O.C.G.A. § 11-9-625 (2019)

Annotations

Law reviews. For comment on a secured party’s burden of proof in seeking a deficiency judgment after resale of collateral, see 33 Mercer L. Rev. 397 (1981).

For article, “Nonjudicial Foreclosures in Georgia Revisited,” see 24 Ga. St. B. J. 43 (1987). For annual survey of commercial law, see 43 Mercer L. Rev. 119 (1991). For survey article on commercial law, see 44 Mercer L. Rev. 99 (1992).

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. Liability for loss caused by failure to comply with law. - The debtor or any person entitled to notification has a right to recover from secured party any loss caused by failure to comply with provisions of law. Georgia Cent. Credit Union v. Coleman, 155 Ga. App. 547, 271 S.E.2d 681, 1980 Ga. App. LEXIS 2668 (1980) (decided under former Code 1933, § 109A9-507). Recovery of “any loss” by the debtor under former paragraph (1) for the creditor’s noncompliance with the Codal provisions must necessarily be limited to actual damages caused by a sale at less than an adequate price. Willis v. Healthdyne, Inc., 191 Ga. App. 671, 382 S.E.2d 651, 1989 Ga. App. LEXIS 782 (1989) (decided under former Code Section 11-9-507). Disposition approved in judicial proceeding. - A judicial order which merely authorized plaintiff to conduct a commercially reasonable sale but did not declare the manner in which plaintiff ultimately conducted the sale to be commercially reasonable did not constitute judicial approval of the sale which would conclusively deem the sale to be commer-

cially reasonable. Carlton Mfg., Inc. v. Bauer, 207 Ga. App. 850, 429 S.E.2d 329, 1993 Ga. App. LEXIS 371 (1993) (decided under former Code Section 11-9-507). Effect of failure to prove commercial reasonableness of disposition. - A creditor who fails to prove that notice of sale was given debtor (where required) or fails to prove that disposition, including its method, manner, time, place and terms, was commercially reasonable, is barred from obtaining a deficiency judgment. Farmers Bank v. Hubbard, 247 Ga. 431, 276 S.E.2d 622, 1981 Ga. LEXIS 737 (1981) (decided under former Code Section 11-9-507). When the reasonableness of the sale is challenged, the seller of the collateral has the burden of proving that the sale was reasonable. A secured creditor who fails to meet this burden is barred from recovering any deficiency between the sale price and the debt. Walker v. Modnar Corp., 194 Ga. App. 68, 389 S.E.2d 558, 1989 Ga. App. LEXIS 1708 (1989) (decided under former Code Section 11-9-507). Creditor’s failure to notify of dispository intent immaterial. - Where collateral securing debt was never repossessed by subsequent creditor but was instead sold at auction by guarantor’s bankruptcy trustee and the proceeds thereof were retained by the trustee as an asset of the bankruptcy estate and not distributed to creditor, pursuant to former

paragraph (2), this disposition by creditor’s representative was conclusively deemed to be commercially reasonable, rendering immaterial creditor’s failure to notify guarantor of its intent not to repossess and dispose of that collateral. Davis v. Concord Com. Corp., 209 Ga. App. 595, 434 S.E.2d 571, 1993 Ga. App. LEXIS 939 (1993) (decided under former Code Section 11-9-507). Creditor’s failure to comply with notice requirement of former § 11-9505. - Even though a debtor gave possession of a note and security deed and executed a transfer and assignment of the instruments to the creditor as collateral for a loan, the instruments never vested in the creditor and the transaction was not the creation or transfer of an interest in real estate under former § 11-9-104(h); thus, where the creditor did not comply with the notice requirement of former § 11-9-503(2), the debtor was entitled to recover either damages for conversion of the collateral after default or damages prescribed by this former section. Chen v. Profit Sharing Plan, 216 Ga. App. 878, 456 S.E.2d 237, 1995 Ga. App. LEXIS 316 (1995), cert. denied, No. S95C1173, 1995 Ga. LEXIS 793 (Ga. June 1, 1995) (decided under former Code Section 11-9507). Reasonable terms of sale. - For secured party to meet burden of proving every aspect of sale to be commercially reasonable, it must establish affirmatively that the “terms” of sale were commercially reasonable; this includes burden to show that resale price was fair and reasonable value of collateral. Granite Equip. Leasing Corp. v. Marine Dev. Corp., 139 Ga. App. 778, 230 S.E.2d 43, 1976 Ga. App. LEXIS 1985 (1976) (decided under former Code 1933, § 109A-9-507). Where commercial reasonableness of sale is challenged by debtor, party holding security interest has burden of proving that terms of sale were commercially reasonable and that resale price was fair and reasonable value of collateral. Richard v. Fulton Nat’l Bank, 158 Ga. App. 595, 281 S.E.2d 338, 1981 Ga. App. LEXIS 2327 (1981) (decided under former Code Section 11-9-507). Denial of the creditor’s motion for a directed verdict was proper since, based

