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676 S.E.2d 394
Page 1
296 Ga.App. 782, 676 S.E.2d 394, 68 UCC Rep.Serv.2d 576, 09 FCDR 1129
(Cite as: 296 Ga.App. 782, 676 S.E.2d 394)
© 2009 Thomson Reuters. No Claim to Orig. US Gov. Works.
Ga.App.,2009.
Okefenokee Aircraft, Inc. v. PrimeSouth Bank
296 Ga.App. 782, 676 S.E.2d 394, 68 UCC Rep.Serv.2d 576, 09 FCDR 1129
Court of Appeals of Georgia.
OKEFENOKEE AIRCRAFT, INC. et al.
v.
PRIMESOUTH BANK.
No. A08A1926.
March 20, 2009.
balance due on loan following repossession of collateral that secured loan without first having to dispose of collat-
eral.
Affirmed.
349Ak240 k. Deficiency and Personal Liability. Most Cited Cases
Secured creditor was statutorily authorized to seek money judgment on balance due on loan following repossession
of collateral that secured loan without first having to dispose of collateral. West's Ga.Code Ann. § 11-9-601.
[2] Secured Transactions 349A 226
[3] Secured Transactions 349A 1
349A Secured Transactions
349AI Nature, Requisites, and Validity
676 S.E.2d 394
Page 2
296 Ga.App. 782, 676 S.E.2d 394, 68 UCC Rep.Serv.2d 576, 09 FCDR 1129
(Cite as: 296 Ga.App. 782, 676 S.E.2d 394)
[4] Secured Transactions 349A 1
with an immediate source of recovery in addition to the standard remedies of an unsecured creditor.
[5] Secured Transactions 349A 161
349A Secured Transactions
349AVII Default and Enforcement
349Ak229 Disposition of Collateral
349Ak231 k. Manner of Disposition in General. Most Cited Cases
The Uniform Commercial Code (UCC) includes a mandate that the creditor act in a commercially reasonable man-
ner. West's Ga.Code Ann. § 11-9-101 et seq.
Secured Transactions 349A 231
349A Secured Transactions
349AVII Default and Enforcement
349AVII Default and Enforcement
349Ak242 Wrongful Enforcement
349Ak242.1 k. In General. Most Cited Cases
Once a creditor has possession of collateral that was security for a note, he must act in a commercially reasonable
manner toward sale, lease, proposed retention, where permissible, or other disposition, and if such disposition is not
676 S.E.2d 394
Page 3
296 Ga.App. 782, 676 S.E.2d 394, 68 UCC Rep.Serv.2d 576, 09 FCDR 1129
(Cite as: 296 Ga.App. 782, 676 S.E.2d 394)
**395 Cohen, Pollock, Merlin & Small, Gus H. Small, Jr., Karen F. White, Atlanta, for appellants.
Kopp & Conner, Neal L. Conner, Jr., Waycross, for appellee.
while seeking an independent action for money judgment and therefore affirm.
The following facts are undisputed. On or around September 9, 2005, the Bank issued a loan to OAI for the purchase
of an airplane. OAI executed a promissory note (the “Note”) in favor of the Bank in the principal amount of
$161,306.25 plus interest. Rimes executed a personal guarantee on the Note, guaranteeing the payment of sums due
The Bank moved for summary judgment, arguing that the facts of the case were undisputed and that the only issue
for the trial court's consideration was OAI's admitted default and non-payment of the indebtedness under the Note;
therefore, the Bank argued that it was entitled to the relief sought as a matter of law. The Bank considered irrelevant
its repossession of the collateral to the fact that it was entitled to a money judgment against the appellants for the
a genuine issue of material fact as to whether the Bank acted in a commercially reasonable manner as required by
the Uniform Commercial Code.
The trial court agreed with the Bank and, given that the existence of the loan, the default, and the guarantee were
undisputed, granted its motion for summary judgment. The trial court specifically held that “[t]he potential breach of
collateral and credits the net proceeds of the sale to the indebtedness.
[1] Appellants' arguments are misplaced. The present lawsuit dealt only with the Note that OAI signed and that
Rimes guaranteed; the undisputed facts established both the appellants' default in payment and the amount of the
underlying debt. Appellants did not file a counterclaim or otherwise present any evidence that the Bank's handling or
676 S.E.2d 394
Page 4
296 Ga.App. 782, 676 S.E.2d 394, 68 UCC Rep.Serv.2d 576, 09 FCDR 1129
(Cite as: 296 Ga.App. 782, 676 S.E.2d 394)
© 2009 Thomson Reuters. No Claim to Orig. US Gov. Works.
not disposing of the collateral itself gave rise to a factual issue as to the reasonableness of its conduct. But, as illus-
trated below, the applicable statutory and case law authorizes the Bank to simultaneously *784 repossess and retain
its collateral while at the same time seeking a money judgment for the full amount of the outstanding debt.
