Frierson v. United Farm Agency, Inc.
Eighth Circuit
868 F.2d 302 (1988)
Merchants Bank held a perfected senior security interest in United Farm Agency's (UFA) bank account, and UFA defaulted on the underlying loan, but Merchants chose not to exercise its right to foreclose on the account. Retha Frierson (defendant), a junior lienholder, then garnished the same bank account; UFA moved to quash the garnishment, Merchants intervened to object based on its senior perfected interest, and the district court ruled Merchants couldn't block Frierson's levy given its own failure to foreclose first, ordering the funds paid to Frierson; UFA and Merchants both appealed.
Whether a senior lienholder who has declined to exercise its own right to foreclose on collateral after a debtor's default may prevent a junior lienholder from levying on that same collateral.