Farr v. Trust Company Bank of Savannah, N. A.

Blackburn, Judge. Nancy Farr brought the underlying defamation action against Bud’s Wholesale1 and Trust Company Bank of Savannah, N. A. (Trust Company) to recover damages allegedly sustained upon being wrongfully prosecuted on a check which had been honored by her bank, Wachovia Bank. By her complaint, Farr alleged, among other things, that Trust Company negligently discharged its duties as the “collecting bank” in presenting her check for payment to Wachovia. Trust Company answered denying any negligence, but moved for partial summary judgment limiting damages to those authorized a collecting bank pursuant to OCGA § 11-4-103 (5). On appeal, Farr contends that the trial court’s grant of partial summary judgment for Trust Company was error in that she was a non-party to the Uniform Commercial Code (UCC) transaction involved. “The measure of damages for failure to exercise ordinary care in handling an item is the amount of the item reduced by an amount which could not have been realized by the use of ordinary care, and where there is bad faith it includes other damages, if any, suffered by the party as a proximate consequence.”2 OCGA § 11-4-103 (5). Farr argues that the foregoing limitation on damages is inapplicable because she did not participate in a UCC transaction within the meaning of OCGA § 11-1-201 (29). OCGA § 11-1-201 (29) defines the word “party” as a “person who has engaged in a transaction or made an agreement within this title.” It is uncontroverted Farr drew the check in question on her bank and made it payable to Bud’s Wholesale in the amount of $79.50. Bud’s Wholesale, in turn, deposited the same in its Trust Company account for collection. Farr does not dispute that her check was a negotiable instrument. Having used a negotiable instrument she may be deemed to have done so in contemplation of its presentment for payment upon the action of a collecting bank. Under these circumstances, Farr’s assertion that she has not engaged in a transaction governed by the UCC is without merit. See OCGA § 11-3-104 (2) (b) (a check is a writing constituting a negotfable instrument “if it is a draft drawn on [424] a bank and payable on demand”). See also OCGA § 11-4-101 et seq. (UCC rules for the governance of bank deposits and collections). The UCC is clear. As a collecting bank, Trust Company “[is] required to exercise ordinary care under O.C.G.A. § 11-4-202 and thus has the right to invoke the damage limitation of O.C.G.A. § 11-4-103 (5).” Alimenta (U.S.A.), Inc. v. Stauffer, 568 FSupp. 674, 678 (N.D. Ga. 1983). Accordingly, we deem this enumeration of error to be without merit. Judgment affirmed. Andrews, J., concurs. McMurray, P. J., concurs specially. Footnotes [1] Bud’s Wholesale is not involved in this appeal. [2] The court interpreted an identical statute in Marcoux v. Van Wyk, 572 F2d 651 (8th Cir. 1978). There the court explained that “[w]hen a bank handles an item carelessly, it is liable for the damages caused by its negligence in the amount of the item reduced by the amount that could not have been collected in any event. [Cit.] In other words, the plaintiffs’ measure of damages is the amount they could have collected had the Bank returned the unpaid drafts seasonably; conversely, if the amounts due were uncollectible in any event, the Bank’s negligence caused no damage.” (Emphasis supplied.) Id. at 653.