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No. 100,999 IN THE COURT OF APPEALS OF THE STATE OF KANSAS STATE OF KANSAS, ex rel. STEVEN N. SIX, ATTORNEY GENERAL (BOARD OF COUNTY COMMISSIONERS OF SHAWNEE COUNTY, KANSAS), Appellee, v. MIKE W. GRAHAM & ASSOCIATES, LLC, and WEST LAWN MEMORIAL GARDENS, LLC, et al., Defendants, and CHARLES HEINSOHN, Appellant.

SYLLABUS BY THE COURT

1. When the application of a statute is challenged on constitutional grounds, we exercise de novo review. A statute is not unconstitutional as applied unless it is clear beyond a substantial or reasonable doubt that the statute infringes on constitutionally protected rights.

2. Cemetery property in Kansas enjoys a unique status and is not subject to the laws of ordinary property. A cemetery corporation is organized for a public rather than private purpose, and the cemetery management is in the nature of a trust. When a cemetery has 1

been abandoned and its property is transferred to a municipality pursuant to K.S.A. 2008 Supp. 17-1367, there is no compensable taking of the property of the cemetery corporation because the transfer is a noncompensable exercise of the police power.

3. Smith v. State Highway Comm'n, 185 Kan. 445, 346 P.2d 259 (1959), and State ex rel. Stephan v. Lane, 228 Kan. 379, 614 P.2d 987 (1980), are discussed and distinguished.

4. It is generally recognized that a state's exercise of police power is subject to constitutional limitations. Although the police power is the least limitable of governmental powers, it is not a totally unlimited power. The legislature may not, under the guise of regulating in the public interest, impose conditions which are on their face unreasonable, arbitrary, discriminatory, or confiscatory.

5. Where the legislative intent for retroactive application of a statute is clear, courts must still consider whether retrospective application will affect vested or substantive rights and therefore would violate the due process provisions of the United States and Kansas Constitutions.

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6. In determining whether vested rights have been affected by retroactive legislation, important factors are: (1) the nature of the rights at stake (e.g., procedural, substantive, remedial), (2) how the rights were affected (e.g., were the rights partially or completely abolished by the legislation; was any substitute remedy provided), and (3) the nature and strength of the public interest furthered by the legislation.

7. A judgment lien has long been considered a statutory right that should receive the most liberal construction. Generally, the right to enforce payment of a judgment is a property right which is beyond the power of a state to destroy.

8. The retroactive abrogation of a remedial right may not survive constitutional scrutiny.

9. There appears to be no public policy impediment for allowing execution against assets of a cemetery corporation not used for burial.

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10. Under the facts of this case, the 2008 amendment of K.S.A. 17-1367, which sought to retroactively invalidate valid judgment liens on abandoned cemetery property, was unconstitutionally applied to defeat preexisting lien rights.

Appeal from Shawnee District Court; CHARLES E. ANDREWS, JR., judge. Opinion filed December 4, 2009. Reversed and remanded.

Thomas W. Harris, of Roeland Park, for appellant.

Shawn S. Leisinger, assistant county counselor, and Richard V. Eckert, county counselor, for appellee.

Before GREENE, P.J., McANANY, J., and LARSON, S.J.

GREENE, J.: Charles Heinsohn, judgment creditor of the former owner of West Lawn Memorial Gardens Cemetery in Shawnee County, appeals the district court's order dismissing his attempt to enforce his judgment lien against cemetery assets, arguing the statute relied on by the district court, K.S.A. 2008 Supp. 17-1367, was unconstitutionally applied to defeat his judgment lien. Concluding the legislative amendment to the statute,

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which purported to retroactively nullify judgment liens against cemetery property, was violative of due process and unconstitutionally applied to defeat Heinsohn's claim, we reverse and remand for further proceedings.

Factual and Procedural Background

In May 2005, the State filed a petition to dissolve West Lawn Memorial Gardens, Inc., to declare the corporation's cemetery property in Shawnee County as abandoned, and to transfer title of all personal and real property of the corporation to Shawnee County pursuant to K.S.A. 17-1367. In late June 2005, the State sought and received a temporary restraining order against Mike W. Graham & Associates, LLC, and West Lawn Memorial Gardens, Inc., concluding that these defendants had engaged in unconscionable acts violative of the Kansas Consumer Protection Act and violative of the Cemetery Corporation Act and the Prearranged Funeral Act. The order sequestered all assets, funds, or property of the defendants, pursuant to the Consumer Protection Act, K.S.A. 50-632, and transferred these assets to the treasurer of Shawnee County as receiver. The order also directed the appointment of Heinsohn and his wife as caretakers of the cemetery property.

