Barnhill v. Johnson

In Barnhill v. Johnson (1992) 503 U.S. 393, the debtor (or more precisely, the soon-to-be debtor in bankruptcy) delivered a check to pay a bona fide debt on November 18--a date outside of 90 days before the date of the bankruptcy petition. The check was honored by the bank on November 20--the 90th day before the bankruptcy petition. (See Barnhill v. Johnson, supra, 503 U.S. at p. 395 112 S. Ct. at p. 1388.) So when did the transfer of property occur? Answer: November 20, not November 18. The federal high court reasoned that the check might have bounced, the funds in the account been subjected to a lien, or the check even mistakenly not been honored. ( Barnhill v. Johnson, supra, 503 U.S. at p. 399 112 S. Ct. at p. 1390.) The salient fact was that the debtor retained full control over the disposition of the checking account until the check was honored. ( Id. at p. 401 112 S. Ct. at p. 1391.) The debtor could, for example, even have stopped payment in the intervening time period. Therefore there was no "transfer of funds" until the creditor actually received the money on November 20. (Ibid.)