Hofflehaus Inc Owns a Large Piece of Land Known as Schwarzermorgen

Hofflehaus Inc owns a large piece of land known as Schwarzermorgen. It wanted to use that land as security for loans totaling $6 000 000. When it explained the situation to Primus Bank, however, it was told that it qualified for a loan of only $4 000 000. The company accepted the offer of that loan and allowed Primus Bank to take a mortgage over Schwarzermorgen. Primus Bank did not, however, immediately register its mortgage. The next day, the company approached Deuce Bank, asked for a loan of $2 000 000, and offered security in the form of a mortgage over Schwarzermorgen. The company did not mention that it had already granted a mortgage to Primus Bank and Deuce Bank had no other way of knowing about that first mortgage. Deuce Bank then (1) checked the records at the land registration office and found that there were no interests registered against Schwarzermorgen, (2) loaned $2 000 000 to the company, and (3) immediately filed its own mortgage. The next day, Primus Bank finally registered its mortgage. And later that same day, the company suffered a devastating financial loss. That loss wiped out virtually every asset that the company had, including the $6 000 000 that it had borrowed from the two banks. The company's only remaining asset is Schwarzermorgen. The value of Schwarzermorgen has, however, dropped to $1 500 000. That land has now been sold and the only question before the court concerns the disposition of the $1 500 000 in cash. Which of the following statements is TRUE?

A) Primus Bank will receive $1 000 000 and Deuce Bank will receive $500 000.
B) Deuce Bank will receive $1 500 000.
C) Primus Bank will receive $1 500 000 and Deuce Bank must pay $4 500 000 to Primus Bank.
D) Each bank will receive half of the value of Schwarzermorgen.
E) Deuce Bank will receive $1 000 000 and Primus Bank will receive $500 000.