In the
United States Court of Appeals
For the Seventh Circuit

No. 99-4110

In re:    Vic Supply Company, Inc.,

Debtor.


Falconbridge U.S., Inc.,

Plaintiff-Appellant,

v.

Bank One Illinois, N.A.,

Defendant-Appellee.



Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 99 C 2714--Elaine E. Bucklo, Judge.


Argued May 18, 2000--Decided September 19, 2000




 Before Posner, Diane P. Wood, and Williams, Circuit
Judges.

 Posner, Circuit Judge. This case involves a
dispute between two creditors of the bankrupt Vic
Supply Company. Bank One had a security agreement
with Vic, covering all of Vic’s assets.
Falconbridge sold Vic nickel for resale,
acquiring a purchase money security interest
covering the proceeds of the resale. The
bankruptcy court, seconded by the district court,
to which Falconbridge had appealed, ruled that
Bank One’s security interest was prior to
Falconbridge’s under Article 9 of the Uniform
Commercial Code (codified in Illinois as 810 ILCS
5/9). Falconbridge argues that its interest is
prior because the security agreement between the
bank and Vic was never accepted by the bank. The
argument turns on whether a secured lender’s
failure to sign such an agreement, when the
agreement provides that it is effective only when
signed by the lender, allows a subsequent secured
lender to take priority over the earlier one.

 The bank began lending money to Vic in 1980, and
that year it filed a UCC financing statement with
the Secretary of State of Illinois covering all
of Vic’s inventory, accounts receivable, and
equipment. The statement implied that the parties
had or intended soon to make an agreement
granting the bank a security interest in these
assets, the purpose of filing such a statement
being to perfect such an interest. The UCC does
not require, for a security interest to be
perfected, that the security agreement precede
the filing of the financing statement, sec. 9-
402, let alone that it be attached to the
statement (the statement "indicates merely that
the secured party who has filed may have a
security interest in the collateral described,"
sec. 9-402, official comment 2; see In re Varney
Wood Products, Inc., 458 F.2d 435 (4th Cir.
1972)), although that is often done; and we do
not know the agreement’s terms.

 Ten years later, with the bank continuing to
extend credit to Vic, Vic signed another
agreement, granting the bank a continuing
security interest in all Vic’s assets. The
agreement expressly covered--what was anyway
implicit, sec. 9-306(2)--the proceeds of sales
from inventory. A few months earlier the bank had
filed with the Illinois Secretary of State a
continuation financing statement materially
identical to the one filed back in 1980.

 Years passed, and Falconbridge, having obtained
a purchase money security interest in the nickel
that it was selling to Vic, filed a financing
statement, just as Bank One had done. This
security interest, like Bank One’s, automatically
extended to the proceeds of Vic’s resale of the
nickel. When Vic later defaulted, Bank One’s
security interest, having been recorded before
Falconbridge’s, would normally have had priority,
sec. 9-312(5)(a); Falconbridge was not entitled
to the superpriority that is accorded to a
purchase money security interest when the debtor
receives cash proceeds in a sale of the
collateral, sec. 9-312(3), because the proceeds
that Vic received were in the form of accounts
receivable rather than cash.

 But Bank One had failed to sign the 1990
security agreement, and Falconbridge argues that
this failure means that the agreement did not
become effective. The agreement provides that
"the terms and provisions of this agreement shall
not become effective and Bank shall have no
duties hereunder unless and until this agreement
is accepted by Bank as provided below"--and below
is a blank for a signature that was never filled
in. Falconbridge reminds us that "a security
agreement is effective according to its terms
between the parties, against purchasers of the
collateral and against creditors." UCC sec. 9-
201. "According to its terms," Falconbridge
argues, the agreement never came into effect.
Although the agreement authorizes the bank to
fill in any blanks in it, the bank had not done
that; and according to Falconbridge, it was too
late for the bank to do so once Falconbridge
perfected its own security interest by filing a
UCC financing statement. In short, Falconbridge
argues, the bank had no security interest when
Falconbridge acquired its own security interest.

