BANKRUPTCY

Somerset Legal Journal headnotes from approximately 1991 through the present.

For earlier cases, please visit the Somerset County Law Library.

 

ATTACHMENT BANK ACCOUNTS

 

As a general principle, a judgment creditor may attach the general bank deposit of the debtor; in essence, the judgment creditor stands in the shoes of the debtor/depositor and thus, is entitled to the funds located in the account upon demand. Guelich Explosive Co. v. Soberdash Coal Co., et al., 51 Som.L.J. 252

 

Unlike a general depository account which created the relationship of debtor and creditor between bank and depositor, special bank deposits made expressly for a particular purpose cannot generally be attached to satisfy the depositor's general obligations. Where such funds are considered special, the funds are said to be held "in trust" for the benefit of the third party. Guelich Explosive Co. v. Soberdash Coal Co., et al., 51 Som.L.J. 252

 

Where a debtor deposits money into an account to be used solely for a particular purpose, where the power to withdraw for other purposes is limited, and where the debtor may not use the account to satisfy general obligations as well as those obligations for which the account was established, a special account for specific purpose exists. Guelich Explosive Co. v. Soberdash Coal Co., et al., 51 Som.L.J. 252

 

Where restriction placed upon bank account is self-imposed, such account is not special but rather is general, and therefore can be attached. Guelich Explosive Co. v. Soberdash Coal Co., et al., 51 Som.L.J. 252

 

BANKS & BANKING

 

A borrower does not have a legally cognizable cause of action against a lending institution which has allegedly failed to deal with its borrower in good faith. Somerset Motel Partners v. United States National Bank in Johnstown, 52 Som.L.J. 226; Economy Savings Association v. Hrivnak, 56 Som.L.J. 127; and Citizens National Bank v. Secrest, 56 Som.L.J. 360

 

GENERALLY

 

Guarantors may be sued in a state court even though bankruptcy proceedings are pending against the principal debtor in a federal district court. United Leasing, Inc. v. Burton, 52 Som.L.J. 165

 

Generally the discharge of a debtor in bankruptcy has no effect on the liability of co-debtors, guarantors or sureties. United Leasing, Inc. v. Burton, 52 Som.L.J. 165

 

The bankruptcy court has no power to discharge the liabilities of the bankrupt's guarantors; and a creditor's approval of a bankruptcy plan will not operate as a discharge. United Leasing, Inc. v. Burton, 52 Som.L.J. 165