The Peoples State Bank of Ellinwood, Kansas, and Marian Isern v. Marlette Coach Company

LEWIS, Circuit Judge.

The determinative question here presented is whether, under Kansas law, a junior mortgagee, after having foreclosed his mortgage and having become purchaser at the foreclosure sale, can require the lien of prior mortgages to be reduced in amount by the application of proceeds paid from an insured fire loss occurring to the mortgaged property, the insurance benefits having been paid to senior mortgagees but applied by them, by agreement with the mortgagor, to other debts owed to them by the mortgagor. The junior mortgagee was not a contractual party to the policy of…