O.C.G.A. § 11-4-201 (2019)
Status of collecting bank as agent and provisional status of credits; applicability of article; item indorsed “pay any bank.”
(a) Unless a contrary intent clearly appears and before the time that a settlement given by a collecting bank for an item is or becomes final, the bank, with respect to the item, is an agent or subagent of the owner of the item and any settlement given for the item is provisional. This provision applies regardless of the form of indorsement or lack of indorsement and even though credit given for the item is subject to immediate withdrawal as of right or is in fact withdrawn; but the continuance of ownership of an item by its owner and any rights of the owner to proceeds of the item are subject to rights of a collecting bank, such as those resulting from outstanding advances on the item and rights of recoupment or setoff. If an item is handled by banks for purposes of presentment, payment, collection, or return, the relevant provisions of this article apply even though action of the parties clearly establishes that a particular bank has purchased the item and is the owner of it. (b) After an item has been indorsed with the words “pay any bank” or the like, only a bank may acquire the rights of a holder until the item has been: (1) Returned to the customer initiating collection; or (2) Specially indorsed by a bank to a person who is not a bank.
History
Code 1933, § 109A-4-201, enacted by
Ga. L. 1962, p. 156, § 1; Ga. L. 1996, p. 1306, § 6.
Annotations
JUDICIAL DECISIONS ANALYSIS GENERAL CONSIDERATION “PAY ANY BANK” ENDORSEMENT General Consideration Editor’s notes. - In light of the similarity of the statutory provisions, certain
decisions under former Code 1933, § 14502 are included in the annotations for this Code section.
General Consideration (Cont’d) The collecting bank is merely an agent of the drawer of a draft. Wallace v. Harrison, 166 Ga. App. 461, 304 S.E.2d 487, 1983 Ga. App. LEXIS 2211 (1983). Where check is deposited and credited to depositor’s account and depositor is allowed to draw against it, the bank is presumed to be holder in due course in spite of express conditions in deposit contract making bank a mere agent for collection, where there are other facts; namely, that draft was endorsed in blank and bank thereafter paid checks drawn by endorser against such deposit, making bank at least a pledgee, if not absolute owner of the draft, and placing it on same footing as a purchaser. Southern Fruit Distribs., Inc. v. Citizens’ Bank, 44 Ga. App. 832, 163 S.E. 261, 1932 Ga. App. LEXIS 547 (1932); Pike v. First Nat’l Bank, 99 Ga. App. 598, 109 S.E.2d 620, 1959 Ga. App. LEXIS 913 (1959) (decided under former Code 1933, § 14-502). Effect of collection agreement. - Collection agreement is simply a device for bank and depositor to determine respective rights between themselves, not such a contract as will conclusively and in all events determine status of paper so far as third parties are concerned. Pike v. First Nat’l Bank, 99 Ga. App. 598, 109 S.E.2d 620, 1959 Ga. App. LEXIS 913 (1959) (decided under former Code 1933, § 14-502). While deposit to credit of depositor under collection agreement gives rise to presumption of agency relationship rather than debtor-creditor relationship, and while, between parties themselves, the
bank may always charge back uncollected check against its depositor whether it has advanced funds thereon or not, nevertheless, the presumption of agency relationship, so far as third parties are concerned, holds only so long as no contrary agreement between bank and depositor is shown. Proof that bank did in fact not only credit fund to depositor but allowed the depositor to draw against that credit is, according to better rule, conclusive evidence of a contrary agreement. Pike v. First Nat’l Bank, 99 Ga. App. 598, 109 S.E.2d 620, 1959 Ga. App. LEXIS 913 (1959) (decided under former Code 1933, § 14-502). When a bank credited depositors’ accounts and permitted them to withdraw funds prior to their collection, and they did in fact withdraw funds, the bank became a holder in due course as to the amounts withdrawn so as to be able to enforce payment of the amounts. Howell v. Bank of Newman (In re Summit Fin. Servs., Inc.), 240 B.R. 105, 1999 Bankr. LEXIS 1270 (Bankr. N.D. Ga. 1999). “Pay Any Bank” Endorsement Endorsement no basis for drawer’s recovery against bank. - Endorsement on check reading, “Pay to Any Bank, Banker or Trust Company. All Prior Endorsements Guaranteed,” runs only to a bank, banker, or trust company, and drawer cannot base its right to recover from the bank on guarantee contained in the endorsement. Columbian Peanut Co. v. Frosteg, 472 F.2d 476, 1973 U.S. App. LEXIS 11994 (5th Cir.), cert. denied, 414 U.S. 824, 94 S. Ct. 126, 38 L. Ed. 2d 57 (1973).
OPINIONS OF THE ATTORNEY GENERAL O.C.G.A. § 11-4-201 not restrictive of bank’s freedom. - Neither O.C.G.A. T. 7 nor T. 11 restricts in any way a bank’s freedom to decide how it will treat any particular collection item, whether it be a
check or a credit union share draft. 1977 Op. Att’y Gen. No. 77-2. Credit union share drafts. - Banks not required to process credit union share drafts as cash items, rather than as drafts
for collection. 1977 Op. Att’y Gen. No. 77-2. RESEARCH REFERENCES Am. Jur. 2d. 11 Am. Jur. 2d, Banks and Financial Institutions, §§ 972, 976. 11 Am. Jur. 2d, Bills and Notes, § 249. C.J.S. 9 C.J.S., Banks and Banking, §§ 383 et seq., 415, 425 et seq. U.L.A. Uniform Commercial Code (U.L.A.) § 4201. ALR. Fraud or other defense to check as available against paper issued by drawee bank in payment of check, 9 A.L.R. 963. Measure of damages for breach of duty by bank in respect to collection of commercial paper, 19 A.L.R. 555; 67 A.L.R. 1511.
Trust in proceeds of collections made by charging debtor’s account in collecting bank, 24 A.L.R. 1152; 42 A.L.R. 754; 47 A.L.R. 761; 77 A.L.R. 473. Liability of collecting bank for loss of funds through attachment thereof, 36 A.L.R. 742. Liability of bank taking commercial paper for collection for default of correspondent, 36 A.L.R. 1308; 44 A.L.R. 1430; 80 A.L.R. 815. Title to commercial paper deposited by the customer of a bank to his account, 42 A.L.R. 492; 68 A.L.R. 725; 99 A.L.R. 486. Bank’s right to apply or set off deposit against debt of depositor not due at time of his death, 7 A.L.R.3d 908.