In re Cherokee County Revenue Bonds

The opinion of the court was delivered by Cherokee County, Kansas, issued revenue bonds for construction of an adult care facility. All bonds were issued on parity secured by the facility. The tenant of the facility defaulted on rent owed, which constituted the sole source of bond repayment. The defendant Glenn Mumma's $50,000 bond matured after default. The trustee appointed by the county sought a declaratory judgment, asking among other things that moneys accumulated in the principal and interest account be paid pro r**a on past due interest payments to all bondholders before payment on Mumma's principal indebtedness. The trial court agreed with the trustee and certified Mumma's appeal under the provision of K.S.A. 60-254(b). We affirm. The facts are not in dispute. Pursuant to K.S.A. 12-1740 et seq., the Board of Cherokee County Commissioners (County) issued revenue bonds to fund construction of a nursing home and assisted living facility, as well as for the purpose of paying the cost of issuance and the interest on the bonds during the construction period. The bonds were issued in the following series, years, and principal amounts: Series A, 1991: $1,575,000; Series B, 1991: $175,000; Series A, 1993: $300,000; and Series B, 1993: $150,000.