Judges: Per Curiam
Filed: Sep. 13, 2004
Latest Update: Mar. 02, 2020
Summary: In the United States Court of Appeals For the Seventh Circuit _ No. 03-3337 IN RE: MIDWAY AIRLINES, INC., MIDWAY AIRLINES (1987) and MIDWAY AIRCRAFT ENGINEERING, INC. Debtors-Appellees. MONARCH AIR SERVICE, INC., Defendant-Appellant, v. SHELDON L. SOLOW, Trustee, Plaintiff-Appellee. _ Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 03 CV 2580—John A. Nordberg, Judge. _ ARGUED FEBRUARY 12, 2004—DECIDED SEPTEMBER 13, 2004 _ Before CUDAHY, C
Summary: In the United States Court of Appeals For the Seventh Circuit _ No. 03-3337 IN RE: MIDWAY AIRLINES, INC., MIDWAY AIRLINES (1987) and MIDWAY AIRCRAFT ENGINEERING, INC. Debtors-Appellees. MONARCH AIR SERVICE, INC., Defendant-Appellant, v. SHELDON L. SOLOW, Trustee, Plaintiff-Appellee. _ Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 03 CV 2580—John A. Nordberg, Judge. _ ARGUED FEBRUARY 12, 2004—DECIDED SEPTEMBER 13, 2004 _ Before CUDAHY, CO..
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In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 03-3337
IN RE: MIDWAY AIRLINES, INC.,
MIDWAY AIRLINES (1987) and
MIDWAY AIRCRAFT ENGINEERING, INC.
Debtors-Appellees.
MONARCH AIR SERVICE, INC.,
Defendant-Appellant,
v.
SHELDON L. SOLOW, Trustee,
Plaintiff-Appellee.
____________
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 03 CV 2580—John A. Nordberg, Judge.
____________
ARGUED FEBRUARY 12, 2004—DECIDED SEPTEMBER 13, 2004
____________
Before CUDAHY, COFFEY and ROVNER, Circuit Judges.
CUDAHY, Circuit Judge. Unfortunately lacking a crystal
ball, in August 1990, defendant Monarch Air Service, Inc.
(Monarch) entered into an agreement with Midway Airlines,
Inc. (Midway) to provide fueling services for Midway’s air-
craft. These services included, among other things, the man-
agement of Midway’s fuel storage tank farm. By March
1991, Midway and two related entities, Midway Airlines
2 No. 03-3337
(1987) (Midway 1987) and Midway Aircraft Engineering, Inc.
(Midway Engineering) (collectively, the Midway debtors)
filed for Chapter 11 bankruptcy. Monarch was required by
the bankruptcy court, together with other vendors, to con-
tinue providing services to the ailing Midway Airlines. Alas,
Midway’s financial situation took a turn for the worse, and by
November 1991, Midway unilaterally (and without notice)
ejected Monarch from the tank farm, converting to a
Chapter 7 bankruptcy two weeks later.
In January 1992, the bankruptcy court authorized the
sale of the jet fuel stored in Midway’s tank farm. Monarch
belatedly realized that this was a perfect opportunity to
assert claims that both its pre-petition and post-petition
expenses were actually secured by a common law bailee’s or
warehouseman’s lien on the jet fuel. The sale of the jet fuel
went forward, and the disputed amount of the proceeds has
been held in escrow ever since.
Eventually, it came time to dispose of the remaining
smaller claims against the Midway debtors, including
Monarch’s claims. Monarch consented to the disallowance
of its claim for pre-petition expenses. The amount in dispute
at the present juncture is Monarch’s claim for post-petition
expenses of $36,938.60. The bankruptcy court found that
Monarch had consented to the treatment of its post-petition
claim as an unsecured administrative expense, and, in the
alternative, that Monarch was not entitled to a lien on the
jet fuel in the first place. The district court affirmed on the
first ground, ignoring the second. Monarch appeals both of
the bankruptcy court’s findings, but for the reasons that
follow, we affirm.
I.
