While on a family trip to Chicago in January, Gob Bluth is outraged by the inferior local magicians. In order to bring a world class magic act to the Windy City, Gob somehow convinced his stingy brother Michael Bluth to loan him $1,000 to create his next great illusion. Gob, however, was required to put his most prized possession—his Segway—up as collateral. Michael and Gob signed a written security agreement covering the Segway in which they agreed that the security agreement was governed by Illinois law. Michael advanced Gob the $1,000 check at O’Hare Airport in Chicago before heading home.
On February 1, Gob moved to New York instead of Chicago. On February 8, Michael filed a UCC-1 financing statement covering the Segway in Illinois while on a business trip. By the end of February, Gob needed more money and put up his Segway as collateral in another agreement with NY attorney Bob Loblaw. Bob Loblaw filed a UCC-1 covering the Segway in New York on March 1.
On March 3, Gob decided to move to Chicago after all. Chicago didn’t really work out well either though—by July 15, Gob was broke and decided to sell his Segway to analyst/therapist Tobias Funke who was living in Nevada. Prior to the transfer, Bob Loblaw had filed a new UCC-1 covering the Segway in Illinois, on July 13. After the transfer on September 1, Bob Loblaw filed another UCC-1 (this time identifying Tobias Funke as the debtor) covering the Segway in Nevada.
On August 15, The Blue Man Group loaned Tobias money to buy a dog and took a security interest in the Segway. The Blue Man Group filed a UCC-1 in Nevada on August 16. In September, Tobias Funke defaulted on an unsecured loan he had earlier obtained from First Bank. On September 30, First Bank obtained a judgment and had the sheriff levy upon the Segway.
Which creditor has first priority in the Segway?
1. Michael Bluth
2. Bob Loblaw
3. The Blue Man Group
4. First Bank