Vickers v

Broxton State Bank, 230 Ga. App. 170, 495 S.E.2d 645, 1998 Ga. App. LEXIS 76 (1998). On plaintiff commercial checking account customer’s suit against defendant, its payor bank, under O.C.G.A. § 11-4401, alleging checks forged by it employee, although the reduced check images returned with the monthly statements were difficult to read, the customer reasonably should have detected the unauthorized payment by examining each check’s payee information and the statements and thus, the customer failed to comply with its duties under O.C.G.A. § 11-4-406(c), (d)(2). Ownbey Enters. v. Wachovia Bank, N.A., 457 F. Supp. 2d 1341, 2006 U.S. Dist. LEXIS 44806 (N.D. Ga. 2006). Bank actions in failing to inform customers of a rule change on signature verification, allowing an employee of customer to place funds in a checking account from the customer’s line of credit, and arranging personal loans for the employee were not evidence of a lack of good faith on the part of the bank in paying forged checks. Eason Publications, Inc. v. Nation- 517 General Consideration (Cont’d) sbank, 217 Ga. App. 726, 458 S.E.2d 899, 1995 Ga. App. LEXIS 587 (1995) (decided under former § 11-4-606). Customer’s failure to notify regarding improperly honored checks. — A surety on a guardianship bond having joint control of a checking account under an agreement with the guardian was a customer of the bank by virtue of the agreement, and the surety’s untimely failure to request statements or notify the bank of improperly honored checks barred its claims against the bank. Travelers Indemnity Co. v. Trust Co. Bank, 228 Ga. App. 893, 495 S.E.2d 296, 1997 Ga. App. LEXIS 1318 (1997). Sixty-Day and One-Year Notice Requirements Comparison with previous Code. — There is no substantial difference in intent and purpose between Code 1933, §§ 13-2044 and 109A-4-406 in imposing upon depositor the duty of notifying bank of unauthorized signatures or alterations within specified time limits, and decisions under former law are applicable to provide guides as to what may constitute a jury question of whether depositor is to be excused from this duty. Bank of Thomas County v. Dekle, 119 Ga. App. 753, 168 S.E.2d 834, 1969 Ga. App. LEXIS 1289 (1969), overruled on other grounds, Decatur Fed. Sav. & Loan Ass’n v. Litsky, 207 Ga. App. 752, 429 S.E.2d 300, 1993 Ga. App. LEXIS 351 (1993). Applicability of subsection (f). — Subsection (4) (now O.C.G.A. § 11-4406(f)) is limited to two types of claims by a customer: (1) unauthorized signature and (2) any alteration. Georgia Motor Club, Inc. v. First Nat’l Bank & Trust Co., 137 Ga. App. 521, 224 S.E.2d 498, 1976 Ga. App. LEXIS 2516 (1976). Under the pre-July 1, 1996 version of this section, where the bank sent monthly statements including canceled checks or imaged copies of checks and made all items available to the customer, the customer’s unauthorized payment claim was limited to those forged checks which it discovered and reported within the 60-day limit of paragraph (4) (now O.C.G.A. § 11- 11-4-406 4-406(f)). Summit Transp. Servs., Inc. v. NationsBank, 232 Ga. App. 8, 500 S.E.2d 911, 1998 Ga. App. LEXIS 568 (1998), cert. denied, No. S98C1190, 1998 Ga. LEXIS 852 (Ga. Sept. 11, 1998). On plaintiff commercial checking account customer’s suit against defendant, its employee embezzler’s depository bank, O.C.G.A. § 11-4-406’s notice requirements applied to the embezzler’s depository bank and the depository bank was not liable for the forged checks paid more than 60 days before the customer reported the forgeries to its payor bank. Ownbey Enters. v. Wachovia Bank, N.A., 457 F. Supp. 2d 1341, 2006 U.S. Dist. LEXIS 44806 (N.D. Ga. 2006). Customer’s duties as to reporting discrepancies. — As to items paid in good faith by a bank, the depositor must discover and report discrepancies to the bank within times prescribed by former Code 1933, § 109A-4-406 (see now O.C.G.A. § 11-4-406) after bank furnishes or in a reasonable manner affords depositor an opportunity to examine items supporting debits to the account, or else show, at least by proof sufficient to create a jury issue, why depositor failed to notify the bank. Bank of Thomas