Premier Bank v. J. D. Homes of Olathe, Inc.

50 P.3d 517, 30 Kan. App. 2d 898, 2002 Kan. App. LEXIS 681
CourtCourt of Appeals of Kansas
DecidedJuly 26, 2002
DocketNo. 87,560
StatusPublished

This text of 50 P.3d 517 (Premier Bank v. J. D. Homes of Olathe, 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
Premier Bank v. J. D. Homes of Olathe, Inc., 50 P.3d 517, 30 Kan. App. 2d 898, 2002 Kan. App. LEXIS 681 (kanctapp 2002).

Opinion

Gernon, J.:

Raintree Homes Association, Inc., (Raintree) appeals the decision of the district court in a mortgage foreclosure case concerning real property on which a nuisance had been found to exist. We affirm.

[899]*899In December 1999, Raintree, a not-for-profit home association in Olathe, Kansas, filed a petition against J. D. Homes, Inc., (J. D. Homes) and Premier Bank (Premier), alleging, inter alia, that a nuisance had been created on building sites owned by Raintree in Olathe. J. D. Homes was involved in building and improving residential lots on the site. Premier provided the mortgages on the lots.

The nuisance claimed by Raintree consisted of trash, dirt, rock, and lumber scattered throughout the property that allegedly affected the enjoyment and ownership of the Raintree Condominiums by their owners. Raintree sought $11,973.50 in damages.

J. D. Homes admitted to creating the nuisance on Raintree’s property. The trial court found that J. D. Homes created and maintained a nuisance on the property, ordered that it be abated, and granted a judgment for $11,973.50.

In January 2000, Premier filed a mortgage foreclosure action on the Olathe property. The case was filed in Johnson County, as was the nuisance action. The foreclosure petition alleged that J. D. Homes had failed and refused to pay the outstanding loan principal and accrued interest on the property. The court appointed a receiver to prevent a further nuisance on the property and to manage it.

Premier filed a motion for summary judgment in its foreclosure action. Raintree countered with a motion to stay summary judgment and to compel abatement of the adjudicated nuisance.

The court granted Premier’s motion for summary judgment and entered judgment against J. D. Homes for $267,908.46 plus interest. After a sheriff s sale, die court determined that Premier had a first and prior lien over the sale proceeds. Raintree appeals.

PRIORITY

Raintree argues that the judgment for street repairs stemming from the damage caused by the nuisance is prior in right to Premier’s mortgage. Premier counters that the trial court properly exercised the discretion it had to determine the priority of the distribution of the proceeds from the sale. ■

[900]*900McFall v. Ford, 133 Kan. 593, 1 P.2d 273 (1931), concerns a very similar situation. A bank in Wichita filed three actions to foreclose on three tracts of land owned by the mortgagor, M. C. Combs. A judgment was entered for the bank and against Combs in each case. On the same day as that judgment was entered, Katie Thomas was awarded a personal judgment against Combs and a judgment for foreclosure. Later, some of the land involved in the bank’s case was sold, with none of Thomas’ judgment having been satisfied.

According to the court, when two of the foreclosure lawsuits were filed, Thomas had no lien on those tracts. However, when Thomas won a judgment of foreclosure on one of the tracts, her judgment became a lien on the other tracts. As support for the last contention, the court cited R.S. 1923, 60-3126, which stated: “Judgments of courts of record of this state, and of courts of the United States rendered within this state, shall be hens on the real estate of the debtor within the county in which the judgment is rendered.” The court decided Thomas’ lien “originated in her judgment, and the [bank’s] hens were necessarily superior to the lien which [Thomas] acquired.” 133 Kan. at 595.

The modem version of the statute cited in McFall is K.S.A. 2001 Supp. 60-2202(a):

“Any judgment rendered in this state by a court of the United States or by a district court of this state in an action commenced under chapter 60 of the Kansas Statutes Annotated shall be a hen on the real estate of the judgment debtor within the county in which judgment is rendered. Except as provided in subsection (c), the hen shah be effective from the time at which the petition stating the claim against the judgment debtor was filed but not to exceed four months prior to the entry of the judgment.”

Statutory interpretation is a question of law, and this court’s review is unlimited. See Babe Houser Motor Co. v. Tetreault, 270 Kan. 502, 506, 14 P.3d 1149 (2000).

Pursuant to 60-2202(a), the judgment against J. D. Homes for the nuisance was a hen on J. D. Homes’ real estate located in Johnson County. Raintree’s petition was filed on December 7, 1999, and the judgment was entered on June 29, 2000. Raintree’s [901]*901lien was, therefore, effective on February 29, 2000. Premier s hen was effective on July 24,1997, the day the mortgage was recorded.

The trial court was correct in finding that Premiers hen had priority.

TRANSFERRED LIABILITY

Raintree claims that Premier became a transferee of the property when it filed a foreclosure action on the property and a receiver was appointed to manage the property. Premier asserts that it never held title to the Olathe property and any responsibility to abate the nuisance was with the new owner, A & H Properties, and not with Premier. A & H Properties purchased the property on March 30, 2001.

Raintree’s first argument is that Premier is liable for the abatement because Premier filed a foreclosure action on the property. Although this issue is one of first impression in Kansas, the legal theory behind it can be analogized to the hen theory/title theory of mortgage law.

Kansas is a lien theory state, not a title theory state. “In a ‘title theory’ jurisdiction . . . the mortgage is viewed as a form of title to property. [Citation omitted.] In hen theory states, a mortgagee is not entitled to immediate possession of the property upon default because the mortgage is merely a hen and not a form of title. [Citations omitted.]” Hoelting Enterprises v. Trailridge Investors, L.P., 17 Kan. App. 2d 777, 783, 844 P.2d 745, rev. denied 252 Kan. 1092 (1993).

Under Kansas law, a mortgagee does not acquire an interest in the property, either before or after the promise to pay is broken, “but acquires only a lien securing the indebtedness described in the instrument.” ’ [Citations omitted.]” 17 Kan. App. 2d at 783.

Premier, as the mortgagee, only had a lien on the property and was not entitled to possess the property. Since Premier could not possess the property upon filing a foreclosure action, it logically follows that it should not be hable for nuisance abatement on that property. The filing of the foreclosure action by Premier was an acceptable exercise of its rights under the mortgage. If the lawwere as Raintree suggests, no mortgagee would ever foreclose on a piece [902]*902of property for fear it would be liable for judgments on the property.

Premier did not become liable for the nuisance abatement simply by filing a foreclosure action against Raintree. If that were the case, mortgage lending would carry a potentially heavy price for the lending institution.

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Bluebook (online)
50 P.3d 517, 30 Kan. App. 2d 898, 2002 Kan. App. LEXIS 681, Counsel Stack Legal Research, https://law.counselstack.com/opinion/premier-bank-v-j-d-homes-of-olathe-inc-kanctapp-2002.