Galyen Petroleum Co. v. Hixson

Norman Hixson (originally a defendant) owed Commercial Bank over $7,000 on promissory notes giving the bank a security interest in and setoff right against his deposit account, regardless of whether the notes were yet due. Hixson wrote Galyen Petroleum Company (plaintiff) three checks for fuel, drawn on his Commercial Bank account, which had enough funds to cover some of them at the time of presentment; but Commercial Bank refused payment and returned the checks, then used the account funds to set off Hixson's not-yet-due promissory notes, leaving nothing for Galyen's checks, with Hixson never objecting to the setoff. Galyen sued both Hixson (later dismissed after bankruptcy discharge) and Commercial Bank; the lower court granted summary judgment to the bank, and Galyen appealed.