Ann needed a bigger closet, so she went to AMC Bank to obtain a loan for $20,000 to finance the construction of her new master closet. AMC Bank took a valid security interest in Ann's designer shoe collection. AMC Bank perfected by filing a UCC-1 financing statement covering the shoes.
Ann’s trust fund ran dry, so in a panic she sold her entire collection on eBay to Sally for $15,000. Sally has been enjoying the shoes for the past 2 weeks and has no idea about AMC Bank's security interest. Which statement is true:
1. Sally took the shoe collection free of AMC Bank's security interest under the garage sale rule (UCC 9-320 (b))
2. If Sally does not satisfy the debt or turn over the shoes to AMC Bank, AMC Bank can recover a judgment against Sally in the amount of $20,000.
3. Sally took the shoe collection free of AMC Bank's security interest as a buyer in the ordinary course of business
4. Sally took the shoes subject to AMC Bank's security interest.