International Harvester Credit Corp. v. Associates Financial Services Co., Inc.
| Decision Date | 05 December 1974 |
| Docket Number | No. 3,No. 49816,49816,3 |
| Citation | 211 S.E.2d 430,133 Ga.App. 488 |
| Parties | , 16 UCC Rep.Serv. 396 INTERNATIONAL HARVESTER CREDIT CORPORATION v. ASSOCIATES FINANCIAL SERVICES COMPANY, INC., et al |
| Court | Georgia Court of Appeals |
Hansell, Post, Brandon & Dorsey, W. Rhett Tanner, Atlanta, for appellant.
Kilpatrick, Cody, Rogers, McClatchey & Regenstein, George B. Haley, Jr., Robert W. Coleman, Atlanta, for appellees.
Syllabus Opinion by the Court
Associates Financial Services Company, Inc. ('Associates') commenced two actions seeking to foreclose on security interests it held in two 1970 International trucks. International Harvester Credit Corporation ('IHCC') joined issue by filing its claim affidavit, claim bond, and forthcoming bond in each action, and subsequently disposed of the two trucks by sale. The two actions were consolidated by agreement of the parties; both parties moved for summary judgment; the trial court granted IHCC's motion and denied that of Associates; and this court reversed in a prior appeal, holding that neither party had carried its summary judgment burden. Associates Financial Services Co. v. International Harvester Credit Corp., 127 Ga.App. 636, 194 S.E.2d 518.
Following additional discovery, the case came on for trial before the court without a jury. The evidence disclosed that Sebring International, Inc. ('Sebring') was a duly authorized dealer for International Harvester Company ('IH') with its principal place of business in Scottsboro, Alabama. Pursuant to a 'dealer Sales and Service Agreement,' effective April 1, 1969, Sebring was authorized to maintain an inventory of International motor trucks and to sell the trucks from inventory in the ordinary course of retail trade, even though they may have been financed through a 'floor plan' arrangement with IH or IHCC as provided for in the agreement. In July, 1969, a UCC-1 form financing statement was filed by IHCC in Alabama, showing IHCC as the secured party and Sebring as the debtor, and describing the collateral as 'all new or used motor trucks and trailers of whatsoever description; . . . and all other items of tangible personal property held or offered for sale by the debtor.' Proceeds from the collateral were also covered.
On September 29, 1969, Sebring ordered the two new International tractor-trucks in question from IH. The order, which was approved by IH, and the 'wholesale orders,' prepared by IH, showed that the trucks were being ordered specially equipped for Compbell Truck Leasing, Inc. ('Campbell') as the customer, and that the sale to it by Sebring was to be financed by an outside source. In November, 1969, the trucks were delivered to Sebring by IH, and Sebring 'floor planned' the purchase of the trucks by executing to IH a note and security agreement as contemplated by the dealer agreement. This document was in turn assigned to IHCC.
Sometime prior to January 12, 1970, Sebring communicated with Associates, which was engaged in the business of purchasing commercial paper, chattel paper, conditional sales contracts, etc., to determine whether Associates was interested in financing Compbell's purchase of the two trucks from Sebring. Associates conducted an investigation of Campbell's credit standing and determined that Campbell was acceptable as a purchaser of the trucks. Prior to this occasion Associates had financed the purchase of other trucks by Campbell, and the sale of other trucks by Sebring.
On January 12, Campbell executed two 'Alabama Security Agreements' and notes for the purchase of the trucks on security agreement forms supplied by Associates. Each agreement recited a cash down payment of $4,350 by Campbell, and in a printed portion of each form Campbell acknowledged delivery and possession of each truck. Campbell agreed in each note to pay the holder $21,054 in 35 consecutive monthly instalments of $584.83, and a final instalment of $584.95. These agreements were assigned to Associates by Sebring on the same day they were executed.
As a condition of financing the sale, Associates required Campbell to execute as additional collateral an 'Assignment of Lease Monies,' which assigned to Associates the right to receive all monies due Campbell from truck leases with a concern known as Imperial Carpet Mills, Inc. On January 14, Sebring delivered the agreements and assignments to Associates' office in Tennessee. At that time, Associates verified the two agreements by calling Campbell's office and paid Sebring $34,800 for the two agreements. Sebring, however, failed to pay this amount over to IHCC. On January 26, Associates perfected its security interest in the trucks by filing Form UCC-1 financing statements in Alabama showing Campbell as the debtor, Sebring as the secured party, and Associates as assignee of the secured party. Sebring paid the Alabama sales tax as required on each truck, and Campbell insured them as provided for by the agreements.
