author: Mr. Justice Blackmun Mr. Justice Douglas,

text:
    D. H. OVERMYER CO., INC., OF OHIO et al. v. FRICK CO.
    No. 69-5.
    Argued November 9, 1971
    Decided February 24, 1972
    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 the 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.
   Mr. Justice Blackmun

delivered the opinion of the Court.

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 cognovit is the ancient legal device by which the debtor consents in advance to the holder’s obtaining a judgment without notice or hearing, and possibly even with the appearance, on the debtor’s behalf, of an attorney designated by the holder. It was known at least as far back as Blackstone’s time. 3 W. Blackstone, Commentaries *397. In a case applying Ohio law, it was said that the purpose of the cognovit is “to permit the note holder to obtain judgment without a trial of possible defenses which the signers of the notes might assert.” Hadden v. Rumsey Products, Inc., 196 F. 2d 92, 96 (CA2 1952). And long ago the cognovit method was described by the Chief Justice of New Jersey as “the loosest way of binding a man's property that ever was devised in any civilized country.” Alderman v. Diament, 7 N. J. L. 197, 198 (1824). Mr. Dickens noted it with obvious disfavor. Pickwick Papers, c. 47. The cognovit has been the subject of comment, much of it critical.

Statutory treatment varies widely. Some States specifically authorize the cognovit. Others disallow it. Some go so far as to make its employment a misdemeanor. The majority, however, regulate its use and many prohibit the device in small loans and consumer sales.

In Ohio the cognovit has long been recognized by both statute and court decision. 1 Chase’s Statutes, c. 243, §34 (1810); Osborn v. Hawley, 19 Ohio 130 (1850); Marsden v. Soper, 11 Ohio St. 503 (1860); Watson v. Paine, 25 Ohio St. 340 (1874); Clements v. Hull, 35 Ohio St. 141 (1878). The State’s courts, however, give the instrument a strict and limited construction. See Peoples Banking Co. v. Brumfield Hay & Grain Co., 172 Ohio St. 545, 548, 179 N. E. 2d 53, 55 (1961).

This Court apparently has decided only two cases concerning cognovit notes, and both have come here in a full faith and credit context. National Exchange Bank v. Wiley, 195 U. S. 257 (1904); Grover & Baker Sewing Machine Co. v. Radcliffe, 137 U. S. 287 (1890). See American Surety Co. v. Baldwin, 287 U. S. 156 (1932).

I

The argument that a provision of this kind is offensive to current notions of Fourteenth Amendment due process is, at first glance, an appealing one. However, here, as in nearly every case, facts are important. We state them chronologically:

1. Petitioners D. H. Overmyer Co., Inc., of Ohio, and D. H. Overmyer Co., Inc., of Kentucky, are segments of a warehousing enterprise that counsel at one point in the litigation described as having built “in three years . . . 180 warehouses in thirty states.” The corporate structure is complex. Because the identity and individuality of the respective corporate entities are not relevant here, we refer to the enterprise in the aggregate as “Overmyer.”

2. In 1966 a corporation, which then was or at a later date became an Overmyer affiliate, executed a contract with the respondent Frick Co. for the manufacture and installation by Frick, at a cost of $223,000, of an automatic refrigeration system in a warehouse under construction in Toledo, Ohio.

3. Overmyer fell behind in the progress payments due from it under the contract. By the end of September 1966 approximately $120,000 was overdue. Because of this delinquency, Frick stopped its work on October 10. Frick indicated to Overmyer, however, by letter on that date, its willingness to accept an offer from Overmyer to pay $35,000 in cash “provided the balance can be evidenced by interest-bearing judgment notes.”

4. On November 3 Frick filed three mechanic’s liens against the Toledo property for a total of $194,031, the amount of the contract price allegedly unpaid at that time.

5. The parties continued to negotiate. In January 1967 Frick, in accommodation, agreed to complete the work upon an immediate cash payment of 10% ($19,-403.10) and payment of the balance of $174,627.90 in 12 equal monthly installments with 6%% interest per annum. On February 17 Overmyer made the 10% payment and executed an installment note calling for 12 monthly payments of $15,498.23 each beginning March 1, 1967. This note contained no confession-of-judgment provision. It recited that it did not operate as a waiver of the mechanic’s liens, but it also stated that Frick would forgo enforcement of those lien rights so long as there was no default under the note.

6. Frick resumed its work, completed it, and sent Over-myer a notice of completion. On March 17 Overmyer’s vice president acknowledged in writing that the system had been “completed in a satisfactory manner” and that it was “accepted as per the contract conditions.”

7. Subsequently, Overmyer requested additional time to make the installment payments. It also asked that Frick release the mechanic’s liens against the Toledo property. Negotiations between the parties at that time finally resulted in an agreement in June 1967 that (a) Overmyer would execute a new note for the then-outstanding balance of $130,997 and calling for payment of that amount in 21 equal monthly installments of $6,891.85 each, beginning June 1, 1967, and ending in February 1969, two years after Frick’s completion of the work (as contrasted with the $15,498.23 monthly installments ending February 1968 specified by the first note); (b) the interest rate would be 6%< rather than 6%%; (c) Frick would release the three mechanic’s liens; (d) Overmyer would execute second mortgages, with Frick as mortgagee, on property in Tampa and Louisville; and (e) Overmyer’s new note would contain a confession-of-judgment clause. The new note, signed in Ohio by the two petitioners here, was delivered to Frick some months later by letter dated October 2, 1967, accompanied by five checks for the June through October payments. This letter was from Overmyer’s general counsel to Frick’s counsel. The second mortgages were executed and recorded, and the mechanic’s liens were released. The note contained the following judgment clause:

“The undersigned hereby authorize any attorney designated by the Holder hereof to appear in. any court of record in the State of Ohio, and waive this issuance and service of process, and confess a judgment against the undersigned in favor of the Holder of this Note, for the principal of this Note plus interest if the undersigned defaults in any payment of principal and interest and if said default shall continue for the period of fifteen (15) days.”

8. On June 1, 1968, Overmyer ceased making the monthly payments under the new note and, asserting a breach by Frick of the original contract, proceeded to institute a diversity action against Frick in the United States District Court for the Southern District of New York. Overmyer sought damages in excess of $170,000 and a stay of all proceedings by Frick under the note. On July 5' Judge Frankel vacated an ex parte stay he had theretofore granted. On August 7 Judge Mansfield denied Overmyer’s motion for reinstatement of the stay. He concluded, “Plaintiff has failed to show any likelihood that it will prevail upon the merits. On the contrary, extensive documentary evidence furnished by defendant indicates that the plaintiff’s action lacks merit.”

9. On July 12, without prior notice to Overmyer, Frick caused judgment to be entered against Overmyer (specifically against the two petitioners here) in the Common Pleas Court of Lucas County, Ohio. The judgment amount was the balance then remaining on the note, namely, $62,370, plus interest from May 1, 1968, and costs. This judgment was effected through the appearance of an Ohio attorney on behalf of the defendants (petitioners here) in that Ohio action. His appearance was “by virtue of the warrant of attorney” in the second note. The lawyer waived the issuance and service of process and confessed the judgment. This attorney was not known to Overmyer, had not been retained by Over-myer, and had not communicated with the petitioners prior to the entry of the judgment.

10. As required by Ohio Rev. Code § 2323.13 (C), the clerk of the state court, on July 16, mailed notices of the entry of the judgment on the cognovit note to Over-myer at addresses in New York, Ohio, and Kentucky.

11. On July 22 Overmyer, by counsel, filed in the Ohio court motions to stay execution and for a new trial. The latter motion referred to “[ijrregularity in the proceedings of the prevailing party and of the court . . . On August 6, Overmyer filed a motion to vacate judgment and tendered an answer and counterclaim alleging breach of contract by Frick, and damages. A hearing was held. Both sides submitted affidavits. Those submitted by Overmyer asserted lack of notice before judgment and alleged a breach of contract by Frick. A copy of Judge Mansfield’s findings, conclusions, and opinion was placed in the record. On November 16 the court overruled each motion.

12. Overmyer appealed to the Court of Appeals for Lucas County, Ohio, specifically asserting deprivation of due process violative of the Ohio and Federal Constitutions. That court affirmed with a brief journal entry.

13. The Supreme Court of Ohio “sua sponte dis-misse[d] the appeal for the reason that no substantial constitutional question exists herein.”

We granted certiorari. 401 U. S. 992 (1971).

II

This chronology clearly reveals that Overmyer’s situation, of which it now complains, is one brought about largely by its own misfortune and failure or inability to pay. The initial agreement between Overmyer and Frick was a routine construction subcontract. Frick agreed to do the work and Overmyer agreed to pay a designated amount for that work by progress payments at specified times. This contract was not accompanied by any promissory note.

Overmyer then became delinquent in its payments. Frick naturally refrained from further work. This impasse was resolved by the February 1967 post-contract arrangement, pursuant to which Overmyer made an immediate partial payment in cash and issued its installment note for the balance. Although Frick had suggested a confession-of-judgment clause, the note as executed and delivered contained no provision of that kind.

Frick completed its work and Overmyer accepted the work as satisfactory. Thereafter Overmyer again asked for relief. At this time counsel for each side participated in the negotiations. The first note was replaced by the second. The latter contained the confession-of-judgment provision Overmyer now finds so offensive. However, in exchange for that provision and for its execution of the second mortgages, Overmyer received benefit and consideration in the form of (a) Frick’s release of the three mechanic’s liens, (b) reduction in the amount of the monthly payment, (c) further time in which the total amount was to be paid, and (d) reduction of a half point in the interest rate.

Were we concerned here only with the validity of the June 1967 agreement under principles of contract law, that issue would be readily resolved. Obviously and undeniably, Overmyer’s execution and delivery of the second note were for an adequate consideration and were the product of negotiations carried on by corporate parties with the advice of competent counsel.

More than mere contract law, however, is involved here.

