IN THE SUPREME COURT OF THE STATE OF KANSAS
No. 127,532
In the Matter of the Estate of LORINE H. MUELLER.
SYLLABUS BY THE COURT
A right of setoff against a beneficiary's distributive share of an estate requires a debt owed by the beneficiary to the estate. When the agreement giving rise to a confessed judgment establishes that the judgment is not a debt due and owing to the estate, there is no debt subject to setoff.
Review of the judgment of the Court of Appeals in 65 Kan. App. 2d 643, 571 P.3d 61 (2025).
Appeal from Sedgwick District Court; ROBB RUMSEY, judge. Oral argument held April 8, 2026. Opinion filed September 4, 2026. Judgment of the Court of Appeals reversing the district court is reversed. Judgment of the district court is affirmed.
Michael Jilka, of Graves & Jilka, P.C., of Lawrence, argued the cause, and Donald N. Peterson and Nathan Elliott, of Graybill & Hazlewood, LLC, of Wichita, were with him on the briefs for appellants Margo Loop and Gary Mueller.
Clark J. Grant, pro hac vice, of Columbus, Nebraska, argued the cause, and Marc A. Powell, of Powell Law Office, of Wichita, was with him on the briefs for appellee Cheryl Mueller.
The opinion of the court was delivered by
WALL, J.: While living in Nebraska, Lorine H. Mueller executed a will leaving most of her estate to her daughter-in-law, Cheryl Mueller. The will nearly disinherited her two surviving children, Margo Loop and Gary Mueller.
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Lorine passed in 2017 after moving to Kansas. Her will was admitted to probate.
Since then, Cheryl and Lorine's children have vigorously contested the proper distribution of Lorine's estate in both Kansas and Nebraska courts.
But the strife between Cheryl and Lorine's children predates the probate proceedings. Before Lorine's death, Margo became Lorine's guardian and conservator. Margo then sued Cheryl on Lorine's behalf, alleging Cheryl had financially exploited Lorine. Margo and Cheryl eventually settled those and other claims.
As part of the settlement, Cheryl confessed judgment in the amount of $340,846.52. But Margo promised that she would not seek to collect the judgment. And as Lorine's conservator, Margo promised that Lorine's estate would not seek to collect the judgment.
The parties' settlement agreement and Cheryl's confessed judgment have become the central focus of the probate dispute. Margo and Gary argue the confessed judgment is a debt Cheryl owes Lorine's estate. And they believe that Kansas law requires the district court to set off that debt against Cheryl's portion of the estate—that is, the debt must be subtracted from Cheryl's inheritance. Cheryl claims that the confessed judgment is not a debt. But if it were, Nebraska law controls under the will's choice-of-law provision. And under Nebraska law, she has valid defenses against the setoff claim.
The Kansas district court initially granted Margo and Gary's setoff petition. But Cheryl then filed an ancillary probate case in Nebraska. The Nebraska court exercised jurisdiction over the Nebraska real property in Lorine's estate and distributed it to Cheryl. And after interpreting the parties' settlement agreement, it denied Margo and Gary's setoff request. Given this development, the Kansas district court reconsidered its initial ruling and denied Margo and Gary's setoff petition.
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Margo and Gary appealed. And the Court of Appeals reversed the district court. It held that Cheryl's confessed judgment is a debt owed to Lorine's estate. The panel also agreed with Margo and Gary that Kansas law controls how that debt is treated when distributing Lorine's estate. And the panel concluded that Kansas law requires the district court to set off Cheryl's debt from her share of Lorine's estate.
We granted Cheryl's petition to review the panel's decision. The parties raise several issues, including whether Kansas law or Nebraska law controls the setoff issue. But we don't reach most of those questions for a simple reason: the Nebraska court interpreted the parties' settlement agreement, and under that interpretation the confessed judgment is not a debt Cheryl owes to Lorine's estate. Like the Kansas district court, we defer to the Nebraska court's decision inspired by comity principles. Moreover, Nebraska law governed the interpretation of the settlement. And Nebraska law required the panel to adopt the same plain-language interpretation that the Nebraska district court landed on. Because Cheryl owes no debt to the estate, there is nothing to set off against her inheritance.
FACTS AND PROCEDURAL BACKGROUND
Lorine and her husband, Casper Mueller, had three children: Randy, Margo, and Gary. Randy later married Cheryl. The Muellers also formed a Nebraska dairy and farming operation in the 1980s, Mue-Cow Farms, Inc.
