Court Opinion

ID: 9642729
Source: CourtListenerOpinion
Date Created: 2023-08-22 18:07:54.261663+00
Date Added: 2024-06-11T18:10:51.867375
License: Public Domain

Opinion of the Court by
Justice WINTERSHEIMER.
This appeal is from a decision of the Court of Appeals which affirmed a summary judgment rendered by the circuit court in favor of McCubbins.
The questions are whether the trial judge properly applied the summary judgment standard to a) whether a genuine issue of material fact existed with regard to whether First Federal intentionally and voluntarily discharged the obligations under the first and larger note, and b) whether genuine issues in material fact exist with regard to whether McCubbins paid off the first and larger note.
McCubbins and his wife, who is now deceased, entered into a mortgage with Bullitt Federal Savings & Loan Association in 1978. ■ The loan was for a principal sum of $16,000 plus interest at a rate of 9 percent per annum for 25 years and was secured by a mortgage on real property. The McCubbinses signed a note indicating they would pay the amount of $135.37 per month beginning June 1, 1978, and continue paying until the note was paid on May 1, 2003. In October of 1978, McCubbins and his wife obtained a second loan in the amount of $1,600 which was for the same term as the earlier' loan. The new loan amount of $14.41 per month per annum was added to the previous loan amount for a total of $176.39 per month including the monthly escrow payment. The second loan was for the installation of a water and sewer system at the residence. First Federal acquired Bullitt Savings & Loan in 1999.
In the summer of 2002, McCubbins, believing that his loan was ready to be paid off, went to the bank with his daughter to inquire into its status. The 70-year-old McCubbins cannot read or write except to sign his own name. He was informed that the pay-off amount was $20.41, which he paid on July 3, 2002. He received a letter of the same date from the loan administrator of the bank regarding his “recently paid loan” and enclosing the note dated May 1, 1978 stamped “paid in full” on July 3, 2002, as well as the mortgage on his property entered into May 1, 1978, also stamped “paid in full” on July 3, 2002. The mortgage and the letter referred to loan No. 601001397. On July 25, 2002, the deed of release of the mortgage signed by the senior vice-president of the bank was recorded in the Bullitt County Clerk’s office.
According to payment records produced by First Federal, McCubbins continued to make monthly mortgage payments until July 2003, nearly a year after the mortgage had been released. Approximately *20320 months later, in February 2004, First Federal sued McCubbins claiming that he had defaulted on the original $16,000 loan and sought to recover $6,547 as the outstanding balance. McCubbins answered the complaint and attached the note and mortgage, both of which had been stamped paid in full by First Federal. He stated that the documents were proof that First Federal had intentionally and voluntarily released him from any further obligation.
Dining discovery, First Federal was requested to and did produce its loan file and its loan history on this matter. McCub-bins then filed a motion for summary judgment contending that the bank discharged his obligation under the note pursuant to KRS 355.3-604(l)(a) by a voluntary and intentional act and noting that the loan history only dated back to January 4,1999, whereas the loan dated back to 1978. The bank objected to the motions although acknowledging that the original note and mortgage stamped paid in full had been mailed, it asserted that those actions were clerical errors on the part of employees and that there was no intention to release McCubbins from his obligation on the $16,000 note. The bank argued that there was a factual issue as to whether the bank intentionally and voluntarily released the obligation on the $16,000 note. First Federal attached an affidavit from Recovery and Preservation Officer David G. Bush who indicated that only the smaller loan had been paid off and that First Federal had mistakenly mailed the original and larger note and mortgage to McCubbins. McCubbins replied in part that he had still not received a full payment history from First Federal and that the lender had not provided any affidavits from those responsible for discharging the obligation.
Following a hearing and a review of the evidence in the record, the circuit judge granted the motion of McCubbins for a summary judgment. First Federal appealed to the Court of Appeals which affirmed the decision of the circuit judge and this Court accepted discretionary review.
