Case Title: Sutton Bank v. Progressive Polymers, LLC

Citation: 2020-Ohio-5101

Docket Number: 2019-1314

State: ohio

Court: Ohio Supreme Court

Date: 2020-11-03T00:00:00Z

Document:
[Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as 
Sutton Bank v. Progressive Polymers, L.L.C., Slip Opinion No. 2020-Ohio-5101.] 
 
 
 
NOTICE 
This slip opinion is subject to formal revision before it is published in an 
advance sheet of the Ohio Official Reports.  Readers are requested to 
promptly notify the Reporter of Decisions, Supreme Court of Ohio, 65 
South Front Street, Columbus, Ohio 43215, of any typographical or other 
formal errors in the opinion, in order that corrections may be made before 
the opinion is published. 
 
 
SLIP OPINION NO. 2020-OHIO-5101 
SUTTON BANK, APPELLANT, v. PROGRESSIVE POLYMERS, L.L.C., ET AL., 
APPELLEES. 
[Until this opinion appears in the Ohio Official Reports advance sheets, it 
may be cited as Sutton Bank v. Progressive Polymers, L.L.C., Slip Opinion No. 
2020-Ohio-5101.] 
Cognovit promissory notes—Courts must give effect to the clear intent of the 
parties when interpreting cognovit notes—Judgment reversed. 
(No. 2019-1314—Submitted July 21, 2020—Decided November 3, 2020) 
APPEAL from the Court of Appeals for Portage County, 
Nos. 2018-P-0079 and 2019-P-0001, 2019-Ohio-3239. 
_________________ 
STEWART, J. 
{¶ 1} This case concerns whether certain inconsistencies in a cognovit 
promissory note signed by the debtors prevent its enforcement.  Because the 
contract, viewed as a whole, put the debtors on notice of the rights that they were 
relinquishing by signing the note, the court of appeals erred in holding that the note 
SUPREME COURT OF OHIO 
 
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was defective.  We therefore reverse the judgment of the Eleventh District Court of 
Appeals and reinstate the trial court’s cognovit judgment entered in favor of the 
creditor. 
I. Background 
{¶ 2} On July 22, 2016, appellees, Progressive Polymers, L.L.C., and Darin 
A. Bay, borrowed $500,000 from appellant, Sutton Bank.  To secure the loan, Bay 
signed a cognovit promissory note as a member of Progressive Polymers and in his 
own behalf.  Pursuant to the note, Progressive Polymers and Bay promised to repay 
Sutton Bank the principal amount of the loan, with interest, in 72 monthly 
installments.  The note included a confession-of-judgment clause that contained a 
warrant of attorney by which Progressive Polymers and Bay agreed that should they 
default on the note, an attorney could confess judgment against them. 
{¶ 3} The note begins with a section of definitions: “ ‘I’, ‘me,’ and ‘my,’ 
refer to each Borrower signing this Note,” Progressive Polymers and Bay, and  
“ ‘You’ and ‘Your’ refer to the Lender,” Sutton Bank.  The pronouns retain this 
usage through the 30 paragraphs of the note, including in the boxed confession-of-
judgment clause between paragraphs 29 and 30.  The only portion of the document 
that does not clearly retain the construction of “you” and “your” as defined and 
quoted above, is the R.C. 2323.13(D)-required warning.  This warning, which 
recites the language in R.C. 2323.13(D), is located immediately following 
paragraph 30 and directly above Bay’s two signatures.  Bold and in capital letters, 
it states: 
 
