Editor's notes.

- In light of the similarity of the provisions, decisions under former Code 1933, § 14-607 are included in the annotations for this section.

Certified check.

- A certified check has a distinctive character as a species of commercial paper, and constitutes a new contract between a holder and a certifying bank. Funds of the drawer are, in legal contemplation, withdrawn from drawer's credit and appropriated to payment of the check, and the bank becomes debtor of holder as for money had and received. Citizens & S. Bank v. Daniel, 107 Ga. App. 398, 130 S.E.2d 231 (1963) (decided under former Code 1933, § 14-607).

Where check is certified at request of drawer, bank and drawer are both bound, the bank being primarily and drawer secondarily liable; where check is certified at request of holder, bank becomes absolute debtor of holder, and drawer is released. Citizens & S. Bank v. Daniel, 107 Ga. App. 398, 130 S.E.2d 231 (1963) (decided under former Code 1933, § 14-607).

Cited in Trust Co. v. Refrigeration Supplies, Inc., 241 Ga. 406, 246 S.E.2d 282 (1978); Trust Co. Bank v. Atlanta IBM Employees Fed. Credit Union, 245 Ga. 262, 264 S.E.2d 202 (1980); Trust Co. of Ga. Bank v. Port Term. & Warehousing Co., 153 Ga. App. 735, 266 S.E.2d 254 (1980); First Bank & Trust Co. v. Insurance Serv. Ass'n, 154 Ga. App. 697, 269 S.E.2d 527 (1980); Rohner, Gehrig & Co. v. Capital City Bank, 655 F.2d 571 (5th Cir. 1981); First Ga. Bank v. Webster, 168 Ga. App. 307, 308 S.E.2d 579 (1983); Peavy v. Bank South, N.A., 222 Ga. App. 501, 474 S.E.2d 690 (1996).

Payment made on forged check with forged endorsement.

- It is arguable that warranties on presentment provided in O.C.G.A. § 11-4-207 would favor drawee over collecting bank where payment has been made on a forged check with a forged endorsement. Citizens & S. Nat'l Bank v. American Sur. Co., 347 F.2d 18 (5th Cir. 1965).

Negligence as defense.

- While the payor bank must have paid the item in good faith in order to recoup its loss from the collecting bank, negligence on the part of the payor bank is not a defense. First Guar. Bank v. Northwest Ga. Bank, 203 Ga. App. 583, 417 S.E.2d 348 (1992).

Liability for failure to obtain copayee's endorsement.

- Cashing bank is liable in damages to copayee for failure to obtain copayee's endorsement. Insurance Co. of N. Am. v. Atlas Supply Co., 121 Ga. App. 1, 172 S.E.2d 632 (1970).

Damaged payee has cause of action against cashing bank for damages sustained where cashing bank fails to obtain endorsements of all copayees on check. Insurance Co. of N. Am. v. Atlas Supply Co., 121 Ga. App. 1, 172 S.E.2d 632 (1970).

Bank's duty to inquire into validity of irregular endorsements.

- Where endorsements are irregular enough on their face to raise question as to their validity, and when checks are offered for deposit into account of one not payee, bank has duty to inquire to ascertain authority of depositor to endorse and deposit payee's checks and cannot escape its duty of inquiry by relying on word of its customer, the depositor, nor does fact that bank could proceed against its customer under warranty provisions and O.C.G.A. § 11-4-207 absolve it of obligation of inquiry. Failure to inquire into the validity of such endorsements precludes bank from asserting defense of commercial reasonableness as a matter of law. Thornton & Co. v. Gwinnett Bank & Trust Co., 151 Ga. App. 641, 260 S.E.2d 765 (1979).

Burden of assuring validity of endorsements on checks rests directly on first bank in collection chain since it is the first bank which has best opportunity to verify endorsements; this standard applies equally to situation of missing endorsements as well as forged endorsements. First Nat'l Bank v. Trust Co., 510 F. Supp. 651 (N.D. Ga. 1981).

