Gardner Bank loaned Holland Company $20,000 to purchase
some inventory to resell in its store. Gardner had Holland
sign a security agreement that listed as collateral all present and
future inventory of Holland as well as the proceeds of any sales of
the inventory. Later, Boldon Company, who was aware of Gardner’s
security interest, extended credit to Holland but Holland
failed to pay back either Gardner or Boldon. Boldon has sought
to defeat the security interest pointing out that Gardner never
filled out a financing statement. Which of the following is correct?

Gardner has an enforceable security interest that is
valid against Holland and has priority over Boldon’s interests.
Gardner does not have an enforceable security interest
valid against Holland or against Boldon.
Gardner does have an enforceable security interest
valid against Holland but not valid against Boldon.
Gardner does not have an enforceable security interest
valid against Holland but does have one valid against
Boldon.

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