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Banque Worms v. BankAmerica International

New York Court of Appeals
570 N.E.2d 189 (1991)


Facts

Spedley Securities (Spedley) maintained a bank account with Security Pacific International Bank (Security) (plaintiff). Spedley instructed Security to wire $1,974,267.97 to the account of Banque Worms (defendant) at BankAmerica International (BankAmerica) (defendant). Within a few hours and prior to the funds being electronically transferred, Spedley instructed Security to stop payment on the transfer to Banque Worms and to wire the same amount to National Westminster Bank USA. Security mistakenly honored the first request and transferred the funds to Banque Worms. Security also honored the second request and wired the same amount to National Westminster Bank USA. Spedley’s account was debited for both wires, but the account did not have sufficient funds to cover the second wire. Spedley was forced into an involuntary liquidation, and Security sued BankAmerica and Banque Worms to recover the $1,974,267.97 that was mistakenly paid. BankAmerica settled, and the case proceeded against Banque Worms. The trial court ruled for Banque Worms, and Security appealed to the United States Court of Appeals for the Second Circuit. The Second Circuit certified a question to the New York Court of Appeals, inquiring whether New York law recognized the discharge for value rule.

Rule of Law

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Issue

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Holding and Reasoning (Alexander, J.)

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  • A “yes” or “no” answer to the question framed in the issue section;
  • A summary of the majority or plurality opinion, using the CREAC method; and
  • The procedural disposition (e.g. reversed and remanded, affirmed, etc.).

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