Co-Alliance, LLP v. Monticello Farm Service, Inc.

OPINION

SHEPARD, Senior Judge.

We conclude that Indiana should follow the majority rule on agreements to modify the priority of liens securing interests in a borrower’s assets.

Here, the lender in first position agreed to subordinate part of its lien in favor of a third-position lender, in effect a partial assignment that reduced the extent of its first position. Such a contract should nei ther harm nor help the second-position lender, who was not a party to the agreement.

We think recognizing such agreements is consistent with the Uniform Commercial Code and Indiana common law. We therefore…