Terryphone Corp. v. Modems Plus, 171 Ga.App. 710, 711-712(2), 320 S.E.2d 784 (1984). To the contrary, the Code
expressly states that the rights and remedies afforded a secured creditor “are cumulative and may be exercised sim-
ultaneously.” OCGA § 11-9-601(c).
FN1. The Note specifically provided that, in the event of default, the Bank “may use any remedy ... under
state or federal law.”
creditor. The intent of the [C]ode was to broaden the options open to a creditor after default rather than to limit
them under the old theory of election of remedies.
(Citation and punctuation omitted.) McCullough, 139 Ga.App. at 263(2), 228 S.E.2d 146. See ITT Terryphone
Corp., 171 Ga.App. at 711-712(2), 320 S.E.2d 784.
file suit on the [Note] without first disposing of the collateral was not improper under the terms of the [Note] or of
the Uniform Commercial Code.” *785 ITT Terryphone Corp., 171 Ga.App. at 712(2), 320 S.E.2d 784. Nor did the
Bank's repossession of the collateral impact the amount of the OAI's outstanding debt under the Note. See id.;
McCullough, 139 Ga.App. at 263(2), 228 S.E.2d 146.FN2
FN2. We note that other jurisdictions that have considered this issue have reached the same result. See gen-
in possession of collateral, including a mandate that the creditor act in a commercially reasonable manner. FN3 As
this Court has previously explained:
676 S.E.2d 394
Page 5
296 Ga.App. 782, 676 S.E.2d 394, 68 UCC Rep.Serv.2d 576, 09 FCDR 1129
(Cite as: 296 Ga.App. 782, 676 S.E.2d 394)
© 2009 Thomson Reuters. No Claim to Orig. US Gov. Works.
FN3. See, e.g., OCGA §§ 11-9-207(a) (“[A] secured party shall use reasonable care in the custody and
pose of collateral, “[e]very aspect of a disposition of collateral, including the method, manner, time, place,
and other terms, must be commercially reasonable.”).
It would be unfair to allow a creditor to deprive the debtor of the possession and use of the collateral for an unrea-
sonable length of time and not apply the asset or the proceeds from its sale toward liquidation of the debt. Moreo-
a right of recovery.
(Citation and punctuation omitted; emphasis in original.) ITT Terryphone Corp., 171 Ga.App. at 712(3), 320 S.E.2d
784.
Thus, if the Bank fails to proceed in a commercially reasonable manner with respect to its handling of the repos-
answer that question in the positive. See Ricker, 215 Ga.App. at 794-795, 452 S.E.2d 583; ITT Terryphone Corp.,
171 Ga.App. at 711-712(2), 320 S.E.2d 784; McCullough, 139 Ga.App. at 263(2), 228 S.E.2d 146. Accordingly, we
affirm the judgment of the trial court.
Judgment affirmed.
END OF DOCUMENT
676 S.E.2d 394
Page 2
296 Ga.App. 782, 676 S.E.2d 394, 68 UCC Rep.Serv.2d 576, 09 FCDR 1129
(Cite as: 296 Ga.App. 782, 676 S.E.2d 394)
[4] Secured Transactions 349A 1
with an immediate source of recovery in addition to the standard remedies of an unsecured creditor.
[5] Secured Transactions 349A 161
349A Secured Transactions
349AVII Default and Enforcement
349Ak229 Disposition of Collateral
349Ak231 k. Manner of Disposition in General. Most Cited Cases
The Uniform Commercial Code (UCC) includes a mandate that the creditor act in a commercially reasonable man-
ner. West's Ga.Code Ann. § 11-9-101 et seq.
Secured Transactions 349A 231
349A Secured Transactions
349AVII Default and Enforcement
349AVII Default and Enforcement
349Ak242 Wrongful Enforcement
349Ak242.1 k. In General. Most Cited Cases
Once a creditor has possession of collateral that was security for a note, he must act in a commercially reasonable
manner toward sale, lease, proposed retention, where permissible, or other disposition, and if such disposition is not
676 S.E.2d 394
Page 3
296 Ga.App. 782, 676 S.E.2d 394, 68 UCC Rep.Serv.2d 576, 09 FCDR 1129
(Cite as: 296 Ga.App. 782, 676 S.E.2d 394)
**395 Cohen, Pollock, Merlin & Small, Gus H. Small, Jr., Karen F. White, Atlanta, for appellants.
Kopp & Conner, Neal L. Conner, Jr., Waycross, for appellee.
while seeking an independent action for money judgment and therefore affirm.
