City of Salina v. Star B, Inc.

• Decision Date: 05 February 1987
• Docket Number: No. 59442,59442
• Citation: 11 Kan.App.2d 639,731 P.2d 1290
• Parties: The CITY OF SALINA, Kansas v. STAR B, INC., et al. The FIRST NATIONAL BANK & TRUST COMPANY OF SALINA, Salina, Kansas, Appellant, v. FIRST AGENCY OF LEOTI, INC., Appellee.
• Court: Kansas Court of Appeals

Page 1290

731 P.2d 1290

11 Kan.App.2d 639

The CITY OF SALINA, Kansas v. STAR B, INC., et al.

The FIRST NATIONAL BANK & TRUST COMPANY OF SALINA, Salina, Kansas, Appellant, v. FIRST AGENCY OF LEOTI, INC., Appellee.

No. 59442.

Court of Appeals of Kansas.

Feb. 5, 1987.

Review Granted April 3, 1987.

Syllabus by the Court

1. Entry of a final judgment on less than all the claims or for less than all the parties in an action involving multiple claims or parties is not effective unless the court makes "an express determination that there is no just reason for delay" and "an express direction for the entry of judgment." K.S.A. 60-254(b).

2. A judgment lien does not attach as a result of summary judgment on one of multiple claims or for one of multiple parties in an action until the trial court properly certifies the judgment as final under K.S.A. 60-254(b) or adjudicates the remaining claims in the action. K.S.A. 1984 Supp. 60-2202(a); K.S.A. 60-258.

3. A judgment entered "pursuant to K.S.A. 60-254(b)," unaccompanied in the record by a statement that there is no just reason for delay or reasons for certification, does not satisfy the requirement in K.S.A. 60-254(b) that the court make "an express determination that there is no just reason for delay."

4. For certification under K.S.A. 60-254(b) to be effective, the trial court's conclusion that there is no just reason to delay entry of final judgment must appear affirmatively in the record, either by a recitation of the statutory language or by a statement of the reasons for the decision to certify.

5. A K.S.A. 60-254(b) certification may not be supplied by a nunc pro tunc order.

6. In an action in which fewer than all of the claims of all of the parties had been adjudicated, the statement "Now on this 8th day of November, 1984, pursuant to K.S.A. 60-254(b), ... the Court enters the following judgments" was insufficient to effectuate a certification of judgment under K.S.A. 60-254(b) and to cause a judgment lien to attach.

Aubrey G. Linville, of Clark, Mize & Linville, Chartered, Salina, for appellant.

John Q. Royce and David D. Moshier, of Hampton, Royce, Engleman & Nelson, Salina, for appellee.

Before DAVIS, P.J., J. STEPHEN NYSWONGER, District Judge, assigned, and CARL B. ANDERSON, Jr., Associate District Judge, assigned.

J. STEPHEN NYSWONGER, District Judge:

The First National Bank & Trust Company of Salina (First National Bank) appeals a judgment granting First Agency of Leoti, Inc., (First Agency) priority to proceeds from the condemnation of real property belonging to a debtor of both parties. To resolve the dispute we must determine whether entry of a partial summary judgment "pursuant to K.S.A. 60-254(b)" satisfied the requirements for certification in K.S.A. 60-254(b).

The parties submit the case on an agreed statement of facts pursuant to Supreme Court Rule 3.05 (235 Kan. lxiv). A summary of the pertinent facts is as follows.

On August 28, 1981, R & D Investments, a Kansas general partnership composed of Royce D. Patton, Delores M. Patton, Donald W. Ogborn, and Rosetta Ogborn, entered into an installment real estate contract for the purchase of the Great Plains Building.

On September 21, 1981, the Pattons and the Ogborns acquired title to real estate known as The East Bank Properties, which they mortgaged to First National Bank, a Kansas banking corporation in Salina.

On February 6, 1984, in connection with the sale of First National Bank, two promissory notes executed by R & D Investments and secured by the mortgage on The East Bank Properties were assigned to First Agency. On March 8, 1984, First Agency commenced an action against R & D Investments and the individual partners for judgment on the two promissory notes and foreclosure of the mortgage on The East Bank Properties. First Agency of Leoti, Inc. v. R & D Investments, et al., District Court of Saline County, Case No. 84 C 64.

On August 3, 1984, in a signed document entitled "Assignment of Equitable Interest as Collateral Security," Royce Patton and Rosetta Ogborn assigned their purchasers' equitable interest in the Great Plains Building to First National Bank as security for loans made by the bank to R & D Investments. The security interest was not recorded with the Saline County Register of Deeds until May 8, 1985.

