United States v. Bank of America National Trust & S. Ass'n
| Decision Date | 18 May 1964 |
| Docket Number | Civ. No. 426-61. |
| Citation | 229 F. Supp. 906 |
| Court | U.S. District Court — Southern District of California |
| Parties | UNITED STATES of America, Plaintiff, v. BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, a national banking association, Defendant. |
Francis C. Whelan, U. S. Atty., for the Southern District of California, by Loyal E. Keir, Asst. U. S. Atty., Chief, Tax Section, and Herbert D. Sturman, Asst. U. S. Atty., Los Angeles, Cal., for plaintiff.
Hugo A. Steinmeyer, Robert H. Fabian and Alfred T. Twigg, Los Angeles, Cal., for defendant.
This action involves priority of claims to funds in a taxpayer's bank accounts. The United States asserts a lien right; and the defendant bank asserts a statutory right of setoff. There is no dispute as to the facts, both parties having moved for summary judgment.
The taxpayer, J. B. Edmondson, maintained accounts with defendant bank at a branch office in Fullerton, Orange County, California. The accounts stood in the taxpayer's own name and in certain business names. For aught that appears in the record, the businesses were sole proprietorships. The accounts have been treated by the parties as being those of the individual taxpayer, and this Court shall so treat them.
The taxpayer became indebted to the United States for withholding and F.I. C.A. (Social Security) taxes for the first, second and third quarters of 1955. Notices of the various assessments were given, and demands for payment made of the taxpayer, in accordance with applicable provisions of the Internal Revenue Code. Notice of lien for the first assessment was filed in Orange County, California, October 19, 1955; notices as to the two other assessments were filed in Orange County January 28, 1958.
On August 27, 1959, the district director of Internal Revenue served upon defendant a notice of levy upon all property or rights of property belonging to the taxpayer. By this notice, demand was made of defendant for $12,219.09, this being a portion of the amount defendant then owed the taxpayer. Defendant had no actual knowledge of the existence of the assessments, nor of any United States tax lien against the taxpayer's property, prior to service of this notice.
The district director served final demand upon defendant September 25, 1959. Defendant has refused to pay any of the amount to the Government.
On the date of the notice of levy, the taxpayer's accounts with defendant bank showed total credits of $6,658.31. This figure included amounts credited to Edmondson for deposits during the preceding 30 days of part of the proceeds of various checks drawn on other banks. At the time of such levy, the taxpayer was indebted to the bank in the amount of $11,570.40 upon the following instruments:
With exception of the demand note, each of these instruments contained an acceleration clause providing that in the event of default, all sums unpaid should, at the option of the creditor, immediately become due and owing.
As of the date of the levy, no demand had been made for payment of the demand note, nor had any payment been made thereon. On each of the other instruments there was an installment past due which had not been paid.
The day following the notice of levy, the bank made bookkeeping entries charging the taxpayer's accounts with the sum of $6,658.31 (the entire amount on deposit) and crediting this sum against the balances due on the various instruments as follows:
A. On conditional sale contracts for cars
Balances Credit Given for Distribution Balances
due Unearned Portion of After
Car 8-27-59 of Finance Charge $6,658.31 Entries
1959 Chev. $1,853.68 $132.33 $1,721.35 Ø
1959 Ford 2,125.14 52.14 2,073.00 Ø
1957 Cad. 2,842.02 367.88 $2,474.14
1959 Ford 2,205.12 none 2,205.12
1956 Ford 135.30 135.30 Ø
_________ ________ _________ __________
$9,161.25 $184.47 $4,297.53 $4,679.26
B. On boat mortgage
$1,179.14 $ 48.46 $1,130.68 Ø
C. On unsecured note
$1,230.10 $1,230.10 Ø
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