Is It Possible To Seize Negotiable Instruments With 89/1 Notice Of Seizure?

The section titled “Measures for the Preservation of Seized Property” of the Enforcement and Bankruptcy Law No. 2004 is as follows:

“Measures for the Preservation of Seized Property

1- Movable property

ARTICLE 88

The execution office shall preserve the seized cash, banknotes, promissory notes, bills of exchange, and other negotiable instruments, as well as gold, silver, and other valuable items.

ARTICLE 89

If a claim or other right to payment that does not belong to the bearer or is not based on a negotiable instrument, or if a movable property belonging to the debtor is seized from a third party, the enforcement officer shall: notify the debtor, whether a natural or legal person, that from now on they may only pay the debt to the enforcement office and that any payment made to the debtor in execution shall not be valid, or notify the third party holding the movable property that from now on they may only deliver the movable property to the enforcement office and must not hand it over to the debtor in execution, failing which they shall be required to pay the value of the property to the enforcement office. (Notice of Attachment). This notice of attachment shall also inform the third party of the provisions of paragraphs 2, 3, and 4.”

Article 89 of the Enforcement and Bankruptcy Law regarding the seizure of claims held by third parties and Article 88 regarding movable property have led to disputes and have been the subject of multiple disputes in the past.

Upon reviewing the Supreme Court decisions on the matter, it has been determined that the issue of whether the value of negotiable instruments can be claimed from banks must be evaluated within the framework of the negotiability of such instruments:

1- Prof. Dr. Baki Kuru: If it is known that the debtor has a specific claim (deposit) or property (e.g., a promissory note) at the bank, the first attachment notice sent to the bank shall state that attachment is imposed only on that specific claim or property, and proceedings shall be conducted in accordance with the explanations provided up to this point.

However, the creditor generally does not know whether the debtor has any receivables or assets at the bank. Therefore, the first attachment notice should state that attachment is imposed on the debtor’s receivables, securities, and assets at the bank to the extent necessary to cover the amount of the receivable being pursued. Upon receiving such a garnishment notice, the bank must investigate whether the debtor has any deposits, promissory notes, or other movable property at the bank, as in the example above, and respond accordingly. If the debtor has both a deposit (deposit account) and movable property (e.g., a promissory note given for collection) at the bank, the bank must report both to the enforcement office.

Even if a garnishment notice is sent to the bank regarding only the claim or only the movable property, the bank must investigate whether the debtor has any claims (deposits), promissory notes, or other movable property at the bank, and if so, must provide information about all of them to the enforcement office. This is because the warning section of the printed attachment notice sent to banks contains provisions regarding both receivables and movable property, and the attachment notice is prepared and sent without crossing out the irrelevant provisions.

Receivables secured by valuable documents are not subject to attachment pursuant to Article 89 of the Enforcement and Bankruptcy Code. However, for example, when a promissory note is submitted to the bank for collection, it is not in the possession of the debtor but in the possession of a third party. The seizure of the promissory note held by the third party as movable property may be possible. Therefore, Article 89 of the Enforcement and Bankruptcy Code should also apply to the seizure of promissory notes submitted to the bank for collection or pledged as collateral. (Baki Kuru)

2- Dr. Burcu YILMAZ: The phrase “receivables or other claims not belonging to the bearer or not supported by a negotiable instrument, or movable property of the debtor in the possession of a third party” in Article 89 of the Enforcement and Bankruptcy Law covers the concepts in the second group. The debtor’s receivables from third parties may arise in different forms.

Examples include the debtor’s deposit in a bank, money lent to a third party, wages, rights and claims arising from life insurance, rent claims, the price of goods sold, and the seller’s claim against the buyer for payment of the price of goods sold with a reservation of ownership.

If the debtor’s claim against a third party is based on valuable documents in their possession, such documents are seized like movable property.(IİK 88/1) The Court of Cassation, in various case law decisions, has ruled that promissory notes, checks, documents payable to bearer or negotiable instruments, in short, “negotiable instruments and shares of joint-stock companies, cannot be seized from the third-party debtor of the instrument pursuant to Article 89 (the company that issued the share certificate) by sending a “seizure notice.” Instead, they may be seized by physically seizing and securing the documents—that is, in accordance with Article 88 of the Enforcement and Bankruptcy Code.

Since this rule is a mandatory rule related to public order, any action contrary to it may result in an unlimited complaint. If the claim is not dependent on a valuable document, the attachment shall be carried out in accordance with the procedure set forth in Article 89. Similarly, valuable documents owned by the debtor but held by a third party for any reason, such as deposit, loan, agency, or pledge, shall also be seized in accordance with Article 89 of the Enforcement and Bankruptcy Code, as they constitute movable property of the debtor held by third parties. (e.g., a promissory note pledged to a bank or handed over for collection)

Supreme Court of Appeal, 12th Civil Chamber, Case No. 2016/9569, Decision No. 2017/1238, Date: February 6, 2017

“The seizure of negotiable instruments is regulated under Article 88 of the Enforcement and Bankruptcy Code titled ‘Preservation Measures Regarding Seized Movable Property.’ The seizure of negotiable instruments held by the debtor in favor of the creditor is permissible under Article 88 of the Enforcement and Bankruptcy Code. However, the relevant provision imposes a requirement for actual seizure in the case of negotiable instruments that are negotiable by endorsement. The preservation of the bills is a condition for the validity of the seizure. 

For this reason, the seizure of bills of exchange in the possession of the debtor is only possible by physically taking possession of the bill, and it is not possible to seize the claim attached to the bill by sending a seizure notice to the debtor. On the other hand, negotiable instruments that cannot be transferred to another party by the third party holding the instrument may be seized in accordance with the procedure set forth in Article 89 of the Enforcement and Bankruptcy Code, as in such a case, the negotiable instrument constitutes “movable property of the debtor held by a third party.”

