Each provision of this article with regard to the rights, obligations, and remedies of the seller, the buyer, purchasers, or other third parties applies irrespective of title to the goods except where the provision refers to such title. Insofar as situations are not covered by the other provisions of this article and matters concerning title become material the following rules apply:
Unless otherwise explicitly agreed where delivery is to be made without moving the goods:
If the seller is to deliver a tangible document of title, title passes at the time when and the place where he or she delivers such documents and if the seller is to deliver an electronic document of title, title passes when the seller delivers the document; or
If the goods are at the time of contracting already identified and no documents of title are to be delivered, title passes at the time and place of contracting.
A rejection or other refusal by the buyer to receive or retain the goods, whether or not justified, or a justified revocation of acceptance revests title to the goods in the seller. Such revesting occurs by operation of law and is not a "sale."
(Code 1933, § 109A-2 - 401, enacted by Ga. L. 1962, p. 156, § 1; Ga. L. 2010, p. 481, § 2-6/HB 451.)
The 2010 amendment, effective May 27, 2010, inserted "or her" in subsection (2) and in paragraph (2)(a); inserted "the" in the introductory paragraph of subsection (3); in paragraph (3)(a), inserted "tangible", inserted "or she", and added "and if the seller is to deliver an electronic document of title, title passes when the seller delivers the document" at the end; and inserted "of title" in paragraph (3)(b). See the Editor's notes for applicability.
Editor's notes.- Ga. L. 2010, p. 481, § 3-1, not codified by the General Assembly, provides that: "This Act applies to a document of title that is issued or a bailment that arises on or after the effective date of this Act. This Act does not apply to a document of title that is issued or a bailment that arises before the effective date of this Act even if the document of title or bailment would be subject to this Act if the document of title had been issued or bailment had arisen on or after the effective date of this Act. This Act does not apply to a right of action that has accrued before the effective date of this Act." This Act became effective May 27, 2010.
Ga. L. 2010, p. 481, § 3-2, not codified by the General Assembly, provides that: "A document of title issued or a bailment that arises before the effective date of this Act and the rights, documents, and interests flowing from that document or bailment are governed by any statute or other rule amended or repealed by this Act as if such amendment or repeal had not occurred and may be terminated, completed, consummated, or enforced under that statute or other rule." This Act became effective May 27, 2010.
Law reviews.- For article discussing the resolution of conflicting claims to goods between an unsecured seller of goods and a creditor of a buyer claiming under an after-acquired property clause, see 28 Mercer L. Rev. 625 (1977). For article surveying insurance law in 1984-1985, see 37 Mercer L. Rev. 275 (1985). For comment on Cook Motor Co. v. Richardson, 103 Ga. App. 129, 118 S.E.2d 502 (1961), see 24 Ga. B.J. 266 (1961). For comment on Fender v. Colonial Stores, Inc., 138 Ga. App. 31, 225 S.E.2d 691 (1976), see 28 Mercer L. Rev. 751 (1977).
JUDICIAL DECISIONSANALYSIS
General Consideration
When title passes.
- If contract requires or authorizes seller to send goods to buyer but does not require seller to deliver them at destination, title passes to buyer at the time and place of shipment, but if contract requires delivery at destination, title passes on tender there. Promech Corp. v. Brodhead-Garrett Co., 131 Ga. App. 314, 205 S.E.2d 511 (1974).
Construction with other law.
- After obtaining consent from the probate court to sell construction equipment an executrix's decedent secured with a promissory note, the executrix was entitled to summary judgment as to the tort claims alleged against the decedent's corporation, after the corporation wrongfully retained possession of said equipment, converted two certificates of deposit, and the decedent's liability on the notes was extinguished under a provision of a stock sales agreement; furthermore, evidence was presented that the corporation's failure to release the equipment prevented its sale to third parties and thereby constituted a breach of a duty to mitigate damages. Midway R.R. Constr. Co. v. Beck, 281 Ga. App. 412, 636 S.E.2d 110 (2006).
Title did not pass to the shipper's customer upon delivery of goods to the carrier where it was agreed between all parties that the seller bore the expense, not of putting the goods in possession of the carrier, but rather of transporting the goods to the place of destination. Clark v. Messer Indus., Inc., 222 Ga. App. 606, 475 S.E.2d 653 (1996).
Delivery, in exchange for promise to pay in future, without retained security interest.
- Where defendant offered to pay in future for goods to be delivered presently, and seller agreed, delivered merchandise to defendant, and did not retain any security interest therein, there was a completed "sale" of the goods in question, and defendant had not only rightful possession of items, but title to them as well. Elliott v. State, 149 Ga. App. 579, 254 S.E.2d 900 (1979).
Attempted reservation of title amounted to a security interest.
