Rollins Communications, Inc. v. Georgia Institute of Real Estate, Inc.

• Decision Date: 01 November 1976
• Docket Number: No. 3,No. 52859,52859,3
• Citation: 231 S.E.2d 397,140 Ga.App. 448,20 UCC Rep. 1027
• Parties: , 20 UCC Rep.Serv. 1027 ROLLINS COMMUNICATIONS, INC., etc. v. GEORGIA INSTITUTE OF REAL ESTATE, INC
• Court: Georgia Court of Appeals

Page 397

231 S.E.2d 397

140 Ga.App. 448, 20 UCC Rep.Serv. 1027

ROLLINS COMMUNICATIONS, INC., etc. v. GEORGIA INSTITUTE OF REAL ESTATE, INC.

No. 52859.

Court of Appeals of Georgia, Division No. 3.

Nov. 1, 1976.

Rehearing Denied Nov. 16, 1976.

Levy, Buffington & Adams, D. Merrill Adams, Atlanta, for appellant.

J. Don Jones, Marietta, for appellee.

WEBB, Judge.

Rollins Communications, Inc., a division of Rollins International, Inc., as lessor, brought suit against Georgia Institute of Real Estate, Inc., the lessee, for unpaid rentals under an 'Equipment Lease Agreement.' At trial defendant lessee moved for a directed verdict on the ground that the term of the lease never commenced since it was to be measured from a defined 'Date in Service,' written notice of which was required to be, but was not, given by lessor to lessee. The trial court directed a verdict on this ground and on the additional ground, raised sua sponte, that the lease was not a true lease but was intended as a security agreement so that the suit, construed as one for a 'deficiency judgment,' could not proceed in the absence of compliance with Code Ann. § 109A-9-504(3). We reverse as to both issues.

1. The record demands a finding that the installation was not completed, and the 'Date in Service' never arrived at, since lessor's employee, who was finishing up the installation, was told by lessee to stop work because lessee had determined not to honor the contract. Under everyman's definition of anticipatory breach, further performance by lessor was not required and it was entitled to sue at once for its damages. Whitley Construction Co. v. Virginia Supply & Well Co., 99 Ga.App. 419, 108 S.E.2d 819 and cases cited; Jinright v. Russell, 123 Ga.App. 706, 708(2), 182 S.E.2d 328 and authorities cited.

2. Paragraph 8 of the agreement provides: 'Acceptance of this Agreement by Rollins is conditioned upon . . . (4) evidence of the filing of Form UCC-1.' Paragraph 13 provides: 'Lessee shall execute and deliver to Rollins duly executed financing statements and security agreements to secure the then unpaid portion of the lease rentals as set forth in Schedule 'A'; provided, however, that failure of Rollins to request such financing statement and security agreement or of the Lessee to execute the same shall not affect the reservation of title in Rollins.' In paragraph 18, entitled 'Default,' provision is made for the contingency of lessee becoming 'insolvent (as defined under the Uniform Commercial Code) . . .'

Because of this language the trial court ruled that the lease was not a true lease but was intended as a security agreement so that failure to comply with Code Ann. § 109A-9-504(3) (secured party's disposition of collateral after default) was a bar to the suit. Braswell v. American Nat'l Bk., 117 Ga.App. 699, 161 S.E.2d 420 (1968); Edmondson v. Air Service Co., 123 Ga.App. 263, 180 S.E.2d 589 (1971); Gurwitch v. Luxurest Furniture Mfg. Co., 233 Ga. 934, 214 S.E.2d 373 (1975).

UCC Article 9, Secured Transactions, applies to a 'lease . . . intended as security.' Code Ann. § 109A-9-102(1)(a). 'Unless a lease . . . is intended as security, reservation of title thereunder is not a 'security interest' . . . Whether a lease is intended as security is to be determined by the facts of each case; however, (a) the inclusion of an option to purchase does not of itself make the lease one intended for security, and (b) an agreement that upon compliance with the terms of the lease, the lessee shall become or has the option to become the owner of the property for no additional consideration or for a nominal consideration does make the lease one intended for security.' Code Ann. § 109A-1-201(37).

In the instant case the lessee had the option of becoming the owner of the leased equipment for additional consideration which was more than nominal, but it was not required to do so, nor was it 'locked into a contract to purchase (the equipment) whenever (lessor) desired' as was the case in Redfern Meats, Inc. v. Hertz Corp., 134 Ga.App. 381, 392, 215 S.E.2d 10, 18 (1975). It is sufficient to say that, under Code Ann. § 109A-1-201(37), supra, and prior decisions of this court (Mays v. Citizens & Southern Nat'l Bank, 132 Ga.App. 602, 609, 208 S.E.2d 614 (1974); McGuire v. Associates Capital Services Corp., 133 Ga.App. 408, 410(3), 210 S.E.2d 862 (1974); Redfern Meats, Inc. v. Hertz Corp., 134 Ga.App. 381, 385(4), 215 S.E.2d 10, supra), the instant lease is not a security interest unless lease paragraphs 8, 13, and 18, referring to financing statements and the UCC as quoted above, require that construction in and of themselves.

We hold that they do not. In Hays v. Jordan, 85 Ga. 741, 748, 11 S.E. 833, 835 (1889), the Supreme Court, in holding that a contract calling...