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 
January Term, 2020 
 
3
FROM YOU 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. 
 
{¶ 4} On September 13, 2018, Sutton Bank filed a complaint for a cognovit 
judgment against Progressive Polymers and Bay in the Portage County Court of 
Common Pleas alleging default.  The complaint sought the remaining balance owed 
on the principal, plus late fees, accrued interest, pre- and postjudgment interest, 
court costs, and attorney fees.  Pursuant to the warrants of attorney in the note, an 
attorney chosen by Sutton Bank filed an answer confessing judgment against 
Progressive Polymers and Bay and in Sutton Bank’s favor.  The trial court ruled in 
favor of Sutton Bank and issued the cognovit judgment. 
{¶ 5} Progressive Polymers and Bay appealed from the trial court’s 
judgment to the Eleventh District Court of Appeals and also filed a Civ.R. 60(B) 
motion for relief from judgment in the trial court.  The Eleventh District remanded 
the matter to the trial court to rule on the motion. 
{¶ 6} In their motion, Progressive Polymers and Bay argued that the 
promissory note was not a valid cognovit note and that therefore the trial court 
lacked jurisdiction to enter a cognovit judgment in favor of Sutton Bank.  The 
cognovit note was invalid, they argued, because the statutory warning had to be 
read as being directed to Sutton Bank as the lender, and not to them as the 
borrowers, since the note specifically defines “you” and “your” as the lender, 
Sutton Bank.  Bay and Progressive Polymers asserted that this interpretation of the 
warning language was the only legitimate one inasmuch as a cognovit note must be 
strictly construed against the party seeking its enforcement. Accordingly, 
Progressive Polymers and Bay maintained that the warning was defective because 
SUPREME COURT OF OHIO 
 
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it failed to put them on notice of the rights that they were waiving by signing the 
note. 
{¶ 7} Sutton Bank countered that while the definition section identified 
“you” and “your” with the lender, those definitions do not apply in the warning.  
Instead, the bank argued that courts must give words in a promissory note their 
defined meaning unless some other meaning is apparent on the face of the 
document.  Sutton Bank maintained that it is was clear from the overall context of 
the document and the language used in the warning that the word “you,” as 
contained in the warning, referred to Progressive Polymers and Bay as the signers 
of the note, notwithstanding the relevant provisions of the definition section. 
{¶ 8} The trial court denied the motion to vacate, and Progressive Polymers 
and Bay appealed from that judgment also.  In a split decision, the Eleventh District 
reversed the judgment of the trial court, vacated the cognovit judgment in favor of 
Sutton Bank, and remanded the cause to the trial court for further proceedings on 
the bank’s complaint.  2019-Ohio-3239, ¶ 19. 
{¶ 9} The court of appeals began by acknowledging that because cognovit 
notes allow judgment to be entered against a party without notice or hearing, they 
are strictly construed against the party seeking enforcement. The majority further 
reasoned that the parties’ intent is revealed in their language.  Unambiguous and 
clear terms need no interpretation, and courts must give effect to all contract 
provisions.  After applying these rules, the court concluded: 
 
Interpreting the contract as a whole and avoiding 
interpretations that have the effect of annulling parts of it, the 
definition section of the Note unambiguously grants [Progressive 
Polymers and Bay] the right to confess judgment against Sutton 
Bank in the event of a breach. This is the language chosen by the 
parties to the contract—namely, Sutton Bank as the drafter of the 
January Term, 2020 
 
5
Note—despite the default language inserted from the Ohio statute 
using the pronoun “you” instead of “I” to describe the signer(s).  
Sutton Bank acknowledges the borrower must be given the warning 
set forth in the statute.  However, a plain reading of the definitions 
chosen by Sutton Bank establishes that there is no statutory warning 
directed to the borrower[s], [Progressive Polymers and Bay]. 
 
Id. at ¶ 15.  Accordingly, the majority held that the note did not meet the strict 
requirements of R.C. 2323.13(D) and was therefore not a valid cognovit note upon 
which judgment could be entered. 
{¶ 10} The dissent reached the opposite conclusion.  It noted that 
Progressive Polymers and Bay’s argument, while “creative,” was unreasonable in 
light of the following facts: the note used the precise warning language required by 
R.C. 2323.13(D); the language clearly and naturally applied to Progressive 
Polymers and Bay and if read to apply to Sutton Bank, it would be meaningless and 
absurd; and the note, signed by Progressive Polymers and Bay, included a warrant 
of attorney, placing them at least constructively on notice that the warning provision 
applied to them and not Sutton Bank.  Id. at ¶ 32-39 (Trapp, J., dissenting).  The 
dissent admonished the majority for failing to apply the rule of contractual 
interpretation that defined terms within a contract should be interpreted as retaining 
their meaning throughout the contract unless evidence shows that the parties 
intended the term to have a different meaning.  Id. at ¶ 22 (Trapp, J., dissenting).  
Finding that the overall context of the note, and the language employed by the 
warning provision itself, expressed a clear intent that “you” in the warning applied 
to Progressive Polymers and Bay, the dissent concluded that the note met the strict 
statutory requirements for cognovit notes and consequently that the cognovit 
judgment should be enforced.  Id. at ¶ 39 (Trapp, J., dissenting). 
SUPREME COURT OF OHIO 
 
