Security Bank of Kansas City v. Tripwire Operations Group

Citations: 412 P.3d 1030; 55 Kan. App. 2d 295Docket: 117534

Court: Court of Appeals of Kansas; January 11, 2018; Kansas; State Appellate Court

Original Court Document: View Document

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A bank's right to setoff, as per K.S.A. 9-1206, allows it to apply funds from a depositor's account to satisfy any matured obligations without requiring judicial action. The satisfaction of a judgment concludes legal proceedings, extinguishing the claim and preventing further challenges, unless the satisfaction is conditional. The doctrine of acquiescence bars a party from appealing a judgment while simultaneously accepting its burdens or benefits, requiring voluntary acceptance for it to preclude appeal rights. Notably, failing to post a supersedeas bond does not equate to acquiescence. The mootness doctrine ensures courts address actual controversies and render conclusive determinations.

In this case, the appeal was dismissed as moot due to the satisfaction of judgment, leaving no ongoing controversy. The court clarified that, although Security Bank of Kansas City was entitled to setoff under the contract, Anthony Nichols had not acquiesced to the judgment. The lawsuit stemmed from a guaranty contract where Nichols guaranteed debts of Tripwire Operations Group, LLC. Following Tripwire's default, the bank sought recovery from Nichols, Tripwire, and another guarantor, leading to the summary judgment against Nichols, which he subsequently appealed, citing multiple reasons against the judgment.

The Bank moved for involuntary dismissal of Nichols' appeal, arguing it was moot due to Nichols’ acquiescence in the judgment by failing to post a supersedeas bond. The Bank exercised its right of setoff, taking $7,595.96 from Nichols' account to satisfy its judgment, which was acknowledged as satisfied in a court filing on June 19, 2017. Nichols did not seek a stay of proceedings or file a supersedeas bond under K.S.A. 2016 Supp. 60-262(d), allowing the Bank to resolve the matter unilaterally. The motions panel of the court denied the Bank's dismissal motion without resolving the acquiescence issue, leaving the question of mootness pending. The court affirmed that the Bank's right to setoff, established under K.S.A. 9-1206, is a self-help remedy that does not require judicial intervention, provided debts are mutual and the bank is not aware of third-party claims. The legal precedent supports the bank's actions, as demonstrated in the case of Iola State Bank v. Bolan and Karner v. Willis, where the courts upheld the bank’s right to setoff even when garnishment orders were in place. Additionally, Nichols' guaranty contract included a setoff provision, further legitimizing the Bank's actions.

Lender retains a right of setoff against all of Guarantor's accounts, including future accounts and joint accounts, except for IRA, Keogh, or certain prohibited trust accounts. In the event of default, Lender may hold and apply funds from these accounts to satisfy Guarantor's obligations under the Guaranty. The Bank successfully executed this right by recovering a judgment debt against Nichols, as no stay order was in place. The satisfaction of judgment filed by the Bank marks the conclusion of the debt, extinguishing all claims against Nichols and preventing further legal actions related to that judgment.

The issue of acquiescence arises, with the Bank asserting that Nichols has accepted the judgment by not posting a supersedeas bond, thus allegedly waiving his right to appeal. However, it is determined that Nichols did not demonstrate an intent to waive his appeal rights, as the acceptance of burdens or benefits of a judgment must be voluntary. The case cited by the Bank, Vap v. Diamond Oil Producers, indicates acquiescence where a party fails to act against a known intent to garnish. In contrast, Nichols' actions do not reflect such acquiescence, affirming his right to appeal the judgment.

Nichols appealed the district court's summary judgment favoring the Bank after the Bank withdrew funds from his account without prior notice. The court found no voluntary action by Nichols, emphasizing that receiving a notice of withdrawal does not equate to compliance with the judgment. Nichols' failure to post a bond was deemed insufficient to imply acquiescence. The court addressed mootness, noting it does not decide moot issues or provide advisory opinions. It established that an appeal will only be dismissed for mootness if it is evident that the actual controversy has ended, and any judgment would be ineffectual. In this case, the court found no remaining issues to litigate, as the controversy had resolved, and the Bank's actions would have led to the same outcome regardless of the timing relative to the summary judgment. The court concluded that the lawsuit was concluded and addressed the Bank's request for attorney fees separately, dismissing the appeal.