Ill

Petitioner Overmyer first asserts that the Ohio judgment is invalid because there was no personal service upon it, no voluntary appearance by it in Ohio, and no genuine appearance by an attorney on its behalf. Thus, it is said, there was no personal jurisdiction over Over-myer in the Ohio proceeding. The petitioner invokes Pennoyer v. Neff, 95 U. S. 714, 732 (1878), and other cases decided here and by the Ohio courts enunciating accepted and long-established principles for in personam jurisdiction. McDonald v. Mabee, 243 U. S. 90, 91 (1917); Vanderbilt v. Vanderbilt, 354 U. S. 416, 418 (1957); Sears v. Weimer, 143 Ohio St. 312, 55 N. E. 2d 413 (1944); Railroad Co. v. Goodman, 57 Ohio St. 641, 50 N. E. 1132 (1897); Cleveland Leader Printing Co. v. Green, 52 Ohio St. 487, 491, 40 N. E. 201, 203 (1895).

It is further said that whether a defendant's appearance is voluntary is to be determined at the time of the court proceeding, not at a much earlier date when an agreement was signed; that an unauthorized appearance by an attorney on a defendant’s behalf cannot confer jurisdiction; and that the lawyer who appeared in Ohio was not Overmyer’s attorney in any sense of the word, but was only an agent of Frick.

The argument then proceeds to constitutional grounds. It is said that due process'requires reasonable notice and an opportunity to be heard, citing Boddie v. Connecticut, 401 U. S. 371, 378 (1971). It is acknowledged, however, that the question here is in a context of “contract waiver, before suit has been filed, before any dispute has arisen” and “whereby a party gives up in advance his constitutional right to defend any suit by the other, to notice and an opportunity to be heard, no matter what defenses he may have, and to be represented by counsel of his own choice.” In other words, Overmyer’s position here specifically is that it is “unconstitutional to waive in advance the right to present a defense in an action on the note.” It is conceded that in Ohio a court has the power to open the judgment upon a proper showing. Bellows v. Bowlus, 83 Ohio App. 90, 93, 82 N. E. 2d 429, 432 (1948). But it is claimed that such a move is discretionary and ordinarily will not be disturbed on appeal, and that it may not prevent execution before the debtor has notice, Griffin v. Griffin, 327 U. S. 220, 231-232 (1946). Goldberg v. Kelly, 397 U. S. 254 (1970), and Sniadach v. Family Finance Corp., 395 U. S. 337 (1969), are cited.

The due process rights to notice and hearing prior to a civil judgment are subject to waiver. In National Equipment Rental, Ltd. v. Szukhent, 375 U. S. 311 (1964), the Court observed:

“[I]t is settled . . . that parties to a contract may agree in advance to submit to the jurisdiction of a given court, to permit notice to be served by the opposing party, or even to waive notice altogether.” Id., at 315-316.

And in Boddie v. Connecticut, supra, the Court acknowledged that “the hearing required by due process is subject to waiver.” 401 U. S., at 378-379.

This, of course, parallels the recognition of waiver in the criminal context where personal liberty, rather than a property right, is involved. Illinois v. Allen, 397 U. S. 337, 342-343 (1970) (right to be present at trial); Miranda v. Arizona, 384 U. S. 436, 444 (1966) (rights to counsel and against compulsory self-incrimination); Fay v. Noia, 372 U. S. 391, 439 (1963) (habeas corpus); Rogers v. United States, 340 U. S. 367, 371 (1951) (right against compulsory self-in crimination).

Even if, for present purposes, we assume that the standard for waiver in a corporate-property-right case of this kind is the same standard applicable to waiver in a criminal proceeding, that is, that it be voluntary, knowing, and intelligently made, Brady v. United States, 397 U. S. 742, 748 (1970); Miranda v. Arizona, 384 U. S., at 444, or “an intentional relinquishment or abandonment of a known right or privilege,” Johnson v. Zerbst, 304 U. S. 458, 464 (1938); Fay v. Noia, 372 U. S., at 439, and even if, as the Court has said in the civil area, “[w]e do not presume acquiescence in the loss of fundamental rights,” Ohio Bell Tel. Co. v. Public Utilities Comm’n, 301 U. S. 292, 307 (1937), that standard was fully satisfied here.

Overmyer is a corporation. Its corporate structure is complicated. Its activities are widespread. As its counsel in the Ohio post-judgment proceeding stated, it has built many warehouses in many States and has been party to “tens of thousands of contracts with many contractors.” This is not a case of unequal bargaining power or overreaching. The Overmyer-Frick agreement, from the start, was not a contract of adhesion. There was no refusal on Frick’s part to deal with Overmyer unless Overmyer agreed to a cognovit. The initial contract between the two corporations contained no confession-of-judgment clause. When, later, the first installment note from Overmyer came into being, it, too, contained no provision of that kind. It was only after Frick’s work was completed and accepted by Overmyer, and when Overmyer again became delinquent in its payments on the matured claim and asked for further relief, that the second note containing the clause was executed.

Overmyer does not contend here that it or its counsel was not aware of the significance of the note and of the cognovit provision. Indeed, it could not do so in the light of the facts. Frick had suggested the provision in October 1966, but the first note, readjusting the progress payments, was executed without it. It appeared in the second note delivered by Overmyer’s own counsel in return for substantial benefits and consideration to Over-myer. Particularly important, it would seem, was the release of Frick’s mechanic’s liens, but there were, in addition, the monetary relief as to amount, time, and interest rate.

Overmyer may not have been able to predict with accuracy just how or when Frick would proceed under the confession clause if further default by Overmyer occurred, as it did, but this inability does not in itself militate against effective waiver. See Brady v. United States, 397 U. S., at 757; McMann v. Richardson, 397 U. S. 759, 772-773 (1970).

We therefore hold that Overmyer, in its execution and delivery to Frick of the second installment note containing the cognovit provision, 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.

Insurance Co. v. Morse, 20 Wall. 445 (1874), affords no comfort to the petitioners. That case concerned the constitutional validity of a state statute that required a foreign insurance company, desiring to qualify in the State, to agree not to remove any suit against it to a federal court. The Court quite naturally struck down the statute, for it thwarted the authority vested by Congress in the federal courts and violated the Privileges and Immunities Clause.

Myers v. Jenkins, 63 Ohio St. 101, 120, 57 N. E. 1089, 1093 (1900), involving an insurance contract that called for adjustment of claims through the company alone and without resort to the courts, is similarly unhelpful.

IV

Some concluding comments are in order:

1. Our holding necessarily means that a cognovit clause is not, per se, violative of Fourteenth Amendment due process. Overmyer could prevail here only if the clause were constitutionally invalid. The facts of this case, as we observed above, are important, and those facts amply demonstrate that a cognovit provision may well serve a proper and useful purpose in the commercial world and at the same time not be vulnerable to constitutional attack.

2. Our holding, of course, is not controlling precedent for other facts of other cases. For example, where the contract is one of adhesion, where there is great disparity in bargaining power, and where the debtor receives nothing for the cognovit provision, other legal consequences may ensue.

3. Overmyer, merely because of its execution of the cognovit note, is not rendered defenseless. It concedes that in Ohio the judgment court may vacate its judgment upon a showing of a valid defense and, indeed, Overmyer had a post-judgment hearing in the Ohio court. If there weré defenses such as prior payment or mistaken identity, those defenses could be asserted. And there is nothing we see that prevented Overmyer from pursuing its breach-of-contract claim against Frick in a proper forum. Here, again, that is precisely what Overmyer has attempted to do, thus far unsuccessfully, in the Southern District of New York.

The judgment is

Affirmed.

Mr. Justice Powell and Mr. Justice Rehnquist took no part in the consideration or decision of this case.

Mr. Justice Douglas,

whom Mr. Justice Marshall joins, concurring.

I agree that the heavy burden against the waiver of constitutional rights, which applies even in civil matters, Ohio Bell Tel. Co. v. Public Utilities Comm’n, 301 U. S. 292, 307 (1937); Aetna Ins. Co. v. Kennedy, 301 U. S. 389, 393 (1937), 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.

I add a word concerning the contention that opening of confessed judgments in Ohio is merely discretionary and requires a higher burden of persuasion than is ordinarily imposed upon defendants. As I read the Ohio law of cognovit notes, trial judges have traditionally enjoyed wide discretion in vacating confessed judgments. 32 Ohio Jur. 2d, Judgments § 558 (1958). In Livingstone v. Rebman, 169 Ohio St. 109, 158 N. E. 2d 366 (1959), however, the Ohio Supreme Court imposed certain safeguards on the exercise of a judge’s discretion in opening confessed judgments. That case also involved a petition to open a confessed judgment where, as here, the debtor alleged the affirmative defense of failure of consideration. Using the preponderance-of-the-evidence test, the trial court had found insufficient support for the debtor’s claim and had dismissed the motion to open. On appeal, however, the Ohio Supreme Court reversed on the degree of proof needed to vacate a confessed judgment. Said the court:

“[I]f there is credible evidence supporting the defense . . . from which reasonable minds may reach different conclusions, it is then the duty of the court to suspend the judgment and permit the issue raised by the pleadings to be tried by a jury or, if a jury is waived, by the court.” Id., at 121-122, 158 N. E. 2d, at 375. (Emphasis supplied.)

Thus it would appear that the Ohio 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.

The fact that a trial judge is dutybound to vacate judgments obtained through cognovit clauses where debtors present jury questions is a complete answer to the contention that unbridled discretion governs the disposition of petitions to vacate. See also Goodyear v. Stone, 169 Ohio St. 124, 158 N. E. 2d 376 (1959); McMillen v. Willard Garage Inc., 14 Ohio App. 2d 112, 115, 237 N. E. 2d 155, 158 (1968); Central National Bank of Cleveland v. Standard Loan & Finance, 5 Ohio App. 2d 101, 104, 195 N. E. 2d 597, 600 (1964).

The record shows that the petitioners were given every opportunity after judgment to explain their affirmative defense to the state courts and that the defense was rejected solely because the evidence adduced in support thereof was too thin to warrant further presentation to a jury.

