Kansas Business Attorney

If you are unfamiliar, the Walnut Valley Festival is underway in Winfield, Sep. 17-21.  In their own words

The Walnut Valley Association was formed in 1972,with its sole purpose to produce the Walnut Valley National Guitar Flat-Picking Championships Festival, also known as the Flat-Picking Championships, currently known as the “Walnut Valley Festival” or simply “Winfield” to the long time attendees.

Evolving from 2 days in 1972 to its current 4-days the 3rd weekend of September annually, it endeavors to produce “family fare” entertainment on 4 stages simultaneously, a large quality, juried arts and crafts fair, workshops, and acoustic instrument contests. What began with 10 acts and 2 contests now boasts over 40 acts and 8 contests, including one international contest, 5 national contests and 2 Walnut Valley contests.

The contests are a major part of the festival. Along with the National Flat Pick Championships and the National Finger Pick Championships, the Walnut Valley Festival hosts the International Autoharp, National Mountain Dulcimer, National Hammered Dulcimer, National Bluegrass Banjo, Walnut Valley Old Time Fiddle, and Walnut Valley Mandolin Championships. Over the course of years, the contests at Winfield have attracted more than 3,000 contestants from all 50 states as well as many foreign countries including Australia, Canada, Denmark, Sweden, England, Germany, Italy, Japan, New Caledonia, Switzerland, and Wales. Well-known Winfield winners include Mark O’Connor of Nashville, Tennessee, who has won or placed in more Walnut Valley Festival contests than any other contestant. Mark won the National Guitar Flat-Picking Championship in 1975 and 1977, and also won the Walnut Valley Fiddle Championship in 1974 and 1977. Alison Krauss of Nashville, won the Walnut Valley Fiddle Championship in 1984 and Steve Kaufman of Alcoa, Tennessee, is the only three-time winner of the National Guitar Flat-Picking Contest, having won in the years 1978, 1984, and 1986 respectively. (Tennessee has consistently produced the most winners over the years.) Other Winfield winners include Mandolin virtuoso Chris Thile, the Mandolin Champion in 1993 and Dixie Chick fiddler Martie Erwin Seidel in 1987 and 89.

Festival attendance has been between 11,000 and 15,000 annually …

While other events are keeping me local, I cannot attend.  However comma.  I have just found a live stream on Front Porch Radio.  If you’re timely, you are sure to enjoy.

If you are familiar with banking and the mortgage industry, you may have followed with some interest the journey of Mortgage Electronic Registration Systems, Inc. Some large banks contracted in some manner with MERS to act as a clearinghouse of sorts to the extent that at the end of the day, MERS was appearing/acting as Plaintiff in its capacity as “nominee for the mortgagee _________”. Without knowing how widespread was the blanket of rulings, I noticed that perhaps beginning in Florida about two years ago, courts began consistently ruling that MERS did not, in its nominee capacity, have standing to foreclose mortgages or litigate on behalf of the true mortgagees.
Now, the Kansas Court of Appeals has affirmed shutting another door in the face of MERS. See Landmark National Bank v. Kesler, et al. In addition to not allowing the mortgagee to intervene beyond time after judgment and sale (go figure), the Court examined what it is that a ‘nominee’ purports to be:

… But for reasons thought beneficial by a group of lenders who trade mortgages, the form of mortgage used in this case designates an entity that is not the lender as the mortgagee. See MERSCORP, Inc. v. Romaine, 8 N.Y.3d 90, 96, 828 N.Y.S.2d 266, 861 N.E.2d 81 (2006) (MERS was established by large lenders to allow easy electronic trading and tracking of mortgages). Specifically, the mortgage says that the mortgagee is MERS, though “solely as nominee for Lender.” Does this mean that MERS really was the mortgagee, even though it didn’t lend money or have any rights to loan repayments? Assuming so, MERS argues that it was a necessary party to the foreclosure and that the foreclosure must be set aside. But the premise upon which MERS bases this argument is flawed.

What is MERS’s interest? MERS claims that it holds the title to the second mortgage, not the real estate. So it does, but only as a nominee. In terms of the roles that we’ve discussed in the mortgage business, MERS holds the mortgage but without rights to the debt. The district court found that MERS was merely an agent for the principal player, Millennia. While MERS objects to its characterization as an agent, it’s a fair one.

MERS had no right to the underlying debt repayment secured by the mortgage; MERS did not even act as the servicing agent to receive the payments and remit them to the lender. MERS’s right to act to enforce the mortgage was strictly limited: if “necessary to comply with law or custom,” MERS could foreclose the mortgage or enter a release of the mortgage. MERS certainly could not act at odds to its principal, the lender. Its role fits the classic definition of an agent: one “‘authorized by another to act for him, or intrusted with another’s business.’” In re Tax Appeal of Scholastic Book Clubs, Inc., 260 Kan. 528, 534, 920 P.2d 947 (1996) (quoting Black’s Law Dictionary 85 [4th ed. 1968]).

Only one Kansas case has discussed the meaning of nominee in any detail. In Thompson v. Meyers, 211 Kan. 26, 30, 505 P.2d 680 (1973), the court noted that the meaning of the term may vary from a pure straw man or limited agent to one who has broader authority.

But whatever authority the nominee may have comes from the delegation of that authority by the principal. In its ordinary meaning, a nominee represents the principal in only a “nominal capacity” and does not receive any property or ownership rights of the person represented. See, e.g., Cisco v. Van Lew, 60 Cal. App. 2d 575, 583-84, 141 P.2d 433 (1943); see also Applebaum v. Avaya, Inc., 812 A.2d 880, 889 (Del. 2002) (referring to nominees “as agents of the beneficial owners”). The Millennia mortgage does not purport to give MERS any greater rights than normally given a nominee. The mortgage says that MERS acts “solely as nominee for Lender.” There is no express grant of any right to MERS to transfer or sell the mortgage or even to assign its duties as nominee. Nor does MERS obtain any right to the borrower’s payments or even a role in receiving payments.

Courts across the country have said a lot about mortgagees and MERS acting as ‘nominee’. My father is not quite so wordy. He would call it “getting too smart for their own good.” Well said.