This matter was heard by the court on September 5, 1995, on the motion of the defendant debtor, Southern Illinois Mining Company, to dismiss the complaint.

The complaint of the plaintiff, Community Bank of Lexington, Inc., is grounded on title 11 U.S.C. § 541(c)(2) and (d), neither of which subsections appear to be applicable because the funds which are the subject of the complaint no longer exist.

The complaint alleges, and it is admitted by the defendant debtor, that on January 23, 1992, at the request of the debtor, Community Bank transferred by wire transfer the sum of $32,054.05 from the debtor's account at Community Bank to the debtor's account at First National Bank & Trust Company of Georgetown, Kentucky. It is further alleged and admitted that on or about January 29, 1992, Community Bank transferred by wire transfer an identical sum to the debtor's account at First National Bank & Trust Company of Georgetown. It is undisputed that the second wire transfer was an erroneous duplication of the first wire transfer. Presumably Community Bank did not deduct the amount of the second wire transfer from the debtor's account at the bank and consequently suffered a loss in that amount.

Southern Illinois Mining Company filed a petition for relief under chapter 11 of the Bankruptcy Code in this court on February 1, 1993. Insofar as can be determined from examination of the schedules and statement of financial affairs of the debtor thereafter filed, there were no funds in the debtor's bank account at the First National Bank of Georgetown when bankruptcy intervened.

Wire transfers are governed by Federal Reserve Regulation J (12 C.F.R. § 210.25-32), a federal law governing fund transfers through the Fed Wire System. Regulation J adopts Article 4A of the Uniform Commercial Code for purposes of determining the rights of users of Fed Wire.

Section 4A-205 of the Uniform Commercial Code as incorporated by reference and made a part of federal law by Regulation J provides that if the sender (Southern Illinois Mining Company) complied with the security procedures established by the agreement between it and the receiving bank (Community Bank) and the error would have been detected if the receiving bank (Community Bank) had also complied, then the sender (Southern Illinois Mining) is not obligated to pay and the receiving bank (Community Bank) is entitled to recover from the beneficiary (Southern Illinois Mining) to the extent allowed by the law governing mistake and restitution.

Thus, it is obvious that Community Bank has a claim against Southern Illinois Mining Company for the amount of the erroneous payment based on mistake and restitution. This is merely a general claim for the amount of the erroneous payment. Other theories of recovery, as for example the creation of a constructive trust as herein attempted, appear to be inconsistent with and therefore superseded by the provisions of Regulation J.

In any event, the court agrees with the contention of the defendant debtor in possession that the plaintiff Community Bank is not entitled to preferential treatment in the distribution of the bankruptcy estate. The argument that the funds in the estate are impressed with a constructive trust for payment of the bank's claim ahead of the claims of other unsecured creditors is unavailing. In re Omegas Group, Inc., 16 F.3rd 1443 (6th Cir. 1994).

Accordingly, the complaint in this adversary proceeding shall be dismissed.

The claim of Community Bank of Lexington, Inc. shall be allowed as an unsecured claim in the amount of $32,054.05 for the purpose of computing the dividend payable thereon in the distribution of the assets of the debtor's estate.

Dated:

By the court -

________________________________

JOE LEE, CHIEF JUDGE

Copies to:

W. Thomas Bunch, Esq.

Susan J. Hoffman, Esq.

Glen A. Hoskins, Esq.

United States Trustee

In conformity with the memorandum of the court this day entered, IT IS ORDERED the complaint in this adversary proceeding be and the same is hereby DISMISSED.

The claim of Community Bank of Lexington, Inc. shall be allowed as an unsecured claim in the amount of $32,054.05 for the purpose of computing the dividend payable thereon in the distribution of assets of the debtor's estate.

By the court -

_____________________________

JOE LEE, CHIEF JUDGE

Copies to:

W. Thomas Bunch, Esq.

Susan J. Hoffman, Esq.

Glen A. Hoskins, Esq.

United States Trustee