Fact Pattern 19-1
General Leasing Company (GLC) buys equipment for use as inventory,borrow-ing $1 million from Helpful Finance Corporation for a security in-terest in the equipment.The next day,GLC borrows $500,000 from Interstate Bank,also for a security interest in the equipment.GLC defaults on the loans.
-Refer to Fact Pattern 19-1.Suppose that two weeks after GLC takes pos-session of the equipment,Helpful and Interstate file financing state-ments,with Interstate fil-ing first.In that cir-cum-stance,the party with priority to the equipment is
A)GLC.
B)Helpful and Interstate proportionately.
C)Helpful only.
D)Interstate only.

Question

Quizplus · Accepted Answer

In this case, Interstate has priority to the equipment because they filed their financing statement first. This is known as the first-to-file rule, which gives priority to the party who files their financing statement first. Therefore, Interstate only has priority over GLC's equipment. Helpful does not have priority because they filed second.

Fact Pattern 19-1 General Leasing Company (GLC) Buys Equipment for Use as Inventory,borrow-Ing