Opinion
Nos. 37030, 37031, 37032 and 37033
Decided December 27, 1961.
Negotiable instruments — Cognovit note — Authority to confess judgment must be expressly conferred — Judgment in personam, void, when — No service of summons, entry of appearance or authorization therefore.
1. The authority of one to execute a warrant of attorney to confess judgment against another should not be recognized unless expressly conferred.
2. Where a judgment in personam has been rendered against a defendant who was not served with summons, who did not enter an appearance and who did not authorize anyone to enter an appearance for him, such judgment is void and may be attacked by motion after term without following the procedure specified in the Ohio statutes for the vacation of judgments after term.
APPEALS from the Court of Appeals for Hancock County.
On February 15, 1960, plaintiff in cause No. 37030 secured a judgment in the Common Pleas Court of Hancock County against Brumfield Hay Grain Company, a partnership.
The judgment was rendered by confession by an attorney purporting to act for defendant pursuant to a warrant of attorney incorporated in a promissory note which was signed:
"Brumfield Hay Grain Co.
"By A.D. Daniel."
Thereafter, at a subsequent term of court, defendant filed a motion reading in part:
"Without entering its general appearance herein, but for the sole and special purpose of making objection to the improper and unlawful assumption of jurisdiction over its person * * * comes now the defendant and moves the court to set aside and vacate the judgment * * * upon the ground that this court has never lawfully had jurisdiction over the person of this defendant * * * for the following reasons: * * *."
The motion then specifies in effect (1) that the record shows no service of process on defendant, (2) that the attorney who confessed judgment is unknown to defendant and appeared without authority from defendant and (3) that the warrant of attorney pursuant to which that attorney purported to act was not signed on behalf of defendant by anyone having either express or implied authority to sign such a warrant.
From the court's journal, it appears that this motion was heard "upon an affidavit and exhibits attached, submitted to the court and received as evidence and upon arguments of counsel" and was overruled.
From the bill of exceptions, which was certified by the trial judge as containing "all of the evidence introduced and received on the hearing on said motion to vacate," it affirmatively appears that the trial court overruled the motion because the defendant had not proceeded under Section 2325.01, Revised Code, relative to vacation of a judgment after term and because, even if its motion should be treated as a petition pursuant to that statute, defendant had failed to offer to establish any defense.
The Court of Appeals affirmed the overruling of defendant's motion, upon the ground that reasonable men could conclude from the evidence presented to the trial court that the agent who signed the note for defendant had authority to sign a note incorporating the warrant of attorney pursuant to which the judgment was rendered.
The cause is now before this court on appeal from the judgment of the Court of Appeals as a matter of right and pursuant to allowance of defendant's motion to certify the record.
Mr. Thomas A. Orndorff, for appellee.
Mr. John C. Firmin and Messrs. Turley, Tackett Geralds, for appellant.
The affidavit submitted in support of defendant's motion expressly negatived any authority of its "commission agent," A.D. Daniel, to sign a warrant of attorney to confess a judgment. Attached thereto as an exhibit is a copy of a letter giving Daniel "authority to act as * * * commission agent to sign * * * agreements prepared by" plaintiff. Also attached to that affidavit as an exhibit is a copy of a prior agreement between plaintiff and defendant, which is apparently referred to in that letter, providing that plaintiff had agreed "to finance portions of hay and straw purchase from farmers * * * by" defendant; that defendant agreed "to give chattel mortgage on all stored hay or straw * * * as security to loans"; and that plaintiff was "to be paid six per cent interest from date of loan until paid, plus $1.50 for collection of each * * * sight draft" plus certain other specified charges for "work involved in handling financing, plus any other cost involved."
Nothing in this agreement or letter purports to expressly authorize Daniel to sign evidences of indebtedness, such as promissory notes, for defendant. Even if such authority could be implied from the words of the letter and of the agreement, there is nothing in either to support any reasonable inference that Daniel either had or was represented to have authority to sign any warrant of attorney to confess judgment against defendant.
Although an agent with authority to borrow money may have authority to do what is reasonably necessary to obtain that money, including authority to give negotiable instruments in the usual form where required, such authority alone will not support a reasonable inference of authority to give any warrant of attorney to confess judgment. Restatement of the Law of Agency (2d), Section 75, Comment b.