In late 2005, Heinsohn obtained a judgment against Mike W. Graham and Associates, LLC, d/b/a/ West Lawn Memorial Gardens, for $45,717.15 plus interest and costs, based on his work in the general upkeep and maintenance of the cemetery property, 5

including grave opening and closing, at West Lawn Memorial Gardens' cemeteries in both Topeka and Lawrence. The decision awarding the judgment found that Heinsohn "has not been fully paid for his considerable efforts." It is not clear from the record, but was conceded at oral argument, that a portion of Heinsohn's work giving rise to the judgment was performed after entry of the temporary restraining order directing his appointment as caretaker. This judgment was later clarified to include as additional defendants and judgment debtors West Lawn Memorial Gardens, LLC, and Lawrence Memorial Park Cemetery, LLC.

After procuring his judgment, Heinsohn sought to intervene in the dissolution action pending between the State and his judgment debtors. His intervention sought authority to issue execution upon the assets of his judgment debtors, including separate tracts or parcels owned by the cemetery corporation containing a residential structure, a barn, a pet cemetery, and a hay meadow; he agreed not to pursue human burial grounds-- both sold and unsold burial lots. After an order permitting Heinsohn's intervention, the legislature amended the operative statute to retroactively nullify judgment liens, and the State and the defendants then entered into a consent judgment declaring the cemetery property abandoned and purporting to transfer all assets of the defendants to Shawnee County "free and clear" of all mortgages, liens, judgments, and any other encumbrances, pursuant to K.S.A. 2008 Supp. 17-1367. The State then moved to dismiss all remaining claims and liens against the defendants, but Heinsohn objected to the dismissal of his claim. 6

The district court cited the amended version of K.S.A. 17-1367 and summarily dismissed all other claims--including Heinsohn's--and ordered the County take the cemetery property with no liens attached, pursuant to K.S.A. 2008 Supp. 17-1367.

Heinsohn appeals.

Did the District Court Err in Dismissing Heinsohn's Claim Pursuant to K.S.A. 2008 Supp. 17-1367 or was that Statute Unconstitutionally Applied to Defeat His Claim?

Heinsohn argues that K.S.A. 2008 Supp. 17-1367 was unconstitutionally applied to defeat his claim, principally because the 2008 amendment to this statute was retroactively applied in violation of due process of law. When the application of a statute is challenged on constitutional grounds, we exercise de novo review. State v. Myers, 260 Kan. 669, 676, 923 P.2d 1024 (1996), cert. denied 521 U.S. 1118 (1997). A statute is not unconstitutional as applied unless it is clear beyond a substantial or reasonable doubt that the statute infringes on constitutionally protected rights. State v. Cook, 286 Kan. 766, 768, 187 P.3d 1283 (2008) (employing reasonable doubt standard); State v. Wilkinson, 269 Kan. 603, 606, 9 P.3d 1 (2000) (employing substantial doubt standard). The constitutionality of a statute is presumed, and the court must resolve all doubts in favor of its validity. It is the court's duty to uphold a statute under attack, if possible, rather than defeat it, and if there is any reasonable way to construe the statute as constitutionally 7

valid, that should be done. In re Tax Appeal of Garden City Medical Clinic, 36 Kan. App. 2d 114, 117, 137 P.3d 1058 (2006).

At the outset, we note that all real and personal property of the judgment debtor was initially sequestered and transferred to a receiver pursuant to K.S.A. 50-632, and only later was the property ordered held pursuant to K.S.A. 2008 Supp. 17-1367, but we have made no attempt to analyze Heinsohn's rights under Chapter 50 because this issue was apparently never raised in district court, nor is it asserted on appeal. Consequently, we restrict our analysis of Heinsohn's claims to Chapter 17 and express no opinion whether the analysis might differ under Chapter 50 during the time the property was held pursuant to that statutory scheme.

Overview of the Statutory Scheme and the 2008 Amendment Thereto

Prior to its amendment by the 2008 Kansas Legislature, K.S.A. 17-1367 provided as follows:

"Whenever the attorney general determines the existence of an abandoned cemetery in this state, the attorney general shall immediately proceed to dissolve the cemetery corporation owning the same. Upon the dissolution of such corporation, title to all property owned by the cemetery corporation shall vest in the municipality in which the cemetery is located, and the permanent maintenance fund, together with all investments then 8

outstanding, and all books, records and papers of such corporation shall be transferred to the treasurer of such municipality and shall become the property thereof."

Although we find little evidence in the record on appeal of the circumstances surrounding the 2008 amendment to this statute, Heinsohn claims that Shawnee County played a pivotal role in urging the amendment due to his pending claim. In any event, the amended version of the statute provides as follows:

"Whenever the attorney general determines the existence of an abandoned cemetery in this state, the attorney general shall immediately proceed to dissolve the cemetery corporation owning the same. Upon the dissolution of such corporation, title to all property owned by the cemetery corporation shall vest in the municipality in which the cemetery is located, and any liens, perfected or unperfected, against such property shall be immediately quashed, null and void and unenforceable on and after January 1, 2003, and the permanent maintenance fund, together with all investments then outstanding, and all books, records and papers of such corporation shall be transferred to the treasurer of such municipality and shall become the property thereof. Upon the transfer of such property and funds, the governing body of such municipality shall care for and maintain such cemetery with any moneys of the cemetery corporation including the principal of and income from the permanent maintenance fund and, if such moneys are insufficient to properly maintain such cemetery, with funds of the municipality. The principal of and income from the permanent maintenance fund may be deposited in any appropriate fund of the 9

municipality or may be invested in the manner provided in K.S.A. 17-1311, and amendments thereto, but shall be used exclusively for care and maintenance of such cemetery. " (Amended portion emphasized.) L. 2008, ch. 109 sec. 38.

