## Facts

- Dwaine F. Radke and Barbra Radke became insolvent and filed a voluntary receivership proceeding for the benefit of creditors.
- Two parcels were involved in the receivership: the “Doebbling land” and the “Beltz land.”
- The receiver sold the Doebbling land and realized net proceeds of $27,626.70.
- The receiver sold the Beltz land and realized net proceeds of $13,495.74.
- Rickel, Inc. held a judgment lien against the Doebbling land effective May 5, 1976, originally $19,431.29, reduced by payment to a remaining lien balance of $13,439.48.
- Oral Anspaugh held a judgment lien against the Doebbling land, also effective May 5, 1976, in the amount of $2,840.
- Keith Cook was a creditor of the Radkes who claimed a distribution priority over other creditors, including with respect to the Doebbling land proceeds.
- Separately, Icer Addis entered a contract to purchase the Beltz land from the Radkes, who claimed they owned it.
- As part of the purchase price, Addis paid money to a bank to satisfy indebtedness secured by the Beltz land.
- Addis later discovered record title to the Beltz land was in Dwaine Radke’s mother, Mary Hazel Radke, rather than the Radkes; Addis disaffirmed the purchase contract.
- After the Beltz land was sold by the receiver, Addis asserted a claim that he should receive priority from the Beltz land sale proceeds because his payment reduced the bank debt tied to that land and otherwise Mary Hazel Radke and the other creditors would benefit unfairly.
- The district court allocated receivership costs and fees totaling $5,091.50 between the two funds (67% to Doebbling proceeds and 33% to Beltz proceeds), paid Rickel and Anspaugh from the Doebbling proceeds as lien creditors, and ordered the remaining funds distributed proportionately among the general creditors.
- Cook appealed the denial of his claimed priority, and Addis appealed and cross-appealed the denial of his claimed priority as to the Beltz land proceeds.

## Issues

1. Whether a purchaser who paid off a bank debt secured by land the debtor falsely claimed to own is entitled, on unjust-enrichment or related equitable grounds, to priority in distribution from the receivership proceeds of that land.
2. Whether a general creditor (Cook) can obtain priority, or parity, in the distribution of sale proceeds from land encumbered by previously perfected judgment liens held by other creditors (Rickel, Inc. and Anspaugh).
3. Whether, in a voluntary receivership, the court must distribute sale proceeds by paying administrative expenses and valid lien claims first, with any remainder distributed ratably among unsecured creditors.

## Decision

- The Kansas Court of Appeals affirmed the district court’s distribution order.
- Rickel, Inc. and Oral Anspaugh were entitled to first payment from the Doebbling land sale proceeds based on their prior judgment liens, plus applicable interest.
- Cook was not entitled to displace the lien creditors or receive a special priority; he remained a general creditor sharing in the remaining receivership funds.
- Addis was not entitled to a priority claim to the Beltz land proceeds on an unjust-enrichment theory; he also remained a general creditor.
- After payment of receivership expenses and the Doebbling land lien claims, the remaining proceeds were properly distributed proportionately among the general creditors.

## Legal Principles

- A receiver takes the debtor’s property subject to valid, existing liens; the appointment of a receiver does not reorder pre-receivership lien priorities.
- Judgment liens that are properly perfected against specific real property are payable first from the proceeds of the sale of that property, before distribution to unsecured creditors.
- Equitable remedies that function like a lien (such as an equitable lien, constructive trust, or similar restitution-based priority) are not granted merely because a claimant’s money benefited property later sold in receivership; the claimant must show a recognized basis for priority that does not unfairly harm other creditors’ rights.
- In an insolvency administration, unsecured creditors ordinarily share proportionately in the remaining assets after administrative expenses and secured or lien claims are satisfied.

## Conclusion

In *In re Application of Radke*, the Kansas Court of Appeals upheld a receivership distribution that paid receivership expenses and honored prior judgment-lien claims against the Doebbling land before any general distribution, and it rejected Icer Addis’s request for a priority share of the Beltz land proceeds based on unjust enrichment from his payoff of a bank debt tied to land the Radkes did not own, leaving both Addis and Cook to recover only as general creditors on a proportional basis.


In re Application of Radke, 5 Kan. App. 2d 407, 619 P.2d 520 (1980)