In the
 United States Court of Appeals
               For the Seventh Circuit
                          ____________

No. 02-2517
BANK OF AMERICA, N.A.,
                                                  Creditor-Appellant,
                                  v.

ALEX D. MOGLIA,
                                                     Trustee-Appellee.
                          ____________
             Appeal from the United States District Court
        for the Northern District of Illinois, Eastern Division.
               No. 02 C 110—Marvin E. Aspen, Judge.
                          ____________
      ARGUED JANUARY 21, 2003—DECIDED JUNE 2, 2003
                          ____________


  Before POSNER, KANNE, and DIANE P. WOOD, Circuit
Judges.
  POSNER, Circuit Judge. Outboard Marine Corporation is
in Chapter 7 bankruptcy, and among its holdings are
the assets, currently worth some $14 million, in what is
known as a “rabbi trust.” Bank of America, as the agent
of Outboard’s secured creditors, claims a security interest
in these assets, while the trustee in bankruptcy claims
them for the unsecured creditors. The security agreement
on which Bank of America relies covers all Outboard’s
“general intangibles,” a term of great breadth in commercial
law, see UCC § 9-102(a)(42) and official comment 5(d), and
2                                                  No. 02-2517

broadly defined in the agreement as well to include, besides
a number of irrelevant enumerated items, “all other intangi-
ble personal property of every kind and nature.” The term
describes the assets of the rabbi trust, but the bankruptcy
court, seconded by the district court, held that they never-
theless were not subject to the security agreement, and so
ruled for the trustee. The ruling was a final, appealable
order because it resolved a discrete dispute that, were it
not for the continuing bankruptcy proceedings, would
have been a stand-alone dispute between Bank of America
and the trustee as the representative of the general creditors.
In re Golant, 

, 934 (7th Cir. 2001); In re Rimsat,
Ltd., 

, 1044 (7th Cir. 2000). “A judgment does
not lose its finality merely because there is uncertainty
about its collectibility, corresponding to uncertainty about
how many cents on the dollar the creditor will actually
receive on his claim once all the bankrupt’s assets are
marshaled and compared with the total of allowed claims,
and the priorities among those claims are determined.
Thus the fact that the bankruptcy proceeding continues
before the bankruptcy judge does not preclude treating
an interlocutory order by him—interlocutory in the sense
that it does not terminate the entire proceeding—as final
for purposes of appellate review. (And if it is final for
those purposes, then so is the district court’s affirmance
of his order.)” In re Szekely, 

, 899 (7th Cir. 1991).
  A rabbi trust, so called because its tax treatment was first
addressed in an IRS letter ruling on a trust for the benefit
of a rabbi, Private Letter Ruling 8113107 (Dec. 31, 1980); see
also IRS General Counsel Memorandum 39230 (Jan. 20,
1984), is a trust created by a corporation or other institu-
tion for the benefit of one or more of its executives (the
rabbi, in the IRS’s original ruling). See, e.g., Westport Bank
& Trust Co. v. Geraghty, 

, 663-64 (2d Cir. 1996);
Hills Stores Co. v. Bozic, 

, 99 (Del. Ch. 2000);
No. 02-2517                                                3

Kathryn J. Kennedy, “A Primer on the Taxation of Execu-
tive Deferred Compensation Plans,” 35 John Marshall L. Rev.
487, 524-27 (2002). The main reason (recited at the outset
of the trust document in this case) for such a trust is that,
should the control of the institution change, the new
management might reduce the old executives’ compensa-
tion, or even fire them; the trust, which consistent with
this purpose is not funded until the change of control
occurs, cushions the fall.
  But as the IRS explained in the letter ruling, unless
an executive’s right to receive money from the trust is
“subject to substantial limitations or restrictions,” rather
than being his to draw on at any time (making it income to
him in a practical sense), the executive must include any
contribution to the trust and any interest or other earnings
of the trust in his gross income in the year in which
the contribution was made or the interest obtained. See
McAllister v. Resolution Trust Corp., 

