O.C.G.A.

O.C.G.A. § 11-3-403 (2019)

Unauthorized signature

✓ O.C.G.A. — 2019 edition (Public.Resource.Org Release 73)

Code text and O.C.G.A. statutory annotations on this page reflect the 2019 Official Code of Georgia Annotated (Public.Resource.Org Release 73, 2019-08-21; public domain per Georgia v. Public.Resource.Org, 2020). The Syfert case-law annotations in Notes of Decisions, below, are current.

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(a) Unless otherwise provided in this article or Article 4 of this title, an unauthorized signature is ineffective except as the signature of the unauthorized signer in favor of a person who in good faith pays the instrument or takes it for value. An unauthorized signature may be ratified for all purposes of this article. (b) If the signature of more than one person is required to constitute the authorized signature of an organization, the signature of the organization is unauthorized if one of the required signatures is lacking. (c) The civil or criminal liability of a person who makes an unauthor406

ized signature is not affected by any provision of this article which makes the unauthorized signature effective for the purposes of this article.

History

Code 1981, § 11-3-403, enacted by Ga. L. 1996, p. 1306, § 3.

Annotations

JUDICIAL DECISIONS ANALYSIS GENERAL CONSIDERATION RATIFICATION General Consideration Editor’s notes. - In light of the similarity of the statutory provisions, decisions under former Code 1933, §§ 14-223, 14-505 and former Code Section 11-3-404 are included in the annotations for this Code section. A forged endorsement is wholly ineffective to pass any title to or confer any interest in the instrument. Citizens & S. Nat’l Bank v. New York Cas. Co., 84 Ga. App. 47, 65 S.E.2d 461, 1951 Ga. App. LEXIS 626 (1951) (decided under former Code 1933, § 14-223). Payment over forged endorsement not protection against true owner. - Payment of a promissory note to a supposed transferee, holding it by virtue of a forged endorsement, will not protect the maker or one who has assumed the debt, against payment to the true owner; and, consequently, in a suit by such an alleged transferee to enforce liability against such parties, the assumer may avail self of the defense that the alleged transfer by the payee was not genuine. Austell Bank v. National Bondholders Corp., 188 Ga. 757, 4 S.E.2d 913, 1939 Ga. LEXIS 628 (1939) (decided under former Code 1933, § 14223). Former Code 1933, §§ 109A-3-404(1) and 109A-3-406 must be read together. Trust Co. of Ga. Bank v. Port Term. & Warehousing Co., 153 Ga. App. 735, 266 S.E.2d 254, 1980 Ga. App. LEXIS 1962 (1980) (decided under former Code 1933, § 109A-3-404). Estoppel based on negligence. - Former paragraph (1) does not establish separate and distinct estoppel by negli-

gence defense for payor who pays instrument over forged endorsement. Trust Co. of Ga. Bank v. Port Term. & Warehousing Co., 153 Ga. App. 735, 266 S.E.2d 254, 1980 Ga. App. LEXIS 1962 (1980) (decided under former Code 1933, § 109A-3-404). When one who has paid an instrument asserts that another is estopped by negligence from denying that unauthorized signature on it operates as own, payor personally must have paid in good faith and in accordance with reasonable commercial standards of one’s business. Trust Co. of Ga. Bank v. Port Term. & Warehousing Co., 153 Ga. App. 735, 266 S.E.2d 254, 1980 Ga. App. LEXIS 1962 (1980) (decided under former Code 1933, § 109A-3-404). When payor seeks to estop or preclude another from asserting that payor’s signature on an instrument is forged under former paragraph (1) of this section and the basis for asserting this estoppel or preclusion is neglect of one whose “signature” appears, former Code 1933, § 109A3-406 (see now O.C.G.A. § 11-3-406) controls. Trust Co. of Ga. Bank v. Port Term. & Warehousing Co., 153 Ga. App. 735, 266 S.E.2d 254, 1980 Ga. App. LEXIS 1962 (1980) (decided under former Code 1933, § 109A-3-404). The word “precluded” has been held to be synonymous with “estoppel,” and not to include ratification or adoption of the instrument or signature thereon unless these involve also the elements of estoppel. To create such an estoppel, there must be actual injury or damage. Beeland v. Clark, 47 Ga. App. 77, 169 S.E. 681, 1933 Ga. App. LEXIS 295

