Final Payment of Item by Payor Bank; When Provisional Debits and Credits Become Final; When Certain Credits Become Available for Withdrawal

1. Law
2. Georgia Code
3. Commercial Code
4. Bank Deposits and Collections
5. Collection of Items: Depositary and Collecting Banks
6. Final Payment of Item by Payor Bank; When Provisional Debits and Credits Become Final; When Certain Credits Become Available for Withdrawal

1. An item is finally paid by a payor bank when the bank has first done any of the following:
   1. Paid the item in cash;
   2. Settled for the item without having a right to revoke the settlement under statute, clearing-house rule, or agreement; or
   3. Made a provisional settlement for the item and failed to revoke the settlement in the time and manner permitted by statute, clearing-house rule, or agreement.
2. If provisional settlement for an item does not become final, the item is not finally paid.
3. If provisional settlement for an item between the presenting and payor banks is made through a clearing-house or by debits or credits in an account between them, then to the extent that provisional debits or credits for the item are entered in accounts between the presenting and payor banks or between the presenting and successive prior collecting banks seriatim, they become final upon final payment of the item by the payor bank.
4. If a collecting bank receives a settlement for an item which is or becomes final, the bank is accountable to its customer for the amount of the item and any provisional credit given for the item in an account with its customer becomes final.
5. Subject to applicable law stating a time for availability of funds and any right of the bank to apply the credit to an obligation of the customer, credit given by a bank for an item in a customer's account becomes available for withdrawal as of right:
   1. If the bank has received a provisional settlement for the item, - when the settlement becomes final and the bank has had a reasonable time to receive return of the item and the item has not been received within that time;
   2. If the bank is both the depositary bank and the payor bank, and the item is finally paid, - at the opening of the bank's second banking day following receipt of the item.
6. Subject to applicable law stating a time for availability of funds and any right of a bank to apply a deposit to an obligation of the depositor, a deposit of money becomes available for withdrawal as of right at the opening of the bank's next banking day after receipt of the deposit.

(Code 1933, § 109A-4 - 213, enacted by Ga. L. 1962, p. 156, § 1; Code 1981, §11-4-215, as redesignated by Ga. L. 1996, p. 1306, § 11.)

Editor's notes.

- Ga. L. 1996, p. 1306, § 11, effective July 1, 1996, renumbered former Code Section 11-4-213 as Code Section 11-4-215.

JUDICIAL DECISIONS

ANALYSIS

• General Consideration
• Posting

General Consideration

Final payment imposes liability upon drawee bank for amount of check.

- Final sentence of former subsection (1) of this section creates liability on part of drawee bank for amount of check when any "final payment" has been made. Georgia R.R. Bank & Trust Co. v. First Nat'l Bank & Trust Co., 139 Ga. App. 683, 229 S.E.2d 482 (1976), aff'd, 238 Ga. 693, 235 S.E.2d 1 (1977) (decided prior to 1996 amendment).

Once item is finally paid by drawee under this paragraph, drawer loses right to revoke settlement. Georgia R.R. Bank & Trust Co. v. First Nat'l Bank & Trust Co., 139 Ga. App. 683, 229 S.E.2d 482 (1976), aff'd, 238 Ga. 693, 235 S.E.2d 1 (1977) (decided prior to 1996 amendment).

Cited in Citizens & S. Nat'l Bank v. Youngblood, 135 Ga. App. 638, 219 S.E.2d 172 (1975); Trading Assocs. v. Trust Co. Bank, 142 Ga. App. 229, 235 S.E.2d 661 (1977); Trust Co. v. Student Air Travel Agency, Inc., 142 Ga. App. 248, 235 S.E.2d 670 (1977); National Bank v. Weiner, 180 Ga. App. 61, 348 S.E.2d 492 (1986); National Bank of Ga., Inc. v. Air Atlanta, Inc., 74 Bankr. 426 (Bankr. N.D. Ga. 1987); Baker v. Campbell, 255 Ga. App. 523, 565 S.E.2d 855 (2002).

Posting

"Process of posting."

- The "process of posting" means the usual procedure followed by payor bank in determining to pay an item and in recording payment, including one or more of the following or other steps as determined by the bank: (a) verification of any signature; (b) ascertaining that sufficient funds are available; (c) affixing a "paid" or other stamp; (d) entering a charge or entry to a customer's account; (e) correcting or reversing an entry or erroneous action with respect to the item. Southeastern Pipeline Serv., Inc. v. Citizens & S. Bank, 617 F.2d 67 (5th Cir. 1980).

Completion of posting as final payment.

- Where item has been posted to account of drawer, although in a smaller amount than true amount of the item, it is sufficient to constitute final payment within meaning of former subparagraph (1)(c) of this section, and payor bank becomes accountable for the amount of the item. Georgia R.R. Bank & Trust Co. v. First Nat'l Bank & Trust Co., 139 Ga. App. 683, 229 S.E.2d 482 (1976), aff'd, 238 Ga. 693, 235 S.E.2d 1 (1977) (decided prior to 1996 amendment).

RESEARCH REFERENCES

Am. Jur. 2d.

- 10 Am. Jur. 2d, Banks and Financial Institutions, §§ 770, 779 et seq.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 4-215.

ALR.

- Banks: effect of overcertification of check, 2 A.L.R. 86.

Bank's acceptance of check as affected by attempt to pay it otherwise than in cash, 38 A.L.R. 185.

Trust in proceeds of collections made by charging debtor's account in collecting bank, 42 A.L.R. 754; 47 A.L.R. 761; 77 A.L.R. 473.

Presumption of payment as applicable to bank deposit, 69 A.L.R.3d 1311.

What constitutes final payment under UCC § 4-213, 23 A.L.R.4th 203.

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