In re: William N. Porayko

Of the Northern District of Indiana, sitting by designation. å
In the
United States Court of Appeals
For the Seventh Circuit
No. 12-2777
IN THE MATTER OF:
WILLIAM N. PORAYKO,
Debtor.
APPEAL OF:
EUGENE CRANE, Trustee
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 10 C 2630—James B. Zagel, Judge.
ARGUED JANUARY 14, 2013—DECIDED JANUARY 28, 2013
Before EASTERBROOK, Chief Judge, HAMILTON, Circuit
Judge, and MILLER, District Judge.å
EASTERBROOK, Chief Judge. When William Porayko
entered bankruptcy in August 2009, he had more than
$10,000 in a checking account at TCF Bank. Travis Crowell
claims that money. Crowell obtained a $73,000 judg-

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2 No. 12-2777
ment against Porayko in October 2008; that same month
Crowell served Porayko with a citation to discover
assets. In Illinois, a citation creates a lien. 735 ILCS 5/2-
1402(m). The competing claimant is Eugene Crane, as
Trustee for the benefit of Porayko’s creditors. The Trustee
contends that a citation served on the owner of a bank
account does not create a lien on the value of that
account; only a citation directly on the bank can do that,
the Trustee maintains. (Crowell did serve a citation on
TCF Bank in June 2009, so close to the bankruptcy’s
commencement that any lien against the Bank is subject
to the Trustee’s avoiding powers. 11 U.S.C. §547(b)(4)(A).)
Crowell asked Bankruptcy Judge Hollis to lift the
automatic stay, 11 U.S.C. §362(d), so that he could
collect from TCF Bank while the bankruptcy proceeds.
The parties agree that it is proper to lift the stay if, and
only if, the citation served on Porayko creates a lien on
the value of the checking account. Judge Hollis granted
the motion, and the district court affirmed. We must
decide whether Illinois law treats a citation served on a
judgment debtor as a lien on the value of the debtor’s
bank account.
Section 5/2-1402(m) provides that a citation to discover
assets creates a lien on all “nonexempt personal property,
including money, choses in action, and effects of the
judgment debtor”. Paragraph (1) adds that this includes
“all personal property belonging to the judgment debtor
in the possession or control of the judgment debtor or
which may thereafter be acquired or come due to the
judgment debtor”. Judge Hollis concluded that the value

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No. 12-2777 3
of a checking account is “personal property” within the
depositor’s “control”. This conclusion has the support of
the only state decision that has mentioned the subject.
Chicago v. Air Auto Leasing Co., 297 Ill. App. 3d 873, 878
(1st Dist. 1998); cf. TM Ryan Co. v. 5350 South Shore, LLC,
361 Ill. App. 3d 352 (1st Dist. 2005).
The Trustee asks us to disagree with Air Auto Leasing
on the ground that the appellate court’s statement is
unreasoned. According to the Trustee, the Supreme
Court of Illinois is likely to rule otherwise. The Trustee
relies on the observation in Citizens Bank of Maryland v.
Strumpf, 516 U.S. 16, 21 (1995), that a bank account “con-
sists of nothing more or less than a promise to pay,
from the bank to the depositor.” The account’s value
therefore cannot be “personal property”, the Trustee
insists—which means, he tells us, that the vital issue is
whether a checking account is a “chose in action.” That
question the Trustee answers in the negative, insisting
that it is only a “potential” chose in action (which
would ripen should the bank refuse to pay).
Strumpf did not present the question whether a bank
account is “personal property” for the purpose of §5/2-
1402(m) or a similar state law. It held that a bank does
not violate §362 by deferring payment so that it can offset
an account’s value against a debt owed to it. The Court’s
point is that a bank is not a warehouse, as if its vault
(like Gringotts Bank) held stacks of specie labeled for
each depositor. A bank’s delay in complying with a
payment instruction does not take any property away
from the depositor and so does not violate the auto-

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4 No. 12-2777
matic stay. This does not speak to the question whether
an account holder’s rights are “personal property.” Cer-
tainly the rights are not real property! A bank account
may be an intangible interest, but intangible rights (for
example, patents or copyrights) are still personal prop-
erty. The Illinois statute asks what property rights
a judgment debtor “controls”; it is sensible to say that a
checking account’s holder controls the right to designate
who receives the funds on deposit, which makes its value
a form of “personal property” under Illinois law.
We need not resolve the parties’ debate about the
meaning of “chose in action”. It is enough to agree with
the bankruptcy court that an account is “personal prop-
erty” under the definition in §5/2-1402(m)(1). The Trustee
has not identified any decision in Illinois—or for that
matter any other state—concluding that a bank account
is not personal property for the purpose of a statute
similar to §5/2-1402(m). It is therefore not surprising
that Air Auto Leasing was curt; the judges must have
thought the proposition obvious.
Indeed, if the Trustee were right, then serving a cita-
tion on a bank would be as useless as serving one on a
debtor. If the value of an account is not “personal prop-
erty” from the debtor’s perspective, it is not “personal
property” from a bank’s either. The bank sees an account
as a debt to its client—as a liability, not an asset. The
bank’s assets lie in what it has done with the money (for
example, lent it to a business or homeowner); the bor-
rower’s note promising to repay is the bank’s property.
Bank accounts are an important form of personal wealth;

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No. 12-2777 5
we cannot believe that Illinois has placed them beyond
the reach of judgment creditors, and done so in such
an obscure way.
A prudent judgment creditor will serve the judgment
debtor’s bank as well as the judgment debtor personally;
otherwise the bank will go on paying the judgment
debtor’s checks, and the account may be depleted.
Crowell might have secured a larger payment had it
served TCF Bank, as well as Porayko, in August 2008.
But the $10,000 that remained in August 2009, when
bankruptcy began, was part of Porayko’s personal
property and covered by a lien superior to the Trustee’s.
The judgment therefore is
AFFIRMED.
1-28-13

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