Ofthe Northe rnDis t ri c tofI ndi ana , s i t t i ng by des i gna t i on.  

## In the 

# U n ited S ta tes Co urt o f Ap p ea ls

F o rth eS e v e n th C ir cu it
N o. 12

- 2777 I N THE M A T T E ROF : W I L L I A M N. P OR AY KO, D e b t or . A PP E A L OF : E UGENE C R ANE, Trust ee

A pp eal from the United S t ates Di strictC our t fo r the N o rthernDi stricto f Illino is, Eas tern Di v isi on. No . 10 C2630

—Jam es B. Z agel, Ju dge .
A RG UE D J AN UA RY 14, 2013

— D ECI DE D J AN UA RY 28, 2013

Befo re E A S T E RB R OO K, Chi e f Judg e, H A MI L T ON, C ir cuit J udg e, a nd M IL LER, D i s t r i ctJudg e .  E A S T E RB R OO K, Chief J udg e . W hen W i l l i am Por ayk o enter ed bankr up tc y in A ugust 2 009, he ha d m or e than $1 0,0 00 in a c h ec kin g ac c ou n t at T C F B an k. T ra vis C ro w ell cl ai m s that m oney . C ro w el l o btai ned a $7 3, 000 j ud g-2 N o. 12

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m ent a gai nst Po ra yko i n Octobe r 2008 ; thatsa m e m onth Crowells er ved Por ayk o w i th a ci tat i on t o disc ove r ass ets
. I n I l l i noi s, a ci tat i on cr eat es a l i en. 7 35 I LC S 5/2- 1402(m ). Th e co m peti ng cl ai m ant i s Eugene Crane, as Truste e f orthe benefi t ofP or ayk o’ s credi tor s. The Trust ee co nt en ds th ata c i ta ti on s er ve d o n the o wnero fa b an k acco unt does not cre ate a l i en o n th e va lue o fthat acco unt; o nl y a ci tat i on di re c tly on the b ank c an do that, the Tr ustee m ai n ta i ns. ( Crowelldi d ser ve a ci tat i on o n T C F B an k i n J u n e 2 0 0 9, so close to the ba nk rup tcy’s com m encem ent that a ny l i en ag ai nst the Bank i s s ubj ect to t h e T ru st ee ’s av oid in g p ow er s. 11 U .S.C . §54 7(b )(4) (A ).) Cr o wel l a sk ed Bankr upt cy J udg e H o l l i s to l i f t th e au to m at ic s ta y, 11 U .S .C . §36 2(d ), so th at h e c ou ld col l ect from TCF Bank w hi l e the bank ruptcy proce eds. The pa r ti es a g r ee tha t it is p rop er t o l i f t th e st ayi f, a nd o nl y i f, t he c i t a t i o n s e r v e d o n Po r a y k o c r e a t e s a l i en o n the v al ue o fthe ch ecki ng ac count. J ud ge H ol l i s g ra nted the m oti on, and the dist ri ct c ourtaffi rm ed. W e m ust dec i de whethe r I l l i no i s l aw t r ea ts a c ita ti o n s er ve d o n a j ud gm en t d e b tor as a l ien on th e value of the d ebtor’s bank acco unt. Se ction 5/2- 1402 ( m ) pro vi des thata ci tat i on t o disc ove r ass ets cr eat es a l i en o n al l “nonexem pt perso nal pro perty, i nc l udi ngmone y , c ho se s i n a ct i o n, a nd eff ec ts o fthe j ud gm e ntde b t o r ”
. P a r a g r a ph( 1 ) a dds tha tthi s i nc l ud es “al l per sonalpro p er ty bel ongi ng to the j ud gm ent debt or i n the posse ssi on o r contr olo fthe j ud gm ent debt oro r whi chmay th er eafter be a cqui r ed o r c o m e due t o the j udg m en t deb to r ”. J ud ge Hol l i s co nc l ude d tha t th e va l ueN o. 12

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o fa c he ck i nga cc o unti s “pe rson al pr o per ty ” wi th i n the deposi tor ’ s “ contr ol ”. Thi s co ncl usi on has the supp or t o f the o nl y s tat e deci si on that has m enti oned the subj ect. Chi c ag o v. Ai rAu t o L e as i n g Co
. , 29 7 Ill. A pp . 3d 87 3, 87 8 (1s t D ist . 199 8); c f. TM Ryan Co. v. 53 50 Sou t h S hore, L LC, 361 Il l. A p p . 3d 352 (1st D ist. 2005). The Tru stee a sk s us t o di sa g r ee wi th AirAut o L e as i ng on th e g ro u n d th at th e a p p el l a t e co u rt ’s s ta te m en t is u n r e a s o n e d

. A c c o r d i n g t o th e T r u s t e e , th e S u pr e me Co ur to fI l l i no i s i s l i k e l y t o r ul e o t he r wi s e . T he Trust ee re lies on th e o b se rv at i o n inCi t ize ns Bank o f M aryl and v. St r um pf , 5 16 U. S
. 1 6, 2 1 (1995) , tha t a ba nka cc o unt“ co nsi sts o fnothi ng m or e o r l ess than a pro m i se to pay, f r o m the b an kt o the de po si to r . ” The a cc o unt’s v al ue ther ef or e ca nnot b e “ perso nal pro perty ”, the Truste e i nsi sts

