GA Code § 11-9-109 (2021)
2021 Georgia Code|Title 11 - Commercial Code|Article 9 - Secured Transactions|Part 1 - General Provisions|§ 11-9-109. Scope

  General scope of article. Except as otherwise provided in subsections (c) and (d) of this Code section, this article applies to:   A transaction, regardless of its form, that creates a security interest in personal property or fixtures by contract;   An agricultural lien;   A sale of accounts, chattel paper, payment intangibles, or promissory notes;   A consignment;   A security interest arising under Code Section 11-2-401, Code Section 11-2-505, subsection (3) of Code Section 11-2-711, or subsection (5) of Code Section 11-2A-508, as provided in Code Section 11-9-110; and   A security interest arising under Code Section 11-4-210 or 11-5-118.     Security interest in secured obligation. The application of this article to a security interest in a secured obligation is not affected by the fact that the obligation is itself secured by a transaction or interest to which this article does not apply.   Extent to which article does not apply. This article does not apply to the extent that:   A statute, regulation, or treaty of the United States preempts this article;   Another statute of this state expressly governs the creation, perfection, or priority;   A statute of another state, a foreign country, or a governmental unit of another state or a foreign country, other than a statute generally applicable to security interests, expressly governs creation, perfection, priority, or enforcement of a security interest created by the state, country, or governmental unit; or   The rights of a transferee beneficiary or nominated person under a letter of credit are independent and superior under Code Section 11-5-114.     Inapplicability of article. This article does not apply to:   A landlord's lien, other than an agricultural lien;   A lien, other than an agricultural lien, given by statute or other rule of law for services or materials, but Code Section 11-9-333 applies with respect to priority of the lien;   An assignment of a claim for wages, salary, or other compensation of an employee;   A sale of accounts, chattel paper, payment intangibles, or promissory notes as part of a sale of the business out of which they arose;   An assignment of accounts, chattel paper, payment intangibles, or promissory notes which is for the purpose of collection only;   An assignment of a right to payment under a contract to an assignee that is also obligated to perform under the contract;   An assignment of a single account, payment intangible, or promissory note to an assignee in full or partial satisfaction of a preexisting indebtedness;   A transfer of an interest in or an assignment of a claim under a policy of insurance, other than an assignment by or to a health care provider of a health care insurance receivable and any subsequent assignment of the right to payment, but Code Sections 11-9-315 and 11-9-322 apply with respect to proceeds and priorities in proceeds;   An assignment of a right represented by a judgment, other than a judgment taken on a right to payment that was collateral;   A right of recoupment or setoff, but:   Code Section 11-9-340 applies with respect to the effectiveness of rights of recoupment or setoff against deposit accounts; and   Code Section 11-9-404 applies with respect to defenses or claims of an account debtor;     The creation or transfer of an interest in or lien on real property, including a lease or usufruct or rents thereunder, except to the extent that provision is made for:   Liens on real property in Code Sections 11-9-203 and 11-9-308;   Fixtures in Code Section 11-9-334;   Fixture filings in Code Sections 11-9-501, 11-9-502, 11-9-512, 11-9-516, and 11-9-519; and   Security agreements covering personal and real property in Code Section 11-9-604;     An assignment of a claim arising in tort, other than a commercial tort claim, but Code Sections 11-9-315 and 11-9-322 apply with respect to proceeds and priorities in proceeds;   An assignment of a deposit account in a consumer transaction, but Code Sections 11-9-315 and 11-9-322 apply with respect to proceeds and priorities in proceeds;   An assignment of a lottery prize payable by this state or any instrumentality of this state;   An assignment of a claim or right to receive payment as described in and to the extent limited by the provisions of Code Section 34-9-84 or by Article 4 of Chapter 12 of Title 51; or   A security interest created by or affecting property of this state or any governmental unit of this state in any public finance transaction, other than a security interest created by:   An authority activated under Chapter 62 of Title 36, the "Development Authorities Law"; or   A local authority having as its principal function the stimulation of industrial growth and the reduction of unemployment.         (Code 1981, §11-9-109, enacted by Ga. L. 2001, p. 362, § 1.)   