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Copies are Okay, Right? …Wrong.

With advances in technology, the increased acceptance of “images” for the purposes of authentication have become widely accepted. However, in Ohio, many businesses use Cognovit Notes when credit is obtained. Cognovit Notes are preferred because they streamline the collection process. They allow a confession of judgment. However, not only are they frowned upon in most other states, in Ohio, the laws dealing with Cognovit Notes must be strictly adhered to.

In Buzby v. Chamoun, 2014-Ohio-4676 (October 23, 2014), the Eighth Appellate District Court (Cuyahoga County) found that a cognovit judgment could be set aside because the original was not produced. The statutory provisions regarding Cognovit Notes are strictly construed and must be met in order for a valid judgment to be granted upon a Cognovit Note. The Court determined that there was a complete lack of jurisdiction because of the failure of the plaintiff to produce the original Cognovit Note. The Eighth District cited with approval the Franklin County Tenth District’s Decision in Huntington Natl. Bank v. 199 S. Fifth St. Co., L.L.C., 2011-Ohio-3707.

When dealing with business loans and transactions, it is critical to keep track of and maintain the original documents. Technology has not caught up on all fronts and on all issues…yet!

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