3- Gökçe ER: Claims based on negotiable instruments are not subject to seizure under Article 89 of the Enforcement and Bankruptcy Code. However, for example, when a promissory note is given to a bank for collection, it is not in the possession of the debtor but in the possession of a third party. The seizure of the promissory note in the possession of the third party as movable property may be possible. Therefore, Article 89 of the Enforcement and Bankruptcy Code should also apply to the seizure of promissory notes given to a bank for collection or pledged.

In a recent decision, the Court of Cassation also stated that “seizure of promissory notes given by the debtor to a third party, such as a bank, and for which the bank claims a pledge right, is possible under Article 89 of the Enforcement and Bankruptcy Code.”

Supreme Court of Appeals, 19th Civil Chamber, Case No. 2000/6124, Decision No. 2000/6722, Date: 12.10.2000

“Claims of the debtor against third parties based on negotiable instruments or instruments capable of endorsement must be seized and placed under custody if such instruments are in the possession of the debtor. The seizure of negotiable instruments given by the debtor to a third party, such as a bank, and claimed by the bank as collateral is permissible under Article 89 of the Enforcement and Bankruptcy Code. Since these instruments are not negotiable, pursuant to Article 88 of the Enforcement and Bankruptcy Code, they do not need to be physically seized and placed under custody, and therefore the seizure imposed pursuant to Article 19 of the Enforcement and Bankruptcy Code is valid.

In our opinion, the new view of the Court of Cassation is correct. Since the negotiable instruments delivered to the bank for collection are not in the possession of the debtor but in the possession of a third party (the bank), the promissory note held by the third party may also be seized as movable property. The creditor may request the seizure of the negotiable instruments delivered to the bank for collection or pledged by the debtor by informing the enforcement office of their existence. Upon this, the enforcement office sends the first seizure notice to the bank.

4- Dr. Ahmet Cahit İYİLİKLİ: The collection endorsement does not grant all rights arising from the bill, but only the authority to collect the bill amount on its own behalf and on behalf of another person to the bank to which it is endorsed. In this case, the bank to which the bill is endorsed acts as the representative of the endorser. As is known, a seizure notice based on Article 89 of the Enforcement and Bankruptcy Law cannot be sent for rights and claims related to negotiable instruments. However, the promissory note transferred to the bank by means of a collection endorsement is not in the possession of the debtor but in the possession of the bank, which is a third party. In this case, the seizure of the promissory note as a movable asset is applicable, and Article 89 of the Enforcement and Bankruptcy Law will apply to the seizure of the promissory note transferred to the bank by means of a collection endorsement.

This is because, in this case, the negotiability of the valuable document has also ceased. The Court of Cassation has stated that banknotes subject to attachment, promissory notes belonging to the holder, and other negotiable instruments shall be kept by the enforcement office; that such negotiable instruments may be seized under Article 89 of the Enforcement and Bankruptcy Law if they are in the possession of a third party for reasons other than the transfer of ownership. The Court of Cassation has accepted this and included the following points in its decision:

These documents representing the claim (payable to the bearer or negotiable) may be in the possession of third parties for any legal reason other than the transfer of ownership (such as pledge, agency, usufruct, or deposit). In this case, it should be noted that the valuable documents in the possession of third parties referred to in Article 89 of the Enforcement and Bankruptcy Law are movable property.

In other words, the third party referred to here is not the debtor of the bearer or transferable instrument, but a third party who is a party to a legal relationship such as pledge, deposit, or agency. Therefore, for example, negotiable instruments that are subject to execution but are pledged to a third party, even though they belong to the debtor, may be seized in accordance with the procedures set forth in Article 89 of the Enforcement and Bankruptcy Law (without the necessity of actual seizure and taking possession).

“In the attachment of rights attached to valuable documents, the documents are examined and placed under the custody of the enforcement office. If third parties are in possession of the documents, there is no need to physically examine or seize the documents; the attachment order may be issued by merely mentioning the documents. Finally, it is also necessary to serve the notification under Article 89/1 of the Enforcement and Bankruptcy Code on third parties as a precautionary measure.” Domaniç, p. 769.

Finally; While the definition of deposits and movable property held in banks was interpreted more narrowly in the old case law of the Court of Cassation, in recent decisions, this definition has been broadened, and it has been accepted that the amounts of valuable documents deposited with a bank for collection purposes may be claimed from the bank under Article 89/1 of the Enforcement and Bankruptcy Law No. 2004, as they constitute property held by a third party.

While attachment proceedings must be applied under Article 88 of the Enforcement and Bankruptcy Code for negotiable instruments that are actually in circulation; since negotiable instruments deposited with a bank as collateral or for collection purposes can no longer be endorsed by the bank to a third party or circulated, they must be considered movable property held by third parties, and attachment proceedings must be applied under Article 89 of the Enforcement and Bankruptcy Code.

Year: 2025

Application: Is It Possible To Seize Negotiable Instruments With 89/1 Notice Of Seizure?

Lawyers: Mehmet Said Sarıbaş & Bilal Akbaba

E-mail: info@saribasakbaba.av.tr

Website: saribasakbaba.av.tr

REFERENCES

Enforcement and Bankruptcy Law No. 2004, Articles 88 and 89

Prof. Dr. Baki Kuru, Amendments to Article 89 of the Enforcement and Bankruptcy Law

Attorney Talih UYAR, Attachment of the Debtor’s Rights and Claims Against Third Parties

Supreme Court Precedents