County v. Dekle, 119 Ga. App. 753, 168 S.E.2d 834, 1969 Ga. App. LEXIS 1289 (1969), overruled on other grounds, Decatur Fed. Sav. & Loan Ass’n v. Litsky, 207 Ga. App. 752, 429 S.E.2d 300, 1993 Ga. App. LEXIS 351 (1993). Shortening of notice period by agreement. — The trial court properly upheld an agreement between a customer and a bank under which the bank could not be charged with liability for negligence because the customer had not notified the bank of disputed checks within 30 days; under O.C.G.A. § 11-4-103(a), parties by agreement could change the 60-day notice period allowed for in O.C.G.A. § 114-406(f), and such an agreement was controlling unless it was manifestly unreasonable, which was not the case here, and shortening the time period did not excuse the bank from its duty of ordinary care or disclaim the bank’s liability for negligence in the future inasmuch as the notice period started over again each time the bank sent a new statement to the customer. Freese v. Regions Bank, N.A., 284 Ga. App. 717, 644 S.E.2d 549, 2007 Ga. App. 518 LEXIS 398 (2007), cert. denied, No. S07C1190, 2007 Ga. LEXIS 691 (Ga. Sept. 24, 2007). Effect of customer negligence. — Under the pre-July 1, 1996 version of O.C.G.A. § 11-4-406, the trial court erred in holding that the customer’s alleged negligence was relevant under former paragraph (2), because a bank could not insulate itself from liability if the customer established lack of ordinary care on the part of the bank in paying items. Summit Transp. Servs., Inc. v. NationsBank, 232 Ga. App. 8, 500 S.E.2d 911, 1998 Ga. App. LEXIS 568 (1998), cert. denied, No. S98C1190, 1998 Ga. LEXIS 852 (Ga. Sept. 11, 1998). Absence of timely notice is absolute protection to bank. — Even if bank is negligent in paying in good faith an item not covered by customer’s notice of unauthorized signatures or alterations, and even if depositor is negligent in not preventing or in failing to discover the payment, absence of timely notice is absolute in protecting bank and excluding any right of recovery by depositor. Bank of Thomas County v. Dekle, 119 Ga. App. 753, 168 S.E.2d 834, 1969 Ga. App. LEXIS 1289 (1969), overruled on other grounds, Decatur Fed. Sav. & Loan Ass’n v. Litsky, 207 Ga. App. 752, 429 S.E.2d 300, 1993 Ga. App. LEXIS 351 (1993). Duty of bank to show it furnished depositor statement. — With respect to 60-day provision of subsection (4) (now O.C.G.A. § 11-4-406(f)), and assuming payment in good faith, essential controlling fact which bank must show to eliminate liability, as movant for summary judgment, is that it furnished to depositor the items paid, or notified depositor that statements and items paid were available for examination, more than 60 days before the depositor notified it of unauthorized payment. Bank of Thomas County v. Dekle, 119 Ga. App. 753, 168 S.E.2d 834, 1969 Ga. App. LEXIS 1289 (1969), overruled on other grounds, Decatur Fed. Sav. & Loan Ass’n v. Litsky, 207 Ga. App. 752, 429 S.E.2d 300, 1993 Ga. App. LEXIS 351 (1993). Application of subsection (4) (now O.C.G.A. § 11-4-406(f)) where forgeries on front and back. — The rationale for allowing the drawer more time to re- 11-4-406 port an unauthorized indorsement than an unauthorized signature is that there is little excuse for a customer not detecting an alteration of the customer’s own check or a forgery of the customer’s own signature. However, the customer does not know the signatures of indorsers and may be delayed in learning that indorsements are forged. Where both are present, the customer should discover and report the unauthorized payment within the shorter time period. Decatur Fed. Sav. & Loan Ass’n v. Litsky, 207 Ga. App. 752, 429 S.E.2d 300, 1993 Ga. App. LEXIS 351 (1993). Good faith by bank as prerequisite to notice. — Before bank is entitled to notice prescribed by former Code 1933, § 13-2044, it must appear that bank in good faith paid and charged to depositor’s account money on a forged or raised check. White v. Georgia R.R. Bank & Trust Co., 71 Ga. App. 78, 30 S.E.2d 118, 1944 Ga. App. LEXIS 284 (1944). There are circumstances wherein notice referred to in former Code 1933, § 132044, need