GA Code § 11-9-322 (2021)
2021 Georgia Code|Title 11 - Commercial Code|Article 9 - Secured Transactions|Part 3 - Perfection and Priority|§ 11-9-322. Priorities Among Conflicting Security Interests in and Agricultural Liens on Same Collateral

  General priority rules. Except as otherwise provided in this Code section, priority among conflicting security interests and agricultural liens in the same collateral is determined according to the following rules:   Conflicting perfected security interests and agricultural liens rank according to priority in time of filing or perfection. Priority dates from the earlier of the time a filing covering the collateral is first made or the security interest or agricultural lien is first perfected, if there is no period thereafter when there is neither filing nor perfection;   A perfected security interest or agricultural lien has priority over a conflicting unperfected security interest or agricultural lien; and   The first security interest or agricultural lien to attach or become effective has priority if conflicting security interests and agricultural liens are unperfected.     Time of perfection: proceeds and supporting obligations. For the purposes paragraph (1) of subsection (a) of this Code section:   The time of filing or perfection as to a security interest in collateral is also the time of filing or perfection as to a security interest in proceeds; and   The time of filing or perfection as to a security interest in collateral supported by a supporting obligation is also the time of filing or perfection as to a security interest in the supporting obligation.     Special priority rules: proceeds and supporting obligations. Except as otherwise provided in subsection (f) of this Code section, a security interest in collateral which qualifies for priority over a conflicting security interest under Code Section 11-9-327, 11-9-328, 11-9-329, 11-9-330, or 11-9-331 also has priority over a conflicting security interest in:   Any supporting obligation for the collateral; and   Proceeds of the collateral if:   The security interest in proceeds is perfected;   The proceeds are cash proceeds or of the same type as the collateral; and   In the case of proceeds that are proceeds of proceeds, all intervening proceeds are cash proceeds, proceeds of the same type as the collateral, or an account relating to the collateral.       First to file priority rule for certain collateral. Subject to subsection (e) of this Code section and except as otherwise provided in subsection (f) of this Code section, if a security interest in chattel paper, deposit accounts, negotiable documents, instruments, investment property, or letter of credit rights is perfected by a method other than filing, conflicting perfected security interests in proceeds of the collateral rank according to priority in time of filing.   Applicability of subsection (d) of this Code section. Subsection (d) of this Code section applies only if the proceeds of the collateral are not cash proceeds, chattel paper, negotiable documents, instruments, investment property, or letter of credit rights.   Limitations on subsections (a) through (e) of this Code section. Subsections (a) through (e) of this Code section are subject to:   Subsection (g) of this Code section and the other provisions of this part;   Code Section 11-4-210 with respect to a security interest of a collecting bank;   Code Section 11-5-118 with respect to a security interest of an issuer or nominated person; and   Code Section 11-9-110 with respect to a security interest arising under Article 2 or 2A of this title.     Priority under agricultural lien statute. A perfected agricultural lien on collateral has priority over a conflicting security interest in or agricultural lien on the same collateral if the statute creating the agricultural lien so provides.     (Code 1981, §11-9-322, enacted by Ga. L. 2001, p. 362, § 1.)   Law reviews.   - For article discussing the resolution of conflicting claims to goods between an unsecured seller of goods and a creditor of a buyer claiming under an after-acquired property clause, see 28 Mercer L. Rev. 625 (1977). For article, "The Revisions to Article IX of the Uniform Commercial Code," see 15 Ga. St. B.J. 120 (1977). For article, "The Good Faith Purchase Idea and the Uniform Commercial Code," see 15 Ga. L. Rev. 605 (1981). For article, "Preparing the Georgia Farmer (or Other Smaller Entrepreneur) for Bankruptcy," see 22 Ga. State Bar J. 186 (1986). 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 comment discussing good faith performance and priorities of secured parties, see 36 Emory L.J. 948 (1987).   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.   Determining priority.    - Under former subsection (5) determining priority involves a two-prong determination: (1) how security interest is to be perfected and (2) whether security interest has in fact been so perfected. Enterprises Now, Inc. v. Citizens & S. Dev. Corp., 135 Ga. App. 602, 218 S.E.2d 309 (1975) (decided under former Code Section11-9-312).   Determining priority in destroyed property covered by insurance.   - 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).   Order of filing determinative.    - When competing security interests are all perfected by filing, order of filing determines priority. Tuftco Sales Corp. v. Garrison Carpet Mills, Inc., 158 Ga. App. 674, 282 S.E.2d 159 (1981) (decided under former Code Section11-9-312).    