Uniform Commercial Code. Monroe Superior Court. Before Judge Fears.
Daniel L. Wilder, for appellant.
Anderson Walker & Reichert, Eugene S. Hatcher, Allen E. Orr, for appellee.
In June 2003 and November 2005 respectively, appellant The Four County Bank (" the Bank" ) provided financing for the purchase of two different pieces of foresting equipment by Shepherd Brothers Timber Company, LLC (" Shepherd" ). The Bank perfected its security interests in both pieces of equipment by filing financing statements in Wilkinson County Superior Court. While the Bank's original financing statements were still effective, Shepherd sold both pieces of equipment to appellee Tidewater Equipment Company (" Tidewater" ), which later resold them. In October 2008 and March 2011, more than five years after the filing of each of the original financing statements, the Bank attempted to file continuation statements as to the equipment. After Shepherd declared bankruptcy, the Bank sued Tidewater to recover the equipment or its value. On appeal from the trial court's grant of summary judgment to Tidewater, the Bank argues that Tidewater is liable for the value of the equipment because Tidewater should have known of the Bank's perfected security interest at the time Tidewater resold the equipment. We disagree and affirm.
Although we view the record in favor of the Bank as the nonmovant, the relevant facts are not in dispute. The Bank filed a purchase money financing statement as to Shepherd's 2003 Tigercat Cutter on June 5, 2003, and a purchase money financing statement as to Shepherd's 2005 Tigercat Skidder, a piece of construction equipment, on November 18, 2005. On August 30, 2007, Tidewater accepted the Cutter from Shepherd as a trade-in worth $52,500 toward Shepherd's purchase of a new piece of equipment; Tidewater resold the used Cutter to a third party the same day. On June 26, 2008, Tidewater accepted the Skidder from Shepherd as a trade-in worth at least $47,000 toward Shepherd's purchase of a second new piece of equipment; Tidewater sold the used Skidder to a third party on May 9, 2009. Tidewater did not perform any lien search before accepting the Tigercats, neither of which was required to have a motor vehicle title. The Bank did not receive any proceeds from either sale.
On October 31, 2008, the Bank filed a second financing statement as to the Cutter; on March 10, 2011, the Bank filed a second financing statement as to the Skidder. Shepherd filed for bankruptcy in the Middle District of Georgia on March 16, 2011. In September 2012, the Bank sued Tidewater for trover and conversion. Both sides moved for summary judgment, which the trial court granted to [331 Ga.App. 754] Tidewater because the Bank had failed to file timely continuation statements and because Tidewater lacked actual knowledge of the Bank's security interests. This appeal followed.
1. The Bank first asserts that the trial court erred when it granted Tidewater summary judgment because the Bank's security interests were perfected at the time Tidewater took possession of the equipment. We disagree.
OCGA § 11-9-515, Georgia's version of Article 9, Section 515 of the Uniform Commercial Code (UCC), provides in relevant part as follows:
(a) Five-year effectiveness.
Except as otherwise provided in subsection (d) of this Code section [concerning the effect of filing continuation statements], a filed financing statement is effective for a period of five years after the date of filing or until the twentieth day after any earlier maturity date required to be specified on the filed financing statement.
(b) Lapse and continuation of financing statement.
The effectiveness of a filed financing statement lapses on the expiration
of the period of its effectiveness unless before the lapse a continuation
statement is filed pursuant to subsection (c) of this Code section. Upon
lapse, a financing statement ceases to be effective and any security interest
or agricultural lien that
was perfected by the financing statement becomes unperfected, unless the security interest is perfected otherwise. If the security interest or agricultural lien becomes unperfected upon lapse, it is deemed never to have been ...