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American General Financial Services, Inc. v. Carter

May 16, 2008

AMERICAN GENERAL FINANCIAL SERVICES, INC., APPELLANT,
v.
JEFF L. CARTER, GINA L. CARTER, BOARD OF COUNTY COMMISSIONERS OF RENO COUNTY, KANSAS, DEFENDANTS, AND THE STATE OF KANSAS, APPELLEE.



Appeal from Reno District Court; RICHARD J. ROME, judge.

SYLLABUS BY THE COURT

1. In construing a statute, an appellate court's initial task is to determine the legislature's intent in enacting it. Since the legislature expresses its intent through the words of the statute, an appellate court gives effect to the plain and unambiguous meaning of those words. To that end, an appellate court gives ordinary words their ordinary meanings without adding words not found in the statute or ignoring words found in the statute. Likewise, statutes are construed in a manner that avoids unreasonable results, since courts presume the legislature did not intend to enact useless or meaningless legislation. Finally, a reviewing court does not consider parts of an enactment in isolation, but rather considers and construes all parts of an act together in order to reconcile the different provisions to the extent possible so that they are consistent, harmonious, and make sense.

2. K.S.A. 58-2305 gives a purchase money mortgagee priority over a prior judgment against the purchaser.

3. K.S.A. 2007 Supp. 79-3617 describes the procedure for collecting unpaid or delinquent state taxes and imposing tax liens on real property.

4. Tax liens, which are not the product of any ruling by a court but are merely registered by the clerk of the district court on its records pursuant to K.S.A. 2007 Supp. 79-3617, are not judgments. Nevertheless, while they do not have all the attributes of judgments (e.g., they cannot be invoked to bar litigation of a claim under the doctrine of collateral estoppel), for collection purposes they are treated as judgments.

5. In the absence of an expression by the legislature of its intent to abrogate common-law rules relating to lien priorities, the common-law priority rules remain part of our law.

6. A judgment lien can attach only to whatever interest the judgment debtor has in the property; if the debtor has no interest in the property, then the lien cannot attach.

7. In a purchase money first mortgage transaction, at the time of the closing the purchaser does not acquire title to the real property and then the purchase money mortgage attaches to and becomes a lien on the property. To the contrary, the purchaser acquires title to the property already encumbered by the purchase money mortgage. At that point, a prior tax lien may attach to the property, but this occurs after the creation of the mortgagee's purchase money first mortgage encumbrance.

8. The order in which the exceptions are listed in the homestead exemption found in Article 15, § 9 of the Kansas Constitution does not establish an order of priority among claimants different from the priorities established at common law.

The opinion of the court was delivered by: McANANY, J.

Reversed and remanded.

Before BUSER, P.J., MALONE and McANANY, JJ.

This is a real estate foreclosure action brought by the purchase money mortgagee. At issue is the distribution of the proceeds following the foreclosure sale. In this appeal we consider the relative priorities of a lien for unpaid sales taxes and a later purchase money mortgage given by the defaulting taxpayers to acquire the property which is later sold in foreclosure. The district court found that the tax lien has priority. We conclude that the mortgage given to secure the loan used by the taxpayer to purchase the property has priority and, therefore, reverse the decision of the district court.

In November 2001, the Kansas Department of Revenue (KDR) filed a tax warrant in Reno County District Court against Jeff L. Carter and others for failure to pay sales tax in the amount of $266,550.23. The record does not disclose whether during the period November 2001 to June 2004 Carter owned any real estate in Reno County to which the tax lien would have attached. In any event, in June 2004, Carter and his wife, Gina, (the Carters) purchased a home in Hutchinson. They financed the purchase through American General Financial Services, Inc. (American). As evidence of the ...


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