Question: When Butch borrowed 10 000 from Olympia Bank the bank not
When Butch borrowed $10,000 from Olympia Bank, the bank not only made him get a surety, but also demanded that the inventory of Butch’s feed store stand as collateral. Butch talked his brother Arnold into signing the promissory note as surety and signed the necessary papers for the bank to get an Article 9 security interest in the inventory. Unfortunately, the bank failed to file the Article 9 financing statement in the correct place, so when Butch had financial difficulties, other creditors prevailed over the bank’s attempt to claim the inventory. The inventory was worth $6,000. What is the effect of the bank’s Article 9 difficulties on Arnold, Butch’s surety?
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