Casper died in 1991. And Randy died in 2001. After Randy's death, Lorine moved in with Cheryl and Cheryl's children at a house on the Nebraska farm.
Lorine originally executed a will in 1979 that divided her estate equally among her three children. But several years after moving in with Cheryl, Lorine executed a second will leaving a portion of her estate to Cheryl.
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Lorine executed her third and final will in 2007. Before discussing how Lorine chose to distribute her assets under that will, it's helpful to understand some terms of art. While probate terms can often sound archaic, their definitions are not as complicated. A will often gives specific property to specific people. We call that type of gift a "specific bequest." And the property remaining after the will's specific bequests is called the "residuary estate."
The 2007 will left most of Lorine's estate to Cheryl through specific bequests including: (1) Lorine's cabin on Wagner's Lake in Nebraska; (2) all of Lorine's personal property and effects in her home and cabin; (3) all Mue-Cow Farms stock and real estate; and (4) all farm machinery, equipment, tools, and livestock. The will divided Lorine's residuary estate equally among Margo, Gary, and Cheryl. But it gave Cheryl an exclusive option to buy any real estate in the residuary estate.
Finally, the 2007 will contained a Nebraska choice-of-law provision: "Without regard to my domicile at my death, Nebraska law shall govern the rights of all persons interested in my estate and the validity and construction[.]"
Over time, Lorine's mental health declined. In 2014, Margo initiated guardianship and conservatorship proceedings in Nebraska. A Nebraska court eventually appointed Margo as Lorine's guardian and conservator. Margo then moved Lorine to a nursing facility in Wichita.
The next year, Margo, on Lorine's behalf, sued Cheryl in Nebraska for breach of fiduciary duties, fraud, unjust enrichment, negligence, and conversion. Mue-Cow Farms, Inc., also filed a forcible-entry-and-detainer action to evict Cheryl and her children from the Nebraska farmhouse. At the same time, Cheryl, as the personal representative of Randy's estate, was involved in a Nebraska lawsuit regarding his estate.
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To resolve all three lawsuits, Margo—both individually and as Lorine's guardian and conservator—and Cheryl entered a Settlement and Mutual Release Agreement.
In the agreement, the parties expressly denied any liability or indebtedness. The agreement required Cheryl to confess judgment for $340,846.52 in the fraud action. But the settlement terms provided that "Margo, and Lorine's estate shall not seek to collect the Confession of Judgment. The Confession of Judgment shall not be forgiven."
The settlement also included a Nebraska choice-of-law provision requiring courts to construe and enforce the terms under Nebraska law. And it included a Nebraska forum-selection clause requiring the parties to file any dispute related to the agreement "in the state or federal courts located in Columbus, Platte County, Nebraska, and in no other court."
Lorine died in Wichita in 2017. Margo petitioned a Kansas court to probate Lorine's 1979 will. But Lorine's personal representative under the 2007 will asked the court to probate the 2007 will. Margo contested the validity of that will, but the district court admitted it to probate. Margo appealed, but the Court of Appeals affirmed the district court. In re Estate of Mueller, No. 119,358, 2019 WL 2554344, at *13 (Kan. App. 2019) (unpublished opinion).
Margo and Gary then petitioned the Kansas district court to set off Cheryl's confessed judgment against her portion of Lorine's estate. They relied on In re Estate of Wernet, 226 Kan. 97, 596 P.2d 137 (1979). There, our court held that an estate may set off an heir's debt against his distributive share even if the statute of limitations prevented the estate from bringing a direct action to collect that debt. 226 Kan. at 108-09. Margo and Gary asserted that, under the terms of the Settlement Agreement, the confessed judgment was a debt Cheryl owed to Lorine's estate. They reasoned that the Settlement
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Agreement was like the statute of limitations in Wernet—that is, the agreement prevented direct collection of Cheryl's debt but was not a defense against setoff.
Cheryl opposed the petitions. She argued that Nebraska law should control under the choice-of-law provision in Lorine's will. And she explained that Nebraska statute allowed an heir to raise any defense to setoff available in a direct proceeding to collect the debt. See Neb. Rev. Stat. § 30-24,101. So even if the settlement terms only prevented the estate from bringing a direct action to collect Cheryl's purported debt, Cheryl argued that Nebraska law allowed her to assert that same defense to setoff claims.
