Bank 1 took a security interest in "all of Debtor’s inventory." The security agreement did not contain an after-acquired property clause. Bank 1 perfected by filing a UCC-1 covering "inventory." Bank 2 subsequently took a security interest in "all of Debtor’s chairs," and perfected it by filing a UCC-1 covering "all of Debtor's chairs." Debtor is in the business of selling dining room furniture.
One week later, Debtor acquires 5 chairs (which it places on its sales floor to be sold). Which secured party has priority as to the 5 newly-acquired chairs?
1. Bank 2, because Bank 1's security agreement does not include an after-acquired clause in its security agreement
2. Bank 2, because its financing statement covers the chairs whereas Bank 1’s financing statement does not.
3. Bank 1, because Bank 1 was the first to perfect.
4. Bank 1, because the chairs are inventory and Bank 1 was first to file with respect to inventory.