D.H. Overmyer Co. v. Frick Co.

After a corporation (Overmyer) had defaulted in its payments for equipment manufactured and being installed by respondent company (Frick) and Overmyer under a post-contract arrangement had made a partial cash payment and issued an installment note for the balance, Frick completed the work, which Overmyer accepted as satisfactory. Thereafter Overmyer again asked for relief and, with counsel for both corporations participating in the negotiations, the first note was replaced with a second, which contained a "cognovit" provision in conformity with Ohio law at that time whereby Overmyer consented in advance, should it default in interest or principal payments, to Frick's obtaining a judgment without notice or hearing, and issued certain second mortgages in Frick's favor, Frick agreeing to release three mechanic's liens, to reduce the monthly payment amounts and interest rate, and to extend the time for final payment. When Overmyer, claiming a contract breach, stopped making payments on the new note, Frick, under the cognovit provision, through an attorney unknown to but on behalf of Overmyer, and without personal service on or prior notice to Overmyer, caused judgment to be entered on the note. Overmyer's motion to vacate the judgment was overruled after a post-judgment hearing, and the judgment court's decision was affirmed on appeal against Overmyer's contention that the cognovit procedure violated due process requirements.

Held: Overmyer, for consideration and with full awareness of the legal consequences, waived its rights to prejudgment notice and hearing, and on the facts of this case, which involved contractual arrangements between two corporations acting with advice of counsel, the procedure under the cognovit clause (which is not unconstitutional per se) did not violate Overmyer's Fourteenth Amendment rights. Pp. 182-185.

Affirmed.

BLACKMUN, J., delivered the opinion of the Court, in which all Members joined except POWELL and REHNQUIST, JJ., who took no part in the consideration or decision of this case. DOUGLAS, J., filed a concurring opinion, in which MARSHALL, J., joined, post, p. 188.

Russell Morton Brown argued the cause and filed a brief for petitioners.

Gregory M. Harvey argued the cause for respondent. With him on the brief was James M. Tuschman.

Franklin A. Martens filed a brief for the Ohio State Legal Services Assn. et al. as amici curiae urging reversal.