Jackson & Scherer, Inc. v. Washburn

• Decision Date: 06 May 1972
• Docket Number: No. 46319,46319
• Citation: 209 Kan. 321,496 P.2d 1358
• Parties: JACKSON & SCHERER, INC., Appellee, v. Margaret A. WASHBURN a/k/a Margaret A. Castagna, Appellant, and Glenn E. Brunk (Sheriff), (Defendant), and Howard Washburn and Dorothy Lee Washburn, (Defendants), and The Brotherhood State Bank of Kansas City, Kansas, Intervenor-Appellee.
• Court: Kansas Supreme Court

Page 1358

496 P.2d 1358

209 Kan. 321

JACKSON & SCHERER, INC., Appellee, v. Margaret A. WASHBURN a/k/a Margaret A. Castagna, Appellant, and Glenn E. Brunk (Sheriff), (Defendant),

and

Howard Washburn and Dorothy Lee Washburn, (Defendants),

and

The Brotherhood State Bank of Kansas City, Kansas,

Intervenor-Appellee.

No. 46319.

Supreme Court of Kansas.

May 6, 1972.

Syllabus by the Court

1. Under the law of this state the general rule is that any interest a person may have in property may, in a proper case, be levied upon and sold under execution subject to liens or encumbrances already existing.

2. An action can be maintained by the owner of real property to enjoin its sale under an execution issued on a judgment against another person in an action to which the owner of the property was not a party where the owner makes a showing that the sale would prejudice his rights in the property.

3. A judgment lien operates to give the judgment creditor priority over other adverse interests subsequently acquired and precludes the subsequent disposal or encumbrance of the property from operating to prejudice the judgment creditor.

4. Whether the taking of a new mortgage in place of a prior one amounts to an extinguishment thereof depends upon the intention of the parties, and the acceptance by a mortgagee of a new mortgage does not amount to a payment or satisfaction and does not deprive him of his right to have the lien of the prior mortgage continued as against an intervening lien, in the absence of an intention to give priority to the intervening lien and in the absence of paramount equities.

5. An action for malicious prosecution is concerned with maliciously causing process to issue. An action for abuse of process is concerned with the improper use of process after it has been issued. Neither action can be maintained where process was neither issued without justification nor misused to accomplish an end for which it was not intended.

John H. Fields, of Carson, Mahoney & Fields, Kansas City, argued the cause and Charles D. Kugler, Kansas City, was with him on the brief for appellant.

Edward H. Powers, Kansas City, argued the cause and was on the brief for appellee, Jackson & Scherer, Inc.

Donald H. Corson, Jr., Kansas City, argued the cause and was on the brief for intervenor-appellee, Brotherhood State Bank of Kansas City, Kan.

Howard Washburn, pro se.

KAUL, Justice.

This appeal stems from a controversy arising from the efforts of Margaret A. Castagna, formerly Washburn, to enforce a judgment for past due alimony and child support against her former husband, Howard Washburn. The judgment was in the original sum of $8,014.00. (See Washburn v. Washburn, 204 Kan. 160, 460 P.2d 503) Both Howard and Margaret remarried and Howard was later divorced from his second wife, Dorothy Lee.

Plaintiff-appellee, Jackson & Scherer, Inc. (hereafter referred to as plaintiff or Jackson), a partnership at the time, owned property at 1718 North 79th Street in Kansas City, Kansas, upon which it buit a residence after securing a short-term construction loan in the amount of $37,500. from the Brotherhood State Bank (hereafter referred to as Bank) on April 27, 1966. The residence was completed and, on August 9, 1967, Howard Washburn and his wife, Dorothy Lee, executed an option agreement with Jackson & Scherer, Inc. to purchase it for the sum of $55,000.00. Bank's loan to plaintiff was increased to $44,000.00 and a ten-year mortgage was executed.

In January 1970 Howard became in default on the option agreement which was written on a Form 319A 'Option Agreement-Flat Payment'-a document which has been quite familiar to this court down through the years. (See Letzig v. Rupert, Executor, 209 Kan. 143, 495 P.2d 955) In the meantime, Margaret, on December 16, 1969, in her divorce action against Howard, procured an order of sale of the property. The sale was set for January 20, 1970, and notice thereof was published in the Wyandotte Echo, a weekly newspaper published in Wyandotte County.