- When the peanut growers completed the performance of the growers' duties under the growers' contracts with a peanut broker by delivering the growers' peanuts to a peanut company, title passed to the broker. The growers' attempted reservation of title amounted to a security interest. Farm Credit of Northwest Fla., ACA v. Easom Peanut Co., 312 Ga. App. 374, 718 S.E.2d 590 (2011), cert. denied, No. S12C0444, 2012 Ga. LEXIS 315 (Ga. 2012).
Customer's selection of goods and placing in shopping cart.
- Where defendant owner of barbecue restaurant continued to purchase large quantities of cut meat from plaintiff market's meat case (thereby leaving the market's meat case empty for other customers) instead of special ordering required meat as requested by plaintiff, plaintiff prevented defendant from paying for meat when defendant again disregarded plaintiff's instructions, and defendant refused to leave the market premises without paying for the meat selected, title to the meat did not pass to the defendant at the time defendant selected it and placed it in defendant's cart so as to serve as a basis for allowing defendant to ignore plaintiff's demand that defendant leave, thereby violating a criminal statute (criminal trespass). Watson v. State, 190 Ga. App. 671, 379 S.E.2d 811 (1989).
Delivery of automobile.
- Where seller delivered possession of automobile to buyer and transaction was complete as between them even though compliance had not yet been made with recording and insurance statutes, buyer was "owner" of the automobile and buyer alone was liable to third party for injuries sustained in accident while buyer was driving automobile. American Mut. Fire Ins. Co. v. Cotton States Mut. Ins. Co., 149 Ga. App. 280, 253 S.E.2d 825 (1979).
The evidence authorized the finding by the fact finder that, pursuant to the parties' understanding, the title to a motor vehicle passed to the buyer at the time the buyer received physical possession, with the seller holding the certificate as security only for the final payment of $50.00, which document was to be delivered at such time and place as the indebtedness was paid, and that, consequently, the sale was complete and the seller's uninsured motorist coverage on the vehicle was no longer in effect. Stone v. Nolan, 171 Ga. App. 644, 320 S.E.2d 781 (1984).
Since there was no explicit agreement to the contrary, a used car dealer acquired title to a car and the right to sell the car to a third party when the car was delivered to the dealer for this purpose; the fact that the dealer did not obtain the certificate of title did not deprive the dealer of title in the car or prevent it from transferring title. Right Touch of Class, Inc. v. Superior Bank, FSB, 244 Ga. App. 473, 536 S.E.2d 181 (2000); Mitchell Motors, Inc. v. Barnett, 249 Ga. App. 639, 549 S.E.2d 445 (2001).
Evidence showed that a car dealership sold its interest in a car to the buyer before a collision since the father signed the purchase and financing documents relating to the car sale, a credit company financed the purchase in the buyer's name and paid the dealership the car's purchase price, and the buyer's daughter took possession of the vehicle, regardless of whether an application for a certificate of title was filed before or after the collision. West v. Village Ford-Mercury, Inc., 256 Ga. App. 18, 567 S.E.2d 355 (2002).
O.C.G.A. § 11-2-401 creates, in favor of unpaid cash seller, unperfected interest which, though generally subject to a valid and perfected Article Nine security interest, may on some rare occasions provide relief to the aggrieved cash seller who can substantiate allegations either that a secured party acted in other than good faith or that one of the conditions described in O.C.G.A.11-9-113 has been met. Dixie Bonded Whse. & Grain Co. v. Allstate Fin. Corp., 693 F. Supp. 1162 (M.D. Ga. 1988).
Perfected security interest had priority over attempted reservation of title.
- Peanut growers' attempted reservation of title when the growers' delivered peanuts to a peanut company at a peanut broker's direction amounted to a security interest; however, the growers never perfected the growers' security interests. A cooperative bank's security interest in the peanuts was perfected, as the bank had filed financing statements and the security interest had attached so that the bank's perfected security interest had priority over the growers' unperfected security interests. Farm Credit of Northwest Fla., ACA v. Easom Peanut Co., 312 Ga. App. 374, 718 S.E.2d 590 (2011), cert. denied, No. S12C0444, 2012 Ga. LEXIS 315 (Ga. 2012).
Seller's failure to reserve title or obtain security interest.- Unpaid seller of cotton was an unsecured creditor with no standing to challenge a secured creditor's ownership rights in accounts receivable, where the seller failed to reserve title and did not obtain a security interest in the cotton or the accounts receivable before releasing possession and control of its goods. Graniteville Co. v. Bleckley Lumber Co., 944 F.2d 819 (11th Cir. 1991).
Seller's security interest not discharged by sale where buyer does not complete terms of sale.