       When the judgment challenged here was entered in 1968 the statute read:
      “Sec. 2323.13. (A) An attorney who confesses judgment in a case, at the time of making such confession, must produce the warrant of attorney for making it to the court before which he makes the confession, which shall be in the county where the maker or any one of several makers resides or in the county where the maker or any one of several makers signed the warrant of attorney authorizing confession of judgment, any agreement to the contrary notwithstanding; and the original or a copy of the warrant shall be filed with the clerk.
      “(B) The attorney who represents the judgment creditor shall include in the petition a statement setting forth to the best of his knowledge the last known address of the defendant.
      “(C) Immediately upon entering any such judgment the court shall notify the defendant of the entry of the judgment by personal service or by registered or certified mail mailed to him at the address set forth in the petition.”
      Senate Bill No. 85, 133 Ohio Laws 196-198 (1969-1970), effective Sept. 16, 1970, amended paragraphs (A) and (C), in ways not pertinent here, and added paragraph (D):
      “(D) A warrant of attorney to confess judgment contained in any promissory note, bond, security agreement, lease, contract, or other evidence of indebtedness executed on or after January 1, 1971, is invalid and the courts are without authority to render a judgment based upon such a warrant unless there appears on the instrument evidencing the indebtedness, directly above or below the signature of each maker, or other person authorizing the confession, in such type size or distinctive marking that it appears more clearly and conspicuously than anything else on the document:
      “ ‘Warning — By signing this paper you give up your right to notice and court trial. If you do not pay on time a court judgment may be taken against you without your prior knowledge and the powers of a court can be used to collect from you or your employer regardless of any claims you may have against the creditor whether for returned goods, faulty goods, failure on his part to comply with the agreement, or any other cause.’ ”

       The Iowa Supreme Court succinctly has defined a cognovit as “the written authority of the debtor and his direction ... to enter judgment against him as stated therein.” Blott v. Blott, 227 Iowa 1108, 1111-1112, 290 N. W. 74, 76 (1940).
      In Jones v. John Hancock Mutual Life Insurance Co., 289 F. Supp. 930, 935 (WD Mich. 1968), aff’d, 416 F. 2d 829 (CA6 1969), Judge Fox, in applying Ohio law, pertinently observed:
      “A cognovit note is not an ordinary note. It is indeed an extraordinary note which authorizes an attorney to confess judgment against the person or persons signing it. It is written authority of a debtor and a direction by him for the entry of a judgment against him if the obligation set forth in the note is not paid when due. Such a judgment may be taken by any person or any company holding the note, and it cuts off every defense which the maker of the note may otherwise have. It likewise cuts off all rights of appeal from any judgment taken on it.”

       Historical references appear in General Contract Purchase Corp. v. Max Keil Real Estate Co., 35 Del. 531, 532-533, 170 A. 797, 798 (1933), and First Nat. Bk. v. White, 220 Mo. 717, 728-732, 120 S. W. 36, 39-40 (1909).

       Recent Cases, Confession of Judgments—Refusal of New York State to Enforce Pennsylvania Cognovit Judgments, 74 Dick. L. Rev. 750 (1970); Note, Enforcement of Sister State’s Cognovit Judgments, 16 Wayne L. Rev. 1181 (1970); H. Goodrich, Conflict of Laws §73, p. 122 (4th ed. 1964); Hopson, Cognovit Judgments: An Ignored Problem of Due Process and Full Faith and Credit, 29 U. Chi. L. Rev. 111 (1961); Hunter, The Warrant of Attorney to Confess Judgment, 8 Ohio St. L. J. 1 (1941); Note, A Clash in Ohio?: Cognovit Notes and the Business Ethic of the UCC, 35 U. Cin. L. Rev. 470 (1966); Comment, The Effect of Full Faith and Credit on Cognovit Judgments, 42 U. Colo. L. Rev. 173 (1970); Comment, Confessions of Judgment: The Due Process Defects, 43 Temp. L. Q. 279 (1970); Comment, Cognovit Judgments and the Full Faith and Credit Clause, 50 B. U. L. Rev. 330 (1970); Comment, Cognovit Judgments: Some Constitutional Considerations, 70 Col. L. Rev. 1118 (1970); Note, Confessions of Judgment, 102 U. Pa. L. Rev. 524 (1954); Note, Foreign Courts May Deny Full Faith and Credit to Cognovit Judgments and Must Do So When Entered Pursuant to an Unlimited Warrant of Attorney, 56 Va. L. Rev. 554 (1970); Note, Should a Cognovit Judgment Validly Entered in One State be Recognized by a Sister State?, 30 Md. L. Rev. 350 (1970).

       Ill. Rev. Stat., c. 110, § 50; Mo. Rev. Stat. § 511.100; Ohio Rev. Code § 2323.13; Pa. Stat. Ann., Tit. 12, §§ 738 and 739 and Pa. Rules of Civil Procedure 2950-2976; S. D. Comp. Laws §21-26-1.

       See, for example, Ala. Code, Tit. 20, § 16, and Tit. 62, §248; Ariz. Rev. Stat. Ann. §§ 6-629 and 44-143; Mass. Gen. Laws Ann., c. 231, § 13A.

       Ind. Ann. Stat. §§ 2-2904 and 2-2906; N. M. Stat. Ann. §§ 21-9-16 and 21-9-18; R. I. Gen. Laws Ann. §§ 19-25-24 and 19-25-36.

       See, for example, Conn. Gen. Stat. Rev. §§ 42-88 and 36-236; Mich. Comp. Laws §§ 600.2906 and 493.12, Mich. Stat. Ann. §§27A-2906 and 23.667 (12); Minn. Stat. §§548.22, 168.71, and 56.12; N. J. Stat. Ann. § 2A: 16-9.

       Brief for Petitioners 16.

       Tr. of Oral Arg. 17.

      Thus the Ohio system places no undue burden of proof upon the debtor desiring to open a confessed judgment, in marked contrast to the Pennsylvania procedure involved in Swarb v. Lennox, post, p. 191. In Pennsylvania, in order to vacate such a judgment, a borrower must prove his defense by the preponderance of the evidence rather than by merely mustering enough evidence to present a jury question. Once the judgment is vacated, moreover, he must again prevail by that standard at a subsequent trial. In effect, the Pennsylvania confessed debtor is required to win two consecutive trials, not simply one. Given the proclivities of reasonable men to differ over the probative value of jury questions, the Pennsylvania requirement of twice sustaining the preponderance of the evidence imposes a stiffer burden of persuasion.


source: Caselaw Access Project

author: Mr. Justice Blackmun Mr. Justice White, Mr. Justice Douglas,

license: Public Domain

text:
    SWARB et al. v. LENNOX et al.
    No. 70-6.
    Argued November 9, 1971
    Decided February 24, 1972

      BlacKMUN, J., delivered the opinion of the Court, in which Burger, C. J., and BreNNAN, Stewart, White, and Marshall, JJ., joined. White, J., filed a concurring opinion, post, p. 202. Douglas, J., filed an opinion dissenting in part, post, p. 203. Powell and Rehnquist, JJ., took no part in the consideration or decision of the case.

      David A. Scholl argued the cause for appellants pro hac vice. With him on the briefs was Harvey N. Schmidt.

      Philip C. Patterson argued the cause for appellees. With him on the brief for appellees Middle Atlantic Finance Assn, et al. was Marvin Comisky. J. Shane Creamer, Attorney General, and Barry A. Roth, Assistant Deputy Attorney General, filed a brief for appellee the Commonwealth of Pennsylvania.

      William L. Matz argued the cause for the Pennsylvania Savings & Loan League as amicus curiae urging affirmance. With him on the brief was Herbert Bass.

    Briefs of amid curiae urging reversal were filed by Don B. Kates, Jr., Martin R. Click, and Carol Ruth Silver for California Rural Legal Assistance et al.; by John J. Brennan and Cordon W. Gerber for the Pennsylvania Bankers Assn.; by David M. Jones for the Pennsylvania Credit Union League; and by Edward Donald Foster and Blair C. Shick for the National Consumer Law Center.
    Briefs of amici curiae urging affirmance were filed by Matthew Hale for the American Bankers Assn., and by Gilbert Nurick and Moses K. Rosenberg for the Pennsylvania Land Title Assn.
   Mr. Justice Blackmun

delivered the opinion of the Court.

This appeal, heard as a companion to D. H. Overmyer Co. v. Frick Co., ante, p. 174, decided today, also purports to raise for the Court the issue of the due process validity of cognovit provisions. The system under challenge in this case is that of Pennsylvania. The three-judge District Court, with one judge dissenting in part because, in his view, the court did not go far enough, refrained from declaring the Commonwealth’s rules and statutes unconstitutional on their face and granted declaratory and injunctive relief only for a limited class of cognovit signers. 314 F. Supp. 1091 (ED Pa. 1970). The plaintiffs, but not the defendants, appealed. We noted probable jurisdiction the same day certiorari was granted in Overmyer. 401 U. S. 991.

I

The cognovit system is firmly entrenched in Pennsylvania and has long been in effect there.

A confession of judgment for money “may be entered by the prothonotary . . . without the agency of an attorney and without the fifing of a complaint, declaration or confession, for the amount which may appear to be due from the face of the instrument,” Pa. Rule Civ. Proc. 2951 (a), except that the action must be instituted by a complaint if the instrument is more than 10 years old or cannot be produced for filing, “or if it requires the occurrence of a default or condition precedent before judgment may be entered.” Rules 2951 (c) and (d). In an action instituted by a complaint, the plaintiff shall file a confession of judgment substantially in a prescribed form, and the attorney for the plaintiff “may sign the confession as attorney for the defendant” unless a statute or the instrument provides otherwise. Rule 2955. The prothonotary enters judgment “in conformity with the confession.” Rule 2956. The amount due, interest, attorneys' fees, and costs may be included by the plaintiff in the praecipe for a writ of execution. Rule 2957.

Within 20 days after the entry of judgment the plaintiff shall mail the defendant written notice. Failure to do this, however, does not affect the judgment lien. Rule 2958 (a). Within the same 20 days the plaintiff may issue a writ of execution and may do so even if the notice is not yet mailed. Rule 2958 (b). If an affidavit of mailing is not filed within the 20-day period, the writ of execution may not issue until 20 days after the affidavit of mailing has been filed. Rule 2958 (c).

