TITLE 11 COMMERCIAL CODE

Section 4. Bank Deposits and Collections, 11-4-101 through 11-4-504.

ARTICLE 4 BANK DEPOSITS AND COLLECTIONS

11-4-403. Customer's right to stop payment; burden of proof of loss.

A customer or any person authorized to draw on the account if there is more than one person may stop payment of any item drawn on the customer's account or close the account by an order to the bank describing the item or account with reasonable certainty received at a time and in a manner that affords the bank a reasonable opportunity to act on it before any action by the bank with respect to the item described in Code Section 11-4-303. If the signature of more than one person is required to draw on an account, any of these persons may stop payment or close the account.
A stop-payment order is effective for six months, but it lapses after 14 calendar days if the original order was oral and was not confirmed in writing within that period. A stop-payment order may be renewed for additional six-month periods by a writing given to the bank within a period during which the stop-payment order is effective.
The burden of establishing the fact and amount of loss resulting from the payment of an item contrary to a stop-payment order or order to close an account is on the customer. The loss from payment of an item contrary to a stop-payment order may include damages for dishonor of subsequent items under Code Section 11-4-402.

(Code 1933, § 109A-4 - 403, enacted by Ga. L. 1962, p. 156, § 1; Ga. L. 1996, p. 1306, § 13.)

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

General Consideration

Editor's notes.

- In light of the similarity of the issues dealt with under the provisions, decisions under former Code 1933, §§ 14-507 and 14-1707 are included in the annotations for this 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).

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).

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).

Effect of O.C.G.A.

§ 11-4-406(f). - Section11-4-406(4) (now O.C.G.A. § 11-4-406(f) has no specific application to O.C.G.A. § 11-4-403 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).

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) (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) (decided under former Code 1933, § 14-1707).

Cited in First Nat'l Bank & Trust Co. v. Georgia R.R. Bank & Trust Co., 238 Ga. 693, 235 S.E.2d 1 (1977); Georgetown Village Apts. v. Fontana, 92 Bankr. 559 (Bankr. M.D. Ga. 1988).

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, rev'd on other grounds, 246 Ga. 349, 271 S.E.2d 491 (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, rev'd on other grounds, 246 Ga. 349, 271 S.E.2d 491 (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 Bankr. 559 (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. § 11-4-403. 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.) § 4-403.

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, stop-payment 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.

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