The following facts are undisputed. On or around September 9, 2005, the Bank issued a loan to OAI for the purchase
of an airplane. OAI executed a promissory note (the “Note”) in favor of the Bank in the principal amount of
$161,306.25 plus interest. Rimes executed a personal guarantee on the Note, guaranteeing the payment of sums due
The Bank moved for summary judgment, arguing that the facts of the case were undisputed and that the only issue
for the trial court's consideration was OAI's admitted default and non-payment of the indebtedness under the Note;
therefore, the Bank argued that it was entitled to the relief sought as a matter of law. The Bank considered irrelevant
its repossession of the collateral to the fact that it was entitled to a money judgment against the appellants for the
a genuine issue of material fact as to whether the Bank acted in a commercially reasonable manner as required by
the Uniform Commercial Code.
The trial court agreed with the Bank and, given that the existence of the loan, the default, and the guarantee were
undisputed, granted its motion for summary judgment. The trial court specifically held that “[t]he potential breach of
collateral and credits the net proceeds of the sale to the indebtedness.
[1] Appellants' arguments are misplaced. The present lawsuit dealt only with the Note that OAI signed and that
Rimes guaranteed; the undisputed facts established both the appellants' default in payment and the amount of the
underlying debt. Appellants did not file a counterclaim or otherwise present any evidence that the Bank's handling or
676 S.E.2d 394
Page 4
296 Ga.App. 782, 676 S.E.2d 394, 68 UCC Rep.Serv.2d 576, 09 FCDR 1129
(Cite as: 296 Ga.App. 782, 676 S.E.2d 394)
© 2009 Thomson Reuters. No Claim to Orig. US Gov. Works.
not disposing of the collateral itself gave rise to a factual issue as to the reasonableness of its conduct. But, as illus-
trated below, the applicable statutory and case law authorizes the Bank to simultaneously *784 repossess and retain
its collateral while at the same time seeking a money judgment for the full amount of the outstanding debt.
Terryphone Corp. v. Modems Plus, 171 Ga.App. 710, 711-712(2), 320 S.E.2d 784 (1984). To the contrary, the Code
expressly states that the rights and remedies afforded a secured creditor “are cumulative and may be exercised sim-
ultaneously.” OCGA § 11-9-601(c).
FN1. The Note specifically provided that, in the event of default, the Bank “may use any remedy ... under
state or federal law.”
creditor. The intent of the [C]ode was to broaden the options open to a creditor after default rather than to limit
them under the old theory of election of remedies.
(Citation and punctuation omitted.) McCullough, 139 Ga.App. at 263(2), 228 S.E.2d 146. See ITT Terryphone
Corp., 171 Ga.App. at 711-712(2), 320 S.E.2d 784.
file suit on the [Note] without first disposing of the collateral was not improper under the terms of the [Note] or of
the Uniform Commercial Code.” *785 ITT Terryphone Corp., 171 Ga.App. at 712(2), 320 S.E.2d 784. Nor did the
Bank's repossession of the collateral impact the amount of the OAI's outstanding debt under the Note. See id.;
McCullough, 139 Ga.App. at 263(2), 228 S.E.2d 146.FN2
FN2. We note that other jurisdictions that have considered this issue have reached the same result. See gen-
in possession of collateral, including a mandate that the creditor act in a commercially reasonable manner. FN3 As
this Court has previously explained:
676 S.E.2d 394
Page 5
296 Ga.App. 782, 676 S.E.2d 394, 68 UCC Rep.Serv.2d 576, 09 FCDR 1129
(Cite as: 296 Ga.App. 782, 676 S.E.2d 394)
© 2009 Thomson Reuters. No Claim to Orig. US Gov. Works.
FN3. See, e.g., OCGA §§ 11-9-207(a) (“[A] secured party shall use reasonable care in the custody and
pose of collateral, “[e]very aspect of a disposition of collateral, including the method, manner, time, place,
and other terms, must be commercially reasonable.”).
It would be unfair to allow a creditor to deprive the debtor of the possession and use of the collateral for an unrea-
sonable length of time and not apply the asset or the proceeds from its sale toward liquidation of the debt. Moreo-
a right of recovery.
(Citation and punctuation omitted; emphasis in original.) ITT Terryphone Corp., 171 Ga.App. at 712(3), 320 S.E.2d
784.
Thus, if the Bank fails to proceed in a commercially reasonable manner with respect to its handling of the repos-
answer that question in the positive. See Ricker, 215 Ga.App. at 794-795, 452 S.E.2d 583; ITT Terryphone Corp.,
171 Ga.App. at 711-712(2), 320 S.E.2d 784; McCullough, 139 Ga.App. at 263(2), 228 S.E.2d 146. Accordingly, we
affirm the judgment of the trial court.
Judgment affirmed.
END OF DOCUMENT
