Death or Incompetence of Customer

1. Law
2. Georgia Code
3. Commercial Code
4. Bank Deposits and Collections
5. Relationship Between Payor Bank and Its Customer
6. Death or Incompetence of Customer

1. A payor or collecting bank's authority to accept, pay, or collect an item or to account for proceeds of its collection, if otherwise effective, is not rendered ineffective by incompetence of a customer of either bank existing at the time the item is issued or its collection is undertaken if the bank does not know of an adjudication of incompetence. Neither death nor incompetence of a customer revokes the authority to accept, pay, collect, or account until the bank knows of the fact of death or of an adjudication of incompetence and has reasonable opportunity to act on it.
2. Even with knowledge, a bank may for ten days after the date of death pay or certify checks drawn on or before that date unless ordered to stop payment by a person claiming an interest in the account.

(Code 1933, § 109A-4 - 405, enacted by Ga. L. 1962, p. 156, § 1; Ga. L. 1996, p. 1306, § 13.)

Cross references.

- Disposition by bank of deposit of deceased depositor, § 7-1-239.

JUDICIAL DECISIONS

Bank honoring instrument without knowledge of drawer's death.

- A check does not of itself operate as assignment of any part of drawer's funds deposited with bank upon which it is drawn, but is merely an order upon bank to pay from drawer's account. It may be revoked at any time by drawer before it has been certified, accepted or paid by bank, and is revoked by operation of law ten days after death of drawer although drawee bank is not liable where it has in good faith honored such instrument without knowledge of depositor's death. Lambeth v. Lewis, 114 Ga. App. 191, 150 S.E.2d 462 (1966).

Cited in Holsomback v. Akins, 134 Ga. App. 543, 215 S.E.2d 306 (1975); Stewart v. Citizens & S. Nat'l Bank, 138 Ga. App. 209, 225 S.E.2d 761 (1976).

RESEARCH REFERENCES

Am. Jur. 2d.

- 11 Am. Jur. 2d, Banks and Financial Institutions, § 894.

C.J.S.

- 9 C.J.S., Banks and Banking, §§ 326, 352 et seq., 383.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 4-405.

ALR.

- Liability to trustee in bankruptcy of bank paying checks of insolvent depositor before proceedings in bankruptcy, 41 A.L.R. 557.

Liability of bank which pays checks after filing of petition in bankruptcy against drawer, 54 A.L.R. 751.

Insanity of maker, drawer, or endorser as defense against holder in due course, 24 A.L.R.2d 1380.

Effect of incompetency of joint depositor upon status and ownership of bank account, 62 A.L.R.2d 1091.

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