## Facts

- Justin Shelton maintained a checking account at National Bank of Commerce (NBC); W.J. “Sonny” Shelton also maintained an NBC account.
- In October 1999, Justin International (owned by Justin) issued two paychecks to Sonny totaling $747.50.
- The bookkeeper mistakenly deposited the checks into Justin’s account instead of Sonny’s.
- After the error was discovered, the bookkeeper asked NBC to transfer the funds from Justin’s account to Sonny’s account, and NBC performed the transfer.
- Due to a bank computer error, NBC repeatedly executed the same transfer each month, moving $747.50 from Justin’s account to Sonny’s account for years.
- The recurring transfers continued until Justin discovered them and notified NBC in April 2005.
- Justin sued NBC seeking recovery of the transferred amounts and related relief; Sonny admitted liability for any judgment awarded in Justin’s favor.

## Issues

1. Whether the recurring monthly transfers were governed by UCC Article 4A’s provision for unauthorized payment orders (§ 4A-204) or its provision for erroneous/duplicate execution of payment orders (§ 4A-205).
2. Whether contractual account terms could shift or limit NBC’s statutory responsibility for the erroneous duplicate transfers under Article 4A.
3. Whether recovery had to be reduced by a time bar, including Article 4A’s one-year statute of repose or Mississippi’s general three-year statute of limitations.
4. Whether the trial court correctly calculated interest on the recoverable amounts under Article 4A’s remedial scheme.

## Decision

- The court affirmed NBC’s liability for the repeated transfers but held the governing provision was UCC Article 4A § 4A-205 (erroneous/duplicate execution), not § 4A-204 (unauthorized orders).
- The court rejected NBC’s argument that account agreements eliminated or displaced its Article 4A responsibility for a bank-generated computer error causing duplicate transfers.
- The court reversed and remanded for further proceedings on (1) the proper interest award and (2) whether damages must be reduced under the applicable statute of limitations or Article 4A statute of repose.
- The court left the precise temporal scope of recoverable transfers and the correct interest computation to be determined on remand consistent with Article 4A.

## Legal Principles

- UCC Article 4A supplies the primary loss-allocation rules for disputes arising from electronic funds transfers and generally displaces inconsistent common-law theories for the covered conduct.
- When a bank repeats a transfer due to its own processing error after authority existed for only a single transfer, the error is treated as an erroneous or duplicated execution governed by UCC § 4A-205 rather than as an “unauthorized” order under § 4A-204.
- Contractual terms may vary some Article 4A provisions, but banks cannot use general account-agreement language to avoid statutory responsibility for bank-generated erroneous duplicate transfers.
- Courts must apply the relevant time bars to determine which transfers remain recoverable, including any Article 4A repose period and applicable state limitations periods.
- Interest on Article 4A recovery must be calculated in accordance with the statute’s remedial framework, including the effect of customer notice and the timing of any refund.

## Conclusion

The court held that NBC’s repeated, computer-generated monthly transfers were an erroneous duplicate execution governed by UCC Article 4A § 4A-205, affirmed liability on that basis, and remanded to determine the correct interest award and the extent to which time bars limit the recoverable transfers.


Nat'l Bank of Com. v. Shelton, 27 So. 3d 444 (Miss. Ct. App. 2009)