O.C.G.A. § 11-9-320 (2019)

Annotations

Law reviews. For comment on Sherrock v. Commercial Credit Corp., 290 A.2d 648 (Del. S. Ct. 1972), see 10 Ga. St. B.J. 110 (1973). For article surveying developments in

Georgia commercial law from mid-1980 through mid-1981, see 33 Mercer L. Rev. 33 (1981). For note, “U.C.C. Section 9-307(1) and the Non-Possessory Buyer: Is the Good Faith Purchaser Always Right?,” see 19 Ga. L. Rev. 123 (1984).

JUDICIAL DECISIONS 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. Legislative intent. - Guiding principle in former subsection (1) of this section is to protect buyer in ordinary course of business from dealer against reservation of title or other hidden interest in goods. Commercial Credit Equip. Corp. v. Bates, 154 Ga. App. 71, 267 S.E.2d 469, 1980 Ga. App. LEXIS 2047 (1980) (decided under former Code 1933, § 109A-9-307). Statute was intended to protect buyers in the ordinary course from the lien claims of creditors who financed floor plan arrangements for the dealer. Superior Bank, FSB v. Human Servs. Emples. Credit Union, 252 Ga. App. 489, 556 S.E.2d 155, 2001 Ga. App. LEXIS 1229 (2001), cert. dismissed, No. S02C0470, 2002 Ga. LEXIS 259 (Ga. Mar. 25, 2002) (decided under former Code Section 11-9307). Protection of buyers. - Buyers in ordinary course of business take free of previously perfected security interests for the sake of untrammeled commercial dealing. United States v. McCleskey Mills, Inc., 409 F.2d 1216, 1969 U.S. App. LEXIS 13007 (5th Cir. 1969) (decided under former Code 1933, § 109A-9-307).

Applicability. - This provision not operative where perfection of security interest is required under the Motor Vehicle Certificate of Title Act (see now O.C.G.A. § 40-3-1 et seq.). First Nat’l Bank & Trust Co. v. Smithloff, 119 Ga. App. 284, 167 S.E.2d 190, 1969 Ga. App. LEXIS 1076 (1969) (decided under former Code 1933, § 109A-9-307). Floor-plan financed vehicle. - Where there is floor-plan financing of vehicle, perfection of security interest in inventory would come under Uniform Commercial Code and as to such security interest created by a dealer priority is governed by former § 11-9-307 (see now O.C.G.A. § 11-9-320). Rome Bank & Trust Co. v. Bradshaw, 143 Ga. App. 153, 237 S.E.2d 612 (1977) (decided under former Code 1933, § 109A-9-307). Knowledge of violation of security interest. - A buyer who merely knows of a security interest of another party covering certain goods constitutes a buyer in ordinary course of business and takes free of that security interest, whereas a buyer who knows that the sale actually violates some term of the security agreement not waived by the secured party takes subject to that security interest. First Nat’l Bank v. Atlanta Classic Cars, Inc., 184 Ga. App. 784, 363 S.E.2d 16, 1987 Ga. App. LEXIS 2406 (1987) (decided under former Code Section 11-9-307).

Sale of collateral. - Bona fide purchaser’s, a corporation, purchase of a machine did not fall within an exception to the general rule that a security interest continued after the sale of the collateral, as a similar argument in Superior Bank v. Human Services Employees Credit Union, 252 Ga. App. 489, 556 S.E.2d 155 (2001) was rejected. Intermet Corp. v. Fin. Fed. Credit, Inc., 263 Ga. App. 622, 588 S.E.2d 810, 2003 Ga. App. LEXIS 1279 (2003). Purchase of used car from car-leasing business. - Where sale of used cars upon termination of leases was merely incidental to leasing business, former subsection (1) had no application to such incidental sales and purchaser at such sale did not purchase from a person engaged in business of selling cars and was

therefore not entitled to protection afforded to buyers in the ordinary course of business. United Carolina Bank v. Capital Auto. Co., 163 Ga. App. 796, 294 S.E.2d 661, 1982 Ga. App. LEXIS 2653 (1982) (decided under former Code Section 11-9307). Attachment proceedings. - Where plaintiffs in attachment proceedings are seeking refund of down payment after recission of contract, fact that debt is to be satisfied by execution sale of attached mobile home does not make them buyers in ordinary course of business. Troy Lumber Co. v. Williams, 124 Ga. App. 636, 185 S.E.2d 580, 1971 Ga. App. LEXIS 1053 (1971) (decided under former Code 1933, § 109A-9-307).

RESEARCH REFERENCES Am. Jur. 2d. 68A Am. Jur. 2d, Secured Transactions, §§ 70, 71, 269, 550, 780-800, 895-925. Am. Jur. Proof of Facts. Status as “Buyer in Ordinary Course of Business,” 2 POF2d 165. C.J.S. 72 C.J.S., Pledges, § 43. U.L.A. Uniform Commercial Code (U.L.A.) § 9320. ALR. Rights as between holder of “trust receipt” and purchaser of goods from one who gave it, 31 A.L.R. 937. Chattel mortgage on live stock as including increase, 39 A.L.R. 153.

Relative rights as between assignee of conditional seller and a subsequent buyer from the conditional seller after repossession or the like, 72 A.L.R.2d 342. Who is “person in business of selling goods of that kind” within provision of UCC § 1-201(9) defining buyer in ordinary course of business for purposes of UCC § 9-307(1), 73 A.L.R.3d 338. Construction of UCC § 9-307(e) providing that under certain conditions a buyer, other than a buyer in the ordinary course of business, takes free of a security interest securing “future advances”, 35 A.L.R.4th 390.