Munson v. Tri-State Commodities, Inc.

98 P.3d 990, 33 Kan. App. 2d 153, 2004 Kan. App. LEXIS 1104
CourtCourt of Appeals of Kansas
DecidedOctober 15, 2004
DocketNo. 91,348
StatusPublished

This text of 98 P.3d 990 (Munson v. Tri-State Commodities, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals of Kansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Munson v. Tri-State Commodities, Inc., 98 P.3d 990, 33 Kan. App. 2d 153, 2004 Kan. App. LEXIS 1104 (kanctapp 2004).

Opinion

Hill, J.:

In this appeal, two creditors, Greg Munson, d/b/a Greg Munson Trucking (Munson), and the Burlington Northern and Santa Fe Railway Company (BNSF), that had judgments against Tri-State Commodities, Inc. (Tri-State), are competing for the same garnished funds. First, Munson successfully sued Tri-State and obtained a judgment against it. Later, Tri-State was sued by the BNSF and, in settling this lawsuit, Tri-State assigned to BNSF [154]*154its interest in litigation it had pending against another company, GSO. Ultimately, Tri-State won its lawsuit against GSO and GSO deposited money with its lawyer to satisfy the judgment. In turn, since those judgment proceeds were owing to Tri-State, Munson garnished GSO’s lawyer in order to attach those funds in partial satisfaction of Munson’s judgment against Tri-State. But BNSF intervened, asserting that its claim through its assignment from TriState to the judgment was superior to Munson’s.

Using a common-law analysis, the trial court awarded the garnished funds to Munson, the Tri-State creditor that had obtained the first judgment. We believe that was erroneous. It is well settled that property validly transferred or assigned cannot thereafter be reached by garnishment. Further, a judgment does not act as a lien on personal property until a levy is made on the judgment. Therefore, we must reverse because Munson had failed to levy on his judgment until after Tri-State made it assignment of its cause of action to the railroad.

Background

A series of lawsuits, judgments, and an assignment of a cause of action over the sale of some mulch are the basis of this case. In order to make sense of the claims of the parties, they must be reviewed.

Munson filed his lawsuit against Tri-State in Sherman District Court in 1995 and received a $31,234 judgment in May 1998.

In 1996, Tri-State sued GSO America, Inc., in federal court in Kansas.

Later, BNSF sued Tri-State in federal court. The two settled their lawsuit by agreeing that BNSF would receive a $104,934 consent judgment and an assignment of Tri-State’s claim against GSO. They also agreed that the attorney for Tri-State would continue to pursue tire claim against GSO on behalf of BNSF. If successful in its lawsuit, Tri-State would receive 10% of any recovery made on its claim against GSO, its attorney would receive a 20% contingent fee, and the remainder would be turned over to BNSF. In accordance with their agreement on July 20, 1998, BNSF obtained a [155]*155security agreement and assignment from Tri-State, and a day later a consent judgment was entered in favor of BNSF against Tri-State.

Finally, Tri-State received a judgment against GSO in the amount of $32,132.60 on March 6, 1999, and that judgment has since been upheld by the federal Court of Appeals. Funds from GSO to satisfy tire judgment were held by its attorney, who, because of the competing claims, would not distribute them in the absence of a court order. Therefore, Munson issued a garnishment of the funds in his state court lawsuit and BNSF moved to intervene. The court held a hearing on their competing claims and ordered the GSO attorney to pay the funds into court. The court then decided that Munson was entitled to the money because he had filed his lawsuit and obtained his judgment before BNSF had received its assignment.

BNSF appeals that ruling. It contends that the trial court erroneously awarded the funds to Munson. Since there are no disputes about the facts, this is a question of law over which we exercise unlimited review. See NEA-Coffeyville v. U.S.D. No. 445, 268 Kan. 384, 386, 996 P.2d 821 (2000).

