Editor's notes.

- In light of the similarity of the issues dealt with under the provisions, decisions under former Code 1933, §§ 14-214, 14-223, 14-505, 14-506 and former Code Section 11-3-301 are included in the annotations for this section.

Bank as holder or holder in due course.

- There is no compelling reason that a bank cannot be a holder or holder in due course of an instrument drawn on it if it meets all qualifications of the status, e.g., by taking instrument from transferor who is a holder in due course. FDIC v. West, 244 Ga. 396, 260 S.E.2d 89 (1979) (decided under former Code Section11-3-301).

Bank that acquired a promissory note and security deed that a Chapter 13 debtor executed before the debtor declared bankruptcy, transferred the note and deed to a loan trust, and acted as the trustee for the benefit of entities that purchased interests in the trust, had standing to request relief under 11 U.S.C. § 362(d) to foreclose on the debtor's property; the bankruptcy court allowed the bank to proceed with a foreclosure sale and to record a deed of sale it obtained when it bought the debtor's property at the foreclosure sale because the debtor did not have equity in the property and did not have a reasonable prospect of proposing a viable Chapter 13 plan. The bank was a "holder" of the note and was entitled under O.C.G.A. § 11-3-301 to enforce the note. In re Darlington, Bankr. (Bankr. N.D. Ga. Sept. 11, 2009).

Trial court did not err in granting a bank summary judgment on the bank's claims against an automobile seller for enforcement of drawer and signer obligations under the Georgia Uniform Commercial Code (UCC), O.C.G.A. § 11-3-414(b), and for a violation of the bad check statute, O.C.G.A. § 13-6-15, because there was no genuine issue of material fact as to whether the bank was a holder in due course of the check; the bank was entitled to enforce the drawer and signer obligations imposed upon the seller because the bank was the "holder" of the check pursuant to § 11-3-414(b), and since the bank was the depository bank, and the amount of the check was deposited to the bank's customer's account, the bank became the holder of the instrument when the bank received the check for collection. Consumer Solutions Fin. Servs. v. Heritage Bank, 300 Ga. App. 272, 684 S.E.2d 682 (2009).

Bank, who acquired the debtors' note, did not have to possess both the original note and the note modification to be a "holder" entitled to bring suit and enforce the underlying debt obligation against the debtors. River Forest, Inc. v. Multibank 2009-1 Res-ADC Venture, LLC, 331 Ga. App. 435, 771 S.E.2d 126 (2015), cert. denied, No. S15C1134, 2015 Ga. LEXIS 529 (Ga. 2015).

Sufficient proof that bank was holder of note.

- In a bank's suit against the guarantor of a note, the affidavit of the bank's vice-president established that the note was among the bank's business records and in the bank's possession; as such, the bank submitted competent proof that the bank was the holder of the note for purposes of the bank's summary judgment motion. Salahat v. FDIC, 298 Ga. App. 624, 680 S.E.2d 638 (2009).

Holder is one who has possession of a check.

- Pursuant to O.C.G.A. § 11-3-301(i), the holder of a check is entitled to negotiate the check, and a holder is one who has possession of the check. Sun Nurseries, Inc. v. Lake Erma, LLC, 316 Ga. App. 832, 730 S.E.2d 556 (2012).

Rights of original payee.

- Original payee of note, as party to transaction for sale of securities, of which the note is but a part, is limited in claim on the note to rights of one not a holder in due course. Morris v. Durbin, 123 Ga. App. 383, 180 S.E.2d 925 (1971) (decided under former Code Section11-3-301).

Payee of a check who does not take delivery of the check cannot recover against bank for fraudulent endorsement.

- Payee of a check who never received the check and was unaware that the check had been made out to the payee due to fraud by the payee's cousin was not a person who could enforce the check or recover against the bank for the bank's payment of the check over the fraudulent endorsement of the payee's cousin, pursuant to O.C.G.A. §§ 11-3-301 and11-3-420. Jenkins v. Wachovia Bank, Nat'l Ass'n, 309 Ga. App. 562, 711 S.E.2d 80 (2011).

Liability of drawer.

- While drawer of check has right to stop payment of it at any time before it has been certified or paid by drawee, drawer remains liable, unless the drawer has a defense which is good against the holder. Tidwell v. Bank of Tifton, 115 Ga. App. 555, 155 S.E.2d 451 (1967) (decided under former Code Section11-3-301).

