OWENS, District Judge:
James A. Firth, an individual doing business under the unregistered trade name of National Photocopy Equipment Company, on June 2, 1972, filed a bankruptcy petition under § 322 of the Bankruptcy Act, 11 U.S.C.A. § 722. Pursuant to § 376 of the Act, 11 U.S.C.A. § 776, he was adjudged a bankrupt on December 14, 1972. The First National Bank & Trust Company in Macon on January 31, 1973, as an alleged secured creditor, filed a reclamation petition seeking the return of certain items of personal property. Because the bank’s security instruments including mainly but not limited to its Uniform Commercial Code financing statements and the Georgia motor vehicle certificate of title showed the name of the debtor and owner as National Photocopy Equipment Co., an unregistered trade name, and not as James A. Firth, the trustee contended that the bank’s alleged security interests were not valid. The Referee’s order sustained the trustee’s contentions, and it is that order that is before this court for review. It poses two questions:
(a) Is a Uniform Commercial Code financing statement that shows the name of the debtor only in his unregistered trade name form legally sufficient to create a security interest?
(b) Is a valid security interest created by the issuance of a Georgia motor vehicle certificate of title which shows the name of the owner in his unregistered trade name form?
I.
The Financing Statements
The financing statements filed by the bank are identical in every material aspect.
A form was employed for filing purposes, the upper left hand corner of which is entitled:
“1 Debtor(s) (Last Name First) and address(es)”
Each statement bears the name of the debtor as “National Photocopy Equipment Co.” In the space provided for the
debtor’s signature, each financing statement is executed as follows:
“National Photocopy Equipment Co.
“By: /s/ James A. Firth_
“Signature(s) of Debtor(s)”
The name as shown is the unregistered trade name of Firth, who is the sole owner and operator of the business. The statements were filed with the Clerk, Superior Court, Bibb County, Georgia, prior to June 2, 1972, and naturally were indexed according to the unregistered trade name only.
Georgia Code Annotated § 109A-9— 402, provides,
inter alia,
that:
“(1) A financing statement is sufficient if it is signed by the debtor and the secured party, gives an address of the secured party from which information concerning the security interest may be obtained, gives a mailing address of the debtor and contains a statement indicating the types, or describing the items, of collateral.
ft
* * # * *
“(5) A financing statement substantially complying with the requirements of this section is effective even though it contains minor errors which are not seriously misleading.”
In arguing that its financing statements met the formal requirements of Ga.Code Ann. § 109A-9 — 402(1), the bank relies on several introductory provisions of the Uniform Commercial Code,* the Georgia statute on transactions conducted by firms doing business under unregistered trade names,
and National Cash Register Co. v. Sikes, 94 Ga.App. 391, 94 S.E. 2d 782 (1956), a pre-code case. Its reliance is misplaced.
Although there are no appellate decisions in Georgia concerning the use of an unregistered trade name on a financing statement, the precise issue has been properly decided elsewhere. In In re Leichter, 471 F.2d 785 (2d Cir. 1972), the bankrupt executed both a conditional sales contract and a financing statement under the registered trade name as follows:
“Landman Dry Cleaners By: Matthew R. Leichter”
As in the case
sub judice,
the financing statement was indexed only under the bankrupt’s assumed business name. The inquiry undertaken by the Second Circuit focused on whether a subsequent creditor of “Leichter” would be led to find the security interest filed and indexed under “Landman”.
The court held that persons searching the records would not be put on notice by such a filing and thereby held it to be insufficient. A similar result was reached in In re Thomas, 466 F.2d 51 (9th Cir. 1972), where the correct name of the
debtor was Burris Haley Thomas, but the debtor’s name was listed in the financing statement only as West Coast Avionics. The court held that “[i]t can hardly be said to be a ‘minor error’ when a potential creditor of Burris Haley Thomas searches the index under ‘Thomas’ and finds no notice of a security interest because that notice is filed under ‘West Coast Avionics’.”
Although the provisions of the Georgia version of the Uniform Commercial Code are to be liberally construed, the underlying purpose of the code’s notice filing system would be frustrated by a holding that a financing statement filed and indexed only under the name “National Photocopy Equipment Co.” gave notice to creditors of Firth. One searching the records under the name of the debtor, Firth, would simply not discover the security interest of the bank.
The case of National Cash Register Co. v. Sikes,
supra,
is of little aid to the bank, not only because it was decided prior to the effective date of the Georgia Uniform Commercial Code but also because the facts there are distinguishable from the instant case. The court there held that a title retention contract signed “Dixie Service Station by Allen Roth” did not import the name of any legal or artificial person, so it was obvious that the obligation was assumed by the person signing the instrument, i. e. by Roth. When a financing statement is signed “National Photocopy Equipment Co. by James A. Firth”, however, the clear implication is that the individual party signs on behalf of the real debtor, National Photocopy Equipment Co. The signature does import the name of a legal or artificial person. Moreover, insofar as the formal requirements of Ga.Code Ann. § 109A-9— 402(1) are concerned, the real debtor, Firth, has not signed in his individual capacity but only on behalf of a fictitious business entity; the financial statement is therefore conceptually insufficient since the signature of the real debtor in his real name does not appear thereon.