 Ordinarily, only a party (actual or alleged) to
a contract can challenge its validity, e.g.,
Williams v. Eggleston, 170 U.S. 304, 309 (1898);
IDS Life Insurance Co. v. SunAmerica, Inc., 103
F.3d 524, 529 (7th Cir. 1996); OPE Shipping Ltd.
v. Allstate Ins. Co., 687 F.2d 639, 643 (2d Cir.
1982); Tri-Star Pictures, Inc. v. Leisure Time
Productions, B.V., 749 F. Supp. 1243, 1250
(S.D.N.Y. 1990), and neither party to the
security agreement that is at issue in this case-
-neither Bank One nor Vic--challenges the
validity of the agreement. Of course there are
illegal contracts that the government, or persons
injured by the contract, can challenge, such as a
contract in restraint of trade, but there is no
suggestion of that here. Obviously the fact that
a third party would be better off if a contract
were unenforceable does not give him standing to
sue to void the contract. A contract that while
not unenforceable by either party, or within the
class of contracts deemed illegal, might,
intentionally or negligently, deceive a third
party, who in that event might have a tort
remedy. But there is no suggestion that the
defect in the bank’s security agreement with Vic-
-the absence of the bank’s signature--harmed
Falconbridge. So far as appears, Falconbridge was
unaware of the defect or of anything else about
the agreement. It knew, or at least thought,
there was an agreement, because before extending
credit to Vic it checked the UCC registry and
read the bank’s financing statement, which
notified Falconbridge that the bank had a
security interest, implying, as we said, that it
had a security agreement with Vic. Falconbridge
even wrote Bank One that it was planning to
obtain a purchase money security interest in the
nickel it was selling Vic and in any proceeds of
resales of the nickel. The bank cannot be accused
of having misled Falconbridge. National Bank v.
Haupricht Bros., Inc., 564 N.E.2d 101, 114 (Ohio
App. 1988) (per curiam); cf. Elhard v. Prairie
Distributors, Inc., 366 N.W.2d 465, 468 (N.D.
1985).

 So Falconbridge cannot appeal to any general
legal or equitable principle that might enable it
to challenge the validity of the bank’s agreement
with Vic. But we must consider the bearing of UCC
sec. 9-203(1)(a), which provides that a security
interest is not "enforceable against the debtor
or third parties with respect to the collateral"
unless (the collateral not being in the
creditor’s possession or control) "the debtor has
signed a security agreement which contains a
description of the collateral." Some courts have
permitted a subsequent creditor to use this
provision to knock out the priority of an earlier
creditor without requiring proof that he was
actually misled or otherwise prejudiced by any
defect in the security agreement. World Wide
Tracers, Inc. v. Metropolitan Protection, Inc.,
384 N.W.2d 442 (Minn. 1986); In re Middle
Atlantic Stud Welding Co., 503 F.2d 1133, 1136
(3d Cir. 1974). This result, which is contrary to
the Haupricht case cited earlier, strikes us as
questionable despite its conformity to the
literal language of section 9-203; it gives the
later creditor a windfall by enabling him to
knock out a priority on the basis of a defect on
which he did not rely. No matter. The debtor
signed the security agreement in this case and
the agreement describes the collateral. The fact
that section 9-203 requires the debtor to sign
and does not mention signature by the creditor
helps to show that the draftsmen did not think
that a priority should be lost merely because the
creditor’s signature was missing.