- The security interest of the mortgagee of a mobile home retail installment sales contract was not discharged by a sale to the mobile home dealer by the mortgagee following default by the purchasers where the mortgagee and the dealer agreed that the title to the mobile home was to be transferred to the dealer only after it had paid mortgagee for the mobile home, the dealer did not complete payment for the mobile home, and there was no transfer of the certificate of title or ownership interest to the dealer, nor was there need prior to the resale of the mobile home for the mortgagee to secure a new certificate of title. Sunnyland Employees' Fed. Credit Union v. Fort Wayne Mtg. Co., 182 Ga. App. 5, 354 S.E.2d 645 (1987).
When owner estopped from asserting title to property sold by another.
- Where one party sells property belonging to another, if latter received proceeds of sale with knowledge of fact that it is proceeds of sale of own property, the seller is estopped from asserting title to property against purchaser; if party to whom property belongs receives proceeds from sale of property in ignorance of fact that it is proceeds from sale of own property, seller is not estopped to assert title against purchaser, but may be required to account for money received. Stubbs v. Smith, 248 Ga. 768, 285 S.E.2d 720 (1982).
Definition of "sale" used in drug prosecution.
- There was no error, in a prosecution for trafficking in cocaine, in using the language contained in O.C.G.A. § 11-2-401(2) when giving the jury a definition of the word "sale." Quinn v. State, 171 Ga. App. 590, 320 S.E.2d 827 (1984).
Sale of marijuana was completed when defendant caused marijuana to be delivered to undercover agent. Freeman v. State, 163 Ga. App. 71, 292 S.E.2d 563 (1982).
Sale of marijuana not completed.
- Offense of selling marijuana was not complete upon defendants' leading of undercover agents to the site of the marijuana since an agreed-upon weighing, loading, and delivering had not yet occurred; thus, the substantive trafficking offense did not merge with or extinguish the conspiracy-to-traffic offense. Meyers v. State, 174 Ga. App. 161, 329 S.E.2d 293 (1985).
Factor's purchase of accounts receivable.- Factor's interest as a good faith purchaser of a cotton buyer's accounts receivable was superior to the interests asserted by unsecured aggrieved sellers, where the factor's actions with respect to the sellers could be characterized as nothing other than honesty in fact and good faith under Article Two of the UCC. Dixie Bonded Whse. & Grain Co. v. Allstate Fin. Corp., 755 F. Supp. 1543 (M.D. Ga.), aff'd, 944 F.2d 819 (11th Cir. 1991).
Legal title passed when goods tendered to third-party customer and bill of lading issued listing nonresident corporation as consignee.
- Under O.C.G.A. § 11-2-401(2), the nonresident corporation took legal title to goods when the manufacturer tendered those goods to a third-party customer at the manufacturer's Georgia facility and issued a bill of lading listing the nonresident corporation as the consignee. Taking physical possession of the goods was not necessary; the nonresident corporation took legal title to goods located in Georgia, and that was sufficient for purposes of "transacting business" under O.C.G.A. § 9-10-91(1). Diamond Crystal Brands, Inc. v. Food Movers Int'l, 593 F.3d 1249 (11th Cir.), cert. denied, 131 S. Ct. 158, 178 L. Ed. 2d 39 (2010).
Cited in Wooden v. Michigan Nat'l Bank, 117 Ga. App. 852, 162 S.E.2d 222 (1968); First Nat'l Bank & Trust Co. v. Smithloff, 119 Ga. App. 284, 167 S.E.2d 190 (1969); First Nat'l Bank & Trust Co. v. McElmurray, 120 Ga. App. 134, 169 S.E.2d 720 (1969); Marshall v. Universal C.I.T. Credit Corp., 121 Ga. App. 751, 175 S.E.2d 84 (1970); Rockwin Corp. v. Kincaid, 124 Ga. App. 570, 184 S.E.2d 509 (1971); Tri-County Livestock Auction Co. v. Bank of Madison, 228 Ga. 325, 185 S.E.2d 393 (1971); Giant Peanut & Grain Co. v. Long Mfg. Co., 129 Ga. App. 685, 201 S.E.2d 26 (1973); International Harvester Credit Corp. v. Associates Fin. Servs. Co., 133 Ga. App. 488, 211 S.E.2d 430 (1974); Redfern Meats, Inc. v. Hertz Corp., 134 Ga. App. 381, 215 S.E.2d 10 (1975); McDuffie v. State, 135 Ga. App. 616, 218 S.E.2d 320 (1975); Cone Mills Corp. v. A.G. Estes, Inc., 399 F. Supp. 938 (N.D. Ga. 1975); Spurlock v. Commercial Banking Co., 138 Ga. App. 892, 227 S.E.2d 790 (1976); Canal Ins. Co. v. P & J Truck Lines, 145 Ga. App. 545, 244 S.E.2d 81 (1978); Johnson v. State, 154 Ga. App. 353, 268 S.E.2d 406 (1980); Madewell v. Marietta Dodge, Inc., 506 F. Supp. 286 (N.D. Ga. 1980); Leader Nat'l Ins. Co. v. Smith, 162 Ga. App. 612, 292 S.E.2d 456 (1982); Palmer v. State, 250 Ga. 219, 297 S.E.2d 22 (1982); Robinson v. State, 164 Ga. App. 652, 297 S.E.2d 751 (1982); Ansley Park Plumbing & Heating Co. v. Mikart, Inc., 9 Bankr. 