NOTE: Where it is feasible, a syllabus (headnote) will be released, as is being done in connection with this case, at the time the opinion is issued. The syllabus constitutes no part of the opinion of the Court but has been prepared by the Reporter of Decisions for the convenience of the reader. See United States v. Detroit Lumber Co., 200 U. S. 321, 337.

SUPREME COURT OF THE UNITED STATES

Syllabus

CITIZENS BANK OF MARYLAND v. STRUMPF

certiorari to the united states court of appeals for the fourth circuit

No. 94–1340. Argued October 3, 1995—Decided October 31, 1995

When respondent filed for relief under the Bankruptcy Code, he had a checking account with, and was in default on the remaining balance of a loan from, petitioner bank. Under the Code, a bankruptcy filing gives rise to an automatic stay of a creditor's ``setoff of any debt owing to the debtor that arose before the commencement of the [bankruptcy case] against any claim against the debtor.'' 11 U. S. C. §362(a)(7). After respondent had filed in bankruptcy, petitioner placed an ``administrative hold'' on so much of respondent's account as it claimed was subject to setoff—that is, it refused to pay withdrawals that would reduce the account balance below the sum it claimed to be due on the unpaid loan—and filed a ``Motion for Relief from Automatic Stay and for Setoff'' under §362(d). In granting respondent's motion to hold petitioner in contempt, the Bankruptcy Court concluded that petitioner's ``administrative hold'' constituted a ``setoff'' in violation of §362(a)(7). The District Court disagreed and reversed, but was in turn reversed by the Court of Appeals.

Held:

1. Petitioner's refusal to pay its debt to respondent upon the latter's demand was not a setoff within the meaning of §362(a)(7), and hence did not violate the automatic stay. Petitioner refused to pay, not permanently and absolutely, but merely temporarily while it sought relief under §362(d) from the automatic stay. The requirement of an intent permanently to settle accounts is implicit in the prevailing state-law rule that a setoff has not occurred until (i) a decision to effectuate it has been made, (ii) some action accomplishing it has been taken, and (iii) a recording of it has been entered. Even if state law were different, the question whether a setoff under §362(a)(7) has occurred is a matter of federal law, and other provisions of the Bankruptcy Code such as §§542(b) and 553(a) would lead this Court to embrace the same intent requirement. Pp. 2–4.

2. Petitioner's refusal to pay its debt to respondent also did not violate §362(a)(3) or §362(a)(6) of the Bankruptcy Code. Pp. 4–5.

37 F. 3d 155, reversed.

Scalia, J., delivered the opinion for a unanimous Court.