## Facts

- Johnny and Kellie Parish borrowed $40,000 from Stanley Bank to purchase a GMC Yukon and granted Stanley a purchase-money security interest (PMSI) in the vehicle.
- Stanley perfected its PMSI by timely submitting a notice of security interest to the Kansas Department of Revenue (KDOR) under K.S.A. 8-135(c)(5); KDOR issued and maintained an electronic certificate of title reflecting Stanley’s lien.
- The Parishes later possessed a paper title and receipt listing Stanley’s lien and defaulted on the loan.
- Bazin Excavating, Inc. obtained an unrelated money judgment against Johnny Parish and secured an order to attach property, including the Yukon, and provided Stanley notice of the planned execution sale.
- When Bazin Excavating presented the court order to a motor-vehicle office, a clerk issued a paper certificate of title listing no liens, despite KDOR’s electronic title records continuing to show Stanley’s lien.
- At the execution auction, Robert A. Bazin (individually) purchased the Yukon.
- Stanley demanded the sale proceeds; defendants did not remit them, and Stanley sued for a declaration of priority and recovery of the proceeds.
- The district court granted summary judgment to Stanley; the Kansas Court of Appeals affirmed; the Kansas Supreme Court granted review.

## Issues

1. Whether a PMSI in a Kansas motor vehicle is perfected upon attachment under Article 9 or only by complying with the Kansas certificate-of-title statute, K.S.A. 8-135(c)(5).
2. Whether an execution-sale purchaser who receives a “clean” paper title showing no liens takes free of a previously and properly perfected PMSI that appears in KDOR’s electronic title records.

## Decision

- The Kansas Supreme Court affirmed the Court of Appeals and the district court.
- A security interest in a vehicle subject to Kansas certificate-of-title law is perfected only by complying with K.S.A. 8-135(c)(5), as directed by K.S.A. 84-9-311(a)(2), not upon attachment.
- Stanley properly perfected its PMSI by delivering the required notice to KDOR, and KDOR’s electronic certificate of title reflected the lien.
- The “clean” paper title issued in error did not cut off Stanley’s perfected security interest; Bazin took the vehicle subject to Stanley’s lien.
- Summary judgment was proper because the material facts were not genuinely disputed and the dispute was legal.

## Legal Principles

- For collateral covered by a certificate-of-title statute, Article 9 defers to the title statute for perfection; perfection is achieved only through the method specified in the title statute.  
- Under Kansas law, a secured party perfects a motor-vehicle security interest by properly completing and timely delivering or mailing a notice of security interest to KDOR.  
- Kansas’ electronic title system gives controlling effect to KDOR’s electronic certificate of title for vehicles subject to liens; an incorrect later-issued paper title omitting the lien does not extinguish a properly perfected interest.  
- An execution-sale purchaser is not a buyer in ordinary course and, absent a specific statutory cut-off rule, does not take free of a prior perfected security interest merely because a paper title erroneously appears lien-free.

## Conclusion

Kansas law required perfection of Stanley’s vehicle PMSI through KDOR under the certificate-of-title statutes, and KDOR’s electronic record controlled; therefore, an execution purchaser could not rely on an erroneously “clean” paper title to defeat Stanley’s prior perfected lien, and Stanley had priority to the sale proceeds.


Stanley Bank v. Parish, 317 P.3d 750 (Kan. 2014)