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

No. 03-1157
IN RE: THOMAS O. OAKLEY,
                                                   Debtor-Appellee.

APPEAL OF: DANIEL L. FREELAND,
                                                            Trustee.
                          ____________
              Appeal from the United States District Court
       for the Northern District of Indiana, Hammond Division.
                  No. 02 C 50—Rudy Lozano, Judge.
                          ____________
   ARGUED SEPTEMBER 5, 2003—DECIDED SEPTEMBER 25, 2003
                          ____________


  Before BAUER, POSNER, and ROVNER, Circuit Judges.
   POSNER, Circuit Judge. The question presented by this
appeal is whether U.S. currency is “tangible” or “intangible”
personal property within the meaning of an Indiana statute
that places some of the property of a bankrupt or other
judgment debtor beyond the reach of his creditors. See
Arnold v. Melvin R. Hall, Inc., 496 N.E.2d 63, 65 (Ind. 1986);
State ex rel. Wilson v. Monroe Superior Court IV, 444 N.E.2d
1178, 1178 (Ind. 1983); In re Salzer, 52 F.3d 708, 711 (7th Cir.
1995). The statute exempts $4000 worth of tangible property,
but only $100 of intangible property, Ind. Code §§ 34-55-10-
2(b)(2), (3), which is why it makes a difference how currency
is classified. The statute is applicable to this bankruptcy case
because the Bankruptcy Code allows a state to substitute its
2                                                  No. 03-1157

own system of debtor exemptions for the Code’s, 11 U.S.C.
§§ 522(b)(1), (2)(A), and Indiana has taken up this option.
Ind. Code § 34-55-10-1; In re Salzer, supra, 52 F.3d at 711 n. 2.
  Thomas Oakley declared bankruptcy under Chapter 7 of
the Bankruptcy Code and claimed an exemption of $2700 in
cash, which was too much by $2600 if cash, like a bank
account, corporate stock, Treasury note or other bond, or
promissory note, is intangible property within the meaning
of the Indiana statute. The only uncontroversially tangible
property that Oakley sought to exempt consisted of house-
hold goods and furnishings ($500), necessary wearing
apparel ($250), and a watch ($150), which add up to only
$900, so it is understandable why he wanted his cash
deemed tangible property. The trustee objected and his
objection was sustained by the bankruptcy judge, but the
district judge reversed. 287 B.R. 174 (N.D. Ind. 2002). The
district judge’s order was final and therefore (see 28 U.S.C.
§ 158(d)) appealable. In re Erickson, 815 F.2d 1090, 1091-
92 (7th Cir. 1987); In re Barker, 768 F.2d 191, 194 (7th Cir.
1985); In re White, 727 F.2d 884, 886 (9th Cir. 1984); cf. John
T. Mather Memorial Hospital of Port Jefferson, Inc. v. Pearl, 723
F.2d 193, 194 n. 1 (2d Cir. 1983). Although it didn’t wind up
the bankruptcy proceeding, it definitively adjudicated the
debtor’s entitlement to a definite amount of money. The
adjudication is definitive because it cannot be affected by
the resolution of any other issue in the proceeding, and
therefore no purpose would be served by postponing the
appeal to the proceeding’s conclusion.
  To our surprise, the question whether cash is intangible
property for purposes of debtor exemption statutes has not
been discussed in any reported appellate opinion that we
can find. Plenty of cases, laboriously parsed in the parties’
briefs, address the question whether cash is tangible or
intangible property in other contexts, such as taxation or
No. 03-1157                                                    3

probate, but none involves debtor exemptions. Those cases
reach divergent results—for example, compare Blodgett v.
Silberman, 277 U.S. 1, 18 (1928), with In re Estate of Larson,
538 N.W.2d 802 (Wis. App. 1995); see also Losana Corp. v.
Porterfield, 236 N.E.2d 535, 537 (Ohio 1968)—but that is
altogether natural. The correct classification depends on the
legal consequences, which vary from statute to statute; but
as a result the classifications that have been made by cases
interpreting other statutes do not illuminate, let alone -
control, the issue in this case.
   Oakley makes much of the fact that currency is tangible in
the literal sense: it can be touched (also tasted, felt, sniffed,
etc.), unlike a bank account. Although the amount of money
in a person’s bank account is evidenced by a piece of paper
(if only a printout of a computer record— and anyway the
electrons in a computer file are tangible in a conventional
sense of the word), the money itself cannot be touched,
tasted, etc. You cannot peek inside your bank account and
see something any more that you can look under the hood
of your car and see the torque or the horsepower. A bank
account, a bond, a stock interest in a corporation, and other
such financial assets do not have a physical or temporal site;
they are to currency as an idea or a number is to a rock or an
onion. They have, in short, a different ontology.
  This is just a historical accident, though. Paper money
used to consist of promissory notes issued by banks, the
promise being to pay gold or silver. Such paper money,
though tangible, is so in the same irrelevant sense in which
any promissory note is tangible. Later, paper money
consisted of promissory notes issued by government banks,
such as the federal reserve banks, but it was still redeemable
in specie (just as a winning lottery ticket is redeemable in
money). Eventually they ceased to be redeemable, but why
4                                                  No. 03-1157

