In re Porayko

Summarized by George Spathis , Horwood Marcus & Berk Chartered
13 years 1 month ago

Citation:

No. 12-2777 (7th Cir. January 28, 2013)

Tag(s):

Ruling:

A checking account consitutues "personal property" that reamins within the "control" of the account's holder, and therefore subject to a citation lien under Illinois law. This is consistant with Illinois appellate court guidance in Chicago v. Air Auto Leasing Co., 297 Ill. App. 3d 873, 878 (1st Dist. 1998). The Seventh Circuit rejected as innaposite the holding in Citizens Bank of Maryland v. Strumpf, noting that the Court held that a bank does not violate §362 by deferring payment for the purposes of offsetting an account’s value against a debt owed that it is owed to it, never addressing the more fundamental issue--whether an account holder’s rights are “personal property.”

Procedural context:

Trustee appealed the Bankruptcy Court's decision permitting judgment creditor with a citation lien to lift the stay so as to collect from debtor's bank the the proceeds of a checking account. The Seventh Circuit affirmed the bankruptcy court's decison to lift the stay.

Facts:

When he filed for bankruptcy in 2009, Debtor, Porayko, had $10,000 in a checking account at TCF Bank. At the time of the filing, Crowell was a judgment creditor of Porayko in the amount of $73,000. Crowell served a citation to discover assets on Porayko more than ninety days prior to the bankruptcy, asserting a citation lien under Illinois law. 735 ILCS 5/2-1402(m). In the bankruptcy, Crowell sought and obtained an order lifting the stay to permit him to collect from the Bank. The bankruptcy trustee had contested the motion to lift the stay, arguing that only a citation served directly on the bank would establish a lien on the proceeds of the account, and disputing whether the account constituted “personal property belonging to the judgment debtor in the possession or control of the judgment,” to which the citation lien would attach. Citing the seminal case of Citizens Bank of Maryland v. Strumpf, 516 U.S. 16, 21 (1995), the trustee argued that the account represented a “potential” chose in action which would ripen should the bank refuse to pay. The Trustee appealed.

Judge(s):

EASTERBROOK, Chief Judge, HAMILTON, Circuit Judge, and MILLER, District Judge for the Northern District of Indiana, sitting by special designation.

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