John and Clara Lockovich bought a 22-foot Chaparrel Villian II boat from Greene County Yacht Club for $32,500. They paid $6,000 cash and borrowed the rest of the purchase money from Gallatin National Bank, which took a security interest in the boat. Gallatin filed a financing statement in Greene County, Pennsylvania, where the bank was located. But Pennsylvania law at that time required financing statements to be filed in the county of the debtor’s residence, and the Lockoviches lived in Allegheny County.

The Lockoviches soon washed up in Bankruptcy Court. Other creditors demanded that the boat be sold, claiming that Gallatin’s security interest had been filed in the wrong place. Who wins?