B-178835, NOV 20, 1974, 54 COMP GEN 397

B-178835, NOV 20, 1974, 54 COMP GEN 397

CHECKS - PAYEES - DEPOSITARY BANK - HOLDER IN DUE COURSE DEPOSITARY BANK WHICH CREDITS GOVERNMENT CHECKS TO DEPOSITOR'S ACCOUNT AND ALLOWS WITHDRAWALS OF THE AMOUNT OF THE DEPOSIT WITHOUT NOTICE OF ANY DEFECTS IS HOLDER IN DUE COURSE, ENTITLED TO RECEIVE PAYMENT OF CHECKS IN FULL FROM TREASURY DEPARTMENT WITHOUT SETOFF FOR TAX OR OTHER DEBTS OWING BY THE PAYEE, NOTWITHSTANDING STOP ORDER PLACED ON PAYMENT.

IN THE MATTER OF WINN FARMERS COOPERATIVE, NOVEMBER 20, 1974:

BY LETTER OF NOVEMBER 14, 1973, THE DEPARTMENT OF THE TREASURY (TREASURY) REFERRED TO THE GENERAL ACCOUNTING OFFICE (GAO) FOR REVIEW AND DECISION A CLAIM, BY LETTER OF NOVEMBER 2, 1973, OF NORTHWEST NATIONAL BANK (HEREAFTER NORTHWEST OR THE CLAIMANT BANK) BY ITS ATTORNEY, JAMES T. EVANS, FOR PAYMENT OF THESE SEVEN CHECKS TOTALING $27,550.60:

DATES

NO. AMOUNT DRAWN NEGOTIATED

3,884,503 2,221.80 3/ 2/73 3/ 8/73

3,884,740 2,114.00 3/ 2/73 3/ 8/73

3,887,106 4,197.00 3/ 6/73 3/12/73

3,887,150 7,175.43 3/ 6/73 3/12/73

3,888,771 3,192.73 3/ 7/73 3/12/73

3,888,772 4,689.80 3/ 7/73 3/12/73

3,893,961 3,959.84 3/12/73 3/12/73

TOTAL 27,550.60

THE CHECKS WERE NEGOTIATED TO NORTHWEST FOR DEPOSIT BY A RUBBER STAMP RESTRICTIVE ENDORSEMENT OF THE PAYEE, WINN FARMERS COOPERATIVE (WINN). THE CLAIM IS BASED UPON NORTHWEST'S RIGHTS AS HOLDER IN DUE COURSE FOR GOOD AND VALUABLE CONSIDERATION WITHOUT NOTICE OF ANY DEFAULT OR DEFENSE.

UNAUTHORIZED NEGOTIATION OF THE CHECKS WAS REPORTED TO TREASURY BY CLAUDE L. O'BRYAN, PRESIDENT OF WINN. ON PRESENTATION OF THE CHECKS TO TREASURY PAYMENT WAS DECLINED, AND THE CHECKS WERE CHARGED BACK, THROUGH THE FEDERAL RESERVE BANK, HOUSTON, TEXAS, TO THE CLAIMANT BANK. ALSO, BY LETTER OF MAY 14, 1973, GAO SUGGESTED THAT TREASURY CONTINUE TO WITHHOLD PAYMENT OF THE CHECKS, AT LEAST $25,000, BECAUSE OF OVERCHARGES BY WINN FOR TRANSPORTATION SERVICES PERFORMED FOR THE GOVERNMENT.

IN ADDITION, THIS LEVY FOR TAXES HAS BEEN FILED WITH TREASURY AGAINST WINN FOR $21,852.93 BY THE INTERNAL REVENUE SERVICE (IRS):

ASSESSMENT DATE OF LEVY

DATE AMOUNT TOTALS NOTICE

3/12/73 $4,320.63 -------------------- ---------------

6/ 4/73 4,534.04 $ 8,854.67 6/22/73

3/12/73 12,998.26 21,852.93 5/29/73

THE QUESTION PRESENTED IS WHETHER NORTHWEST'S CLAIM IS SUPERIOR TO GAO'S OVERPAYMENT CLAIMS AND TO THE TAX INDEBTEDNESS CLAIM OF IRS.

