Question: On October 28 1983 Steve Gresham doing business as Midway
On October 28, 1983, Steve Gresham, doing business as Midway Cycle Sales, entered into a Wholesale Financing Agreement with ITT Commercial Finance Corporation. The agreement was to finance the purchase of new motorcycles from Suzuki Motor Corporation. ITT filed a financing statement with the Indiana secretary of state on December 16, 1983. The description of the collateral in which ITT asserted a security interest included "all inventory.....replacements and proceeds." On January 9, 1984, Union Bank filed a financing statement with the Indiana secretary of state claiming it was engaged in "floor planning of new motorcycles" for Midway Cycle Sales. In August 1984, ITT began paying Suzuki invoices for Gresham. In July 1985, ITT sent a letter to Union Bank notifying it that it expected to acquire purchase money security interests in the inventory of Stephan Gresham d/b/a Midway Cycle Sales. In early 1986, Union Bank began loaning money to Gresham under its floor planning agreement with him. Actually, Gresham was "double floor planning"-that is, he was taking invoices for motorcycles that had been paid for by ITT to the Union Bank and claiming that he had paid for the motorcycles but had decided to floor plan them. When Union Bank advanced money to him, he used the money to make payments on the loans to ITT. He made no payments to Union Bank and did not pay off all of his loan to ITT. Midway Cycle Sales went bankrupt when Union Bank repossessed 22 new Suzuki motorcycles. ITT brought suit against Union Bank, claiming it had paid for the motorcycles and had a perfected security interest in the motorcycles that had priority over Union Bank's security interest in them. Did ITT's security interest have priority over Union Bank's security interest?
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