The Georgia statute relating to the capacity of persons to contract under unregistered trade names is likewise unpersuasive, i. e. 1933 Ga.Code Ann.
Free access — add to your briefcase to read the full text and ask questions with AI
OWENS, District Judge:
James A. Firth, an individual doing business under the unregistered trade name of National Photocopy Equipment Company, on June 2, 1972, filed a bankruptcy petition under § 322 of the Bankruptcy Act, 11 U.S.C.A. § 722. Pursuant to § 376 of the Act, 11 U.S.C.A. § 776, he was adjudged a bankrupt on December 14, 1972. The First National Bank & Trust Company in Macon on January 31, 1973, as an alleged secured creditor, filed a reclamation petition seeking the return of certain items of personal property. Because the bank’s security instruments including mainly but not limited to its Uniform Commercial Code financing statements and the Georgia motor vehicle certificate of title showed the name of the debtor and owner as National Photocopy Equipment Co., an unregistered trade name, and not as James A. Firth, the trustee contended that the bank’s alleged security interests were not valid. The Referee’s order sustained the trustee’s contentions, and it is that order that is before this court for review. It poses two questions:
(a) Is a Uniform Commercial Code financing statement that shows the name of the debtor only in his unregistered trade name form legally sufficient to create a security interest?
(b) Is a valid security interest created by the issuance of a Georgia motor vehicle certificate of title which shows the name of the owner in his unregistered trade name form?
I.
The Financing Statements
The financing statements filed by the bank are identical in every material aspect.
A form was employed for filing purposes, the upper left hand corner of which is entitled:
“1 Debtor(s) (Last Name First) and address(es)”
Each statement bears the name of the debtor as “National Photocopy Equipment Co.” In the space provided for the
debtor’s signature, each financing statement is executed as follows:
“National Photocopy Equipment Co.
“By: /s/ James A. Firth_
“Signature(s) of Debtor(s)”
The name as shown is the unregistered trade name of Firth, who is the sole owner and operator of the business. The statements were filed with the Clerk, Superior Court, Bibb County, Georgia, prior to June 2, 1972, and naturally were indexed according to the unregistered trade name only.
Georgia Code Annotated § 109A-9— 402, provides,
inter alia,
that:
“(1) A financing statement is sufficient if it is signed by the debtor and the secured party, gives an address of the secured party from which information concerning the security interest may be obtained, gives a mailing address of the debtor and contains a statement indicating the types, or describing the items, of collateral.
ft
* * # * *
“(5) A financing statement substantially complying with the requirements of this section is effective even though it contains minor errors which are not seriously misleading.”
In arguing that its financing statements met the formal requirements of Ga.Code Ann. § 109A-9 — 402(1), the bank relies on several introductory provisions of the Uniform Commercial Code,* the Georgia statute on transactions conducted by firms doing business under unregistered trade names,
and National Cash Register Co. v. Sikes, 94 Ga.App. 391, 94 S.E. 2d 782 (1956), a pre-code case. Its reliance is misplaced.
Although there are no appellate decisions in Georgia concerning the use of an unregistered trade name on a financing statement, the precise issue has been properly decided elsewhere. In In re Leichter, 471 F.2d 785 (2d Cir. 1972), the bankrupt executed both a conditional sales contract and a financing statement under the registered trade name as follows:
“Landman Dry Cleaners By: Matthew R. Leichter”
As in the case
sub judice,
the financing statement was indexed only under the bankrupt’s assumed business name. The inquiry undertaken by the Second Circuit focused on whether a subsequent creditor of “Leichter” would be led to find the security interest filed and indexed under “Landman”.
The court held that persons searching the records would not be put on notice by such a filing and thereby held it to be insufficient. A similar result was reached in In re Thomas, 466 F.2d 51 (9th Cir. 1972), where the correct name of the
debtor was Burris Haley Thomas, but the debtor’s name was listed in the financing statement only as West Coast Avionics. The court held that “[i]t can hardly be said to be a ‘minor error’ when a potential creditor of Burris Haley Thomas searches the index under ‘Thomas’ and finds no notice of a security interest because that notice is filed under ‘West Coast Avionics’.”
Although the provisions of the Georgia version of the Uniform Commercial Code are to be liberally construed, the underlying purpose of the code’s notice filing system would be frustrated by a holding that a financing statement filed and indexed only under the name “National Photocopy Equipment Co.” gave notice to creditors of Firth. One searching the records under the name of the debtor, Firth, would simply not discover the security interest of the bank.