CLAUDE L. O'BRYAN EXECUTED TWO FORMS TUS 1133C, TITLED "CLAIM AGAINST THE UNITED STATES FOR THE PROCEEDS OF A GOVERNMENT CHECK OR CHECKS," DATED APRIL 5, 1973, STATING THAT THE SEVEN CHECKS (1) WERE NOT RECEIVED OR SEEN BY THE PAYEE, (2) WERE ENDORSED AND DEPOSITED WITHOUT AUTHORITY TO AN UNAUTHORIZED ACCOUNT IN NORTHWEST, (3) WERE NOT ENDORSED BY THE PAYEE AND (4) WERE NOT ENDORSED WITH PAYEE'S CONSENT OR BY AGREEMENT OR UNDERSTANDING WITH ANYONE. AGAIN, BY A SWORN LETTER AFFIDAVIT OF MARCH 22, 1973, SIGNED BY CLAUDE L. O'BRYAN, IT IS ALLEGED THAT WINN HAD NO ACCOUNT IN NORTHWEST, THAT THE ENDORSEMENTS ON THE SEVEN CHECKS WERE UNAUTHORIZED, AND THAT NONE OF THE CHECKS WERE RECEIVED BY WINN.

THE RECORD CONTAINS A COPY OF A FACTORING AGREEMENT ENTERED INTO BETWEEN WINN AND NORTHWEST VENTURES, INC. (VENTURES). THE AGREEMENT IS DATED AUGUST 7, 1972.

CONTRARY TO THE ALLEGATIONS OF WINN'S PRESIDENT, VENTURES WAS AUTHORIZED BY PARAGRAPH 12 OF THE AGREEMENT "*** TO ENDORSE THE NAME OF THE COMPANY (WINN) UPON ANY AND ALL CHECKS *** RECEIVED IN PAYMENT OF ALL OR ANY PART OF ANY ACCOUNT PURCHASED BY ***" VENTURES, AND PARAGRAPH 16 OF THE AGREEMENT PROVIDES THAT WINN AGREES TO CONDUCT ALL ITS BANKING BUSINESS WITH NORTHWEST. PARAGRAPH 17 OF THE AGREEMENT PROVIDES THAT THE TERM OF THE AGREEMENT IS TO BE THREE YEARS, WITH AUTOMATIC ANNUAL EXTENSIONS UNLESS TERMINATED ON 90 DAYS NOTICE.

THE AUTHORITY GRANTED TO VENTURES TO ENDORSE CHECKS FOR WINN AND TO DEPOSIT THE AMOUNTS IN THE CLAIMANT BANK, GRANTED IN THE FACTORING AGREEMENT, COULD BE CHANGED OR WITHDRAWN ONLY BY TERMINATION OR AMENDMENT OF THE AGREEMENT. THERE IS NO EVIDENCE IN THE RECORD THAT THE AGREEMENT HAS BEEN TERMINATED OR AMENDED, AND NORTHWEST, BY ITS ATTORNEY, HAS ADVISED GAO INFORMALLY THAT THE AGREEMENT, IN FACT, HAS NEVER BEEN TERMINATED, AND IS IN FULL FORCE AND EFFECT.

THE CHECKS WERE MAILED TO THE ADDRESS SHOWN ON THE CLAIM VOUCHERS WHICH APPARENTLY WERE SIGNED BY OFFICIALS OF WINN. NORTHWEST, BY ITS ATTORNEY, ALSO HAS INFORMALLY ADVISED GAO THAT THIS ADDRESS WAS A JOINT DEPOSITORY OF WINN AND VENTURES FOR RECEIPT OF PAYMENTS OF FACTORED ACCOUNTS. THEREFORE SEEMS THAT THESE SEVEN CHECKS WERE RECEIVED BY VENTURES IN PAYMENT OF FACTORED ACCOUNTS AND WERE ENDORSED FOR DEPOSIT BY VENTURES FOR WINN AS AUTHORIZED IN THE FACTORING AGREEMENT. THUS, WE BELIEVE THAT THE CONTENTION OF WINN THAT THE CHECKS WERE NOT RECEIVED AND WERE ENDORSED WITHOUT AUTHORITY IS WITHOUT MERIT.

BY A LETTER OF JUNE 11, 1974, THE CLAIMANT BANK ALLEGES, BY ITS ATTORNEY, THAT FROM SEPTEMBER 1972 AT LEAST 100 GOVERNMENT CHECKS IN PAYMENT OF TRANSPORTATION FOR THE DEPARTMENT OF DEFENSE AND MAILED TO WINN AT THE ADDRESS OF THE JOINT DEPOSITORY WERE RECEIVED BY THE CLAIMANT BANK AND CREDITED TO THE ACCOUNT MAINTAINED IN THE NAME OF WINN, PURSUANT TO THE FACTORING AGREEMENT. WITH THE EXCEPTION OF THE SEVEN CHECKS HERE INVOLVED, ALL SUCH CHECKS WERE HONORED BY THE TREASURY AND NO QUESTIONS OR OBJECTIONS WERE RAISED AT ANY TIME BY THE DRAWER, BY THE PAYEE, OR BY THE DRAWEE.