144 (Bankr. N.D. Ga. 1981); Graniteville Co. v. Bleckley Lumber Co., 687 F. Supp. 589 (M.D. Ga. 1988); Cotton States Mut. Ins. Co. v. Gomez, 192 Ga. App. 76, 383 S.E.2d 567 (1989); Mail Concepts, Inc. v. Foote & Davies, Inc., 200 Ga. App. 778, 409 S.E.2d 567 (1991); Saffron, Inc. v. Macon Kraft, Inc., 134 Bankr. 62 (Bankr. M.D. Ga. 1991); Superior Bank, FSB v. Human Servs. Emples. Credit Union, 252 Ga. App. 489, 556 S.E.2d 155 (2001); Edel v. Southtowne Motors of Newnan II, Inc., 338 Ga. App. 376, 789 S.E.2d 224 (2016).
Rejection or Revocation of Acceptance
Election at time of delivery.
- O.C.G.A. § 11-2-401(4), which provides that a "rejection or other refusal by the buyer to receive or retain the goods, whether or not justified, or a justified revocation of acceptance revests title to the goods in the seller," pertains to an election a buyer may make at the time the goods are presented to the buyer for delivery. Tennessee-Virginia Constr. Co. v. Willingham, 117 Ga. App. 290, 160 S.E.2d 444 (1968).
Return of automobile to dealer.
- The plaintiffs obtained all the rights to an automobile originally held by the defendant when they purchased the automobile from the dealer to whom it had been entrusted. However, after returning the car to the dealer in hopes this would enable plaintiffs to obtain a proper certificate of title, the plaintiffs eventually agreed to give up their claim to the automobile in exchange for the dealer's promise to order them a new and different automobile. This subsequent agreement with the dealer revoked any right or title the plaintiffs had to the automobile in question and revested title back to the original owner, the defendant. Walker v. Castello, 187 Ga. App. 196, 369 S.E.2d 527 (1988).
RESEARCH REFERENCES
Am. Jur. 2d.
- 67 Am. Jur. 2d, Sales, §§ 390-398. 68A Am. Jur. 2d, Secured Transactions, § 13.
6 Am. Jur. Pleading and Practice Forms, Commercial Code, § 2:346.
C.J.S.- 77A C.J.S., Sales, § 214 et seq.
U.L.A.- Uniform Commercial Code (U.L.A.) § 2-401.
ALR.
- Forfeiture by innocent vendor of article sold conditionally and used by vendee in violation of law, 2 A.L.R. 1596.
Taking note for price as waiver of reservation of title under conditional sale, 13 A.L.R. 1044; 55 A.L.R. 1160.
Bankruptcy: rights of trustee in bankruptcy and contract purchaser of chattel remaining in the possession of the bankrupt, 22 A.L.R. 1328.
Validity and effect of provision in contract of sale with reservation of title, for collection of unpaid purchase money after retaking the property, 25 A.L.R. 1490; 43 A.L.R. 1243.
Provision in land contract against removal of buildings as affecting rights of third person under chattel mortgage or conditional sale, 30 A.L.R. 542.
Rule that title passes on delivery to carrier as applicable to shipment in "pool" car for several purchasers, 36 A.L.R. 410.
Who bears loss incident to destruction of goods sold conditionally, 38 A.L.R. 1319.
Passing of title to goods by acceptance of draft for purchase price, with warehouse receipt attached, or by transfer of draft with receipt, 55 A.L.R. 1116.
Time and place of passage of title to goods shipped under bill of lading, with draft attached, consigning them to shipper's order, 60 A.L.R. 677.
Rights and remedies as between parties to a conditional sale after the seller has repossessed himself of the property, 83 A.L.R. 959; 99 A.L.R. 1288; 49 A.L.R.2d 15.
Validity as against third person of sale or pledge of goods, or receipts issued for goods, retained in warehouse on premises of seller or pledgor (field warehousing), 133 A.L.R. 209.
Rights and duties of parties to conditional sales contract as to resale of repossessed property, 49 A.L.R.2d 15.
Punitive damages for wrongful seizure of chattel by one claiming security interest, 35 A.L.R.3d 1016.