Relief from a judgment by confession may be sought by a petition asserting “[a] 11 grounds for relief whether to strike off the judgment or to open it . . . .” Rule 2959 (a). If the petition states prima facie grounds for relief, the court issues a rule to show cause and may grant a stay. A defendant “waives all defenses and objections” not included in the petition. The court “shall dispose of the rule on petition and answer, and on any testimony, depositions, admissions and other evidence.” Rules 2959 (b), (c), and (e). If the judgment is opened in whole or in part, the issues are then tried. Rule 2960.

The procedure for confession of judgment for possession of real property is essentially the same except that the action shall be commenced by filing a complaint. Rules 2970-2973.

The prothonotary specifically is given power to “enter judgments at the instance of plaintiffs, upon the confessions of defendants.” Pa. Stat. Ann., Tit. 17, § 1482. The prothonotary is the clerk of the court of common pleas. He has no judicial function. It has been said that his power is derived from the instrument under which he acts and not from his office, Smith v. Safeguard Mut. Ins. Co., 212 Pa. Super. 83, 87, 239 A. 2d 824, 826 (1968), and that his entry of judgment is a ministerial act, Lenson v. Sandler, 430 Pa. 193, 197, 241 A. 2d 66, 68 (1968).

It has also been said that the confession of judgment procedure in Pennsylvania exists “independent of statute.” Equipment Corp. of America v. Primos Vanadium Co., 285 Pa. 432, 437, 132 A. 360, 362 (1926); Cook v. Gilbert, 8 Serg. & R. 567, 568 (1822); Hatch v. Stitt, 66 Pa. 264 (1870).

It is apparent, therefore, that in Pennsylvania confession-of-judgment provisions are given full procedural effect; that the plaintiff’s attorney himself may effectuate the entire procedure; that the prothonotary, a nonjudicial officer, is the official utilized; that notice issues after the judgment is entered; and that execution upon the confessed judgment may be taken forthwith. The defendant may seek relief by way of a petition to strike the judgment or to open it, but he must assert prima facie grounds for this relief, and he achieves a trial only if he persuades the court to open. Meanwhile, the judgment and its lien remain.

The pervasive and drastic character of the Pennsylvania system has been noted. Cutler Corp. v. Latshaw, 374 Pa. 1, 4-5, 97 A. 2d 234, 236 (1953). See Kine v. Forman, 404 Pa. 301, 172 A. 2d 164 (1961), and Atlas Credit Corp. v. Ezrine, 25 N. Y. 2d 219, 250 N. E. 2d 474 (1969).

II

Seven individuals are the named plaintiffs in the original complaint filed in December 1969. Jurisdiction is based on the civil rights statutes, 28 U. S. C. § 1343 and 42 U. S. C. § 1983. The plaintiffs purport to act on behalf of a class consisting of all Pennsylvania residents who have signed documents containing cognovit provisions leading, or that could lead, to a confessed judgment in Philadelphia County. The defendants are the county’s prothonotary and sheriff, the officials responsible, respectively, for the recording of confessed judgments and for executing upon them. The complaint alleges that each plaintiff has signed one or another type of consumer financing agreement pursuant to which his creditor has entered judgment; that each faces immediate judicial sale of his home or personal belongings; that the Pennsylvania rules and statutes are unconstitutional on their face because they deprive members of the class of procedural due process in the denial of notice and hearing before judgment; that the signing of the cognovit contract was not an intelligent and voluntary waiver of the right to notice and hearing; that the only recourse against the recorded judgment is an action to strike or reopen; and that such recourse is costly and burdensome to low income consumers, and denies them equal protection. The relief sought is a declaration that the Pennsylvania rules and statutes are unconstitutional, and an injunction against the defendants’ “operating under the above acts and rules.” A three-judge court was requested.

The single District Judge entered a temporary restraining order staying execution of judgments against the seven plaintiffs. He also provided a procedure for adding additional plaintiffs. The three-judge court continued and expanded the restraining order to stay all executions upon confessed judgments in the Commonwealth. A number of additional plaintiffs were added, and one original plaintiff was dismissed from the case. A group of finance companies was permitted to intervene.

Stipulations were made. One was between counsel for the plaintiffs and the city solicitor; another was between counsel for the plaintiffs and for the intervenor finance companies. These stipulations are not identical but they do overlap. They established the following:

1. Judgments by confession against the various plaintiffs had been entered ranging in amounts from $249.23 to $25,800.

2. If called as witnesses, the original plaintiffs would testify to the facts alleged in the complaint. Each would also testify as to his unawareness of the cognovit clause, his lack of understanding of its significance if he had read it, and his inability to bargain about it anyway.

3. If called, some of the plaintiffs would testify that they were encouraged not to read their contracts; that the judgments exceeded the debts because of the addition of penalties, costs, and fees; that they could not afford proceedings to strike or reopen; and that they believed they had meritorious defenses.

4. The imposition and amount of sheriff’s costs, bar association fee schedules, and necessary deposition and transcript costs in the cognovit procedure were acknowledged.

The three-judge court held a hearing. In addition to the appearance of counsel for the plaintiffs and for the intervenors, an assistant city solicitor of Philadelphia appeared for the named defendants, and a Deputy Attorney General appeared for the Commonwealth. The only plaintiff to testify was one of those added after the complaint had been filed. She was a postal clerk who earned $6,100 annually and who had agreed with a door-to-door salesman to buy a carpet for $1,300. Her contract contained a cognovit clause pursuant to which a finance company had obtained a confessed judgment. A detective and a finance company officer were presented by the plaintiffs. They testified to the pervasiveness of cognovit clauses and the “disbelief and shock” of those who had signed them.

The plaintiffs also introduced in evidence by stipulation a published report by David Caplovitz, Ph. D., Consumers in Trouble. This was a 1968 study of confessed-judgment debtors in four major Pennsylvania cities. It included 245 Philadelphia debtors. The study purported to show that 96%' had annual incomes of less than $10,000, and 56% less than $6,000; that only 30%' had graduated from high school; and that only 14% knew the contracts they signed contained cognovit clauses.

The only other witness at the hearing was one called by the intervenors. He was a finance company officer and testified as to the usual practice of making loans.

The three-judge District Court held:

1. The Pennsylvania-system leading to confessed judgment and execution does comply with due process standards provided “there has been an understanding and voluntary consent of the debtor in signing the document.” 314 F. Supp., at 1095.

2. If, however, there is no such understanding consent, the procedure violates due process requirements of notice and an opportunity to be heard. Ibid.

3. The plaintiffs did not sustain their burden of proof with respect to the lack of valid consent in the execution of bonds and warrants of attorney accompanying mortgages. Id., at 1098.

4. The record did not establish that the action could be maintained as a class action on behalf of individual natural persons with annual incomes of more than $10,000. Id., at 1098-1099.

5. It could be maintained, however, as a class action on behalf of natural persons residing in Pennsylvania who earn less than $10,000 annually and who signed consumer financing or lease contracts containing cognovit provisions. Id., at 1099.

6. There was no intentional waiver of known rights by members of that class in executing confession-of-judgment clauses. These were the right to have prejudgment notice and hearing, the right to have the burden of proof on the creditor, and the right to avoid the expenses attendant upon opening or striking a confessed judgment. Since the Pennsylvania procedure with respect to the designated class was based upon a waiver concept without adequate understanding, it was violative of due process. Id., at 1100.

7. It was not the federal court’s function to dictate to Pennsylvania “exactly what constitutes understanding waiver.” Ibid. Where the debtor is an attorney, an affidavit to that effect may be all that is necessary to prove understanding, but where the debtor is not a high school graduate more proof “may be required.” Id., at 1101. A “statewide rule or legislation providing for the filing of proof of intentional, understanding and voluntary consent,” in order to comply with the court’s opinion, was among the methods available to the State to permit continued use of the confession-of-judgment clause. Id., at 1100-1101, n. 24.

8. No judgment by confession may be entered as to a member of the recognized class after November 1, 1970, unless it is shown that at the time of executing the document the debtor “intentionally, understandingly, and voluntarily waived” his rights lost under the Pennsylvania law. Id., at 1102-1103.

9. Liens of judgments recorded prior to June 1, 1970 (the date of the filing of the court's opinion), were preserved. A confessed judgment on a contract signed before June 1 could be entered between that date and November 1, but could not be executed upon without a prior hearing to determine the validity of the waiver.

The court then declared the Pennsylvania practice of confessing judgments to be unconstitutional, prospectively effective as of the dates stated, as applied to the class designated, and enjoined the entry of any confessed judgment against a member of the class in the absence of a showing of the required waiver. Id., at 1103. The judge dissenting did so as to the limitation of relief to those earning less than $10,000 annually. Id., at 1102.

Ill

From this judgment only the plaintiffs appeal. Their claim is that the District Court erred in confining the relief it granted to certain members of the appellants’ proffered class and that the court should have declared the Pennsylvania rules and statutes unconstitutional on their face. A holding of facial unconstitutionality, of course, wholly apart from any class consideration, would afford relief to every Pennsylvania cognovit obligor. Today's decision in Overmyer, although it concerns a corporate and not an individual debtor, is adverse to this contention of the plaintiff-appellants. In Overmyer it is recognized, as the District Court in this case recognized, that, under appropriate circumstances, a cognovit debtor may be held effectively and legally to have waived those rights he would possess if the document he signed had contained no cognovit provision.

On the plaintiff-appellants’ appeal, therefore, the judgment of the District Court must be affirmed.

This affirmance, however, does not mean that the District Court’s opinion and judgment are approved as to their other aspects and details that are not before us. As has been noted, the named defendants and the inter-venors have taken no cross appeal. Furthermore, the Pennsylvania Attorney General’s office, apparently due to an interim personnel change, no longer supports the position taken at the trial by the city solicitor and the deputy attorney general and, not choosing to pursue its customarily assumed duty to defend the Commonwealth’s legislation, now joins the appellants in urging here that the rules and statutes are facially invalid. With the Attorney General taking this position, argument on the side of the defendant-appellees has been presented to us only by the intervenor finance companies and by amici. The permissible reach of this opposition, however, coincides with and goes no further than the extent of the appellants’ appeal. In the absence of a cross appeal, the opposition is in no position to attack those portions of the District Court’s judgment that are favorable to the plaintiff-appellants.

