## Facts

- Trustmark Insurance Company maintained two deposit accounts at Bank One and had a wire-transfer agreement with the bank.
- Trustmark sent Bank One a written letter directing it to (1) retain a daily balance of $10,000 and (2) automatically transfer funds to Trustmark’s account at another bank whenever the Bank One account balance reached $110,000 or more.
- After Bank One automated its wire-transfer operations, the automatic transfers stopped for an extended period.
- The Bank One account balance accumulated to roughly $19.2 million before the problem was discovered.
- After Bank One notified Trustmark of the large balance, Trustmark directed a transfer of the excess funds and closure of the account; Bank One transferred all but $10,000.
- Trustmark claimed it lost more than $500,000 in interest because the funds were not timely transferred to the other bank.
- Trustmark sued Bank One asserting, among other theories, a claim under U.C.C. Article 4A governing funds transfers; a jury found for Trustmark on the Article 4A claim.

## Issues

1. Whether Trustmark’s letter directing minimum-balance maintenance and automatic “sweep” transfers upon reaching a specified balance constituted a “payment order” under U.C.C. Article 4A.
2. Whether an instruction that conditions transfers on account-balance thresholds and minimum retained balances is excluded from Article 4A because it imposes conditions on payment other than the time of payment.

## Decision

- The Arizona Court of Appeals reversed the jury verdict for Trustmark on the Article 4A claim.
- The court held the letter was not a “payment order” under Article 4A because it imposed conditions on payment beyond the time of payment.
- Because Article 4A did not apply, Trustmark could not recover under Article 4A based on the bank’s failure to perform the requested automatic transfers.

## Legal Principles

- An instruction to a receiving bank is not a “payment order” under U.C.C. Article 4A if it states a condition to payment to the beneficiary other than the time of payment.
- Conditions requiring a bank to monitor account balances and determine whether multiple balance-related triggers are satisfied are substantive conditions, not merely timing conditions, and therefore fall outside Article 4A’s definition of a payment order.
- The parties’ past practice of handling similar instructions does not alter the statutory definition or expand Article 4A’s scope to cover non-qualifying instructions.

## Conclusion

The court concluded that a standing “sweep” instruction requiring ongoing account monitoring and minimum-balance maintenance is not an Article 4A payment order, so Article 4A’s remedies and risk-allocation rules do not govern claims based on the bank’s failure to execute such instructions.


Trustmark Ins. Co. v. Bank One, Ariz., N.A., 202 Ariz. 535, 48 P.3d 485 (Ct. App. 2002)