Valley Bank and Trust Company v. Rite Way

FACTS. - Rite Way executed a note to Valley Bank guaranteed by the Lowes and secured by certain collateral. Rite Way was sold to Bailey, who assumed the Valley Bank loan and took ownership of the collateral. Bailey subcontracted with Jacobsen-Robbins, but was unable to fulfill its subcontract, surrendered the collateral to Jacobesen-Robbins, and defaulted on the Valley Bank note. Bailey disappeared, and the Bank demanded payment by the Lowes. Lowes located the collateral and authorized the Bank to repossess it, but instead, the Bank released the collateral, reserving its rights against Rite Way.