ASSIGNMENT
Victor sells to Bonnie a refrigerator for $600 payable in monthly installments of $30 for twenty months. Bonnie signs a security agreement granting Victor a security interest in the refrigerator. The refrigerator is installed in the kitchen of Bonnie’s apartment. There is no filing of any financing statement. Assume that after Bonnie has made the first three monthly payments:
a. Bonnie moves from her apartment and sells the refrigerator in place to the new occupant for $350 cash. What are the rights of Victor?
b. Bonnie is adjudicated bankrupt, and her trustee in bankruptcy claims the refrigerator. What are the rights of the parties?
2. On January 2, Burt asked Logan to loan him money “against my diamond ring.” Logan agreed to do so. To guard against intervening liens, Logan received permission to file a financing statement, and Burt and Logan signed a security agreement giving Logan an interest in the ring. Burt also signed a financing statement, which Logan properly filed on January 3. On January 4, Burt borrowed money from Tillo, pledging his ring to secure the debt. Tillo took possession of the ring and paid Burt the money on the same day. The next day, January 5,Logan loaned Burt the money under the assumption that Burt still had the ring. Who has priority, Logan or Tillo? Explain.
3. Joanna takes a security interest in the equipment in Jason Store and files a financing statement claiming “equipment and all after acquired equipment.” Berkeley later sells Jason Store a cash register, taking a security interest in the register, and (a) files nine days after Jason receives the register or (b) files twenty-five days after Jason receives the register. If Jason fails to pay both Joanna and Berkeley and they foreclose their security interests, who has priority on the cash register? Explain.
4. Finley Motor Company sells an automobile to Sara and retains a security interest in it. The automobile is insured, and Finley is named beneficiary. Three days after the automobile is totally destroyed in an accident, Sara files a petition in bankruptcy. As between Finley and Sara’s trustee in bankruptcy, who is entitled to the insurance proceeds?
5. On September 5, Wanda, a widow who occasionally teaches piano and organ in her home, purchased an electric organ from Murphy’s music store for $4,800, trading in her old organ for $1,200 and promising in writing to pay the balance at $120 per month and granting to Murphy a security interest in the property in terms consistent with and incorporating provisions of
the Uniform Commercial Code. A financing statement covering the transaction was also properly filled out and signed, and Murphy properly filed it. After Wanda failed to make the December or January payments, Murphy went to her home to collect the payments or take the organ. Finding no one home and the door unlocked, he went in and took the organ. Two hours later, Tia, a third party and the present occupant of the house, who had purchased the organ for her own use, stormed into Murphy’s store, demanding the return of the organ. She showed Murphy a bill of sale from Wanda to her, dated December 15, that listed the organ and other furnishings in the house.
a. What are the rights of Murphy, Tia, and Wanda?
b. Would your answer change if Murphy had not filed a financing statement? Why?
c. Would your answer change if the organ had been used principally to give lessons? Explain