CHECK NUMBERS 3,884,503 AND 3,884,740 WERE CREDITED TO THE ACCOUNT ON MARCH 8, 1973, AND THE OTHER FIVE CHECKS WERE CREDITED TO THE ACCOUNT ON MARCH 12, 1973. BETWEEN MARCH 13 AND 20, 1973, THE CLAIMANT BANK ALLOWED CHARGES OF $156,429.28 BY VENTURES AGAINST THE ACCOUNT. THERE IS NO INDICATION IN THE RECORD THAT THE CLAIMANT BANK HAD ANY ACTUAL KNOWLEDGE OF THE DEBTS DUE FROM THE PAYEE TO THE GOVERNMENT. IN FACT, THE DATES THAT THE CHECKS WERE CREDITED TO WINN'S ACCOUNT IN THE CLAIMANT BANK ARE SIMULTANEOUS WITH OR PRIOR TO THE DATES THAT THE TAX ASSESSMENTS WERE MADE AND THE DATES THAT VENTURES WITHDREW FUNDS FROM THE ACCOUNT ARE PRIOR TO THE DATES THAT NOTICES OF LEVY WERE SENT TO TREASURY. THEREFORE, THE CHECKS WERE RECEIVED BY THE CLAIMANT BANK IN GOOD FAITH AND WITHOUT NOTICE OF ANY DEFENSES OR DEFECTS.

RELYING UPON THE STATUTES AND JUDICIAL AUTHORITY OF THE STATE OF TEXAS THE AMOUNTS OF THE SEVEN CHECKS ARE CLAIMED BY THE CLAIMANT BANK FREE OF THE DEFENSE OF ANY AMOUNTS OWING BY THE PAYEE TO THE UNITED STATES, DRAWER AND DRAWEE.

WHEN THE GOVERNMENT FOLLOWS THE USUAL COMMERCIAL PRACTICE IN THE CONDUCT OF ITS BUSINESS IT INCURS THE RESPONSIBILITY OF PRIVATE PERSONS IN SIMILAR CIRCUMSTANCES, SO THAT WHEN IT ISSUES CHECKS, IT BECOMES SUBJECT TO THE ORDINARY RULES APPLICABLE TO THE ISSUANCE OF NEGOTIABLE INSTRUMENTS BY PRIVATE PERSONS. SEE CLEAR FIELD TRUST COMPANY V. UNITED STATES, 318 U.S. 363, 366 (1943); 12 COMP. GEN. 492 (1933). HOWEVER, IN CLEAR FIELD, THE SUPREME COURT OF THE UNITED STATES WENT ON TO POINT OUT THAT WHEN THE UNITED STATES DISBURSES ITS FUNDS OR PAYS ITS DEBTS, IT IS EXERCISING A CONSTITUTIONAL FUNCTION OR POWER, AND THE AUTHORITY TO ISSUE THE CHECK THERE INVOLVED HAD ITS ORIGIN IN THE CONSTITUTION AND THE STATUTES OF THE UNITED STATES, AND IS, IN NO WAY, DEPENDENT ON THE LAWS OF ANY STATE. THEREFORE, THE COMMERCIAL PAPER OF THE UNITED STATES IS NOT GOVERNED BY THE STATUTES AND DECISIONS OF ANY PARTICULAR STATE BUT BY THE FEDERAL LAW MERCHANT, REPRESENTING GENERAL COMMERCIAL LAW, AND THE FEDERAL STATUTES AND REGULATIONS. SEE, ALSO NATIONAL METROPOLITAN BANK V. UNITED STATES, 323 U.S. 454, 456 (1945); FULTON NATIONAL BANK V. UNITED STATES, 197 F.2D 763 (5TH CIR. 1952); UNITED STATES V. PHILADELPHIA NATIONAL BANK, 304 F. SUPP. 955 (E.D. PA. 1969); UNITED STATES V. BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, 288 F. SUPP. 343, AFF'D. 438 F.2D 1213 (9TH CIR. 1971); 51 COMP. GEN. 668 (1972); 50 ID. 441 (1970); 26 ID. 834, 836 (1947); 14 ID. 212, 213 (1934).