This court has often held that a warrant of attorney to confess judgment must be strictly construed. Lathrem v. Foreman (1958), 168 Ohio St. 186, 151 N.E.2d 905, 68 A.L.R. (2d), 1151; Haggard v. Shick (1949), 151 Ohio St. 535, 86 N.E.2d 785; Cushman v. Welsh (1869), 19 Ohio St. 536; Spence v. Emerine (1889), 46 Ohio St. 433, 21 N.E. 866, 15 Am. St. Rep., 634. See 30 American Jurisprudence, 270, Section 175. It would seem to follow as a corrolary that the authority of one to execute a warrant of attorney to confess judgment against another should not be recognized unless expressly conferred.
In our opinion, the evidence before the trial court on the motion, all of which is certified as being in the bill of exceptions, requires the conclusion as a matter of law that Daniel was not authorized to sign any warrant to confess judgment against defendant.
Where, as in the instant case, a judgment in personam has been rendered against a defendant who was not served with summons, who did not enter an appearance and who did not authorize anyone to enter an appearance for him, such judgment is void and may be attacked by motion either during or after term without following the procedure specified in our statutes for the vacation of judgments after term. Kingsborough v. Tousley (1897), 56 Ohio St. 450, 47 N.E. 541. See Hayes v. Kentucky Joint Stock Land Bank (1932), 125 Ohio St. 359, 181 N.E. 542. See also Lenz v. Frank, Treas. (1949), 152 Ohio St. 153, 161, 87 N.E.2d 578, 581; paragraph one of the syllabus of Lincoln Tavern, Inc., v. Snader (1956), 165 Ohio St. 61, 72, 133 N.E.2d 606, 614.
It follows that the judgments of the Court of Appeals and of the Common Pleas Court must be reversed and the cause is remanded to the Common Pleas Court with instructions to grant defendant's motion to vacate the judgment.
Except for the amounts of the judgments involved, the facts and the proceedings and questions involved in cases Nos. 37031, 37032 and 37033 are the same as in case No. 37030, so the judgments in those cases are the same as in case No. 37030.
Judgments reversed.
ZIMMERMAN, MATTHIAS, BELL and O'NEILL, JJ., concur.
WEYGANDT, C.J., and HERBERT, J., dissent.
In the majority opinion appears the statement that "the trial court overruled the motion because the defendant had not proceeded under Section 2325.01, Revised Code, relative to vacation of a judgment after term * * *." However, the opinion of the Court of Appeals contains the following statement exactly to the contrary:
"From the journal entry of judgment before this court, and from the record, it thus appears that the trial court did not hold `that a motion to vacate a judgment after term is not permissible where the ground for vacation is that the judgment is void for want of jurisdiction of the persons of the defendants,' but on the contrary, considered such procedure as being proper, and proceeded to consider the mixed question of law and fact as to whether the agent of defendant had the authority to exercise the warrant for the confession of judgment on which jurisdiction over the person of defendant was founded in the original action."
Hence, that procedural question is not before this court, as assumed in the second paragraph of the syllabus.
On the question of the extent of the authority of the defendant's agent, a letter signed by one of the partners stated that "this letter will give you authority to act as our commission agent to sign the agreements, as prepared by the Peoples Banking Co. of McComb, Ohio." Furthermore, the defendant admits that its agent was authorized to sign promissory notes in the performance of his agency but insists that this was limited to ordinary notes not containing a warrant of attorney. The defendant's letter contains no such limitation of authority although the agent was to operate in a state where cognovit notes are lawful and in general use by banks in making loans. Under these circumstances it seems hardly consistent for the defendant to disavow the authority of the agent of its own selection and after having had the benefit of the transactions conducted by him. The opinion of the Court of Appeals contains the following pertinent comment:
"The judgment raises a presumption that it was properly rendered, that the trial court rightfully determined the issue; that the judgment was rendered upon sufficient ground and that every fact necessary to sustain it was brought before the court. In the instant case the trial court, as shown by the bill of exceptions, had before it all facts necessary for a full determination of the issues involved both on the question of agency and also as to the extent of the authority of such agent. From the evidence contained in the bill of exceptions reasonable men might differ in their conclusions relating to the agency and the extent of the authority of the agent and we cannot say that the judgment of the trial court is against the weight of the evidence."
It would seem that the judgments of the Court of Appeals should be affirmed.
HERBERT, J., concurs in the foregoing dissenting opinion.