Some Exam Questions

Because it's time to retire this line of questions anyway, I'll post their latest iteration (without the answer options).

6. Demetrius, the world’s only ultrarunning groupie, hoped to borrow money to fly from Indianapolis to Leadville, Colorado, to observe the Leadville 100 ultramarathon. He approached Left Bank about a loan. Left Bank decided Demetrius was too great a credit risk and demanded security before it was willing to proceed. Demetrius offered Left Bank a security interest in his perfectly restored 1981 Colnago bicycle with a value of $2500. On June 21, Demetrius signed a promissory note and a security agreement. Left Bank filed a financing statement containing all necessary information that same day. If nothing else occurred, would Left Bank have a perfected security interest in the bicycle?

7. Assume the facts of Question 6, above. On July 2 (same year), Demetrius’ ex-wife, who left him because she was tired of being an “ultrarunning widow” (you think watching football for a couple of hours on Sunday is tough on a relationship?), sued for past-due alimony. Because Demetrius was in Leadville, she got a default judgment, petitioned for and was awarded a writ of execution, and took it to the sheriff. Learning of this, Left Bank declared Demetrius in default and repossessed the bicycle. (Demetrius, sitting beside a trail somewhere in the Rockies cheering every 45 minutes when a runner staggered by, had no idea what was going on.) When the sheriff entered the bank and declared that he was levying on the bicycle pursuant to the writ of execution, is Left Bank in a position to keep the collateral (even if it has to take additional steps)?

19. Recall Question 6, above, and assume Left Bank’s interest attached to the bicycle and Left Bank perfected. Left Bank decided to proceed against the collateral when Demetrius predictably defaulted. (Legend has it Demetrius absconded to Copper Canyon, State of Chiapas, MX, to live in a mud hut and run full time.) It turns out the president of Left Bank was a huge Italian cycling fan and was dying to get his hands on the Colnago. Knowing that, the loan officer decided his best career move was to keep the bicycle in satisfaction of the loan. The amount owing on David’s obligation to the bank was $750 and the bicycle was worth about $2500. What possible impediment(s) exist to Left Bank’s keeping the bicycle in satisfaction of the loan?