O.C.G.A. § 11-3-408 (2019)
Drawee not liable on unaccepted draft
A check or other draft does not of itself operate as an assignment of funds in the hands of the drawee available for its payment, and the drawee is not liable on the instrument until the drawee accepts it.
History
Code 1981, § 11-3-408, enacted by Ga. L. 1996, p. 1306, § 3.
Annotations
JUDICIAL DECISIONS Editor’s notes. - In light of the similarity of the statutory provisions, decisions under Ga. L. 1924, pp. 152, 153, subsequently codified as former Code 1933, §§ 14-1002, 14-1707, and 109A-3409, and former Code Section 11-3-409 are included in the annotations for this Code section. Check not assignment of funds with drawee. - A check itself does not operate as an assignment of any part of the funds to credit of drawer with drawee bank, and the latter is not liable to holder unless and until it accepts or certifies the check. Salzburger Bank v. Standard Oil Co., 173 Ga. 722, 161 S.E. 584, 1931 Ga. LEXIS 390 (1931) (decided under former Ga. L.
1924, pp. 152, 163, subsequently codified as former Code 1933, § 14-1707). A check does not in and of itself operate as an assignment of any part of drawer’s funds deposited with drawee bank, but is merely an order upon such bank to pay from drawer’s account. Lambeth v. Lewis, 114 Ga. App. 191, 150 S.E.2d 462, 1966 Ga. App. LEXIS 685 (1966); Harris v. Harbin Lumber Co. (In re Ellison), 31 B.R. 545, 1983 Bankr. LEXIS 5767 (Bankr. M.D. Ga. 1983) (decided under former Code Section 11-3-409). Bill not assignment of funds with drawee. - A bill in and of itself does not operate as an assignment of funds in hands of drawee available for payment
thereof, and drawee is not liable on bill unless and until the drawee accepts same. Salzburger Bank v. Standard Oil Co., 173 Ga. 722, 161 S.E. 584, 1931 Ga. LEXIS 390 (1931) (decided under former Ga. L. 1924, pp. 152, 163, subsequently codified as former Code 1933, § 14-1002). This rule does not do away with doctrine of equitable assignment. - Rule that checks by themselves do not operate as assignments of funds in drawee’s hands and do not operate as assignment of any part of funds to credit of drawer with bank, does not do away with doctrine of equitable assignment of funds to credit of drawers of such instruments in banks upon which they are drawn. Salzburger Bank v. Standard Oil Co., 173 Ga. 722, 161 S.E. 584, 1931 Ga. LEXIS 390 (1931) (decided under former Ga. L. 1924, pp. 152, 163, subsequently codified as former Code 1933, § 14-1707). Certification of check not assignment until delivery. - While under the negotiable instrument’s act, Michie’s Code, 1926, § 4294 (189), the certification of a check, even if procured by drawer, amounts to assignment of the fund in the sense that it operates to withdraw it from deposit account of drawer, the mere fact of such certification by the drawer does not, before delivery of the check, operate as an assignment of the fund to payee. McIntire v. Raskin, 42 Ga. App. 303, 155 S.E. 799, 1930 Ga. App. LEXIS 375 (1930), rev’d, 173 Ga. 746, 161 S.E. 363, 1931 Ga. LEXIS 393 (1931) (decided under former Code 1926, § 4294). Drawer who procures certification may surrender check to bank for cancellation prior to delivery. McIntire v. Raskin, 42 Ga. App. 303, 155 S.E. 799, 1930 Ga. App. LEXIS 375 (1930), rev’d, 173 Ga. 746, 161 S.E. 363, 1931 Ga. LEXIS 393 (1931) (decided under former Code 1926, § 4294). Acceptance required for right of action. - Under this section, holder or payee of check which has not been accepted or certified has no right of action against drawee bank based upon its fail-
ure or refusal to honor the check, even though at time check was presented for payment, bank had sufficient funds of drawer on deposit to pay it. Georgia Bank & Trust Co. v. Hadarits, 111 Ga. App. 195, 141 S.E.2d 172, 1965 Ga. App. LEXIS 919, rev’d, 221 Ga. 125, 143 S.E.2d 627, 1965 Ga. LEXIS 397 (1965) (decided under former Code 1933, § 109A-3-409). Presumption is that a check is only intended as conditional payment, and if dishonored, and the holder is not guilty of laches causing loss to drawer, the latter is liable upon original cause or debt for which check was given. Hiatt v. Edwards, 52 Ga. App. 152, 182 S.E. 634, 1935 Ga. App. LEXIS 82 (1935) (decided under former Code 1933, § 14-1707). Remedy upon dishonor. - Upon presentment of check as to which payment was refused, the check was dishonored, and plaintiff’s remedy, as a holder, was “against the drawers and endorsers,” not the defendant bank and its agent, neither of whom owed plaintiff a duty. Stewart v. Citizens & S. Nat’l Bank, 138 Ga. App. 209, 225 S.E.2d 761, 1976 Ga. App. LEXIS 2109 (1976); Green Property Corp. v. O’Callaghan, Saunders & Stumm, 177 Ga. App. 686, 340 S.E.2d 652, 1986 Ga. App. LEXIS 1497 (1986) (decided under former Code Section 11-3-409). Garnishment. - After delivery of check, and before dishonor, drawer cannot be garnished as debtor of payee in respect to debt for which check is given. Hiatt v. Edwards, 52 Ga. App. 152, 182 S.E. 634, 1935 Ga. App. LEXIS 82 (1935) (decided under former Code 1933, § 14-1707). Revocation of check, voluntary and by operation of law. - Check may be revoked at any time by drawer before it has been certified, accepted, or paid by the bank, and is revoked by operation of law ten days after death of drawer, although drawee bank is not liable where it has in good faith honored such instrument without knowledge of depositor’s death. Lambeth v. Lewis, 114 Ga. App. 191, 150 S.E.2d 462, 1966 Ga. App. LEXIS 685 (1966) (decided under former Code 1933, § 109A-3-409).
RESEARCH REFERENCES Am. Jur. 2d. 6 Am. Jur. 2d, Attachment and Garnishment, § 507. 11 Am. Jur. 2d, Banks and Financial Institutions, § 888. 11 Am. Jur. 2d, Bills and Notes, §§ 140, 382. 12 Am. Jur. 2d, Bills and Notes, §§ 487, 488. 38 Am. Jur. 2d, Gifts, § 59. C.J.S. 6A C.J.S., Assignments, § 60. 10 C.J.S., Bills and Notes, §§ 19, 21.
U.L.A. Uniform Commercial Code (U.L.A.) § 3408. ALR. Right of transferee of postdated check, 21 A.L.R. 234.