not be given, and it is only when a bank has in good faith paid a forged check that it is entitled to such notice. G. Franklyn Fischer & Assocs. v. First Nat’l Bank, 102 Ga. App. 567, 116 S.E.2d 902, 1960 Ga. App. LEXIS 682 (1960). Two circumstances where notice requirement of section inapplicable. — There are two circumstances where notice requirement of former Code 1933, § 13-2044, is not a prerequisite to recovery: (1) where bank has not paid forged or raised check out of depositor’s account in good faith, and (2) where depositor for other sufficient reason is relieved from giving such notice. G. Franklyn Fischer & Assocs. v. First Nat’l Bank, 102 Ga. App. 567, 116 S.E.2d 902, 1960 Ga. App. LEXIS 682 (1960). Bank’s payment to one it believes depositor authorized to obtain funds. — To require of depositor the notice referred to in former Code 1933, § 13-2044, check paid must be a forgery as contemplated by criminal statutes, but where bank paid money from depositor’s account because it believed person obtaining funds was authorized by depositor to do so, 519 Sixty-Day and One-Year Notice Requirements (Cont’d) § 13-2044 is not applicable, and no notice is required to hold the bank liable. G. Franklyn Fischer & Assocs. v. First Nat’l Bank, 102 Ga. App. 567, 116 S.E.2d 902, 1960 Ga. App. LEXIS 682 (1960). Conversion and negligence action barred. — Bank account holder’s conversion and negligence action against a bank for paying two checks on the holder’s account without authorization was barred by O.C.G.A. § 11-4-406(f) of Georgia’s Uniform Commercial Code, because the holder admitted receiving regular statements from the bank but did not open the statements until more than one year after the allegedly unauthorized checks had been paid. Ogundele v. Wachovia Bank, N.A., No. 1:04-CV1852-CC, 2004 U.S. Dist. LEXIS 25396 (N.D. Ga. Dec. 6, 2004). Forgeries committed and concealed by depositor’s agent. — Fact that forgeries were committed and concealed by one whom depositor entrusted to examine depositor statements and vouchers was not sufficient to excuse depositor from giving notice to the bank. G. Franklyn Fischer & Assocs. v. First Nat’l Bank, 102 Ga. App. 567, 116 S.E.2d 902, 1960 Ga. App. LEXIS 682 (1960). Form of notification. — Subsection (4) (now O.C.G.A. § 11-4-406(f)) contains no language either prescribing or proscribing the form in which the notification called for from a customer is to be made; the term “report” is a verb, not a noun, and does not require a written report. Trammell v. F & M Bank, 170 Ga. App. 347, 317 S.E.2d 323, 1984 Ga. App. LEXIS 1893 (1984). 11-4-406 Effect of timeliness of suit. — Bank’s claim that plaintiff was estopped from asserting that bank had improperly collected and deposited check with a missing endorsement was not meritorious in that suit had been filed against the bank within one year from the time of the making of the checks involved. Horne v. C & S Bank, 167 Ga. App. 187, 305 S.E.2d 897, 1983 Ga. App. LEXIS 2463 (1983). Whether facts excuse depositor’s failure to give notice is jury issue. — It is jury issue to determine whether or not facts pleaded are such as to absolve depositor from penalty prescribed by former Code 1933, § 13-2044 (loss of funds paid by bank on forged check) for failure to give 60-day notice provided for therein. White v. Georgia R.R. Bank & Trust Co., 71 Ga. App. 78, 30 S.E.2d 118, 1944 Ga. App. LEXIS 284 (1944). Jury question whether notice excused and whether bank paid in good faith. — Under petition alleging that all of the defendants including the bank acted jointly in withdrawing money, that signature on check was mere scrawl and was not signature of depositor, that it was the only check drawn against the account in nearly 11 years, and that there was notation on the check which it was alleged showed that suspicions of bank were aroused, it was question for jury to determine whether or not plaintiff was or should have been excused from giving notice under former Code 1933, § 132044, and whether bank acted in good faith in cashing forged check. White v. Georgia R.R. Bank & Trust Co., 71 Ga. App. 78, 30 S.E.2d 118, 1944 Ga. App. LEXIS 284 (1944).