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Relates to judgment by confession
(D, WF) 47th Senate District
| Assembly Actions - Lowercase Senate Actions - UPPERCASE | |
|---|---|
| Aug 30, 2019 | signed chap.214 |
| Aug 28, 2019 | delivered to governor |
| Jun 20, 2019 | returned to senate passed assembly ordered to third reading rules cal.395 substituted for a7500a |
| Jun 19, 2019 | referred to codes delivered to assembly passed senate ordered to third reading cal.1714 |
| Jun 07, 2019 | referred to rules |
(D, IP, WF) Senate District
(D, WF) 28th Senate District
See Assembly Version of this Bill: A7500 Law Section: Civil Practice Law and Rules Laws Affected: Amd §3218, CPLR
Relates to judgment by confession; allows a government agency engaged in the enforcement of a civil or criminal law to file an affidavit in any county.
BILL NUMBER: S6395 SPONSOR: HOYLMAN TITLE OF BILL: An act to amend the civil practice law and rules, in relation to judgment by confession This proposal is one in a series of measures being introduced at the request of the Chief Administrative Judge upon the recommendation of his Advisory Committee on Civil Practice. This measure would amend section 3218 of the Civil Practice Law and Rules to remedy abuses in the use of confessions of judgment by credi- tors against out-of-state debtors. This measure is in response to recent press reports regarding creditors that execute confessions of judgment in New York State even though the associated agreement or debtor have no nexus to the State.* Under the current statute, a confession of judgment is a written and signed statement, in the form of an affidavit, in which a debtor admits liability and agrees to pay the sum confessed as owed to the creditor pursuant to an agreement. A confession of judgment is a legitimate tool that may facilitate commercial transactions, resolve or avoid liti- gation, support collection of moneys owed under an equitable distrib-
ution plan, or ensure that government agencies can recover funds on behalf of victims. When the debtor does not perform or pay according to the agreement, a confession may be filed as a judgment with the county clerk, even in the absence of a pending court action.** But, in recent years, creditors, often from out-of-state, have entered confessions of judgment in various New York counties against debtors who themselves are out-of-state small business owners with no connection to New York. This practice has resulted in some unscrupulous creditors using New York law and procedure to freeze and then seize debtors' assets based on a judgment entered in a venue far from where the agree- ment was executed and the parties reside, making it difficult for a debtor to contest abusive conduct by a creditor. This measure seeks to correct such abuse without frustrating legitimate use of confessions of judgment within the State. It limits the venue for filing a confession of judgment to in-state debtors, based on where the debtor resided at the time the affidavit was executed or, if the debtor moves, where he or she resides at the time of filing the judgment. This approach is intended to prevent creditors from abusing confessions of judgment by using New York courts as a venue to profit from debtors with no New York connection. Under this measure, a non-natural person, such as a corporation, would be deemed to reside in the county where it has a principal place of business. This measure would provide an exemption for government agencies engaged in enforcing civil or criminal law against a person or non-natural person, including non-residents. Government agencies often use confessions of judgment to ensure that they can recover assets to pay, for example, restitution to victims. Therefore, the proposal would permit government law enforcement agencies to enter such judgments in any county within the State. This measure, which would have no fiscal impact, would take effect imme- diately and apply to judgments by confession filed on or after the effective date. LEGISLATIVE HISTORY: None. New Proposal * Zachary R. Mider and Zeke Faux, 'Sign Here to Lose Everything', Bloom- berg Businessweek (online, November 20, 2018), https://www.bloom berg.comigraphics/2018-confessions-ofjudgment/?smd=confessions-of-judg ment. ** In the mid-1980s, the Federal Trade Commission (FTC) banned confessions of judgment in consumer transactions and bank transactions: " It is an unfair act or practice within the meaning of Section 5 of THE FTC Act for a lender or retail installment seller directly or indirectly to take or receive from a consumer an obligation that: 1) Constitutes or contains a cognovit or confession of judgment ( for purposes other than executory process in the State of Louisiana), warrant of attorney, or other waiver of the right to notice and the opportunity to be heard in the event of suit or process there on." (16 CFR 444.2.)
S T A T E O F N E W Y O R K ________________________________________________________________________ 6395 2019-2020 Regular Sessions I N S E N A T E June 7, 2019 ___________ Introduced by Sen. HOYLMAN -- (at request of the Office of Court Admin- istration) -- read twice and ordered printed, and when printed to be committed to the Committee on Rules AN ACT to amend the civil practice law and rules, in relation to judg- ment by confession THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Paragraph 1 of subdivision (a) and subdivision (b) of section 3218 of the civil practice law and rules, paragraph 1 of subdi- vision (a) as amended by chapter 311 of the laws of 1963, are amended to read as follows: 1. stating the sum for which judgment may be entered, authorizing the entry of judgment, and stating the county where the defendant resides [or if he is a non-resident, the county in which entry is authorized]; (b) Entry of judgment. At any time within three years after the affi- davit is executed, it may be filed, BUT ONLY with the clerk of the coun- ty where the [defendant] DEFENDANT'S AFFIDAVIT stated [in his affidavit that he] THAT THE DEFENDANT resided when it was executed or[, if the defendant was then a non-resident, with the clerk of the county desig- nated in the affidavit] WHERE THE DEFENDANT RESIDED AT THE TIME OF FILING. [Thereupon the] THE clerk shall THEN enter a judgment in the supreme court for the sum confessed. [He] THE CLERK shall tax costs [to] IN the amount of fifteen dollars, besides disbursements taxable in an action. The judgment may be docketed and enforced in the same manner and with the same effect as a judgment in an action in the supreme court. No judgment by confession may be entered after the defendant's death. FOR PURPOSES OF THIS SECTION, A NON-NATURAL PERSON RESIDES IN ANY COUNTY WHERE IT HAS A PLACE OF BUSINESS. NOTWITHSTANDING ANY OTHER PROVISION OF LAW TO THE CONTRARY, A GOVERN- MENT AGENCY ENGAGED IN THE ENFORCEMENT OF CIVIL OR CRIMINAL LAW AGAINST EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD11359-03-9
S. 6395 2 A PERSON OR A NON-NATURAL PERSON MAY FILE AN AFFIDAVIT IN ANY COUNTY WITHIN THE STATE. § 2. This act shall take effect immediately and apply to judgments by confession entered upon affidavits filed on or after such effective date.
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