O.C.G.A. § 11-9-310 (2019)

Annotations

Editor’s notes. Ga. L. 2010, p. 481, § 3-1/HB 451, not codified by the General Assembly, provides that: “This Act applies to a document of title that is issued or a bailment that arises on or after the effective date of this Act. This Act does not apply to a document of title that is issued or a bailment that arises before the effective date of this Act even if the document of title or bailment would be subject to this Act if the document of title had been issued or bailment had arisen on or after the effective date of this Act. This Act does not apply to a right of action that has accrued before the effective date of this Act.” This Act became effective May 27, 2010. Ga. L. 2010, p. 481, § 3-2/HB 451, not codified by the General Assembly, provides that: “A document of title issued or a bailment that arises before the effective date of this Act and the rights, documents, and interests flowing from that document

or bailment are governed by any statute or other rule amended or repealed by this Act as if such amendment or repeal had not occurred and may be terminated, completed, consummated, or enforced under that statute or other rule.” This Act became effective May 27, 2010. Law reviews. For comment on Maley v. National Acceptance Co., 250 F. Supp. 841 (N.D. Ga. 1966), see 3 Ga. St. B.J. 248 (1966). For article discussing the classification of a continuing security interest in changing collateral as an unenforceable preference under Section 60a of the Bankruptcy Act, see 1 Ga. L. Rev. 257 (1967). For article, “Security Transfers by Secured Parties,” see 4 Ga. L. Rev. 527 (1970). For note examining the conflict between the floating lien in after-acquired property under the Uniform Commercial Code and the voidable preferences provisions of the Bankruptcy Act, see 9 Ga. L. Rev. 685 (1975). For article, “Commercial Law,” see 53 Mercer L. Rev. 153 (2001).

JUDICIAL DECISIONS ANALYSIS GENERAL CONSIDERATION PERFECTION BY POSSESSION CONSUMER GOODS ASSIGNMENTS OF ACCOUNTS MOTOR VEHICLES General Consideration Editor’s notes. - In light of the similarity of the statutory provisions, decisions under former Article 9 are included in the annotations for this Code section. For a table of comparable provisions, see the table at the beginning of the Article. Filing of financing statement can perfect only those interests acquired through security agreements. Tri-

County Livestock Auction Co. v. Bank of Madison, 228 Ga. 325, 185 S.E.2d 393, 1971 Ga. LEXIS 560 (1971) (decided under former Code 1933, § 109A-9-402). Financing statements and security agreements distinguished. - Financing statement merely gives notice of existence of security interest but in itself does not create a security interest, for which a security agreement is required. Trust Co.

v. Associated Grocers Coop., 152 Ga. App. 701, 263 S.E.2d 676, 1979 Ga. App. LEXIS 3012 (1979) (decided under former Article 9). Requirements to perfect purchase money security interests. - To perfect a purchase money security interest and for it to be enforceable against debtor and third parties, there must be a written agreement, signed by debtor and filing of financing statement . Food Serv. Equip. Co. v. First Nat’l Bank, 121 Ga. App. 421, 174 S.E.2d 216, 1970 Ga. App. LEXIS 1238 (1970) (decided under former Code 1933, § 109A-9-302). Creditor did not file financing statement. - Georgia’s Article 9 of the Uniform Commercial Code requires proper filing of a financing statement in order to perfect an interest in personal property. The creditor did not dispute that a financing statement indicating the creditor’s security interest in any of the debtor’s personal property had not been filed and, therefore, the creditor held an unperfected security interest in the debtor’s personal property, including the debtor’s inventory and its proceeds; thus, the creditor was not an entity with an interest in cash collateral within the meaning of 11 U.S.C. § 363. In re Shree Meldikrupa Inc., No. 15-4141 1-EJC, 2016 Bankr. LEXIS 159 (Bankr. S.D. Ga. Jan. 15, 2016). Computer information and programming. - Computer information and programming recorded on magnetic tape were “general intangibles” which are not included in the types of collateral in which security interests can be perfected by possession under former § 11-9-305 (see now § 11-9-313), and a security interest therein could therefore only be perfected by filing a financing statement. Dabney v. Information Exch., Inc., 98 B.R. 603, 1989 Bankr. LEXIS 605 (Bankr. N.D. Ga. 1989) (decided under former Code Section 11-9302). Pre-petition enforcement. - Creditor had a valid post-petition lien in rents, profits, and proceeds from a Chapter 11 debtor’s hotel operations, though the creditor took no pre-petition enforcement action under Georgia law, as its lien in the pre-petition rents was valid from the time

