Opinion ID: 1091092
Heading Depth: 1
Heading Rank: 4

Heading: The Applicability of Article 4A

Text: The Fittses first argue that AmSouth's transfer of the $85,000 is not within the scope of Article 4A of the Alabama Commercial Code. We disagree. Article 4A governs funds transfers. A funds transfer is defined as the series of transactions, beginning with the originator's payment order, made for the purpose of making payment to the beneficiary of the order. § 7-4A-104(a), Ala.Code 1975. A payment order is defined as an instruction of a sender to a receiving bank, transmitted orally, electronically, or in writing, to pay, or to cause another bank to pay, a fixed or determinable amount of money to a beneficiary under certain circumstances. § 7-4A-103(a)(1), Ala.Code 1975. The sender is the person giving the instruction to the receiving bank. § 7-4A-103(a)(5), Ala.Code 1975. The receiving bank is the bank to which the sender's instruction is addressed. § 7-4A-103(a)(4), Ala.Code 1975. Article 4A also refers to a sender as an originator. See § 7-4A-104(c), Ala.Code 1975. The beneficiary is the person to be paid by the beneficiary's bank. § 7-4A-103(a)(2), Ala.Code 1975. The beneficiary's bank is the bank identified in a payment order in which an account of the beneficiary is to be credited.... § 7-4A-103(a)(3), Ala.Code 1975. As the trial court correctly noted, the originator and the beneficiary may be the same person or the same entity. In some cases, the Originator and the Beneficiary may be the same person. This will occur, for example, when a corporation orders a bank to transfer funds from an account of the corporation in that bank to another account of the corporation in that bank or in some other bank. Official Comment to § 7-4A-104, Ala.Code 1975. As discussed in the Official Comment, a receiving bank may also serve as the beneficiary's bank. In this case, George requested that AmSouth transfer funds, through the banking system, from one EFL account to another EFL account. George was the sender and the originator in the transaction; AmSouth was the receiving bank. AmSouth was also the beneficiary's bank. EFL, Inc., the owner of the third account, was the beneficiary of the payment order. When AmSouth issued the payment order, it debited the first account in the amount of $85,000 and credited the third account in that same amount. By debiting the first account in the amount of the withdrawal, AmSouth gave notice to the first account, and to the Fittses, of the $85,000 withdrawal. This overall transaction is referred to as a funds transfer, and it is governed by Article 4A. See Official Comment to § 7-4A-104, Ala.Code 1975. Thus, we disagree with the Fittses; Article 4A governs this transaction.