, 572-73,
575 (5th Cir. 2000). The “substantial limitations or restric-
tions” condition was satisfied in the transaction on which
the IRS ruled. The trust agreement provided that the rabbi
would not receive the trust assets until he retired or other-
wise ended his employment by the congregation. Until
then the corpus of the trust and any interest on it would
be owned by the congregation, see Maher v. Harris Trust
& Savings Bank, 

, 1185 (7th Cir. 1996); Goodman
v. Resolution Trust Corp., 

, 1125 (4th Cir. 1993),
so the rabbi would have neither legal nor equitable right
to the money. Cf. 26 U.S.C. § 457(f)(1)(A). And, what is key
in this case, the trust instrument provided that “the as-
sets of the trust estate shall be subject to the claims of
[the congregation’s] creditors as if the assets were the
general assets of [the congregation].”
  The word “creditors” is not defined either in the IRS’s
letter ruling or in the trust agreement in this case; but a
4                                                 No. 02-2517

“Model Rabbi Trust” agreement approved by the IRS states
that the assets of the trust are subject to the claims of the
settlor’s “general creditors,” Rev. Proc. 92-64, 1992-2 C.B.
422 (July 28, 1992), a term invariably used to refer to a
debtor’s unsecured creditors. See, e.g., United States v. Mun-
sey Trust Co., 

, 240 (1947); Dewsnup v. Timm, 

, 431-32 (1992) (dissenting opinion); In re Mer-
chants Grain, Inc., 

, 1352 (7th Cir. 1996); United
States v. One Sixth Share, 

, 44 (1st Cir. 2003);
United States v. Watkins, 

, 1283 (11th Cir. 2003);
United States v. $20,193.39 U.S. Currency, 

, 346
(9th Cir. 1994); Douglas G. Baird, The Elements of Bank-
ruptcy 12, 101, 154, (3d ed. 2001). The cases assume rather
than hold that “general creditor” means “unsecured credi-
tor,” but what else could it mean? What work does “gen-
eral” do unless to distinguish unsecured from secured
creditors? Bank of America has no answer to that question.
  Outboard is conceded to have established a bona fide
rabbi trust, so that its contributions to the trust and the
income that those contributions generated were not
includible in the executives’ gross income. Therefore, if
the validity of a rabbi trust depends on its assets’ being
reserved for the employer’s unsecured creditors, we can
stop right here and affirm; the Bank of America, as a
secured creditor, would have no right to the assets—
otherwise the trust’s beneficiaries would not have received
the favorable tax treatment accorded the beneficiaries of
a rabbi trust, and they did receive it. But it is uncertain
whether such a reservation actually is essential to the
favorable tax treatment of a rabbi trust. All that the tax law
requires is that there be substantial limitations on the
beneficiaries’ access to the trust assets, and a reservation
of the assets in the event of bankruptcy to both the se-
cured and the unsecured creditors of the settlor, rather
than to the unsecured creditors, might well be thought
No. 02-2517                                                5

substantial. For the reservation would keep those assets,
most of them at any rate, out of the beneficiaries’
hands—though this is provided that the limitation were
coupled with a limitation on the beneficiaries’ having free
access to the assets of the trust before they leave their
employment with the grantor. Without such a limitation, the
reservation of creditors’ rights would be illusory—the
beneficiaries would pull the money out of the trust as
soon as insolvency loomed on the horizon—and indeed
the trust’s assets might well be taxable as income to the
beneficiaries. But we recall that, consistent with this con-
cern, the assets of the rabbi trust were owned by the con-
gregation until the rabbi’s employment ended.
   We say that a limitation to all, rather than just to the
unsecured, creditors “might be” rather than “would be”
substantial enough to satisfy the Internal Revenue Ser-
vice because executives often are creditors of their firm;
if they were secured creditors and their security interest
embraced the assets of the trust, their claims to those
assets would be superior to those of the firm’s unsecured
creditors, which would tend to make the limitation that
is fundamental to the favorable tax treatment of the rabbi
trust—that the creditors have a superior claim to the
beneficiaries—illusory. But the trust instrument in this
case took care of that concern by providing that Out-
board’s executives could not obtain a security interest in
the trust’s assets.
  Even if the executives would not have sacrificed their
favorable tax treatment had the trust instrument reserved
the assets of the trust for all the company’s creditors,
secured and unsecured alike, in the event of bankruptcy,
the instrument did not do this; it reserved those assets
for the unsecured creditors. It states (we italicize the key
terms) that the “Trust Corpus . . . shall remain at all times
subject to the claims of the general creditors of [Outboard].
6                                                  No. 02-2517