IV

The decision in Overmyer and the disposition of the present appeal prompt the following observations:

1. In our second concluding comment in Overmyer, supra, at 188, we state that the decision is “not controlling precedent for other facts of other cases,” and we refer to contracts of adhesion, to bargaining power disparity, and to the absence of anything received in return for a cognovit provision. When factors of this kind are present, we indicate, “other legal consequences may ensue.” That caveat has possible pertinency for participants in the Pennsylvania system.

2. Overmyer necessarily reveals some discomfiture on our part with respect to the present case. However that may be, the impact and effect of Overmyer upon the Pennsylvania system are not to be delineated in the one-sided appeal in this case and we make no attempt to do so.

3. Problems of this kind are peculiarly appropriate grist for the legislative mill.

On the appellants' appeal, the judgment of the District Court is affirmed. The stay heretofore granted by the Circuit Justice is dissolved.

Is is so ordered.

Mr. Justice Powell and Mr. Justice Rehnquist took no part in the consideration or decision of this case.

Mr. Justice White,

concurring.

I join in the opinion of the Court and add these comments about a narrow aspect of the case.

It is true that this Court has no jurisdiction of that portion of the District Court’s judgment from which no appeal or cross-appeal was taken. Morley Construction Co. v. Maryland Casualty Co., 300 U. S. 185, 191-192 (1937); cf. United States v. Raines, 362 U. S. 17, 27 n. 7 (1960). But it is also well established that the prevailing party below need not cross-appeal to entitle him to support the judgment in his favor on grounds expressly rejected by the court below. Walling v. General Industries Co., 330 U. S. 545 (1947); Langnes v. Green, 282 U. S. 531, 534-539 (1931); United States v. American Railway Express Co., 265 U. S. 425, 435-436 (1924); and the Court may notice a plain error in the record that disposes of a judgment before it. Reynolds v. United States, 98 U. S. 145, addendum n. to op., pp. 168-169 (1879). Thus, despite the fact that appellee-inter-venors did not cross-appeal, they were free to support that part of the judgment in their favor on grounds that were presented and rejected by the District Court in arriving at an adverse judgment on other aspects of the case. Those grounds, if sustained, would not affect the finality of the unappealed judgment, but they would, if sufficient, be available to support the judgment of the District Court insofar as it is challenged here. Nothing to the contrary is to be inferred from our affirmance of that judgment on other grounds. At least that is my understanding of the Court's opinion, which I join.

Mr. Justice Douglas,

dissenting in part.

Pennsylvania permits creditors to extract from debtors their consent to a confession-of-judgment procedure which, while not rendering debtors completely defenseless, deprives them of many of the safeguards of ordinary civil procedure. A group of low-income plaintiffs asked the three-judge court below to enjoin the further operation of this scheme on the ground that debtors who consented to this abbreviated form of justice did so unwittingly or did so out of compulsion supplied by the standard form of adhesion contracts. The District Court granted limited relief, holding that the scheme worked a denial of procedural due process only when applied to individual debtors who earned less than $10,000 annually and who entered into nonmortgage credit transactions, except where it is shown prior to judgment that their waivers had been knowing and voluntary. The plaintiffs have appealed, arguing that the lower court should have invalidated the regime on its face and that, in any event, class relief was wrongly denied both to persons earning more than $10,000 yearly and to home mortgagors.

The Commonwealth did not cross-appeal but instead now confesses that the scheme is unconstitutional and agrees substantially with the appellants. Various lending institutions intervened below but have not taken cross-appeals. When the appeal was filed in this Court, they did, however, file a motion to dismiss that contained an argument on the law governing the main facets of the case. Moreover, at the request of this Court they filed a brief, maintaining that the District Court correctly excluded mortgage borrowers and consumer borrowers with incomes in excess of $10,000 from the class benefited by the decree and that it incorrectly found that the Pennsylvania cognovit procedure was unconstitutional unless the debtor knowingly and understandingly consented to the authorization to confess judgment.

The appellees are the county’s prothonotary and sheriff and they are represented here by the Attorney General of Pennsylvania who concedes before us that the State’s statutes in question are unconstitutional. No one suggests, however, that there is lacking a case or controversy. Appellants say the District Court did not go far enough. Whether we affirm, modify, or reverse, the decree of the District Court has an ongoing life. It has not become moot. Large interests ride on the outcome of this important litigation.

It is said, however, that the case is not appropriate for review. We refuse to let confessions of error conclusively govern the disposition of cases, acting only after our examination of the record. We have remanded for reconsideration in light of a confession of error. In Young v. United States, 315 U. S. 257 (1942), however, we declined to remand but instead incorporated into our holding the theory advanced by the Solicitor General in support of the petitioner. Obviously a remand does not bind the courts to the parties’ view as to what the law is.

“The considered judgment of the law enforcement officers that reversible error has been committed is entitled to great weight, but our judicial obligations compel us to examine independently the errors confessed.” Id., at 258-259.

As we stated in Sibron v. New York, 392 U. S. 40, 58:

“It is the uniform practice of this Court to conduct its own examination of the record in all cases where the Federal Government or a State confesses that a conviction has been erroneously obtained.”

That is the practice in civil cases also. Cates v. Haderlein, 342 U. S. 804.

Moreover, once a case is properly here, our disposition does not necessarily follow the recommendations or concessions of the parties. Utah Comm’n v. El Paso Gas Co., 395 U. S. 464, 468-469. In that case, the appellant changed its view of the merits after the case reached us and, like the appellee, thought the appeal should be dismissed. An amicus, however, presented contrary views. We concluded that the decree of the District Court, after our prior remand, did not comply with our order. Consensus of the parties does not, in other words, control our decisionmaking process.

The Court, to be sure, approves that part of the District Court's opinion which holds that the Pennsylvania confession-of-judgment scheme cannot constitutionally be applied to the class of Pennsylvania residents who earn less than $10,000 annually and who enter into nonmort-gage credit transactions, unless prior to judgment it is shown that they voluntarily and knowingly executed such instruments purporting to waive trial and appeal. On the other hand, the Court now affirms without discussion the refusals of the District Court (1) to extend similar class relief to confessed debtors who either enter into mortgage transactions or who earn more than $10,000 yearly, and (2) to declare the statutes facially unconstitutional. 314 F. Supp. 1091, 1102-1103, 1112 (1970).

It is anomalous that an appellee by confessing error can defeat an appeal. In the instant case we have not been handicapped by the appellees’ refusal to oppose the judgment below. Finance companies intervened in the District Court. We have been fully informed by them and by amici of the many facets of this controversy. We should therefore discuss the merits and reach all issues tendered.

       Pa. Rules Civ. Proc. 2950-2976, effective Jan. 1, 1970 (which, by the Act of June 21, 1937, Pa. Laws 1982, have the effect of state statutes); Act of Apr. 14, 1834, Pa. Stat. Ann., Tit. 17, § 1482 III; Act of Feb. 24, 1806, Pa. Stat. Ann., Tit. 12, § 739; Act of Mar. 21, 1806, Pa. Stat. Ann., Tit. 12, § 738. By Rule 2976, Pa. Stat. Ann., Tit. 12, § 739 is suspended “only insofar as it may be inconsistent with these rules,” and Pa. Stat. Ann., Tit. 12, § 738 is suspended in its application to actions to confess judgment for money or for possession of real .property.

       Prior to the effective date of Rules 2950-2976, Pa. Stat. Ann., Tit. 12, § 738 provided that it “shall be the duty” of the prothonotary to enter an application and “on confession in writing ... he shall enter judgment . . . .”

       Compare the result reached with respect to the Delaware system in Osmond v. Spence, 327 F. Supp. 1349 (Del. 1971).

       The absence of a cross-appeal means only that the appellate court will not upset any portion of the lower court’s judgment not challenged by the appeal. As stated by Mr. Justice Cardozo in Morley Construction Co. v. Maryland Casualty Co., 300 U. S. 185, 191-192:
      “Without a cross-appeal, an appellee may 'urge in support of a decree any matter appearing in the record although his argument may involve an attack upon the reasoning of the lower court or an insistence upon matter overlooked or ignored by it.’ United States v. American Railway Express Co., 265 U. S. 425, 435. What he may not do in the absence of a cross-appeal is to ‘attack the decree with a view either to enlarging his own rights thereunder or of lessening the rights of his adversary, whether what he seeks is to correct an error or to supplement the decree with respect to a matter not dealt with below.’ Ibid. The rule is inveterate and certain. . . . Findings may be revised at the instance of an appellant, if they are against the weight of evidence, where the case is one in equity. This does not mean that they are subject to like revision in behalf of appellees, at all events in circumstances where a revision of the findings carries with it as an incident a revision of the judgment. There is no need at this time to fix the limits of the rule more sharply. ‘Where each party appeals each may assign error, but where only one party appeals the other is bound by the decree in the court below, and he cannot assign error in the appellate court, nor can he be heard if the proceedings in the appeal are correct, except in support of the decree from which the appeal of the other party is taken.’ ”

         Mayberry v. Pennsylvania, 382 U. S. 286 (1965); Nicholson v. Boles, 375 U. S. 25 (1963). See R. Stern & E. Gressman, Supreme Court Practice 224-225 (4th ed. 1969).

       Cf. California Welfare Rights Organization v. Superior Court of Alameda County, 5 Cal. 3d 730, 488 P. 2d 953 (1971), where a state official against whom an adverse judgment had been obtained took no appeal; but the judgment was challenged in California by an “aggrieved” organization which had been denied intervention in the lower court and which appealed both from the denial of intervention and from the judgment on the merits. The California Supreme Court reversed on the merits.


author: Per Curiam. Mr. Justice Douglas, Me. Justice Brennan,

text:
    RICHARDSON, SECRETARY OF HEALTH, EDUCATION, AND WELFARE v. WRIGHT et al.
    No. 70-161.
    Argued January 13, 1972
    Decided Febrary 24, 1972

      Assistant Attorney General Gray argued the cause for appellant in No. 70-151 and for appellee in No. 70-5211. With him on the briefs were Solicitor General Griswold, Kathryn H. Baldwin, Wilmot R. Hastings, Edwin H. Yourman, and Paul Merlin.

