## Facts

- Jay Ritz carried out a fraud involving two separate $47,000 online transactions occurring at the same time.
- Ritz agreed to buy watches from Greis Jewelers, Inc. (Greis) for $47,000.
- Ritz also agreed to sell a car to Olympia Logistics & Services, Inc. (Olympia) for $47,000, even though Ritz did not own the car and did not intend to deliver anything to Olympia.
- Ritz obtained Greis’s wire-transfer information for Greis’s account at First Place Bank (First Place).
- Ritz instructed Olympia to wire $47,000 to Greis’s account at First Place and to identify the recipient as “Greis JEW, Inc.”
- Olympia directed its bank to send the wire transfer as Ritz instructed; First Place received the wire and credited the $47,000 to Greis’s account.
- After the funds were credited, Greis shipped the watches to Ritz.
- Olympia never received the car and claimed it was entitled to the $47,000.
- First Place filed a statutory interpleader action against Greis and Olympia because both asserted ownership of the $47,000.
- First Place settled with Greis, and thereafter First Place stood in Greis’s position in litigating entitlement to the $47,000 against Olympia.
- The parties filed cross-motions for summary judgment over who was entitled to the disputed funds and whether Olympia could recover from Greis (and, by substitution, First Place).

## Issues

1. Who is entitled to the $47,000 wired into Greis’s account at First Place: Olympia (the sender that was defrauded in the underlying deal) or Greis (the named beneficiary that shipped goods after receipt)?
2. When a sender authorizes and directs a wire transfer to a specific beneficiary and the beneficiary’s bank credits the beneficiary’s account, can the sender reclaim the funds from the beneficiary (or its successor) based on the fraud of a third party?
3. Do restitution-based theories (such as unjust enrichment or payment by mistake) allow Olympia to recover from Greis where Greis acted in good faith and delivered the watches in exchange for the payment?

## Decision

- The court granted First Place’s motion for summary judgment and denied Olympia’s cross-motion for summary judgment.
- The court determined that Greis (and therefore First Place, standing in Greis’s position after settlement) was entitled to the $47,000 that had been wired into and credited to Greis’s account.
- Because Olympia instructed that the wire be sent to Greis and the transfer was accepted and credited as directed, Olympia could not shift its loss from Ritz’s fraud to Greis or to First Place.
- The court rejected Olympia’s restitution-based recovery attempts because Greis was not a wrongdoer and Greis provided value by shipping the watches after receiving payment.

## Legal Principles

- Article 4A of the U.C.C. generally controls rights and duties arising from commercial wire transfers, including when payment becomes effective upon acceptance by the beneficiary’s bank.
- When a sender authorizes a wire transfer to a named beneficiary and the beneficiary’s bank accepts the payment order and credits the beneficiary’s account, the transfer is treated as completed as between sender and beneficiary under Article 4A’s allocation rules.
- Losses caused by a third party’s fraud in the underlying transaction ordinarily remain with the party that dealt with the fraudster, not with an innocent beneficiary or a bank that processed the wire according to the sender’s instructions.
- Restitution remedies such as unjust enrichment typically do not apply where the recipient took the funds in good faith and gave value in exchange (here, by shipping the watches after receiving the wire).
- In an interpleader, a stakeholder that resolves one claimant’s demand may litigate the remaining claimant’s entitlement to the disputed funds in the settling claimant’s stead, based on the rights acquired through settlement.

## Conclusion

The court held that the $47,000 belonged to Greis, and after First Place’s settlement with Greis, First Place was entitled to judgment against Olympia for the disputed funds. Olympia wired the money to Greis exactly as instructed, First Place credited Greis’s account, and Greis shipped the watches without notice of the fraud; as a result, Olympia’s remedy lay against the fraudster, not against the innocent beneficiary or the bank that executed the wire as directed.


First Place Bank v. Olympia Logistics & Services, Inc., 2013 WL 1122559 (2013)