In re Carmichael Enterprises, Inc.

• Decision Date: 10 September 1971
• Docket Number: No. 66007.,66007.
• Citation: 334 F. Supp. 94
• Parties: In the Matter of CARMICHAEL ENTERPRISES, INC., Bankrupt.
• Court: U.S. District Court — Northern District of Georgia

334 F. Supp. 94

In the Matter of CARMICHAEL ENTERPRISES, INC., Bankrupt.

No. 66007.

United States District Court, N. D. Georgia, Atlanta Division.

September 10, 1971.

King & Spalding, Atlanta, Ga., for plaintiff.

Morton P. Levine, Levine, D'Alessio & Cohn, Atlanta, Ga., for defendant.

ORDER

MOYE, District Judge.

By reason of its jurisdiction over bankruptcy proceedings in this district, this Court must now decide a question of state commercial law which has never been decided by the Georgia courts. At issue is the construction of the filing provisions of the Georgia Uniform Commercial Code, Ga.Code Ann. § 109A-9-401. As the statutory provision involved is part of a uniform law, the statute itself and decisions from other Uniform Commercial Code jurisdictions provide the basis for disposition of the question at issue. A statement of the facts and specific issues follow.

The issue arises in a petition to review the decision of Referee in Bankruptcy in which Union Camp Corporation and Trust Company of Georgia were denied the status of secured creditors of the bankrupt, Carmichael Enterprises, Inc. The question common to the claims of both parties is whether their financing statements were properly filed in accordance with the requirements of Ga.Code Ann. § 109A-9-401. An additional question is whether or not Union Camp obtained from the bankrupt a "security agreement" as that term is defined in Ga.Code Ann. § 109A-9-105(1) (h). The findings of fact of the Referee, which are adopted by this Court, follow.

The bankrupt, Carmichael Enterprises, Inc., was incorporated on November 30, 1962, by the Superior Court of Fulton County, Georgia, its charter stating that county to be the site of its "principal office." On March 15, 1968, the bankrupt executed a note, security agreement and financing statement to the Trust Company of Georgia in the sum of $250,000. On March 21, 1968, Trust Company filed its financing statement in the Office of the Clerk of the Superior Court, Gwinnett County, Georgia. On January 24, 1969, Union Camp Corporation, pursuant to an alleged security agreement with the bankrupt,¹ filed a financing statement in the Office of the Clerk of the Superior Court, Gwinnett County, Georgia. At the time the financing statements of Trust Company and Union Camp were filed, the bankrupt maintained its only business operation in Gwinnett County, Georgia. On February 10, 1969, the bankrupt filed an amendment to its corporate charter in the Superior Court of Gwinnett County, Georgia, in which amendment the "principal office" was changed to Gwinnett County. Upon consideration of the briefs of both parties and the pertinent authorities, the Referee concluded that the proper place for filing the financing statements under Ga.Code Ann. § 109A-9-401 was the "principal office" as designated in the Certificate of Incorporation (Fulton County at the time the financing statements were filed) and not the factual principal place of business (Gwinnett County).

PROPER PLACE TO FILE

Ga.Code Ann. § 109A-9-401 provides, in pertinent part:

"(1) The proper place to file in order to perfect a security interest is as follows: (b) * * * When the debtor is * * * a corporation, * * * in the county of the debtor's principal place of business in this State * * *." The narrow question before the Court is the meaning of the term "principal place of business" for purposes of the filing requirements of the statute.

