Opinion ID: 1140596
Heading Depth: 1
Heading Rank: 4

Heading: Seizure and Set Off

Text: In Alabama, a bank has the right of set-off to a customer's account when the bank and the customer are in a debtor-creditor relationship and there is mutuality of demands. First City Nat'l Bank of Oxford v. Long-Lewis Hardware Co., 363 So.2d 770, 773 (Ala.1978). The debtor-creditor relationship is created when a customer deposits money into a bank account, thus transforming the deposit into a debt owed by the bank to the customer. Rainsville Bank v. Willingham, 485 So.2d 319, 323 (Ala.1986). Under Code 1975, § 7-4-212, FAB has a right of charge back for any credit given to the Azalea Management checking account if the item of credit was a provisional settlement that was later dishonored. These rights to revoke, charge back and obtain refund terminate if and when a settlement for the item received by the bank is or becomes final (subsection (3) of section 7-4-211 and subsections (2) and (3) of section 7-4-213). Code 1975, § 7-4-212(1). Because the $100,000 check credited to the Azalea Management account became final within the meaning of the UCC, and because FAB failed to prove any right of restitution for the $100,000 credit to the Azalea Management account, FAB possessed no right of set-off against Azalea Management's account. For the foregoing reasons, the judgment of the trial court must be reversed and the cause remanded. REVERSED AND REMANDED. HORNSBY, C.J., and JONES, ADAMS and KENNEDY, JJ., concur.