The facts in this case are essentially undisputed. Monarch
entered into an airport fueling services agreement with
Midway on August 28, 1990 (1990 Contract). (R. 1-1, tab A.)
According to this agreement, Monarch’s responsibilities
No. 03-3337 3
were twofold: supplying fueling services for Midway’s air-
craft at Midway airport (which included refueling and
defueling the aircraft and transporting the fuel from
Midway’s tanks to its aircraft in Monarch’s own tanker
trucks), as well as managing Midway’s fuel storage tanks
(which consisted of operating the fuel tanks in connection
with providing fueling services and routine maintenance of
the tanks). The agreement stated that all fuel would be
ordered, purchased and owned by Midway. It also provided
that the fuel tank facilities in which Midway’s fuel was
stored were owned by the City of Chicago and leased to (and
controlled by) Midway. Midway has, however, admitted that
Monarch had sole physical possession and control over the
fuel tank facilities pursuant to the contract. (Appendix 11,
Trustee’s Rule 402(N) Response, #12.) The agreement gave
Midway the option of assuming management of its storage
facilities upon thirty days’ written notice to Monarch.
On March 25, 1991, the three Midway debtors filed
voluntary Chapter 11 bankruptcy petitions. In accordance
with these petitions, the Midway debtors obtained an in-
junction barring key vendors, such as Monarch, from sus-
pending services under their contracts. The order imposing
the injunction provided that “each such defendant or party
which . . . otherwise provides goods or rendered services as
requested by the plaintiffs pursuant to the Industry
Agreements on or after March 26, 2001, shall be entitled to
payment therefor in the ordinary course of business, as an
administrative expense under 11 U.S.C. § 503(b)(1).” (Loose
Pldgs. 1-1, Exhibit B.) Monarch filed an initial proof of an
unsecured claim for pre-petition services of $75,645 on June
18, 1991 (Initial Claim). (Trustee’s Br., Supp. Appx., tab B.)
On November 13, 1991, without any notice, Midway re-
moved Monarch from physical possession of and control
over the fuel tank facilities. At this point, Monarch was
owed approximately an additional $37,000 for its post-pe-
4 No. 03-3337
tition services. About two weeks later, Midway and Midway
Engineering converted their Chapter 11 petitions to Chapter
7 bankruptcies; Midway 1987 followed suit on March 9,
1992.
Meanwhile, the bankruptcy court had entered an order on
January 27, 1992, authorizing the sale of the fuel inventory
in Midway’s storage tanks, providing that “Liens, including
warehousemen’s liens and possessory liens, shall attach to
the proceeds.” Monarch did not receive actual notice of this
order until March 1992, at which time it informed the
trustee of the Midway debtors’ bankruptcy estate, plaintiff
Sheldon Solow (Trustee), that it held a possessory lien in
the proceeds of the sale. The disputed proceeds were placed
in escrow pending determination of the validity of Mon-
arch’s claimed lien. More than 12 years later, these pro-
ceeds continue to be held in escrow.
On April 29, 1992, Monarch filed two proofs of claim. One
claim purported to amend its Initial Claim by asserting that
Monarch’s pre-petition expenses of $75,645 were secured by
a common law bailee’s or warehouseman’s possessory lien
on the jet fuel in Midway’s fuel storage tanks and Mon-
arch’s tanker trucks (Claim One). (Trustee’s Br., Supp.
Appx., tab D.) The other claim was for expenses of
$112,583.19, which included both Monarch’s pre-petition
expenses of $75,645 and its post-petition expenses of
$36,938.60 (Claim Two). (Trustee’s Br., Supp. Appx., tab E.)
Like Claim One, these expenses were also said to be
secured by a common law bailee’s/warehouseman’s posses-
sory lien on the jet fuel in Midway’s fuel storage tanks and
Monarch’s tanker trucks. However, on the same form,
Monarch also expressed an intent to claim (in the alternative)
that the $36,938.60 was a priority (unsecured) administra-
tive expense as provided under the terms of the March 26,
1991 order. The bankruptcy court, in an order entered May
18, 1993, allowed Monarch’s post-petition claim in full as an
administrative expense under 11 U.S.C. § 503. (Trustee’s
No. 03-3337 5
Br., Supp. Appx., tab C.) No mention was made of any
secured status for this claim.
