provision in your loan or mortgage agreement? 26.5. After the decision in Grocers Supply, Bob Gorman, president of Intercity Investments, directed the sheriff to surrender possession of The Grocery Store inventory to Grocers Supply and paid Grocers Supply $24,000 in satisfaction of the judgment. Gorman discharged the attorneys who represented Intercity in the execution and came to you for advice on how to collect Intercity's $36,000 judgment against The Grocery Store and Cedric Wise. It appears that after its victory in court, Grocers Supply instructed the sheriff to return the inventory to The Grocery Store, the sheriff has done so, and The Grocery Store is back in business. Wiser from his earlier experience, Gorman contacted Grocers Supply and told them that he intended to execute on the inventory again to enforce his judgment. Grocers Supply objected, saying that they preferred that the inventory remain in place, and threatened that if Gorman executed "it will just be a repeat of the earlier case." Gorman thinks the inventory is worth more than enough to pay both liens, and Grocers Supply is only objecting in order to protect The Grocery Store. "If they can do this," Gorman says, "any debtor with a cooperative secured creditor can beat its judgment creditors." What do you tell Gorman? Under the Uniform Commercial Code, if two lienholders attempt to foreclose on collateral at the same time, must a junior lienholder yield possession to a senior lienholder? Holding and Reasoning (Cannon, J.) Yes. When two lienholders simultaneously seek to foreclose on collateral, the more senior lienholder has a superior right to possession. Under 9-609 of the Texas Uniform Commercial Code (UCC), a secured party has the right to take possession of collateral in the event of a debtor's default, unless the parties agree otherwise. Generally, a prior perfected creditor retains a right to possession of the collateral, and this right is superior to any judgment creditor's right to possession. In addition, a prior perfected creditor is entitled to take possession of the collateral from a marshal who levied on the property based on a judgment creditor's writ of execution. Further, if a judgment creditor takes unauthorized possession of the property in derogation of a prior secured creditor's rights, the secured creditor may pursue a claim of conversion against the judgment creditor for expenses related to reclaiming the property. H the security agreement between Grocers Sup Rule of Law Under the Uniform Commercial Code, if two lienholders attempt to foreclose on collateral at the same time, a junior lienholder must yield possession to a senior lienholder. Facts In February 1989, the Grocers Supply Company, Inc. (Grocers Supply) (plaintiff) was granted and perfected a security interest in the inventory of Grocery Store, Inc. (Grocery). The security agreement provided that a judgment against Grocery or any levy of the collateral would constitute a default, resulting in the immediate acceleration of the entire debt at Grocers Supply's option. In March 1989, a \$36,000 judgment was entered against Grocery in the favor of Intercity Investments Properties, Inc. (Intercity) (defendant). Thereafter, Intercity obtained writs of execution on the judgment. The constable levied the writs on Intercity's behalf, taking possession of Grocery's inventory and equipment. Although Intercity knew of Grocers Supply's prior recorded security interest in the property, Intercity did not attempt to notify Grocers Supply before levying on the property. When Grocers Supply became aware of Intercity's actions, Grocers Supply provision in your loan or mortgage agreement? 26.5. After the decision in Grocers Supply, Bob Gorman, president of Intercity Investments, directed the sheriff to surrender possession of The Grocery Store inventory to Grocers Supply and paid Grocers Supply $24,000 in satisfaction of the judgment. Gorman discharged the attorneys who represented Intercity in the execution and came to you for advice on how to collect Intercity's $36,000 judgment against The Grocery Store and Cedric Wise. It appears that after its victory in court, Grocers Supply instructed the sheriff to return the inventory to The Grocery Store, the sheriff has done so, and The Grocery Store is back in business. Wiser from his earlier experience, Gorman contacted Grocers Supply and told them that he intended to execute on the inventory again to enforce his judgment. Grocers Supply objected, saying that they preferred that the inventory remain in place, and threatened that if Gorman executed "it will just be a repeat of the earlier case." Gorman thinks the inventory is worth more than enough to pay both liens, and Grocers Supply is only objecting in order to protect The Grocery Store. "If they can do this," Gorman says, "any debtor with a cooperative secured creditor can beat its judgment creditors." What do you tell Gorman? Under the Uniform Commercial Code, if two lienholders attempt to foreclose on collateral at the same time, must a junior lienholder yield possession to a senior lienholder? Holding and Reasoning (Cannon, J.) Yes. When two lienholders simultaneously seek to foreclose on collateral, the more senior lienholder has a superior right to possession. Under 9-609 of the Texas Uniform Commercial Code (UCC), a secured party has the right to take possession of collateral in the event of a debtor's default, unless the parties agree otherwise. Generally, a prior perfected creditor retains a right to possession of the collateral, and this right is superior to any judgment creditor's right to possession. In addition, a prior perfected creditor is entitled to take possession of the collateral from a marshal who levied on the property based on a judgment creditor's writ of execution. Further, if a judgment creditor takes unauthorized possession of the property in derogation of a prior secured creditor's rights, the secured creditor may pursue a claim of conversion against the judgment creditor for expenses related to reclaiming the property. H the security agreement between Grocers Sup Rule of Law Under the Uniform Commercial Code, if two lienholders attempt to foreclose on collateral at the same time, a junior lienholder must yield possession to a senior lienholder. Facts In February 1989, the Grocers Supply Company, Inc. (Grocers Supply) (plaintiff) was granted and perfected a security interest in the inventory of Grocery Store, Inc. (Grocery). The security agreement provided that a judgment against Grocery or any levy of the collateral would constitute a default, resulting in the immediate acceleration of the entire debt at Grocers Supply's option. In March 1989, a \$36,000 judgment was entered against Grocery in the favor of Intercity Investments Properties, Inc. (Intercity) (defendant). Thereafter, Intercity obtained writs of execution on the judgment. The constable levied the writs on Intercity's behalf, taking possession of Grocery's inventory and equipment. Although Intercity knew of Grocers Supply's prior recorded security interest in the property, Intercity did not attempt to notify Grocers Supply before levying on the property. When Grocers Supply became aware of Intercity's actions, Grocers Supply
