Careful Bank made a loan to Sampson and took his truck as security in a credit agreement. The bank filed a financing statement in Ontario. Sampson took the truck to Manitoba and used it as a trade-in on a new one. The truck dealer knew Sampson was not from Manitoba but never asked where exactly he was from. The bank discovered Sampson’s move and registered a financing statement in Manitoba. When Sampson defaulted on his loan, the bank seized the truck from the dealer’s lot. Who is entitled to the truck – the dealer or the bank? What should each have done differently?
How likely is it that the bank could trace the truck in circumstances such as these?
To complicate matters, the bank sold the truck without informing Sampson of the time and place of the sale. The sale proceeds were not enough to pay the balance on the loan, so the bank is now suing Sampson for the shortfall. On what basis can Sampson challenge the bank’s actions and defend the claims against him?
How important are the terms of the security agreement and the applicable laws?
In terms of priority by registration, the bank’s registration in Ontario was first, the dealer was second and the bank’s registration in Manitoba was third. The bank’s initial registration was valid in Ontario, but does it take precedence in Manitoba?