On January 2, Albert loaned money to Beverly and took a security interest in Beverly’s watch....

On January 2, Albert loaned money to Beverly and took a security interest in Beverly’s watch. Beverly signed a security agreement and a financing statement but retained possession of the watch. On January 15, Beverly borrowed money from Pete, again using the watch as collateral. Pete took possession of the watch. On January 20, Albert filed the financing statement. Under these facts:

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Albert loaned money to Beverly on basis of the latter's watch as a security interest. The two signed a security agreement as well as a financing statement. Though the watch was retained by Beverly, he does not have any legal right on the watch until he repays the loan to Albert. However, he borrowed money from Pete on basis of the same watch as a collateral. Pete took the watch. While, Albert filed the financing statement. Now, Beverly has to repay either repay both loans or either of them and give his watch to the other one.

If he repays loan taken from Albert's and not the one taken from Pete's , then the watch would remain in custody of Pete until Beverly repays his loan.

Else, if he repays loan taken from Pete and not the one taken from Albert, then the watch would be in Albert's possession until he repays the entire loan.

Else, Beverly must repay all the loans as per contractual agreement and free his watch.

keosha answered 1 week ago

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