 A complicating factor in some cases, though not
in this one, is that a trustee in bankruptcy (or
debtor in possession) has the status of a
hypothetical lien creditor "without regard to any
knowledge of the trustee or of any creditor," 11
U.S.C. sec. 544(a), entitling him to void a
security interest because of defects that need
not have misled, or even have been capable of
misleading, anyone. Pearson v. Salina Coffee
House, Inc., 831 F.2d 1531 (10th Cir. 1987); In
re Sandy Ridge Oil Co., 807 F.2d 1332 (7th Cir.
1986); Sommers v. International Business
Machines, 640 F.2d 686, 688-89 (5th Cir. 1981).
The trustee did not assert this right here,
probably because the only benefit would have been
to another secured creditor, Falconbridge, and
the trustee’s duty is to maximize the recovery of
the unsecured creditors.

 For completeness we further note that while the
provision requiring an adequate description of
the collateral is intended in part for the
protection of subsequent creditors, In re Martin
Grinding & Machine Works, Inc., 793 F.2d 592,
596-97 (7th Cir. 1986); In re Laminated Veneers
Co., 471 F.2d 1124, 1125 (2d Cir. 1973), and so
may be enforced by them, at least when they can
show they were misled by an inadequate
description, the provision requiring the debtor’s
signature is not intended for their protection.
It is a statute of frauds provision intended to
make it easier for courts to resolve disputes
over the meaning of the agreement. 2 James J.
White & Robert S. Summers, Uniform Commercial
Code sec. 24-4 at 305 (1988). Falconbridge had no
standing to enforce it. See UCC sec. 2-201,
official comment 4; cf. BDS, Inc. v. Gillis, 477
A.2d 1121, 1123 (D.C. App. 1984) (per curiam); 2
E. Allan Farnsworth, Farnsworth on Contracts sec.
6.10, p. 168 (1990).

 The real significance of section 9-203 in this
case is in helping to explain section 9-201. In
providing that a security agreement is effective
only according to its terms, the draftsmen meant
to state the general rule to which section 9-203
creates an exception. See UCC sec. 9-201,
official comment. An agreement that violates
section 9-203 may not be effective according to
its terms. But that is not the only function of
section 9-201. For the fact that Falconbridge is
not permitted to question that the bank had a
security interest does not automatically
extinguish Falconbridge’s security interest. That
depends on the relative priority of the
contestants’ security interests, and this is
where section 9-201 could bite in this case: the
bank can enforce a security agreement against a
subsequent creditor of its debtor, that is, can
retain its priority, only insofar as the
agreement gives it a security interest. Had the
agreement granted the bank a security interest
only in inventory by expressly disclaiming any
grant of a security interest in proceeds as well,
the bank could not claim the proceeds in
derogation of Falconbridge’s later-perfected
security interest in them. But there is nothing
like that here. There is no discrepancy between
the bank’s financing statement and its security
interest. Both cover all the assets of Vic,
leaving nothing for Falconbridge until the bank’s
claim has been satisfied.

 Although unnecessary to add, the security
agreement was valid; that is, Vic would have had
no defense against enforcement of the agreement
by the bank, or vice versa. For one thing, it is
apparent from the wording of the signature
requirement and the fact that the bank was
authorized to fill in any blank in the agreement
that the requirement was intended solely for the
bank’s protection, and was not intended to confer
any right on Vic; it was a defect of which no one
could complain. For another thing (but it is
actually closely related), after the agreement
was not signed the bank lent money to Vic against
its inventory nonetheless, and the parties
assumed that this credit was pursuant to the
terms of the security agreement. Acceptance can
be effectuated by performance as well as by a
signature. Restatement (Second) of Contracts sec.
30(2) (1981); 1 Farnsworth, supra, sec. 3.12, p.
222; see also UCC sec. 2-206(1)(a); 1 White &
Summers, supra, sec. 1-5, p. 55. And while
parties can specify that performance shall not be
effective as acceptance, Golden Dipt Co. v.
Systems Engineering & Mfg. Co., 465 F.2d 215 (7th
Cir. 1972); In re Newport Plaza Associates, L.P.,
985 F.2d 640, 645 (1st Cir. 1993); Restatement,
supra, sec. 30, comment a, this would be an
implausible interpretation of the acceptance
clause that we quoted earlier. It would amount to
saying that if the parties had been asked, "if
the bank fails to sign the agreement, will the
agreement be void even if the parties behave in a
way that shows they thought it was in effect?"
they would have said "yes." Or that if they had
been asked, "does the bank’s failure to sign mean
that the debtor could repudiate the agreement at
any time?" they would have said "no." What they
really would have said would have been, "don’t be
silly; it was just an oversight, of no
significance--and anyway the requirement of the
bank’s signature was for the protection of the
bank, not of the debtor."