After nearly eight years had gone by, the bankruptcy court,
upon the Trustee’s motion, approved a claims resolution
procedure authorizing the Trustee to use a negative notice
format to resolve the remaining 11,000 or so claims by the
creditors of the Midway debtors. Pursuant to this proce-
dure, the Trustee sent notices to the persons designated to
receive notices on Monarch’s Claim One and Claim Two
forms—Monarch’s president and Monarch’s general counsel,
respectively. The Trustee’s notice of objection to Claim Two,
served on Monarch’s general counsel in July 2001, is the
one at issue here. (Trustee’s Br., Supp. Appx., tab H.) This
notice proposed to allow the post-petition amount of
$36,938.60 in full, with the caveat that “Your distribution
will be a percentage of your Allowed Amount.” The notice
objected to the portion of the claim for pre-petition services,
stating that “[n]o distribution will be made to pre-petition
claims because the Estate lacks funds to pay all post-pe-
tition claims in full.” No explicit mention was made whether
the Allowed Amount ($36,938.60) was being treated as an
administrative expense or as a secured post-petition ex-
pense. Monarch’s president signed and returned a consent
form agreeing to this treatment dated August 3, 2001. A
second notice objecting to Claim One as being both pre-
petition and duplicative was sent in May 2002 directly to
Monarch’s president (Trustee’s Br., Supp. Appx., tab K),
and no response was filed.1
On February 5, 2003, the bankruptcy court issued an oral
ruling that Monarch had consented to the treatment of its
proof of secured post-petition claim as an administrative
expense and entered summary judgment in the Trustee’s
1
Monarch therefore consented to the Trustee’s treatment of
Claim One.
6 No. 03-3337
favor. Monarch filed a motion for reconsideration the next
day, which was denied on February 24, 2003 when the
bankruptcy court confirmed its holding that Monarch had
waived its secured claim to post-petition expenses, and, in
the alternative, that Monarch did not, in any event, have a
valid post-petition lien entitling it to secured status.
On March 6, 2003, Monarch appealed to the district court,
which by order dated July 30, 2003, affirmed the bank-
ruptcy court’s grant of summary judgment to the Trustee on
the ground that Monarch had waived its alleged secured
claim. Monarch subsequently appealed to this court.
II.
A court of appeals applies the same standard of review to
bankruptcy court decisions as does a district court. A
bankruptcy court’s findings of fact are reviewed for clear
error, and its conclusions of law are reviewed de novo. In re
Smith,
286 F.3d 461, 464-65 (7th Cir. 2002) (internal
citations omitted). As a conclusion of law, a grant of sum-
mary judgment by the bankruptcy court is therefore re-
viewed de novo. A grant of summary judgment will be
affirmed if “there is no genuine issue as to any material fact
and . . . the moving party is entitled to judgment as a
matter of law.” Fed. R. Civ. P. 56(c). Summary judgment
may be affirmed on any ground supported by the record,
even if it was not relied upon by the court below. Johnson
v. Gudmundsson,
35 F.3d 1104, 1115 (7th Cir. 1994).
The issues in this case boil down to two questions: (1) Did
the bankruptcy court and the district court properly find
that Monarch had waived its secured claim for post-petition
expenses against Midway? And (2), did the bankruptcy
court properly find that Monarch had failed to establish the
existence of a valid post-petition lien?
No. 03-3337 7
A.
In the 2003 proceedings, both the bankruptcy court and
the district court found that Monarch had impliedly waived its
post-petition secured claim by consenting to the Trustee’s
treatment of Claim Two. The bankruptcy court found that
Monarch had consented to the treatment of its post-petition
claim as a straight (unsecured) administrative claim, which
was indicated by the bankruptcy court’s May 18, 1993 order
and by the language of the Trustee’s objection to Claim
Two, served in July 2001. (See Monarch’s Short Appx., tab
1, at 6, 10.) The bankruptcy court additionally pointed out
that the consent form, signed by Monarch’s president and
dated August 3, 2001, stated that Monarch would receive a
percentage of the allowed amount, which is typical of
regular (unsecured) administrative expenses when the
bankruptcy estate is administratively insolvent. See
id. at
12.