I. Standard of Review
The proper standard of review on appeal when a trial judge grants a motion for summary judgment is whether the trial judge correctly found that there were no genuine issues as to any material fact and that the moving party was entitled to a judgment as a matter of law. CR 56.03. It has long been held that a trial judge must view the evidence in the light most favorable to the nonmoving party, and summary judgment should be granted only if it appears impossible that the non-moving party will be able to produce evidence at trial warranting a judgment in his favor. The moving party bears the initial burden of demonstrating that no genuine issue of material fact exists and then the burden shifts to the party opposing summary judgment to produce at least some affirmative evidence showing that there is a genuine issue of material fact requiring trial. See Hubble v. Johnson, 841 S.W.2d 169 (Ky.1992); James Graham Brown Foundation, Inc. v. St. Paul Fire & Marine Ins. Co., 814 S.W.2d 273 (Ky.1991); Steelvest, Inc. v. Scansteel Service Center, Inc., 807 S.W.2d 476 (Ky.1991); Paintsville Hospital Co. v. Rose, 683 S.W.2d 255 (Ky.1985). We have examined the evidence in light of that standard and agree that there is no genuine issue of material fact.
As the Court of Appeals correctly noted, the decision in this case is based on the application of KRS 355.3-604(1) which provides:
A person entitled to enforce an instrument, with or without consideration, may discharge the obligation of a party to pay the instrument:
*204(a) By an intentional voluntary act, such as surrender of the instrument to the party, destruction, mutilation, or cancellation of the instrument, cancellation of striking out of the party’s signature, or the addition of words to the instrument indicating discharge.
First Federal contends that the discharge of the obligation was neither voluntary nor intentional and that consequently a disputed factual issue remains. We cannot agree.
Initially, it should be observed that First Federal has not claimed that any type of fraud or deceit was involved on the part of McCubbins. The posture of this case requires First Federal to meet its burden of bringing at least some affirmative evidence to challenge the evidence from McCubbins that the debt had been fully paid. McCubbins provided the note and mortgage stamped “paid in full” that he received from First Federal as well as the deed of release. First Federal produced only an affidavit from a bank official whose role in the situation is not clear. The official did indicate that he had personal knowledge of the circumstance, but the affidavits failed to indicate precisely how he was involved or how long he had been involved in the account. In addition neither the loan officer who sent the letter to McCubbins along with the stamped note and mortgage, nor the vice-president who signed the deed of release, provided any testimony or other evidence in this regard. The affidavit alone is not enough to establish the burden of First Federal that a genuine issue of material fact exists with regard to the intentional and voluntary discharge of the loan obligations.
First Federal relies on Richardson v. First Nat. Bank of Louisville, 660 S.W.2d 678 (Ky.App.1983), to support its argument that the discharge of the obligation is not intentional but rather only a clerical error. Richardson, supra, can be factually distinguished. In that case, the lending institution mistakenly informed the parties in December of 1980 that the note had been paid. The following April, approximately four months later, the lender realized the mistake and filed suit to recover the amount due. In that case, the reviewing court examined the statute in place at that time which was KRS 355.3 — 605(a)(1) and determined that substantial evidence in the record established that the bank did not have the required intent to cancel the obligation.
Richardson, supra, is not dispositive of this situation. One of the significant differences is the time. In Richardson, the bank recognized its error and filed suit within four months. Here, First Federal waited over twenty months before taking legal action. In addition, in this case, McCubbins presented the documentary evidence and affidavits to counter the affidavits provided by First Federal and established that the note at issue had been paid. Moreover, there is a significant factual gap in regard to the establishment that a debt was ever owed. First Federal never provided a full payment or loan history prior to 1999. This note dated back to 1978 and over twenty years of payment history are missing. Here, McCubbins claimed payment and provided the note and mortgage stamped “paid in full” as well as a deed of release, all of which he received from First Federal. First Federal did not meet its burden to establish that any debt remained when it did not produce records reflecting the full payment of the loan history. Accordingly, there are no disputed facts on this question.
It is the decision of this Court that the summary judgment was proper. There was no genuine .issue as to any material fact and McCubbins is entitled to a summary judgment as a matter of law. The *205decision of the Court of Appeals is affirmed.
LAMBERT, C.J., GRAVES and SCOTT, concur.
McANULTY, J. dissents by separate opinion and is joined by ROACH, J.
ROACH, J. dissents by separate opinion and is joined by McANULTY, J. MINTON, J., not sitting.