In Illinois, a beneficial interest in a land trust is considered intangible personal property. Burditt Radzius, Chartered v. Brown (In re Barone), 184 B.R. 747, 749 (N.D.Ill. 1995); In re Fowler, 90 B.R. 375, 377 (Bankr.N.D.Ill. 1988); In re Marriage of Mostow, 126 Ill. App.3d 67, 81 Ill.Dec. 490, 492, 466 N.E.2d 1292, 1294 (1st Dist. 1984). The proper method under the Illinois Code of Civil Procedure to perfect a lien in intangible personal property is via a citation to discover assets, under 735 ILCS 5/2-1402.
There has been considerable debate about whether mere service of a citation to discover assets imposes a lien of any sort. Many recent federal cases hold that the citation proceeding does impose a lien on discovered assets. General Telephone Co. of Illinois v. Robinson, 545 F. Supp. 788, 797 (C.D.Ill. 1982); In re Fowler, 90 B.R. 375, 377 (Bankr.N.D.Ill. 1988); In re Einoder, 55 B.R. 319, 324 (Bankr.N.D.Ill. 1985); In re Foluke, 38 B.R. 298, 301 (Bankr.N.D.Ill. 1984); In re Lapiana, 31 B.R. 738, 742 (Bankr.N.D.Ill. 1983). The district court in Barnett v. Stern, 93 B.R. 962, 975, n. 5 (N.D.Ill. 1988), however, convincingly argues that the initiation of a citation proceeding does not create a lien.
; In re T.M. Sweeney Sons, LTL Services, Inc., 120 B.R. 101, 105 (Bankr.N.D.Ill. 1990) (Schmetterer, J.); In re Fowler, 90 B.R. 375, 377 (Bankr.N.D.Ill. 1988) (Coar, J.); In re Einoder, 55 B.R. 319, 325 (Bankr.N.D.Ill. 1985) (Ginsberg, J.)
The bankruptcy judges in this district, including this Court, have almost uniformly ruled that the clear weight of Illinois authority finds service of citation summons to create a lien while it also compels the discovered assets to be used toward satisfaction of the judgment. In re Waner, 89 B.R. 751, 755 (Bankr.N.D.Ill. 1988) (Schmetterer, J.); In re Fowler, 90 B.R. 375, 377 (Bankr.N.D.Ill. 1988) (Coar, J.); In re Einoder, 55 B.R. 319, 325 (Bankr.N.D.Ill. 1985) (Ginsberg, J.); In re Gus Hormovitis and George Karahalios, 57 B.R. 471, 475 (Bankr.N.D.Ill. 1985) (Schwartz, J.); In re Foluke, 38 B.R. 298, 300 (Bankr.N.D.Ill. 1984) (Hertz, J.); In re Lapiana, 31 B.R. 738, 742 (Bankr.N.D.Ill. 1983) (Fisher, J.), aff'd on other grounds, 909 F.2d 221 (7th Cir. 1990). 10. The one exception to the above line of cases is In re Jaffe, 111 B.R. 701, 704 (Bankr.N.D.Ill. 1990) (Barliant, J.).
See, e.g., In re Fowler, 90 B.R. 375, 377 (Bankr.N.D.Ill. 1988); LaPiana v. Farmers State Bank of Somonauk (In re LaPiana), 31 B.R. 738, 742 (Bankr.N.D.Ill. 1983); Einoder v. Mount Greenwood Bank (In re Einoder), 55 B.R. 319, 324 (Bank.N.D.Ill. 1985). The parties here disagree as to whether the lien has been extinguished by the Movants' delay in seeking enforcement of the lien.
Additionally, prior to the amendment, the cases held that citation proceedings against a trustee created a lien against the beneficial interest of the trust. In re Fowler, 90 B.R. 375, 377 (Bkrtcy.N.D.Ill. 1988); In re Gus Hormovitis George Karahalios, 57 B.R. 471, 475 (Bkrtcy.N.D.Ill. 1985); In re Marriage of Mostow, 126 Ill. App.3d 67, 81 Ill.Dec. 490, 492, 466 N.E.2d 1292, 1294 (1984); Mid-West National Bank of Lake Forest v. Metcoff, 23 Ill. App.3d 607, 319 N.E.2d 336, 340-41 (1974). Burditt's asserts the language of the amendment stating that "upon all personal property belonging to the judgment debtor in the possession or control of the third party" changed the above existing law.
Asher v. U.S., 570 F.2d 682, (7th Cir.1978), Rochford v. LaserIn re Waner Corp., , 46 Ill.Dec. 94 [943], 949 [414 N.E.2d 1096, 1102] (1st Dist.1980), 89 B.R. 751, 755 (Bankr.N.D.Ill.1988), In re Fowler, 90 B.R. 375, 377 (Bankr.N.D.Ill.1988), In re Foluke, 38 B.R. 298, 301 (Bankr.N.D.Ill.1984), In re Hormovitis, 57 B.R. 471, 475 (Bankr.N.D.Ill.1985).
Under Illinois law, a beneficial interest in a land trust is considered to be intangible personal property. In re Nowicki, 202 B.R. 729, 737 (Bankr. N.D. Ill. 1996) (citing In re Barone, 184 B.R. 747, 749 (N.D. Ill. 1995); In re Fowler, 90 B.R. 375, 377 (Bankr. N.D. Ill. 1988); In re Marriage of Mostow, 126 Ill.App.3d 67, 466 N.E.2d 1292, 1294 (1st Dist. 1984)). The proper method under the Illinois Code of Civil Procedure to perfect a lien on intangible personal property is the filing of a Citation to Discover Assets under 735 ILL. COMP. STAT. 5/2-1402.
; In re Waner, 89 B.R. 751, 755 (Bankr.N.D.Ill. 1988) (Schmeterer, J.); In re Fowler, 90 B.R. 375, 377 (Bankr.N.D.Ill. 1988) (Coar, J.); In re Einoder, 55 B.R. 319, 325 (Bankr.N.D.Ill. 1985) (Ginsberg, J.)
Later bankruptcy decisions only follow the earlier cases — beginning with the ill-advised Stoner opinion — in holding that the initiation of supplementary proceedings creates a lien in various types of intangible personal property. In the Matter of Einoder, 55 B.R. 319, 324 (Bankr.N.D.Ill. 1985); In re Waner Corp., 89 B.R. 751, 755 (Bankr.N.D.Ill. 1988); In re Fowler, 90 B.R. 375, 377, 380 (Bankr.N.D.Ill. 1988). This Court is not bound by, and cannot agree with, these holdings. It is for Illinois, not this Court, to determine how judgment liens are created.