 Falconbridge’s argument that the bank’s effort
to show acceptance by performance violates the
parol evidence rule (which both parties call the
"parole evidence" rule) is frivolous. The rule
bars evidence oral or written concerning
negotiations leading up to an integrated
contract, not evidence of events subsequent to
the writing that is claimed to be the statement
of the parties’ contract. Fischer v. First
Chicago Capital Markets, 195 F.3d 279, 282 (7th
Cir. 1999); Williams v. Jader Fuel Co., 944 F.2d
1388, 1394 (7th Cir. 1991); 2 Farnsworth, supra,
sec. 7.6 p. 228. Anyway, to repeat a theme of
this opinion, the parol evidence rule, like other
contract defenses, is intended for the protection
of parties or alleged parties to contracts; it is
not intended to enable a stranger to break up a
contractual relation. Northern Assurance Co. v.
Chicago Mutual Building Ass’n, 64 N.E. 979 (Ill.
1902); Quality Lighting, Inc. v. Benjamin, 592
N.E.2d 377, 382 (Ill. App. 1992); Rittenhouse v.
Tabor Grain Co., 561 N.E.2d 264, 271 (Ill. App.
1990). So there was acceptance; but if there
hadn’t been, yet the parties agreed they had a
contract, that would be enough to defeat
Falconbridge’s effort to invalidate a contract on
which (or on the defect in which) it did not rely
in extending credit to Vic.

Affirmed.
  Williams, Circuit Judge, concurring. I agree with
my colleagues that Falconbridge cannot challenge
the validity of the security agreement between
Bank One and Vic Supply. I write separately to
voice my concern regarding the majority’s further
determination that the security agreement is, in
any event, valid. While I am sympathetic to the
majority’s intuition that Bank One and Vic Supply
could not have intended the signature provision
to mean what it says, I am not persuaded that
such an intuition justifies reading the provision
out of the agreement.

 Under the signature provision, the security
agreement becomes effective only if and when Bank
One accepts the agreement by filling in the
signature blank; something Bank One did not do.
The signature provision is not at all ambiguous,
nor is there any reason to believe it is merely
surplusage. It is a cardinal principal of
contract law that since the language of a
contract is the best evidence of the parties’
intent, every provision of a contract should be
given content and effect, and unambiguous
contractual language should be given its plain
and natural meaning. See, e.g., Emergency Med.
Care, Inc. v. Merion Mem’l Hosp., 94 F.3d 1059,
1061 (7th Cir. 1996) (applying Illinois law);
River Forest State Bank & Trust Co. v. Rosemary
Joyce Enters. Inc., 689 N.E.2d 163, 167 (Ill.
App. Ct. 1998). It does not matter that in
hindsight one or both parties (or a court) might
have second thoughts about the wisdom of
including a particular term. Our task is to
enforce the terms the parties included in their
contract.

 To my mind, moreover, it is telling that the
majority cites not a single case adopting the
same pragmatic approach it employs in
interpreting the signature provision of the
security agreement. No rule of law of which I am
aware allows us to disregard the unambiguous
terms of a contract in favor of what we believe
the parties must have intended. Again, our task
is to enforce the terms the parties included in
their contract. Accordingly, I cannot join in the
majority’s conclusion that the security agreement
between Bank One and Vic Supply is valid.
