Stanley Bank v. Parish

On January 31, 2006, Johnny and Kellie Parish borrowed $40,000 from Stanley Bank (Stanley) (plaintiff) to purchase a GMC Yukon. The Parishes granted Stanley a purchase-money security interest (PMSI) in the vehicle. Stanley perfected its PMSI by filing a proper notice under Kansas Statutes Annotated (K.S.A.) 2010 Supp. 8-135(c)(5) with the Kansas Department of Revenue, which issued the Parishes a title reflecting Stanley’s interest and kept an electronic copy of the Parishes’ title reflecting Stanley’s lien. In April 2006, the Parishes registered the Yukon in their names and received a certificate of title and a receipt that listed Stanley’s lien on the vehicle. In April 2007, the Parishes defaulted on their payments. Two months later, in June 2007, Bazin Excavating, Inc. (defendant), a company that formerly employed Johnny, secured a money judgment in court against Johnny for a matter not connected to the Yukon. Bazin Excavating, owned by Robert Bazin, secured a court order authorizing the seizure and sale of the Parishes’ GMC Yukon and a motor home. Bazin Excavating sent notice to Stanley of the upcoming sale of the Yukon at auction. Bazin had seen Johnny’s title and receipt for the Yukon, which reflected Stanley’s lien. However, when Bazin went to the motor-vehicle office on behalf of Bazin Excavating with the court order to request vehicle titles, the clerk gave him a clean paper title that listed Bazin Excavating as the owner of the Yukon as of September 19, 2007, and did not list Stanley’s lien. The auction was held on September 21, 2007, and Bazin purchased both vehicles acting in his individual capacity and not on behalf of Bazin Excavating. When Bazin Excavating did not respond to Stanley’s letters demanding the proceeds of the sale of the Yukon, Stanley sued Bazin Excavating and Bazin personally. Both the district court and the appeals court ruled in favor of Stanley. Both defendants sought review of the decision of the appeals court by the Kansas Supreme Court.