Law reviews.   - For article, "The Revisions to Article IX of the Uniform Commercial Code," see 15 Ga. St. B.J. 120 (1977). For article on choice-of-law of contracts in Georgia, see 21 Mercer L. Rev. 389 (1970).   JUDICIAL DECISIONS   Editor's notes.   - In the light of the similarity of the 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.   Ordinary meaning of "unsecured".    - Ordinary meaning of "unsecured" is that there is no security interest that can be effective against third parties under the Georgia Uniform Commercial Code, specifically O.C.G.A. § 11-9-109. In re Estate of Sims, 259 Ga. App. 786, 578 S.E.2d 498 (2003).   Federal statutory preemption of article.    - Where a bank, based on its prior perfected security interest, sued a cattle-raiser for cattle in possession, the trial court correctly ruled that the Federal Security Act (7 U.S.C.A. § 1631), which controlled the transaction, preempted this article and properly awarded summary judgment to cattle-raiser. Ashburn Bank v. Farr, 206 Ga. App. 517, 426 S.E.2d 63 (1992) (decided under former Code Section11-9-104).   Maritime liens.    - Creditor-holder of a properly perfected UCC security interest in debtor's freights did not take priority over holders of valid maritime liens. While freights fall within the literal terms of the definitions in former § 11-9-106, their inclusion therein does not subject maritime lien claimants to UCC priority rules. First, former subsection (a) of this section excludes security interests arising under federal statutes from the ambit of the UCC; unlike former subsection (b). Its state law counterpart, former subsection (a) does not specifically subject federal liens to UCC priority provisions. Second, former § 11-9-102 excludes non-consensual transactions from the UCC. Maritime liens by nature arise without intent or consent. Finally, maritime liens take priority over UCC security interests under pre-or post-UCC cases. McAllister Towing v. Ambassador Factors, (In re Topgallant Lines), 154 Bankr. 368 (S.D. Ga. 1993), aff'd, 20 F.3d 1175 (11th Cir. 1994) (decided under former Code Section11-9-104).   Priority over bank's right of setoff.    - The Code's priority rules require that a perfected security interest will prevail over a bank's right of setoff. Continental Am. Life Ins. Co. v. Griffin, 251 Ga. 412, 306 S.E.2d 285 (1983) (decided under former Code Section11-9-104).   Bank's right of setoff superior.    - In a case predicated on the Georgia tort law of conversion, a district court's entry of summary judgment in favor of a bank was affirmed because O.C.G.A. §§ 11-9-109(a)(1) and (d)(10)(A), and11-9-340 governed the effectiveness of setoff rights in deposit accounts, brought the case expressly within the authority of the Uniform Commercial Code, and provided that the bank's setoff right was superior to any security interest of a company in a predecessor company's deposited funds. Eleison Composites, LLC v. Wachovia Bank, N.A., F.3d (11th Cir. Mar. 7, 2008)(Unpublished).    Former paragraph (c) did not include remuneration payable to an independent contractor. Perry v. Freeman, 163 Ga. App. 186, 293 S.E.2d 381 (1982) (decided under former Code Section11-9-104).    Debtor's assignment to bank of specific amounts from future proceeds from debtor's business was not exempted from former Article 9 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) (decided under former Code Section11-9-104).   Transfer and assignment of note and security deed not interest in real estate.    - 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 subsection (h); thus, where the creditor did not comply with the notice requirement of former § 11-9-305(2), the debtor was entitled to recover either damages for conversion of the collateral after default or damages prescribed by former § 11-9-507. Chen v. Profit Sharing Plan, 216 Ga. App. 878, 456 S.E.2d 237 (1995) (decided under former Code Section11-9-104).   Security interest in proceeds from sale of debtor's residence.   - Execution of guaranty, although ineffective to create security interest in debtor's residence, since real property is excluded from operation of Article 9, was effective to create a security interest in cash proceeds from sale of debtor's residence. United States v. Wood, 28 Bankr. 383 (N.D. Ga. 1983) (decided under former Code Section 11-9-104).   Inapplicability of article to deposit accounts.    - Since former subsection (j) clearly provided that former Article 9 did not apply to a transfer of an interest in any deposit account, inasmuch as a depositor's commercial checking account is a "deposit account" as that term was defined in former § 11-9-105(1)(e), the strictures of this former article were not applicable to the bank's appropriation of the account under its right of set-off. Design Spectrum, Inc. v. First Nat'l Bank, 182 Ga. App. 418, 355 S.E.2d 733 (1987) (decided under former Code Section11-9-104).    