of recording, and the lien in post-petition rents was valid from the time of the bankruptcy filing. In re Resort Inns, Inc., No. 04-41721, 2004 Bankr. LEXIS 1580 (Bankr. S.D. Ga. Aug. 30, 2004). Security interest in accounts. - This section required filing of financing statement to perfect security interest in accounts. M.D. Hodges Enters., Inc. v. First Ga. Bank, 243 Ga. 664, 256 S.E.2d 350, 1979 Ga. LEXIS 1021 (1979) (decided under former Code 1933, § 109A-9-302). Equipment lessors. - To take precedence over previously recorded loan deed covering subsequently purchased equipment, equipment lessor must perfect security interest. Citizens & S. Equip. Leasing, Inc. v. Atlanta Fed. Sav. & Loan Ass’n, 144 Ga. App. 800, 243 S.E.2d 243, 1978 Ga. App. LEXIS 1792 (1978) (decided under former Code 1933, § 109A-9-302). Banks. - Bank perfected security interest by filing UCC financing statement. See Trust Co. Bank v. Walker, 35 B.R. 237, 1983 Bankr. LEXIS 4944 (Bankr. N.D. Ga. 1983) (decided under former Code Section 11-9-302). Perfection by Possession Security interest in money is perfected by possession. - Security interest in money (either originally given or received as proceeds from negotiation of instrument) is perfected by possession. In re Atlanta Times, Inc., 259 F. Supp. 820, 1966 U.S. Dist. LEXIS 10458 (N.D. Ga. 1966), aff’d, 383 F.2d 606, 1967 U.S. App. LEXIS 4987 (5th Cir. 1967) (decided under former Code 1933, § 109A-9-302). Perfected security interest had priority over attempted reservation of title. - Peanut growers’ attempted reservation of title when the growers delivered peanuts to a peanut company at a peanut broker’s direction amounted to a security interest; however, the growers never perfected the growers’ security interests. A cooperative bank’s security interest in the peanuts was perfected as the bank had filed financing statements and the security interest had attached so that the bank’s perfected security interest had priority over the growers’ unperfected security interests. Farm Credit of Northwest Fla., ACA v. Easom Peanut Co., 312 Ga.

Perfection by Possession (Cont’d) App. 374, 718 S.E.2d 590, 2011 Ga. App. LEXIS 817 (2011), cert. denied, No. S12C0444, 2012 Ga. LEXIS 315 (Ga. Mar. 19, 2012). Consumer Goods Constitutionality. - This section, pursuant to which purchase money security interest in consumer goods is perfected without filing, does not violate equal protection, is a rational classification, and does not violate due process because it does not provide notice by filing, since existence of exception is sufficient to put corporate entities on notice. Personal Thrift Plan of Perry, Inc. v. Georgia Power Co., 242 Ga. 388, 249 S.E.2d 72, 1978 Ga. LEXIS 1223 (1978) (decided under former Code 1933, § 109A-9-302). Purpose of description in unfiled security agreement. - Purchase money security agreements on consumer goods are not required to be filed, and purpose of description of collateral in unfiled security agreement is not to give notice, as on a financing statement, but is to provide identification of collateral so as to avoid disputes over its identity. Personal Thrift Plan of Perry, Inc. v. Georgia Power Co., 242 Ga. 388, 249 S.E.2d 72, 1978 Ga. LEXIS 1223 (1978) (decided under former Code 1933, § 109A-9-302). Interest in consumer goods cannot exceed price. - Purchase money security interest must be in the item purchased, and if vendor of consumer goods is to be protected despite absence of filing security interest cannot exceed price of item purchased in transaction out of which it arose. Roberts Furn. Co. v. Pierce, 507 F.2d 990, 1975 U.S. App. LEXIS 16183 (5th Cir. 1975) (decided under former Code 1933, § 109A-9-302). Household goods. - A purchasemoney security interest in household goods is automatically perfected without filing. Dennis v. W.S. Badcock Corp., 31 B.R. 128, 1983 Bankr. LEXIS 5842 (Bankr. M.D. Ga. 1983) (decided under former Code Section 11-9-302). Assignments of Accounts Filing requirements. - Financing statement must be filed to perfect all

