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Stanley Bugg

Stanley Bugg finally realized his dream and began operating Bugg's Bug Extermination as a sole proprietor. Stanley Bugg did not have the cash to purchase a truck, so he borrowed $10,000 from Sucker Bank & Trust. In exchange for the money, Stanley Bugg promised to pay the bank a monthly payment and entered into a security agreement (but did not file a financing statement). Unfortunately, bugs headed south for the winter and Stanley had very little business. As a result, Stanley was unable to make his monthly payment on his small truck. After several months, Sucker Bank & Trust became impatient with Stanley Bugg and decided to repossesses the vehicle. A bank employee went to Stanley's home and saw the truck parked in Stanley's open garage. The bank employee entered the truck and began to pull out of the garage when Stanley came storming out of his home yelling and screaming at the bank employee. Stanley managed to get to the truck and began pounding on the door. The bank employee was vigilant and managed to escape Stanley's pounding and raced away with Stanley's vehicle.
1(A) Did the bank have the right to repossess Stanley's truck or is it required to go to the court?
1(B) Was there a problem with the method in which the bank repossessed Stanley's vehicle?
1(C) Why would a bank choose to file a finance statement?
1(D) In your state, where would a bank file a financing statement?

Solution Preview

Stanley Bugg finally realized his dream and began operating Bugg's Bug Extermination as a sole proprietor. Stanley Bugg did not have the cash to purchase a truck, so he borrowed $10,000 from Sucker Bank & Trust. In exchange for the money, Stanley Bugg promised to pay the bank a monthly payment and entered into a security agreement (but did not file a financing statement). Unfortunately, bugs headed south for the winter and Stanley had very little business. As a result, Stanley was unable to make his monthly payment on his small truck. After several months, Sucker Bank & Trust became impatient with Stanley Bugg and decided to repossesses the vehicle. A bank employee went to Stanley's home and saw the truck parked in Stanley's open garage. The bank employee entered the truck and began to pull out of the garage when Stanley came storming out of his home yelling and screaming at the bank ...

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