## Facts

- A farmer (Brenner) executed promissory notes to State Bank of Piper City secured by a perfected Article 9 security interest in Brenner’s grain stored at A‑Way, Inc.’s warehouse.
- Brenner defaulted, and the Bank obtained a money judgment against him for $131,083.91.
- In supplementary citation proceedings, A‑Way produced a ledger showing it held 5,141.20 bushels of Brenner’s grain and listed storage/drying charges.
- The Bank mistakenly treated “5,141.20” as a dollar amount and obtained an order directing A‑Way to pay $5,141.20; A‑Way failed to appear at the hearing.
- A‑Way sold the grain for $11,310.64, remitted $5,141.20 to the Bank, and applied the remainder to charges on Brenner’s account.
- About eight months later, the Bank filed a separate UCC Article 9 action against A‑Way seeking the remaining proceeds, alleging A‑Way wrongfully retained proceeds subject to the Bank’s security interest.

## Issues

1. Whether the doctrine of merger extinguished the Bank’s Article 9 security interest after the Bank obtained a money judgment on the promissory notes.
2. Whether res judicata barred the Bank’s later Article 9 action against A‑Way for additional proceeds following the earlier judgment and citation proceedings.

## Decision

- The Illinois Supreme Court affirmed the appellate court’s reversal of the trial court’s dismissal.
- Merger did not extinguish the Bank’s security interest; the security agreement and Article 9 rights in the collateral and proceeds survived the judgment on the debt.
- Res judicata did not bar the later Article 9 action because the Bank sought to enforce its collateral rights, and Article 9 permits successive, cumulative remedies absent double recovery.
- The Court rejected A‑Way’s hardship arguments, noting A‑Way’s nonappearance at the citation hearing and its retention of sale proceeds while on notice of the Bank’s perfected security interest.

## Legal Principles

- Under UCC Article 9, a secured party’s remedies are cumulative; the secured party may pursue judgment on the obligation and enforcement against collateral successively or simultaneously, subject to no double recovery.
- A money judgment on the underlying debt does not, by itself, merge and extinguish a secured creditor’s separate property and contract rights in the collateral and its proceeds.
- Claim preclusion does not bar a later action where the later claim seeks enforcement of distinct Article 9 collateral rights rather than relitigation of the debt reduced to judgment, particularly where earlier supplementary proceedings did not finally adjudicate the full extent of collateral proceeds.

## Conclusion

The court held that obtaining a judgment on a secured debt neither merges nor precludes later enforcement of the creditor’s Article 9 security interest in collateral proceeds, and the Bank could sue the warehouse operator to recover proceeds beyond the amount paid under the earlier citation order.


State Bank of Piper City v. A-Way, Inc., 115 Ill. 2d 401, 504 N.E.2d 737 (Ill. 1987)