A security agreement covering the creditor's interest in unearned insurance premiums did not come within the ambit of the Uniform Commercial Code. Paulsen Street Investors v. EBCO Gen. Agencies, 224 Ga. App. 507, 481 S.E.2d 246 (1997) (decided under former Code Section11-9-104).   Repossession of collateral located in Georgia.    - Absent agreement that law of another state shall govern, Georgia law applies to repossession, resale, and right to deficiency judgment where collateral was located in Georgia at time of repossession and resale. Lewis v. First Nat'l Bank, 134 Ga. App. 798, 216 S.E.2d 347 (1975).   Credit transaction pursuant to revolving account.    - Security interest can be created in credit transaction pursuant to revolving account. Brown v. Jenkins, 135 Ga. App. 694, 218 S.E.2d 690 (1975).   Effect on subrogation.    - The Uniform Commercial Code does not abrogate, modify, affect, or abridge equitable doctrine of subrogation. Argonaut Ins. Co. v. C & S Bank, 140 Ga. App. 807, 232 S.E.2d 135 (1976).    Surety is "secured" by its right of subrogation, which relates back to issuance of bond, to defeat intervening creditors. Uniform Commercial Code does not abrogate, modify, affect or abridge equitable doctrine of subrogation, and a surety is not required to file under the Code to preserve priority under equitable right of subrogation. Pembroke State Bank v. Balboa Ins. Co., 144 Ga. App. 609, 241 S.E.2d 483 (1978).   Sale-leaseback agreement.   - The former provisions of this section applied to sale-leaseback agreement which constitutes secured transaction. United Counties Trust Co. v. Mac Lum, Inc., 643 F.2d 1140 (5th Cir. 1981).    Whether lease is intended as security is to be determined by facts of each case. Ford Motor Credit Co. v. Dowdy, 159 Ga. App. 666, 284 S.E.2d 679 (1981), overruled on other grounds, Adams v. D & D Leasing Co., 191 Ga. App. 121, 381 S.E.2d 94 (1989).    Name which parties give to transaction is not conclusive. Ford Motor Credit Co. v. Dowdy, 159 Ga. App. 666, 284 S.E.2d 679 (1981), overruled on other grounds, Adams v. D & D Leasing Co., 191 Ga. App. 121, 381 S.E.2d 94 (1989).   Mere holding of title insufficient.    - Mere holding of title as a lessor of a leased motor vehicle does not give rise to a security interest therein, unless the interest arose under a lease intended as security. First Nat'l Bank v. Strother Ford, Inc., 188 Ga. App. 749, 374 S.E.2d 203 (1988).    Factors tending to establish that a "lease" transaction is a conditional sale are: lessor's purchase of equipment from supplier; requirement that lessee be responsible for payment of all taxes, insurance and expenses for repairs, an initial downpayment, and additional payment of security deposit. Ford Motor Credit Co. v. Dowdy, 159 Ga. App. 666, 284 S.E.2d 679 (1981), overruled on other grounds, Adams v. D & D Leasing Co., 191 Ga. App. 121, 381 S.E.2d 94 (1989).   "Installment-service agreement" not "lease . . . intended as security".    - Where nowhere within an "installation-service agreement" could it be construed that the parties contemplated a sale, an option to purchase, or creation of a security interest, the agreement was not a "lease . . . intended as security" and thus former Article 9 did not apply. Ford v. Rollins Protective Servs. Co., 171 Ga. App. 882, 322 S.E.2d 62 (1984).    Agreement which did not stipulate a purchase price but indicated an intent to negotiate a purchase price was a true lease, and not a conditional sale. Chapman v. Avco Fin. Servs. Leasing Co., 193 Ga. App. 147, 387 S.E.2d 391 (1989).   Trademark, trade name, and goodwill subject to security interests.    - In addition to a trademark, a trade name, along with the goodwill it represents, may be the subject of an Article 9 security interest and may be reacquired along with other secured property on foreclosure. Reis v. Ralls, 250 Ga. 721, 301 S.E.2d 40 (1983).   Radio tower as equipment.   - Where a radio tower which had been determined to be personal property was used and bought for use primarily in debtor's business and defendants did not allege that the radio tower constituted inventory, farm products, or consumer goods, the radio tower was equipment. Tidwell v. Slocumb (In re Ga. Steel, Inc.), 71 Bankr. 903 (Bankr. M.D. Ga. 1987).   Commercial reasonableness standard inapplicable to realty transactions.    - The UCC, along with its standard of commercial reasonableness, does not apply to transactions involving realty. B & W Pipeline, Inc. v. Newton County Bank, 181 Ga. App. 684, 353 S.E.2d 829 (1987).   Security interest in proceeds from sale of debtor's residence.   - Execution of guaranty, although ineffective to create security interest in debtor's residence, since real property is excluded from operation of Article 9, was effective to create a security interest in cash proceeds from sale of debtor's residence. United States v. Wood, 28 Bankr. 383 (N.D. Ga. 1983).   