Logan Paving Co. v. Massey-Ferguson Credit Corp.

• Decision Date: 12 October 1984
• Docket Number: No. 68457,MASSEY-FERGUSON,68457
• Citation: 323 S.E.2d 259,172 Ga.App. 368
• Parties: , 40 UCC Rep.Serv. 116 LOGAN PAVING COMPANY v.CREDIT CORPORATION et al.
• Court: Georgia Court of Appeals

Page 259

323 S.E.2d 259

172 Ga.App. 368, 40 UCC Rep.Serv. 116

LOGAN PAVING COMPANY v. MASSEY-FERGUSON CREDIT CORPORATION et al.

No. 68457.

Court of Appeals of Georgia.

Oct. 12, 1984.

J. Edward Allen, Athens, for appellant.

James P. Smith, Ronald C. Thomason, Macon, for appellee.

BENHAM, Judge.

Plaintiff-appellant, Logan Paving Company d/b/a Logan Equipment Company ("Logan"), brought an action for declaratory judgment against defendant-appellee, Massey-Ferguson, Inc. ("Massey-Ferguson"), and Massey-Ferguson Credit Corporation to determine which party had superior rights to the proceeds of the sale of a certain Massey-Ferguson tractor. The case was tried before the court without a jury under the following stipulated facts. In February of 1981, Logan was the fee simple owner of the tractor in question. Sometime thereafter, Logan delivered the tractor to Davis Tractor Company ("Davis"), an authorized Massey-Ferguson dealership, to sell for Logan because Davis was located in a more advantageous market. Davis' inventory was financed by Massey-Ferguson pursuant to a Dealer Sale and Service Agreement, and Massey-Ferguson's interest in Davis' inventory was perfected by the proper filing of financial statements. Logan was not advised of any agreements between Davis and Massey-Ferguson, and title to the tractor was never transferred to Davis from Logan. In April 1982, Davis informed Massey-Ferguson that it had obtained the tractor as a trade-in. The tractor was placed in Davis' Trade-In Used Floor Plan and Davis received a credit of $18,700 on its outstanding balance due Massey-Ferguson. In August 1982, Massey-Ferguson terminated its dealership arrangement and security agreement with Davis, at which time the tractor was in Davis' possession and appeared on the inventory list delivered to Massey-Ferguson by Davis. When a dispute arose between Logan and Massey-Ferguson as to their conflicting rights in the tractor, it was sold, the proceeds placed in escrow, and this action for declaratory judgment filed.

After reviewing the pleadings and depositions, the trial court found, in addition to the stipulated facts set forth above, that Davis was not generally known by its creditors to be substantially engaged in selling the goods of others. The court then concluded as a matter of law that the transaction between Davis and Logan was a "sale or return" governed by OCGA § 11-2-326(3), and held that the claim of Massey-Ferguson was superior to that of Logan. Logan appeals from the judgment subsequently entered.

The Uniform Commercial Code (UCC) as adopted in this state provides in pertinent part as follows: "(3) Where goods are delivered to a person for sale and such person maintains a place of business at which he deals in goods of the kind involved, under a name other than the name of the person making delivery, then with respect to claims of creditors of the person conducting the business the goods are deemed to be on sale or return. The provisions of this subsection are applicable even though an agreement purports to reserve title to the person making delivery until payment or resale or uses such words as 'on consignment' or 'on memorandum.' However, this subsection is not applicable if the person making delivery: (a) Complies with an applicable law providing for a consignor's interest or the like to be evidenced by a sign; or (b) Establishes that the person conducting the business is generally known by his creditors to be substantially engaged in selling the goods of others; or (c) Complies with the filing provisions of the article on secured transactions (Article 9 of this title) ..." OCGA § 11-2-326.

We agree that the undisputed facts of this case fall squarely within the provisions of OCGA § 11-2-326(3). Logan, the owner of the tractor, delivered the tractor to Davis for the purpose of having Davis receive offers to purchase the tractor. The offers were to be approved by Logan, and Davis was to receive a commission for his efforts. Davis was an authorized Massey-Ferguson dealer which dealt in goods of this kind, and operated under a trade name different from that used by Logan. While Logan did not file a financing statement on the tractor, Massey-Ferguson had filed such a statement in June 1974 covering Davis' present and after-acquired inventory of Massey-Ferguson machinery. On the date the dealership arrangement between Davis and Massey-Ferguson was terminated, the tractor remained on Davis' list of inventory financed by Massey-Ferguson.

Allgeier v. Campisi, 117 Ga.App. 105, 159 S.E.2d 458 (1968), relied upon by appellant, is not controlling here. "All that case says is that the facts did not qualify the situation as a 'sale or return' under [OCGA § 11-2-326(1)(b) ]." In re A & T Kwik-N-Handi, Inc., 13 UCC Rep. 779, 782 (M.D.Ga.1973). The case at bar is concerned with the application of ...