Bank
South v. Howard
Mr. Reisman represented Mr. Howard.
BENHAM, Presiding Justice.
Bank South sued Howard on a guaranty which
contained a provision in which Howard purported to waive the right to a jury
trial in any action on the guaranty. Based on that provision, the trial court
struck Howard's demand for jury trial. The Court of Appeals reversed the trial
court's judgment, holding that a valid waiver of jury trial must be knowing and
voluntary, and that since Howard could not have known when he signed the
guaranty contract what the basis and circumstances of a future claim on the
guaranty might be, his waiver could not have been knowing and voluntary. Howard
v. Bank South, N.A., 209 Ga.App. 407(4), 433 S.E.2d 625 (1993). We granted
certiorari to consider whether a pre-litigation contractual waiver of jury trial
is enforceable under the laws of Georgia.
Civil litigants in this state's courts are
guaranteed the right to a jury trial by the Constitution of Georgia [FN1] and
the Civil Practice Act. [FN2] Waiver of that right is a matter which is
"carefully controlled" by statute. Manderson & Assocs. v. Gore,
193 Ga.App. 723(5), 389 S.E.2d 251 (1989). The constitutional guarantee of the
right to trial by jury refers to two circumstances in which the right may be
waived: when no issuable defense is filed and when the parties fail to demand a
jury trial. OCGA § 9-11-39(a) provides for waiver by express stipulation,
either written and filed in the record or made orally in open court. By their
terms, both the statute and the Constitution plainly contemplate the pendency of
litigation at the time of the waiver. We conclude, therefore, that
pre-litigation contractual waivers of jury trial are not provided for by our
Constitution or Code and are not to be enforced in cases tried under the laws of
Georgia.
Our conclusion is bolstered by the similarity
between waiver of jury trial and confession of judgment. Like a waiver of jury
trial, a confession of judgment entails giving up valuable rights. [FN3] Both
are provided for by statutes which, by their terms, contemplate the pendency of
litigation. [FN4] As to both acts, the Court of Appeals has held that foreign
judgments based on pre- litigation contractual provisions are not contrary to
the policy or laws of this state. Melnick v. Bank of Highwood, 151
Ga.App. 261(1), 259 S.E.2d 667 (1979), for confessions of judgment; Manderson
& Assocs., supra, for jury trial waivers. Waiver of jury trial and
confession of judgment differ, however, in that this court has been silent with
regard to pre-litigation waivers of jury trial, but has made clear that the only
type of confession of judgment recognized in litigation in this state is that
which arises after the commencement of litigation. Information Buying Co. v.
Miller, 173 Ga. 786(1), 161 S.E. 617 (1931).
Given the similarity of waivers of jury trial and
confessions of judgment, and considering the magnitude of the rights involved
and the probability of abuse that exists in both situations, waivers of jury
trial are sufficiently analogous to confessions of judgment that the same rule
should apply. [FN5] Accordingly, we hold, as stated above, that pre-litigation
contractual waivers of the right to trial by jury are not enforceable in cases
tried under the laws of Georgia.
Judgment affirmed.
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FN1. Ga. Const.,
1983, Art. I, § I, Para. XI. Right to trial by jury; number of jurors;
selection and compensation of jurors.
(a) The right to trial by jury shall remain inviolate, except that the court
shall render judgment without the verdict of a jury in all civil cases where no
issuable defense is filed and where a jury is not demanded in writing by either
party.
FN2. OCGA §
9-11-38. Right to jury trial.
The right of trial by jury as declared by the Constitution of the state or as
given by a statute of the state shall be preserved to the parties inviolate.
FN3. "The
expression 'confession of judgment,' as contained in the code section, has
reference to the act of the defendant whereby he admits or confesses the right
of the plaintiff to take a judgment against him...." Thomas v.
Bloodworth, 44 Ga.App. 44, 46, 160 S.E. 709 (1931).
FN4. As to waiver
of jury trial, see footnotes 1 and 2, supra; as to confession of judgment, see
OCGA § 9-12-18(b):
No confession of judgment shall be entered except in the county where the
defendant resided at the commencement of the action unless expressly provided
for by law. The action must have been regularly filed and docketed as in other
cases....
FN5. In sharp contrast to both waiver of jury
trial and confession of judgment is the legislative approach to the issue of
arbitration. In 1988, the General Assembly extensively revised the statutory
provisions governing arbitration, repealing the existing common- law arbitration
and construction contract arbitration statutes and enacting the “Georgia
Arbitration Code,” OCGA § 9-9-1 et seq. The stated intention of the General
Assembly in revising the Arbitration Code was to extend the enforcement of
arbitration in Georgia from construction contracts to all contracts in which the
parties have agreed to arbitration in writing. Weyant v. MacIntyre, 211
Ga.App. 281(1), 438 S.E.2d 640 (1993). The legislature has not similarly
extended the provisions for either waivers of jury trial or confessions of
judgment.
