Georgia Bank & Trust Co. v. Hadarits
| Decision Date | 14 June 1965 |
| Docket Number | No. 22930,22930 |
| Citation | 221 Ga. 125,143 S.E.2d 627 |
| Court | Georgia Supreme Court |
| Parties | , 2 UCC Rep.Serv. 992 GEORGIA BANK & TRUST COMPANY v. Louisa D. HADARITS et al. |
Syllabus by the Court
Where a note given by a depositing borrower assigns all assets of the borrower to the bank to secure the same, the bank was authorized to refuse payment of a check thereafter drawn upon it by the borrower where after taking the funds on deposit to apply to its note there remained no funds to pay the check. This rule is unaltered by the fact that upon presentation of the check payment was refused for insufficient funds, and at the request of the payee the bank held the check to be paid when available funds were sufficient to pay it, and during this time funds were deposited sufficient to pay the check but the bank then applied them to its note in accord with its terms.
The writ of certiorari was issued to the Court of Appeals in Georgia Bank & Trust Co. v. Hadarits, 111 Ga.App. 195, 141 S.E.2d 172, which held that a bank, although it had the right to apply a depositor's account to the payment of a note under an assignment of the account to the bank as collateral security, and had paid checks drawn by the depositor which it was not obligated to pay, thus treated the account as the depositor's property and waived its right to apply the funds in the account at that time on its note. The case was before that court on a review of a summary judgement in favor of holders of a check on the account in a suit for damages against the bank, the holders having placed the check in the defendant's hands for collection on the theory that the bank thus became their agent and could not violate its duty to exercise reasonable diligence in collecting the check. The applicant likewise insists that the opinion and judgment of the Court of Appeals is not in accord with a decision of this court in Macon National Bank v. Smith, 170 Ga. 332, 153 S.E. 4, unequivocally holding that such an assignment by a debtor transferred the interest of the debtor in his account as of the date of the execution of the assignment and was effective as to each subsequent deposit by the debtor as to same was made. There are other assignments of error but the above resume is sufficient to state the case as considered by this court in the following opinion.
Martin, Snow, Grant & Napier, Cubbedge Snow, Macon, for plaintiff in error.
George E. Saliba, Macon, for defendants in error.
Aside from the various theories of the defendant in certiorari as to what constitutes a special deposit (Mayer & Lowenstein v. Chattahoochee Nat. Bank, 51 Ga. 325; Schofield Mfg. Co. v. Cochran, 119 Ga. 901, 47 S.E. 208; McGregor v. Battle, 128 Ga. 577, 58 S.E. 28, 13 L.R.A.,N.S., 185; Southern Exchange Bank v. Pope, 152 Ga. 162, 108 S.E. 551; Williams v. Bennett, 158 Ga. 488, 123 S.E. 683, and the duty of an agent to his principal, superior to his individual interests (Planters Bank of Americus v. Albert Pick & Co., 38 Ga.App. 95, 143 S.E. 441; First National Bank of Dalton v. Southern Cotton Oil Co., 76 Ga.App. 779, 47 S.E.2d 288; Sessions v. Payne & Tye, 113 Ga. 955, 39 S.E. 325), we hold that a sound decision in this case requires full recognition of the provision in the note given by Jackson to the bank as follows: 'The payee or holder hereof is hereby given a lien for this note and all other indebtedness of the undersigned * * * to such payee or holder hereof upon all property left with said payee and not herein assigned and conveyed to the holder whether now or heretofore or hereafter deposited, and upon any drafts, notes or other items deposited for collection by the undersigned * * * and all such accounts are hereby assigned to the bank as security for the payment of this note.'
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...superior to the government lien. Principal reliance is placed on Macon National Bank v. Smith, supra, and Georgia Bank & Trust Co. v. Hadarits, 221 Ga. 125, 143 S.E.2d 627 (1965). In No. 3571 the chief argument of the bank is that where there are mutual debts between parties the claim of a ......
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