General Consideration (Cont’d) (1933) (decided under former Code 1933, § 14-223). Inquiry into plaintiff’s title permissible. - In suit instituted by person claiming to be owner and holder of promissory note for purpose of recovering thereon against maker and another alleged to have assumed the debt, it is permissible for the latter to inquire into plaintiff’s title to the note, if necessary either for that one’s protection or to let in any valid defense which that individual may seek to make. Austell Bank v. National Bondholders Corp., 188 Ga. 757, 4 S.E.2d 913, 1939 Ga. LEXIS 628 (1939) (decided under former Code 1933, §§ 14223 and 14-505). Acceptance of forged checks. - Bank was properly granted summary judgment in a suit filed against it by a law firm for negligently accepting stolen checks and for conversion with regards to blank-endorsed cashier’s checks, as such were bearer paper transferable by possession alone; however, because a fact issue remained as to whether it acted in good faith in accepting forged checks, it could not be a holder in due course, and summary judgment on that issue was improper. Gerber & Gerber, P.C. v. Regions Bank, 266 Ga. App. 8, 596 S.E.2d 174, 2004 Ga. App. LEXIS 206 (2004). Note not enforceable against unauthorized signer. - Trial court erred in finding that a bank took a note in good faith

and in ruling that a co-owner was liable for a debt under O.C.G.A. § 11-3-403(a) because the undisputed testimony from the co-owner, the other owner, and the bank’s own vice-president set forth that the coowner was not authorized to sign a promissory note on behalf of the company and, therefore, the bank could not recover the debt from the co-owner in that regard. Davison v. Citizens Bank & Trust Company, 338 Ga. App. 671, 791 S.E.2d 437, 2016 Ga. App. LEXIS 521 (2016). Ratification In order to infer ratification, by principal either from declarations or acts, it must appear affirmatively that at time of making the declarations or doing the acts, the principal knew that agent had performed act claimed to have been ratified. National Bank v. Refrigerated Transp. Co., 147 Ga. App. 240, 248 S.E.2d 496, 1978 Ga. App. LEXIS 2635 (1978) (decided under former Code 1933, § 109A-3-404). Ratification of attorney’s signature. - If a bank customer, by the customer’s own conduct, ratified attorney’s unauthorized signature on a check, the customer was precluded from recovering on a claim for conversion against the bank which accepted for deposit to the attorney’s escrow account a check payable to the customer bearing an allegedly forged endorsement. Hendrix v. First Bank, 195 Ga. App. 510, 394 S.E.2d 134, 1990 Ga. App. LEXIS 550 (1990) (decided under former Code Section 11-3-404).

RESEARCH REFERENCES Am. Jur. Proof of Facts. Ratification of Forged or Unauthorized Signature, 7 POF2d 675. Commercial Paper - Negligence Contributing to Alteration or Unauthorized Signature Under UCC § 3-406, 14 POF2d 693. C.J.S. 10 C.J.S., Bills and Notes, §§ 27 et seq., 80. U.L.A. Uniform Commercial Code (U.L.A.) § 3403. ALR. Payment of check upon forged or unau-

thorized indorsement as affecting the right of true owner against the bank, 14 A.L.R. 764; 69 A.L.R. 1076; 137 A.L.R. 874. Necessity of endorsement by all payees before maturity to make a transferee a bona fide holder, 25 A.L.R. 163. Construction of savings bank by-law expressly assented to by depositor, relieving bank from liability for payment to unauthorized person, 52 A.L.R. 760. Ratification of forged or unauthorized signature on negotiable instrument under the provision of the Negotiable Instruments Act negativing effect of such signa-

ture unless the party against whom it is sought to enforce a right thereunder is precluded from setting up the forgery or want of authority, 150 A.L.R. 978. Invalid instrument as subject of forgery, 174 A.L.R. 1300.

Rights of one who acquires lost or stolen traveler’s checks, 42 A.L.R.3d 846. What constitutes ratification of unauthorized signature under UCC § 3-404, 93 A.L.R.3d 967.

Notes of Decisions

Cited in 31 cases, 1983–2016 · leading case: Davison v. Citizens Bank & Trust Co., 791 S.E.2d 437 (Ga. Ct. App. 2016).

