Articles Posted in Commercial Law

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Sharon Born, the cousin of John Born, held two installment promissory notes upon which the inter vivos revocable trust created by John (“the Born Trust”) assets had been pledged as security when John died. When Betty Born, John’s wife, attempted to make payments on the notes, Sharon asserted that the notes were in default because of John’s death, that the entire remaining balances were immediately due and payable under the notes’ acceleration clauses, and that Sharon’s only remedy under the security agreements was to accept all of the Born Trust’s pledged assets in full satisfaction of the note balances. Betty, in her capacity as a Born Trust trustee, brought this injunction and declaratory judgment action against Sharon, challenging Sharon’s right unilaterally to effect an acceptance-of-collateral remedy. The district court granted summary judgment for Sharon and ordered the Born Trust to turn over the collateral to Sharon. The court of appeals affirmed. The Supreme Court reversed, holding that the Born Trust had the right under the promissory notes to pay the accelerated balances due thereon to prevent Sharon’s acceptance of the pledged assets under the security agreement. Remanded. View "Born v. Born" on Justia Law

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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

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In the garnishment action below, Plaintiffs sought to collect the consent judgments they had previously obtained in settlement of their tort actions against Americold Corporation, which was insured by Northwestern Pacific Indemnity Company (NPIC). NPIC, the garnishee in the instant action, appealed the district court's adverse rulings, contending that the underlying judgments against Americold had become dormant and extinguished, thus depriving the district court of subject matter jurisdiction to proceed with this garnishment action. Finding in favor of NPIC on that issue, the Supreme Court reversed, holding (1) when the district court entered its judgment against NPIC in this garnishment proceeding, Plaintiffs' underlying consent judgments against Americold had been extinguished by operation of the dormancy and revivor statutes; (2) because Americold was not legally obligated to pay an unenforceable judgment, NPIC was no longer indebted to Americold under its contract to pay the judgments for which Americold was legally liable; and (3) accordingly, without an indebtedness from NPIC to Americold, the district court lacked subject matter jurisdiction to grant Plaintiffs judgment against NPIC in a garnishment proceeding. Remanded with directions to dismiss these garnishment proceedings. View "Associated Wholesale Grocers, Inc. v. Americold Corp." on Justia Law

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Plaintiff Gabriel Gaumer filed suit against Rossville Truck and Tractor Company, alleging negligence and strict liability for injuries caused by a used hay baler purchased from Rossville. The district court granted Rossville's motion for summary judgment on both the negligence and strict liability claims. The court of appeals affirmed the district court's decision regarding Gaumer's negligence claim but reversed on his strict liability claim. Rossville petitioned for review, and the Supreme Court granted the petition on the single issue of whether strict liability can be applied to a seller of used goods. After analyzing both the state's common law and the Kansas Product Liability Act, the Court held that sellers of used product are subject to strict liability in Kansas. The decision of the district court was therefore reversed, and the decision of the court of appeals was affirmed. Remanded. View "Gaumer v. Rossville Truck & Tractor Co." on Justia Law