## Facts

- Aleo International, Ltd., through its vice president, Vera Eyzerovich, instructed Citibank to send an electronic funds transfer for $284,563 to Dresdner Bank in Berlin for the account of Behzad Hermatjou.
- Citibank transmitted the payment order on October 13, 1992 at 5:27 p.m. New York time.
- Dresdner Bank credited Hermatjou’s account on October 14, 1992 at 9:59 a.m. Berlin time (3:59 a.m. New York time), net of bank charges.
- On October 14, 1992 at about 9:00 a.m. New York time, Eyzerovich instructed Citibank to stop the transfer.
- Citibank did not stop the transfer, and the funds remained credited to the beneficiary’s account.
- Aleo sued Citibank seeking recovery, characterizing the failure to stop payment as wrongful.

## Issues

1. Whether UCC Article 4-A provides the exclusive framework for claims arising from an electronic funds transfer, displacing inconsistent negligence theories.
2. Whether Aleo’s cancellation instruction was effective under UCC § 4-A-211(2) when the beneficiary’s bank had already accepted the payment order by crediting the beneficiary’s account.

## Decision

- The court granted Citibank’s motion for summary judgment and dismissed the action.
- The court held the transfer was governed exclusively by UCC Article 4-A, and Aleo could not proceed on an independent negligence theory inconsistent with that statute.
- The court held Aleo’s stop-payment communication was ineffective because Dresdner Bank accepted the payment order before Citibank received the cancellation request.
- Because acceptance occurred at 3:59 a.m. New York time and the stop request was not made until approximately 9:00 a.m., there was no triable issue of material fact on timing.

## Legal Principles

- UCC Article 4-A supplies the sole legal framework for rights, duties, and liabilities arising from electronic funds transfers; inconsistent common-law theories may not be used to alter that allocation.
- Under UCC § 4-A-211(2), a sender’s cancellation or amendment is effective only if received in time and manner giving the receiving bank a reasonable opportunity to act before acceptance.
- A beneficiary’s bank “accepts” a payment order, at the earliest, upon paying the beneficiary, notifying the beneficiary of credit, or crediting the beneficiary’s account; once acceptance occurs, cancellation is ineffective.

## Conclusion

The court held Citibank was not liable for failing to stop the transfer because, under UCC Article 4-A, the cancellation was too late: the beneficiary’s bank had already accepted the payment order by crediting the beneficiary’s account, and Article 4-A displaced any inconsistent negligence claim.


Aleo Int’l, Ltd. v. Citibank, N.A., 160 Misc. 2d 950, 612 N.Y.S.2d 540 (Sup. Ct. N.Y. Cnty. 1994)