Gifford v. Casper Neon Sign Co., Inc.
Decision Date | 17 October 1980 |
Docket Number | No. 5325,5325 |
Citation | 618 P.2d 547 |
Parties | Maxine GIFFORD, d/b/a the Closet, Appellant (Defendant), v. CASPER NEON SIGN CO., INC., a Wyoming Corporation, Appellee (Plaintiff). |
Court | Wyoming Supreme Court |
Bruce P. Badley and Michael K. Shoumaker of Badley, Rasmussen & Shoumaker, Sheridan, for appellant.
John Burk, of John Burk, P. C., Casper, for appellee.
Before RAPER, C. J., and McCLINTOCK, THOMAS, ROSE and ROONEY, JJ.
This case comes to us upon direct appeal from a cognovit judgment, which, the appellant alleges, violates provisions of the Constitution of Wyoming and the United States Constitution. Appellee, in whose favor judgment was entered, counters with a two-stage argument: (1) Cognovit judgments are not, per se, unconstitutional; and (2) since no facts were developed in the trial court, the Wyoming Supreme Court may not decide whether, under the particular facts of this case, the cognovit judgment offends either the Wyoming Constitution or the Constitution of the United States. We accept appellee's argument and will affirm the trial court with respect to the facial validity of the cognovit judgment. The appeal also presents issues of unconscionability, the interpretation of our cognovit statutes and attorneys' fees, all of which we will discuss.
In this case, the appellant, Maxine Gifford, sole proprietor of a clothing store, signed an "Advertising Display Lease Agreement" with the Casper Neon Sign Company. The contract obligated her to lease a sign for five years, with monthly payments of $137.12, and called for the appellee company to furnish a sign during that period. The lease provided for acceleration of payments upon default by the lessee and contained the following cognovit provision:
On appeal, Ms. Gifford argues that the obtaining of the judgment in this manner violated her rights under the Fourteenth Amendment of the United States Constitution and Sections 6 and 8 of Article 1 of the Wyoming Constitution.
Our decision in Westring v. Cheyenne National Bank, Wyo., 393 P.2d 119 (1964), is relevant to the question here raised, even though the issues in Westring were not cast in the constitutional mold. In Westring, at page 121, we said:
"In this state, unlike many jurisdictions, a confession of judgment under a warrant of attorney contained in a promissory note is not contrary to public policy ...."
Appellant has not attempted to distinguish Westring, but it is to be noted that, in Westring, the warrant of attorney was contained in a promissory note, where, in this case, the warrant of attorney is contained in a lease agreement. We see no distinguishing significance in this fact-at least for any purpose with which we are concerned in this appeal.
In Westring, we made reference to § 1-312, W.S.1957 (now § 1-16-202, W.S.1977), which authorizes and prescribes a mode of procedure for the sort of cognovit judgment obtained in Westring and here. The statute provides:
In Westring, we noted that the above statute was derived from Ohio law. In 1972, the United States Supreme Court decided D. H. Overmyer Co. v. Frick Co., 405 U.S. 174, 92 S.Ct. 775, 31 L.Ed.2d 124 (1972). The first sentence of the opinion phrased the issue as follows:
"This case presents the issue of the constitutionality, under the Due Process Clause of the Fourteenth Amendment, of the cognovit note authorized by Ohio Rev.Code § 2323.13."
The first sentence of the cited Ohio statute is virtually identical to our § 1-16-202 reproduced "Our holding necessarily means that a cognovit clause is not, per se, violative of Fourteenth Amendment due process ...." 405 U.S. at 187, 92 S.Ct. at 783.
above. The Supreme Court concluded:
That holding, of course, rebuts any argument that the cognovit judgment in our case is, per se, violative of the Fourteenth Amendment.
Appellant also alleges that enforcement of cognovit judgments offends Sections 6 and 8 of Article 1 of the Wyoming Constitution. Article 1, Section 8, of the Wyoming Constitution provides:
In declining to hold cognovit judgments facially invalid, we are not leaving the cognovit-judgment defendant without a remedy. In Westring, supra, we specifically approved the use of a Rule 60(b), W.R.C.P., motion to reopen a cognovit judgment and held that the district court abused its discretion in denying such a motion where a meritorious defense had been tendered. Similarly, in Overmyer, supra, the cognovit defendant was given a post-judgment hearing and the Supreme Court noticed this hearing in justifying its refusal to invalidate the cognovit judgment against Overmyer, 405 U.S. at 188, 92 S.Ct. at 783. In declining to hold the judgment in this appeal facially invalid, we are, therefore, not denying appellant access to the courts.
Article 1, Section 6, of the Wyoming Constitution provides:
"No person shall be deprived of life, liberty or property without due process of law."
This provision, of course, tracks the due-process clause of the Fourteenth Amendment to the United States Constitution. We regard the United States Supreme Court's conclusion to the effect that the Ohio statutory scheme for cognovit judgments-from which ours is derived-does not, per se, offend the due-process clause of the Fourteenth Amendment, to be a persuasive argument that our statutory scheme does not, per se, offend Article 1, Section 6, of the Wyoming Constitution. Overmyer, supra.
Appellant argues that in Westring -despite our statement that cognovit judgments are not against public policy-we, nevertheless, observed that public policy favors an adjudication on the merits and we reversed the district court's denial of a Rule 60(b), W.R.C.P., motion to reopen the case. Appellant also correctly points out that the Supreme Court's decision in Overmyer was premised on a number of circumstances peculiar to the Overmyer case. These include: (1) Overmyer was a giant corporation with operations in 30 states; (2) Overmyer was represented by counsel when it signed the contract with a cognovit provision; and (3) Overmyer's original contract did not contain a cognovit provision. There is no indication that Overmyer agreed to the cognovit provision under a "take it or leave it" threat; indeed, the cognovit provision arose only after a renegotiation of the original contract, in which Overmyer gained substantial benefits. The Supreme Court emphasized that Overmyer, in agreeing to include the cognovit provision in the contract, "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." 405 U.S. at 187, 92 S.Ct. at 783. The Supreme Court, in Overmyer, was careful to limit its holding to the facts of that case, and it would be fair to say that Overmyer, and its companion case of Swarb v. Lennox, 405 U.S. 191, 92 S.Ct. 767, 31 L.Ed.2d 138 (1972), are pregnant with the possibility that cognovit judgments under certain different circumstances offend the Fourteenth Amendment. In contrast to Overmyer, appellant Gifford offers us an affidavit, which was not made a part of the We do not consider that appellant's affidavit is properly before us. Although we may, in certain extraordinary circumstances, exercise original jurisdiction, we are, in this case, exercising appellate jurisdiction, thus making Rule 1.04, W.R.A.P., applicable. It provides:
record in the district court, in which she deposes and says that she has only a high school education and signed the Lease Agreement without any understanding of the cognovit provision.
"A judgment rendered or final order made by a district court may be reversed in whole or in part, vacated or modified by the Supreme Court for errors appearing on the record." (Emphasis supplied.)
Rule 4.01, W.R.A.P., sets out the composition of the record on appeal as follows:
"The original papers and exhibits filed in the district court, the transcript of proceedings, if any, or any designated portion thereof, and a certified copy of the docket entries prepared by the clerk of the district court shall constitute the record on appeal in all cases ...." (Emphasis supplied.)
We thus agree with the appellee that the Wyoming Supreme Court, sitting in this case in its customary role as an appellate court, is not the proper forum in...
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