Accepting checks without endorsement, or with defective endorsement.

- Where bank breached warranty provisions of O.C.G.A. § 11-4-207 by accepting drawers' checks, either without endorsement by the payee or with endorsements defective on their face, and then deposited the checks into an account other than that of named payee, it was liable for all funds wrongfully deposited and was not entitled to set off from the verdict the amount of funds traced to named payee's benefit. C & S Bank v. Pilco Plantation, Inc., 173 Ga. App. 37, 325 S.E.2d 426 (1984).

Collecting bank breaches warranty of good title when check missing necessary endorsement is presented to and accepted by payor bank. First Nat'l Bank v. Trust Co., 510 F. Supp. 651 (N.D. Ga. 1981).

Obliteration of joint-payee's name.

- Warranty against material alteration is breached by obliteration of joint-payee's name. First Nat'l Bank v. Trust Co., 510 F. Supp. 651 (N.D. Ga. 1981).

Collecting bank's defense of "ordinary care" is irrelevant to payor bank's right to recovery under O.C.G.A. § 11-4-207. First Nat'l Bank v. Trust Co., 510 F. Supp. 651 (N.D. Ga. 1981).

Determination of "reasonable time" is generally a question of fact depending upon circumstances; however, where facts are undisputed, court need only determine proper legal inference to be drawn from facts and trial of matter becomes unnecessary. First Nat'l Bank v. Trust Co., 510 F. Supp. 651 (N.D. Ga. 1981).

As to what constitutes "reasonable time" for notice of breach of warranty of good title to checks and warranty against material alterations, see First Nat'l Bank v. Trust Co., 510 F. Supp. 651 (N.D. Ga. 1981).

Notifying bank a day after discovering missing endorsement.

- Bank customer has duty to discover and report unauthorized signature or alteration and notify bank promptly after such discovery, but customer is not required to check for missing endorsements, and where record shows that customer notified bank of missing endorsement the day after it was discovered, "reasonable time" requirement of former subsection (4) of this section was satisfied. Atlanta IBM Employees Fed. Credit Union v. Trust Co. Bank, 150 Ga. App. 253, 257 S.E.2d 346 (1979).

Delay in giving notice not detrimental to collecting bank.

- Where payor bank's unreasonable delay in giving notice to collecting bank of breach of warranty of good title to checks and warranty against material alterations has no effect on any loss collecting bank could claim, payor bank can recover funds it gave to collecting bank in exchange for checks which had been materially altered. First Nat'l Bank v. Trust Co., 510 F. Supp. 651 (N.D. Ga. 1981).

Am. Jur. 2d.

- 10 Am. Jur. 2d, Banks and Financial Institutions, § 721. 11 Am. Jur. 2d, Banks and Financial Institutions, § 895. 11 Am. Jur. 2d, Bills and Notes, § 389. 12 Am. Jur. 2d, Bills and Notes, § 522 et seq.

C.J.S.

- 9 C.J.S., Banks and Banking, § 420 et seq.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 4-207.

ALR.

- Banks: effect of overcertification of check, 2 A.L.R. 86.

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.

Rights and remedies of purchaser of draft, payable to third person, against drawer where draft is not paid, 71 A.L.R. 1454.

Title to commercial paper deposited by customer of bank to his account, 99 A.L.R. 486.

Arrangement or course of dealing between forwarding bank and collecting bank as affecting relations or rights as between depositor of collection item and the collecting bank, 118 A.L.R. 363.

Right and remedy of drawer of check against collecting bank which receives it on forged endorsement and collects it from drawee bank, 99 A.L.R.2d 637.

Bank's liability for payment or withdrawal on less than required number of signatures, 7 A.L.R.4th 655.

Liability of bank for diversion to benefit of presenter or third party of proceeds of check drawn to bank's order by drawer not indebted to bank, 69 A.L.R.4th 778.