6
{¶ 11} Sutton Bank appealed to this court, and we accepted jurisdiction over 
the following proposition of law: “Although cognovit clauses are construed strictly 
against those enforcing them, courts must still follow traditional rules of contractual 
interpretation when analyzing those clauses.”  See 157 Ohio St.3d 1510, 2019-
Ohio-5193, 136 N.E.3d 495. 
II. Analysis 
A. Cognovit Promissory Notes 
{¶ 12} A cognovit promissory note is a special type of commercial paper by 
which a debtor1 authorizes a creditor, in the event of the debtor’s default on his 
payment obligation, to obtain an immediate judgment against him without prior 
notice or an opportunity to be heard.  See D.H. Overmyer Co., Inc. v. Frick Co., 
405 U.S. 174, 176, 92 S. Ct. 775, 31 L. Ed. 2d 124 (1972).  A note takes the form 
of a cognovit note if it includes a warrant of attorney.  Huntington Natl. Bank v. 
Burda, 10th Dist. Franklin No. 08AP-658, 2009-Ohio-1752, ¶ 8.  The warrant of 
attorney authorizes an attorney of the creditor’s choosing to act on behalf of the 
debtor to confess judgment against the debtor in a court of law.  See Overmyer at 
176, fn. 2; Cleveland Bar Assn. v. Greenberg, 112 Ohio St. 3d 138, 2006-Ohio-
6519, 858 N.E.2d 400, ¶ 5, fn. 1.  At bottom, “the purpose of a cognovit note is to 
allow the holder of the note to quickly obtain judgment, without the possibility of 
a trial.”  Sky Bank v. Colley, 10th Dist. No. 07AP-751, 2008-Ohio-1217, ¶ 7. 
{¶ 13} R.C. 2323.12 and 2323.13 govern cognovit notes.  For the warrant 
of attorney to be valid so that the court has authority to enter a cognovit judgment 
on the note, a specific warning must appear on it.  R.C. 2323.13(D) states: 
 
                                          
 
1.  A debtor will also be referred to as a “maker.” A “maker” is “[s]omeone who signs a promissory 
note.”  Black’s Law Dictionary 1145 (11th Ed.2019). 
January Term, 2020 
 
7
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, 1974, 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 space or 
spaces provided for the signatures of the makers, 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 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.” 
 
{¶ 14} In the past, this court has stated that a warrant of attorney is to be 
strictly construed against the person in whose favor the judgment is given.  See 
Lathrem v. Foreman, 168 Ohio St. 176, 188, 151 N.E.2d 905 (1958), citing 
Haggard v. Shick, 151 Ohio St. 535, 86 N. E.2d 785 (1949); Peoples Banking Co. 
v. Brumfield Hay & Grain Co., 172 Ohio St. 545, 548, 179 N.E.2d 53 (1961); 
Cushman v. Welsh, 19 Ohio St. 536, 539 (1869); Spence v. Emerine, 46 Ohio St. 
433, 439, 21 N. E. 866 (1889).  We have also said that “court proceedings based on 
such warrants must conform in every essential detail with the statutory law 
governing the subject.”  Lathrem at paragraph one of the syllabus. 
 
