The Supreme Court/The Supreme Court.iso/pc/ascii/1991/91_159/91_159.zd

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SUPREME COURT OF THE UNITED STATES
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No. 91-159
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WILLIAM BARNHILL, PETITIONER v. ELLIOT
JOHNSON, TRUSTEE
on writ of certiorari to the united states court of
appeals for the tenth circuit
[March 25, 1992]

  Justice Stevens, with whom Justice Blackmun joins,
dissenting.
  In my opinion, a ``transfer'' of property occurs on the date
the check is delivered to the transferee, provided that the
check is honored within 10 days.  This conclusion is
consistent with the traditional commercial practice of
treating the date of delivery as the date of payment when
a payment is made by a check that is subsequently honored
by the drawee bank.  It is also consistent with the treat-
ment of checks in tax law.  A taxpayer may deduct expenses
paid by a check delivered on or before December 31 against
that year's income even though the drawee bank does not
honor the check until the next calendar year.  Insofar as
possible, it is wise to interpret statutes regulating commer-
cial behavior consistently with established practices in the
business community.  The custom that treats the delivery
of a check as payment should not be rejected unless
Congress has unequivocally commanded a contrary result.
In the Bankruptcy Code, Congress has done no such thing.
On the contrary, the Code is entirely consistent with the
normal practice.
  The definition of the term ``transfer'' in 101(54) is
plainly broad enough to encompass the conditional transfer
of the right to funds in the debtor's bank account that
occurs when the debtor delivers a check to a creditor.
Section 101(54) defines a ``transfer'' as ``every mode, direct
or indirect, absolute or conditional, voluntary or involun-
tary, of disposing of or parting with property or with an
interest in property . . . .''  11 U. S. C. 101(54) (1988 ed.,
Supp. II).  A check is obviously a ``mode'' through which
the debtor may ``par[t] with property.''
  Of course, the fact that delivery of a check effects a
``transfer'' within the meaning of the Code does not answer
the question whether the trustee may avoid the transfer by
check in this case because 547(b) only authorizes the
trustee to avoid transfers made ``on or within 90 days before
the date of the filing of the [bankruptcy] petition.''  11
U. S. C. 547(b)(4)(A).  That raises the question:  when did
the ``transfer'' occur?  Section 547(e)(2) provides the answer.
It states that for purposes of the preference avoidance
section, 11 U. S. C. 547, a transfer is made
    ``(A) at the time such transfer takes effect between the
    transferor and the transferee, if such transfer is
    perfected at, or within 10 days after, such time;
    ``(B) at the time such transfer is perfected, if such
    transfer is perfected after such 10 days . . . .''
    547(e)(2).
    The Court interprets this section as supporting its
conclusion that the transfer does not occur until the check
is honored by the drawee bank because, it reasons, a
transfer cannot take effect between the transferor and
transferee as long as the transferor retains the ability to
stop payment on the check.  Ante, at 8.  But that reasoning
is foreclosed by 101(54), which states that even a condi-
tional transfer is a ``transfer'' for purposes of the Code.
Because delivery of a check effects a conditional transfer
from the transferor to the transferee, the ``transfer'' is
made, for purposes of 547, on the date of delivery, provid-
ed that the transfer is ``perfected'' within 10 days as
required by 547(e)(2).
  As the Court of Appeals for the Seventh Circuit recog-
nized, the use of the term ``perfected'' is ``jarring'' because
the meaning of the word ``perfected'' is not immediately
apparent in this context.  Global Distribution Network, Inc.
v. Star Expansion Co., 949 F. 2d 910, 913 (1991).  ``Debtors
transfer assets; creditors perfect security interests.''  Ibid.
The answer lies in the fact that the term ``perfected'' has a
broader meaning in 547(e) than it does in the Uniform
Commercial Code.  Section 547(e)(1)(B) states that ``a trans-
fer of . . . property other than real property is perfected
when a creditor on a simple contract cannot acquire a
judicial lien that is superior to the interest of the transfer-
ee.''  Under this definition, a transfer by check is ``perfec-
ted'' when the check is honored because after that time no
one can acquire a judicial lien superior to the interest of the
transferee.
  Thus 101(54) and 547, when read together, plainly
indicate that a ``transfer'' by check occurs on the date the
check is delivered to the transferee, provided that the
drawee bank honors the check within 10 days.  If, however,
the check is not honored within 10 days, the ``transfer''
occurs on the date of honor.
  An additional consideration reinforces this interpretation
of the statutory text.  The Courts of Appeals are unanimous
in concluding that the date of delivery of a check is control-
ling for purposes of 547(c), and the Court does not dispute
that conclusion for the purposes of its decision today.  Ante,
at 9, n. 9.  These Courts of Appeals decisions are consistent
with the legislative history, which, though admittedly not
conclusive, identifies the date of delivery of a check as the
date of transfer for purposes of 547(c).  Normally, we
assume that the same terms have the same meaning in
different sections of the same statute.  See, e.g., Sullivan v.
Stroop, 496 U. S. 478, 484 (1990).  That rule is not inexora-
ble, but nothing in the structure or purpose of 547(b) and
547(c) suggests a reason for interpreting these adjacent
subsections differently.
  I would therefore reverse the judgment of the Court of
Appeals.