Banks & Banking – Civil Practice – Pleadings Amendment – Wire Transfer – Misidentified Transferee

Song Chuan Technology (Fujian) Co. v. Bank of America, NA (Lawyers Weekly No. 002-133-17, 10 pp.) (Richard Mark Gergel, J.) 2:16-cv-03269; D.S.C.

Holding: If the defendant-bank knew that the name and account number of the transferee on plaintiff’s wire transfer did not match, then it must return the transmitted funds if the account holder was not entitled to receive payment from plaintiff. Accordingly, the court’s order dismissing plaintiff’s original complaint does not preclude plaintiff from filing a future claim that the bank knew that the name and account number of the wire transfer identified different persons or that the bank did not know this but paid the person identified by name rather than by account number.

Plaintiff’s motion for reconsideration is granted as to two potential future claims.

As to the second claim, in the event of cancellation of a payment order, S.C. Code Ann. § 36-4A-211 entitles the bank “to recover from the beneficiary any amount paid to the beneficiary to the extent allowed by the law governing mistake and restitution.” Although the statute provides no cause of action to the party sending funds, if the bank kept transferred funds despite a legally effective cancellation of the transfer, it might be liable for those funds.

Nevertheless, plaintiff’s proposed amended complaint does not allege that its payment order was cancelled before it was accepted. Nor does it allege that a funds-transfer system rule allowed cancellation without the bank’s agreement.

Liberally construing the proposed complaint, the only plausible reading is someone with the bank said the bank would agree to cancel the transfer but the bank did not honor that and did not agree to the cancellation. Plaintiff has not explained or proposed a complaint alleging any facts suggesting how the bank deciding not to accept a request to cancel under § 211 an already-accepted wire transfer after someone at the bank initially indicated that the request would be accepted would entitle plaintiff to relief.

However, the court will amend its previous order to provide that the constructive trust claim against the bank is dismissed without prejudice to plaintiff’s ability to file a complaint asserting a constructive trust claim against the bank alleging failure to return funds transferred from plaintiff to one of the bank’s account holders under a transfer order effectively cancelled under § 211.

Motion granted in part.