On October 9, 1978 plaintiff-appellant Sarah Ford signed an “Installation-Service Agreement” with defendant-appellee Rollins Protective Services Company (“Rollins”) providing for the installation and maintenance of a protective alarm system in a restaurant, “Mama’s Soul Food,” owned and operated by Mrs. Ford and her husband, plaintiff-appellant William Ford. Under the agreement, appellants agreed to pay the installation cost of the system, $1,920, along with a monthly charge of $38.40 for maintenance and service for a period of three years. Appellants financed the major portion of the installation cost with appellee by separate agreement calling for payments to be made in thirty-six consecutive monthly installments. The agreement stated that if appellants allowed the account to be in default for a period of sixty days from the due date, that Rollins had the option to enter appellants’ premises, take possession and remove the system. Appellants made a partial payment on the account on July 23, 1981. As of October 5, 1981, Rollins had received no additional payment. Due to this default in payment, on October 5,1981 an authorized Rollins employee entered appellants’ restaurant and removed the alarm system control box, rendering useless the remaining parts of the system.
Appellants brought suit against Rollins in two counts: in Count I alleging that Rollins had retained a security interest in the system and had wrongfully repossessed it through breach of the peace, as well as failing to comply with OCGA § 11-9-504; in Count II alleging *883 Rollins’ actions to be in violation of the Uniform Deceptive Trade Practices Act, OCGA § 10-1-372 (a) (12). Rollins filed its answer denying the allegations of the complaint and a counterclaim, later amended, seeking to recover amounts remaining and due on appellants’ account. After discovery, a trial was had before a jury. At the close of appellants’ evidence, Rollins moved for and was granted a directed verdict both on appellants’ claims and on the counterclaim. Appellants appeal the verdict directed in favor of Rollins.
1. Initially we address appellants’ assertion that the trial court erred in directing a verdict as to whether Rollins violated the Uniform Commercial Code by the manner of repossession and subsequent failure to dispose of the equipment after default and repossession. A directed verdict in Rollins’ favor on these claims was based upon the trial court’s conclusion that the “Installation-Service Agreement” was a true lease rather than a security agreement. Therefore, those provisions of the UCC relied upon by appellant are not applicable to the transaction between appellants and Rollins. We agree.
Article 9 of the UCC, Secured Transactions, applies to a “lease . . . intended as security.” OCGA § 11-9-102 (2). “Unless a lease . . . is intended as security, reservation of title thereunder is not a ‘security interest’. . . . Whether a lease is intended as security is to be determined by the facts of each case; however, (a) the inclusion of an option to purchase does not of itself make the lease one intended for security, and (b) an agreement that upon compliance with the terms of the lease, the lessee shall become or has the option to become the owner of the property for no additional consideration or for a nominal consideration does make the lease one intended for security.” OCGA § 11-1-201 (37).
The one-page agreement contains the following provisions: “The Rollins Protective System shall remain personal property and title thereto shall continue in Rollins.” We are aware that retention of title in Rollins is not dispositive in the analysis of whether the agreement is a lease or security agreement. See
Citizens & Southern Equip. Leasing v. Atlanta Fed. Savings &c. Assn.,
A “lease intended as security” is an agreement in which the ultimate intent is a sale. The prime essential distinction between a lease and a conditional sale is that in a lease the lessee never owns the property. “In the absence of a right or option in the lessee to acquire ownership of the leased property, the transaction is one of lease.” In re Atlanta Times, 259 FSupp. 820, 827 (N.D. Ga. 1966), affd. sub nom. Sanders v. Nat. Acceptance Co., 383 F2d 606 (5th Cir. 1967). Nowhere within the “Installation-Service Agreement” “can it be construed that the parties contemplated a sale, an option to purchase, or creation of a security interest. [Cits.] Thus, Article 9 of [the UCC, OCGA Ch. 11-9] does not apply and the parties’ conduct is governed by the terms of the lease. . . .”
McGuire v. Assoc. Capital Svcs. Corp.,
2. The record reveals no evidence in support of appellants’ allegation that Rollins violated OCGA § 10-1-372 (a) (12). The directed verdict on this issue was, therefore, proper. See OCGA § 9-11-50 (a).
3. Appellants contend that the trial court erred in declining to allow the admission of the deposition of Caldwell, the Rollins employee who repossessed the control box. The transcript shows that Caldwell testified at trial and that during cross-examination appellants’ counsel used passages from the deposition testimony in an attempt to impeach his trial testimony. Counsel did not request ádmission of the entire deposition until the close of appellants’ case. “Under these circumstances, the court’s refusal to admit the deposition constituted at most harmless error.”
Marathon Oil Co. v. Hollis,
4. Appellants enumerate as error the directed verdict in Rollins’ favor on the issue of wrongful repossession based upon appellants’ assertion of a “quasi-new agreement” between the parties. 1 We agree.
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OCGA § 13-4-4 provides: “Where parties, in the course of the execution of a contract, depart from its terms and pay or receive money under such departure, before either can recover for failure to pursue the letter of the agreement, reasonable notice must be given to the other of intention to rely on the exact terms of the agreement. The contract will be suspended by the departure until such notice.” The mutual departure creates a “quasi-new agreement” as to the contract term which was the subject of mutual deviation. See
Curl v. Fed. Savings &c. Assn.,
Appellants’ evidence at trial showed from Rollins’ own records that during many of the thirty-five months of the thirty-six month lease, appellants were in default in payment under the terms of the lease. Also, on at least two occasions, appellants’ checks to Rollins were returned for insufficient funds. Evidence was in dispute as to Rollins’ notice to appellants that Rollins intended to adhere to the strict terms of the lease regarding default and repossession.
“Evidence of repeated, late, irregular payments, which are accepted by the creditor, creates a factual dispute as to whether a quasi new agreement is created under [OCGA § 13-4-4].”
Vaughan v. Wrenn Bros.,
5. Appellants’ sole basis for challenging the directed verdict on Rollins’ counterclaim is grounded in their claim that Rollins failed to comply with the UCC by disposing of the system in a commercially reasonable manner. As explained in Division 1, Rollins was under no duty to do so because the UCC is inapplicable to the lease agreement at issue here. Appellants’ counsel stipulated to the amounts due under the agreement, reserving the right to appeal the trial court’s ruling on the inapplicability of the UCC. Our holding in Division 4 does not change the fact that this undisputed amount is still due and owing Rollins under the agreement. “A mutual departure from one contract term . . . does not affect the enforceability of the other contractual provisions.” Southwest Plaster &c. Co. v. R. S. Armstrong &c. Co., supra at 374. The trial court properly granted Rollins’ motion for directed verdict on its counterclaim.
Judgment affirmed in part; reversed in part.
Notes
Although Rollins complains that the theory of “quasi-new agreement” was not men
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tioned in the complaint or raised in the pre-trial conference, the record contains no pre-trial order. We agree that had an order been entered, the issues would have been so restricted unless modified at trial. See OCGA § 9-11-16 (b);
Georgia Power Co. v. O’Bryant,