Uniform Commercial Code; Warehousemen; Liens

Subject:

Uniform Commercial Code; Warehousemen; Liens

Requested By:

Resa L. Harris, Legal Officer Office of the Clerk of Superior Court Mecklenburg County

Question:

May a warehouseman with liens pursuant to both Article 1 of Chapter 44A of the General Statutes and Article 7 of the Uniform Commercial Code enforce his lien pursuant to G.S. § 25-7-210 without allowing the owner a judicial hearing pursuant to G.S. § 44A-4?

Conclusion:

Yes.

A warehouseman in North Carolina may have a lien on goods in his possession covered by a warehouse receipt, or on the proceeds thereof, pursuant to G.S. § 25-7-209, which is part of Article 7 of the Uniform Commercial Code. The same warehouseman could have a lien pursuant to Chapter 44A of the General Statutes, specifically G.S. § 44A-2(a). If a warehouseman were to pursue his rights solely under the Uniform Commercial Code provisions, he could enforce the lien created in G.S. § 25-7-209 pursuant to the provisions of G.S. § 25-7-210 by giving appropriate notice and selling the goods at either a public or private sale if all requirements of

G.S.

25-7-210 are met. If the same warehouseman were to enforce his lien only under Chapter 44A, the owner or the person with whom the warehouseman dealt would be entitled to a hearing under G.S. § 44A-4(b).

The question has arisen whether the warehouseman may proceed solely under G.S. § 25-7-210 and sell the goods without the opportunity being given to the owner or bailor for a hearing as would be required under G.S. § 44A-4. G.S. § 25-7-209 creates a lien on goods or the proceeds of goods which are covered by a warehouse receipt. The lien is only on goods which are in his possession and which he has not unjustifiably refused to deliver. G.S. § 25-7-209(4). G.S. § 44A-3 provides a lien only for goods in the possession of the lienor, like the Uniform Commercial Code provisions, but does not require a warehouse receipt. Thus, the provisions of Article 7 of the Uniform Commercial Code are special provisions for goods covered by warehouse receipts, bills of lading or other documents of title. In contrast, the provisions of Article 1 of Chapter 44A cover any person who tows, alters, repairs, stores, services, treats or improves personal property other than a motor vehicle in the ordinary course of his business.

G.S.

§ 44A-2(a).

The special provisions of Article 7 of the Uniform Commercial Code should be available to the warehouseman even though he also has a lien under Article 1 of Chapter 44A. G.S. § 25-7-210(7) specifically provides that "(The) rights provided by this section shall be in addition to all other rights allowed by law to a creditor against his debtor." Since he has these rights in addition to all other rights that may be provided by law, the warehouseman may choose to proceed solely under Article 7 of the Uniform Commercial Code so long as he relies only on the Provisions of Article 1 of Chapter 44A to create or define the extent of his lien.

Rufus L. Edmisten Attorney General

Norma S. Harrell Associate Attorney