O.C.G.A. § 11-3-602 (2019)
Payment
(a) Subject to subsection (b) of this Code section, an instrument is paid to the extent payment is made (i) by or on behalf of a party obliged to pay the instrument; and (ii) to a person entitled to enforce the instrument. To the extent of the payment, the obligation of the party obliged to pay the instrument is discharged even though payment is made with knowledge of a claim to the instrument under Code Section 11-3-306 by another person.
(b) The obligation of a party to pay the instrument is not discharged under subsection (a) of this Code section if:
(1) A claim to the instrument under Code Section 11-3-306 is enforceable against the party receiving payment, and either:
(i) Payment is made with knowledge by the payor that payment is prohibited by injunction or similar process of a court of competent jurisdiction; or
(ii) In the case of an instrument other than a cashier’s check, teller’s check, or certified check, the party making payment accepted, from the person having a claim to the instrument, indemnity against loss resulting from refusal to pay the person entitled to enforce the instrument; or
(2) The person making payment knows that the instrument is a stolen instrument and pays a person the payor knows is in wrongful possession of the instrument.
(c) Notwithstanding any other provision of this article, with respect to a note which is a negotiable instrument within the meaning of this article and which is to be paid off in installment payments or in more than one payment, the maker or drawer is authorized to pay the assignor until the assignee or its authorized agent sends a registered or certified letter to the maker or drawer at the maker’s or drawer’s last known address notifying the maker or drawer that the amount due or to become due has been assigned and that payment is to be made to the assignee. A notification that does not reasonably identify the rights assigned is ineffective. If requested by the drawer or maker, the assignee must furnish reasonable proof that the assignment has been made and, unless the assignee does so, the maker or drawer may pay the assignor.
History
Code 1981, § 11-3-602, 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 former Code 1933, §§ 14-223, 14-505, and 109A-3-603 and former Code Section 11-3-603 are included in the annotations for this Code section. Stop payment order does not relieve drawer of liability to holder. - While drawer of check has the right to stop payment of it at any time before certification or payment by drawee, drawer remains liable, unless drawer has a defense good against the holder. Tidwell v. Bank of Tifton, 115 Ga. App. 555, 155 S.E.2d 451, 1967 Ga. App. LEXIS 1171 (1967) (decided under former Code 1933, § 109A-3-603). Sale of note does not relieve maker. - The sale of a note, although it may provide the seller with sufficient funds to cover the debt, does not discharge the maker’s obligation to pay the note according to its terms. First State Bank & Trust Co. v. McIver, 893 F.2d 301, 1990 U.S. App. LEXIS 954 (11th Cir. 1990) (decided under former Code Section 11-3-603). Payment over forged endorsement not protection against true owner. - 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 alleged transferee to enforce liability against such parties, assumer may utilize defense that alleged transfer by 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, § 14-223). Inquiry into plaintiff’s title. - In a suit instituted by a person claiming to be the owner and holder of a promissory note, for the purpose of recovering thereon against the maker and another person alleged to have assumed the debt, it is permissible for the latter to inquire into the plaintiff’s title to the note, if necessary
either for the other’s protection or to let in any valid defense which that person seeks 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, §§ 14-223 and 14505). Plaintiffs could not assert claim based on instruments to which plaintiffs were not parties or third-party beneficiaries. - Plaintiffs’ claim that the defendant violated the “one satisfaction rule” by foreclosing on the plaintiffs’ home failed because the plaintiffs could not assert a claim against the defendant based on a purported insurance policy or settlement agreement as the plaintiffs were not parties to, or third-party beneficiaries of, those instruments. Fenello v. Bank of Am., N.A., No. 1:11-cv-4139-WSD, 2013 U.S. Dist. LEXIS 159925 (N.D. Ga. Nov. 8, 2013), aff’d, 577 Fed. Appx. 899, 2014 U.S. App. LEXIS 15424 (11th Cir. 2014). Pooling of mortgage loan argument failed. - In a case arising from a foreclosure, a pro se borrower’s argument that the underlying debt had been paid was meritless. The pooling of the mortgage loan into a securitized trust did not absolve the borrower from having to make loan payments or somehow shield the borrower’s property from foreclosure. Morrison v. Bank of Am., N.A., No. 1:13-cv1052-WSD, 2014 U.S. Dist. LEXIS 104426 (N.D. Ga. July 31, 2014). Bankruptcy. - In a case arising from a foreclosure, a pro se borrower’s argument that the underlying debt had been paid was meritless. While the borrower was granted a bankruptcy discharge, it was axiomatic that a discharge in bankruptcy extinguished only the borrower’s personal liability of the debtor, and a creditor’s right to foreclose on the property secured by the loan survived or passed through the bankruptcy. Morrison v. Bank of Am., N.A., No. 1:13-cv-1052WSD, 2014 U.S. Dist. LEXIS 104426 (N.D. Ga. July 31, 2014).
RESEARCH REFERENCES Am. Jur. 2d. 11 Am. Jur. 2d, Bills and Notes, §§ 656, 963, 964, 970. 69 Am. Jur. 2d, Secured Transactions, §§ 230, 529, 530. C.J.S. 10 C.J.S., Bills and Notes, § 231 et seq. U.L.A. Uniform Commercial Code (U.L.A.) § 3602. ALR. Renewal of bill or note as precluding defenses available against the original, 35 A.L.R. 1258; 72 A.L.R. 600. May one not a holder in due course of original note acquire that character as to a renewal note, 35 A.L.R. 1300. Construction of savings bank by-law expressly assented to by depositor, reliev-
ing bank from liability for payment to unauthorized person, 52 A.L.R. 760. Discharge of drawer or endorser of check by holder’s acceptance therefor of something other than money, 52 A.L.R. 994; 87 A.L.R. 442. Renewal note as discharging original obligation or indebtedness, 52 A.L.R. 1416. Right of purchaser of stolen bonds, 85 A.L.R. 357; 102 A.L.R. 28. Surrender of commercial paper received as conditional payment as condition to recovery on original obligation, 85 A.L.R. 1057. Payment to payee, indorser, or guarantor of bill or note not in possession thereof, 103 A.L.R. 653.