#### UNITED STATES of America and John R. Lansdon, Revenue Agent, Internal Revenue Service, Petitioners, v. BANK OF STOCKTON and Sam Yost, Manager, Stockton and San Joaquin Branch, Respondents. John R. Marthaler and Grace J. Marthaler, Intervenors

No. S78-682-AAH.

United States District Court, E. D. California.

Feb. 23, 1979.

Solomon E. Robinson, Asst. U. S. Atty., Sacramento, Cal., for petitioners.

*307John Marthaler, pro se and for Grace Marthaler.

Respondent Bank of Stockton did not appear.

FINDINGS OF FACT; CONCLUSIONS OF LAW; AND ORDER ENFORCING SUMMONS

HAUK,* District Judge.

*Findings of Fact*

1. The Petitioner John R. Lansdon is a Revenue Agent employed by the Examination Division of the Internal Revenue Service (IRS), and is authorized to issue Internal Revenue summonses pursuant to the Internal Revenue Code, 26 U.S.C. § 7602.

2. On September 19, 1978, Agent Lansdon issued the IRS summons (Treasury Form 2079), a copy of which is attached hereto as Exhibit A, as part of his investigation to determine the civil tax liability of John and Grace Marthaler, the intervenors in this proceeding.

3. The summons was carefully, properly, and lawfully issued under the Internal Revenue Code, 26 U.S.C. § 7602, and its issuance did not violate the Constitution of the United States.

4. The summons was carefully, properly, and lawfully served by Agent Lansdon pursuant to the Internal Revenue Code, 26 U.S.C. §§ 7603 and 7609, and its service did not violate the Constitution of the United States.

5. The purpose of the summons, which calls for bank statements, deposit slips, copies of checks, signature cards, savings accounts, time certificates, and loan records in the name of the intervenors at the Respondent Bank, was, and continues to be, to secure information relevant to the IRS inquiry into the civil tax liability of the intervenors. As such, its issuance was in furtherance of a legitimate purpose under the Internal Revenue Code, 26 U.S.C. 7602.

6. In the issuance and service of the summons, the administrative steps and procedures required by the Internal Revenue Code, 26 U.S.C. § 7609, relating to third-party summonses were followed.

7. There has been no abandonment by Petitioners of their inquiry into the civil tax liability of the intervenors.

8. Petitioners have neither recommended nor undertaken an inquiry into the possible criminal tax liability of the intervenors.

9. There is no factual basis for any finding of harassment, bad faith, conflict of interest, or violation of Constitutional standards relating to the issuance, service or judicial enforcement of this summons by this Court.

*Conclusions of Law*

1. This Court has jurisdiction pursuant to 26 U.S.C. § 7402(b) and 7604(a).

2. The Petitioners have made a legally sufficient showing that they met the standards of' probable cause to obtain judicial enforcement of the summons. *United States v. Church of Scientology of California,*520 F.2d 818 (9th Cir. 1975).

3. After this initial showing was made by the Petitioners, the burden is upon the taxpayer-intervenors to establish that the summons was issued in bad faith or for an improper purpose. *United States v. LaSalle National Bank,*434 U.S. 996, 98 S.Ct. 632, 54 L.Ed.2d 489 (1978); *United States v. Powell,*379 U.S. 48, 85 S.Ct. 248, 13 L.Ed.2d 112 (1964); *United States v. Zack,*521 F.2d 1366 (9th Cir. 1975). The intervenors have failed to meet this burden.

4. There is no legal merit to the intervenors’ other arguments. The Constitutionality of income tax laws enacted pursuant to the United States Constitution, Amendment 16, is established. *Brushhaber v. Union Pac. R. R.,*240 U.S. 1, 36 S.Ct. 236, 60 L.Ed. 493 (1916); *Burnet v. Wells,*289 U.S. 670, 53 S.Ct. 761, 77 L.Ed. 1439 (1933); *Swallow v. United States,*325 F.2d 97 (10th Cir. 1963), *cert. denied,*377 U.S. 951, 84 S.Ct. 1630,12 L.Ed.2d 497; *Crowe v. Commissioner,*396 F.2d 766 (8th Cir. 1968). Nor do *308income tax laws, as applied to Federal judges, violate the United States Constitution, Art. III, § 1. *O’Malley v. Woodrough,*307 U.S. 277, 59 S.Ct. 838, 83 L.Ed. 1289 (1939). Equally established is the proposition that Federal Reserve Notes are taxable legal tender. *United States v. Daly,*481 F.2d 28 (8th Cir.), *cert. denied,*414 U.S. 1064, 94 S.Ct. 571, 38 L.Ed.2d 469 (1973); *United States*v. *Schmitz,*542 F.2d 782 (9th Cir. 1976) *cert. denied,*429 U.S. 1105, 97 S.Ct. 1134, 51 L.Ed.2d 556 (1977); *United States v. Wangrud,*533 F.2d 495 (9th Cir.), *cert. denied,*429 U.S. 818, 97 S.Ct. 64, 50 L.Ed.2d 79 (1976).

Accordingly, an Order enforcing the summons shall be entered.

*Order Enforcing Internal Revenue Summons*

The Order to Show Cause having come on for hearing before this Court on February 15, 1979, and this Court having considered the pleadings, briefs, affidavits, testimony, exhibits, and arguments of counsel for Petitioners and John Marthaler on behalf of himself and Grace Marthaler, the intervenors, and having this day entered its Findings of Fact and Conclusions of Law herein;

IT IS HEREBY ORDERED, ADJUDGED AND DECREED THAT Respondent Bank of Stockton produce the records described in the subject Internal Revenue Service summons, a true copy of which is attached hereto as Exhibit A, at its Main and San Joaquin Branch in Stockton, California, on the dates and at the times set forth below:

> Dated Record

> February 28, 1979 10:00 AM Copies of signature cards, bank statements relating to demand (cheeking) accounts, certificates of deposit and ledger or comparable statements relating to savings accounts.

> March 15, 1979 10:00 AM Loan records; deposit slips, and other records of deposit on all accounts (except copies of checks).

> April 20, 1979 10:00 AM Microfilm copies of all checks deposited in checking or savings accounts (including the purchase of certificates of deposit).

IT IS FURTHER ORDERED that each party shall bear its, his, and her own costs of this proceeding.

IT IS FURTHER ORDERED that, pursuant to the provisions of 26 U.S.C. § 7610(a)(2), upon compliance with the summons by the Respondent and upon the submission of satisfactory proof to the Petitioners, the Respondent shall be reimbursed for such costs that were reasonably necessary and which have been directly incurred in searching for and reproducing the records sought by the summons.

ORDERED this 23rd day of February, 1979, at Sacramento, California.

*309EXHIBIT A

*310

*

 Sitting by designation of Chief 9th Circuit Judge James R. Browning.