The case of National Cash Register Co. v. Sikes,
supra,
is of little aid to the bank, not only because it was decided prior to the effective date of the Georgia Uniform Commercial Code but also because the facts there are distinguishable from the instant case. The court there held that a title retention contract signed “Dixie Service Station by Allen Roth” did not import the name of any legal or artificial person, so it was obvious that the obligation was assumed by the person signing the instrument, i. e. by Roth. When a financing statement is signed “National Photocopy Equipment Co. by James A. Firth”, however, the clear implication is that the individual party signs on behalf of the real debtor, National Photocopy Equipment Co. The signature does import the name of a legal or artificial person. Moreover, insofar as the formal requirements of Ga.Code Ann. § 109A-9— 402(1) are concerned, the real debtor, Firth, has not signed in his individual capacity but only on behalf of a fictitious business entity; the financial statement is therefore conceptually insufficient since the signature of the real debtor in his real name does not appear thereon.
The Georgia statute relating to the capacity of persons to contract under unregistered trade names is likewise unpersuasive, i. e. 1933 Ga.Code Ann. § 106-303. That statute, while it has the effect of binding those like Mr. Firth who contract in fictitious names to the contract so executed, does not have the effect of saying that financing statements given in fictitious names are sufficient to notify subsequent creditors of the identity of the party using the fictitious name. Were the court to hold otherwise, “the purpose of the statutory scheme of requiring security interest to be perfected by filing a financing statement — to give notice to future creditors of the debtor — would be seriously undermined.” In re Thomas,
supra
466 F.2d at 52.
Accordingly, that part of the referee’s opinion and order which deals with Uniform Commercial Code financing statements is affirmed.
II.
The Auto Certificate of Title
The status of the bank’s security interest in the motor vehicle requires a different approach since Ga.Code Ann. § 109A-9 — 302(3) (b), the Uniform Commercial Code, provides:
“(3) The filing provisions of this Article do not apply to a security interest in property subject to a statute
(b) of this State which provides for central filing of, or which requires indication on a certificate of title of, such security interests in such property.”
The Motor Vehicle Certificate of Title Act, Ga.Code Ann. § 68-401a et seq. (hereafter “Title Act”), is such a statute, and perfection of security interests must be accomplished pursuant to its provisions.
The Title Act applies generally to all post 1963 model vehicles and requires that a certificate of title be applied for by the owner and issued by the Georgia State Revenue Commissioner. § 68-406a. The owner in applying is required to show his name, the description of the vehicle including particularly make, model and identifying number, date and from whom purchased, and names, addresses and rank of holders of security interests and liens.
Upon receipt of an application the Commissioner is required to check the vehicle identifying number against the required office records, and upon being satisfied of its genuineness is required to issue a certificate of title containing date of issuance, name of owner, names, addresses of security interest and lien holders; title number; and a description of the vehicle including in particular its make, model and identifying number.
Where
there are security interests the certificate of title is mailed or delivered by the Commissioner to the holder of the first security interest and the said holder may retain the certificate of title until the security interest is satisfied.
The
Commissioner is required to maintain a record of all title certificates issued “(1) Under a distinctive title number assigned to the vehicle; (2) Under the identifying number of the vehicle; (3) Alphabetically, under the name of the owner; (4) Under the vehicle tag registration number . . . . ”
After the issuance of the certificate of title, subsequent creditors desiring to perfect security interest do so by delivering to the commissioner the existing certificate of title and an application to have the subsequent security interest shown thereon.
If it is alleged that a certificate of title is lost, application
may be made for issuance of a duplicate and if issued it will be a duplicate.
The source of the notice which the Title Act serves the purpose of giving, is one piece of paper — the certificate of title. That piece of paper, regardless of the manner in which the owner’s name is shown thereon, discloses the presence or absence of existing security interests. If that paper is lost or unavailable, the records of the Commissioner’s office contain the same information and it is indexed by owner’s name and vehicle identification number, make and model. It is, therefore, apparent that the use of an unregistered trade name as the owner’s name does not defeat a creditor’s search for and the giving of notice to the world of the existenee of the bank’s security interest and does not therefore invalidate the bank’s security interest. Unlike the indexing of a Uniform Commercial Code financing statement in the office of the Clerk of the Superior Court, the name of the owner of a motor vehicle is not the main point of reference.
Perfection of security interests under the Title Act as under the Uniform Commercial Code serves the purpose of giving notice to subsequent creditors. Perfection of security interests is particularly important in a bankruptcy context because it determines whether the secured party is subordinate to the rights of the trustee under 70c of the Bankruptcy Act.
An examination of the certificate of title in the instant case reveals that the certificate was issued in the trade name of the bankrupt on July 19, 1972, which is later in time than the filing of the petition in bankruptcy. While the certificate evidences the existence of the bank’s security interest, it does not reveal when the bank applied to the commissioner for a certificate of title evidencing its security interest and thus when its security interest was perfected.
The decision of the referee, which focused only on whether the National Photocopy Equipment Company could be an “owner” under the Title Act, is reversed and the ease is remanded for a determination of when the bank’s security interest was perfected.
If the evidence reveals that the security interest was perfected prior to filing of the petition in bankruptcy, the bank’s reclamation petition should be granted; if not, it should be denied.
For the foregoing reasons, the decision of the Referee is affirmed in part and reversed and remanded in part.