O.C.G.A. § 11-5-118 (2019)
Security interest of issuer or nominated person
(a) An issuer or nominated person has a security interest in a document presented under a letter of credit to the extent that the issuer or nominated person honors or gives value for the presentation.
(b) So long as and to the extent that an issuer or nominated person has not been reimbursed or has not otherwise recovered the value given with respect to a security interest in a document under subsection (a) of this Code section, the security interest continues and is subject to Article 9 of this title, but:
(1) A security agreement is not necessary to make the security interest enforceable under paragraph (3) of subsection (b) of Code Section 11-9-203;
(2) If the document is presented in a medium other than a written or other tangible medium, the security interest is perfected; and
(3) If the document is presented in a written or other tangible medium and is not a certificated security, chattel paper, a document of title, an instrument, or a letter of credit, the security interest is perfected and has priority over a conflicting security interest in the document so long as the debtor does not have possession of the document.
History
Code 1981, § 11-5-118, enacted by Ga. L. 2002, p. 995, § 1.
LETTERS OF CREDIT
Annotations
RESEARCH REFERENCES
U.L.A. Uniform Commercial Code (U.L.A.) § 5118.
ARTICLE 6 BULK TRANSFERS Sec. 11-6-101 through 11-6-111. [Reserved]
Cross references. Requirement that bulk sales of heating fuel be accompanied by delivery ticket
containing specified information, § 10-210.
JUDICIAL DECISIONS ANALYSIS GENERAL CONSIDERATION REMEDIES General Consideration Editor’s notes. - In light of the similarity of the statutory provisions, decisions under former Civil Code 1910, § 3226, and former Code 1933, §§ 28-203 and 109A-6-107 are included in the annotations for this article. Article derogates common law, and one’s right to alienate one’s own property without restriction and is therefore to be strictly construed. Yancey v. Lamar-Rankin Drug Co., 140 Ga. 359, 78 S.E. 1078, 1913 Ga. LEXIS 131 (1913); Martin v. Taylor, 24 Ga. App. 598, 101 S.E. 690, 1919 Ga. App. LEXIS 958 (1919); Bank of La Grange v. Rutland, 27 Ga. App. 442, 108 S.E. 821, 1921 Ga. App. LEXIS 952 (1921) (decided under former Civil Code 1910, § 3226). Purpose of article. - Purpose of article is to protect creditors against fraudulent sales by debtors. W.W. Stovall Co. v. W.E. Shepherd Co., 10 Ga. App. 498, 73 S.E. 761, 1912 Ga. App. LEXIS 591 (1912) (decided under former Civil Code 1910, § 3226). This article is for protection of creditors existing at time of sale, who are to be notified, and in absence of fraud such sale cannot be attacked by subsequent creditors for noncompliance with this article. Dodd v. Raines, 1 F.2d 658, 1924 U.S. Dist. LEXIS 1033 (D. Ga. 1924) (decided under former Civil Code 1910, § 3226).
Purpose of article is to permit seller’s creditors to subject consideration of proposed sale to garnishment before buyer disburses funds of such sale. McLean v. G.T. Duke Co., 95 Ga. App. 135, 97 S.E.2d 537, 1957 Ga. App. LEXIS 737 (1957) (decided under former Code 1933, § 28203). Purpose of this article is not to eliminate remedy of original seller, but rather to protect seller on contractual indebtedness assumed to have been made at least partly on implication of solvency of purchaser arising from ownership of inventory of a going business. McClain v. Laurens Glass Co., 127 Ga. App. 316, 193 S.E.2d 194, 1972 Ga. App. LEXIS 869 (1972). Central purpose underlying Art. 6 of the Uniform Commercial Code is to deal with type of commercial fraud in which merchant debtor sells stock and trade to another, pockets the proceeds, and then absconds, leaving the merchant’s creditors unpaid. Johnson v. Vincent Brass & Aluminum Co., 244 Ga. 412, 260 S.E.2d 325, 1979 Ga. LEXIS 1256 (1979) (decided under former Code 1933, § 109A-6-107). Creation of right in creditor not known at common law. - In imposing obligation upon third party buyer (transferee) and allowing cause of action against that party for breach of obligation, the article creates right in creditor not known at common law. Indon Indus., Inc. v.