Enforcement by bank when O.C.G.A.

§ 11-3-603 does not apply. - Where plaintiff bank is holder of a check and there are no provisions of O.C.G.A. § 11-3-603 which apply, the bank can enforce payment in its own name against drawer. Pazol v. Citizens Nat'l Bank, 110 Ga. App. 319, 138 S.E.2d 442 (1964) (decided under former Code Section11-3-301).

Assignment for collection as defense.

- Contention that note has been assigned to collection agencies presents no defense where plaintiff is holder of the note and none of the provisions of O.C.G.A. § 11-3-603 (concerning discharge of liability to the extent of payment or satisfaction) prevent recovery. Wall v. Citizens & S. Bank, 153 Ga. App. 29, 264 S.E.2d 523 (1980), overruled on other grounds by Southall v. State, 2017 Ga. LEXIS 33 (Ga. 2017), aff'd, 247 Ga. 216, 274 S.E.2d 486 (1981) (decided under former Code Section11-3-301).

Nongenuine transfer as defense.

- Payment of promissory note to supposed transferee, holding it by virtue of forged endorsement, will not protect maker or one who has assumed the debt against payment to true owner; and consequently, in suit by such an alleged transferee to enforce liability against such parties, the assumer may avail self of defense that alleged transfer by payee was not genuine. Austell Bank v. National Bondholders Corp., 188 Ga. 757, 4 S.E.2d 913 (1939) (decided under former Code 1933, § 14-223).

Inquiry into holder's title in suit by holder against maker.

- In suit instituted by person claiming to be owner and holder of promissory note, for the purpose of recovering thereon against maker and another person alleged to have assumed the debt, it is permissible for the latter to inquire into plaintiff's title to note, if necessary either for plaintiff's protection or to let in any valid defense which plaintiff seeks to make. Austell Bank v. National Bondholders Corp., 188 Ga. 757, 4 S.E.2d 913 (1939) (decided under former Code 1933, § 14-505).

"Claim."

- Word "claim" descends from the law merchant and indicates certain rights in instrument on which suit is based rather than mere reasons why alleged debtor is not liable for the fund. It is, however, to some extent broader than concept of legal title to instrument. Fulton Nat'l Bank v. Delco Corp., 128 Ga. App. 16, 195 S.E.2d 455 (1973) (decided under former Code Section11-3-304).

Unclean hands did not apply.

- Since there was no dispute that the promissory notes at issue were authentic, that the buyers signed the notes, that the sellers' were the holders, or as to the amount due on the notes, and since a trial court did not err in finding that no novation occurred and that there were no other meritorious defenses, the trial court did not err in finding that the buyers had no defense to the sellers' suit seeking payment on the notes; however, the equitable doctrine of unclean hands had no application to an action at law, and the trial court was not authorized to reduce the amounts shown to be due and payable on the notes on account of its finding of unclean hands. Park v. Fortune Ptnr., Inc., 279 Ga. App. 268, 630 S.E.2d 871 (2006).

Cited in Gerber & Gerber, P.C. v. Regions Bank, 266 Ga. App. 8, 596 S.E.2d 174 (2004).

Notice of infirmity or defect.

- Actual knowledge of infirmity or defect, or knowledge of facts such as to render taking of instrument an act of bad faith is necessary to constitute notice of infirmity under former Code 1933, § 14-506. Equitable Disct. Corp. v. Guest, 103 Ga. App. 258, 118 S.E.2d 864 (1961) (decided under former Code 1933, § 14-506).

Words on instrument alluding to underlying transaction.

- Mere fact that trade acceptance, otherwise complete and regular upon its face, had printed thereon the words "Trade Acceptance" and "The transaction which gives rise to this instrument is the purchase of goods by the acceptor from the drawer," was not sufficient to constitute such notice of infirmity in the instrument as to alter status of plaintiff as a bona fide holder in due course. Equitable Disct. Corp. v. Guest, 103 Ga. App. 258, 118 S.E.2d 864 (1961) (decided under former Code 1933, § 14-506).

Authority regarding blanks.

- Former Code 1933, § 14-214 puts a purchaser of blank paper on inquiry as to authority given regarding blanks. A.J. Cannon & Co. v. Collier, 91 Ga. App. 40, 84 S.E.2d 482 (1954) (decided under former Code 1933, § 14-214).

