Gorham State Bank v. Sellens, 62552

• Decision Date: 14 April 1989
• Docket Number: No. 62552,62552
• Citation: 772 P.2d 793,244 Kan. 688
• Parties: GORHAM STATE BANK, Appellant, v. Berniece M. SELLENS, et al., Appellees.
• Court: Kansas Supreme Court

Page 793

772 P.2d 793

244 Kan. 688

GORHAM STATE BANK, Appellant, v. Berniece M. SELLENS, et al., Appellees.

No. 62552.

Supreme Court of Kansas.

April 14, 1989.

Syllabus by the Court

In an appeal from an order granting summary judgment, the record is examined and it is held: There remain unresolved material issues of fact and the granting of summary judgment was premature.

Alan F. Alderson, of Alderson, Alderson & Montgomery, Topeka, argued the cause, and Joseph M. Weiler, of the same firm, was with him on the brief, for appellant.

Jerry E. Driscoll, of Driscoll & Driscoll, Russell, argued the cause, and Richard M. Driscoll, of the same firm, was with him on the brief, for appellees.

HOLMES, Justice:

This is an appeal by Gorham State Bank from an order of the Russell County District Court granting summary judgment to the defendants in a civil action filed by plaintiff bank to set aside certain conveyances of real estate as having been made with intent to hinder, delay, and defraud creditors of defendant Berniece M. Sellens. Summary judgment was granted to defendants on the ground that this civil action was commenced more than four months after the first publication of notice to creditors in the estate of Berniece Sellens' husband, Ralph Sellens, to whom the subject real estate had been conveyed. The district court ruled that the nonclaim statute, K.S.A.1988 Supp. 59-2239, barred the claim of plaintiff bank to the properties, which had been listed as assets of the decedent's estate. We reverse.

The underlying facts leading to this appeal are not disputed. Sometime prior to May 23, 1984, the plaintiff, Gorham State Bank, made an unsecured loan to the defendant, Berniece M. Sellens. Following a number of extensions, the loan became due December 11, 1984, in the amount of $82,880.83. Berniece defaulted on the loan.

At the time the loan was originally made, Berniece and her husband, Ralph Sellens, owned several parcels of real estate in Russell County in joint tenancy. On July 29, 1985, Berniece Sellens and Ralph Sellens, as joint tenants, conveyed the real estate to Ralph Sellens, individually. The deeds were promptly recorded.

On October 15, 1985, the Gorham State Bank filed suit in Russell County District Court against Berniece M. Sellens and on December 27, 1985, secured a default judgment in the amount of $82,880.83 plus interest thereon at 14 percent per annum from December 11, 1984.

Ralph Sellens died January 7, 1986, and his widow was appointed executrix of his will and estate on January 14, 1986. Berniece Sellens, as executrix, first published the notice to creditors required by K.S.A.1988 Supp. 59-2236 on January 20, 1986. On May 5, 1986, Berniece disclaimed all her interest in her husband's estate pursuant to K.S.A. 59-2291 et seq. The four-month period for filing claims or demands against Ralph Sellens' estate expired May 20, 1986. No claim or demand was filed by Gorham State Bank within that statutory period. The inventory and appraisal filed in Ralph's estate in January 1987 included the real properties described in the July 1985 deeds.

On June 12, 1986, this action was filed by the bank against Berniece M. Sellens, individually and as executrix of her husband's will and estate. The defendant answered, raising, inter alia, the defense that the plaintiff's claim was barred by the nonclaim statute, K.S.A.1988 Supp. 59-2239. Thereafter, Berniece resigned as executrix due to ill health, and Joyce A. Mahoney was appointed as administrator C.T.A. On June 19, 1987, she was substituted as a party defendant in this case in place of Berniece M. Sellens, executrix. On July 29, 1987, the defendants Berniece M. Sellens, individually, and Joyce A. Mahoney, as administrator C.T.A., filed a motion for summary judgment asserting that this action was barred by the nonclaim statute.

On May 23, 1988, the trial court rendered its memorandum decision granting summary judgment to the defendants, reasoning that plaintiff's exclusive remedy was to file a demand or claim against the estate of Ralph Sellens, and since the plaintiff failed to do so the action was barred by K.S.A.1988 Supp. 59-2239. Plaintiff has appealed. The case was transferred to this court pursuant to K.S.A. 20-3018(c).

The scope of appellate review applicable when a grant of summary judgment is challenged has been stated many times.

