[Favi's Furniture] Favi took out a loan from First Bank and executed a security agreement which gave First Bank rights to any after-acquired property as collateral. A year later, Favi took out a loan with Second Bank and executed a security agreement with Second Bank using his new delivery truck as collateral. Favi eventually defaulted on both loans.
-Which creditor has rights to Favi's delivery truck as collateral?
A) First Bank, because in a dispute between two secured but unperfected creditors, the party who attached first takes priority.
B) First Bank, because in a dispute between two secured and perfected creditors, the party who perfected first takes priority.
C) First Bank, because in a dispute between a secured perfected creditor and a secured unperfected creditor, the secured perfected creditor takes priority.
D) The two banks will have equal rights to the property.
E) Second Bank, because "after-acquired property" is not specific enough to grant attachment right to First Bank, and, thus, the secured agreement of Second Bank takes priority.
Correct Answer:
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