Farmers State Bank v. Cooper

The opinion of the court was delivered by This is an appeal by the defendant, Paul A. Cooper, Jr., from judgment entered against him in the Logan district court in an action brought by Farmers State Bank of Oakley on a past-due promissory note. The issues are (1) whether the note sued upon was subject to the Uniform Consumer Credit Code, K.S.A. 16a-1-101 et seq.; (2) whether defendant is entitled to recover civil penalties, costs, and attorney's fees; and (3) whether the bank unjustifiably impaired the collateral by failing to perfect its security agreement, and by allowing the removal of the collateral from the State of Kansas. In determining the last of these issues, we must also determine whether the defendant is an accommodation party or a principal maker of the note. The factual background is necessary to an understanding of the issues. In July, 1971, Dr. Michael P. Cooper, son of defendant Paul A. Cooper, Jr., moved with his wife Georgia to Oakley, Kansas. Michael, a chiropractor, intended to establish a practice in Oakley. He approached the bank for a loan in order to purchase equipment and remodel his office, rented from the bank and located on an upper floor of the bank building. The bank committed a line of credit of five thousand dollars. The president of the bank testified that when the original commitment was made, the professional equipment, household items, and automobile that were offered as security were not sufficient to completely secure the loan; therefore Paul Cooper's signature was necessary to protect the bank for the total amount.