The district court initially granted Margo and Gary's setoff petition. Though the procedural path to that decision was somewhat complex, those details are not relevant to our analysis here.
Cheryl then filed an ancillary probate action in Nebraska. She asked the Nebraska court to distribute all of Lorine's "Nebraska assets," including (1) a 15-acre parcel of real property in Nebraska; (2) Lorine's stock in Mue-Cow Farms, Inc.; (3) a lease and cabin located on Wagner's Lake in Nebraska; and (4) an option for Cheryl to purchase property inherited by Margo and Gary. Cheryl also asked the Nebraska court to deny the setoff of her confessed judgment.
The Nebraska court found that it had jurisdiction over only the real property in Nebraska—the 15-acre parcel and the cabin—and distributed it to Cheryl. It interpreted the Settlement Agreement and concluded that it prevented Margo and Lorine's estate from ever collecting on the judgment, whether in a direct proceeding or by setoff. Neither party appealed the Nebraska court's order.
Based on this ruling, Cheryl petitioned the Kansas district court for distribution of the remaining assets in Lorine's estate without setoff. Cheryl argued that under the terms
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of Lorine's will, Nebraska law determined the rights of the parties interested in her estate. Cheryl also argued that the Nebraska court's ruling settled the setoff issue.
After a hearing, the Kansas court reconsidered its previous ruling. It denied Margo and Gary's request to set off Cheryl's confessed judgment and ordered that the estate's assets be distributed according to the will's instructions. Margo and Gary appealed.
The Court of Appeals reversed the district court. In re Estate of Mueller, 65 Kan.
App. 2d 643, 662, 571 P.3d 61 (2025). The panel first interpreted the parties' Settlement Agreement to decide whether the Confession of Judgment was a debt Cheryl owed to Lorine's estate. 65 Kan. App. 2d at 653. The panel acknowledged that Nebraska law controlled the interpretation given the Nebraska choice-of-law provision. 65 Kan. App. 2d at 653. And applying Nebraska law, the panel concluded that the Confession of Judgment is a debt owed to the estate. 65 Kan. App. 2d at 657-58.
The panel then considered whether Kansas or Nebraska law controlled the estate's setoff claim. It concluded that the distribution of an estate is a matter of procedural law and thus the forum's law applies—Kansas law. 65 Kan. App. 2d at 658. The panel then interpreted our Wernet decision and concluded that it compelled the district court to set off Cheryl's debt from her inheritance. 65 Kan. App. 2d at 659-61. Finally, the panel concluded that applying Nebraska setoff law would have undercut Kansas public policy. 65 Kan. App. 2d at 662.
Cheryl petitioned for review of the panel's decision. We granted her petition and heard oral argument from the parties on April 8, 2026. We have jurisdiction over the appeal. See K.S.A. 20-3018(b) (aggrieved party may seek review of Court of Appeals' decision); K.S.A. 60-2101(b) (Supreme Court jurisdiction to review panel decision).
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ANALYSIS
I. A setoff claim exists only if an heir first owes a debt to the estate. The Nebraska court effectively ruled that Cheryl's confessed judgment was not a debt under the terms of the Settlement Agreement. We conclude that interpretation resolves the setoff dispute.
Lorine died while living in Kansas. Her will distributes real property in Nebraska and personal property in Kansas. A Nebraska court distributed the real property to Cheryl and denied Margo and Gary's request to set off Cheryl's confessed judgment. The question before us is how should Kansas courts handle the confessed judgment when distributing the personal property in Lorine's estate?
Margo and Gary assert that Cheryl's confessed judgment is a debt Cheryl owes to Lorine's estate. They also argue that Kansas law governs how that debt should be treated when distributing the remaining estate property because Lorine died domiciled in Kansas. See Restatement (First) of Conflict of Laws § 306 (2025) (validity and effect of will disposing of personal property determined by law of testator's domicile at death). And they claim that under Wernet, Cheryl's indebtedness must be set off against her portion of the estate, even though the Settlement Agreement prevents the estate from collecting it directly.
Cheryl argues the confessed judgment is not a debt owed to Lorine's estate. But if it were, she believes Nebraska law applies to any setoff claim given the Nebraska choice- of-law provision in Lorine's will. See Restatement (Second) of Conflict of Laws § 264 (2025) ("A will insofar as it bequeaths an interest in movables is construed in accordance with the local law of the state designated for this purpose in the will."). And under Nebraska law, Cheryl argues that she has defenses to setoff.
