Fact Pattern 20-2
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 20-2.Suppose that two weeks after GLC takes possession of the equipment,Helpful and Interstate file financing statements,with Interstate filing first.In that circumstance,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

When two financing statements covering the same collateral are filed, generally the first to file has priority. Therefore, because Interstate filed first, they would have priority over Helpful and GLC in the security interest in the equipment.

Fact Pattern 20-2 General Leasing Company (GLC) Buys Equipment for Use as Inventory