"The burden on the party seeking summary judgment is a strict one. The trial court is required to resolve all facts and inferences which may reasonably be drawn from the evidence in favor of the party against whom the ruling is sought. On appeal we apply the same rule, and where we find reasonable minds could differ as to the conclusions drawn from the evidence, summary judgment must be denied. [Citation omitted.] The party opposing summary judgment, however, has the affirmative duty to come forward with facts to support its claim, although it is not required to prove its case. [Citation omitted.] If factual issues do exist, they must be material to the case to preclude summary judgment. [Citation omitted.]" Bacon v. Mercy Hosp. of Ft. Scott, 243 Kan. 303, 306-07, 756 P.2d 416 (1988).

As noted in Bacon, the mere existence of unresolved factual issues does not necessarily preclude summary judgment. "If a disputed fact, however resolved, could not affect the judgment it is not a material fact so as to preclude summary judgment." In re Estate of Messenger, 208 Kan. 763, Syl p 4, 494 P.2d 1107 (1972); see Secrist v. Turley, 196 Kan. 572, 575, 412 P.2d 976 (1966).

Plaintiff relies upon K.S.A. 33-102, a section of the Kansas Statute of Frauds that has not been amended since its enactment in 1868. The statute provides:

"33-102. Transfers to delay or hinder creditors or purchasers. Every gift, grant or conveyance of lands, tenements, hereditaments, rents, goods or chattels, and every bond, judgment or execution, made or obtained with intent to hinder, delay or defraud creditors of their just and lawful debts or damages, or to defraud or to deceive the person or persons who shall purchase such lands, tenements, hereditaments, rents, goods or chattels, shall be deemed utterly void and of no effect."

It is the plaintiff's position that the July 1985 conveyances of the real property from Berniece and Ralph, as joint tenants, to Ralph, individually, were made with intent to defraud the plaintiff, a creditor, and that the conveyances were void under the statute. Plaintiff then contends that, since the conveyances were void, title to the property vested in Berniece as the surviving joint tenant by operation of law upon the death of Ralph. Thus, the property never became a part of Ralph's estate, and therefore plaintiff was not required to file a claim or demand against the estate and the nonclaim statute is inapplicable.

Defendants, on the other hand, assert that, because record title to the real estate was in Ralph, this is an action to withdraw or remove property from the estate, and it had to be filed as a claim or demand against the estate within the four-month period of the nonclaim statute.

This court has held that whether or not a conveyance is fraudulent as to creditors under K.S.A. 33-102 is largely a question of fact. Credit Union of Amer. v. Myers, 234 Kan. 773, Syl. p 5, 676 P.2d 99 (1984), and cases cited therein; Polk v. Polk, 210 Kan. 107, 110, 499 P.2d 1142 (1972); Walkeen v. Brown, 88 Kan. 571, 572, 128 P. 1122 (1913); Parmenter v. Lomax, 68 Kan. 61, 66, 74 P. 634 (1903). The party alleging a fraudulent conveyance must prove the allegation by clear and convincing evidence. Nordstrom v. Miller, 227 Kan. 59, 65, 605 P.2d 545 (1980). However, a party resisting a motion for summary judgment need not present this quantum of evidence in order to succeed in opposing the motion. Credit Union of Amer. v. Myers, 234 Kan. 773, Syl. p 7, 676 P.2d 99.

For purposes of this appeal, the issue is not whether the conveyance was fraudulent, but whether a determination of that fact issue could affect the judgment and whether the plaintiff is timely in asserting its cause of action. If so, there remain unresolved "material" facts which precluded summary judgment.

Along with similar early statutes of other states, K.S.A. 33-102 was based upon the 16th century Statute of Elizabeth (13 Eliz. ch. 5 [1570]. Like the Statute of Elizabeth, our statute explicitly provides that a fraudulent conveyance "shall be deemed utterly void and of no effect." However, the courts have not been in agreement as to the practical effect of such a conveyance. In 37 Am.Jur.2d, Fraudulent Conveyances § 106, it is stated:

"The early statutes and many of those which have been patterned after them declared that the prohibited conveyance should be 'void'; and if this language were to be taken literally, the consequence would be to render the transaction invalid and ineffectual, not only as to persons who have been defrauded, but also as to strangers and even the transferor himself. The Uniform Fraudulent Conveyance Act [which Kansas has not adopted], on the other hand, does not, in terms, state that a conveyance shall be 'void,' providing merely that certain conveyances shall be 'fraudulent.' Under both the older statutes and the Uniform Act, the courts have generally held that a voluntary or fraudulent conveyance is valid between the parties and in fact as to the whole world, except those within the protection of the statutes. The word 'void' in the statutes has ordinarily been construed to mean 'voidable,' and 'voidable' only at the instance and option of those who are within the meaning of the expression 'creditors and others' or 'purchasers.' Hence, even as against creditors, the generally prevailing view is that a fraudulent conveyance is merely voidable at their option. The statement that a fraudulent transfer is void as to creditors is generally held to mean that the rights of creditors are not affected by the transfer, that creditors...