Analysis

The trial court based its conclusions on three findings: (1) the May 7, 1998, entry of judgment in favor of Munson against TriState in case number 95 C 68 predated the July 20, 1998, assignment from Tri-State to BNSF; (2) at the time of the assignment, Tri-State knew of the judgment entered against it in favor of Mun-son; and (3) at the time of the assignment, BNSF knew or should have known of Munson’s judgment against Tri-State. Essentially, the court ruled that “first in time is first in right” in this case and attempted to distinguish this case from a pertinent case in this area, Carson v. Chevron Chemical Co., 6 Kan. App. 2d 776, 635 P.2d 1248 (1981).

Like this case, the procedural history of Carson is complex. In Carson, Johnson sued Chevron and Waits Homegas, Inc. in case number 77-C-4, alleging breach of warranties. Waits counterclaimed seeking payment of Johnson’s overdue account. Subsequently, on June 23, 1977, Waits filed a separate action against [156]*156Johnson in case number 77-C-ll to recover additional amounts owed by Johnson from other matters.

On July 10, 1978, Johnson assigned to Collingwood Grain Company the right to receive up to $50,000 of the proceeds which might be awarded to Johnson in his pending litigation against Waits in case number 77-C-4. This assignment served as collateral to secure Johnson’s debt of $41,858.82 to Collingwood. On January 25,1979, judgment was entered in favor of Waits and against Johnson in case number 77-C-ll. This judgment, in the amount of $18,149.22, was reached by agreement of the parties. On March 14,1980, Johnson’s attorney filed an attorney’s lien in case number 77-C-4. That same day, a jury entered a verdict in case number 77-C-4 in favor of Johnson against Chevron for $28,350 and against Waits for $5,000. Additionally, the jury awarded Waits $3,336 on Waits’ counterclaim against Johnson. The journal entry of judgment was filed April 24, 1980.

In March 1980, after the jury verdict but before the journal entry was filed, Waits garnished Chevron, based upon Waits’ judgment in case number 77-C-ll, and claimed any money due to Johnson by Chevron from the judgment entered in case number 77-C-4. Two months later, Waits again garnished Chevron; this time, the garnishment was based upon Waits’ judgment against Johnson in case number 77-C-4.

On May 19, 1980, Collingwood filed a motion to intervene in both case numbers 77-C-4 and 77-C-ll, claiming it had priority over Waits’ garnishments by virtue of Collingwood’s prior assignment from Johnson, which was dated July 10, 1978. The district court granted Collingwood’s motion to intervene and held a hearing to determine priority to the judgment proceeds. Ultimately, the court found the assignment between Collingwood and Johnson was valid and prior to any liens claimed through Waits’ garnishments; Waits’ judgment in case number 77-C-4 was not subject to being set off against Johnson’s judgment versus Waits in that same case, and when Waits paid the judgment due to Johnson, the proceeds should go to Collingwood under its assignment; and Johnson’s attorney’s lien had priority over Waits’ garnishments.

[157]*157Waits appealed, arguing, inter alia, the district court erred in finding that the assignment was valid and had priority over Waits’ garnishments and claims. This court rejected Waits’ challenges to the validity of the assignment. Regarding Waits’ claim of priority, the court held:

“The mere fact that Waits’ first garnishment stems from the January 25,1979, judgment in case No.

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Related

Carson v. Chevron Chemical Co.
635 P.2d 1248 (Court of Appeals of Kansas, 1981)
NEA-Coffeyville v. Unified School District No. 445
996 P.2d 821 (Supreme Court of Kansas, 2000)
Nelson v. Boula
486 P.2d 1340 (Supreme Court of Kansas, 1971)
In Re Wilson
390 F. Supp. 1121 (D. Kansas, 1975)

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Bluebook (online)
98 P.3d 990, 33 Kan. App. 2d 153, 2004 Kan. App. LEXIS 1104, Counsel Stack Legal Research, https://law.counselstack.com/opinion/munson-v-tri-state-commodities-inc-kanctapp-2004.