On January 15, 1970, plaintiff filed this action against Glenn E. Brunk, Sheriff of Wyandotte County, Mararet Washburn a/k/a Margaret A. Castagna, and Howard and Dorothy Lee Washburn. Plaintiff alleged that it owned the property; that it was indebted to Bank in the amount of $41,379.54, secured by a first mortgage on the property; and that, assuming Howard and Dorothy Lee complied with the option agreement, they would be presently indebted to plaintiff in the amount of $43,746.19. Plaintiff further alleged that defendants each claimed some estate in or lien on the subject real estate, but whatever claims any of the defendants had they were inferior and subject to the title of plaintiff; and that all of the defendants should be ordered to present their claims. Plaintiff further alleged that if defendant sheriff attempted a sheriff's sale of the subject property, the rights of plaintiff would be seriously prejudiced. Plaintiff prayed that its title be quieted as against each defendant; that the court should set out what inferior claims the defendants might have to the property; and that the sheriff be restrained from selling the property under the order of sale issued in Margaret's divorce action.

An ex parte order was issued restraining the sheriff from proceeding with the sale until the further order of the court.

On January 23, 1970, Howard filed an answer alleging that he had an equitable interest in the property and that it was his homestead. He further alleged that he and Dorothy Lee Washburn had purchased an option agreement on subject real estate and had paid $11,253.81 on said contract.

Bank moved to intervene and filed an answer alleging the indebtedness of plaintiff; that it was a renewal and extension loan made to plaintiff for the purpose of constructing a house on the property; that Bank's mortgage was a purchase money mortgage; and that any interests of Howard, Dorothy Lee or Margaret were inferior to the title of plaintiff and the lien of Bank.

On February 7, 1970, Margaret filed an answer denying that plaintiff's rights would be prejudiced by the sheriff's sale. Margaret also filed a counterclaim against plaintiff in which she alleged that the restraining order was unnecessary; that it was maliciously issued without any reasonable or probable cause. Margaret prayed for actual damages in the amount of $3,500.00 and punitive damages in the amount of $50,000.00 on her counterclaim.

On February 9, 1970, Margaret filed a motion to dissolve the restraining order. On February 20, the motion was heard and denied-the trial court ruling as follows:

'The motion fo Margaret Castagna to dissolve the restraining order in the above matter was heard on February 20, 1970, and was taken under advisement. I have since examined the files in the two cases. In my opinion, a fair sale of any kind would be very improbable until after such time as the various interests and priorities are determined. The motion will therefore be overruled. I have set the matter for trial to the Court on Monday, March 23, 1970, commencing at 9 a. m. and I have allowed one-half day for the trial. As a matter of fact, it seems to me that the parties could stipulate as to practically all of the facts, at least insofar as the documents and records concerned are involved. I do not believe the interests of Mrs. Castagna will be jeoparized by staying the sale until the matter can be heard and therefore no bond will be required.'

In the meantime, plaintiff filed a separate action against Howard and Dorothy Lee seeking cancellation of the option agreement. This action was consolidated with the instant action and both came on for trial to the court on March 23, 1970.

The trial court filed a comprehensive memorandum in which it reviewed the claims of the parties; their stipulations, testimony and exhibits before the court. The trial court held that the option agreement was in default and should be canceled, the restraining order should be set aside and the property sold, either at private sale or if that could not be accomplished then by judicial sale and the proceeds applied first, to the payment of costs and taxes, second, to the Bank's mortgage, third, to Margaret's judgment, and fourth, the balance-if any-to plaintiff. The court reserved jurisdiction to make any orders necessary to effectuate the judgment and further ruled that plaintiff's motion for summary judgment on Margaret's counterclaim would be set for hearing at an early date.

After a dispute concerning a journal entry, judgment was entered on April 14, 1970, at which time the court found that the real estate should be sold at private sale. On June 6, 1970, Howard moved the court to set a date at which the private sale should be concluded and further, if the private sale be not concluded by the date set, the court should determine his amount of equity and the redemption he was entitled to under the option agreement.

The private sale referred to in the court's judgment was a sale between Howard and Dorothy Lee Washburn, sellers, and Jerry L. Andrew, purchaser, all of whom executed a contract for the purchase of the real estate on January 27, 1970. The sale price was $54,000.00 to be paid $1,000.00 down and the purchaser to pay the difference in cash between the sale price and the outstanding loan held by Bank in the approximate amount of $41,000.00. The contract further provided that the sellers (Howard and Dorothy Lee) were to pay plaintiff a six percent sales commission.

In connection with the private sale it should be mentioned that on February 19, 1970, Margaret, in her divorce action against Howard, commenced a collateral proceeding to enforce her judgment by filing a praecipe for garnishment naming Andrew as a garnishee defendant. The garnishment proceeding was processed in another division of the Wyandotte District Court. Margaret's appeal from an adverse ruling therein has reached this court and is...