O.C.G.A. § 11-4-401 (2019)
When bank may charge customer’s account
(a) A bank may charge against the account of a customer an item that is properly payable from that account even though the charge creates an overdraft. An item is properly payable if it is authorized by the customer and is in accordance with any agreement between the customer and bank. (b) A customer is not liable for the amount of an overdraft if the customer neither signed the item nor benefited from the proceeds of the item. (c) A bank may charge against the account of a customer a check that
is otherwise properly payable from the account, even though payment was made before the date of the check, unless the customer has given notice to the bank of the postdating describing the check with reasonable certainty. The notice is effective for the period stated in subsection (b) of Code Section 11-4-403 for stop-payment orders, and must be received at such time and in such manner as to afford the bank a reasonable opportunity to act on it before the bank takes any action with respect to the check described in Code Section 11-4-303. If a bank charges against the account of a customer a check before the date stated in the notice of postdating, the bank is liable for damages for the loss resulting from its act. The loss may include damages for dishonor of subsequent items under Code Section 11-4-402. (d) A bank that in good faith makes payment to a holder may charge the indicated account of its customer according to: (1) The original terms of the altered item; or (2) The terms of the completed item, even though the bank knows the item has been completed unless the bank has notice that the completion was improper.
History
Code 1933, § 109A-4-401, enacted by Ga. L. 1962, p. 156, § 1; Ga. L. 1996, p. 1306, § 13.
Annotations
Law reviews. For comment on Perini Corp. v. First
Nat’l Bank, 553 F.2d 398 (5th Cir. 1977), see 27 Emory L.J. 393 (1978). 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 PAYMENT OF OVERDRAFTS General Consideration Editor’s notes. - In light of the similarity of the statutory provisions, decisions under former Code 1933, § 13-2044 are included in the annotations for this Code section. Check is “properly payable” when it was made payable to a named payee and delivered to that payee. Delivery to either of the partners of a partnership constitutes delivery to the partnership. Mustin v. Citizens & S. Nat’l Bank, 168 Ga. App. 549, 309 S.E.2d 822, 1983 Ga. App. LEXIS 2845 (1983). A check bearing a forged endorse-
ment is not “properly payable.” TransAmerican Steel Corp. v. Federal Ins. Co., 535 F. Supp. 1185, 1982 U.S. Dist. LEXIS 11544 (N.D. Ga. 1982). Liability for check not “properly payable”.Drawee bank is generally liable to drawer customer for payment of check not “properly payable.” Perini Corp. v. First Nat’l Bank, 553 F.2d 398, 1977 U.S. App. LEXIS 13115 (5th Cir. 1977). Liability of bank for wrongful honor of forged endorsement. - The liability of a depositary bank for wrongly honoring a forged endorsement will be reduced by any amount the forger has already paid in restitution to the drawer.
General Consideration (Cont’d) Trans-American Steel Corp. v. Federal Ins. Co., 535 F. Supp. 1185, 1982 U.S. Dist. LEXIS 11544 (N.D. Ga. 1982). On plaintiff commercial checking account customer’s suit against defendant, its payor bank, under O.C.G.A. § 11-4401, alleging checks forged by it employee, although the customer reasonably should have detected the unauthorized payment by examining each check’s payee information and the statements, and the customer thus failed to comply with its duties under O.C.G.A. § 11-4-406(c), (d)(2), the payor bank made no showing that it complied with local industry standards or acted consistently with general banking usage; the comparative negligence test of § 11-4406(e) applied. Ownbey Enters. v. Wachovia Bank, N.A., 457 F. Supp. 2d 1341, 2006 U.S. Dist. LEXIS 44806 (N.D. Ga. 2006). Effect of failure of collecting bank to supply missing payee’s endorsement. - Absence of payee’s endorsement and failure of collecting bank to supply missing endorsement as it was authorized to do did not affect payor bank’s right to pay check and to debit plaintiffs’ account. First Nat’l Bank v. Barrett, 141 Ga. App. 161, 233 S.E.2d 24, 1977 Ga. App. LEXIS 1809 (1977). Effect of general deposit. - Deposit of money in bank on general deposit creates relation of creditor and debtor between bank and depositor and debtor bank can discharge its liability to general depositor only by paying money to depositor, or as directed by depositor and cannot discharge its liability by accepting and paying forged checks drawn in name of the depositor against the bank. White v. Georgia R.R. Bank & Trust Co., 71 Ga. App. 78, 30 S.E.2d 118, 1944 Ga. App. LEXIS 284 (1944) (decided under former Code 1933, § 13-2044).
Charging depositor’s account for payments on forged checks. - A bank is bound to know signatures of its customers, and it cannot legally charge amount paid on forged check to account of depositor whose name was forged, but must be considered as having made payment out of its own funds. White v. Georgia R.R. Bank & Trust Co., 71 Ga. App. 78, 30 S.E.2d 118, 1944 Ga. App. LEXIS 284 (1944) (decided under former Code 1933, § 13-2044). Signature of alleged incompetent, made by another guiding his hand. - Allegations that, while depositor was on death bed and not physically or mentally in condition to transact business, depositor’s name was written on a check by one of the defendants who held depositor’s hand and guided it and that signature was not written by depositor and was not depositor’s act and deed, were sufficient to charge that check in question was a forgery (see also § 11-4-405). White v. Georgia R.R. Bank & Trust Co., 71 Ga. App. 78, 30 S.E.2d 118, 1944 Ga. App. LEXIS 284 (1944) (decided under former Code 1933, § 13-2044). Payment of Overdrafts Payment of overdraft by drawee gives it remedy against drawer. - Where drawee bank turns money over to collecting bank who is a holder in due course on an instrument which would overdraw drawee bank’s customer’s account, it has turned over its own money on the instrument, and has both a remedy against its customer under Ga. L. 1962, p. 156, § 1 (see now O.C.G.A. § 11-4-401), and also a remedy on the instrument against drawer provided drawee does not give up possession of the instrument. FDIC v. West, 244 Ga. 396, 260 S.E.2d 89, 1979 Ga. LEXIS 1250 (1979).
RESEARCH REFERENCES Am. Jur. 2d. 10 Am. Jur. 2d, Banks and Financial Institutions, §§ 770, 779 et seq. C.J.S. 9 C.J.S., Banks and Banking, § 341 et seq. U.L.A. Uniform Commercial Code (U.L.A.) § 4401.
ALR. Banks: effect of overcertification of check, 2 A.L.R. 86. Effect of verbal order with respect to payment of check or transfer of bank deposit, 2 A.L.R. 175. Acceptance of checks by telegraph or telephone, 2 A.L.R. 1146; 13 A.L.R. 989.
Right of drawee bank to charge back a credit given on a forged check, 5 A.L.R. 1566. Right of bank to recover amount of overdraft from depositor, 12 A.L.R. 360. Right of bank to charge back check drawn upon itself, which it has credited to a depositor under mistaken belief that the drawer’s account is good, 15 A.L.R. 709. Burden of proof as to alteration not apparent on face of instrument, 31 A.L.R. 1455. Duty of bank to prior parties to the
paper to apply deposit to credit of endorser on paper owned by bank, 37 A.L.R. 578. Bank’s right to recover back money paid on stopped check, 39 A.L.R. 1239. Rights and duties where check is presented to bank which exceeds balance on deposit, 62 A.L.R. 187. Bank depositor’s act in seeking restitution from third person to whom, or for benefit of whom, the bank has paid out the deposit, as election of remedy precluding action against bank, 144 A.L.R. 1440.