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Stanley Bank v. Parish

Supreme Court of Kansas

January 24, 2014

Stanley Bank, Appellee,
v.
Johnny R. Parish, et al., Defendants, and Bazin Excavating, Inc. and Robert A. Bazin, Appellants

Review of the judgment of the Court of Appeals in 46 Kan.App.2d 422, 264 P.3d 491 (2011).

Appeal from Johnson District Court; Gerald T. Elliott, judge.

SYLLABUS

BY THE COURT

1. Summary judgment is appropriate when the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. The trial court is required to resolve all facts and inferences which may reasonably be drawn from the evidence in favor of the party against whom the ruling is sought. When opposing a motion for summary judgment, an adverse party must come forward with evidence to establish a dispute as to a material fact. In order to preclude summary judgment, the facts subject to the dispute must be material to the conclusive issues in the case. On appeal, we apply the same rules and when we find reasonable minds could differ as to the conclusions drawn from the evidence, summary judgment must be denied.

2. Under K.S.A. 2012 Supp. 84-9-311(a)(2), a purchase money security interest in property that is subject to any certificate-of-title law in Kansas, including automobiles, is not perfected upon attachment. Instead, it can be perfected only by compliance with K.S.A. 2012 Supp. 8-135(c)(5), the Kansas statute applicable to certificates of title and security interests in motor vehicles.

3. A secured party complies with K.S.A. 2012 Supp. 8-135(c)(5), and perfects its security interest in a motor vehicle, by properly completing and timely mailing or delivering a notice of security interest to the Kansas Department of Revenue.

4. K.S.A. 2012 Supp. 8-135d(a) requires the Kansas Department of Revenue to electronically retain possession of a certificate of title and to create an electronic certificate of title when the vehicle at issue is subject to a lien or encumbrance.

Michael E. Millett, of Law Offices of Michael A. Millett, P.A., of Overland Park, argued the cause and was on the brief for appellant.

R. Scott Beeler, of Lathrop & Gage, LLP, of Overland Park, argued the cause and was on the brief for appellee.

OPINION

Page 751

[298 Kan. 756] Moritz, J.

This court granted review in this case to consider, as a matter of first impression, whether the purchaser of a vehicle who obtained a paper certificate of title from the Kansas Department of Revenue showing no existing liens could take the vehicle free of a bank's properly perfected purchase money security interest in the vehicle which was recorded in the Kansas Department of Revenue's digital records and noted on an electronic certificate of title issued in the name of

Page 752

the original purchasers. We conclude the Court of Appeals panel correctly considered and applied perfection and priority rules under the Uniform Commercial Code (UCC), K.S.A. 84-9-101 et seq., to conclude the purchaser did not take free and clear of the bank's security interest.

Factual and Procedural Background

On January 31, 2006, Stanley Bank (the Bank) loaned $40,000 to Johnny and Kellie Parish to purchase a 2006 GMC Yukon. As security for the loan, the Parishes gave the Bank a security interest in the Yukon. That same day, the Bank filed a notice of security interest (NOSI) with the Kansas Department of Revenue (KDOR) utilizing the KDOR's motor vehicle electronic lien filing system. On April 3, 2006, the Parishes applied for a title and registered the vehicle in their name. The KDOR provided a title and registration receipt to the Parishes reflecting the Bank's lien on the Yukon. K.S.A. 2012 Supp. 8-135d requires the KDOR to retain such a lien-encumbered title ...


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