The district court agreed that the language of the ob-
jection indicated that the post-petition expense was being
treated as an unsecured administrative expense and that
the lack of any mention of a lien in the Trustee’s objection
form indicated that the Trustee was not proposing to allow
the claim as a secured expense. (See Monarch’s Short Appx.,
tab 5, at 12.) The district court also agreed with the bank-
ruptcy court that Monarch unreasonably continued to rely
on its proof of claim, filed more than eight years earlier, to
maintain a secured claim in the face of the negative notice
procedure being used and the language of the objection
notice referring to recovery of a “percentage” of the allowed
amount.
Monarch argues on appeal that it asserted a secured
claim to administrative expenses in Claim Two, and that 11
U.S.C. § 502(a) and the Federal Rules of Bankruptcy
Procedure 3001(f) provide that the proof of claim is prima
facie valid and the claim is deemed allowed unless the
8 No. 03-3337
Trustee objects in writing. The bankruptcy court’s May 18,
1993 order is said not to have addressed the secured status
of Monarch’s administrative expense claim. Moreover,
Monarch argues, the Trustee did not address the secured
status of its post-petition claim in its objection to Claim
Two, and the “percentage” language in a footnote to the
objection notice should not be considered to be a written
“objection” that placed Monarch on notice that its secured
claim was being treated as an unsecured administrative
expense. On this point, Monarch further argues that being
told it would receive a “percentage” did not necessarily in-
dicate that its claim was being treated as unsecured rather
than secured, since it is possible for secured claimants to
receive a percentage of their claims in certain circum-
stances.
Let us begin with a brief explanation of the types and
priorities of claims, which may be helpful here. Secured
claims are paid (or the collateral returned) before any dis-
tribution is made to priority claimants or to unsecured
general creditors. 11 U.S.C. § 725. The Bankruptcy Code
defines several categories of priority claims in § 507, all of
which are paid out after secured creditors have received
their funds.
Id. at § 726. General unsecured creditors re-
ceive a distribution from the bankruptcy estate only if any
funds remain after all priority claims have been paid.
Among priority claims, administrative expenses receive
the top priority.
Id. at § 507(a)(1). Typically, administrative
expenses are unsecured, due perhaps to the operation of 11
U.S.C. § 362(a)(4)’s automatic stay, which bars any entity
from “any act to create, perfect, or enforce any lien against
property of the estate.” There are a few possible exceptions,
such as in the case of extensions of post-petition credit in
accordance with 11 U.S.C. § 364(d), or, as some courts have
found, in the case of ad valorem real estate taxes, see City
of New York Dept. of Finance v. R.H. Macy & Co., Inc.,
176
B.R. 315 (S.D.N.Y. 1994). These are usually classified as
No. 03-3337 9
“superpriority” administrative expenses and are paid out
before “regular” administrative expenses.2 Although the
bankruptcy court here found § 362(a)(4)’s automatic stay
inapplicable to liens created by operation of law, a finding
with respect to which we render no opinion, this does not
change the fact that a reference to “administrative ex-
penses” without any indication of superpriority or secured
status will typically refer to unsecured administrative
expenses.
Turning to Monarch’s claims, Claim Two (the claim at
issue here) asserted a secured claim for Monarch’s pre- and
post-petition expenses of $112,583.19. In the alterna-
tive—presumably as a fall-back position if its lien were
found invalid—Monarch asserted an unsecured claim to
priority administrative expenses of $36,938.60 pursuant to
the bankruptcy court’s March 26, 1991 order. (Trustee’s Br.,
Supp. Appx., tab E.) The March 26, 1991 order did not
indicate that a creditor’s entitlement to administrative
expenses under 11 U.S.C. § 503(b)(1) for provision of post-
petition goods or services would (or could) entitle it to any-
thing other than regular unsecured administrative expenses.
