Answer by John Burnett:For set-off there must be offsetting obligations. A must owe B and B must owe A. In your case, you have a deposit account which is a bank obligation to Corporate Signer, and an overdraft which is an obligation of Corporation to the bank. Those are not offsetting obligations. It is most unlikely that you have a guarantee of the corporate overdraft signed by Corporate Signer. You can't legally take the money.
Answer by Ken Golliher:I agree with John; what's missing here is "unity of title." For there to be any possibility that you might have a right of offset, the same person who owes you a debt must be the same person you owe money to; i.e. a person who has a deposit at your bank. Even if John owned 100% of the stock in the corporation, you could not take money out of his personal account to pay the corporation's overdraft because the corporation is a separate person from the owner. If your customer is only a signatory on the corporate account, not an owner, you don't even have a glimmer of a claim.
First published on BankersOnline.com 8/28/06