Issue #2: In his spare time, Willie is a painter. Art owns a gallery that shows and sells paintings. On March 1, Willie delivered three paintings on consignment to Art's Gallery. According to the terms of the consignment agreement, Willie retained title to the paintings and Art's Gallery would receive a commission for any that it sold. [Assume that Art's Gallery generally does not sell goods on consignment, but made an exception for Willie.]

On June 29, Art's Gallery took out a $400,000 loan from BB. Art executed a note to BB for $400,000 and a security agreement giving BB a security interest in all of the gallery's current and future inventory.

Before it entered into the loan to Art's, BB's lawyers conducted a search of the UCC filings related to Art's Gallery. They did not find any previously filed financing statements covering inventory. BB properly perfected its security interest by filing a UCC-1 financing statement on June 30.

On September 15, Art's Gallery defaulted on its note to BB. BB sent Art's Gallery a notice of foreclosure of all of the gallery's inventory. Willie also wants to know whetherBB can foreclose on the paintings that Willie consigned to the gallery. [Assume that the paintings consigned by Willie had not been sold and still were in the possession of the gallery.]