on the evidence presented, the jury could have determined that a sale was commercially unreasonable and that the debtor was entitled to money damages as a result. Atlantic Coast Fed. Credit Union v. Delk, 241 Ga. App. 589, 526 S.E.2d 425, 1999 Ga. App. LEXIS 1590 (1999) (decided under former Code Section 11-9-507). Presumption that value of collateral equals debt on it is overcome by proving fair and reasonable value of collateral, whereupon creditor is entitled to deficiency judgment in amount of debt (plus or minus any payments or charges properly applicable to disposition) less fair and reasonable value of collateral proved by creditor (if resale price is less than fair and reasonable value proved). Farmers Bank v. Hubbard, 247 Ga. 431, 276 S.E.2d 622, 1981 Ga. LEXIS 737 (1981) (decided under former Code Section 11-9-507). Burden is on secured party to prove value of collateral at time of repossession and that such value does not equal debt; failure to so prove results in a presumption that value was at least amount of debt. Granite Equip. Leasing Corp. v. Marine Dev. Corp., 139 Ga. App. 778, 230 S.E.2d 43, 1976 Ga. App. LEXIS 1985 (1976) (decided under former Code 1933, § 109A-9-507). Where adequacy of price is challenged, creditor must overcome presumption as to value to recover deficiency. Farmers Bank v. Hubbard, 247 Ga. 431, 276 S.E.2d 622, 1981 Ga. LEXIS 737 (1981) (decided under former Code Section 11-9-507). Debtor’s contention that the debtor could have obtained higher price for aircraft sold at private sale had the debtor sold them personally was insufficient to infer that creditor, who sold planes, acted in commercially unreasonable manner. Cessna Fin. Corp. v. Wall, 876 F. Supp. 273, 1994 U.S. Dist. LEXIS 19734 (M.D. Ga. 1994) (decided under former Code Section 11-9-507). Wide discrepancy between sale price and value of collateral signals need for close scrutiny, even though a seemingly low return is usually not dispositive on question of commercial reasonableness. Granite Equip. Leasing Corp. v. Marine Dev. Corp., 139 Ga. App. 778, 230

S.E.2d 43, 1976 Ga. App. LEXIS 1985 (1976) (decided under former Code 1933, § 109A-9-507). Sale of repossessed collateral is not commercially reasonable when there is wide discrepancy between sale price and value of such collateral (presumed to equal amount of debt in absence of proof otherwise) coupled with secured party’s failure to prove value at time of repossession, and that such value does not equal debt. Granite Equip. Leasing Corp. v. Marine Dev. Corp., 139 Ga. App. 778, 230 S.E.2d 43, 1976 Ga. App. LEXIS 1985 (1976) (decided under former Code Section 11-9-507). Ultimate question of commercial reasonableness is one of law. - When reasonableness of sale of repossessed collateral is challenged, secured party has burden of proving that it was reasonable; and ultimate question of commercial reasonableness is one of law. Granite Equip. Leasing Corp. v. Marine Dev. Corp., 139 Ga. App. 778, 230 S.E.2d 43, 1976 Ga. App. LEXIS 1985 (1976) (decided under former Code 1933, § 109A-9-507). Notice to secured party holding interest senior to that of selling secured party. - Secured party who holds interest senior to one held by secured party selling property at public sale and who meets other requirements of Code, must be sent notification of sale, and failure to do so gives rise to cause of action under the former provisions of this section. Bank of Camilla v. Stephens, 234 Ga. 293, 216 S.E.2d 71, 1975 Ga. LEXIS 1109 (1975) (decided under former Code 1933, § 109A9-507). Acts of secured party which deny debtor opportunity to redeem collateral. - Act of secured party, in selling collateral without strict compliance with notice of sale provisions of former § 11-9504 precluded purchaser or owner from exercising right of redemption under former § 11-506, and for that reason secured party cannot recover for deficiency owed by purchaser. Braswell v. American Nat’l Bank, 117 Ga. App. 699, 161 S.E.2d 420, 1968 Ga. App. LEXIS 1199 (1968) (decided under former Code 1933, § 109A-9-507). Sale of property by secured party without notice. - In action for conversion of mortgaged property, instruction