 
SUPREME COURT OF OHIO 
 
8
B. Traditional Rules of Interpretation Apply to Cognovit Provisions 
{¶ 15} Rules of contract interpretation are tools that we use to give meaning 
to disputed terms or provisions so that the contract as a whole will reflect the 
parties’ intent.  See Skivolocki v. E. Ohio Gas Co., 38 Ohio St.2d 244, 313 N.E.2d 
374 (1974), paragraph one of the syllabus.  These rules can be broken down into 
two basic categories: primary interpretive rules and secondary interpretive rules.  In 
all cases involving contract interpretation, we start with the primary interpretive 
rule that courts should give effect to the intentions of the parties as expressed in the 
language of their written agreement.  See Sunoco, Inc. (R&M) v. Toledo Edison 
Co., 129 Ohio St.3d 397, 2011-Ohio-2720, 953 N.E.2d 285, ¶ 37.  Other primary 
interpretive rules assist the court in doing this by giving guidance on how to 
interpret the meaning of certain words.  For example, one rule is that “[c]ommon 
words appearing in a written instrument will be given their ordinary meaning unless 
manifest absurdity results, or unless some other meaning is clearly evidenced from 
the face or overall contents of the instrument.”  Alexander v. Buckeye Pipe Line 
Co., 53 Ohio St.2d 241, 374 N.E.2d 146 (1978), paragraph two of the syllabus.  
Another more specific, but also at times very helpful, rule is that technical terms 
are to be given their technical meaning “unless a different intention is clearly 
expressed.”  See Foster Wheeler Enviresponse v. Franklin Cty. Convention 
Facilities Auth., 78 Ohio St. 3d 353, 361, 678 N.E.2d 519 (1997).  Other rules are 
secondary, rather than primary, interpretive tools and do not operate unless the 
primary rules of interpretation fail to resolve the contract’s meaning.  The rule that 
a contract provision should be strictly construed against one party and liberally 
construed in favor of the other—either due to the type of contract or contractual 
provision at issue, inequality in bargaining power, or the fact that one party is the 
drafter and the other is not—is a secondary rule.  See Malcuit v. Equity Oil & Gas 
Funds, Inc., 81 Ohio App.3d 236, 239-240, 610 N.E.2d 1044 (9th Dist.1992).  
Accordingly, it does not come into play unless the intent of the parties cannot be 
January Term, 2020 
 
9
deciphered because the contract language is reasonably susceptible of two different 
interpretations.  See id. 
{¶ 16} We conclude that traditional rules of contract interpretation do apply 
to cognovit provisions, just as they would to any other provision in any other 
contract.  Rules of interpretation have one purpose—to give meaning to the 
language of the contract in a way that reflects the intent of the parties.  If courts did 
not use rules of interpretation when interpreting cognovit provisions, those 
provisions could be open to all manner of interpretations, some of which would 
naturally be incongruous with the parties’ actual intent. 
{¶ 17} The majority and dissenting opinions of the court of appeals did, to 
some extent, apply traditional rules of contract interpretation in their respective 
analyses.  We agree with Sutton Bank, however, that the majority’s analysis 
stopped short of where it should have when it applied the note’s definition of “you” 
(referring to the lender, Sutton Bank) to the statutory warning language without 
considering, as it should have considered, whether the parties intended this reading. 
C. The Note’s Definition Section Does Not Apply to the Statutory Warning 
{¶ 18} Because this case involves an issue of contract interpretation, the 
outcome depends on whether the parties intended the note’s definition of “you” to 
apply to the statutory warning.  Sunoco, 129 Ohio St.3d 397, 2011-Ohio-2720, 953 
N.E.2d 285, at ¶ 37 (A court’s primary concern when confronted with an issue of 
contract interpretation is to give effect to the parties’ intentions).  Although words 
and terms within a contract will be given their ordinary meaning, see Alexander at 
paragraph two of the syllabus, where parties to a contract have given a word a 
specific meaning by expressly defining it in the contract, that definition will 
generally override whatever definition might otherwise be established by an 
examination of the word’s ordinary meaning or common usage.  In re Payne, 450 
B.R. 711, 719 (Bankr.S.D.Ohio 2011).  Furthermore, when a word is expressly 
defined, then that word should be given its expressed meaning whenever it is used 
SUPREME COURT OF OHIO 
 
10 
in the contract.  Id. at 719-720.  Both rules regarding defined terms stem from the 
broader principle that where terms in a contract are clear and unambiguous, they 
should be applied as written.  It is clear from the appellate court’s opinion that the 
court used these rules to conclude that the definition section of the note must apply 
to the warning provision.  However, what the appellate court failed to understand 
is that these rules—helpful though they are—are not unbreakable or inviolable.  
They must yield to the intent of the parties, and when the parties clearly did not 
intend an express definition to apply, a court cannot force that construction upon 
them.  See In re Adelphia Communications Corp., 368 B.R. 348, 354 
(Bankr.S.D.N.Y.2007) (defined terms must still be interpreted in the context of the 
entire agreement); Beanstalk Group, Inc. v. AM Gen. Corp., 283 F.3d 856, 860 (7th 
Cir.2002) (“a contract will not be interpreted literally if doing so would produce 
absurd results in the sense of results that the parties, presumed to be rational persons 
pursuing rational ends, are very unlikely to have agreed to seek”). 
{¶ 19} Focusing on what the parties would have intended, we are 
unpersuaded by Progressive Polymers and Bay’s argument that the note’s defined 
terms had the effect of modifying the warning provision such that the warning no 
longer applied to them.  To begin, the very first sentence of the warning says: “BY 
SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND 
COURT TRIAL.”  (Capitalization sic.)  The “you” clearly refers to the signers of 
the note.  And because Bay’s signatures, on behalf of himself and Progressive 
Polymers, are the only ones on the note and appear directly below the warning, the 
“you” must necessarily refer to Progressive Polymers and Bay, regardless of how 
“you” is defined elsewhere in the document.  If someone had signed the document 
on behalf of Sutton Bank, there would be ambiguity as to whether “you” referred 
to Sutton Bank as the lender instead of Progressive Polymers and Bay as the 
borrowers.  But since Sutton Bank did not sign, no ambiguity exists.  Likewise, the 
second sentence of the warning provision also makes clear that “you” refers to 
January Term, 2020 
 
