Question
CopyCo is a manufacturer of office copier/fax machines. CopyCo sells 50 of these machines to Machines-to-Go. Machines-to-Go signs a note promising to pay $100,000 for
CopyCo is a manufacturer of office copier/fax machines. CopyCo sells 50 of these machines to Machines-to-Go. Machines-to-Go signs a note promising to pay $100,000 for these machines in 3 months. CopyCo also has Machiners-to-Go sign a security agreement granting a security interest in these machines and files a financing statement in the appropriate filing location. CopyCo then indorses Machine-to-Go's note to BankTwo and assigns its security interest over to BankTwo as well. Machines-to-Go sells 2 of these machines to CostLiquidhouse, an accounting firm, for $3,600 payable at $100/month for three years. Machines-to-Go defaults on its note. BankTwo brings an action against Machines-to-Go on the note as well as CostLiquidhouse on the note and seeks to recover the machines from CostLiquidhouse. CostLiquidhouse responds that it knew nothing of the arrangement between CopyCo, Machines-to-Go and BankTwo, does not have to pay BankTwo, is current on its financing with Machines-to-Go and will retain the machines. Please comment on the legal claims and obligations of the parties
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