§ 25-4A-207. Misdescription of beneficiary. - North Carolina Statutes

§25‑4A‑207.  Misdescription of beneficiary.

(a)        Subject tosubsection (b), if, in a payment order received by the beneficiary's bank, thename, bank account number, or other identification of the beneficiary refers toa nonexistent or unidentifiable person or account, no person has rights as abeneficiary of the order and acceptance of the order cannot occur.

(b)        If a payment orderreceived by the beneficiary's bank identifies the beneficiary both by name andby an identifying or bank account number and the name and number identifydifferent persons, the following rules apply:

(1)        Except as otherwiseprovided in subsection (c), if the beneficiary's bank does not know that thename and number refer to different persons, it may rely on the number as theproper identification of the beneficiary of the order.  The beneficiary's bankneed not determine whether the name and number refer to the same person.

(2)        If the beneficiary'sbank pays the person identified by name or knows that the name and numberidentify different persons, no person has rights as beneficiary except theperson paid by the beneficiary's bank if that person was entitled to receivepayment from the originator of the funds transfer.  If no person has rights asbeneficiary, acceptance of the order cannot occur.

(c)        If (i) a paymentorder described in subsection (b) is accepted, (ii) the originator's paymentorder described the beneficiary inconsistently by name and number, and (iii)the beneficiary's bank pays the person identified by number as permitted bysubsection (b)(1), the following rules apply:

(1)        If the originator isa bank, the originator is obliged to pay its order.

(2)        If the originator isnot a bank and proves that the person identified by number was not entitled toreceive payment from the originator, the originator is not obliged to pay itsorder unless the originator's bank proves that the originator, beforeacceptance of the originator's order, had notice that payment of a paymentorder issued by the originator might be made by the beneficiary's bank on thebasis of an identifying or bank account number even if it identifies a persondifferent from the named beneficiary.  Proof of notice may be made by anyadmissible evidence.  The originator's bank satisfies the burden of proof if itproves that the originator, before the payment order was accepted, signed awriting stating the information to which the notice relates.

(d)        In a case governedby subsection (b)(1), if the beneficiary's bank rightfully pays the personidentified by number and that person was not entitled to receive payment fromthe originator, the amount paid may be recovered from that person to the extentallowed by the law governing mistake and restitution as follows:

(1)        If the originator isobliged to pay its payment order as stated in subsection (c), the originatorhas the right to recover.

(2)        If the originator isnot a bank and is not obliged to pay its payment order, the originator's bankhas the right to recover. (1993, c. 157, s. 1.)