Charles S. Martin Distrib. Co., 234 Ga. 845, 218 S.E.2d 562, 1975 Ga. LEXIS 1303 (1975) (decided under former Code 1933, § 109A-6-111). Transferee to help in creditor protection. - The effect of this article is to require transferee to help in creditor protection, principally a matter of giving notice, if transferee wants to ensure that they cannot reach goods in transferee’s hands after transferee has paid for them. McClain v. Laurens Glass Co., 127 Ga. App. 316, 193 S.E.2d 194, 1972 Ga. App. LEXIS 869 (1972) (decided under former Code 1933, § 109A-6-105). Article applies to secured as well as to unsecured creditors. NCR Co. v. Stubbs, 29 Ga. App. 543, 116 S.E. 44, 1923 Ga. App. LEXIS 111 (1923) (decided under former Civil Code 1910, § 3226). No distinction between creditors on basis of source of debt owed to them. - This article draws no distinction between those creditors whose debts may have arisen from sale of merchandise and such creditors as sustain that relation by reason of indebtedness created by debtor for other independent and disassociated reasons. It applies as well to a sale of a stock of goods in bulk by a debtor to a creditor in extinguishment of debtor’s debt as to a sale for cash or on credit. Anderson v. Merchants & Miners State Bank, 161 Ga. 12, 129 S.E. 650, 1925 Ga. LEXIS 292 (1925) (decided under former Civil Code 1910, § 3226). Levying upon property for which title has been transferred. - This article does not inhibit creditors, where statute has been complied with, from obtaining judgment against original purchaser who received goods and contracted with supplier to pay for them; compliance with its provisions merely prevents creditors, after judgment, from levying on property, title to which has passed out of judgment debtor’s hands. McClain v. Laurens Glass Co., 127 Ga. App. 316, 193 S.E.2d 194, 1972 Ga. App. LEXIS 869 (1972) (decided under former Code 1933, § 109A-6-105). Remedies Compliance by transferee necessary for protection. - Unless transferee complies with requirements of this
article, creditors may pursue goods as though they still belonged to transferor. McClain v. Laurens Glass Co., 127 Ga. App. 316, 193 S.E.2d 194, 1972 Ga. App. LEXIS 869 (1972) (decided under former Code 1933, § 109A-6-105). Defense of payment directly to defendant’s other creditors. - Where article has not been complied with, it is no defense that purchase price of property was paid by purchaser directly to another of defendant’s creditors. McLean v. G.T. Duke Co., 95 Ga. App. 135, 97 S.E.2d 537, 1957 Ga. App. LEXIS 737 (1957) (decided under former Code 1933, § 28-203). Effect of noncompliance on transferred inventory. - Noncompliance with this article subjects inventory transferred to attachment within 12-month statute of limitation. Willson v. Johnson Stores, Inc., 139 Ga. App. 308, 228 S.E.2d 340, 1976 Ga. App. LEXIS 1776 (1976) (decided under former Code 1933, § 109A6-101 et seq.). Contract action on open account against transferee not available remedy. - Inasmuch as transfers in violation of this article are ineffective to pass title of goods from transferor to transferee, remedies available to original seller are those seller would have had against transferor, and contract action on open account against transferee is not such a remedy. American Express Co. v. Bomar Shoe Co., 125 Ga. App. 408, 187 S.E.2d 922, 1972 Ga. App. LEXIS 1353 (1972) (decided under former Code 1933, § 109A-6-101 et seq.). Only in rem actions permitted. - This article permits only in rem action against transferred goods or proceeds therefrom, not in personam action against transferee. American Express Co. v. Bomar Shoe Co., 127 Ga. App. 837, 195 S.E.2d 479, 1973 Ga. App. LEXIS 1660 (1973) (decided under former Code 1933, § 109A-6-101 et seq.). The Bulk Transfer Act, O.C.G.A. § 116-101 et seq., preserves a creditor’s remedy against the goods, not against the transferee personally, and permits a creditor to pursue goods in the hands of a transferee as though they still belonged to the transferor. Consequently, this act does not authorize a direct action for negli-
Remedies (Cont’d) gence against the transferee of corporate stock. Brown Transp. Corp. v. Street, 194 Ga. App. 717, 391 S.E.2d 699, 1990 Ga. App. LEXIS 327 (1990). Seller to one thereafter selling in bulk. - This article has no language which compels creditor of one who thereafter sells to another in bulk to look to latter for payment, whether or not as between debtor and debtor’s transferee there is an agreement that latter will pay the debt, where original seller has not agreed to substitute transferee in place of purchaser and is stranger to contract between the latter. McClain v. Laurens Glass Co., 127 Ga. App. 316, 193 S.E.2d 194, 1972 Ga. App. LEXIS 869 (1972) (decided under former Code 1933, § 109A6-105). Availability of common law remedies. - Where the relationship of the creditor to the bulk transferor is multifac-
eted, the creditor may pursue common law and equitable remedies, if any, against the transferee without reliance on the bulk transfer law. Boss v. Bassett Furn. Indus. of N.C., Inc., 249 Ga. 166, 288 S.E.2d 559, 1982 Ga. LEXIS 768 (1982) (decided under former Code 1933, § 109A-6-101 et seq.). There is nothing in the Uniform Commercial Code to indicate that the creditor of a bulk transferor may not proceed on any common law or equitable cause of action the creditor may have against the transferee, notwithstanding the bulk transfer law. On the contrary, the Uniform Commercial Code provides that unless displaced by particular provisions, the principles of law and equity, including fraud, etc., shall supplement its provisions. Boss v. Bassett Furn. Indus. of N.C., Inc., 249 Ga. 166, 288 S.E.2d 559, 1982 Ga. LEXIS 768 (1982) (decided under former Code 1933, § 109A-6-101 et seq.).
