(Code 1981, §11-3-417, enacted by Ga. L. 1996, p. 1306, § 3; Ga. L. 1997, p. 143, § 11.)
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).
JUDICIAL DECISIONS
Editor's notes.
- In light of the similarity of the provisions, decisions under former Code 1933, §§ 14-606, 14-607 and former Code Section 11-3-417 are included in the annotations for this section.
When endorser liability becomes absolute and when it is discharged.
- Liability of every endorser is contingent until note matures; when conditions of endorser's warranty have been met, liability becomes absolute; when requirements as to presentment and notice of dishonor have not been complied with, endorser is discharged. Massell v. Prudential Ins. Co. of Am., 57 Ga. App. 460, 196 S.E. 115 (1938) (decided under former Code 1933, §§ 14-606 and 14-607).
Forged endorsement is ineffective to pass title. Perini Corp. v. First Nat'l Bank, 553 F.2d 398 (5th Cir. 1977) (decided under former Code Section 11-3-417).
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 of this section 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 of former Code section § 11-3-419(3) as a matter of law. Thornton & Co. v. Gwinnett Bank & Trust Co., 151 Ga. App. 641, 260 S.E.2d 765 (1979) (decided under former Code Section11-3-417).
Defense in conversion suit prohibited.
- Bank may not defend conversion suit under this section by claiming that named payee on negotiable instrument has no enforceable right to receive or retain proceeds evidenced thereby against drawer. Thornton & Co. v. Gwinnett Bank & Trust Co., 151 Ga. App. 641, 260 S.E.2d 765 (1979) (decided under former Code Section11-3-417).
RESEARCH REFERENCES
Am. Jur. 2d.
- 4 Am. Jur. 2d, Alteration of Instruments, § 26. 10 Am. Jur. 2d, Banks and Financial Institutions, § 747. 11 Am. Jur. 2d, Bills and Notes, §§ 389, 390, 412 et seq. 12 Am. Jur. 2d, Banks and Financial Institutions, §§ 912, 980, 981. 12 Am. Jur. 2d, Bills and Notes, §§ 464 et seq., 512 et seq., 647 et seq., 671. 37 Am. Jur. 2d, Fraud and Deceit, § 158.
C.J.S.- 10 C.J.S., Bills and Notes, §§ 39 et seq., 154 et seq., 239.
U.L.A.- Uniform Commercial Code (U.L.A.) § 3-417.
ALR.
- Liability on note given to bank to aid in evading law, 64 A.L.R. 595.
Right of maker or endorser of note to set up fraud in transfer by intermediate holder to plaintiff, 66 A.L.R. 800.
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.
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.