Ashcroft, a seller of aquariums, sells an aquarium to Bond on credit for Bond’s personal household enjoyment. Ashcroft retains a security interest in the aquarium. Ten days later, Bond sells the aquarium to Aquariums-R-Us, a dealer in aquariums and aquarium accessories. Two days after that, Crittenden buys the aquarium from Aquariums-R-Us to put in the foyer of his seafood restaurant. First Bank has a security interest in “all of Crittenden’s equipment, either now owned or after-acquired.” First Bank perfected this security interest by filing a UCC-1 financing statement with the Secretary of State’s office two years ago (on the same day Crittenden signed the security agreement with First Bank and First Bank gave Crittenden the amount of the loan).
As between Ashcroft and First Bank, whose security interest in the aquarium takes priority?
1. First Bank, because it was the first to file or perfect.
2. First Bank, because Crittenden took the aquarium free of Ashcroft’s purchase money security interest as a buyer in the ordinary course of business.
3. Ashcroft, because First Bank’s security interest in the aquarium is subordinate to Ashcroft’s perfected security interest.
4. Ashcroft, because his security interest attached to the aquarium before First Bank’s.