SCENARIO: Elio was in the market to buy an airplane so that he could fly around the country with his family. He had a reasonable down payment and planned on financing the remaining majority of the plane's cost. He finally found a plane that suited his needs and went to his bank, National Credit, to obtain a loan. He signed a document titled "Loan Agreement" with the following provisions: "This agreement is entered into by Elio Juarez, Borrower and Debtor, and National Credit, Bank and Secured Party, on April 15, 2019. The parties agree to the following: Borrower promises to pay Bank the principal amount of $200,000 (Two Hundred Thousand Dollars) plus interest at a rate of 4.25% APR in 60 monthly installments beginning on April 1, 2019; Bank shall secure payment and performance of these terms. Borrower hereby grants Bank a security interest in the Collateral described as follows: 1981 Piper Navajo Chieftan Airplane, Serial Number 12-456789 and US registration number 967-092481. Borrower agrees to make all repairs, replacements, and improvements to maintain any Collateral in good working condition. Signed: _/s/__Elio Juarez _/s/_Belinda Wang, Officer on behalf of National Credit" Upon signing, the bank provided Elio with a cashier's check in the amount of $200,000. The bank also filed a financing statement with the Secretary of State in Ohio and with the Aircraft Registration Branch of the Federal Aviation Administration, where Elio lived but accidently misspelled his last name as "Juarex" and failed to list the serial number of the plane. Elio also registered the aircraft in his name with the Federal Aviation Administration. After two years, Elio began to experience some financial difficulty and stopped making payments on his airplane. He sold his house in Ohio and purchased a smaller home in Montana, taking his plane with him. While in Montana, he took the plane to an aircraft mechanic to have routine maintenance performed. However, being unable to pay for the maintenance, the mechanic properly filed a mechanic's lien on the plane with the State of Montana and with the Federal Aviation Administration resulting in the airplane being stored in the hangar so that Elio would not have access to it. Montana law states, "Any mechanic's lien created may not take precedence over perfected security interests under the Uniform Commercial Code." Concurrently, the bank was attempting to locate Elio to repossess the plane due to his default. They hired a private investigator who notified them of his location in Montana and likelihood of his storage of the plane at the nearby airport, where in fact the plane was being held by the mechanic unbeknownst to the bank. The bank then hired Brook Russell to take possession of the plane on behalf of the bank. Brook knew that the security personnel would not let him enter the hanger and take possession of the plane, because he was technically not the owner. Therefore, he waited until no one was around and hopped a fence to reach the hanger. There were no other people around, so Brook took a quick look at the plane to ensure it was flyable and then proceeded to start the engines. As he was taxying the plane onto the runway, he saw a man in a mechanics suit running after him. He then heard, on his headphones, air traffic control order him to not take off. He took off anyway and flew the plane back to Ohio. Note: Because aircraft sales, leases, and liens, have special federal filing requirements you should presume that the filing of the financing statement and lien statement to the FAA concurrent with the UCC filings satisfy any relevant federal filing requirements and that the UCC's provisions on attachment, perfection, and priorities will prevail. Group Work/Role Play: Break into small groups of 5-7 students. Half of the students in the group should represent the mechanic and half the students in the group should represent the bank and one student should act as a mediator. Each side should develop arguments as to why they have a greater priority in the collateral than the other assuming that the value of the plane is not enough to pay both parties in full. Each side should then present their arguments to the designated mediator who shall make a ruling.