O.C.G.A. § 11-4-303 (2019)

Annotations

Law reviews. For article surveying Georgia cases in

the area of commercial law from June 1979 through May 1980, see 32 Mercer L. Rev. 11 (1980).

JUDICIAL DECISIONS ANALYSIS GENERAL CONSIDERATION EFFECT OF UNDERLYING OBLIGATION

General Consideration Editor’s notes. - In light of the similarity of thestatutory provisions, decisions under former Code 1933, §§ 14-507 and 14-1707 are included in the annotations for this Code section. Right to stop payment. - The law fully accords the drawer of an uncertified check the right to order the bank to stop payment, and stopping payment on a check, especially to recoup monies owed, does not constitute extreme and outrageous conduct. UPS v. Moore, 238 Ga. App. 376, 519 S.E.2d 15, 1999 Ga. App. LEXIS 817 (1999). Customer may stop payment on checks prior to action by drawee. - Under O.C.G.A. § 11-4-403 any customer may by order to the bank stop payment on a check prior to action by drawee. Fulton Nat’l Bank v. Delco Corp., 128 Ga. App. 16, 195 S.E.2d 455, 1973 Ga. App. LEXIS 1366 (1973). Rights of bank carrying account with other bank. - Bank carrying account with another bank has right to stop payment on its check, which would, however, still leave it liable for value of the item unless some legal and valid defense is available to it. Fulton Nat’l Bank v. Delco Corp., 128 Ga. App. 16, 195 S.E.2d 455, 1973 Ga. App. LEXIS 1366 (1973). Effect of O.C.G.A. § 11-4-406(f). - Section 11-4-406(4) (now O.C.G.A. § 11-4406(f)) has no specific application to Ga. L. 1962, p. 156, § 1 (now O.C.G.A. § 11-4403) and does not preclude recovery for payment of an item made contrary to binding stop payment order. Georgia Motor Club, Inc. v. First Nat’l Bank & Trust Co., 137 Ga. App. 521, 224 S.E.2d 498, 1976 Ga. App. LEXIS 2516 (1976). Rights of holders in due course. - Since bank is agent of maker, the latter is entitled as a matter of right to stop payment of any check drawn by maker on such bank any time before it is presented to bank for payment. This right cannot be exercised by maker in way and manner that would prejudice rights of holders in due course of check in question without

becoming liable on instrument to such holders, however when this right is exercised by giving notice to drawee bank by means of telegraph service, telegraph company becomes liable for any damages sustained by inexcusable failure on its part to make proper delivery of the telegram. Stewart v. Western Union Tel. Co., 83 Ga. App. 532, 64 S.E.2d 327, 1951 Ga. App. LEXIS 901 (1951) (decided under former Code 1933, § 14-507). When check subject to revocation by drawer. - A check is a mere order upon a bank to pay from drawer’s account and is subject to revocation by drawer at any time before it has been certified, accepted or paid by the bank. Aiken Bag Corp. v. McLeod, 89 Ga. App. 737, 81 S.E.2d 215, 1954 Ga. App. LEXIS 566 (1954) (decided under former Code 1933, § 14-1707). Effect of Underlying Obligation Stop order does not affect enforceability of underlying obligation. - Enforceability of debt obligation underlying instrument upon which payment has been stopped is unaffected by stop order, and payee of such instrument can still assert any and all claims payee has against drawer for amount of the original obligation. Whitmire v. Woodbury, 154 Ga. App. 159, 267 S.E.2d 783, 1980 Ga. App. LEXIS 2078, rev’d, 246 Ga. 349, 271 S.E.2d 491, 1980 Ga. LEXIS 1103 (1980). Payee cannot impair stop payment right. - Right of bank customer under O.C.G.A. § 11-4-403 to order bank to stop payment on any instrument payable from customer’s account cannot be construed as depending on validity of underlying obligation between customer and payee of instrument, as the right exists between bank customer and drawee bank, and cannot be destroyed or impaired by payee of an instrument for which bank has received an otherwise valid stop payment order. Whitmire v. Woodbury, 154 Ga. App. 159, 267 S.E.2d 783, 1980 Ga. App. LEXIS 2078, rev’d, 246 Ga. 349, 271 S.E.2d 491, 1980 Ga. LEXIS 1103 (1980).

OPINIONS OF THE ATTORNEY GENERAL Cashier’s checks are essentially unconditional promises to pay with respect to which the issuing bank may stop payment only on the grounds of mistake and want of consideration and only where the instrument is in the hands of the original payee. In the case of a bank draft, however, the drawer bank may stop payment on the bank draft at any time prior to action by the drawee and raise any valid claim it may have in defense of its action. 1989 Op. Att’y Gen. No. 89-15. Georgetown Village Apts. v. Fontana, 92 B.R. 559,

1988 Bankr. LEXIS 1804 (Bankr. M.D. Ga. 1988). A bank does not render a bank draft a cashier’s check by imprinting the words “cashier check” on the draft, and by labeling its bank draft as a cashier’s check, the issuing bank also does not waive its right to stop payment under O.C.G.A. § 11-4403. 1989 Op. Att’y Gen. No. 89-15. Bank not obligated to honor customer’s stop-payment order on cashier’s check issued on customer’s behalf. 1977 Op. Att’y Gen. No. 77-16.

RESEARCH REFERENCES Am. Jur. 2d. 11 Am. Jur. 2d, Banks and Financial Institutions, §§ 955, 957. 12 Am. Jur. 2d, Bills and Notes, §§ 456, 457. C.J.S. 9 C.J.S., Banks and Banking, §§ 326, 352 et seq. U.L.A. Uniform Commercial Code (U.L.A.) § 4403. ALR. Liability of drawer who stops payment of check, 14 A.L.R. 562. Right of bank to repudiate payment to foreign correspondent, 23 A.L.R. 1232. Liability of bank which pays checks after filing of petition in bankruptcy against drawer, 31 A.L.R. 256; 54 A.L.R. 751. Right of drawer to stop payment of certified check, 35 A.L.R. 942. Bank’s right to recover back money paid on stopped check, 39 A.L.R. 1239. Right to countermand, or stop payment on, cashier’s check, 56 A.L.R. 532; 107 A.L.R. 1463.

Sufficiency, as regards mode of communication and content, of order to bank to stop payment of check, 88 A.L.R. 741. Stipulation relieving bank from, or limiting its liability for disregard of, stoppayment order, 1 A.L.R.2d 1155. What conduct by drawee of check before receipt of stop-payment order, renders order ineffectual, 10 A.L.R.2d 428. Bank’s liability for its payment of check drawn by one depositor after stop-payment order by a joint depositor, 55 A.L.R.2d 975. Uniform Commercial Code: Bank’s right to stop payment on its own uncertified check or money order, 97 A.L.R.3d 714. Banks and banking: construction and effect of UCC § 4-403(2) regulating oral or written nature of stop-payment order, 29 A.L.R.4th 228. Sufficiency of description of check in stop-payment order under UCC § 4-403, 35 A.L.R.4th 985.