THE UNIFORM COMMERCIAL CODE HAS BEEN ADOPTED IN EVERY STATE OF THE UNITED STATES, EXCEPT LOUISIANA, AND ON NEGOTIABLE INSTRUMENTS GENERALLY EMBODIES AND HAS BECOME THE LAW MERCHANT, WHICH IS INCORPORATED INTO THE FEDERAL LAW GOVERNING TREASURY CHECKS. THEREFORE, IN THE ABSENCE OF A CONTRARY PROVISION BY FEDERAL STATUTE, REGULATION OR RULING, THE PROVISIONS AND DECISIONS UNDER THE UNIFORM COMMERCIAL CODE WILL GOVERN FEDERAL COMMERCIAL PAPER. SEE UNITED STATES V. HEXT, 444 F.2D 804, 809 (5TH CIR. 1971); 51 COMP. GEN. 668 (1972); 50 ID. 441 (1970). TO THE EXTENT HERE PERTINENT THE PROVISIONS OF THE BUSINESS AND COMMERCIAL CODE OF TEXAS, ADOPTING THE UNIFORM COMMERCIAL CODE, TEXAS CODE ANNOTATED, BUS. & C. SECTION 1.101, ET SEQ. (VERNON 1968), ARE WORDED IDENTICALLY TO THE SIMILARLY NUMBERED SECTIONS OF THE UNIFORM COMMERCIAL CODE. FOR CONSISTENCY THEN, REFERENCES HERE WILL BE TO THE SECTIONS OF THE UNIFORM COMMERCIAL CODE.

SECTION 3-302(1) OF THE UNIFORM COMMERCIAL CODE PROVIDES:

A HOLDER IN DUE COURSE IS A HOLDER WHO TAKES THE INSTRUMENT

(A) FOR VALUE; AND

(B) IN GOOD FAITH; AND

(C) WITHOUT NOTICE THAT IT IS OVERDUE OR HAS BEEN DISHONORED OR OF ANY DEFENSE AGAINST OR CLAIM TO IT ON THE PART OF ANY PERSON.

SECTION 4-209 OF THE CODE EXTENDS THE PROVISIONS OF SECTION 3-302 TO A BANK AND SECTION 1-201 INCLUDES A DEPOSITARY BANK WITHIN THE DEFINITION OF A BANK. SECTION 3-206(3) PROVIDES THAT A DEPOSITARY BANK RECEIVING A CHECK UNDER A RESTRICTIVE INDORSEMENT, AS HERE, BECOMES A HOLDER FOR VALUE TO THE EXTENT THAT THE VALUE GIVEN FOR OR ON THE SECURITY OF THE INSTRUMENT IS CONSISTENT WITH THE INDORSEMENT.

IT IS ALMOST UNIVERSALLY HELD OR STATED THAT WHEN A BANK PERMITS ITS DEPOSITOR TO WITHDRAW COMPLETELY OR OTHERWISE EMPLOY THE PROCEEDS OF THE ITEM DEPOSITED PRIOR TO RECEIPT OF ANY NOTICES THAT PAYMENT HAS BEEN STOPPED OR THAT THE INSTRUMENT IS DEFECTIVE, THE BANK HAS GIVEN VALUE FOR THE PAPER AND IS A HOLDER IN DUE COURSE, PROVIDED THAT THE ITEM WAS RECEIVED IN GOOD FAITH AND WITHOUT NOTICE OF DEFECTS. SEE HARTFORD ACCIDENT AND INDEMNITY CO. V. FEDERAL DEPOSIT INSURANCE, 204 F.2D 933 (8TH CIR. 1953); CITIZENS NATIONAL BANK V. FORT LEE SAVINGS AND LOAN ASSOCIATION, 213 A.2D 315 (SUPER. CT. N.J. 1965); WALTHAM CITIZENS NATIONAL BANK V. FLETT, 234 N.E.2D 739 (SUP.JUD.CT.MASS. 1968); EXCHANGE NATIONAL BANK OF WINTERHAVEN V. BESHARA, 236 SO. 2D 198 (DIST.CT.APP.FLA. 1970); PAZOL V. CITIZENS NATIONAL BANK OF SANDY SPRINGS, 138 S.E.2D 442 (CT.APP.GA.1964); MCPHEETERS V. FARMERS STATE BANK, CENTER, TEXAS, 416 S.W.2D 605 (CT.CIV.APP.TTEX. 1967). FOR ADDITIONAL CITATIONS SEE 11 AM.JUR.2D, BILLS & NOTES, SECTION 339, NOTE 10. TO THIS EXTENT THE RULE APPEARS TO BE DECLARATORY OF THE PREEXISTING LAW MERCHANT. SEE ISRAEL V. GALE, 174 U.S. 391 (1899); LINCOLN ALLIANCE BANK V. LANDERS COMPANY, 297 FED. 225 (N.D.TEX. 1924), AFF'D 298 FED. 79 (5TH CIR. 1924), CERT.DEN. 265 U.S. 595 (1923); UNIVERSAL C.I.T. CREDIT CORPORATION V. GUARANTEE BANK AND TRUST COMPANY, 161 F.SUPP. 790 (D. MASS. 1958); QUANAH, A. & P.R.R. V. WICHITA STATE BANK & TRUST COMPANY, 93 S.W.2D 701 (SUPP.CT.TEX. 1936). AT LEAST UNDER THE UNIFORM COMMERCIAL CODE, THE SAME RULE APPLIES ALTHOUGH THE CHECK WAS NEGOTIATED TO THE BANK UNDER A RESTRICTIVE INDORSEMENT. SEE LOWRENCE MOTOR COMPANY V. FIRST NATIONAL BANK, 238 F.2D 625 (5TH CIR. 1956).

