In our view, the bank may not use the CD to offset the son’s overdrawn account.

Under Illinois law, the right of setoff can be asserted under the common law if there is “mutuality” of parties — where the deposit account is owned by the same party that owes the debt to the bank. Because the son does not own the CD, there is no mutuality of ownership in the CD and the overdrawn account. Consequently, we do believe your bank may exercise its common law right of setoff in the CD to satisfy the son’s debt to the bank. And based on the facts you have provided, it does not appear that a contractual right of setoff would apply. 

For resources related to our guidance, please see:

• Selby v. DuQuoin State Bank, 223 Ill.App.3d 105, 107 (5th Dist. 1991) (“Under common law a bank has the power to apply the deposit to the payment of such depositor’s indebtedness only when there are mutual demands and debts between the parties and this right of setoff arises at the time the depositor’s indebtedness to the bank has matured.”)