On May 2, 1990 SAFE BANK agreed to loan Tyler Corp. $500,000. Tyler signed a security agreement and financing statement covering its existing equipment. On May 4th, SAFE BANK properly filed the financing statement. On May 7, STATE BANK loaned Tyler $60,000 secured by the same equipment. STATE had notified SAFE on May 7 of its intention to make the loan. On that same day, Tyler Corp. signed a security agreement and financing statement covering the equipment, and received the money. On May 8, STATE properly filed the financing statement. On May 10, Tyler actually receivedthe$500,000 from SAFE.

If Tyler defaults on both loans, who will have a priority security interest in the equipment? And Why?

a) State because it was the first to perfect its security interest in the equipment.

b) State because it had a purchase money security interest in the equipment and properly notified Safe prior to making the loan.

c) Safe because it was the first to file.

d) None of the above are correct