Document: 516 U.S. 16116 S.Ct. 286133 L.Ed.2d 258 CITIZENS BANK OF MARYLAND, Petitioner,v.David STRUMPF. No. 94-1340. Supreme Court of the United States Argued Oct. 3, 1995. Decided 31, Syllabus * When respondent filed for relief under Bankruptcy Code, he had a checking account with, and was in default on remaining balance loan from, petitioner bank. Under bankruptcy filing gives rise to an automatic stay creditor's "setoff any d ebt owing debtor that arose before commencement [bankruptcy case] against claim debtor." 11 U.S.C. § 362(a)(7). After bankruptcy, placed "administrative hold" so much respondent's as it claimed subject setoff—that is, refused pay withdrawals would reduce below sum be due unpaid loan—and "Motion Relief from Automatic Stay Setoff" 362(d). In granting motion hold contempt, concluded petitioner's constituted "setoff" violation The District disagreed reversed, but turn reversed by Appeals. Held: 1. Petitioner's refusal its debt upon latter's demand not setoff within meaning 362(a)(7), hence did violate stay. Petitioner pay, permanently absolutely, merely temporarily while sought 362(d) requirement intent settle accounts is implicit prevailing state-law rule has occurred until (i) decision effectuate been made, (ii) some action accomplishing taken, (iii) recording entered. Even if state law were different, question whether 362(a)(7) matter federal law, other provisions Code such §§ 542(b) 553(a) lead this embrace same requirement. Pp. ___-___. 2. also 362(a)(3) or 362(a)(6) Code. P. 290. 37 F.3d 155 (CA 4 1994), reversed. SCALIA, J., delivered opinion unanimous Court. Irving E. Walker, Baltimore, MD, petitioner. Miguel A. Estrada, amicus curiae, special leave Court, Washington, DC, Roger Schlossberg, Hagerstown, respondent. Justice SCALIA 1 We must decide creditor may, order protect rights, withhold payment owes without violating imposed 362(a). 2 On January 25, 1991, when Chapter 13 with petitioner, bank conducting business State Maryland. He $5,068.75 362(a), gave various types activity his creditors, including "the 3 October 2, what termed loan. Five days later, 362(d), Setoff." Respondent then claiming administrative violated established ruled contempt first. It sanctioned Several weeks granted authorized set off By time, however, reduced zero, there nothing off. 5 judgment stay, concluding Appeals "[A]n hold," said, "is tantamount exercise right thus violates 362(a)(7)." 155, 158 (C.A.4 1994). certiorari. 514 ----, 115 1398, 131 286 (1995). II 6 (also called "offset") allows entities owe each money apply their mutual debts other, thereby avoiding absurdity making A B A." Studley v. Boylston Nat. Bank, 229 523, 528, 33 806, 808, 57 L.Ed. 1313 (1913). Although no created provides that, certain exceptions, whatever otherwise exists preserved bankruptcy. Here undisputed prior filing, Maryland defaulted account. 362(a) stayed principal 7 our view, debt, only Whether temporary wrongful separate matter—we do consider, example, contention portion subjected exceeded amount properly setoff. All concerns us here think not, because—as evidenced Setoff"—petitioner purport followed majority jurisdictions addressing question, three steps have taken: setoff, See, e.g., Baker National City Bank Cleveland, 511 F.2d 1016, 1018 (C.A.6 1975) (Ohio law); Normand Josef Enterprises, Inc. Connecticut 230 Conn. 486, 504-505, 646 A.2d 1289, 1299 (1994). But even accounts. 8 Section which turnover property estate, requires bankrupt's debtors "pay" trustee (or order) "debt estate matured, payable demand, . except extent may offset section 553 title (emphasis added). 553(a), turn, sets forth general rule, possessed debtor's affected odd construction required immediately specifically excuses doing matter: defense applies. 9 Nor assessm ent these changed fact generally providing affects creditors' prebankruptcy qualifies phrase "[e]xcept provided sections 362 363." This undoubtedly refers we most naturally read recognizing provision's restriction actual effected—which say, during perfectly reasonable reading available, foolish take "except" clause indicating immediate That render 553(a)'s does affect meaningless, forcing immediately, divest very thing supports Furthermore, would, stated, eviscerate 542(b)'s exception duty debts. elementary act cannot held destroy itself." Texas & Pacific R. Co. Abilene Cotton Oil Co., 204 426, 446, 27 350, 358, 51 (1907). 10 Finally, are unpersuaded additional contentions 362(a)(6). sections, automatically stays "any obtain possession control over estate," 362(a)(3), collect, assess, recover case title," Respondent's reliance rests false premise took something respondent, exercised dominion belonged view things might arguable consisted belonging depositor fact, consists more less than promise depositor, see Marin England, 385 99, 101, 87 274, 276, 17 197 (1966); Keller Frederickstown Sav. Institution, 193 Md. 292, 296, 66 924, 925 (1949); neither taking nor exercising it, perform promise. event, will give (6) interpretation proscribe "except[ion]" plainly intended permit: owed bankrupt.** Fourth Circuit 12 ordered. syllabus constitutes part prepared Reporter Decisions convenience reader. See Detroit Lumber, 200 321, 337, 26 282, 287, 50 499 (1906). ** decline address contention, raised below, confirmation Plan 1327 precluded right. Granfinanciera, S.A. Nordberg, 492 33, 39, 109 2782, 2788-89, 106 (1989).

Category: 7