RESEARCH REFERENCES ALR. Rights between parties to sale in violation of Bulk Sales Law, 5 A.L.R. 1517. Applicability of Bulk Sales Law to chattel mortgages and sales thereunder, 9 A.L.R. 473; 14 A.L.R. 753; 57 A.L.R. 1049. Right of creditor to judgment for value of goods against transferee in violation of Bulk Sales Law, 61 A.L.R. 364.
Subrogation of purchaser at sale contrary to Bulk Sales Law to rights of creditors, 80 A.L.R. 712. Garnishment as remedy in case of violation of Bulk Sales Law, 155 A.L.R. 1061. Bulk transfers: construction and effect of UCC Article 6, dealing with transfers in bulk, 47 A.L.R.3d 1114.
11-6-101 through 11-6-111. [Reserved] History. Code 1933, §§ 109A-6-101 through 109A-6-111, enacted by Ga. L. 1962, p. 156, § 1; Ga. L., p. 188, Ga. L. 1963, p. 188, §§ 15-17; Ga. L., p. 1589, Ga. L. 2000, p. 1589, § 3; Ga. L., p. 362, Ga. L. 2001, p.
362, § 15; repealed by Ga. L. 2015, p. 996, § 3D-1/SB 65, effective July 1, 2015. Editor’s notes. These Code sections were repealed and reserved by Ga. L. 2015, p. 996, § 3D-1/SB 65, effective July 1, 2015.
ARTICLE 7 WAREHOUSE RECEIPTS, BILLS OF LADING, AND OTHER DOCUMENTS OF TITLE Part 1
Sec.
General Sec.
Short title. Definitions and index of definitions. Relation of article to treaty or statute. Negotiable and nonnegotiable document of title. Reissuance in alternative medium. Control of electronic document of title.
Part 2
Part 4
Warehouse Receipts: Special Provisions
Warehouse Receipts and Bills of Lading: General Obligations
Person that may issue a warehouse receipt; storage under bond. Form of warehouse receipt; effect of omission. Liability for nonreceipt or misdescription. Duty of care; contractual limitation of warehouse’s liability. Title under warehouse receipt defeated in certain cases. Termination of storage at warehouse’s option. Goods shall be kept separate; fungible goods. Altered warehouse receipts. Lien of warehouse. Enforcement of warehouse’s lien. Part 3
Part 5
Liability for nonreceipt or misdescription; “said to contain”; “shipper’s weight,
Irregularities in issue of receipt or bill or conduct of issuer. Duplicate document of title; overissue. Obligation of bailee to deliver; excuse. No liability for good-faith delivery pursuant to document of title.
Warehouse Receipts and Bills of Lading: Negotiation and Transfer
Bills of Lading: Special Provisions
load, and count”; improper handling. Through bills of lading and similar documents of title. Diversion; reconsignment; change of instructions. Tangible bills of lading in a set. Destination bills. Altered bills of lading. Lien of carrier. Enforcement of carrier’s lien. Duty of care; contractual limitation of carrier’s liability.
Form of negotiation and requirements of due negotiation. Rights acquired by due negotiation. Document of title to goods defeated in certain cases. Rights acquired in the absence of due negotiation; effect of diversion; stoppage of delivery. Indorser not guarantor for other parties.
Sec.
COMMERCIAL CODE Part 6 Delivery without indorsement; right to compel indorsement. Warranties on negotiation or delivery of document of title. Warranties of collecting bank as to documents of title. Adequate compliance with commercial contract.
Cross references. Bailments generally, § 44-12-40 et seq. Issuance of freight receipts, freight bills, and freight lists by common carriers, § 46-9-110 et seq.
Warehouse Receipts and Bills of Lading: Miscellaneous Provisions Sec.
Lost, stolen, or destroyed documents of title. Judicial process against goods covered by negotiable document of title. Conflicting claims; interpleader.
Georgia State Warehouse Act, § 10-4-1 et seq.
RESEARCH REFERENCES Am. Jur. 2d. 15A Am. Jur. 2d, Commercial Code, § 35 et seq. Am. Jur. Proof of Facts. Warehouseman’s Failure to Care for Stored Property - Deterioration of Perishable Goods, 20 POF2d 371.
ALR. Construction and effect of UCC Art. 7, dealing with warehouse receipts, bills of lading, and other documents of title, 21 A.L.R.3d 1339.
PART 1 GENERAL