On September 11, 1984, the trial court granted First Agency leave to file a second amended petition in the foreclosure action. The second amended petition alleged that two strips of land providing access to the mortgaged property had been omitted inadvertently from the mortgage and requested that the court reform the mortgage to include them. Following the filing of answers and counterclaims by R & D Investments and the individual partners, First Agency filed a motion for summary judgment. On November 8, 1984, the court issued a memorandum decision granting partial summary judgment to First Agency against R & D Investments and the individual partners and ordering the mortgage foreclosed. The court reserved for later trial the request that the mortgage be reformed to include the omitted strips of land.

A proposed journal entry was prepared by First Agency's counsel and forwarded to R & D Investments. Royce Patton, on behalf of R & D Investments, objected to the proposed journal entry and, after a hearing, a journal entry of partial summary judgment was signed and filed by Judge Daniel L. Hebert on November 30, 1984. The journal entry began, "Now on this 8th day of November, 1984, pursuant to K.S.A. 60-254(b), and a hearing [on] a Motion to Settle Journal Entry, pursuant to Supreme Court Rule No. 170, the Court enters the following judgments," but contained no statement that there was no just reason for delay or reasons for certifying the judgment pursuant to K.S.A. 60-254(b).

On February 19, 1985, following trial, the court filed a journal entry decreeing an equitable reformation of the mortgage to include the omitted strips of land. Pursuant to order, the sheriff sold The East Bank Properties on May 22, 1985. The court confirmed the sale on March 28, 1986.

On December 3, 1985, the City of Salina commenced a condemnation action, from which this appeal has been taken. The Great Plains Building was among the property sought by the city. First National Bank, which claimed an interest in the building resulting from the August 3, 1984, assignment by Royce Patton and Rosetta Ogborn, was joined as a defendant in the action, as was First Agency, which claimed a judgment lien on the property of R & D Investments based on the November 30, 1984, entry of partial summary judgment in the foreclosure action. On January 21, 1986, the court determined the fair market value of the Great Plains Building and entered judgment against the City of Salina and in favor of the various defendants.

On March 7, 1986, First Agency and First National Bank filed a Joint Motion for Determination of Entitlement to Proceeds, as provided in K.S.A. 26-517. First Agency argued that the November 30, 1984, partial summary judgment was a final judgment because the court had certified it under 60-254(b) and that pursuant to K.S.A. 1984 Supp. 60-2202(a) its judgment lien on the real property of R & D Investments related back four months, to July 30, 1984. First National Bank contended that the partial summary judgment was not a final judgment because the court failed to make an express direction for entry of judgment and express determination that there was no just reason for delay as required by 60-254(b). It argued that judgment for First Agency in the foreclosure action did not become final until February 19, 1985, when the court reformed the mortgage and, thus, that First Agency's judgment lien on R & D Investment's real property did not become effective on July 30, 1984, but on November 19, 1984, well after the bank obtained the August 3, 1984, security interest in the Great Plains Building.

The court held that First Agency had priority to the proceeds. The court noted that in the memorandum decision granting First Agency partial summary judgment, Judge Hebert directed that judgment become "effective" when a journal entry was filed. The court found that "effective" meant "final." It found "no ambiguity" in the November 30, 1984, journal entry. The court then concluded that, by directing entry of judgment "pursuant to K.S.A. 60-254(b)," Judge Hebert fulfilled the requirements for certification under 60-254(b):

"5. The Court further finds and concludes the language in the journal entry executed by Judge Hebert and entered November 30, 1984, states unequivocally that judgment is entered 'pursuant to K.S.A. 60-254(b)'; that by expressly and directly referring to K.S.A. 60-254(b) Judge Hebert has expressly determined there was no just cause for delay, and that reference does constitute an express determination there is no just cause for delay, and, additionally it constitutes an express direction by Judge Hebert for the entry of judgment. Both the negative and positive aspects of the statute are certified in, and determined by the Court by that express statutory reference."

The court ruled that the final judgment entered on November 30, 1984, related back to July 30, 1984, and that First Agency's judgment lien was prior to and superior to the August 3, 1984, security interest held by First National Bank.

On appeal, First National Bank asserts that the trial court erred by concluding that the entry of partial summary judgment for First Agency in the foreclosure action satisfied the requirements of K.S.A. 60-254(b).

An examination of the language and purpose of K.S.A. 60-254(b) convinces us that the trial court erred by holding that "an express determination that there is no just reason for delay" may be implied from the words "pursuant to K.S.A. 60-254(b)." We hold that the reference "pursuant to K.S.A. 60-254(b)," unaccompanied in the record by a statement that there is no just reason for...