SECTION 3-305 OF THE UNIFORM COMMERCIAL CODE PROVIDES THAT TO THE EXTENT THAT A HOLDER (WHICH WOULD INCLUDE A DEPOSITARY BANK) IS A HOLDER IN DUE COURSE HE TAKES THE INSTRUMENT FREE FROM ALL CLAIMS TO IT ON THE PART OF ANY PERSON; AND ALL DEFENSES OF ANY PARTY TO THE INSTRUMENT WITH WHOM THE HOLDER HAS NOT DEALT (WITH EXCEPTIONS NOT HERE PERTINENT). OFFICIAL COMMENT NUMBER 2 TO SECTION 3-305 STATES:

THE LANGUAGE "ALL CLAIMS TO IT ON THE PART OF ANY PERSONS" IS SUBSTITUTED FOR "ANY DEFECT OF TITLE OF PRIOR PARTIES" IN THE ORIGINAL SECTION 57 IN ORDER TO MAKE IT CLEAR THAT THE HOLDER IN DUE COURSE TAKES THE INSTRUMENT FREE NOT ONLY FROM ANY CLAIM OF LEGAL TITLE BUT ALSO FROM ALL LIENS, EQUITIES OR CLAIMS OF ANY OTHER KIND. ***

THEREFORE, UNDER THE UNIFORM COMMERCIAL CODE AND IN THE ABSENCE OF ANYTHING IN FEDERAL LAW TO THE CONTRARY, THE CLAIMANT BANK AS A HOLDER IN DUE COURSE IS ENTITLED TO PAYMENT OF THE FEDERAL CHECKS IN FULL, AND FREE OF ANY AMOUNTS OWING BY THE PAYEE TO THE UNITED STATES.

A LIEN FOR TAXES ARISES UNDER AUTHORITY OF SECTION 6321 OF THE INTERNAL REVENUE CODE, 26 U.S.C. 6321 (1970), WHICH PROVIDES:

IF ANY PERSON LIABLE TO PAY ANY TAX NEGLECTS OR REFUSES TO PAY THE SAME AFTER DEMAND, THE AMOUNT (INCLUDING ANY INTEREST, ADDITIONAL AMOUNT, ADDITION TO TAX, OR ASSESSABLE PENALTY, TOGETHER WITH ANY COSTS THAT MAY ACCRUE IN ADDITION THERETO) SHALL BE A LIEN IN FAVOR OF THE UNITED STATES UPON ALL PROPERTY AND RIGHTS TO PROPERTY, WHETHER REAL OR PERSONAL, BELONGING TO SUCH PERSON.

