ST: Priority Flashcards
SC v. SC
General RULE: First to file or perfect; whichever occurs first, has priority
D needed money for his clothing business. he went to FB and SB asking for Money offering inventory as collateral. SA signed for both and FS. FB filed first on march 10 but didn’t loan until June 15. April 20 SB loaned and filed. D defaulted.
a. Did both banks have a perfected SI assuming they both filed in proper place
b. which bank has superior right to inventory?
c. is priority in any way affected by the knowledge that one may have of the other’s interest?
a. yes
b. FB –> FB perfected on June 15–filed on march 10. SB perfected and filed april 20. FB relates back.
c. No
Feb 1 A lends D $5K and takes SI in D’s equip, On march 1, B lends D $3K and takes SI in the same equip, B files FS on Mrch 5. A does not file a fs until March 20.
a. Whose claim has priority?
b. Assume neither A nor B ever files a FS. Who has priority?
a. B wins–> filed march 5
b. As between two unperfected SCs the first to attach has property.
On march 1, A loans D $2K and takes a PMSI in consumer goods. No FS is filed. On April 1, B obtains a non-purchase money SI in the same consumer goods. B files a FS on april 2, D defaults. Who has priority?
A– perfected march `–> PMSI in consumer goods automatic.
Special Rules: PMSI in goods other than inventory or livestock:
A PMSI in such goods has priority over a conflicting SI in the same goods or its proceeds if the PMSI is perfected that time the D received possession of the collateral or within 20 days thereafter.
On May 1, D buys equipment from A on credit and A retains a SI in the equipment. A delivers the equipment to D on May 5, but does not file a FS until May 12. In the interim, D borrows money from B who obtains a SI in the same equipment and files a FS on May 10. D defaults, and the value of equipment is less than the amount owed to both A and B.
a. Who has priority?
b. What is A had filed its FS on May 30 instead of May 12?
a. A- PMSI delivered May 5–Filed may 12–within 20 days PERFECTED.
* B would win in GR if PMSI didn’t apply.
b. Falls back to GR and B wins because more than 20 days.