(Loose Pldgs. 1-1, Exhibit B.) Given, as we have discussed,
that administrative expenses generally refer to unsecured
expenses, when the bankruptcy court allowed Monarch’s
post-petition claim in 1993 as an administrative expense
pursuant to 11 U.S.C. § 503(b)(1) without any mention of
secured status or of Monarch’s purported lien, this action
served to allow the claim as a typical unsecured administra-
tive expense. Implicit in this decision was the bankruptcy
court’s non-acceptance of Monarch’s secured claim to post-
petition expenses.
2
A creditor may also claim “superpriority” administrative ex-
penses when it has been granted “adequate protection” of its
collateral but the adequate protection fails. See 11 U.S.C. § 507(b).
10 No. 03-3337
Moreover, the bankruptcy and district courts correctly
held that the Trustee’s objection to Claim Two clearly im-
plied that Monarch’s post-petition claim would be treated as
an unsecured administrative expense. First, there is the
footnote on the objection notice indicating that Monarch
would receive a percentage of its claim for post-petition
expenses, a comment that the bankruptcy court observed to
be typical of unsecured administrative expenses. Second,
there is the Trustee’s statement that “[n]o distribution will be
made to pre-petition claims because the Estate lacks funds
to pay all post-petition claims in full.” This language in-
dicates that Monarch’s pre-petition claim was of a lower
priority than claims for post-petition administrative ex-
penses. If the Trustee had accepted Monarch’s claimed lien
as valid, Monarch’s pre-petition expenses would have been
allowed in full because they were secured, rather than
being given a lower priority than post-petition administra-
tive expenses.3
In light of the aforementioned circumstances and the
eight long years that passed without any indication from
Monarch that it was continuing to assert a secured claim
for its post-petition expenses, the Trustee was entitled to
assume that Monarch’s secured claim was no longer viable
and that the Bankruptcy Code’s dual presumptions of valid-
ity and allowability with respect to this claim had been
overcome. Moreover, the Trustee’s objection to Claim Two
clearly implied that Monarch’s pre-petition and post-peti-
tion claims were being treated as unsecured. Thus, the
bankruptcy and district courts correctly held that the onus
3
See United States v. Darnell (In re Darnell),
834 F.2d 1263, 1265
(6th Cir. 1987) (“[A]s a general rule, if a lien is perfected, it must
be satisfied out of the asset(s) it encumbers before any proceeds of
the asset(s) are available to unsecured claimants, including those
having priority (such as holders of administrative claims).”) (citing
3 Collier on Bankruptcy para. 507.02[2] (15th ed. 1985)).
No. 03-3337 11
was on Monarch to reassert the secured status of its claim
for post-petition expenses in the face of the Trustee’s
objection, and Monarch failed to do so. Monarch’s consent
to the Trustee’s objection to Claim Two was a consent to the
treatment of its post-petition claim as regular (unsecured)
administrative expenses.
Monarch’s contention that a hearing is necessary to
determine whether its consent to the Trustee’s objection
was an intentional relinquishment of its claimed lien is
without merit. Monarch’s designated recipient of bank-
ruptcy notices relating to Claim Two was not “akin to a
corporation’s registered agent” or some other unaffiliated
entity (Monarch’s Br. at 31), but rather was Monarch’s own
general counsel. And Monarch’s general counsel would have
been remiss in his obligation to the corporation if he had
merely received important legal notices such as the
Trustee’s objection to Claim Two and forwarded them to
Monarch’s president without advice or comment. This is
true even if the advice consisted of simply advising Mon-
arch’s president to consult with specialized bankruptcy
counsel before signing the consent form. It is true that a
waiver is an intentional relinquishment of a known right.
See Kontrick v. Ryan,
124 S. Ct. 906, 917 n.13 (2004). But
we have held that the Trustee’s written objection was a
clear treatment, even if by implication, of Monarch’s post-
petition claim as an unsecured administrative expense.