Accordingly, [Outboard] shall not create a security interest
in the Trust Corpus in favor of the Executives, the Par-
ticipants [a term that apparently refers to retired executives]
or any creditor.” In the event of insolvency, the trustee “will
deliver the entire amount of the Trust Corpus only as a
court of competent jurisdiction, or duly appointed re-
ceiver or other person authorized to act by such court,
may direct to make the Trust Corpus available to satisfy
the claims of the Company’s general creditors.”
   This couldn’t be clearer: secured creditors have no claim
to the trust assets. And judges usually interpret written
contracts (the instrument creating the rabbi trust in this
case was an agreement nominally between Outboard and
the trustee of the trust, Northern Trust Company, but
realistically between Outboard and the executives who were
the beneficiaries of the trust, see Westport Bank & Trust Co.
v. 

, 90 F.3d at 663-64) according to the
conventional meaning of their terms, that is, literally. This
is especially appropriate in the case of a negotiated con-
tract involving substantial stakes between commercially
sophisticated parties, as in this case, who know how to
say what they mean and have an incentive to draft their
agreement carefully. Such a style of interpretation pro-
tects the parties against the vagaries of the litigation
process—a major reason for committing contracts to
writing—without too great a risk of misinterpretation. But
literal interpretation of written contracts, even when the
parties are sophisticated and the stakes substantial, is
merely presumptively the right approach to take. Even
sophisticated lawyers and businessmen sometimes stum-
ble in their use of language, or use language that is special-
ized to their trade and departs from normal usage, or fail
to anticipate contingencies that may make the language
of the contract yield absurd results if it is read literally, and
if these circumstances are evident to the court the contract
No. 02-2517                                                 7

will not be interpreted literally. Bank of America argues in
this vein that of course all that Outboard intended to do in
the passages of the trust agreement that we quoted was
to create a rabbi trust, that is, a grantor trust that would
enjoy a favorable tax status, and so if a rabbi trust does
not necessarily forfeit its favorable tax status by reserving
the trust assets for secured as well as unsecured creditors,
neither does the trust agreement. The security agreement,
which we quoted at the beginning of this opinion, con-
tains no language to suggest that the assets of the rabbi
trust would be excluded from Bank of America’s secur-
ity interest just because they are pledged to any creditor
and not just to unsecured creditors.
   This argument is not negligible but neither is it suffi-
ciently compelling to rebut the presumption in favor of
literal interpretation to which we referred. Rather the
contrary. The language of the Model Rabbi Trust would
make it natural for Outboard to assume that to create a
valid rabbi trust it would have to reserve the trust’s assets
for its general creditors, which undoubtedly it would
understand to mean its unsecured creditors. The assump-
tion may have been incorrect, more precisely may have been
excessively cautious; but it provides the best guide to the
meaning that Outboard and the executives ascribed to
the agreement. The executives in particular would tend to
favor the cautious approach rather than jeopardize their tax
benefits for the sake of Outboard’s secured creditors. And
though they might benefit indirectly, and Outboard directly,
from the company’s being able to pledge more of its as-
sets to secure a loan to the company, this benefit—since the
assets in a rabbi trust are likely to be only a small fraction
of the company’s total assets—would probably be out-
weighed by the risk of forfeiting favorable tax treatment
by departing from the template of the Model Rabbi Trust.
8                                                 No. 02-2517

