O.C.G.A.

O.C.G.A. § 11-3-405 (2019)

Employer’s responsibility for fraudulent indorsement by employee

✓ 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) In this Code section: (1) “Employee” includes an independent contractor and an employee of an independent contractor retained by the employer; (2) “Fraudulent indorsement” means: (i) In the case of an instrument payable to the employer, a forged indorsement purporting to be that of the employer; or (ii) In the case of an instrument with respect to which the employer is the issuer, a forged indorsement purporting to be that of the person identified as payee; and (3) “Responsibility” with respect to instruments means authority to: (i) Sign or indorse instruments on behalf of the employer; (ii) Process instruments received by the employer for bookkeeping purposes, for deposit to an account, or for other disposition; (iii) Prepare or process instruments for issue in the name of the employer; (iv) Supply information determining the names or addresses of payees of instruments to be issued in the name of the employer; (v) Control the disposition of instruments to be issued in the name of the employer; or (vi) Act otherwise with respect to instruments in a responsible capacity. “Responsibility” does not include authority that merely allows an employee to have access to instruments or blank or incomplete instrument forms that are being stored or transported or are part of incoming or outgoing mail or similar access. (b) For the purpose of determining the rights and liabilities of a person who, in good faith, pays an instrument or takes it for value or for collection, if an employer entrusted an employee with responsibility with respect to the instrument and the employee or a person acting in

concert with the employee makes a fraudulent indorsement of the instrument, the indorsement is effective as the indorsement of the person to whom the instrument is payable if it is made in the name of that person. If the person paying the instrument or taking it for value or for collection fails to exercise ordinary care in paying or taking the instrument and that failure substantially contributes to loss resulting from the fraud, the person bearing the loss may recover from the person failing to exercise ordinary care to the extent the failure to exercise ordinary care contributed to the loss. (c) Under subsection (b) of this Code section, an indorsement is made in the name of the person to whom an instrument is payable if (i) it is made in a name substantially similar to the name of that person; or (ii) the instrument, whether or not indorsed, is deposited in a depositary bank to an account in a name substantially similar to the name of that person.

History

Code 1981, § 11-3-405, enacted by Ga. L. 1996, p. 1306, § 3.

Annotations

RESEARCH REFERENCES U.L.A. Uniform Commercial Code (U.L.A.) § 3405. ALR. Construction and effect of “padded pay-

roll” rule of UCC § 3-405, 45 A.L.R.5th 389.

Notes of Decisions

Cited in 4 cases, 1987–2007 · leading case: Sec. State Bank v. Visiting Nurses Ass'n of Telfair Cnty., Inc., 568 S.E.2d 491 (Ga. Ct. App. 2002).

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Sec. State Bank v. Visiting Nurses Ass'n of Telfair Cnty., Inc., 568 S.E.2d 491 (Ga. Ct. App. 2002). · cites it 4× “VNA argues that these limitation periods do not apply because OCGA § 11-3-405, addressing the effectiveness of an improper endorsement, rather than OCGA § 11-4-406, is the applicable statute.”

Northbrook Prop. & Cas. Ins. Co. v. Citizens & S. Nat'l Bank, 361 S.E.2d 531 (Ga. Ct. App. 1987). · cites it 6× “The trial court granted C & S’s motion for partial summary judgment finding OCGA § 11-3-405 to be controlling. Northbrook appeals to this court and contends that although OCGA § 11-3-405 is applicable, the fictitious payee/padded payroll defense contained therein is not absolute…”

Keane v. Annice Heygood Trevitt Support Trust, 645 S.E.2d 641 (Ga. Ct. App. 2007). · cites it 2× “See OCGA §§ 11-3-405 (signature by representative); 10-6-86 (liability of person signing instrument as agent or fiduciary); 14-2-140 (27) (“ ‘Shareholder’ means the person in whose name shares are registered in the records of a corporation or the beneficial owner of shares to…”

Decatur Fed. Sav. & Loan Ass'n v. Litsky, 429 S.E.2d 300 (Ga. Ct. App. 1993). · cites it 2× “The list of checks identified by Litsky as containing his forged signature reflected payees such as Southern Bell, Georgia Power, and the IRS, along with over 20 checks payable to Charles Jackson, who may or may not have been a fictitious person.”

Annotations are extracted automatically from the opinions in the Syfert caselaw corpus and ranked by authority, recency, and treatment. Dots show Syfertize treatment of the citing case itself.