      Robert N. Sayler argued the cause and filed briefs for appellees in No. 70-161 and for appellants in No. 70-5211.
    Briefs of amici curiae in both cases were filed by Thomas L. Fike for the Legal Aid Society of Alameda County; by David H. Marlin and Jonathan A. Weiss for the National Council of Senior Citizens; and by Albert C. Neimeth for Luella H. Mills et al. Bernard P. Becker and Harvey N. Schmidt filed a brief for Stella Van Guilder et al. as amici curiae.

      Together with No. 70-5211, Wright et al. v. Richardson, Secretary of Health, Education, and Welfare, also on appeal from the same court.

   Per Curiam.

We noted probable jurisdiction of these appeals, 404 U. S. 819 (1971), to consider the applicability of Gold berg v. Kelly, 397 U. S. 254 (1970), to the suspension and termination of disability benefit payments pursuant to § 225 of the Social Security Act, 70 Stat. 817, 42 U. S. C. § 425, and implementing regulations of the Department of Health, Education, and Welfare. Shortly before oral argument, we were advised that the Secretary had adopted new regulations, effective December 27, 1971, governing the procedures to be followed by the Social Security Administration in determining whether to suspend or terminate disability benefits. These procedures include the requirement that a recipient of benefits be given notice of a proposed suspension and the reasons therefor, plus an opportunity to submit rebuttal evidence. In light of that development, we believe that the appropriate course is to withhold judicial action pending reprocessing, under the new regulations, of the determinations here in dispute. If that process results in a determination of entitlement to disability benefits, there will be no need to consider the constitutional claim that claimants are entitled to an opportunity to make an oral presentation. In the context of a comprehensive complex administrative program, the administrative process must have a reasonable opportunity to evolve procedures to meet needs as they arise. Accordingly, we vacate the judgment of the District Court for the District of Columbia, 321 F. Supp. 383 (1971), with direction to that court to remand the cause to the Secretary and to retain jurisdiction for such further proceedings, if any, as may be necessary upon completion of the administrative procedure.

Vacated and remanded.

Mr. Justice Douglas,

dissenting.

While I join Mr. Justice Brennan who reaches the merits, I add a word about the unwisdom of the policy pursued by the Court.

A three-judge district court held § 225 of the Social Security Act, 42 U. S. C. § 425, unconstitutional, insofar as it purported to authorize the Secretary of Health, Education, and Welfare to suspend the payment of social security disability benefits without giving prior notice and “an opportunity to participate” to the disability beneficiary. 321 F. Supp. 383, 386. The court remanded the cause to the Secretary for the formulation of new procedures consistent with its opinion. Judge Matthews, troubled by an implication in the majority’s opinion that participation merely by way of written submissions might satisfy the majority’s notions of due process, dissented “from so much of the opinion as seems to suggest that the procedural requirements of due process may be satisfied with something less than the ‘opportunity’ [to participate] specified in [Goldberg v. Kelly, 397 U. S. 254].” Id., at 388. We noted probable jurisdiction in these cross-appeals to evaluate the opinion below in light of Goldberg. 404 U. S. 819.

Now, however, it is suggested that the Secretary has so far complied with the instructions of the District Court to formulate new procedures that we should remand the cases to the District Court for further proceedings in light of these new requirements. Such a course, I submit, would be a perversion of the philosophy of due process that we expressed in Goldberg.

Judge Matthews, below, captured the essence of Goldberg in her brief partial dissent:

“In Goldberg the Supreme Court held that a welfare recipient, in addition to timely and adequate notice detailing the reasons for a proposed termination of benefits, must have ‘an effective opportunity to defend by confronting any adverse witnesses and by presenting his own arguments and evidence orally.’ ” 321 F. Supp., at 387-388.

It cannot seriously be argued that the Secretary’s "new rules” comport with Goldberg. They may cure the notice defect, but they make no provision whatsoever for the presentation of oral testimony or the confrontation of witnesses. We noted probable jurisdiction, I thought, to determine if the difference between “welfare” payments and “disability” payments is sufficient to say that one’s Fifth Amendment right to be heard may be satisfied by an opportunity to make written submissions in the latter case, although not in the former. We heard oral argument on this basis. Because of the inadequacy of the new rules, in light of Goldberg, the question will remain regardless of the outcome of a remand.

I think it unseemly, needlessly to shuttle any litigant, especially an indigent, back and forth from court to court, hoping that his exhaustion of newly created remedies will somehow or other make his problem disappear and relieve us of an obligation. No concession promising justice to the claimants has been made. The issue of due process was properly raised and is here for decision; and all the requirements of case or controversy within the meaning of Art. Ill of the Constitution have been satisfied.

Me. Justice Brennan,

with whom Mr. Justice Douglas and Mr. Justice Marshall join,

dissenting.

I respectfully dissent. The Court justifies today’s sua sponte action on the ground that if reprocessing under the Secretary’s new regulations “results in a determination of entitlement to disability benefits, there will be no need to consider the constitutional claim that claimants are entitled to an opportunity to make an oral presentation.” (Emphasis by the Court.) Avoidance of unnecessary constitutional decisions is certainly a preferred practice when appropriate. But that course is inappropriate, indeed irresponsible, in this instance. We will not avoid the necessity of deciding the important constitutional question presented by claimants even should they prevail upon the Secretary’s reconsideration. The question is being pressed all over the country. The Secretary’s brief lists no less than seven cases presenting it with respect to disability benefits and 10 cases presenting it with respect to nondisability benefits.

The Secretary’s new regulations permit discontinuance of disability benefits without affording beneficiaries procedural due process either in the form mandated by Goldberg v. Kelly, 397 U. S. 254 (1970), or in the form mandated by the District Court, 321 F. Supp. 383 (DC 1971). The regulations require only that the beneficiary be informed of the proposed suspension or termination and the information upon which it is based and be given an opportunity to submit a written response before benefits are cut off. This procedure does not afford the beneficiary, as Goldberg requires for welfare and old-age recipients, an evidentiary hearing at which he may personally appear to offer oral evidence and confront and cross-examine adverse witnesses. Nor does the procedure satisfy the requirements of due process as determined by the District Court. That court held that the beneficiary must be given not only notice but also, before he responds, a “reasonable opportunity to examine the documentary evidence” upon which the Secretary relies and, in case of conflict in the evidence, a decision by an impartial decision-maker. The court said, however, that an evidentiary hearing and opportunity to confront adverse witnesses were not necessary, although “a hearing could be held” if the beneficiary “submitted some evidence that contradicts that possessed by the Administration.” 321 F. Supp., at 387. Thus, under both Goldberg and the District Court’s decision, the omissions in the Secretary’s new regulations are fatal to the constitutional adequacy of the procedures. Because we may imminently be confronted with another case presenting the question, and because its resolution is vitally essential to the administration of an important Government program, today’s action in avoiding decision of the constitutional question is not a responsible exercise of that practice. We gain a brief respite for ourselves while the Secretary, state agencies, and beneficiaries continue confused and uncertain. Moreover, the question has been thoroughly and ably argued and briefed on both sides, and we have the benefit of thoughtful and well-considered majority and dissenting opinions in the District Court. Today’s disposition results in an unjustified waste, not only of our own all too sparse time and energies, but also of the time and energies of the three judges of the District Court who must again suspend their own heavy calendars to assemble for what can only be an empty exercise. I cannot join in the Court’s abdication of our responsibility to decide this case.

Both the beneficiaries and the Secretary appeal from the District Court’s judgment. The beneficiaries contend that the District Court erred in not holding that the procedure must afford an evidentiary hearing as in Goldberg. The Secretary contends that procedural due process requirements are satisfied by the “paper” hearing-afforded by his new regulations. I agree with the beneficiaries and would therefore vacate the judgment of the District Court and remand with direction to enter a new judgment requiring the procedures held in Goldberg to be requisite with respect to discontinuance of welfare and old-age benefits. See Wheeler v. Montgomery, 397 U. S. 280 (1970).

Section 225 of the Social Security Act, 42 U. S. C. §425, provides that “[i]f the Secretary, on the basis of information obtained by or submitted to him, believes that an individual entitled to benefits . . . may have ceased to be under a disability, the Secretary may suspend the payment of benefits . . . until it is determined . . . whether or not such individual’s disability has ceased or until the Secretary believes that such disability has not ceased.” The District Court held the statute unconstitutional on the ground that “[t]he ex-parte suspension power granted to the Secretary by section 225 is summary adjudication that is inconsistent with the requirements of due process.” 321 F. Supp., at 386.

The Secretary does not challenge that holding in this Court as applied to his now-discarded procedures. Rather, the Secretary insists that the “hearing on paper” afforded to disability beneficiaries by his new regulations is constitutionally sufficient. The Secretary does not contend that disability beneficiaries differ from welfare and old-age recipients with respect to their entitlement to benefits or the drastic consequences that may befall them if their benefits are erroneously discontinued. The only distinctions urged are that the evidence ordinarily adduced to support suspension and termination of disability benefits differs markedly from that relied upon to cut off welfare benefits and that an undue monetary and administrative burden would result if prior hearings were required. Neither distinction withstands analysis.

First. The Secretary points out that the decision to discontinue disability benefits is generally made upon the basis of wage reports from employers and reports of medical examinations. This evidence, in the Secretary’s view, “is highly reliable and not of a type that draws into issue veracity or credibility.” Brief 10. “The basis upon which disability benefits are suspended or terminated thus differs significantly from that upon which the terminations of welfare benefits involved in [Goldberg] rested.” Id., at 25. Hence, the Secretary concludes, while procedural due process requires a pre-termination evidentiary hearing for welfare and old-age recipients, for disability beneficiaries a written presentation will suffice.

