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Prosecuting Bad Checks Presented After Opening Account

By: James C. Busch

On July 1, 1989, the Georgia Legislature updated the laws governing the offense of criminal issuance of bad checks (O.C.G.A. 16-9-20), to include two limited situations in which a supplier could prosecute a customer issuing a bad check after opening an account. To better understand the appropriate use of this provision of law one should first acquire a general understanding of the statute as a whole.

O.C.G.A. 16-9-20 states in part, “A person commits the offense of criminal issuance of a bad check when he makes, draws, utters, or delivers a check, draft, or order for the payment of money on any bank or other depository in exchange for a present consideration or wages, knowing that it will not be honored by the drawee”. Accordingly, a customer would have to write a check in exchange for present consideration “knowing” the check will be dishonored in order to commit the criminal offense of issuance of a bad check.

Broken down into its component parts the above statute first requires the customer to “make, draw, utter, or deliver a check, draft, or order” in exchange for present consideration or wages. Present consideration is the key requirement to prosecuting account customers under this statute. In 1989 the Georgia Legislature broadened the definition of “present consideration” to include without limitation the following: A simultaneous agreement for the extension of additional credit where additional credit is being denied; and a written waiver of mechanic’s or materialmen’s lien rights. By broadening the definition of “present consideration” the Legislature provided suppliers with the ability to prosecute bad checks on account in limited situations. Thus, if a customer brings his/her delinquent account (which was previously closed) up to date or makes additional purchases by payment of a check in exchange for the extension of additional credit which would otherwise have been denied, then the customer may be prosecuted if the check is subsequently dishonored. The key words to the first part of this statute are “simultaneous agreement” and “where additional credit is being denied.”

It is critical that the entire transaction take place at the same time and that the customers account was closed prior to the request for addition credit. A prudent supplier would therefore provide the customer with written notice of the terminated condition of the customers account before agreeing to extend additional credit. In addition, the supplier must satisfy the “simultaneous agreement” provision to be able to prosecute.

This provision can best be satisfied if the customer is required to come in to the supplier’s office to receive Notice of the terminated condition of their account whereupon they make a request for additional credit, in exchange for which the supplier is provided with a check (all in one transaction). If a supplier attempts to meet the “simultaneous agreement” requirement via the mail then he/she is taking a chance that a Court may find that this method fails to satisfy the Code requirement. Also a customer’s written waiver of mechanic’s or materialmen’s lien rights is considered “present consideration” and may be prosecuted.

The final requirement to successfully prosecute a bad check under O.C.G.A. 16-9-20 is the showing that the customer presented the check with the knowledge that the check would be dishonored by the bank or other financial institution. It is prima facie evidence (self proving) that the customer knew the check would be dishonored upon a showing of the following: (1) that the accused had no account with the bank or other financial institution at the time the check was made, drawn, uttered, or delivered; (2) payment was refused by the bank or other financial institution for lack of funds upon presentation within 30 days after delivery and the accused or someone for him shall not have tendered the holder thereof the amount due thereon, together with a service charge, within ten days after receiving written notice that payment was refused upon such instrument; (3) notice mailed by certified or registered mail is returned undelivered to the supplier when such notice was mailed within 90 days of dishonor to the customer at the address printed on the instrument or given by the accused at the time of issuance of the check.

A supplier may satisfy the notice requirement of O.C.G.A. 16-9-20 by sending within ten days of dishonor by certified mail or registered mail using as evidence the return receipt which was sent to the customer at the address printed on the check or given at the time of issuance. The latter notice shall be deemed sufficient and equivalent to notice having been received as of the date on the returned receipt by the customer making, drawing, uttering, or delivering the instrument. The notice document should take substantially the following form: “You are hereby notified that the following check(s) or instrument(s)

Check No. Check Date Check Amount Bank

________ _________ ____________ ______

_________ _________ ____________ ______

_________ _________ ____________ ______

drawn upon ____________ and payable to ________________, (has) (have) been dishonored. Pursuant to Georgia law, you have ten days from receipt of this notice to tender payment of the total amount of the check(s) or instrument(s) plus the applicable service charge(s) of $________, the total amount due being ____________ dollars and ________ cents. Unless this amount is paid in full within the specified time above, a presumption in law arises that you delivered the item(s) with the intent to defraud and the dishonored check(s) or instrument(s) and all other available information relating to this incident may be submitted to the magistrate for the issuance of a criminal warrant or citation or to the district attorney or solicitor for criminal prosecution.”

In summary, while most suppliers feel they can not prosecute bad checks once a credit account has been established O.C.G.A. 16-9-20 provides two limited circumstances in which a supplier may prosecute a customer presenting such a bad check. Please keep in mind the above requisites in order to successfully prosecute. The failure to satisfy each requirement may result in the dismissal of your case.

Mr. Busch is an attorney specializing in commercial and construction litigation for Busch, Reed, Jones & Leeper, P.C. in Marietta, Georgia

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