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Like the panel, the parties largely frame the dispute as a conflict-of-laws issue.
When faced with such questions, Kansas courts follow a multi-step analysis to decide which state's law applies. See, e.g., M & I Marshall & Ilsley Bank v. Higdon, 319 Kan. 572, 577-78, 556 P.3d 498 (2024). But we find it unnecessary to engage in that analysis because the setoff dispute turns on contract interpretation.
In its decision, the panel interpreted the language in the settlement providing that Lorine's estate "shall not seek to collect" the confessed judgment. It relied on a technical definition of "collect"—one that distinguishes affirmative collection actions from defensive ones like setoff. Based on this technical definition, the panel concluded that the "shall not seek to collect" language does not preclude setoff and the confessed judgment is a debt owed to Lorine's estate.
But this interpretation conflicts with the prior Nebraska court judgment interpreting the same instrument. In the ancillary probate proceedings, the Nebraska district court relied on the ordinary meaning of "collect"—one that includes all attempts to recover on an obligation whether by affirmative or defensive means. Under the Nebraska court's interpretation, the agreement did preclude setoff and the confessed judgment is not a debt.
Under the facts of this case, principles of comity counsel deference to the Nebraska court's interpretation. Moreover, the panel's interpretation deviates from Nebraska law requiring courts to interpret contract terms according to their ordinary meaning. Eagle Run Square II v. Lamar's Donuts Internat., 15 Neb. App. 972, 978, 740 N.W.2d 43 (2007). Under a plain-language reading of the settlement, Cheryl's confessed judgment is not a debt owed to Lorine's estate. And if Cheryl owes no debt to the estate, then there can be no setoff.
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To understand this conclusion, we first identify legal standards relevant to our analysis. We then examine the Court of Appeals' and the Nebraska court's conflicting interpretations of the Settlement Agreement. Finally, we explain why the panel erred by failing to adopt the Nebraska court's interpretation.
A. A setoff claim is conditioned on a debt that an heir owes to the estate. Whether the confessed judgment is a debt turns on the interpretation of court rulings and contracts, so our review is unlimited.
A setoff, also known as the right of retainer, is a common-law equitable right. It allows the will's executor or administrator to subtract any debt an heir owes to the estate from that heir's distribution or inheritance under the will. See Holden v. Spier, 65 Kan. 412, 415, 70 P. 348 (1902). If the heir does not owe a debt to the estate, then there can be no setoff.
Our review of the setoff claim requires us to interpret a court's judgment and a contract. These are questions of law, so our review is unlimited. First Security Bank v. Buehne, 314 Kan. 507, 509-10, 501 P.3d 362 (2021); Einsel v. Einsel, 304 Kan. 567, 579, 374 P.3d 612 (2016).
B. The Court of Appeals' interpretation of the Settlement Agreement conflicts with the Nebraska court's interpretation of the same instrument.
The Court of Appeals recognized that it had to interpret the Settlement Agreement to know whether the confessed judgment is a debt subject to set-off claims. In re Estate of Mueller, 65 Kan. App. 2d at 653-54. The panel also recognized that it had to apply Nebraska law when interpreting the settlement—the parties had included a Nebraska choice-of-law provision. 65 Kan. App. 2d at 653.
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The panel held that the Confession of Judgment is a debt under Nebraska law. It observed that "the general nature of a confession of judgment evidences a debt" and no Nebraska law suggested Nebraska courts treated confessed judgments differently. 65 Kan. App. 2d at 655. The panel also rejected Cheryl's claim that the estate was now trying to collect the judgment in violation of the agreement. It reasoned that "an offset [is] different in kind than an action to collect a debt." 65 Kan. App. 2d at 656-57. And it explained that "[a]n action to collect is a direct proceeding for recovery of the debt" while "[s]etoff is an equitable remedy." 65 Kan. App. 2d at 657.
We agree with the panel that the settlement terms determine whether the confessed judgment is a debt owed to Lorine's estate. The confessed judgment arose from and is incorporated into the parties' settlement. So the judgment cannot be understood apart from that settlement. We also agree that Nebraska law controls the interpretation of the settlement. Brenner v. Oppenheimer & Co., 273 Kan. 525, 539, 44 P.3d 364 (2002) (Kansas courts generally honor choice-of-law provisions). But here, a Nebraska court had already interpreted the Settlement Agreement and rejected the panel's interpretation.