security interests unless assignment to assignee does not transfer a significant part of outstanding contract rights of assignor. Park Ave. Bank v. Bassford, 232 Ga. 216, 205 S.E.2d 861, 1974 Ga. LEXIS 912 (1974) (decided under former Code 1933, § 109A-9-302). Exceptions from filing requirements. - Official comment to this section indicates that exception from filing for isolated or casual assignment of accounts is not available to “any person who regularly takes assignments of any debtor’s account”; a bank which regularly loans money and accepts accounts as security must file to perfect its security interests and cannot rely on automatic perfection. M.D. Hodges Enters., Inc. v. First Ga. Bank, 243 Ga. 664, 256 S.E.2d 350, 1979 Ga. LEXIS 1021 (1979) (decided under former Code 1933, § 109A-9-302). Assignment of future proceeds. - Debtor’s assignment to bank of specific amounts from future proceeds from debtor’s business was not exempted from this article and was required to be perfected by the filing of a financing statement. Bank of Cave Spring v. Gold Kist, Inc., 173 Ga. App. 679, 327 S.E.2d 800, 1985 Ga. App. LEXIS 2666 (1985) (decided under former Code Section 11-9-302). Motor Vehicles Inventory. - Security interest in automobiles in dealer’s inventory must be perfected under this article. Staley v. Phelan Fin. Corp., 116 Ga. App. 1, 156 S.E.2d 201, 1967 Ga. App. LEXIS 666 (1967) (decided under former Code 1933, § 109A-9-302); but see In re Chappell, 224 B.R. 507, 1998 Bankr. LEXIS 1109 (Bankr. M.D. Ga. 1998). Motor Vehicle Certificate of Title Act. - Security interest in motor vehicle may be perfected under Motor Vehicle Certificate of Title Act, Ga. L. 1968, p. 68 et seq., if created by other than a dealer or manufacturer or under Uniform Commercial Code if by a dealer or manufacturer. Guardian Disct. Co. v. Settles, 114 Ga. App. 418, 151 S.E.2d 530, 1966 Ga. App. LEXIS 787 (1966) (decided under former Code 1933, § 109A-9-302). As a result of adoption of former § 119-302 and the UCC, the only way to per-

fect security interest in motor vehicles is by filing under Motor Vehicle Certificate of Title Act, Ga. L. 1968, p. 68 et seq. Staley v. Phelan Fin. Corp., 116 Ga. App. 1, 156 S.E.2d 201, 1967 Ga. App. LEXIS 666 (1967) (decided under former Code 1933, § 109A-9-302); General Fin. Corp. v. Hester, 141 Ga. App. 28, 232 S.E.2d 375, 1977 Ga. App. LEXIS 1742 (1977) (decided under former Code 1933, § 109A-9-302); Freeman v. Bentley, 205 Ga. App. 409, 422 S.E.2d 435, 1992 Ga. App. LEXIS 1202 (1992) (decided under former Article 9); but see In re Chappell, 224 B.R. 507, 1998 Bankr. LEXIS 1109 (Bankr. M.D. Ga. 1998). Centralized method of filing security interests in vehicles. - Legal result of passage of Uniform Commercial Code was to replace prior law and provide for only one centralized method of filing security interests in pre-1963 motor vehicles. Any such security interest filed subsequent to effective date of Uniform Commercial Code, to be valid, must be filed pursuant to provisions of the Georgia Motor Vehicle Certificate of Title Act, Ga.