that should affect a debtor’s rights is beyond us. Still, for
what (very little) it is worth, Oakley has literalism on his
side—and he claims also to have liberalism on his side, ar-
guing that exemptions from creditors’ collection efforts are
designed for the benefit of debtors and therefore should
be construed in debtors’ favor. We do not understand
the “therefore.” It is true that decisions in Indiana and
elsewhere say such things as that debtor exemptions are
“based upon considerations of public policy and humanity;
and it was not alone for the benefit of the debtor, but for his
family also, that such laws were enacted, and the same
should be liberally construed.” Pomeroy v. Beach, 49 N.E.
370, 372 (Ind. 1898); see also In re Zimmermann, 46 P.3d 599,
601 (Mont. 2002); In re Portal, 45 P.3d 891, 892 (N.M. 2002);
Goldenberg v. Sawczak, 791 So. 2d 1078, 1081 (Fla. 2001). But
if the exemption itself is pro-debtor, the ceiling on it is pro-
creditor, as acknowledged in cases such as In re Zumbrun,
626 N.E.2d 452, 455 (Ind. 1993), where we read that “the
various statutes adopted over the years fixing the dollar
amount of exemptions represented a policy balancing the
interests of lender and debtor.” The deeper point is that,
as we pointed out in In re Thompson, 867 F.2d 416, 419 (7th
Cir. 1989), and In re Szekely, 936 F.2d 897, 901 (7th Cir. 1991);
cf. Cox v. Zale Delaware, Inc., 239 F.3d 910, 912-13 (7th Cir.
2001), generous-seeming exemptions from debt collection
don’t necessarily benefit debtors. The harder it is to collect
a debt, the higher the interest rate that lenders will charge,
with the result that debtors as a whole, as distinct from the
subset of defaulting debtors, may actually be hurt by a
“generous” scheme of exemptions.
   The key to a sound interpretation of the words “tangible”
and “intangible” in the Indiana debtor-exemptions statute
lies in the legislature’s purpose, so far as that can be in-
ferred, in making the respective exemptions of such dif-
No. 03-1157                                                  5

ferent size. Why would Indiana allow 40 times as great an
exemption for tangible property as for intangible property?
The answer probably is that Indiana doesn’t want the cred-
itor to be able to take away all the debtor’s clothes, dishes,
towels, toilet paper, appliances, work tools, and furniture,
as that would make it almost impossible for him to function;
$4000 is a very modest estimate of the amount of tangible
property that a person needs to survive as a selfrespecting
citizen rather than as a beggar or a derelict. Other exemp-
tions, which work in the same direction, are $7500 for the
debtor’s personal residence, and, without limitation of
value, “professionally prescribed health aids.” Ind. Code §§
34-55-10-2(b)(1), (4). It is significant that, unlike the Bank-
ruptcy Code’s menu of exemptions, Indiana does not
separately exempt “implements, professional books, or
tools, of the trade of the debtor.” 11 U.S.C. § 522(d)(6).
Exemption of them must be sought as part of the exemption
for tangible property. This reinforces the inference that the
tangible-property exemption is intended primarily for
indispensables, although for obvious practical reasons it is
not limited to them; “indispensability” would not be a
workable criterion for determining how much property a
debtor should be permitted to keep out of the hands of his
creditors.
  In contrast to tangible possessions, financial assets are in
the nature of reserves. And creditors much prefer to levy on
them because the cost of selling a debtor’s personal posses-
sions (the creditor isn’t going to want to wear the debtor’s
clothes, after all) is likely to eat up the revenue from the
sale; the essentially in terrorem purpose of authorizing
creditors to threaten to seize and sell such property is well
recognized. In re Thompson, supra, 867 F.2d at 418. Exempt-
ing mainly just tangible property is a win-win solution to
the collection problem from the standpoint of both parties.
6                                               No. 03-1157