Where financing statement giving notice of interest of entruster in office machines entrusted to bankrupt is signed by debtor, incorporates security agreement, and adequately describes collateral, is filed prior to filing of bank's financing statement covering inventory, equipment, furniture, and fixtures, prior security interest must prevail. First Nat'l Bank & Trust Co. v. Olivetti Corp. of Am., 130 Ga. App. 896, 204 S.E.2d 781 (1974) (decided under former Code Section11-9-312).   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 their security interests. A cooperative bank's security interest in the peanuts was perfected as the grower 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. App. 374, 718 S.E.2d 590 (2011), cert. denied, No. S12C0444, 2012 Ga. LEXIS 315 (Ga. 2012).   Correction of errors in financing statement.    - Once the secured party files an effective financing statement, it is relieved, to a certain extent, of the burden of correcting misleading errors, and a prospective creditor is obligated to inquire into the debtor's source of title. Western Auto Supply Co. v. McKenzie, 227 Ga. App. 477, 489 S.E.2d 537 (1997).   Security interest in check exchanged for goods.   - An experienced, informed seller who has sold goods in exchange for a check and who then files a security interest in the check under the former provisions of this Code section will enjoy priority over even subsequent good faith purchasers. Dixie Bonded Whse. & Grain Co. v. Allstate Fin. Corp., 755 F. Supp. 1543 (M.D. Ga.), aff'd, 944 F.2d 819 (11th Cir. 1991) (decided under former Code Section 11-9-312).   Factor's interest in accounts receivable.   - Factor's interest as a good faith purchaser of a cotton buyer's accounts receivable was superior to the interests asserted by unsecured aggrieved sellers, where the factor's actions with respect to the sellers could be characterized as nothing other than honesty in fact and good faith under Article Two of the UCC. Dixie Bonded Whse. & GrainGraniteville Co. v. Bleckley Lumber Co., 755 F. Supp. 1543 (M.D. Ga.), aff'd, 944 F.2d 819 (11th Cir. 1991) (decided under former Code Section 11-9-312).   Possession of collateral.   - For the purposes of subsection (4), a buyer takes possession at the time of the decision to buy, not at the time of technical physical possession if physical possession was obtained earlier. Orix Credit Alliance, Inc. v. CIT Group/Equipment Fin., Inc., 230 Bankr. 213 (Bankr. M.D. Ga. 1998).   Timely perfection of interest.   - Where lease agreements with option to purchase specifically dated back to the time of delivery when debtor took possession, it was held that debtor acquired possession of three scrapers for purposes of subsection (4) at the time they were delivered by seller, rather than the time that debtor and seller entered into the lease agreements for the three scrapers, and because seller did not file its financing statement on two of the scrapers within 15 days of the time debtor took possession, as required by subsection (4), seller failed to timely perfect its purchase money security interest in these two scrapers, so bank's prior security interest in equipment, including after-acquired property, had priority over seller's purchase money security interest in these two scrapers pursuant to subsection (5)(a), but because it timely perfected its purchase money security interest in the third scraper, seller had priority over the bank pursuant to subsection (4). Iron Peddlers, Inc. v. Ivie & Assocs., 84 Bankr. 882 (Bankr. N.D. Ga. 1988).    Where a bank's perfected security interest in a skidder did not qualify as a purchase money security interest because the funds it lent were not used by a logging company to purchase the skidder, and where the logging company received possession and became indebted for the purchase price on the date the purchase money lender paid the seller directly, the purchase money lender was the only creditor holding a purchase money security interest, and its perfection of that interest by filing its financing statement within 15 days after the acquisition of ownership and execution by the purchaser of the note evidencing its obligation to pay the purchase price gave that purchase money lender priority. Citizens Bank of Americus v. Federal Fin. Servs., Inc., 235 Ga. App. 482, 509 S.E.2d 339 (1998).   Impact of actual notice of interest.   - Actual notice of the defendant's lien did not affect the priority of liens and the first to perfect rule governed, giving the plaintiff's lien priority over the defendant's lien. AgGeorgia Farm Credit, ACA v. Wynn (In re Wynn), Bankr. (Bankr. M.D. Ga. Apr. 2, 2021).   RESEARCH REFERENCES   U.L.A.   - Uniform Commercial Code (U.L.A.) § 9-322.   ALR.    - Priority where senior instrument affecting real property is recorded after execution but before recording of junior instrument, 32 A.L.R. 344.    Construction and effect of provisions of Uniform Conditional Sales Law regarding refiling when goods are removed from district where contract is filed, 68 A.L.R. 554.    Priority as between holders of different notes or obligations secured by the same mortgage (or vendor's lien) or mortgages executed contemporaneously, 115 A.L.R. 40.    Applicability of proceeds of sale of collateral security to barred portion of debt secured, 139 A.L.R. 478.   Priority as between seller or conditional seller of personalty and claimant under after-acquired-property clause of mortgage or other instrument, 86 A.L.R.2d 1152.   Equitable estoppel of secured party's right to assert prior, perfected security interest against other secured creditor or subsequent purchaser under Article 9 of Uniform Commercial Code, 9 A.L.R.5th 708.