Court Opinion

ID: 9854320
Source: CourtListenerOpinion
Date Created: 2023-09-24 06:05:10.558958+00
Date Added: 2024-06-11T09:23:01.198512
License: Public Domain

BARNES, Chief Judge,
dissenting.
Because I believe that the trial court erred in finding that the contractual period in OCGA § 11-4-406 (f) could be shortened without regard to either party’s care or lack of care, I must respectfully dissent.
Article 4 of the Uniform Commercial Code, Bank Deposits and Collections, requires that the customer “exercise reasonable promptness” to discover forgeries and notify the bank, OCGA § 11-4-406 (c), and then, in certain circumstances, the bank will not be liable for forgeries if the customer did not fulfill these duties. OCGA § 11-4-406 (d). The loss is allocated between the customer and the bank, however, if both parties failed to exercise reasonable care. OCGA § 11-4-406 (e). Regardless of which party failed to exercise care, the bank is not liable for any forgeries the customer does not report to the bank within 60 days of being sent a statement upon which those forgeries *722are reflected. OCGA§ 11-4-406 (í).1Karrer v. Ga. State Bank &c., 215 Ga. App. 654, 659 (2) (452 SE2d 120) (1994).
Under OCGA § 11-4-103 (a), a bank and its customer may vary the provisions of Article 4 by contract, but
the parties to the agreement cannot disclaim a bank’s responsibility for its lack of good faith or failure to exercise ordinary care or limit the measure of damages for the lack or failure. However, the parties may determine by agreement the standards by which the bank’s responsibility is to be measured if those standards are not manifestly unreasonable.
Id.
The majority holds that this court has previously held that shortened notice provisions are legally enforceable, regardless of the duty of care. In Spacemakers of America v. SunTrust Bank, 271 Ga. App. 335 (609 SE2d 683) (2005), the trial court granted summary judgment to the bank, finding no evidence that the bank failed to exercise ordinary care in the payment of the checks. We affirmed because Spacemakers did not rebut the bank’s evidence showing it exercised ordinary care. Id. at 340 (2). In dicta, we also held that summary judgment could also be affirmed on the basis of the bank’s commercial account terms, which required notification of account discrepancies within 30 days of the statement date. Id. at 342 (3). Spacemakers did not, however, address the question at issue in this case, which is whether the bank’s 30-day notice provision was an absolute bar to recovery, notwithstanding any lack of care on the bank’s part.
The majority also argues that OCGA § 11-4-406 (f) does not apply in this case because the contract controls. This logic, however, ignores the clear legislative intent of the statute.
The Official Comment to UCC § 4-406 explains the policy surrounding its adoption: “The absolute time limit on the discovery of forged indorsements should be ample, because in the great preponderance of cases the customer will learn of the forged indorsements within this time and if in any *723exceptional case he does not, the balance in favor of a mechanical termination of the liability of the bank outweighs what few residuary risks the customer may still have.... Section 4-406 evidence[s] a public policy in favor of imposing on customers the duty of prompt examination of their bank statements and the notification of banks of forgeries and alterations and in favor of reasonable time limitations on the responsibility of banks for payment of forged or altered items.
(Punctuation omitted; emphasis supplied.) Trust Co. Bank v. Atlanta IBM Employees Fed. Credit Union, 245 Ga. 262, 263-264 (264 SE2d 202) (1980). “The theory behind [OCGA§ 11-4-406] is notunakinto a statute of limitation.” (Citations and punctuation omitted.) Decatur Fed. S & L Assn. v. Litsky, 207 Ga. App. 752, 753 (1) (429 SE2d 300) (1993). However, “[a]s a matter of law, a bank cannot insulate itself from liability if its customer establishes lack of ordinary care on the part of the bank in paying the items.” Summit Transp. Svcs. v. NationsBank, 232 Ga. App. 8, 10 (2) (500 SE2d 911) (1998).
The 60-day notice in OCGA § 11-4-406 is a statutorily set standard by which any deviation in the bank’s responsibility must be measured. OCGA § 11-4-103 (a) allows a departure from the notice provision of Article 4, but not to “disclaim a bank’s responsibility for its lack of good faith or failure to exercise ordinary care.” Contrary to the majority’s contention, a shortened notice period without regard for the bank’s exercise of ordinary care is manifestly unreasonable.
In Security State Bank v. Visiting Nurses Assn. &c., 256 Ga. App. 374, 376-377 (3) (568 SE2d 491) (2002), we noted a similar provision in the bank’s contract which provided for a 14-day time limit to assert an altered or unauthorized signature, but also provided that the bank loses this protection if it did not exercise ordinary care unless it received no notification within the statutory period of 60 days. In this appeal, however, the bank has not only shortened the period, but also eliminated the requirement that it act in good faith and exercise ordinary care.
Given the clear purpose of OCGA§ 11-4-103 (a), which allows the bank and customer to contractually vary the terms of Article 4, but cognizant that Article 4 requires both the bank and the customer to exercise reasonable care, Regions’ Customer Agreement shortening the notice provision to 30 days is enforceable under our laws; however, any period shorter than the statutory 60-day period would require that the bank show that it exercised ordinary or reasonable care. Accordingly, I would reverse the grant of summary judgment to Regions Bank.
I am authorized to state that Judge Miller joins in this dissent.
*724Decided March 30, 2007
Cook, Youngelson & Wiggins, Cary S. Wiggins, Drago Cegar, Jr., for appellants.
Parker, Hudson, Rainer & Dobbs, William J. Holley II, Cinnamon V. Davis, for appellee.

 OCGA § 11-4-406 (f) provides that,
[w]ithout regard to care or lack of care of either the customer or the bank, a customer who does not within 60 days after the statement or items are made available to the customer . . . discover and report the customer’s unauthorized signature on or any alteration on the face of the item or who does not within one year from that time discover and report any unauthorized indorsement or alteration on the back of the item is precluded from asserting against the bank the unauthorized signature, indorsement, or alteration.