In the Nebraska ancillary probate proceeding, Cheryl argued that the Settlement Agreement precluded all efforts to recover her confessed judgment. Margo and Gary argued the settlement precluded only direct collection actions, not setoff. They claimed that "collect" is a technical, legal term referring to an offensive or affirmative action to collect an obligation that is due and owing. But setoff is a defensive action falling outside that definition. The Nebraska court rejected that technical definition.
Instead, the Nebraska court noted that contract terms "are to be accorded their plain and ordinary meaning as the ordinary or reasonable person would understand them." Eagle Run Square II, 15 Neb. App. at 978. And it adopted the ordinary meaning of the terms in the settlement's confession-of-judgment provision.
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The court quoted a Nebraska Supreme Court decision relying on the dictionary to define "collection" as the "'[a]ct or process of collecting'" or "'[t]hat which is obtained in payment of demands.'" Placek v. Edstrom, 151 Neb. 225, 231-32, 37 N.W.2d 203 (1949) (quoting Webster's New International Dictionary [2d ed.]). The court also relied on Merriam-Webster Online Dictionary, which defined "collect" as "to claim as due and to receive payment for." The court thus ruled that the ordinary meaning of the phrase "shall not collect" unambiguously included any attempt to recover an obligation that is due and owing, whether by direct collection action or setoff.
The Nebraska court examined other provisions in the four corners of the agreement to confirm this plain-language interpretation. See Eagle Run Square II, 15 Neb. App. at 978 ("When a contract is unambiguous, the intentions of the parties must be determined from the contract itself."). It noted that Cheryl "agreed to a large number of concessions" in the agreement. She agreed to move out of the Nebraska house where she had lived since 1973. She paid additional funds for the Wagner's Lake lot. She dismissed her lawsuits and waived her right to appeal. She agreed not to contact or visit Lorine unless supervised. And she surrendered Randy's shares in Mue-Cow Farms, Inc. The court emphasized that Cheryl did so in exchange for "the promise that neither Margo nor Lorine's [e]state would collect the Confession of Judgment." The Nebraska court reasoned that Cheryl would not have relinquished these rights and claims only to avoid affirmative collection actions. She gave this valuable consideration to ensure that Lorine's estate would never assert any right to recover Cheryl's confessed judgment.
Under the Nebraska court's interpretation, this bargained-for promise not to "collect" included Margo and Gary's attempt to set off the confessed judgment in Lorine's estate proceedings. The court explained that "the only debts that can be enforced by a Personal Representative [in a probate action] are debts owed to the Decedent." But in this case, "Margo, as Lorine's guardian and conservator, promised never to collect the [confessed judgment] through Lorine's estate." That is, Margo and Lorine's estate
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promised never to claim the judgment was due and receive payment for it. And because "Cheryl provided consideration for [the Settlement Agreement], . . . Margo and Lorine's estate should be held to the agreement that they made."
Under the Nebraska court's interpretation, the confessed judgment was never, and never will be, due and owing to Lorine's estate. That interpretation strips the confessed judgment of the essential traits or characteristics of a debt—that is, the confessed judgment is not an obligation that Cheryl is bound to pay the estate, and the estate has no right to receive payment from her. See Gregory v. Williams, 106 Kan. 819, 821, 189 P. 932 (1920) (debt is "'[a] sum of money due by certain and express agreement'"); Miller v. Jones, 137 Neb. 605, 609, 290 N.W. 467 (1940) ("Debt has been defined as 'that which one person is bound to pay to another.' . . . 'Ordinarily the term imports a duty or obligation to pay, for the enforcement of which an action will lie.'"); see also Donley v. Mann, No. 101,185, 2009 WL 3837645, at *3 (Kan. App. 2009) (unpublished opinion) (looking at Black's Law Dictionary to define debt as "'[l]iability on a claim; a specific sum of money due by agreement or otherwise'"); Shaffer v. Shaffer, No. A-01-378, 2002 WL 1540068, at *6 (Neb. App. 2002) (unpublished opinion) (same). The confessed judgment was thus no debt at all—at least not one due and owing to Lorine's estate.