The factual circumstance giving rise to this dispute is that contrary to the recitations in the 'Alabama Security Agreements' assigned to Associates, Campbell did not make the cash down payments nor was actual possession of the trucks taken by him. He had ordered trailers to be used in conjunction with the tractor-trucks; he had no place to store the trucks until the trailers were ready; and he and Sebring agreed that the trucks were to be left on Sebring's lot until the trailers arrived, at which time Campbell would make the cash down payment and take possession. In the interim the amount of the down payments had been charged by Sebring to Campbell on open account, and the testimony was that Campbell and Sebring had always done business in this manner.
Because events transpired in such a manner that Campbell never made the cash down payment and never took actual possession, IHCC contends that the transaction was never finalized and that there was no 'sale' of the trucks by Sebring to Campbell. However, throughout the course of these events IH and IHCC treated the trucks as being sold. From the time the trucks were ordered, IH had knowledge that Campbell was buying them and that he was financing the purchase through 'outside financing.' After the trucks were delivered to Sebring's lot, IHCC conducted monthly inventories of Sebring's sales and trucks on hand and always listed the trucks as being 'Sold-Not Billed Out,' showing Campbell as the purchaser, and indicating that the two trucks were to be delivered to Campbell along with a third truck at some time in the future. The report for January 15 specified that the trucks were to be delivered to Campbell 'in about 65 days.' In March, IHCC found out that Associates had, back in January, paid Sebring for the agreements and had filed financing statements, and IHCC then went to Sebring's lot, inventoried the trucks, and listed the trucks in question on the procceds inventory form rather than the truck inventory form. A notation was made on the form that the trucks were 'On lot but sold.' Demand was made upon Sebring to pay over the $34,800.00 received from Associates, but, unfortunately, the check 'bounced,' Sebring was unable to continue in business, and the dealership was terminated.
Subsequently, IHCC took possession of the trucks and dealt with Campbell as the buyer, telling him the trucks were being stored for him on another dealer's lot in Guntersville and would be available for him on April 15. Campbell attempted to make the cash down payment and take possession of the trucks in accordance with his collateral agreement with Sebring, but IHCC moved the trucks to Atlanta prior to April 15 and refused to turn the trucks over because it had not been paid by Sebring on its floor-plan note. IHCC never gave Sebring any credit on its indebtedness for the return of the trucks and was still demanding payment of the floor-plan note on the two trucks at the time this action was commenced by Associates.
The trial court made findings of fact substantially as outlined above, and concluded that there was a sale of the trucks to Campbell on January 12 which was accomplished by the execution of the two 'Alabama Security Agreements' and notes; that each of them was complete on its face and constituted vaild chattel paper; that there was a valid transfer of the chattel paper by Sebring to Associates for new value, and that Associates took possession of it in the ordinary course of its business; that Campbell breached the agreements by failure to pay the instalments, and as a result Associates was entitled to repossess the trucks; that on August 21, 1970, the trucks were repossessed by Associates as the secured party pursuant to the assigned agreements; that Campbell was a buyer in the ordinary course of business when it purchased the two trucks, and as a result took the trucks free of any security interest in the trucks created by Sebring; that Associates was an unpaid transferee of chattel paper resulting from the sale of goods; that Associates had a valid perfected security interest in the trucks which was entitled to priority over any security interest held by IHCC; and that since IHCC had filed a forthcoming bond and disposed of the trucks, Associates was entitled to a money judgment against IHCC for their value, not to exceed the amount owed to Associates by Campbell. Held:
1. No question has been presented as to the manner or validity of the perfection of any of the security interests; and the parties stipulate that since the relevant provisions of the Uniform Commercial Code are identical in Alabama and Georgia, the Georgia statutes may be cited for convenience.
There is no dispute that if Campbell was a 'buyer in ordinary course of business' (Code Ann. § 109A-1-201(9)), or if Sebring's 'action' was...
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