(Code 1981, §11-3-404, enacted by Ga. L. 1996, p. 1306, § 3.)
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 comment on Trust Co. v. Refrigeration Supplies, Inc., 241 Ga. 406, 246 S.E.2d 282 (1978), discussing liability of collecting and payor banks for payment of check over missing endorsement of copayee, see 13 Ga. L. Rev. 677 (1979).
JUDICIAL DECISIONS
Editor's notes.
- In light of the similarity of the provisions, decisions under former Code Section 11-3-405 are included in the annotations for this section.
"Impostor" refers to impersonation not to false representation that party is authorized agent of payee; this section does not cover one who represents self as agent of a principal and procures check payable to order of the principal. Thornton & Co. v. Gwinnett Bank & Trust Co., 151 Ga. App. 641, 260 S.E.2d 765 (1979) (decided under former Code Section11-3-405).
Applicable in forged check cases.- Nothing in this section limits its application to cases in which drawer's signature is authorized. The provision has also been applied in forged check cases. Perini Corp. v. First Nat'l Bank, 553 F.2d 398 (5th Cir. 1977) (decided under former Code Section 11-3-405).
Negligence by bank.
- Any loss arising from situations provided for in this section should fall upon the employer of a faithless employee who cashes numerous checks payable to fictitious persons, and negligence on the part of the bank in cashing the checks is irrelevant. Only bad faith by a bank prevents invoking the code section to defeat a claim. Northbrook Property & Cas. Ins. Co. v. Citizens & S. Nat'l Bank, 184 Ga. App. 326, 361 S.E.2d 531 (1987) (decided under former Code Section11-3-405).
Cited in Southtrust Bank v. Parker, 226 Ga. App. 292, 486 S.E.2d 402 (1997); Kolodkin v. Cohen, 230 Ga. App. 384, 496 S.E.2d 515 (1998), but see Peterson v. Holtrachem, 239 Ga. App. 838, 521 S.E.2d 648 (1999).
RESEARCH REFERENCES
Am. Jur. 2d.
- 11 Am. Jur. 2d, Banks and Financial Institutions, § 921. 11 Am. Jur. 2d, Bills and Notes, §§ 82, 88, 222, 223. 12 Am Jur. 2d, Bills and Notes, §§ 547, 612.
C.J.S.- 10 C.J.S., Bills and Notes, §§ 129, 192, 220.
U.L.A.- Uniform Commercial Code (U.L.A.) § 3-404.
ALR.
- Payment of check upon forged or unauthorized indorsement as affecting the right of true owner against the bank, 14 A.L.R. 764; 69 A.L.R. 1076; 137 A.L.R. 874.
Necessity of endorsement by all payees before maturity to make a transferee a bona fide holder, 25 A.L.R. 163.
Construction of savings bank by-law expressly assented to by depositor, relieving bank from liability for payment to unauthorized person, 52 A.L.R. 760.
Criminal charge predicated upon fraudulently obtaining a check, note, etc., or signature thereon, from the person executing the same, 141 A.L.R. 210.
Ratification of forged or unauthorized signature on negotiable instrument under the provision of the Negotiable Instruments Act negativing effect of such signature unless the party against whom it is sought to enforce a right thereunder is precluded from setting up the forgery or want of authority, 150 A.L.R. 978.
Deception as to character of paper signed as defense as against bona fide holder of negotiable paper, 160 A.L.R. 1295.
Invalid instrument as subject of forgery, 174 A.L.R. 1300.
Who must bear loss as between drawer or indorser who delivers check to an impostor and one who purchases, cashes, or pays it upon the impostor's indorsement, 81 A.L.R.2d 1365.
Bank's liability to nonsigning payee for payment of check drawn to joint payees without obtaining endorsement by both, 47 A.L.R.3d 537.
Bills and notes: nominal payee rule of UCC § 3-405(1)(b), 92 A.L.R.3d 268.
Construction and application of UCC § 3-405(1)(a) involving issuance of negotiable instrument induced by impostor, 92 A.L.R.3d 608.
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.