Granted, courts typically treat confessed judgments as debts owed to judgment creditors. See 49 C.J.S. Judgments § 171 (A confession of judgment "signifies an acknowledgment of indebtedness, on which it is contemplated that a judgment may and will be rendered."). But Cheryl's confessed judgment is not typical. It arose from and was incorporated into the settlement. So that judgment must be read in harmony with the Settlement Agreement. See Hearst-Argyle Prop. v. Entrex Comm. Servs., 279 Neb. 468, 473, 778 N.W.2d 465 (2010) ("[A] contract is viewed as a whole in order to construe it. Whatever the construction of a particular clause of a contract, standing alone, may be, it
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must be read in connection with other clauses."). And under the Nebraska court's interpretation, the settlement terms established that the confessed judgment is not a debt due and owing to Lorine's estate.
C. The Court of Appeals should have deferred to or adopted the Nebraska court's interpretation.
The question for us is: what effect should the Nebraska court's decision have on the Kansas probate proceedings generally, and the setoff claim specifically? We conclude that the panel should have deferred to the Nebraska judgment under comity principles or recognized that Nebraska law compelled the same interpretation.
First, comity principles strongly favored deference to the Nebraska court's contract interpretation. Judicial comity is a principle by which "courts of one state give effect to the laws and judicial decisions of another, not as a matter of obligation but out of deference and respect." Padron v. Lopez, 289 Kan. 1089, 1108, 220 P.3d 345 (2009). And comity should be exercised to avoid expense, harassment, inconvenience to litigants, or inconsistent judgments. 289 Kan. at 1108; see Nijensohn v. Ring, 216 Vt. 329, 333, 278 A.3d 1008 (2022) (comity designed, in part, to avoid multiple or inconsistent judgments). Because comity is discretionary, we review a court's decision to extend or decline comity for an abuse of discretion. Padron, 289 Kan. at 1108.
The Kansas district court appeared to recognize and embrace these principles. It reconsidered its earlier setoff ruling and ordered that Lorine's estate be distributed without setoff once the Nebraska court reached a final judgment in the ancillary probate proceedings.
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At the Court of Appeals, Margo and Gary reframed the district court's rationale, suggesting that it was influenced by a different, albeit conceptually related, doctrine—full faith and credit. They argued that the Kansas district court erroneously gave full faith and credit to the Nebraska court's order. The Court of Appeals explained that if the district court had relied on the full-faith-and-credit doctrine to reject setoff, then its ruling was legally erroneous. In re Estate of Mueller, 65 Kan. App. 2d at 649. The panel then analyzed the settlement terms, landing on an interpretation that the Nebraska court had rejected.
We agree that the Full Faith and Credit Clause did not compel Kansas courts to adopt the Nebraska court's contract interpretation when distributing Kansas estate property. "Under the Full Faith and Credit Clause of the United States Constitution, Article IV, § 1, a foreign judgment—that is, the judgment of another state—carries the same force and effect in Kansas as it has in the state where the judgment was rendered." In re A.A.-F., 310 Kan. 125, 139, 444 P.3d 938 (2019). The Nebraska court's judgment in the ancillary probate action is entitled to full faith and credit in our state. But that judgment applied only to the Nebraska estate property. So the Full Faith and Credit Clause prevents Kansas courts from distributing the Nebraska real property to Margo or Gary instead of Cheryl. But it doesn't require Kansas courts to reach the same result when distributing the remaining Kansas estate property. See In re Estate of Reed, 233 Kan. 531, 536-40, 664 P.2d 824 (1983) (declining to give full faith and credit to Indiana probate order when Indiana court lacked jurisdiction over will of decedent, who died a resident of Kansas and owned property only in Kansas).
But even when the Full Faith and Credit Clause doesn't compel a court to recognize a foreign judgment, a court should consider the prudence of doing so as a matter of comity. See Padron, 289 Kan. at 1108 (Though conceptually related, "[c]omity differs from the application of the Full Faith and Credit Clause in that a state court must give credit to a foreign judgment or order that is subject to full faith and credit without
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inquiry into the merits of the action, but a foreign judgment or order may be enforced as a matter of comity."). And comity principles strongly favor deference to the Nebraska court's judgment interpreting the Settlement Agreement for at least two reasons.
