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Phillips v. Carson

Kansas Supreme Court
240 Kan. 462, 731 P.2d 820 (1987)


Thelma Phillips (plaintiff) retained her friend David Carson (defendant) and his law firm to handle the estate proceedings for her deceased husband. In 1980, Phillips loaned Carson $200,000 to help him with personal financial problems. To secure the loan, Carson gave Phillips a mortgage on some Arizona property, which was properly recorded. Thereafter, Phillips loaned Carson another $70,000. Carson asked Phillips to release the mortgage on the Arizona property in return for a mortgage on a second property. Phillips did so, trusting Carson’s representations that it would better secure the loans. Carson failed to record the mortgage. During the loan transactions, Carson was assisted by law firm employees and used firm resources. Carson never advised Phillips to seek independent counsel to assist her with the loans. After learning that the second mortgage was never recorded, Phillips retained independent counsel and demanded full payment from Carson. Carson did not repay the loans and filed for Chapter 11 bankruptcy. Phillips sued Carson and his law firm, alleging that Carson, while acting within the scope of his law firm authority, negligently failed to inform her of the consequences of taking and releasing the property mortgages, failed to record the mortgage, and failed to inform her of superior liens on the land. The trial court granted summary judgment against Carson, but in favor of Carson’s law firm, concluding that Carson had not been acting within the ordinary course of the law firm’s business when transacting with Phillips. Both parties appealed.

Rule of Law


Holding and Reasoning (Miller, J.)

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