L. 1968, p. 68 et seq. Maley v. National Acceptance Co., 250 F. Supp. 841, 1966 U.S. Dist. LEXIS 10477 (N.D. Ga. 1966) (decided under former Code 1933, § 109A9-302); but see In re Chappell, 224 B.R. 507, 1998 Bankr. LEXIS 1109 (Bankr. M.D. Ga. 1998). Innocent third-party purchaser protected. - Under this section and the Motor Vehicle Certificate of Title Act, O.C.G.A. §§ 40-3-20, 40-3-50, 40-3-51, the rights of the holder of an unperfected security interest in an automobile are subordinate to the rights of an innocent third party who acquires the automobile for value. A party who purchases a car from another party, who purchased the car at a judicial sale after the car, which had an unperfected security interest on it, was sold to satisfy a judgment against the owner’s spouse, is such an innocent party. May v. Macioce, 200 Ga. App. 542, 409 S.E.2d 45, 1991 Ga. App. LEXIS 1072 (1991), cert. denied, No. S91C1480, 1991 Ga. LEXIS 585 (Ga. Sept. 6, 1991) (decided under former Code Section 11-9-302).

RESEARCH REFERENCES Am. Jur. 2d. 68A Am. Jur. 2d, Secured Transactions, §§ 15, 39-69, 104, 106, 110, 127, 128, 149, 150, 192 et seq., 282, 288 et seq., 304, 306, 323, 437-461, 796, 907. C.J.S. 6A C.J.S., Assignments, §§ 79, 80, 85. 72 C.J.S., Pledges, § 23. U.L.A. Uniform Commercial Code (U.L.A.) § 9310. ALR. Rights of holders of different notes in respect of collateral securing them, 52 A.L.R. 1391. Retention of check received by drawee bank for collection as payment of check, 68 A.L.R. 862. Assignees for creditors as within protection of statute requiring filing or recording of conditional-sale contract or chattel mortgage, 71 A.L.R. 981. Assignability of contemplated debt before execution of agreement by which it is to be created, 116 A.L.R. 955.

Federal government or agencies of federal government as subject to payment of tax or fee imposed upon, or for, recording or filing instrument, 124 A.L.R. 1267. Coverage of “nonrecording” or “nonfiling” insurance against loss from failure to record chattel mortgage, conditional sale, or other security instrument, 51 A.L.R.2d 325. Construction and effect of UCC Article 9, dealing with secured transactions, sales of accounts, contract rights, and chattel paper, 30 A.L.R.3d 9; 67 A.L.R.3d 308; 69 A.L.R.3d 1162; 76 A.L.R.3d 11; 99 A.L.R.3d 807; 99 A.L.R.3d 1080; 100 A.L.R.3d 10; 100 A.L.R.3d 940; 7 A.L.R.4th 308; 11 A.L.R.4th 241; 25 A.L.R.5th 696. Determination of purchase price of farm equipment for purposes of UCC § 9302(1)(c) excusing filing of financing statement, 85 A.L.R.3d 1037. When is filing of financing statement necessary to perfect an assignment of accounts under UCC § 9-302(1)(e), 85 A.L.R.3d 1050.

Effectiveness of original financing statement under UCC Article 9 after change in debtor’s name, identity, or business structure, 99 A.L.R.3d 1194. Construction and effect of “future advances” clauses under UCC Article 9, 90 A.L.R.4th 859.

Creation and perfection of security interests in insurance proceeds under Article 9 of Uniform Commercial Code, 47 A.L.R.6th 347.