Stanley Bank v. Parish

Bank loaned money to Debtor to purchase a vehicle. The loan was secured by a security interest in the vehicle that was recorded in the Kansas Department of Revenue’s (KDOR) digital records and noted on an electronic certificate of title issued in Debtor’s name. Debtor later defaulted on its loan. That same year, Debtor’s former employer (Company) obtained a money judgment against Debtor in an unrelated action and obtained a court order authorizing the attachment of the vehicle. Purchaser, the sole owner of Company, subsequently purchased the vehicle at auction. Thereafter, Bank filed suit against Company and Purchaser (collectively, Defendants), seeking, among other things, a declaratory judgment that its perfected purchase money security interest was superior to any interests held by Defendants. The district court granted summary judgment for Bank and awarded Bank the proceeds of the sale of the vehicle. The court of appeals affirmed in relevant part. The Supreme Court affirmed, holding that the court of appeals correctly considered and applied perfection and priority rules under the Uniform Commercial Code to conclude that Purchaser did not take free and clear of Bank’s security interest. View "Stanley Bank v. Parish" on Justia Law