GA Code § 11-4-205 (2021)
2021 Georgia Code|Title 11 - Commercial Code|Article 4 - Bank Deposits and Collections|Part 2 - Collection of Items: Depositary and Collecting Banks|§ 11-4-205. Depositary Bank Holder of Unindorsed Item

 If a customer delivers an item to a depositary bank for collection:    The depositary bank becomes a holder of the item at the time it receives the item for collection if the customer at the time of delivery was a holder of the item, whether or not the customer indorses the item, and, if the bank satisfies the other requirements of Code Section 11-3-302, it is a holder in due course; and   The depositary bank warrants to collecting banks, the payor bank or other payor, and the drawer that the amount of the item was paid to the customer or deposited to the customer's account.    (Code 1933, § 109A-4 - 205, enacted by Ga. L. 1962, p. 156, § 1; Ga. L. 1996, p. 1306, § 6.)   Law reviews.   - For article discussing judicial activism in cases involving claims and defenses under the Uniform Commercial Code, see 17 Ga. L. Rev. 569 (1983).   JUDICIAL DECISIONS   Purpose of former subsection (1).    - Former subsection (1) of this section was designed to speed up collections by eliminating necessity to return to nonbank depositor any items the depositor may have failed to endorse. Pazol v. Citizens Nat'l Bank, 110 Ga. App. 319, 138 S.E.2d 442 (1964).    O.C.G.A. § 11-4-205 does not eliminate depositary and collecting banks' warranty of title or drawee's duty to accept only properly payable items. Perini Corp. v. First Nat'l Bank, 553 F.2d 398 (5th Cir. 1977).   Effect of incomplete endorsement on liability.   - Handling check bearing incomplete endorsement creates no liability so long as proceeds reach designated payee. Perini Corp. v. First Nat'l Bank, 553 F.2d 398 (5th Cir. 1977).   Bank as holder of instrument issued to it.    - Even if payee does not personally endorse instrument, a bank is holder as long as instrument was issued to the bank. Pazol v. Citizens Nat'l Bank, 110 Ga. App. 319, 138 S.E.2d 442 (1964).   A bank never became a holder in due course where a check made payable jointly to the bank's customer and a third party was never endorsed by the third party before deposit in the bank. Citizens & S. Nat'l Bank v. Sun Belt Elec. Constructors, Inc., 64 Bankr. 377 (Bankr. N.D. Ga. 1986).    Trial court did not err in granting a bank summary judgment on the bank's claims against an automobile seller for enforcement of drawer and signer obligations under the Georgia Uniform Commercial Code (UCC), O.C.G.A. § 11-3-414(b), and for a violation of the bad check statute, O.C.G.A. § 13-6-15, because there was no genuine issue of material fact as to whether the bank was a holder in due course of the check; the bank was entitled to enforce the drawer and signer obligations imposed upon the seller because the bank was the "holder" of the check pursuant to § 11-3-414(b), and since the bank was the depository bank, and the amount of the check was deposited to the customer's account, the bank became the holder of the instrument when the bank received the check for collection. Consumer Solutions Fin. Servs. v. Heritage Bank, 300 Ga. App. 272, 684 S.E.2d 682 (2009).   Bank cannot supply missing third party endorsement.    - Although O.C.G.A. § 11-4-205 allowed the bank to supply the missing endorsement of its own depositor under certain circumstances, the bank could not ignore a defective endorsement and supply the missing endorsement of a third party to that party's detriment. Citizens & S. Nat'l Bank v. Sun Belt Elec. Constructors, Inc., 64 Bankr. 377 (Bankr. N.D. Ga. 1986).    Cited in First Nat'l Bank v. Barrett, 141 Ga. App. 161, 233 S.E.2d 24 (1977); Callahan v. C. & S. Bank, 150 Ga. App. 62, 256 S.E.2d 666 (1979).   RESEARCH REFERENCES   Am. Jur. 2d.   - 11 Am. Jur. 2d, Banks and Financial Institutions, § 978.   C.J.S.   - 9 C.J.S., Banks and Banking, § 408 et seq.   U.L.A.   - Uniform Commercial Code (U.L.A.) § 4-205.   ALR.    - Right of bank officer to take his own paper in payment of another's debt to bank, 28 A.L.R. 666.    Duty of bank to prior parties to the paper to apply deposit to credit of endorser on paper owned by bank, 37 A.L.R. 578.    Authority of bank officer or employee to bind bank by endorsement or guaranty of paper for accommodation of third person, 37 A.L.R. 1373.   Construction and application of UCC § 4-205(1) allowing depositary bank to supply customer's indorsement on item for collection, 29 A.L.R.4th 631.