Document: 503 U.S. 393 112 S.Ct. 1386 118 L.Ed.2d 39 William BARNHILL, Petitionerv.Elliot JOHNSON, Trustee. No. 91-159. Argued Jan. 14, 1992. Decided March 25, Syllabus The debtor's check in payment of a bona fide debt was delivered to petitioner Barnhill New Mexico on November 18 and honored by the drawee bank 20, 90th day before debtor filed Chapter 11 bankruptcy petition. Respondent Johnson, trustee estate, an adversary action against Barnhill, claiming that recoverable under U.S.C. § 547(b) as transfer property made or within 90 days filing. Johnson asserted occurred date check, but claimed it he received check. Bankruptcy Court agreed with denied recovery, District affirmed. Appeals reversed, holding honor rule should govern actions. Held: For purposes 547(b), is deemed occur honored. Pp. 396-402. (a) "What constitutes when complete" matter federal law. McKenzie v. Irving Trust Co., 323 365, 369-370, 65 405, 407-408, 89 L.Ed. 305. Code defines "transfer" "every mode, . absolute conditional, disposing interest property." 101(54). In absence any controlling law, "property" "interests property" are creatures state McKenzie, supra, at 370, S.Ct., 408. Under Uniform Commercial Code, which has been adopted Mexico, simply order pay sum stated demand. If honored, obligation discharged, if not cause accrues recipient "upon demand following dishonor." 396-399. (b) An unconditional did since receipt gave no right funds held account. No part claim until time had "charge" account Barnhill's ceased. Honoring left position would have occupied withdrawn cash from its handed over Barnhill. Thus, directed so, implemented "mode 101(54) took place. 399-400. (c) argument delivery be viewed "conditional" rejected. Any chose gained cannot fairly characterized conditional "property property," since, moment honor, remained full control account's disposition subject variety actions third parties. addition, consistent 547(e)(2)(A), provides occurs "takes effect between transferor transferee," particularly here retained ability stop very last. appeal legislative history also unavailing. 400-402. 931 F.2d 689 (CA 101991), REHNQUIST, C.J., opinion Court, WHITE, O'CONNOR, SCALIA, KENNEDY, SOUTER, THOMAS, JJ., joined. STEVENS, J., dissenting opinion, BLACKMUN, J. Arland, III, Albuquerque, N.M., for petitioner. Nancy S. Cusack, Roswell, respondent. THE CHIEF JUSTICE Court. 1 Code's preference avoidance section, 547, permitted recover, certain exceptions, transfers petition filed. We granted certiorari decide whether, determining 90-day period, presented honors it. hold latter determinative. 2 relevant facts this case dispute. debtor1 18. dated 19, 20. later It parties filing 3 appointed estate. He proceeding petitioner, estate pursuant 547(b). That section generally permits recover benefit bank, therefore period. Petitioner defended 18, (the so-called "date delivery" rule), fell outside period established 547(b)(4)(A). 4 concluded recovery. appealed then Tenth Circuit. 5 Circuit concluding re Antweil, (1991). distinguished prior decision, White River Corp., 799 631 (1986), that, 547(c), occurs.2 547(c) different functions, justifying rules each. further appropriate because such provisions capable easier proof, less manipulation. resolve split.3 502 ----, 48, 116 26 part, provides: 6 "(b) Except provided subsection may avoid property— 7 8 "(4) made— 9 "(A) ." Title (1988 ed., Supp. II)4 mean 10 direct indirect, voluntary involuntary, parting property, including retention title security foreclosure equity redemption." Section 547(e) guidance meaning dating transfer. 12 "[ (e)(1) ](B) fixture other than real perfected creditor simple contract acquire judicial lien superior transferee. 13 (e) ](2) except paragraph (3) subsection, 14 takes transferee, at, after, time; 15 "(B) perfected, after days. 16 Our task, then, determine definition 101(54), supplemented 547(e), seeks can said 17 305 (1945). This unsurprising noted above, statute itself "transfer." But turn includes references interests Id., 408; Butner United States, 440 54, 99 914, 918, 59 136 (1979) ("Congress determination rights assets bankrupt's law"). Thus helpful sketch briefly duties enjoyed law each party transaction.5 A person enjoys amount equal balance. U.C.C., stated, signed maker payable U.C.C. §§ 3-104(1), (2)(b), U.L.A. 224 Receipt does not, however, give bank. present but, refuses it, recourse drawee. 3-409(1), 2A 189 (1991).6 19 say, without rights. underlying suspends "pro tanto instrument['s] presentment[;] discharge obligor instrument discharges him obligation." 3-802(1)(b), 514 refuse drawer dishonor instrument." 3-122(3), 407 (1991); see also, 3-413(2), 208 And dishonored obligation, maintain either obligation. 20 With background we issue hand. argues erred ignoring passed disagree. begin noting there assertion because, just gives drawer's Myriad events intervene presentment result being dishonored. could choose close obtain garnishment proceedings. might mistakenly check.7 21 import preceding discussion instant paying 1-201(21) (defining honor), (1989); 4-213(a), 2B 41 At time, account, 4-401, 307 (1991)—i.e., reduced check—and longer debtor. short, thus believe done "mode, indirect (emphasis added). ordinary therefore, defined before. undisputed presumptively 22 face argument, retreats contained urges rather viewing transaction involving two distinct actions—delivery thereby transferred, honoring transferred—that instead view acknowledge adopts expansive transfer, one mode There some force petitioner's did, fact, gain something most, what debtor.8 Such right, where maintained retains remains To treat nebulous bring suit "conditional transfer" accomplish near-limitless expansion term "conditional." think fairer description his 23 Finally, note our conclusion 547(e)(2)(A). reasons given particular last, do "taken petitioner" honor. 