CHAPTER 4.11. Confession of Judgment

• Jurisdiction: United States

4.11. Confession of Judgment

Confession of judgment, or cognovit as it was traditionally termed, is an important remedy in Delaware. Unlike in some other jurisdictions,¹³⁶ confession of judgment is readily enforced by the Delaware courts when properly implemented.¹³⁷ The essential nature of the confession of judgment is that a debtor agrees in advance to the entry of a judgment in the amount of the debt, authorizes the creditor to apply to the clerk of the court (the prothonotary in Delaware) to enter the judgment against the debtor in the applicable court, and waives any right to a hearing prior to the entry of a judgment.¹³⁸ While there is a post-judgment hearing intended to confirm the entry of judgment, that proceeding is in the nature of a rule to show cause why the judgment should not be entered. Although a creditor has the burden of showing that the waiver was properly given, the debtor carries the burden of raising and proving appropriate defenses to whether there was an effective waiver.¹³⁹ Confession cuts off all other defenses as of the time of filing, but not defenses the debtor did not know it had at the time of signing or that arose after that time.¹⁴⁰ Accordingly, the key issue in the post-judgment hearing is whether the debtor has waived the right to notice and a hearing prior to the entry of a judgment.¹⁴¹ The judgment is stayed pending the hearing, but the lien of the judgment, once confirmed by the court, dates back to the initial pre-hearing entry date.¹⁴²

Although the Delaware Supreme Court has not considered the constitutionality of the Delaware confession of judgment statute, the statute has been found constitutional by the Delaware Superior Court and the United States Bankruptcy Court, which held that the statute does not violate due process.¹⁴³ In Cheidem Corp. v. Farmer, the Delaware Superior Court held that the confession of judgment statute did not violate due process. The court found that even though a debtor has waived all defenses by contract, the Delaware statute permits courts to inquire into the validity of the waiver so that before judgment is entered, the debtor has the opportunity to disprove the waiver and prevent entry of judgment.¹⁴⁴ The court recognized that the United States Supreme Court has found that confessions of judgment statutes are not per se unconstitutional.¹⁴⁵ In DH Obermyer, Inc. v. Frick Co.,¹⁴⁶ the United States Supreme Court, considering Ohio's statute, held that due process rights to notice and hearing prior to civil judgment are subject to waivers so long as the waiver is voluntary, knowing, and intelligently made. The court in Cheidem concluded that the Delaware confession of judgment statute meets this due process standard, because the statute provides an express means for testing the validity of the waiver prior to the entry of judgment.¹⁴⁷

The bankruptcy court offered no additional analysis of the confession of judgment statute in Matter of Marvel.¹⁴⁸ Citing Cheidem, the court simply stated that the Delaware statute has been held to be constitutional.¹⁴⁹

While the Delaware Supreme Court has not specifically addressed the constitutionality of the statute, it has held that a debtor's due process rights to...