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Davison v. Citizens Bank & Trust Co., 791 S.E.2d 437 (Ga. Ct. App. 2016). · cites it 24× “Following a bench trial, the court dismissed HOCO and found that Fricks was not personally liable, but concluded that *672 Davison was personally liable, under OCGA § 11-3-403, as an unauthorized signer on the note because Citizens Bank, in good faith, took the note for value.”

Marek Interior Sys., Inc. v. White, 496 S.E.2d 749 (Ga. Ct. App. 1998). · cites it 14× “We first address an issue Marek raises in both its enumerations: whether the 1996 version of OCGA § 11-3-402, effective when this case was tried to a jury, applies instead of the prior version of OCGA § 11-3-403, which was in effect at the time the parties entered this agreement.”

Hartkopf v. Heinrich Ad. Berkemann, 408 S.E.2d 450 (Ga. Ct. App. 1991). · cites it 16× “OCGA § 11-3-403 (2) provides as follows: “[a]n authorized representative who signs his own name to an instrument: (a) [i]s personally obligated if the instrument neither names the person represented nor shows that the representative signed in a representative capacity; (b)…”

Yeomans v. Coleman, Meadows, Pate Drug Co., 307 S.E.2d 121 (Ga. Ct. App. 1983). · cites it 10× “” The trial court did not refer to OCGA § 11-3-403 (3) (formerly Code Ann. § 109A-3-403 (3) (Ga.”

Peterson v. Holtrachem, Inc., 521 S.E.2d 648 (Ga. Ct. App. 1999). · cites it 10× “In finding that the individual was liable, this Court construed OCGA § 13-6-15 in pari materia with OCGA § 11-3-403 as it then existed. Prior to July 1, 1996, OCGA § 11-3-403 provided that an individual who signed his or her own name to a negotiable instrument was personally…”

Holliday Constr. Co. v. Sandy Springs Assocs., Inc., 400 S.E.2d 380 (Ga. Ct. App. 1990). · cites it 4× “" OCGA § 11-3-403 (1). Under OCGA § 11-3-404 (1), *21 "Any unauthorized signature is wholly inoperative as that of the person whose name is signed unless he ratifies it or is precluded from denying it.”

Dewberry Painting Centers, Inc. v. Duron, Inc., 508 S.E.2d 438 (Ga. Ct. App. 1998). · cites it 8× “We first note that the version of OCGA § 11-3-403 as it existed on the date of the execution of the document, rather than the version which existed at the time summary judgment was entered in this case, applies.”

Gerber & Gerber, P.C. v. Regions Bank, 596 S.E.2d 174 (Ga. Ct. App. 2004). · cites it 2× “See OCGA § 11-3-403 (a). Accordingly, Stafford was not entitled to enforce the instruments or to receive payment thereunder, and Regions Bank converted the instruments when it made or obtained payment on them by allowing them to be deposited into Stafford’s personal account.”

Goodwyne v. Moore, 316 S.E.2d 601 (Ga. Ct. App. 1984). · cites it 4× “OCGA § 11-3-403 (3) provides as follows: “Except as otherwise established the name of an organization preceded or followed by the name and office of an authorized individual is a signature made in a representative capacity.”

Bank South v. Grand Lodge of Free & Accepted Masons, 331 S.E.2d 629 (Ga. Ct. App. 1985). · cites it 2× “Moreover, the effort of the Grand Lodge to establish that Decatur Federal did not follow “reasonable commercial standards applicable to the business” relates to its contention that the signatures were forged endorsements, OCGA § 11-3-419 (1) (c) and (3), but Nicholson’s was an…”

Crolley v. Haygood Contracting, Inc., 411 S.E.2d 907 (Ga. Ct. App. 1991). · cites it 2× “Both parties have cited cases decided under Article 3, Section 3-403 of the Uniform Commercial Code (OCGA § 11-3-403). However, Article 3 applies only to negotiable instruments, Barton v.”

Cooley v. Dickerson & Swift Ent., Inc., 341 S.E.2d 504 (Ga. Ct. App. 1986). · cites it 6× “Appellant contends that this extrinsic evidence constitutes clear and convincing proof that he signed the check in a representative capacity, and that the trial court therefore erred in finding him individually liable.”

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