Editor's notes.

- In light of the similarity of the issues dealt with under the provisions, certain decisions under former Code 1933, § 14-502 are included in the annotations for this section.

Primary purpose of O.C.G.A. § 11-4-201 seems to be to avoid litigation over question of status of collecting banks, i.e., as owners or agents for collection, and to make any settlements given by them to owner of instruments provisional until they have received final settlement for the instruments. By making settlement provisional, this section causes risk of loss to continue in owner of item rather than in agent bank. Pazol v. Citizens Nat'l Bank, 110 Ga. App. 319, 138 S.E.2d 442 (1964).

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).

Bank's right to sue drawer in own name in spite of presumption of agency.

- Fact that presumption of plaintiff-depositary bank's agency of payee-depositor for collection purposes continues even after credit given depositor has been withdrawn does not negative right of bank to bring action in its own name against defendant-drawer. Pazol v. Citizens Nat'l Bank, 110 Ga. App. 319, 138 S.E.2d 442 (1964).

Depositary bank as holder in due course.

- Where plaintiff bank is unable to obtain settlement, either final or provisional, from payor bank by reason of stop payment order of defendant-drawer, it becomes holder in due course (all pertinent requirements having been met) with a security interest in the item which enables it to enforce payment against drawer, with right of charge-back against its depositor's account in event that judgment cannot be obtained against drawer. Pazol v. Citizens Nat'l Bank, 110 Ga. App. 319, 138 S.E.2d 442 (1964).

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); Pike v. First Nat'l Bank, 99 Ga. App. 598, 109 S.E.2d 620 (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) (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) (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 Bankr. 105 (Bankr. N.D. Ga. 1999).

Cited in National Bank v. Weiner, 180 Ga. App. 61, 348 S.E.2d 492 (1986); Green v. State, 182 Ga. App. 695, 356 S.E.2d 673 (1987).

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 (5th Cir.), cert. denied, 414 U.S. 824, 94 S. Ct. 126, 38 L. Ed. 2d 57 (1973).

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.

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.) § 4-201.

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.