  The trust agreement does not merely reserve the trust’s
assets for the general creditors, moreover; it forbids Out-
board to create a security interest in favor not only of the
executives (which might make the trust illusory and forfeit
the beneficiaries’ favorable tax treatment) but also of any
creditor. So even if Outboard thought that the term “gen-
eral creditors” includes secured creditors, the agreement
explicitly forbids the creation of a security interest in the
trust assets. The trust instrument took as it were the extra
step to make clear that the parties really intended to reserve
the trust assets for Outboard’s unsecured creditors. The
security agreement, as we said, does not exclude the as-
sets in the rabbi trust; but to determine what assets it does
include (because they are not listed in the agreement),
one must look beyond the security agreement. And when
one looks one finds the trust instrument, which excludes
those assets. It is important to note in this connection
that the rabbi trust was funded before the security agree-
ment between Outboard and Bank of America was exe-
cuted. Had it been funded after, Outboard’s contribution
of assets to the trust would have been subject to the security
agreement regardless of the terms of the trust. For Out-
board could not be permitted to impair the bank’s se-
curity interest by putting some of the assets covered by
the agreement into a trust that the bank could not reach.
  Bank of America has a second string to its bow: it argues
that Illinois law, which the parties agree governs the
interpretation of the trust agreement, will enforce a con-
tractual antiassignment provision, such as the provision
in the trust instrument that forbids assigning a security
interest in the assets of the rabbi trust to creditors, against
an assignee only if the provision states that the assignor has
no power, and not merely no right, to assign. So, the
argument continues, because the trust instrument does not
say in so many words that any attempt by Outboard to
No. 02-2517                                                  9

create a security interest in the trust assets would be void,
ineffectual, etc., the creation of such an interest is not
prohibited although a party (including any third-party
beneficiaries, which Outboard’s general creditors may or
may not be, see Exchange National Bank v. Harris, 

, 1084 (Ill. App. 1984); Town & Country Bank v. James M.
Canfield Contracting Co., 

, 634-35 (Ill. App.
1977)—we needn’t decide), could sue for damages in the
event of a breach of the provision.
  Clauses in conveyances, or in other instruments con-
tractual or otherwise that create property rights, that for-
bid the recipient of the property to sell it free and
clear—or in legal jargon that create a “restraint on alien-
ation”—are traditionally disfavored. Gale v. York Center
Community Co-op., Inc., 

, 33 (Ill. 1961); Avon-
Avalon, Inc. v. Collins, 

, 574 (Ala. 1994). Some-
times this is because they are thought to create monopoly,
concentrate wealth, or cater to “the capricious whims of the
conveyor.” Gale v. York Center Community Co-op., 

,
171 N.E.2d at 33. But more often and more realistically it
is because they can increase transaction costs by pre-
venting subsequent purchasers or assignees from knowing
what they are getting. Cf. Gregory S. Alexander, “The Dead
Hand and the Law of Trusts in the Nineteenth Century,” 37
Stan. L. Rev. 1189, 1258-60 (1985). A legal requirement that
the restraint be express, recorded, or otherwise readily
ascertainable by potential purchasers and assignees mini-
mizes, and often eliminates, those additional costs, cf.
Noblesville Redevelopment Comm’n v. Noblesville Limited
Partnership, 

, 562-63 (Ind. 1996); if the recipi-
ent’s purchaser knows exactly what he is (not) getting,
a refusal to enforce the restriction merely confers a windfall
on him.
  The requirement of express and readily ascertainable
notice is satisfied here. When Bank of America made its
10                                                 No. 02-2517

credit agreement with Outboard, it knew, if it bothered to
read the trust agreement along with the other documents
that defined Outboard’s assets, as it should have done
and no doubt did do, that the security interest it was acquir-
ing would not cover the assets (currently some $14 million)
in the rabbi trust. Nothing would have been added to the
trust agreement but empty verbiage had it said “and not
only is Outboard forbidden to create a security interest in
these assets in favor of any creditor, but if it tries to do so
its action shall be null, void, and of no effect.” Of course,
if Illinois required those magic words, as many states
still do, see Rumbin v. Utica Mutual Ins. Co., 