If Monarch’s president considered himself insufficiently
well-versed in the intricacies of bankruptcy matters to know
what he was consenting to, he was surely, as a senior
corporate executive, sufficiently sophisticated to know that
he should consult with, at minimum, the company’s general
counsel. Monarch’s president was given the opportunity to
obtain the knowledge required for an informed consent to
the Trustee’s objection when that written notice of objection
was sent to Monarch’s general counsel. Due process cer-
tainly does not require that there be a warning to consult
12 No. 03-3337
counsel before giving one’s consent to the proposed treat-
ment of a bankruptcy claim. And consent is not rendered
ineffective by the failure of a corporate executive to obtain
competent advice on bankruptcy matters. Any strategic
errors made by Monarch or its agents in pursuing its
bankruptcy claims are not for us to redress.
B.
However, even if Monarch had not consented to the treat-
ment of its post-petition expenses as an unsecured claim for
administrative expenses, we would still conclude that
Monarch did not have a lien securing this claim and that
summary judgment was correctly granted to Midway. At
Illinois common law,
[a] bailment is defined as “the delivery of goods for some
purpose, upon a contract, express or implied, that after
the purpose has been fulfilled they shall be redelivered
to the bailor, or otherwise dealt with according to his
directions or kept [until] he reclaims them.” The elements
necessary for a bailment include (1) “an agreement by
the bailor to transfer or deliver and the bailee to accept
exclusive possession of goods for a specified purpose”;
(2) “the actual delivery or transfer of exclusive posses-
sion of the property of the bailor to the bailee”; and (3)
“acceptance of exclusive possession by the bailee.”
Spirit of Excellence, Ltd. v. Intercargo Ins. Co.,
334 Ill. App.
3d 136, 147 n.1 (Ill. App. Ct. 2002) (citations omitted).
The bankruptcy court found that Monarch had “arguably
satisfied the three elements of a bailment” but found that
doing so “did not automatically give rise to a lien.” (Monarch’s
Br. at 37.) The bankruptcy court found that Monarch did
not meet the requirements for an artisan’s lien (which is a
particular form of bailee’s lien) as set out in Lake River v.
No. 03-3337 13
Carborundum Corp.,4 because although “Monarch certainly
provided a service to the debtors, . . . it did not add any
value to [the] jet fuel, the property upon which [it] asserts
a lien.” (Monarch’s Short Appx., tab 3, at 12.)
Monarch argues that at Illinois common law, a lien may
still be had based on the labor or services furnished by the
bailee. “The right to a lien for . . . services arises upon the
furnishing of such . . . services and by force of a statute, an
express contract, an implied contract or the usages of trade
or commerce. The right to retain possession of the property
to enforce a possessory lien continues until such time as the
charges for such . . . services are paid.” Bull v. Mitchell,
114
Ill. App. 3d 177, 181 (Ill. App. Ct. 1983). This is true even
where that labor does not result in increased market value.
See Chicago G.W.R. Co. v. American McKenna Process Co.,
1916 WL 2228, *2 (Ill. App. Ct. 1916) (“Appellant argues
that judgment on this plea is bad because the rehandling
did not enhance the value of the rails, and a lien only exists
where the work of a laborer enhances value. This is true as
a rule, but in applying it, ‘value’ does not always mean
market value.”); Restatement (First) of Security § 61, cmt.
(d).
Although Monarch has made an argument that could be
persuasive under certain circumstances, it does not work
here. Monarch’s line of reasoning fails at the very first step:
the establishment of a relationship giving rise to a lien. Let
us review what took place with respect to Midway’s jet fuel in
accordance with Midway’s contract with Monarch. Midway
arranged for jet fuel to be delivered to its fuel tank storage
farm. Monarch provided basic management services for
Midway’s tank farm and was responsible for transportation
of the jet fuel between Midway’s tank farm and Midway’s
4
769 F.2d 1284 (7th Cir. 1985).
14 No. 03-3337
aircraft for refueling/defueling.5 Although Monarch admit-
tedly had “possession and control” over Midway’s tank farm,
this does not mean that the jet fuel was delivered to
Monarch when it was put into the storage tanks, since
Monarch did not own or lease the storage tanks. Nor was
the jet fuel delivered to the fuel tanks “for some purpose”
that Monarch was to fulfill (e.g., storage). The “purpose” of
Monarch’s services with respect to the fuel in the storage
tanks was merely basic management of the tank farm;
Monarch was not required to do anything with or to the jet
fuel while it was stored in Midway’s tanks.