The Secretary seriously misconstrues the holding in Goldberg. The Court there said that “the pre-termination hearing has one function only: to produce an initial determination of the validity of the welfare department’s grounds for discontinuance of payments in order to protect a recipient against an erroneous termination of his benefits.” 397 U. S., at 267. The Secretary does not deny that due process safeguards fulfill the same function in disability oases. In Goldberg, the Court held that welfare recipients were entitled to hearings because decisions to discontinue benefits were challenged “as resting on incorrect or misleading factual premises or on misapplication of rules or policies to the facts of particular cases.” Id., at 268. The Court expressly put aside consideration of situations “where there are no factual issues in dispute or where the application of the rule of law is not intertwined with factual issues.” Id., at 268 n. 15. However reliable the evidence upon which a disability determination is normally based, and however rarely it involves questions of credibility and veracity, it is plain that, as with welfare and old-age determinations, the determination that an individual is or is not “disabled” will frequently depend upon the resolution of factual issues and the application of legal rules to the facts found. It is precisely for that reason that a hearing must be held.

The Secretary, of course, recognizes that disability determinations often involve factual disputes. His new procedures, as well as the post-termination procedures already available, presumably derive from that premise. The beneficiary may file a written response presenting rebuttal evidence before his benefits are suspended or terminated ; after termination, he is entitled to reconsideration, based upon written submissions, and then a de novo evidentiary hearing, administrative appellate review of the hearing examiner’s decision, and, finally, judicial review. Nevertheless, the Secretary insists that the decision to discontinue disability benefits differs from the decision to discontinue welfare benefits because the latter “may” be based upon “personal and social situations brought to the attention of the authorities by tips, rumor or gossip.” Brief 25. Yet it is irrelevant how the matter is “brought to the attention of the authorities,” whether “by tips, rumor or gossip” or otherwise. The question in a welfare determination, as in a disability determination, is simply whether the recipient continues to be eligible for benefits. Nor does the Secretary make clear the relevance of “personal and social situations.” The Secretary does say that “[o]ne of the recipients in [Goldberg], for example, had been cut off because of her alleged failure to cooperate with welfare authorities in suing her estranged husband; payments to another were terminated because of alleged drug addiction.” Ibid. The second recipient, however, was cut off because “he refused to accept counseling and rehabilitation.” 397 U. S., at 256 n. 2. Consequently, both recipients lost their benefits for refusing to cooperate with the authorities. That, however, is no distinction from disability cases, for disability benefits will also be discontinued if the beneficiary refuses to cooperate.

To support the assertion that pre-termination hearings are required in welfare cases because “credibility and veracity” are in issue, the Secretary focuses upon certain language in Goldberg. He first quotes the statement that “[p] articular ly where credibility and veracity are at issue, as they must be in many termination proceedings, written submissions are' a wholly unsatisfactory basis for decision.” Id., at 269. Apart from the obvious fact that that was not an absolute statement intended to limit hearings solely to those instances, it was but one of three reasons given to demonstrate that written submissions are insufficient. The Court also said that written submissions “are an unrealistic option for most recipients, who lack the educational attainment necessary to write effectively and who cannot obtain professional assistance” and that they “do not afford the flexibility of oral presentations; they do not permit the recipient to mold his argument to the issues the decisionmaker appears to regard as important.” Ibid. Significantly, the Secretary does not deny that those reasons are as fully applicable to disability beneficiaries as to welfare recipients.

The Secretary also relies upon the statement, quoted in Goldberg from Greene v. McElroy, 360 U. S. 474, 496 (1969), that:

“[W]here governmental action seriously injures an individual, and the reasonableness of the action depends on fact findings, the evidence used to prove the Government’s case ■ must be disclosed to the individual so that he has an opportunity to show that it is untrue. While this is important in the case of documentary evidence, it is even more important where the evidence consists of the testimony of individuals whose memory might be faulty or who, in fact, might be perjurers or persons motivated by malice, vindictiveness, intolerance, prejudice, or jealousy. We have formalized these protections in the requirements of confrontation and cross-examination.” 397 U. S., at 270 (emphasis added).

Again, however, the statement hardly indicates that confrontation and cross-examination are available to welfare recipients only because “credibility and veracity” are in issue. An individual has those rights because facts are in issue, as the statement makes clear. Moreover, the Court introduced its quotation of that statement in Goldberg by pointing out that “[i]n almost every setting where important decisions turn on questions of fact, due process requires an opportunity to confront and cross-examine adverse witnesses.” Id., at 269 (emphasis added). And, even assuming the validity of the novel doctrine that confrontation and cross-examination are available solely for the purpose of testing “credibility and veracity,” that would not justify depriving the disability beneficiary of “an effective opportunity to defend ... by presenting his own arguments and evidence orally.” Id., at 268. Finally, I see no reason to suppose, nor does the Secretary suggest any, that the “credibility and veracity” of doctors and employers can never be in issue in a disability case. Indeed, the Secretary’s new regulations indicate that they may. See Disability Ins. State Manual § 353.

The premise of the Secretary’s entire argument is that disability benefits are discontinued “only on the basis of an objective consideration — that the previous disability has ceased — and that conclusion rests on reliable information.” Brief 26. Whether or not the information is reliable, the premise is questionable. The Secretary himself emphasizes that disability determinations require “specialized medical and vocational evaluations” and not simply the acquisition of “medical and other relevant data.” Id., at 28. In any event, there are three grounds, pertinent here, upon which disability can be found to have ceased. None can fairly be characterized by the term “objective.”

First, cessation of disability may be found if the beneficiary refuses to cooperate with the social security authorities. 20 CFR § 404.1539 (c); see Claims Manual §6706 (e). That judgment, of course, could be wholly subjective, as the Secretary points out with reference to welfare cases.

Second, cessation may be found if the beneficiary “has regained his ability to engage in substantial gainful activity ... as demonstrated by work activity.” 20 CFR §404.1539 (a)(2); see Claims Manual §6706 (a). That decision does not, as the Secretary appears to assert, rest solely “upon regular reports made by [the beneficiary’s] employers to the government.” Brief 25. Rather, “the work performed” by the beneficiary “may demonstrate” that he is no longer disabled, but only if it “is both substantial and gainful.” “Substantial work activity involves the performance of significant physical or mental duties, or a combination of both, productive in nature.” A finding of “substantial gainful activity” depends upon the nature of the work performed, the adequacy of the performance, and the special conditions, if any, of the employment, as well as an evaluation of the time spent and the amount of money earned by the beneficiary. 20 CFR §§404.1532-404.1534.

Third, cessation of disability may be found if the evidence establishes medical recovery. 20 CFR § 404.1539 (a)(1); see Claims Manual § 6706 (c). That decision, of course, will be based upon medical examinations, but it does not follow that it is necessarily “objective.” “The function of deciding whether or not an individual is under a disability is the responsibility of the Secretary,” and a medical conclusion that the beneficiary is or is not disabled “shall not be determinative of the question.” 20 CFR § 404.1526. The Secretary’s decision that a beneficiary’s impairment “is no longer of such severity as to prevent him from engaging in any substantial gainful activity,” 20 CFR § 404.1539 (a)(1), obviously depends upon more than an “objective” medical report, for the application of the legal standard necessarily requires the exercise of judgment. And, of course, multiple conflicting medical reports are “not uncommon.” Richardson v. Perales, 402 U. S. 389, 399 (1971).

The Secretary’s claim for “objectivity” is even less persuasive in the situation where a beneficiary’s benefits are suspended. “Benefits are suspended when information is received which indicates that the individual may no longer be under a disability.” Claims Manual § 6708. Here, by definition, there has been no determination that disability has ceased.

Finally, the post-termination reversal rate for disability determinations makes the asserted “objectivity” even more doubtful. According to the Secretary’s figures for 1971, 37% of the requests for reconsideration resulted in reversal of the determination that disability had ceased. Moreover, 55% of the beneficiaries who exercised their right to a hearing won reversal. While, as the Secretary says, these figures may attest to the fairness of the system, Richardson v. Perales, supra, at 410, they also appear to confirm that the Court’s reference in Goldberg to “the welfare bureaucracy’s difficulties in reaching correct decisions on eligibility,” 397 U. S., at 264 n. 12, is fully applicable to the administration of the disability program.

Second. The Secretary also contends that affording disability beneficiaries the opportunity to participate in evidentiary hearings before discontinuance of their benefits will result in great expense and a vast disruption of the administrative system. This justification for denial of pre-termination hearings was, of course, specifically rejected in Goldberg, 397 U. S., at 265-266, and the Secretary offers no new considerations to support its acceptance here.

In Goldberg, the Court pointed out “that termination of aid pending resolution of a controversy over eligibility may deprive an eligible recipient of the very means by which to live while he waits.” 397 U. S., at 264 (emphasis in original). That statement applies equally to eligible disability beneficiaries, for, as the District Court noted and the Secretary does not deny, “a disability beneficiary is by definition unable to engage in substantial gainful activity and he would, therefore, be liable to sustain grievous loss while awaiting the resolution of his claim.” 321 F. Supp., at 386. In view of that result, the District Court concluded that the “fiscal and administrative expenses to the government, whatever their magnitude, are insufficient justification considering the crippling blow that could be dealt to an individual in these circumstances.” Ibid. The Secretary’s response is simply to stress the magnitude of the burden.

Here, as in Goldberg, “[t]he requirement of a prior hearing doubtless involves some greater expense.” 397 ,U. S., at 266.' The Secretary points out that current procedures include a two-step determination of disability: first by the state agency, after a district office of the Social Security Administration has conducted a disability investigation, and then, on review of the state agency’s determination, by the Administration’s Bureau of Disability Insurance, which is located in Baltimore, Maryland. Thus, the Secretary says, a prior hearing “either would require the beneficiary to travel great distances or would necessitate that State or federal officials travel to the area in which the beneficiary resides, neither of which is practical.” Brief 28-29. “Nor could the decision-making function be turned over to the Administration’s district offices, which are located conveniently to the beneficiaries, without staffing them with individuals qualified to make the necessary medical and vocational judgment.” Id., at 29. Hence, the Secretary concludes, prior hearings “would require massive restructuring of the existing administrative adjudicative process.” Id., at 27.

