Stanley Bank v. Parish, 298 Kan. 755

Stanley Bank made a $40,000 purchase‑money loan to Johnny and Kellie Parish for a 2006 GMC Yukon and took a security interest; the Bank filed a notice of security interest (NOSI) with the Kansas Department of Revenue (KDOR) on January 31, 2006.
KDOR’s electronic lien system recorded the Bank’s lien and an electronic certificate of title in the Parishes’ names reflecting that lien. KDOR retains electronic titles for lien‑encumbered vehicles.
The Parishes defaulted; Bazin Excavating obtained a money judgment against Parish in June 2007, seized the Yukon, and later obtained a court order to sell it at auction.
On September 20, 2007, Bazin (or Bazin Excavating) obtained a paper certificate of title from KDOR showing Bazin as owner and showing no liens (a “clean” paper title).
Bazin purchased the Yukon at auction on September 21, 2007, paying $23,000. The Bank sued to enforce its superior perfected purchase‑money security interest and for conversion of the vehicle/proceeds; the district court granted summary judgment for the Bank. The Court of Appeals affirmed on the priority and conversion claims; the Kansas Supreme Court granted review and affirmed.

Issue	Bank's Argument	Defendants' Argument	Held
Whether a purchaser who obtains a paper title showing no liens takes free of a previously perfected purchase‑money security interest recorded electronically with KDOR	Bank: Perfection occurred when Bank delivered a NOSI to KDOR and KDOR’s electronic records and electronic title showed the lien before Bazin acquired any interest; Bank’s PMSI therefore has priority	Defendants: The paper certificate of title Bazin received from KDOR was “clean,” so Bazin (a buyer) took free of the Bank’s lien; factual disputes exist as to Bazin’s knowledge	Held: Bank’s PMSI was perfected on Jan 31, 2006 via NOSI and recorded electronically before Bazin’s interest; Bazin did not take free of the lien because purchase occurred after perfection and the consumer‑buyer exception does not apply
Whether Bazin qualifies as a buyer of consumer goods who takes free of a perfected security interest under UCC buyer exception (K.S.A. 84‑9‑320(b))	Bank: The buyer exception is inapplicable because perfection under the certificate‑of‑title statute is equivalent to filing a financing statement; Bazin purchased after perfection	Defendants: Bazin paid value and (they contend) lacked knowledge of the lien, so qualifies as a protected buyer	Held: Exception requires purchase before filing/perfection; Bazin bought long after Bank’s perfection, so exception fails and Bank’s lien prevails

Mid American Credit Union v. Bd. of Sedgwick County Comm’rs, 15 Kan. App. 2d 216 (Kan. Ct. App. 1991) (buyer took free where secured party failed to perfect before KDOR issued a paper title showing no lien)
In re Hicks, 491 F.3d 1136 (10th Cir. 2007) (trustee/lien creditor prevailed where neither electronic nor paper records showed the secured party’s lien due to clerical/recording errors)
O’Brien v. Leegin Creative Leather Prods., Inc., 294 Kan. 318 (Kan. 2012) (summary judgment standard cited for reviewing district court rulings)