Where payee took check to plaintiff's place of business with amount in blank and filled in blank with plaintiff's knowledge, plaintiff was put in same position plaintiff would have been in had payee transferred the check to plaintiff in blank. In either event, plaintiff would be put on inquiry as to payee's authority relative to amount of check, and when plaintiff took the check, plaintiff did so at peril. A.J. Cannon & Co. v. Collier, 91 Ga. App. 40, 84 S.E.2d 482 (1954) (decided under former Code 1933, § 14-214).

Am. Jur. 2d.

- 4 Am. Jur. 2d, Alteration of Instruments, § 26. 11 Am. Jur. 2d, Bills and Notes, §§ 203 et seq., 238 et seq., 251, 264, 277 et seq., 290, 300 et seq. 12 Am. Jur. 2d, Bills and Notes, §§ 542, 641. 15A Am. Jur. 2d, Commercial Code, § 98.

C.J.S.

- 10 C.J.S., Bills and Notes, §§ 172 et seq., 231 et seq.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 3-301.

ALR.

- Right of purchaser of stolen bonds, 1 A.L.R. 717; 85 A.L.R. 357; 102 A.L.R. 28.

Bona fides of purchaser of note on an executory consideration, performance of which is a condition precedent, 3 A.L.R. 987; 100 A.L.R. 1357.

Fact that note is made payable to maker as affecting bona fides of purchaser, 6 A.L.R. 458.

Effect on bona fides of purchase of promissory note of fact that there is interest due and unpaid upon it, 11 A.L.R. 1277; 40 A.L.R. 832.

Estoppel of maker of nonnegotiable paper to set up against transferee defense good against payee, 17 A.L.R. 862.

Estoppel by delay, after knowledge, in disclosing forgery of commercial paper, 25 A.L.R. 177; 50 A.L.R. 1374.

Rights as between one who buys bill or note after maturity and third person legally or equitably entitled thereto, 33 A.L.R. 699.

Effect of fraud in the inception of a bill or note to throw upon a subsequent holder the burden of proving that he is a holder in due course, 34 A.L.R. 300; 57 A.L.R. 1083.

Liability of party to commercial paper so drawn as to be easily alterable as to amount, 39 A.L.R. 1380.

Renewal of bill or note as precluding defenses available against the original, 41 A.L.R. 963.

Alteration of note before delivery to payee as affecting parties who do not personally consent, 44 A.L.R. 1244.

Genuine making of instrument for purpose of defrauding as constituting forgery, 46 A.L.R. 1529; 51 A.L.R. 568.

Acceleration clause as affecting reissuance of paper by one primarily liable thereon, 58 A.L.R. 180.

Rights as between one who deposits commercial paper for collection without any indication on the paper of that purpose, and one who takes it in good faith from the depository, 58 A.L.R. 259.

Right of purchaser of past-due paper to protection as against defenses or equities between parties to intermediate transfer, 68 A.L.R. 982.

Failure or delay by holder of note to enforce collateral security as releasing endorser, surety, or guarantor, 74 A.L.R. 129.

Necessity in order to negative notice of defenses to negotiable paper purchased by firm or corporation of calling as witnesses all members or officers, or of showing that those not called had no part in transaction, 79 A.L.R. 1139.

Memorandum on negotiable instrument as an alteration, 96 A.L.R. 1102.

Right of purchaser of negotiable paper to the benefit of the position of a former holder who was a holder in due course as affected by notice or purchase after maturity, 98 A.L.R. 296.

Law regarding notice as condition of holding indorser as applied to bill or note with acceleration clause, or payable in installments, 104 A.L.R. 1331.

Waiver of demand and notice as affecting indorsers other than the one above whose name it immediately appears, 110 A.L.R. 1228.

Deposit to individual account of checks or notes drawn or indorsed by agent or fiduciary as charging bank with notice of misappropriation, 115 A.L.R. 648.

Notice which has been forgotten as affecting status as holder in due course, 89 A.L.R.2d 1330.

What constitutes, under the Uniform Negotiable Instruments Law or Commercial Code, a reasonable time for taking a demand instrument, so as to support the taker's status as holder in due course, 10 A.L.R.3d 1199.

Right of pledgor of commercial paper to maintain action thereon in his own name, 43 A.L.R.3d 824.