In light of the alternative filing provisions suggested by the drafters of the Uniform Commercial Code,² it seems evident that an underlying purpose of the Georgia provision is the establishment of a purely local filing system. To allow the "principal office" as stated in the Certificate of Incorporation to serve as the proper place for filing would appear to contradict this purpose: each filer, or searcher, in order to fully insure his compliance with Section 109A-9-401, would have to search a central filing place at the outset, the Office of the Secretary of State where corporate records are maintained. Such requirement would virtually frustrate the purpose of the legislature in establishing a purely local filing system. Thus, one would have to contact the Secretary of State initially to determine the debtor's principal place of business, but there is no assurance that the "correct" information would be given the inquiring creditor. Attached to petitioner's brief is the affidavit of James L. Eaton, Assistant Corporations Commissioner and custodian of all annual reports filed by Georgia corporations (as required by Ga.Code Ann. § 22-1501)³ and all corporate charters filed with the State of Georgia. Mr. Eaton states: "As Assistant Corporations Commissioner for the State of Georgia, I am familiar with the procedures by which information is obtained from the Secretary of State. Numerous employees are assigned to me and respond by telephone to requests by persons for information concerning records maintained in my office with respect to corporations doing business in Georgia. In responding to such requests, including any requests for information as to the principal office of a corporation, the source document used by employees of my office is the Certified Statement for Annual Report of a corporation * * Had requests been made for the principal place of business or the principal office of Carmichael Enterprises, Inc. for the years 1968 and 1969, the information on file in our office would have indicated that the principal office of the corporation was 1831—Highway I-85, Norcross, Georgia,⁴ Gwinnett County for the aforesaid period of time, and employees of my office would have been authorized to offer such information in response to said inquiry."⁵ Thus, a careful lender, aware of the problems involved, and making a diligent search for the principal place of business of the debtor corporation here, nevertheless would have filed in Gwinnett County.

Another factor which the Court deems significant in construing the statutory language is that the "principal place of business" rule is to be applied, by the terms of the statute, when the debtor is a "partnership, a corporation, other business entity not an individual." Partnerships and other business entities, of course, have no charter or certificate of incorporation on file with the Secretary of State. To allow the charter designation to serve as the "principal place of business" for filing purposes would be tantamount to establishing one standard for corporations and another for partnerships and other business entities. There is no indication in the statutory language that a double standard was intended.

On April 1, 1969, the new Georgia Corporations Code became effective and, while the old code was still in effect at the time the parties filed their financing statements here, the Court believes the changes made have a bearing on the issues in the instant case. Among other things, the new corporate code provides that "Each corporation shall have and continuously maintain in this State: (1) A registered office which may be, but need not be, the same as its place of business * * *." Ga.Code Ann. § 22-401. The comments of the drafters of this provision are revealing: "It is not intended that other laws, the application of which now turn upon a determination of the corporation's principal place of business, should be affected by this section. For example, financing statements of a debtor corporation under Ga.Code Ann. § 109A-9-401(1) (b) still would be filed in the county in which the principal place of business is located, not the county of the registered office." The Referee rejected these comments as controlling on the ground that they were "merely the opinion of the drafters attempting to interpret the requirements of a separate and distinct statute which they did not draft, i. e., the filing requirement of the Uniform Commercial Code (Ga.Code Ann. 109-A-9 401(1) (b))." This Court, too, does not consider these comments as controlling or conclusive, but they do provide a source of enlightenment in construing an otherwise maiden statute; and this Court will not completely reject their significance. Even without the comments, however, the changes in the corporate code themselves shed some light on the question of proper filing. As can be seen from the statute, "principal office" is deleted and "registered office" is substituted with the clear mandate that the "registered office" need not be the same as the place of business. The filing rule proposed by the Referee (that the "principal office" as stated in the corporate charter is the equivalent of "principal place of business" for filing purposes) would appear to be inapplicable to corporations created after April 1, 1969. An adoption of the Referee's proposal would result in the application of different filing standards for pre- and post-1969 corporations. Financing statements for pre-1969 corporations would be filed in the "principal office" as designated in the charter while financing statements for post-1969 corporations apparently would have to be filed in the county of the corporation's factual principal place of business. The Court notes, as did the Referee, that the new corporate code provision was not in effect at the time the financing statements were filed here. The Court deems it pertinent, however, to consider the effect of its decision on the filing issue on all corporations, especially since this is a case of first impression in Georgia. The Court cannot overlook the confusion which might result from the establishment of different filing standards for pre- and post-1969 debtor corporations.

There are other factors from which inferences of legislative intent can be drawn. The statutory provision relative to the formation of corporations, which was in effect at the time of the enactment of the Uniform Commercial Code, speaks in terms of "principal office" (Ga. Code Ann. § 22-1802 1965), whereas the Uniform...