GA Code § 11-9-317 (2021)
2021 Georgia Code|Title 11 - Commercial Code|Article 9 - Secured Transactions|Part 3 - Perfection and Priority|§ 11-9-317. Interests That Take Priority Over or Take Free of Security Interest or Agricultural Lien

  Conflicting security interests and rights of lien creditors. A security interest or agricultural lien is subordinate to the rights of:   A person entitled to priority under Code Section 11-9-322; and   Except as otherwise provided in subsection (e) of this Code section, a person that becomes a lien creditor before the earlier of the time:   The security interest or agricultural lien is perfected; or   A financing statement covering the collateral is filed.       Buyers that receive delivery. Except as otherwise provided in subsection (e) of this Code section, a buyer, other than a secured party, of tangible chattel paper, tangible documents, goods, instruments, or a certificated security takes free of a security interest or agricultural lien if the buyer gives value and receives delivery of the collateral without knowledge of the security interest or agricultural lien and before it is perfected.   Lessees that receive delivery. Except as otherwise provided in subsection (e) of this Code section, a lessee of goods takes free of a security interest or agricultural lien if the lessee gives value and receives delivery of the collateral without knowledge of the security interest or agricultural lien and before it is perfected.   Licensees and buyers of certain collateral. A licensee of a general intangible or a buyer, other than a secured party, of collateral other than tangible chattel paper, tangible documents, goods, instruments, or a certificated security takes free of a security interest if the licensee or buyer gives value without knowledge of the security interest and before it is perfected.   Purchase money security interest. Except as otherwise provided in Code Sections 11-9-320 and 11-9-321, if a person files a financing statement with respect to a purchase money security interest before or within 20 days after the debtor receives delivery of the collateral, the security interest takes priority over the rights of a buyer, lessee, or lien creditor which arise between the time the security interest attaches and the time of filing.     (Code 1981, §11-9-317, enacted by Ga. L. 2001, p. 362, § 1; Ga. L. 2010, p. 481, § 2-28/HB 451; Ga. L. 2013, p. 690, § 6/SB 185.)    The 2010 amendment,  effective May 27, 2010, inserted "tangible" near the middle of subsection (b); and inserted "electronic documents," in the middle of subsection (d). See the Editor's notes for applicability.    The 2013 amendment,  effective July 1, 2013, substituted "certificated security" for "security certificate" in subsection (b); and substituted "collateral other than tangible chattel paper, tangible documents, goods, instruments, or a" for "accounts, electronic chattel paper, electronic documents, general intangibles, or investment property other than a" in subsection (d).   Editor's notes.   - Ga. L. 2010, p. 481, § 3-1, 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, 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.   JUDICIAL DECISIONS   Editor's notes.   - In light of the similarity of the provisions, decisions under former Article 9 are included in the annotations of this section.   Effect of perfection.    - Following perfection of security interest, other creditors enjoy no priority over such security interest. General Lithographing Co. v. Sight & Sound Projectors, Inc., 128 Ga. App. 304, 196 S.E.2d 479 (1973) (decided under former Code Section11-9-301).   Knowledge of security interest.    - Where security interest in an automobile was not properly recorded and was documented only in divorce decree's incorporated agreement, the secured party failed to carry the burden of proving that buyer had actual knowledge of the secured party's interest, even assuming the buyer had knowledge of the divorce. Freeman v. Bentley, 205 Ga. App. 409, 422 S.E.2d 435 (1992) (decided under former Code Section11-9-301).    As a cotton gin bought a farmer's cotton crop with actual knowledge, as defined by O.C.G.A. § 11-1-201(25), (27), of a bank's security interest therein, but still withheld some of the proceeds of the sale, under O.C.G.A. § 11-9-315(a)(1), the gin was liable to the bank for conversion and was not entitled to summary judgment. Bank of Dawson v. Worth Gin Co., 295 Ga. App. 256, 671 S.E.2d 279 (2008).   Effect of filing.    - 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) (decided under former Code Section11-9-301).   Unperfected security interests.   - Surety, under master surety agreement in which bankrupt had signed as principal, could not assert priority over trustee with respect to equipment of bankrupt on basis of equitable lien upon retained contract funds following surety's completion of construction contract; without such equitable lien, surety, without perfected security interest, stood as general unsecured creditor which must defer to trustee. In re Merts Equip. Co., 438 F. Supp. 295 (M.D. Ga. 1977) (decided under former Code Section 11-9-301).    Unperfected security interest is subordinate to rights of lien creditors who acquire liens without knowledge of prior security interest and before its perfection; this operates in favor of creditor who has acquired lien on property involved by attachment, levy or the like. Mack Trucks, Inc. v. Ryder Truck Rental, Inc., 110 Ga. App. 68, 137 S.E.2d 718 (1964) (decided under former Code Section11-9-301).   Deemed unperfected security interests.    - Although a bank's security interests in equipment were properly perfected and remained so throughout a buyer's acquisition of the equipment from the debtor, those security interests were deemed never to have been perfected as against a purchaser for value when the bank failed to file timely continuation statements, under O.C.G.A. § 11-9-515(b), and the buyer took free of the security interests under O.C.G.A. § 11-9-317(b) because the buyer did not have actual knowledge of the security interests. Four County Bank v. Tidewater Equip. Co., 331 Ga. App. 753, 771 S.E.2d 437 (2015).   Judgment on note.    - Judgment on debt for unpaid balance on note does not in itself operate to perfect security interest in collateral listed on note, and payee's rights are subordinate to those of lien creditor who has no knowledge of security interest. Fas-Pac, Inc. v. Fillingame, 123 Ga. App. 203, 180 S.E.2d 243 (1971) (decided under former Code Section11-9-301).   Judgment liens are subordinate.    - The legislature intended to make judgment liens subordinate to purchase money security interests perfected within the grace period contained in former subsection (2) of this section. Crossroads Bank v. Corim, Inc., 262 Ga. 364, 418 S.E.2d 601 (1992) (decided under former Code Section11-9-301).   Purchase money security interests.    - A purchase money security interest has priority over a prior judgment lien only to the extent permitted by former subsection (2) of this section, which established a 15-day grace period for filing the purchase money security interest. Crossroads Bank v. Corim, Inc., 262 Ga. 364, 418 S.E.2d 601 (1992) (decided under former Code Section11-9-301).    Unperfected and untimely-perfected purchase money security interests are subordinate to a judgment lien. Crossroads Bank v. Corim, Inc., 262 Ga. 364, 418 S.E.2d 601 (1992) (decided under former Code Section11-9-301).   Applying Canadian law.    - to the facts of the case, a remote purchaser could not prevail over a creditor who had perfected its purchase money security interest in a truck within the time specified by Canadian law. Paccar Fin. Servs., Ltd. v. Johnson, 195 Ga. App. 412, 393 S.E.2d 685 (1990).   RESEARCH REFERENCES   U.L.A.   - Uniform Commercial Code (U.L.A.) § 9-317.