— w h ich m ea n s, h e t ells u s, th at th e v i t a l issu e is w hethera checki ng ac count i s a “cho se i n acti on. ” That que st i o n the Tr us te e an swe rs i n the ne g at i ve , i ns i st i ng that i t i s o nl y a “pot enti al ” cho se i n acti on ( w hi ch w ou ld ripen shou ld th e ban k refuse to p ay). S tr um pfdi d n ot pr es en t th e que st i o n whe th era b an k acco unt i s “ perso nal pro perty ” f orthe pu rpos e o f§5 /2

- 1402 ( m ) o r a s im i l ar st ate l aw . I t hel d that a bankdoes not vi ol ate §3 62 by defe rr i ng paym ent so that i t can off set a n a ccou nt ’s value agains t a de bt ow ed to i t. T he Cou rt’s p oin t is t h a t a b a n k is n ot a w ar eh ou se , as if its va u lt ( l i ke Gri ngot ts Bank) hel d s tacks o fspeci e l abel ed f or ea chde po si to r . A ba nk’s del ayi n c o m pl y i ngwi tha paym ent i nstr ucti on does n ot tak e a ny pro pertyaway f ro m the deposi torand so does notvi ol ate the auto-4 N o. 12

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m ati c st ay. Thi s doe s no t s pe ak to the questi on wh ether an accou nt hold er’s ri gh ts are “p erson al prop erty.” Certai nl y the r i gh ts ar e no tre al pr o per ty ! A ba nka cc o unt m ay be a n i ntangibl e i nter est, bu t int angibl e r i ghts ( f or e xa mpl e , pa t e nt s o r c o py r i g ht s ) a r e s t i l l pe r s o na l pro per ty. The I l l i noi s sta tute ask s w hat proper ty rights a j ud gm ent debt or “ c on trol s”; i t i s s ensibl e t o say thata checki ng ac count’ s ho l der c ontr ol s th e ri ght t o desi gnate who r ec ei ve s th e funds o n depo si t, whi chmake s i ts v al ue a f o r m o f“ p e r s o n a l p r o p e r t y ” u n d e r I l l i n o i s l a w. W e ne ed no t r es o l ve the pa r ti es ’ de ba te abo utthe m ea ni ng o f “ c ho s e i n a c t i o n”
. I t i s e no ugh t o a g r ee w i th t he b a nk r up t c y c o ur ttha ta n a c c o unt i s “ pe r s o na l p r o per ty” under the defi ni ti on i n §5/2- 1402 ( m ) ( 1)
. The Truste e h as n ot id en tifie d a n y d ec isio n in Illin ois

— orf orthat m att er any othe r sta te

— co nc l udi ngtha t a ba nka cc o unt is no tper sonalpro pe rt y for the pu rpos e o fa sta tute si m i l art o § 5/2- 14 02 (m ). Iti s th er ef o r e no t su r pr i si ng thatAi rA ut o L e as i ngwas curt ; the j ud ges m ust hav e thought the pr oposi ti on o bvi ous. I nd eed, i fthe Trustee were ri ght, then ser vi ng a ci tati o n o n a b an kwoul d b e as us el ess as se r vi ngo ne o n a de b t o r . I fthe v a l ue o fa n a c c o un ti s n o t“ pe r s o na l p r o per ty” fro m the debtor ’ s per specti ve, i t i s no t “ perso nal pr o per ty ” f r o m a ba nk ’ s ei th er . The ba nk se es an account as a de btto i ts c l i en t

— as a l i ab i l i ty, no t ana ss et
. The bank’ s a sse ts l i e i n w hat it h as d one w i th the m oney ( f or ex ampl e, l en t i t to a bus i ne ss o r ho m eo wner ) ; th e borro w er ’ s n ot e prom i si ng to r epay i s the bank ’ s pro perty
. Ban ka cc o unt s ar e ani m po rtan t for m o fpe r so na l wea l th ;N o. 12

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we c an no t be l i ev e th atI ll inois ha s pl ac ed th em be y o nd the r each o fj ud gm ent c re dit or s, and done so i n such an o bscur e way. A p rud en t j udg m en t cr edi to r wi l l s er ve the j udg m en t debtor ’ s ba nk as wellas the j ud gm ent debtorper sonal l y; o th er wi se the b an kwi l l g o o n pa y i ngthe j ud gm en t de b t o r ’ s c he c k s , a nd the acc oun tma y b e de pl e t e d. C ro w ell m igh t h av e s ec u re d a lar ge r p ay m en t h ad it ser ved TCF Ba n k, as wellas Por ayk o, i n A ugust 2 008. Bu t the $1 0, 000 that re m ai ned i n A ugust 2 00 9, w hen bankr up tcy bega n, w as part of Por ayk o’ s p er sonal proper ty and cove re d by a l i en superi orto the Truste e’ s. T h e jud gm en t t h er efo re is AFFI RMED .

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