Bayer CropScience, LLC v. Stearns Bank National Association

Texana Rice took out a secured loan from Stearns Bank (defendant) covering all general intangibles and any proceeds from third-party damage to the collateral, and later took a second loan from Amegy Bank. After Texana sued Bayer CropScience (plaintiff) for contaminating its inventory in 2006, Texana and Amegy agreed in 2007 that Amegy would receive a security interest in any proceeds from that lawsuit. Stearns later foreclosed on its own security agreement in 2010 and bought the collateral, and in 2012 Texana settled its suit against Bayer, leaving roughly $933,700 in dispute between Stearns and Amegy, each claiming priority. Bayer interpleaded the funds; the district court held Stearns's foreclosure had terminated its security interest in the proceeds and granted Amegy's motion for summary judgment, denying Stearns's. Stearns appealed.