M & I Marshall & Ilsley Bank v. Higdon

• Docket Number: 125,672
• Decision Date: 15 September 2023
• Parties: M & I MARSHALL & ILSLEY BANK, Appellee, v. KEVIN HIGDON (AND GRETCHEN HIGDON), Appellants,
• Court: Court of Appeals of Kansas

1

M & I MARSHALL & ILSLEY BANK, Appellee,
v.
KEVIN HIGDON (AND GRETCHEN HIGDON), Appellants,

No. 125,672

Court of Appeals of Kansas

September 15, 2023

SYLLABUS BY THE COURT

An action on a judgment is an original cause of action, while garnishment is not an original cause of action, but is ancillary to the original action seeking judgment. Another state's substantive laws cannot provide a de facto exemption from Kansas' garnishment statutes.

APPEAL FROM JOHNSON DISTRICT COURT; PAUL C. GURNEY, JUDGE.

Kristopher C. Kuckelman, of Payne & Jones, Chartered, of Overland Park, for appellants.

Louis J. Wade, of McDowell Rice Smith & Buchanan, P.C., of Kansas City, Missouri, for appellee M & I Marshall & Ilsley Bank.

Before COBLE, P.J., GARDNER and CLINE, JJ.

2

GARDNER, J.

In 2010, M &I Marshall & Ilsley Bank (M &I Bank) got a judgment against Kevin Higdon from the circuit court in Jackson County, Missouri. M &I Bank later registered its judgment in Johnson County, Kansas, and had a garnishment order entered by the Johnson County District Court. This order was served on Equity Bank in Kansas, where Kevin and his wife, Gretchen Higdon, held an account, and the entire balance of the account was garnished. The couple challenged the garnishment, arguing that Missouri law should apply because they had opened their bank account in Missouri, and under Missouri law the account was not subject to garnishment. The district court disagreed, applied Kansas law, and ordered that Gretchen's half of the account was owed to her and Kevin's half of the account was owed to M &I Bank. The Higdons appeal.

FACTUAL AND PROCEDURAL BACKGROUND

Kevin and Gretchen married in 2009 and remain married. Since 2009 they have continuously resided in Missouri. In 2009 or 2010, they opened an account at Adams Dairy Bank (the account), which was located solely in Missouri.

To open the account, the Higdons signed an account agreement in Missouri. That agreement identified Kevin or Gretchen as the account owners with "Joint (Right of Survivorship)." That account agreement remains unchanged, and the parties do not contend that it incorporates a choice-of-law provision. Years later, around 2016, Adams Dairy Bank merged with Equity Bank, the garnishee, which has locations in Kansas.

In October 2010, M &I Bank obtained a judgment against Kevin (and others), but not Gretchen, from the circuit court in Jackson County, Missouri. In April 2017, M &I Bank registered this judgment in Kansas with the Johnson County District Court, then moved for garnishment. As a result, the Johnson County District Court issued an order of

3

garnishment to attach any account owned by Kevin at Equity Bank. The next day, that order of garnishment was served on Equity Bank at one of its Kansas facilities.

Kevin and Gretchen opposed the garnishment and moved to quash it. While the dispute was pending, the parties stipulated that the garnished funds from the account would be paid into and held by the Clerk of the District Court while the district court resolved the garnishment dispute.

Kevin's motion to quash argued that Missouri substantive law should apply because the Higdons' contract to open the bank account was made in Missouri. And under Missouri law, they argued, their account was owned by them as tenants by the entirety. Because Kevin and Gretchen's ownership interests were indivisible and of the entire account, and Gretchen was not subject to the garnishment order, no portion of the account could be garnished. Alternatively, Kevin argued that if Kansas law applied then only his half of the funds in the account could be garnished.

In response, M &I Bank argued that Kansas law applied because, as a properly registered foreign judgment, under the Full Faith and Credit Clause of the United States Constitution, all enforcement mechanisms under Kansas law are available to M &I Bank. M &I Bank argued that under Kansas law it was entitled to the portion of the bank account owned by Kevin, and Kevin had the burden to show that some or all the property was not subject to garnishment. Kevin's account agreement showed his interest was as joint tenants with right of survivorship, and Kansas has "a rebuttable presumption of equal ownership between tenants of joint tenancy property." Walnut Valley State Bank v. Stovall, 223 Kan. 459, Syl. ¶ 2, 574 P.2d 1382 (1978).

The district court heard the arguments and the evidence summarized above, then denied the Higdons' motion to quash in part.