First, Nebraska has a stronger interest in the interpretation of the Settlement Agreement. That contract resolved several lawsuits pending in Nebraska courts. The choice-of-law provision ensured that Nebraska law would govern its interpretation. And the forum-selection provision required a Nebraska court to resolve disputes about its meaning. See Brenner, 273 Kan. at 539 (honoring choice-of-law provision in contract); Vanier v. Ponsoldt, 251 Kan. 88, Syl. ¶ 2, 833 P.2d 949 (1992) (honoring forum-selection provisions in contract). And, in fact, a Nebraska court was the first tribunal to interpret the settlement's terms. See Corvel Corp. v. Homeland Ins. Co. of N.Y., 112 A.3d 863, 868-70 (2015) (when foreign court has interpreted statute, courts in other states should exercise comity and apply that interpretation when interpreting contract in dispute, especially when dispute first arose and was centered in that foreign state). Nijensohn, 216 Vt. at 333 (courts have discretion to stay or dismiss a proceeding when an action concerning the same parties and same subject matter has been commenced in another jurisdiction).
Second, exercising comity avoids the risk of inconsistent judgments. Here, that risk is not speculative. The panel's failure to exercise comity has produced two irreconcilable interpretations of the Settlement Agreement—an untenable result.
Of course, Kansas courts should not exercise comity when deference to a sister state's judgment would undermine Kansas public policy. Padron, 289 Kan. at 1108. But that's not the case here. The Court of Appeals believed that applying Nebraska setoff law would undermine Kansas public policy. In re Estate of Mueller, 65 Kan. App. 2d at 662. We are not certain this is the case. But we need not explore that issue further because we
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are not suggesting that Nebraska setoff law should apply. Rather, the panel should have adhered to the terms of the agreement as the Nebraska court interpreted them.
Granted, Cheryl never explicitly mentioned comity in her arguments. But she did argue that the Nebraska court's order should control the outcome of the setoff issue in the Kansas probate proceedings. The district court's order reconsidering its earlier setoff ruling suggests that it deferred to the Nebraska court's interpretation. And Margo and Gary raised a full-faith-and-credit issue on appeal—comity's corollary doctrine. See Aly v. E.S. Sutton Realty, 360 N.J. Super. 214, 221, 822 A.2d 615 (Ct. App. Div. 2003) (comity is the corollary doctrine to full faith and credit).
But even if comity principles were not squarely before the panel, its contract interpretation is tainted by legal error. Nebraska law governed the settlement's interpretation. And Nebraska law requires courts to interpret contract terms according to their ordinary meaning unless it appears the parties intended the words to carry a technical meaning. Gurrier v. Mid-Century Ins. Co., 266 Neb. 150, 153, 663 N.W.2d 131 (2003); White v. Leyden, 112 Neb. 774, 777, 201 N.W. 637 (1924).
Nothing in the settlement suggests the parties intended to use the technical meaning of "collect." Nebraska law thus required the panel to interpret "shall not seek to collect" according to its ordinary meaning—just like the Nebraska district court did in the ancillary probate proceedings. Given its ordinary meaning, "shall not seek to collect" applies to all attempts to recover an obligation—whether by affirmative collection attempts or defensive acts like setoff. In other words, the ordinary meaning of collect includes all means of recovering an obligation due and owing. And "shall not seek to collect" applies equally to Margo and Gary's attempt to set off the confessed judgment against Cheryl's inheritance.
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This plain-language interpretation strips Cheryl's confessed judgment of the traits central to a lawful and enforceable debt—that is, the confessed judgment will never be due and owing to Lorine's estate. And if Cheryl owes no debt to the estate, there can be no setoff.
CONCLUSION
Margo and Gary hope to collect Cheryl's confessed judgment by setting it off against Cheryl's inheritance. But both Nebraska and Kansas recognize the parties' freedom to contract. See First Security Bank, 314 Kan. at 511; Parkert v. Lindquist, 269 Neb. 394, 397, 693 N.W.2d 529 (2005). And this freedom allowed the parties to negotiate the release of important personal rights and obligations. As the Nebraska court put it, "If Margo, acting as guardian and conservator of Lorine's Estate, intended to collect on the Confession of Judgment then she should not have signed the Settlement and Mutual Release Agreement that said the words, 'shall not collect.'"
Here, the Kansas district court deferred to the Nebraska court's interpretation of the Settlement Agreement when it denied Margo and Gary's setoff claim. The panel should have followed the same course or adopted the same interpretation under Nebraska law. Under that interpretation, Cheryl's confessed judgment is not a debt owed to Lorine's estate. And this conclusion precludes setoff.
Judgment of the Court of Appeals reversing the district court is reversed.
Judgment of the district court is affirmed.