All the Justices concur except FLETCHER and SEARS-COLLINS, JJ., who dissent.
HUNT, C.J., disqualified.
SEARS-COLLINS, Justice, dissenting.
I disagree with the majority's conclusion that
contractual waivers of the right to trial by jury are unenforceable.
1. The provision in our Constitution that
"[t]he right to trial by jury shall remain inviolate" means only that
the right to trial by jury as it existed in England at the time this paragraph
was adopted into our State Constitution shall remain unaltered. Wright v.
Davis, 184 Ga. 846, 852, 193 S.E. 757 (1937). The foregoing phrase does not
expressly state, nor does it imply, that the right to trial by jury may not be
waived in the same manner as any other constitutional right. However, because
Art. I, Sec. I, Para. XI and OCGA § 9-11-39 set forth certain circumstances in
which a party may waive the right to trial by jury and because those
circumstances deal with waivers once litigation has commenced, the majority
holds that pre-litigation waivers are precluded.
I find that no such affirmative conclusion can
be drawn from Art. I, Sec. I, Para. XI and OCGA § 9-11-39. These provisions do
not provide that their methods by which the right to a jury trial can be waived
are exclusive, and it is just as likely as not that the drafters of the
Constitution and the statute did not even consider whether pre-litigation
waivers were appropriate. I find that the ambiguity created by the silence of
Art. I, Sec. I, Para. XI and § 9-11-39 on this issue should be resolved in
favor of the right to contract for such waivers. In this regard, "[p]arties
are free, except as prohibited by statute or public policy, to contract on any
terms and about any subject matter they so desire," Duffett v. E & W
Properties, Inc., 208 Ga.App. 484, 487, 430 S.E.2d 858 (1993), and any
"impairment of that right [to contract] must be specifically expressed or
necessarily implied by the legislature in a statutory prohibition and not left
to speculation," Porubiansky v. Emory Univ., 156 Ga.App. 602, 603,
275 S.E.2d 163 (1980), aff'd 248 Ga. 391, 282 S.E.2d 903 (1981). Here, Art. I,
Sec. I, Para. XI and § 9-11-39 do not expressly impair the ability to contract
for pre-litigation waivers, nor do they necessarily imply such an impairment;
they simply leave a court to speculate on the point. For this reason, they
should not be construed to contain such an impairment.
Furthermore, I note that a majority of the
courts that have considered the question have concluded that pre-litigation
waivers of a constitutional right to a trial by jury are valid and enforceable.
See Telum, Inc. v. E.F. Hutton Credit Corp., 859 F.2d 835 (10th
Cir.1988), cert. denied, 490 U.S. 1021, 109 S.Ct. 1745, 104 L.Ed.2d 182 (1989); Gaylord
Department Stores v. Stephens, 404 So.2d 586, 588 (Ala.1981); Annot., 73
ALR2d 1332, 1333 (1960). In fact, courts should readily place their imprimatur
on such provisions for several reasons. First, by avoiding the delays and
expense inherent in jury trials, they economize litigation for the parties and
for an already overburdened court system, thus furthering the public interest.
Moreover, in most situations, at the time of entering a contract containing such
a waiver, the parties can readily understand the nature of any disputes that
might arise based on the contract and can make a knowing and intelligent
decision whether to waive their right to a jury trial in the event a dispute
does arise. [FN1]
2. Finally, the majority errs by analogizing the waiver of the right to trial
by jury to a confession of judgment and by concluding that because we have held
that a confession of judgment can only arise after the commencement of
litigation, we should hold that a waiver of the right to trial by jury may only
occur after litigation has started. First, a confession of judgment and a waiver
of the right to jury trial are not similar in their impact. With a confession of
judgment, a defendant forfeits a panoply of constitutional and statutory rights,
including the right to any trial whatsoever. With a waiver of the right to trial
by jury, a party forfeits only the right to a jury trial while retaining all
other rights available under the law to litigate the dispute in a bench trial.
Moreover, the rationale that this Court has given for holding that a
confession of judgment must occur after litigation commences does not apply to a
waiver of a right to trial by jury. We have held that a confession of judgment
is "the substitute for a verdict," Information Buying Co. v.
Miller, 173 Ga. 786, 791, 161 S.E. 617 (1931), and thus, "as the
verdict can not be taken until the suit is filed, it seems clear that a
confession of judgment, which takes its place, can not be made prior to the
institution of the suit," id. As a waiver of the right to trial by jury is
not a substitute for a verdict, the reasoning of Information Buying Co.
is inapplicable to this case.
3. For the foregoing reasons, I must dissent to the majority's speculation
that Art. I, Sec. I, Para. XI and § 9-11-39 were intended to impair the freedom
of the citizens of this State to contract for the right to have disputes arising
from their contract resolved through a bench trial.
I am authorized to state that Justice Fletcher joins in this dissent.
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FN1.
I express no opinion regarding whether contractual waivers of the right to trial
by jury may be voided due to unconscionability or other similar considerations.
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