CHAPTER 9 applied to transaction.   - See Trust Co. Bank v. Walker, 35 Bankr. 237 (Bankr. N.D. Ga. 1983).   Insurance proceeds subject to lender's security agreement.   - Bankruptcy court found that under the security deed the credit company held a valid security interest in the destroyed property and the security deed provided sufficient language to grant the credit company a security interest in the proceeds of the collateral, including any insurance proceeds. Altegra Credit Co. v. Ford Motor Credit Co. (In re Brantley), 286 Bankr. 918 (Bankr. S.D. Ga. 2002).   Statute of limitations.    - While it appeared that O.C.G.A. § 9-3-24, rather than O.C.G.A. § 11-2-725, would most likely apply to defendant collection attorney's state court deficiency action against plaintiff consumer, and it was not for the federal court to say what the Georgia courts would hold, the uncertainty meant there was no intentional unfair conduct and the consumer's Fair Debt Collection Practices Act claim was dismissed. Almand v. Reynolds & Robin, P.C., 485 F. Supp. 2d 1361 (M.D. Ga. 2007).   Assignment to surety.    - Trial court properly granted a surety's motion for summary judgment because the security interest in the accounts owed was covered by the Uniform Commercial Code, and to the extent that the anti-assignment clauses of the construction contract could be construed to prohibit the roofing company from assigning the company's right to those accounts to the company's surety, the contracts were unenforceable as a matter of law under O.C.G.A. § 11-9-406(d)(1). State Dep't of Corr. v. Developers Sur. & Indem. Co., 324 Ga. App. 371, 750 S.E.2d 697 (2013).    Cited in Delta Air Lines, Inc. v. Clayton County Bd. of Tax Assessors, 246 Ga. App. 225, 539 S.E.2d 905 (2000); All Fleet Refinishing, Inc. v. W. Ga. Nat'l Bank, 280 Ga. App. 676, 634 S.E.2d 802 (2006).   RESEARCH REFERENCES   Am. Jur. 2d.   - 6 Am. Jur. 2d, Assignments, §§ 78, 79. 54A Am. Jur. 2d, Mortgages, §§ 5, 8. 68A Am. Jur. 2d, Secured Transactions, §§ 2, 3, 129-154.   C.J.S.   - 6A C.J.S., Assignments, §§ 82, 87. 72 C.J.S., Pledges, §§ 6, 41 et seq.   U.L.A.   - Uniform Commercial Code (U.L.A.) § 9-109.   ALR.    - Taking note for price as waiver of reservation of title under conditional sale, 13 A.L.R. 1044; 55 A.L.R. 1160.    Effect of repledge by one who at time holds property under tentative agreement for pledge which is subsequently consummated, 24 A.L.R. 433.    Trust receipt, or instrument purporting to be such, as a chattel mortgage within filing statutes, 25 A.L.R. 332; 49 A.L.R. 309; 87 A.L.R. 316; 101 A.L.R. 463; 168 A.L.R. 378.    Right to setoff deposit in insolvent bank against indebtedness to bank, 25 A.L.R. 938; 82 A.L.R. 665; 97 A.L.R. 588.    Personal liability for mortgage debt of real owner who procures mortgage to be executed by another, 25 A.L.R. 1486.    Rights as between holder of "trust receipt" and purchaser of goods from one who gave it, 31 A.L.R. 937.    Effect of assignment of a conditional-sale contract as collateral, 36 A.L.R. 759.    Pledge as covering pledgor's contingent liability as secondary obligor, 43 A.L.R. 1069.    Trust receipts, 49 A.L.R. 282; 87 A.L.R. 302; 101 A.L.R. 453; 168 A.L.R. 359.    Rights of holders of different notes in respect of collateral securing them, 52 A.L.R. 1391.    Validity as to creditors of the buyer or consignee of reservation of title to goods delivered under implied or express authority to resell, 63 A.L.R. 355.    Conditional sale as within statute providing for penalty for failure to satisfy lien, 65 A.L.R. 1316.    Validity of assignment of future book accounts, 72 A.L.R. 856.    Duty of broker or banker as regards pledged security on bankruptcy of customers, 79 A.L.R. 389.    What amounts to conditional sale, 92 A.L.R. 304; 175 A.L.R. 1366.    Assignability of contemplated debt before execution of agreement by which it is to be created, 116 A.L.R. 955.    Valuation of notes and accounts receivable in determining question of insolvency or bankruptcy, 133 A.L.R. 1274.   Necessity that mortgage covering oil and gas lease be recorded as real-estate mortgage, and/or filed or recorded as chattel mortgage, 34 A.L.R.2d 902.   Rights and duties of parties to conditional sales contract as to resale of repossessed property, 49 A.L.R.2d 15.   Liability of pawnbroker or pledgee for theft by third person of pawned or pledged property, 68 A.L.R.2d 1259.   Necessity and sufficiency of notice or statement prescribed by factor's lien law, 96 A.L.R.2d 727.   Effect of UCC Article 9 upon conflict, as to funds in debtor's bank account, between secured creditor and bank claiming right of setoff, 3 A.L.R.4th 998.   Consignment transactions under Uniform Commercial Code Article 9 on secured transactions, 58 A.L.R.6th 289.   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.   Who is "creditor" within meaning of § 103(f) of Truth in Lending Act (15 USCA § 1602(f)), 157 A.L.R. Fed. 419.