Except for bald assertion, the Secretary offers nothing to indicate that any great burden upon the system would result if the state agencies conducted the hearings. Moreover, the Secretary omits even to mention the existence of the current post-termination hearing procedures. See 20 CFR §§404.917-404.941. It is reasonable to assume that the only “restructuring” necessary would be a change in the timing of the hearings. That was apparently the method by which the Secretary required the States to comply with Goldberg in the administration of various other social security programs, see 45 CFR § 205.10, 36 Fed. Reg. 3034-3035, and it would seem to be an equally available response here. While the administration of the disability program to provide prior hearings may involve “some greater expense,” as the Court noted in Goldberg, 397 U. S., at 266, that expense should not be exaggerated in order to deprive disability beneficiaries of their right to “rudimentary due process,” id., at 267.

The Secretary also claims that the requirement of prior hearings “would result in losses to the Social Security Trust Fund of nearly $16 million per year for disability cases and still greater sums when all Title II programs are considered.” Brief 10. This conclusion does not follow from the facts the Secretary presents.

As to the disability program, the Secretary says that in 1971 there were 38,000 determinations that disability had ceased and that the average monthly benefit in those cases was $207. If, to provide prior hearings, terminations were delayed for two months, the Secretary says, the cost in benefits paid pending the hearings would approach $16 million. It is immediately apparent that this figure is grossly inflated.

First, this figure depends upon the unwarranted assumption that all beneficiaries will demand a prior hearing. The Secretary suggests no reason to suppose that would happen. In fact, while there were 38,000 disability cessations in 1971, there were only 10,941 requests for reconsideration, and although 6,885 cessations were affirmed on reconsideration, there were only 2,330 requests for hearings. These post-termination procedures, of course, were utilized by beneficiaries who could not present their views before termination. Under the new regulations, affording notice and the opportunity to respond in writing before termination, it may well be that even fewer beneficiaries will demand hearings. In any event, experience in the welfare area has not demonstrated that recipients abuse their right to pre-termination hearings, and the Secretary does not claim that disability beneficiaries will do so.

Second, the $16 million figure requires not only that all 38,000 beneficiaries request prior hearings, but also that they all lose. Yet, as noted above, 37% of the recon-siderations on written submissions and 55% of the post-termination hearings in 1971 resulted in reversal. The Secretary does not claim, nor is it conceivable, that in every case a prior hearing would uphold the initial determination that disability had ceased.

Third, not only must every beneficiary request a prior hearing and every hearing affirm cessation of disability, it must also be true, to reach the $16 million figure, that the Secretary will be unable to recover any of the benefits paid to beneficiaries pending the hearings. That result is unlikely. Section 204 (a)(1) of the Act, 42 U. S. C. §404 (a)(1); see 20 CFR §§404.501-404.502, directs the Secretary, if he finds that there has been an overpayment, to require a refund from the beneficiary or to decrease any future benefits to which he may be entitled. Thus, if the beneficiary is not “disabled,” he presumably can engage in “substantial gainful activity,” and the Secretary may well secure a refund. If, on the other hand, the case is a close one and the beneficiary is later found to be “disabled” again, the Secretary may reduce his benefits. Furthermore, § 204 (b), 42 U. S. C. § 404 (b); see 20 CFR §§ 404.506-404.509, directs the Secretary not to require a refund or decrease benefits if the beneficiary “is without fault” and a refund or decrease “would defeat the purpose of” the Act or “would be against equity and good conscience.” The Secretary’s duty to waive claims for excess payments may well apply in many termination cases, particularly where the beneficiary is judgment proof. See 20 CFR § 404.508. Obviously, there is no loss to the social security fund if benefits paid to an ineligible beneficiary pending a hearing are subject to statutory waiver.

Fourth, the $16 million figure depends upon the stated premise that the requirement of a hearing would cause a two-month delay in the termination of benefits. The Secretary does not explain why he chose that time period. Under the new regulations, a beneficiary receives notice of the proposed discontinuance, is informed of the information upon which it is based, and is given the opportunity to submit a written response presenting rebuttal evidence. Only then is the disability determination made. It is difficult to believe that it would require another two months just to provide a hearing.

Finally, under §223 (a)(1) of the Act, 42 U. S. C. §423 (a)(1); see Claims Manual §6707, benefits must be paid for two months after the month in which disability ceases. The $16 million figure depends upon the unwarranted assumption that all terminations occur at least two months after disability is found to have ceased. In this case, for example, the state agency determined that plaintiff Atkins’ disability ceased in January. The Bureau of Disability Insurance approved that determination and on February 3 informed Atkins that his benefits would be terminated at the end of March. Thus, even assuming a two-month delay for a hearing, there would be no cost whatever to the trust fund.

Viewing Title II programs as a whole, the Secretary points out that there were nearly three million terminations of benefits in 1969. The vast majority of these terminations were for death, attainment of a certain age, and so forth, but the Secretary asserts that apart from those cases there were 515,189 terminations that would have been affected by the requirement of a prior hearing. That number, however, includes terminations based upon a student’s leaving school, a change in a beneficiary’s marital status, and the death or adoption of a child. Without those cases, the number drops to 186,035. Moreover, even this number includes disability terminations and the terminations of dependents based thereon. Putting aside those cases, the total appears to be somewhat closer to 100,000. While that is a substantial number of terminations, the Secretary does not indicate what issues are involved in making the decisions. As noted above, prior evidentiary hearings are necessary in disability cases because factual disputes exist. They may exist to a far lesser extent in other programs. Moreover, to whatever extent they do exist, the objections to the Secretary’s inflated cost figure for disability terminations would seem to apply equally to nondisability terminations. In any event, the Secretary has simply provided the bare number of terminations, with no further information, and it is inappropriate, if not impossible, to decide what effect requiring prior hearings in disability cases will have on nondisability cases.

I do not deny that prior hearings will entail some additional administrative burdens and expense. Administrative fairness usually does. But the Secretary “is not without weapons to minimize these increased costs.” Goldberg v. Kelly, 397 U. S., at 266. Despite the Secretary’s protestations to the contrary, I believe that in the disability, as in the welfare, area “[m]uch of the drain on fiscal and administrative resources can be reduced by developing procedures for prompt pre-termination hearings and by skillful use of personnel and facilities.” Ibid. The Court’s conclusion on this point in Goldberg is fully applicable here:

“Indeed, the very provision for a post-termination evidentiary hearing ... is itself cogent evidence that the State recognizes the primacy of the public interest in correct eligibility determinations and therefore in the provision of procedural safeguards. Thus, the interest of the eligible recipient in uninterrupted receipt of public assistance, coupled with the State’s interest that his payments not be erroneously terminated, clearly outweighs the State’s competing concern to prevent any increase in its fiscal and administrative burdens.” Ibid.

My answers to the Secretary’s contentions are also the reasons I disagree with the majority of the District Court and agree with the dissenting judge. I would therefore vacate the judgment of the District Court and remand with direction to enter a new judgment requiring that disability benefits not be discontinued until the beneficiary has been afforded procedural due process in the form mandated by Goldberg with respect to discontinuance of welfare and old-age benefits.

         The new provisions were issued as amendments to the Disability-Insurance State Manual (DISM). DISM §265.1D now requires state agencies to inform a beneficiary of a proposed suspension of benefits, and the reasons therefor, before it formally requests the Bureau of Disability Insurance to authorize the suspension. The beneficiary must also be given an opportunity to submit rebuttal evidence. Ibid. But the “opportunity” contemplated by this section, and the similar provisions respecting cessation of benefits (DISM §353.6A), encompass only written submissions.

       This cause, however, like Goldberg, “presents no question requiring our determination whether due process requires only an opportunity for written submission, or an opportunity both for written submission and oral argument, where there are no factual issues in dispute or where the application of the rule of law is not intertwined with factual issues.” 397 U. S., at 268 n. 15. Disability cases, like welfare cases, invariably turn on difficult and complex resolutions of hotly disputed factual questions. See, e. g., Underwood v. Ribicoff, 298 F. 2d 850, 851 (CA4 1962).

       “The issue regarding a right to a hearing prior to suspension or termination of disability benefits is presented in a number of other cases: Doyle v. Richardson (C.A. 5, No. 31,104); Moore v. Richardson (N.D. Calif., Civ. No. C-70-2573); Eldridge v. Richardson (W.D. Va., Civ. No. 70-C-52-A) (dismissed May 6, 1971); Dye v. Richardson (W.D. Pa., Civ. No. 70-1384) (dismissed March 8, 1971); Harvey v. Richardson (W.D. Pa., Civ. No. 70-1460); Rodriquez v. Finch (D. Colo., Civ. No. C-2294) (dismissed July 1, 1971); Olivas v. Secretary of HEW (D. Colo., Civ. No. C-3262). The issue is also presented in several nondisability cases: Anderson v. Finch (N.D. Ohio, Civ. No. 70-425, decided January 15, 1971, and pending before C.A. 6, No. 71-1317); Garofalo v. Richardson (S.D.N.Y., Civ. No. 70-5133) (remanded July 16, 1971); Lindsay v. Richardson
        (W.D. N.C., Civ. No. 2794); Van Guilder v. Richardson (D. Minn., Civ. No. 4-70-386); Hopkins v. Richardson (E.D. Pa., Civ. No. 71-37); Shisslak v. H. E. W. (D. Ariz., Civ. No. 71-35 TUC, decided April 9, 1971 and pending before C.A. 9, No. 71-2060); Baker v. Finch (N.D. Ga., Civ. No. 13786, decided September 13, 1971); Corona v. Richardson (N.D. Calif., Civ. No. 70-2662); Recide v. Richardson (D. Hawaii, Civ. No. 70-3426); Mills v. Richardson (N.D.N.Y., Civ. No. 71-CV-208, decided October 15, 1971).” Brief for the Secretary 8-9, n. 9.

       Apparently the new procedures apply only to cases involving issues of medical recovery. We are advised, however, that “[t]he Secretary is presently developing a similar termination procedure to cover terminations in cases involving a return to work but no issue of medical recovery.” Supplemental Brief for the Secretary 3.

       The Bureau cannot reverse a state agency’s finding that disability has ceased, although it can require reconsideration by the agency. 42 U. S. C. § 421 (e); 20 CFR § 404.1520 (c); Claims Manual § 6701 (c); see Brief for the Secretary 11-12, 17.