that secured party had no right to sell property if no notice was given was erroneous, as the U.C.C. does not prohibit sale without notice, but rather provides that a debtor is entitled to recover any loss caused by such a sale, that is, a loss caused by a sale at a less than adequate price, and is also protected from any action by secured party to recover any deficiency between sale price and balance owing. Trust Co. v. Kite, 164 Ga. App. 119, 294 S.E.2d 606, 1982 Ga. App. LEXIS 2728, 1982 Ga. App. LEXIS 2966 (1982) (decided under former Code Section 11-9507). The UCC does not prohibit a post-repossession sale without notice. A debtor’s remedies for a sale without notice are recovery of loss caused by an inadequate sale price. Clark v. GMAC, 185 Ga. App. 130, 363 S.E.2d 813, 1987 Ga. App. LEXIS 2457 (1987) (decided under former Code Section 11-9-507). Repossessed collateral need not be disposed of where only fraction of value recoverable. - A secured creditor did not act in a commercially unreasonable manner when it repossessed the collateral and, without ever disposing of it, filed suit against the debtor, there being evidence that the collateral was the type of equipment which in the past the creditor had been able to dispose of at only a fraction of its original sale value. However, if it was later established that the creditor did not act in a commercially reasonable manner, the balance of the indebtedness owed on the contracts would be reduced by the value of the equipment at the time it was repossessed, plus the amount of any damage sustained as a result of the creditor’s inaction in returning or disposing of the goods. ITT Terryphone Corp. v. Modems Plus, Inc., 171 Ga. App. 710, 320 S.E.2d 784, 1984 Ga. App. LEXIS 2323 (1984) (decided under former Code Section 11-9-507). When the resale price is less than the fair and reasonable value, the creditor is entitled to a deficiency judgment in the amount of the debt (plus or minus any payments or changes properly applicable to the disposition) less the fair and reasonable value of the collateral proved by the creditor, not the debt less

the resale price. McMillian v. Bank S., 188 Ga. App. 355, 373 S.E.2d 61, 1988 Ga. App. LEXIS 1040 (1988) (decided under former Code Section 11-9-507). Private auction sale of automobile. - The method and manner of sale of a repossessed automobile were commercially reasonable, where the collateral was disposed of at a private auction by a recognized automobile auction company according to standard practice and procedure for sales of this kind. McMillian v. Bank S., 188 Ga. App. 355, 373 S.E.2d 61, 1988 Ga. App. LEXIS 1040 (1988) (decided under former Code Section 11-9-507). Failure to prove fair and reasonable value of minibuses. - Secured creditor failed to prove the fair and reasonable value of minibuses at the time of sale, where the only evidence of value of the vehicles was the offers received after the default by the creditor’s corporate president, upon the solicitation of some 15 individuals nationwide, and the actual price paid at the sale of the vehicles. Walker v. Modnar Corp., 194 Ga. App. 68, 389 S.E.2d 558, 1989 Ga. App. LEXIS 1708 (1989) (decided under former Code Section 11-9-507). State remedy precludes federal due process claim. - Because Georgia provided a remedy for improper repossession

pursuant to O.C.G.A. § 11-9-625, a former arrestee, who claimed that police officers interfered with the arrestee’s possessory interests in a vehicle at the time of the arrest, had no federal due process claim with respect to the repossession of the vehicle. Carroll v. Henry County, 336 B.R. 578, 2006 U.S. Dist. LEXIS 4071 (N.D. Ga. 2006). Judicial estoppel barred debtor’s claim for damages. - Debtor was judicially estopped from pursuing the debtor’s claim for damages under O.C.G.A. § 11-9625 arising from a company’s sale of the debtor’s car following the car’s repossession because any recovery would not inure to the benefit of the debtor’s creditors, who were not fully compensated when a bankruptcy court discharged the debtor’s debts; the debtor’s claim that the company sold the debtor’s car for an unreasonably low price arose at least two years before the debtor filed for bankruptcy protection, and because the cause of action accrued prior to the debtor’s commencement of the debtor’s bankruptcy action, the debtor was required to disclose the car in the debtor’s schedule of assets to be included as property of the bankruptcy estate under 11 U.S.C. § 541. Sevostiyanova v. Tempest Recovery Servs., 307 Ga. App. 868, 705 S.E.2d 878, 2011 Ga. App. LEXIS 32 (2011).

RESEARCH REFERENCES Am. Jur. 2d. 68A Am. Jur. 2d, Secured Transactions, § 709, 737-779. C.J.S. 72 C.J.S., Pledges, § 30. U.L.A. Uniform Commercial Code (U.L.A.) § 9625. ALR. Uniform Commercial Code: Burden of proof as to commercially reasonable disposition of collateral, 59 A.L.R.3d 369.

Uniform Commercial Code: failure of secured creditor to give required notice of disposition of collateral as bar to deficiency judgment, 59 A.L.R.3d 401. UCC: value of trade-in taken on sale of collateral for purposes of computing surplus or deficiency, 72 A.L.R.4th 1128. Remedies available under revised U.C.C. § 9-625 for secured party’s failure to comply with Article 9, 47 A.L.R.7th Art. 3.