24 Recognizing, perhaps, difficulties position, places heaviest reliance statutory language accompanying history. Specifically, points identical statements Representative Edwards Senator DeConcini "payment means equivalent payment, unless Payment considered sections 547(c)(1) (2)." 124 Cong.Rec. 32400, (1978) id., 34000. 25 begin, appeals well-taken only "statutory ambiguity." Toibb Radloff, 501 111 2197, 2200, 115 145 case. even were, relies, their own terms, apply turn, establishes various exceptions 547(b)'s general permitting recovery preferential transfers. Subsection (c)(1) exception contemporaneous exchange new value creditor; (c)(2) course business. These designed encourage creditors continue deal troubled debtors normal business terms obviating worry subsequent require disgorge earlier payment. specialized purpose, basis history, explicitly confined us adopt 547(b).9 foregoing reasons, judgment 27 Affirmed. 28 Justice whom BLACKMUN joins, dissenting. 29 my traditional commercial practice treating subsequently bank.1 treatment checks tax taxpayer deduct expenses paid December 31 year's income though next calendar year.2 Insofar possible, wise interpret statutes regulating behavior consistently practices community. custom treats rejected Congress unequivocally commanded contrary result. thing. On contrary, entirely practice. 30 plainly broad enough encompass delivers creditor. property. II). check3 obviously "mode" through "par[t] property."4 Of course, fact effects answer question whether authorizes "on [bankruptcy] petition." raises question: occur? 547(e)(2) answer. states made: 32 547(e)(2). 33 interprets supporting take transferee long Ante, 401. reasoning foreclosed Code. Because made, delivery, "perfected" required 34 As Seventh recognized, use "jarring" word immediately apparent context. Global Distribution Network, Inc. Star Expansion 949 910, 913 "Debtors assets; perfect interests." Ibid. lies broader 547(e)(1)(B) "a transferee." definition, 35 read together, indicate If, days, 36 additional consideration reinforces interpretation text. Courts unanimous dispute decision today. 402-403, n. 9. decisions history,5 which, admittedly conclusive, identifies 547(c).6 Normally, assume same statute. See, e.g., Sullivan Stroop, 496 478, 484, 110 2499, 438 (1990). inexorable, nothing structure purpose suggests reason interpreting these adjacent subsections differently.7 37 I reverse Appeals. actually collection whose simultaneous related filings consolidated single proceeding: Alan Mary Frances husband wife, Morris Antweil (deceased), Hobbs Pipe & Supply, partnership. Nothing turns refer them collectively "debtor." preferences, they fall See infra, 402. Those selecting include Nicholson First Investment 705 410 (CA11 1983) (Bankruptcy Act), York City Shoes, Inc., 880 679 (CA3 1989) (dicta). 910 (CA7 1991); Virginia Information Systems 932 338 (CA4 Belknap, 909 879 (CA6 1990); Kenitra, 797 790 (CA9 1986), cert. denied, sub nom. Morrow, Agri-Beef 479 1054, 107 928, 93 980 (1987). codified 1986 101(50). 1990, added eight definitions 101 separate Acts, Pub.L. Nos. 101-311 101-647. addition apparently resulted confusion codifying those definitions, now States 11, defining "stockbroker" second will discuss issues rubric and, particular, Article 3. State occurred, N.Mex.Stat.Ann., 55-3-101, et seq. (1978 Supp.1991), all 49 states, Columbia, Guam, Virgin Islands. aware material differences version jurisdictions consider today, Mexico. "A draft operate assignment hands available liable accepts it." Admittedly, create debtor-drawer, 4-402, (1991), asserts upon Brief overstate matters bit; appears contingent action, contingency dishonoring Official Comment, ¶ 1. unnecessary question, more fails. Appeal payments 547(c). Braniff Airways, Midwest 873 805 (CA5 1989); Continental Commodities, 841 527 1988); Wolf Vine, 825 197 1987); 1986); (CA10 O'Neill Nestle Libbys P.R., 729 (CA1 1984). few disagreed. Hartwig Poultry, 56 B.R. 332 (Bankr.N.D.Ohio 1985). We, express views issue, properly us. note, 547(c)(2) undergone significant change Edwards' DeConcini's comments. previously requirement qualify business, 45 first incurred. eliminated. Union Bank Wolas, ---- - 527, 530-531, context need precisely 547(c)(2). is, inquiring 45th 46th, courts focus 533-534. relevance somewhat undermined; this, clearly inappropriate extrapolate scope Regents University Lacey, N.M. 742, 744, 764 P.2d 873, 875 (1988) ("[I]f, delivered, meet presentment, nature becomes original check"); R. Anderson, 3-802:19, pp. 594-595 (3d ed. 1984) ("When paid, giving check"). Clark Commissioner, 253 745, 748 1958); Don E. Williams Co. 429 569, 572, 2, 582-583, 97 850, 853, 858, 51 48 (1977). Treasury regulations similarly provide charitable contribution clears due course. Treas.Reg. 1.170A-1(b), CFR 1.170A-1(b) order, maker, 3-104, "[m]yriad dishonored," ante, 399, alter expansively modes receives maker—the condition acceptance Indeed, many rely 530 631, 633 35, recognizes, 401, sponsors legislation House Senate effect. Sixth cogently explained: "The policy set aside potentially prefer selected creditors; groups who excepted. 'transfer' complementary subparts seems inconsistent, unworkable, confusing." 879, 883

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