Q: Right to Set Off exercised by my bank.
My wife has a repossession through our Credit Union, but I was not on the loan and she is not on my checking account. I went to deposit a check from the State of FLA issued for our foster child as I have done for over a year and today after handing me a deposit slip showing the funds in my account they removed the funds from my account. Their reasoning is that the check was made payable to my wife, but she signed it on the back and then I signed it taking possession of the check. They stated that they were in their right to exercise Set Off. Is this correct? I was never apart of the loan and she is not on my account and the money was show as deposited into my account.
A: A check is the most common form of negotiable instrument. You were not a holder in due course, because you were aware of the bank's claim against your wife. Therefor the bank was entitled to assert it's setoff claim against the payee of the check (your wife) as a superior claim to that of you as a holder.
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