Opinion
43687.
ARGUED JUNE 4, 1968.
DECIDED SEPTEMBER 4, 1968.
Action on check. Cobb Civil and Criminal Court. Before Judge Ravan.
D. W. Rolader, for appellant.
Edward H. Robertson, for appellee.
Where the plaintiff, as payor bank, made final payment of a check drawn on a fictitious account, instead of returning the check or giving notice of dishonor within the time prescribed by the Uniform Commercial Code, it was not entitled to recover from an indorser of the check the amount of the erroneous payment.
ARGUED JUNE 4, 1968 — DECIDED SEPTEMBER 4, 1968.
The plaintiff bank brought this suit against the indorser of a check drawn on a fictitious account to recover the amount of the item after final payment was erroneously made by the bank. The trial court rendered judgment for the bank based on the following stipulated facts:
"On January 30, 1967, defendant received in payment of an automobile repair bill a check drawn on The Trust Company of Georgia, payable to Ed Samples Transmission Service in the amount of $170.75 and signed by Carolyn D. Jordan (middle initial uncertain). This check was indorsed by defendant, presented by him to the Citizens Southern National Bank and paid by said bank to defendant on February 1, 1967. The check was transmitted by the Citizens Southern National Bank in normal course to Trust Company of Georgia and paid by Trust Company of Georgia on February 2, 1967.
"Trust Company of Georgia inadvertently debited said check to the account of one of its employees, Carolyn Jordan. On or about February 16, 1967, the employee, Carolyn Jordan, having received her bank statement including said check, notified Trust Company of Georgia that the check was not hers. Thereupon, Trust Company of Georgia credited the amount of said check to the account of its employee, Carolyn Jordan, and returned the check to the Citizens Southern National Bank for the reason that Trust Company of Georgia had no such account as `Carolyn D. Jordan.' The Citizens Southern National Bank returned the check to Trust Company of Georgia for the reason that Trust Company of Georgia had not dishonored the check within the time required by law."
"Unless excused . . . notice of any dishonor is necessary to charge any indorser." Code Ann. § 109A-3-501 (2). "Any necessary notice must be given by a bank before its midnight deadline." Code Ann. § 109A-3-508 (2). That is, "midnight on its next banking day following the banking day on which it receives the relevant item." Code Ann. § 109A-4-104 (h). "Where without excuse any necessary presentment or notice of dishonor is delayed beyond the time when it is due . . . any indorser is discharged." Code Ann. § 109A-3-502 (1). "Delay by a . . . payor bank beyond time limits prescribed or permitted by this Act or by instructions is excused if caused by interruption of communication facilities, suspension of payments by another bank, war, emergency conditions or other circumstances beyond the control of the bank provided it exercises such diligence as the circumstances require." Code Ann. § 109A-4-108. The plaintiff bank's failure to give notice of dishonor within the prescribed time was not due to "circumstances beyond the control of the bank" and was not excused by any provision of the Code, but was due to the bank's error in mistaking the signature on a check drawn on a fictitious account for the signature of one of its customers with a similar name. A bank is bound to know the signatures of its depositors. Federal Deposit Ins. Corp. v. Thompson, 54 Ga. App. 611, 615 ( 188 S.E. 737); White v. Georgia R. Bank c. Co., 71 Ga. App. 78, 81 ( 30 S.E.2d 118). Code Ann. § 109A-4-302 also demands a reversal. That section provides: "In the absence of a valid defense such as breach of a presentment warranty . . . settlement effected or the like, if an item is presented on and received by a payor bank the bank is accountable for the amount of . . . a demand item other than a documentary draft whether properly payable or not if the bank . . . does not pay or return the item or send notice of dishonor until after its midnight deadline."
The trial court erred in rendering judgment for the plaintiff bank.
Judgment reversed. Hall and Quillian, JJ., concur.