Kathleen Wilson signed a security agreement with Mark S. Conti and filed a UCC-1 financing statement in 1996 for collateral described as equipment. In 1998, Conti offered 11 paintings as security to the Silver Trust. The trust took possession of the paintings that year. The appellate court held that the trial court had incorrectly classified 4 of the paintings as consumer goods. The appellate court held that all 11 paintings were used for business purposes in offices and model homes. Because the paintings were for business use, they were classified as equipment, which meant that Wilson’s security interest was perfected before that of the Silver Trust and all of the paintings would be transferred to Wilson to secure her loan.

CASE QUESTIONS

1. What would Conti have to do for the law to consider these paintings consumer goods?

2. How could the Silver Trust have avoided this outcome?