Priority Subject to Subordination

  1. Law
  2. Georgia Code
  3. Commercial Code
  4. Secured Transactions
  5. Perfection and Priority
  6. Priority Subject to Subordination

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This article does not preclude subordination by agreement by a person entitled to priority.

(Code 1981, §11-9-339, enacted by Ga. L. 2001, p. 362, § 1.)

Cross references.

- Subordination of obligations, § 11-1-209.

RESEARCH REFERENCES

Am. Jur. 2d.

- 68A Am. Jur. 2d, Secured Transactions, §§ 160 et seq., 792-795.

C.J.S.

- 72 C.J.S., Pledges, § 23.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 9-339.

PART 4 RIGHTS OF BANK 11-9-340. Effectiveness of right of recoupment or set-off against deposit account.
  1. Exercise of recoupment or set-off. Except as otherwise provided in subsection (c) of this Code section, a bank with which a deposit account is maintained may exercise any right of recoupment or set-off against a secured party that holds a security interest in the deposit account.
  2. Recoupment or set-off not affected by security interest. Except as otherwise provided in subsection (c) of this Code section, the application of this article to a security interest in a deposit account does not affect a right of recoupment or set-off of the secured party as to a deposit account maintained with the secured party.
  3. When set-off ineffective. The exercise by a bank of a set-off against a deposit account is ineffective against a secured party that holds a security interest in the deposit account which is perfected by control under paragraph (3) of subsection (a) of Code Section 11-9-104, if the set-off is based on a claim against the debtor.

(Code 1981, §11-9-340, enacted by Ga. L. 2001, p. 362, § 1.)

JUDICIAL DECISIONS

Bank's right of setoff superior.

- In a case predicated on the Georgia tort law of conversion, a district court's entry of summary judgment in favor of a bank was affirmed because O.C.G.A. §§ 11-9-109(a)(1) and (d)(10)(A), and11-9-340 governed the effectiveness of setoff rights in deposit accounts, brought the case expressly within the authority of the Uniform Commercial Code, and provided that the bank's setoff right was superior to any security interest of a company in a predecessor company's deposited funds. Eleison Composites, LLC v. Wachovia Bank, N.A., F.3d (11th Cir. Mar. 7, 2008)(Unpublished).

RESEARCH REFERENCES

U.L.A.

- Uniform Commercial Code (U.L.A.) § 9-340.


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