Murphy’s Hardware is seeking to expand their lumber operations to take advantage of a sudden upsurge in soapbox derby racing. To facilicate this they approached Regional Bank ("Bank") to acquire a line of credit that would finance improvements to their warehouse and would help pay for additional inventory. To secure this line of credit Murphy’s offers a security interest to the bank in all their current and after-acquired inventory.

Prior to making the loan Bank submitted a financing statement to the appropriate filing office properly listing the collateral, the name of the debtor and the name of the secured party. However, the employee filing the financing statement was new to the town and put the street address for O’Murphy’s Hardware on Fifth (Murphy’s is on fourth) and completely neglected to enter what type of organization Murphy’s was. The filing clerk did not catch the mistakes and accepted the financing statement for filing.

A few months after the loan the soapbox fad disappears as quickly as it came and Murphy’s enters into bankruptcy. The trustee seeks to have Bank’s security interest declared invalid since Bank did not conform to UCC requirements for the information on a filing statement. What is the result?

1) Trustee can set aside Bank’s security interest as invalid, because the filing officer should have rejected the financing statement because it did not indicate the type of organization of the debtor.

2) Trustee cannot set aside Bank's security interest, because the filing officer was obligated to have accepted the Bank's filing as it was tendered.

3) Trustee can set aside Bank's security interest as invalid, because the financing statement used an address for the debtor that was “seriously misleading.”

4) Trustee cannot set aside the Bank's security interest, as the Bank's filed financing statement is valid against the Trustee despite the mistakes and omissions in the financing statement.