Tri-County Feed & Seed, Inc. v. Savannah Valley Production Credit Ass'n

Citations: 158 Ga. App. 815; 282 S.E.2d 344; 32 U.C.C. Rep. Serv. (West) 345; 1981 Ga. App. LEXIS 2429Docket: 61598

Court: Court of Appeals of Georgia; April 17, 1981; Georgia; State Appellate Court

SummaryOriginalCytator Case TreatmentBackward CitatorAnalysis

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In 1977 and 1978, Savannah Valley Production Credit Association extended loans to William G. Groseclose and Arthur McCluskey, Jr., secured by security agreements that included a bill of sale for farming equipment, livestock, and all perennial crops on their farm lands. Financing statements were filed in 1977 and 1978 covering the same collateral and its proceeds. In February 1980, the debtors sold their 1979 soybean crop, generating $9,839.40, which was applied to a debt owed to Tri-County Feed, Seed, Inc. Savannah Valley subsequently filed an action against Tri-County, claiming entitlement to the soybean sale proceeds due to conversion related to the secured loans. They alleged the defendant acted wilfully and sought attorney fees and punitive damages.

Tri-County admitted the jurisdiction and the sale contract but denied the conversion claims, asserting it was unaware of any lien on the soybeans, as the financing statements only mentioned "perennial crops." It sought summary judgment, arguing that soybeans are annual crops and therefore outside the scope of the lien. Savannah Valley also moved for summary judgment, contending that the Uniform Commercial Code should be interpreted broadly to fulfill its purposes, arguing that the financing statements sufficiently identified the property to notify potential claimants.

The trial court granted Savannah Valley a partial summary judgment regarding liability and denied Tri-County's motion. Tri-County appealed, asserting that the financing statements were defective for failing to itemize the soybeans as required by the law. The court confirmed that the appeal process for a partial summary judgment is valid, and the main contention revolves around the classification of soybeans as annual versus perennial crops.

The description of crops in the financing statement, which referred only to "perennial crops," failed to notify the defendant of a security interest in annual crops such as soybeans. Relevant case law, including *Yancey Bros. Co. v. Dehco, Inc.* and *Peoples Bank v. Northwest Ga. Bank*, was cited regarding the sufficiency of property descriptions in raising constructive notice. Under Code Ann. 109A-9—402 (1), a financing statement must describe the real estate involved when covering crops. The statute allows for minor errors that are not misleading, but the specific mention of "perennial" instead of "crops" created ambiguity regarding the intended coverage. 

The presence of grain bins and equipment for annual crops suggested a broader intent, leading to a factual issue on whether the defendant had constructive notice of the financing statement's scope. Consequently, it remains a jury question whether an ordinary person would have recognized the secured property or felt prompted to investigate further. The judgment was reversed, with both judges concurring.