,
530-33, 535 (Conn. 2000), and cases cited there, to rebut the
presumption of nonassignability, then Bank of America
could argue persuasively that it had relied on their absence
when it signed the security agreement. But Illinois does
not require them. In re Nitz, 

, 96, 101 (Ill.
App. 2000); Henderson v. Roadway Express, 

,
1113 (Ill. App. 1999); see also CGU Life Ins. Co. v. Singer Asset
Finance Co., 

, 15 (Ga. App. 2001).
   Illinois’s approach implements the modern view, ex-
pressed in Restatement (Second) of Contracts § 322(2) (1981),
that an antiassignment provision in a contract is unenforce-
able against an assignee “unless a different intention is
manifested.” Magic words are not required: “Where there
is a promise not to assign but no provision that an assign-
ment is ineffective, the question whether breach of the
promise discharges the obligor’s duty depends on all the
circumstances.” 

The circumstances here
weigh heavily in favor of enforcing the antiassignment
provision when we consider the alternative remedy that
is all that a “magic words” state would allow in the ab-
sence of the magic words—a suit for damages for breach
of the provision. If the credit agreement between Outboard
and Bank of America violated it by creating a security
No. 02-2517                                                 11

interest in the trust assets, then the contract breaker, and
therefore the defendant in such a suit, would be Out-
board, which is to say the trustee, while the plaintiffs would
be the general creditors—the trustee also. Enough said.
  The Bank of America has one last argument, this one
thoroughly frivolous—that the trustee under the trust
agreement, who, remember, was in the event of Outboard’s
solvency to seek directions from a court concerning the
disposition of the trust assets, was an “account debtor” of
Outboard, that is, someone who owed Outboard money.
UCC § 9-105(1)(a) (now superseded by UCC § 9-102(a)(3),
unchanged however so far as bears on this case). An
antiassignment clause is ineffective against an assign-
ment of the debt of an account debtor. UCC § 9-318(4) (now,
and again with immaterial changes, UCC § 9-406(d)(1)).
Accounts and other simple written promises to pay are
important collateral in modern commercial transactions,
and their value as collateral is maximized by stripping
them of encumbrances, such as an antiassignment clause
unlikely to be noticed in the haste of transacting. The trust
agreement was not that kind of instrument. And in any
event the trustee owed Outboard nothing. The trustee
was the debtor in a sense (an odd sense—one doesn’t
usually think of a trustee as the debtor of the trust’s benefi-
ciaries, though of course he holds its assets on their be-
half) of the executives so long as Outboard was solvent,
and after that he was the “debtor” in the same odd sense
of Outboard’s creditors. But he was never Outboard’s
“debtor.”
  Bank of America, a large, responsible, and well repre-
sented enterprise, should not have made the account-debtor
argument. Nor should it have treated a district court deci-
sion (Lomas Mortgage U.S.A., Inc. v. W.E. O’Neil Construction
Co., 

(N.D. Ill. 1993)) as an authoritative
12                                                 No. 02-2517

statement of Illinois law. Not only has the Supreme
Court instructed us not to give special weight to a district
judge’s interpretation of state law even if it is the state
in which he sits, Salve Regina College v. Russell, 

,
230-31 (1991); Beanstalk Group, Inc. v. AM General Corp., 

, 863 (7th Cir. 2002), but we have repeatedly re-
minded the bar that district court decisions cannot be
treated as authoritative on issues of law. “The reasoning
of district judges is of course entitled to respect, but the
decision of a district judge cannot be a controlling prece-
dent. E.g., Colby v. J.C. Penney Co., 

, 1124
(7th Cir. 1987); Anderson v. Romero, 

, 525 (7th
Cir. 1995). The law’s coherence could not be maintained
if district courts were deemed to make law for their cir-
cuit, let alone for the nation, since district courts do not
have circuit-wide or nationwide jurisdiction.” FutureSource
LLC v. Reuters Ltd., 

, 283 (7th Cir. 2002).
                                                    AFFIRMED.

A true Copy:
        Teste:

                            _____________________________
                            Clerk of the United States Court of
                              Appeals for the Seventh Circuit




                     USCA-02-C-0072—6-2-03