11 
Progressive Polymers and Bay.  It states: 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 REGARDLESS OF ANY CLAIMS YOU MAY HAVE 
AGAINST THE CREDITOR * * *.”  (Capitalization sic.)  Bay and Progressive 
Polymers do not dispute that they are the only parties to the note that have an 
obligation to make timely payments.  Sutton Bank, as the lender and creditor, has 
no such obligation.  Furthermore, according to the warning’s plain language, “you” 
in the second sentence must at least be viewed as referring to a party that is not the 
creditor because that individual or entity might have claims against the creditor.  
Again here, Sutton Bank is the creditor.  If we adopt the construction that 
Progressive Polymers and Bay urge us to adopt, this second sentence would be read 
to mean: “If [Sutton Bank] does not pay on time a court judgment may be taken 
against [Sutton Bank] without [Sutton Bank’s] prior knowledge and the powers of 
the court may be used to collect from [Sutton Bank] regardless of any claims 
[Sutton Bank] may have against [itself] * * *.  This reading obviously makes no 
sense. 
{¶ 20} Accordingly, we find that the statutorily-required language of the 
warning provision, coupled with the placement of the signature line, can leave no 
doubt that the notice was directed to the makers of the note: Progressive Polymers 
and Bay.  Indeed, it is telling that neither Bay nor Progressive Polymers argues, or 
has ever argued, ignorance as to the type of document that they were signing.  Nor 
have they claimed ignorance about waiving their due process rights by signing it.  
Instead, their arguments against upholding the cognovit judgment rest on the fact 
that technically, if the definition of “you” in the note is applied to the “you” in the 
warning provision, the warning provision put Sutton Bank, and not them, on notice 
of rights that Sutton Bank was waiving even though Progressive Polymers and Bay, 
SUPREME COURT OF OHIO 
 
12 
not Sutton Bank, were the signatories.  This is an unnatural and strained reading of 
the warning provision, and the parties did not intend such a result. 
III. Conclusion 
{¶ 21} For the foregoing reasons, we hold that although cognovit clauses 
are construed strictly against those seeking to enforce them, courts must still give 
effect to the clear intent of the parties when interpreting them.  We therefore reverse 
the judgment of the Eleventh District Court of Appeals and reinstate the trial court’s 
cognovit judgment in favor of Sutton Bank. 
Judgment reversed. 
O’CONNOR, C.J., and KENNEDY, FRENCH, FISCHER, DEWINE, and 
DONNELLY, JJ., concur. 
_________________ 
Meyer Kerschner, Ltd., Michael D. Stultz, and Douglas A. Stephan, for 
appellant. 
Buckingham, Doolittle & Burroughs, L.L.C., Patrick J. Keating, and Daniel 
J. Glass, for appellee. 
Ice Miller, L.L.P., and Steven D. Forry, urging reversal for amicus curiae 
Ohio Credit Union League. 
Vorys, Sater, Seymour and Pease, L.L.P., John J. Kulewicz, Jeffrey E. 
Smith, and Scott A. Herkamp; and Jeffrey D. Quayle, urging reversal for amicus 
curiae Ohio Bankers League. 
Porter, Wright, Morris & Arthur, L.L.P., H. Grant Stephenson, and L. 
Bradfield Hughes, urging reversal for amicus curiae Community Bankers 
Association of Ohio. 
_________________