4

"Because the foreign judgment i[s] registered in Kansas following the statutory provisions, Kansas procedural law applies rather than Missouri law. It is unclear in Kansas whether the characterization of the property can be attached for a judgment creditor is [a] substantive or procedural matter.... [H]owever, relevant Missouri case law indicates that categorization-categorizing property is a procedural matter, and because this case is in Kansas, Missouri procedural law is not applicable

"Therefore, it is more likely that Kansas procedural law applies, and the garnishment can attach to the Higdons' account. Because a foreign judgment is registered in Kansas, Kansas procedural law will apply. Persuasive case law with similar facts reveals categorizing property for creditor judgment as a procedural matter. Although Mr. and Mrs. Higdon have a joint bank account, the bank can attach the garnishment to the joint account because Kansas law again will classify the account as a joint tenancy with right of survivorship."

The district court judge found that Kansas law does not recognize tenancy by the entirety, and "the subject garnishment can attach to the Higdons' joint bank account because Kansas property classification would find that the bank account held as joint tenants with the right of survivorship rather than tenants in the entirety, and judgment creditors can recover money from joint bank accounts."

The district court left discovery open on ownership of the account and allowed the parties to rebut the presumption of equal ownership that arises under Kansas law. But during discovery, the Higdons and M &I Bank stipulated that the presumption of equal ownership of the account could not be rebutted. Accordingly, the district court found that before the garnishment Kevin owned half of the account and Gretchen owned the other half. The district court then ordered half the garnished funds, which had been paid into court, paid to Gretchen and the other half paid to M &I Bank. Thus, Gretchen and M &I Bank were each paid $194,455.56.

Kevin and Gretchen timely appeal.

5

ANALYSIS

Before we address the Higdons' substantive issues, we address a procedural issue that impacts our jurisdiction to hear this appeal-M &I Bank's assertion that the Higdons acquiesced in the judgment.

DOES THE DOCTRINE OF ACQUIESCENCE DEPRIVE THIS COURT OF JURISDICTION TO CONSIDER THIS APPEAL?

M &I Bank argues that under the doctrine of acquiescence, this court lacks jurisdiction to consider this appeal. "Because acquiescence involves jurisdiction, the matter raises a question of law subject to unlimited review by this court." Alliance Mortgage Co. v. Pastine, 281 Kan. 1266, 1271, 136 P.3d 457 (2006). "Whether a party intends to waive his or her legal rights, however, depends on the facts." Heartland Presbytery v. Presbyterian Church of Stanley, Inc., 53 Kan.App.2d 622, 636, 390 P.3d 581 (2017) (citing Varner v. Gulf Ins. Co., 254 Kan. 492, 497, 866 P.2d 1044 [1994]).

"The acquiescence doctrine establishes that parties who voluntarily accept the benefit or burden of a judgment lose their right to appeal. Alliance Mortgage Co. v. Pastine, 281 Kan. 1266, 1271, 136 P.3d 457 (2006); see Hemphill v. Ford Motor Co., 41 Kan.App.2d 726, 728, 733, 206 P.3d 1 (2009)." Heartland Presbytery, 53 Kan.App.2d at 635. "'The gist of acquiescence sufficient to cut off a right to appeal is voluntary compliance with the judgment.'" Varner v. Gulf Ins. Co., 254 Kan. 492, 494, 866 P.2d 1044 (1994) (quoting Younger v. Mitchell, 245 Kan. 204, Syl. ¶ 1, 777 P.2d 789 [1989]). When a party's actions "'clearly and unmistakably show an inconsistent course of conduct or an unconditional, voluntary and absolute acquiescence,'" the party waives his or her right to appeal. Uhlmann v. Richardson, 48 Kan.App.2d 1, 17, 287 P.3d 287 (2012).

6

Courts do not generally find an implied waiver from an appellant's postjudgment measures: "[I]t is generally the rule that a waiver is not implied from [postjudgment] measures taken by an appellant in defense of and to protect his [or her] rights or interest." McDaniel v. Jones, 235 Kan. 93, 104, 679 P.2d 682 (1984). For acquiescence to cut off the right to appeal, the acceptance of the burdens or benefits of a judgment debtor must be voluntary. Whether a payment of a judgment is voluntary depends on the facts of the particular case, and the ultimate issue is whether the payer intended to waive his or her legal rights. Varner, 254 Kan. at 497.

"In a . . . garnishment proceeding, whether the appellant has acquiesced to the extent of extinguishing his right to appeal the garnishment depends upon all the facts of the case, including his conduct in response to the garnishment order." Younger v. Mitchell, 245 Kan. 204, 207, 777 P.2d 789 (1989). In Younger, the Kansas Supreme Court held that Mitchell's actions did not show acquiescence to the garnishment. There, Mitchell's

"conduct throughout the garnishment proceeding shows that he did not voluntarily comply with this judgment. The bank account balance was paid into court by Farmers State Bank, the garnishee, not by Mitchell. Mitchell contended all along that all of the funds in the account were exempt from garnishment. He filed a reply to the answer of the garnishee, claiming the funds were exempt from garnishment. He participated in the hearing at which the

...