That it shall be unlawful to execute or procure to be executed as part of or in connection with the execution of any negotiable instrument, or other written contract to pay money, and before a cause of action thereon shall have accrued, any contract, agreement, provision or stipulation giving to any person or persons a power of attorney or authority as attorney for the maker or endorser thereof, in his name to appear in any court of record, and waive the service of process in an action to enforce payment of money claimed to be due thereon, or authorizing or purporting to authorize an attorney or agent, howsoever designated, to confess judgment on such instrument for a sum of money to be ascertained in a manner other than by action of the court upon a hearing after notice to the debtor, whether with or without an attorney fee, or authorizing or purporting to authorize any such attorney to release errors and the right of appealing from such judgment, or to consent to the issue of execution on such judgment. Any and all provisions hereinabove declared to be unlawful, contained in any contract, stipulation or power of attorney given or entered into before a cause of action on such promise to pay, shall have accrued, shall be void.
History: Laws 1933, ch. 46, § 1; 1941 Comp., § 19-916; 1953 Comp., § 21-9-16.
ANNOTATIONSCross references. — For prohibition against confessed judgment in retail installment sales, see 56-1-5 NMSA 1978.
Section operates prospectively only and does not apply to a note executed prior to its passage. Hot Springs Nat'l Bank v. Kenney, 1935-NMSC-066, 39 N.M. 428, 48 P.2d 1029.
Construed in pari materia. — Provisions of this section and 39-1-18 NMSA 1978 must be construed together to arrive at the true intent of the legislature. Ritchey v. Gerard, 1944-NMSC-053, 48 N.M. 452, 152 P.2d 394.
Legislature intended to limit section to voiding the provisions giving power of attorney with authority to confess judgment on cognovit notes for sums of money to be determined in some manner other than court action pursuant to a hearing upon proper service of process. Ritchey v. Gerard, 1944-NMSC-053, 48 N.M. 452, 152 P.2d 394.
Legislature intended to prevent judgment without notice. — The purpose and intent of the legislature, as expressed in this section, is to prevent judgment from being obtained without notice or service of process by virtue of a power of attorney executed prior to the accrual of the cause of action. GECC v. Tidenberg, 1967-NMSC-126, 78 N.M. 59, 428 P.2d 33.
Provisions not to be offensive to full faith and credit. — Sections 39-1-16 to 39-1-18 NMSA 1978 may not be construed or administered in a manner offensive to U.S. Const., art. IV, § 1, providing full faith and credit shall be given in each state to the judicial proceedings of every other state. Mountain States Fixture Co. v. Daskalos, 1956-NMSC-109, 61 N.M. 491, 303 P.2d 698.
Cognovit provisions deemed illegal and void. — Cognovit provisions executed as part of a negotiable instrument or written contract to pay money, and before a cause of action has accrued thereon, are illegal and void. Mountain States Fixture Co. v. Daskalos, 1956-NMSC-109, 61 N.M. 491, 303 P.2d 698.
Waiver of defenses in chattel paper was not in violation of the prohibition against cognovit contracts and notes as set forth in 39-1-16 and 39-1-18 NMSA 1978. GECC v. Tidenberg, 1967-NMSC-126, 78 N.M. 59, 428 P.2d 33.
Only cognovit clause of note void. — A cognovit clause contained in a note does not void the entire instrument but only the cognovit provisions thereof. Ritchey v. Gerard, 1944-NMSC-053, 48 N.M. 452, 152 P.2d 394.
Only cognovit clause of note void, note otherwise enforceable. — When cognovit provisions are disregarded in bringing suit on a cognovit note and no resort is made to them, the note is enforceable as provided by law. Ritchey v. Gerard, 1944-NMSC-053, 48 N.M. 452, 152 P.2d 394.
Provision in note gave Colorado court jurisdiction. — The procedure authorized under cognovit provisions contained in a promissory note executed in this state and payable in Colorado, in connection with a contract made and to be performed in Colorado, is sufficient to give the Colorado court jurisdiction over the defendants in an action upon the promissory note. Mountain States Fixture Co. v. Daskalos, 1956-NMSC-109, 61 N.M. 491, 303 P.2d 698.
Jurisdiction where portions of agreement illegal. — Contracting parties may agree to be bound by the laws of the state of the residence of one of them where the contract was to be performed, although some portion of their agreement is illegal where executed and under the law of the forum where suit is brought. Mountain States Fixture Co. v. Daskalos, 1956-NMSC-109, 61 N.M. 491, 303 P.2d 698.
Am. Jur. 2d, A.L.R. and C.J.S. references. — 46 Am. Jur. 2d Judgments § 236.
Constitutionality, construction, application and effect of statutes invalidating power of attorney to confess judgment or contracts giving such power, 40 A.L.R.3d 1158.
49 C.J.S. Judgments § 139.