mr. Justice Marshall
I agree that the heavy burden against the waiver of constitutional rights, which applies even in civil matters, 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.24 Ohio law provides that the confessed judgment may be opened if the debtor poses a jury question, that is, if his evidence would have been sufficient to prevent a directed verdict against him. That standard is a minimal obstacle.25
The record shows that the petitioners were given every opportunity after judgment to explain their affirmative defense to the state courts. The defense was rejected solely because the evidence adduced in support thereof was too thin to warrant further presentation to a jury.26