Monarch is essentially arguing that it is entitled to a lien
for management services. But Monarch’s argument that a
bailment of Midway’s jet fuel was created by virtue of
Monarch’s possession and control over Midway’s fuel tanks
fails; Monarch’s role with respect to the fuel tanks is that of
an agent. We do not believe that Monarch has demon-
strated that what occurred when the jet fuel was placed in
Midway’s tanks was “the delivery of goods for some purpose,
upon a contract, express or implied, that after the purpose
5
To the extent that Monarch’s lien is claimed to arise from the
provision of transportation services and is said to attach to the jet
fuel in Monarch’s trucks, we note that Monarch was not acting as
a common carrier in its provision of transportation services. If it
were, there would be a carrier’s lien for payment of freight. But
since Monarch’s provision of transportation services was not in
the capacity of a common carrier, Monarch is not entitled to a
possessory lien at common law for transportation services. See
Restatement (First) of Security § 61, cmt. (g) (1941) (“Private car-
riers have less onerous duties and responsibilities [than common
carriers] and have no possessory liens unless granted by contract
or statute.”). Monarch’s contract with Midway does not provide for
any possessory liens, and Monarch has not asserted any statutory
liens, so it is not entitled to a lien on the fuel in its trucks to pay
transportation charges.
No. 03-3337 15
has been fulfilled they shall be redelivered to the bailor.”
Spirit of Excellence,
334 Ill. App. 3d at 147 n.1. Monarch’s
management of the fuel tank farm in which the jet fuel was
stored did not, after all, purport to impact the jet fuel
directly and is not among those services recognized at
common law as giving rise to a possessory lien.6 Cf. Restate-
ment (First) of Security § 61 (1941) (“The service necessary
to create a lien is limited to work actually performed upon
the chattel itself. There is no lien for intellectual labor
although it may have been wholly confined to the chattel as
a subject. Thus an art expert to whom a painting has been
delivered for appraisal and opinion cannot retain the
painting as security for his fee, in the absence of a special
contract for a lien.”).
Thus, under the circumstances of this case, Monarch has
not demonstrated that a bailment ever took place. There
was no delivery of goods into Monarch’s possession for some
purpose to be served—at least, no purpose recognized by the
common law as giving rise to a possessory lien for services.
We agree with the bankruptcy court that Monarch is not
entitled to a lien on the jet fuel, and there is therefore no
basis for Monarch’s secured claim for its expenses, either
pre-petition or post-petition.
6
Those circumstances/services recognized as giving rise to enti-
tlement to a possessory lien include: (1) “a bailee who at the re-
quest of the bailor does work upon or adds materials to a chattel”
(which does not necessarily require the chattel’s market value to
increase); (2) transportation of a chattel by a common carrier; (3)
a hotelkeeper; (4) storage of a chattel provided by a warehouse-
man; (5) finding a chattel for which a specific reward is offered; (6)
sale of a chattel, if the seller is in possession; (7) advancing money
or incurring liability by an agent on behalf of his principal in
respect of a chattel in his possession; (8) a landlord who enters
and seizes chattels in the tenant’s possession after a default on
rent; and (9) a possessor of land who seizes a thing doing damage
on the land. Restatement (First) of Security § 61 (1941).
16 No. 03-3337
III.
We are, frankly, somewhat baffled by Monarch’s pursuit
of this appeal, given the high costs of litigation and the rela-
tively small amount in dispute. But although we cannot
explain Monarch’s litigation strategy, we can express a hope
that the resolution of this claim will bring Midway Airlines
one step closer to terminating its long-standing bankruptcy
estate. For the reasons stated above, the district court is
AFFIRMED.
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—9-13-04