This we imagine explains the statute’s steep tilt in favor of
exempting the debtor’s tangible rather than intangible
goods.
  Our analysis points to classifying cash as intangible
property. From the standpoint of debtor and creditor alike,
cash is interchangeable with other financial assets, and
things that are interchangeable should normally be treated
the same by the law in order to prevent evasion through
easy substitution. If as Oakley argues $4000 in cash but
not in a bank account is exempt, debtors in Indiana
who face collection actions will be quick to convert their
bank accounts to cash, a danger recognized by the Indiana
Supreme Court in a related context in In re Zumbrun, supra,
626 N.E.2d at 455. They are less likely to convert cash to
furniture or clothes that they don’t need as much as they
need the cash. (If they needed them more, they probably
would have bought them already.) By the same token,
creditors are happy to receive cash in lieu of a check—
happier, in fact, since checks can bounce. Treating cash as a
form of tangible property for purposes of the exemption
statute would thus create perverse incentives for debtors
while depriving creditors of access to a financial asset as
easily liquidated as any of the financial assets conceded to
be intangible property entitled to only the meager $100
exemption. Of course, the debtor cannot eat his exempt
tangible property; and $100 does not go far. But its meager-
ness is somewhat deceptive, since Indiana permits creditors
to garnish a maximum of 25 percent of a debtor’s in-
come—of his disposable income, which is only a fraction of
his total income. Ind. Code § 24-4.5-5-105(2). See Mims v.
Commercial Credit Corp., 307 N.E.2d 867, 868 (Ind. 1974).
  The distinction that we are emphasizing is between use
value and exchange value. A napkin has value; you can
wipe your mouth with it. Wallpaper has value; you can
No. 03-1157                                                 7

decorate your walls with it. People do not wipe their
mouths with money or paper their walls with it. They value
cash only because they can use it to obtain useful goods like
napkins and wallpaper. They value money in the bank for
the identical reason. Oakley points out that if you lose your
checkbook, your bank account is intact, but if you lose cash,
it’s gone. It may not be. If cash is stolen from your house,
and you have burglary insurance, the insurance company
will restore the money to you—but not in cash, instead by
check, which you’ll be happy to accept in lieu of cash. If
what was stolen from you was a $100 bill, you could not
complain if the insurance company wrote you a check for
that amount, rather than giving you a $100 bill; or if it gave
you five $20 bills instead of one $100 bill—which shows that
the piece of rag paper, the tangible embodiment of cash
money, is no more indispensable than the stolen checkbook
or credit card. In contrast, if your chair were stolen, the
insurance company might replace the chair or give you a
check for its value, but the one thing it would not do would
be to give you cash equal to the value of the check and tell
you, sit on this.
  There is an exotic analogy to the rule of the English
common law that treasure trove escheats to the government
rather than being the property of the finder. Campbell v.
Cochran, 416 A.2d 211, 222 n. 10 (Del. Super. 1980). Treasure
trove is any money, gold, or silver hidden underground; the
rule’s original reference was to buried Roman treasures
discovered in feudal times. The Crown wanted the treasures
for itself rather than let the finder keep them. Corliss v.
Wenner, 34 P.3d 1100, 1104-05 (Idaho App. 2001); Jesse
Dukeminier & James E. Krier, Property 112-13 (4th ed. 1998).
How the British monarchy financed itself is irrelevant to this
case, but a modern rationale can be suggested for the rule.
We do not want to encourage people to search for buried
8                                                No. 03-1157

money, especially paper money, which has no utilitarian
value (unlike gold or silver, which can be used to make
jewelry and other useful items), because an increase in the
amount of money in circulation does not increase the stock
of useful goods; it merely reduces the exchange value of
each unit of money. The discovery of gold by the Spanish in
the New World caused inflation in Europe; it did not enrich
Europe. Although money does not cease to be treasure trove
merely because it becomes a collector’s item, see, e.g.,
Morgan v. Wiser, 711 S.W.2d 220 (Tenn. App. 1985)—a coin
recovered from a sunken galleon, for example, or a $20 bill
in which Michael Jackson’s face is substituted for Andrew
Jackson’s—at that point it no longer has merely exchange
value. It has become a useful object, like a work of art, and
so is treated as tangible property, Sanders v. Freeman, 221
F.3d 846, 855-56 (6th Cir. 2000); Losana Corp. v. Porterfield,
supra, 236 N.E.2d at 537, though again we cannot find a
pertinent debtor-exemption case.
  We may seem to have wandered from the point, which
was not the metaphysics of money but the practical eco-
nomics of debt collection. But there is a connection. Because
money in whatever form—whether cash or an invisible, a
disembodied, financial asset—is a medium of exchange
rather than a useful good (with the irrelevant exception of
money that has become a collector’s item), it is what
creditors want to levy on. Clothes, furniture, and other
personal possessions are useful goods that are indispensable
(up to a point—but remember that the exemption for
tangible property is modest) to the debtor but of little value
to creditors, who would have to convert them to money to
recover their loan and would incur heavy transaction costs,
relative to the value of the goods, in the process.
 So no more than $100 of Oakley’s $2700 in U.S. currency
was entitled to be exempted from the bankrupt estate; the
No. 03-1157                                                 9

trustee is entitled to the rest. Even Oakley’s entitlement to
the $100 is uncertain. It depends on whether he has any
other intangible property that he wants to exempt—and it
happens that his schedule of exemptions includes $200 for
a security deposit and $100 for a savings account. Both
claims are to exempt intangible property, yet as far as we
can determine the trustee objected to neither even though
their sum exceeds $100. The matter can be straightened out
in the bankruptcy court.
                                                  REVERSED.

A true Copy:
       Teste:

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




                    USCA-02-C-0072—9-25-03