LEVY AND DISTRAINT FOR TAXES IS AUTHORIZED BY SECTION 6331 OF THE INTERNAL REVENUE CODE, 26 U.S.C. 6331 (1970), WHICH PROVIDES:

IF ANY PERSON LIABLE TO PAY ANY TAX NEGLECTS OR REFUSES TO PAY THE SAME WITHIN 10 DAYS AFTER NOTICE AND DEMAND, IT SHALL BE LAWFUL FOR THE SECRETARY OR HIS DELEGATE TO COLLECT SUCH TAX (AND SUCH FURTHER SUM AS SHALL BE SUFFICIENT TO COVER THE EXPENSES OF THE LEVY) BY LEVY UPON ALL PROPERTY AND RIGHTS TO PROPERTY *** BELONGING TO SUCH PERSONS OR ON WHICH THERE IS A LIEN PROVIDED IN THIS CHAPTER FOR THE PAYMENT OF SUCH TAX. *** IN 38 COMP. GEN. 23 (1958) WE HELD THAT FOR SECTION 6331 TO BE APPLICABLE IT WAS ONLY NECESSARY TO DETERMINE WHETHER THE FUNDS SOUGHT TO BE LEVIED UPON ARE PROPERTY OR RIGHTS TO PROPERTY BELONGING TO THE DELINQUIENT TAXPAYER, AND IN 19 COMP. GEN. 811 (1940), UNDER CIRCUMSTANCES ANALOGOUS TO THE FACTS HERE, WE HELD THAT WHERE ANNUITY CHECKS WERE NEGOTIATED TO A BANK AND CREDITED TO THE DEPOSITOR'S ACCOUNT, BUT ON WHICH PAYMENT WAS STOPPED BY THE TREASURY AND THE CHECKS NOT HONORED BEFORE THE DEATH OF THE ANNUITANT, OWNERSHIP OF THE CHECKS WAS IN THE DEPOSITARY BANK. THEREFORE, HERE, AFTER NEGOTIATIONS IN DUE COURSE TO THE CLAIMANT BANK FOR DEPOSIT THE CHECKS WERE NO LONGER THE PROPERTY OF OR RIGHTS TO PROPERTY IN THE DELINQUENT TAXPAYER PAYEE, WINN, BUT WERE THE PROPERTY OF THE DEPOSITARY BANK. AGAIN IN 37 COMP. GEN. 318 (1957), WE STATED AT PAGE 320:

WHERE THE CONTRACT DOES NOT CONTAIN A NO SET-OFF PROVISION IT MAY WELL BE THAT THE LIEN CREATED BY SECTION 6321 OF THE 1954 INTERNAL REVENUE CODE WOULD PREVENT THE EFFECTIVE ASSIGNMENT OF MONEYS THEREAFTER BECOMING DUE THE TAXPAYER UNDER A GOVERNMENT CONTRACT. IF THE ASSIGNMENT OF THE CONTRACT PROCEEDS WAS MADE BEFORE THE TAX BECAME DUE, THERE WOULD BE NO PROPERTY OR RIGHT TO PROPERTY OWNED BY THE TAXPAYER TO WHICH THE LIEN COULD ATTACH, AT LEAST TO THE EXTENT OF THE ASSIGNEE'S ENTITLEMENT TO SUCH PROCEEDS.

THEREFORE, BY THEIR TERMS, NEITHER SECTION 6321 NOR SECTION 6331 WOULD APPLY.

MOREOVER, THE RECORD SHOWS THAT DELINQUENT TAXES OF $16,976.93, PLUS ADDITIONS, WERE ASSESSED ON MARCH 12, 1973, AND OF $4,518.53, PLUS ADDITIONS, ON JUNE 4, 1973. CHECKS NUMBERS 3,884,503 AND 3,884,740 TOTALING $4,339.80 WERE CREDITED TO THE ACCOUNT MAINTAINED IN THE NAME OF WINN IN THE CLAIMANT BANK ON MARCH 8, 1973, PRIOR TO THE ASSESSMENT OF THE DELINQUENT TAX. THE REMAINING CHECKS WERE CREDITED TO THAT BANK ACCOUNT ON MARCH 12, 1973, THE SAME DATE AS THE EARLIEST TAX ASSESSMENTS. HOWEVER, SECTION 6323 OF THE INTERNAL REVENUE CODE, 26 U.S.C. 6323, PROVIDES THAT THE LIEN WILL NOT BE VALID AGAINST ANY PURCHASER, HOLDER OF A SECURITY INTEREST, ETC., UNTIL FILED, AND THE RECORD INDICATES THAT THE LIEN WAS NOT FILED UNTIL AFTER THE CHECKS WERE DEPOSITED AND THE DEPOSITS WITHDRAWN.

ACCORDINGLY THE STOP ORDER ON THE SEVEN CHECKS MAY BE LIFTED, AND THE AMOUNTS PAID TO THE CLAIMANT BANK.