The Supplemental Note on House Bill 2935 states that "Shawn Leisinger, Assistant Shawnee County Counselor, testified in support of the bill, and Sue Hack, Mayor of Lawrence, submitted written testimony in support of the bill. Both municipalities are in the process of assuming responsibility for abandoned cemeteries." The brief, prepared by the Legislative Research Department and not expressing legislative intent, states that "HB 2935 would amend existing law to void all liens on abandoned cemeteries for which the title has been vested in the municipality where the cemetery is located, pursuant to K.S.A. 17-1367. The bill would void existing liens on such property on and after January 1, 2003."

The District Court's Memorandum Opinion

Following the 2008 amendment to K.S.A. 17-1367, the district court dismissed Heinsohn's claims, providing the following reasoning:

"House Bill 2217 amends K.S.A. 17-1367, which governs the disposition of abandoned cemeteries. House Bill 2217 adds language to the 10

statute that is directly on point with the issue presented in this case. The amended portion states that 'any liens, perfected or unperfected, against such property shall be immediately quashed, null and void and unenforceable on and after January 1, 2003.' House Bill 2217 was signed by the Kansas Governor while the lawsuit between the State of Kansas and the owners of the abandoned Westlawn Memorial Gardens Cemetery was active. The lawsuit was settled, which resulted in the cemetery owners transferring ownership of the property to Shawnee County.

"Intervenor Heinsohn argues that the amended Bill is not applicable to this case because the amended portion cannot be applied retroactively. He also argues that the Bill was not signed until the case had already begun; therefore, the pre-amended statute should govern. According to Bulger v. West, 155 Kan. 426, 430 [, 125 P.2d 404] (1942):

'The general rule is that a statute is operative only in the future from the time it is enacted and made effective; that it has no retroactive effect unless the language of the statute clearly indicates the legislature so intended it.'

"The amended portion of House Bill 2217 was intended to operate retroactively. The statutory language written by the Kansas Legislature establishes that any liens will be unenforceable after January 1, 2003. This change in the statute removes any remaining liens still attached to the cemetery property."

Constitutional Analysis of the Statute as Amended

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Cemetery property in Kansas enjoys a unique status and is not subject to the laws of ordinary property. State ex rel. Stephan v. Lane, 228 Kan. 379, 386, 614 P.2d 987 (1980). A cemetery corporation is organized for a public rather than private purpose, and the cemetery management is in the nature of a trust. 228 Kan. at 386. When a cemetery has been abandoned and its property is transferred to a municipality pursuant to the prior version of K.S.A. 17-1367, there is no compensable taking of the property of the cemetery corporation because the transfer is a noncompensable exercise of the police power. 228 Kan. at 388.

The County argues that State ex rel. Stephan v. Lane is applicable here because that case demonstrates that the amendment did not change the existing law. We disagree. Lane addressed constitutionality in the context of the rights of the cemetery corporation, not its creditors. Next, the County argues Lane is applicable here because the amendment invalidating preexisting judgment liens was a valid exercise of the police power over the subject of an abandoned cemetery. The County suggests that a valid exercise of the police power does not incur liability for any resulting injury to private individuals, citing Smith v. State Highway Commission, 185 Kan. 445, 453, 346 P.2d 259 (1959). We also disagree with this assertion.

In Smith, our Supreme Court held that the state's absolute control over the streets and highways within its borders is subject to constitutional limitations and that any

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restriction of curtailment of an abutter's rights of access must be reasonable to be a valid exercise of the police power. 185 Kan. at 454. Smith does not hold or suggest in any way that the exercise of police power is inherently unfettered by any constitutional limitations. And in this regard, Smith is consistent with well-recognized principles of constitutional law.

Indeed, it is generally recognized that an exercise of police power is subject to constitutional limitations:

"While the police power is the least limitable of governmental powers, it is not, despite certain language to be found in some decisions, a totally unlimited power. The legislature may not, under the guise of regulating in the public interest, impose conditions which are on their face unreasonable, arbitrary, discriminatory, or confiscatory. Moreover, the police power is, by its nature, exercisable only restrictively, restriction being implicit in the power itself.

"The judicial branch of the government is the final arbiter of the limitations applicable to the police power; but the notion that courts may freely assume the role of arbiters of public policy is very much exaggerated, for the courts should especially avoid assuming such a role in the face of a statutory scheme which bespeaks its own policy considerations. The limitations of the police power have never been drawn with exactness by the courts, and its boundary line cannot be determined by any general formula in advance." 16A Am. Jur. 2d, Constitutional Law

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