Court Opinion

ID: 9460486
Source: CourtListenerOpinion
Date Created: 2023-08-04 21:51:56.288947+00
Date Added: 2024-06-11T17:36:38.281267
License: Public Domain

FRIENDLY, Circuit Judge
(dissenting) :
I respectfully dissent.
In light of Judge Lumbard’s convincing demonstration that the Sterling National Bank was bound to honor the tax levy upon the entire amount of Smith’s checking account, I cannot agree that a national bank, fully warned (in the IRS’ August 5 letter) of the Service’s position, of the strong authorities therefor, and of its intention to enforce its position, can be said to have had “reasonable cause” to believe that the levy need be honored only for the excess of the ac*924count over the amount owed to the bank. In light of longstanding judicial recognition of the importance of the Government’s being able to collect the revenues swiftly and surely, see Murray’s Lessee v. Hoboken Land & Improvement Co., 59 U.S. (18 How.) 272, 15 L.Ed. 372 (1856), it seems to me even more essential in this area than in the context presented by Danielson v. Joint Board of Coat, Suit & Allied Garment Workers’ Union, ILGWU, 494 F.2d 1230, 1239-1245 (2 Cir. 1974), that “reasonable cause” should not be read to include a clearly erroneous view of the law, stubbornly adhered to after investigation should have disclosed the error. The majority’s ruling permits a bank to pay the Government whatever its lawyers say it should, with no risk beyond having to pay the balance if it turns out to be wrong. Surely the distinctions between this case and Hampton Garment, the antiquarian unreality of Judge Woolsey’s opinion in United States v. Bank of United States, 5 F.Supp. 942 (S.D.N.Y. 1934), and the force of the Ninth Circuit decisions, all so ably elucidated in the majority opinion, should not have escaped the notice of Sterling’s experienced counsel.
The majority says, quite properly, that no bank in the Second Circuit can ever again claim reasonable cause to act precisely as Sterling did, and the Government will scarcely founder through its failure to collect the $1,889.82 penalty here at issue. But lawyers will dream up other “reasons” why parties holding property belonging to a taxpayer should not pay this to the Government as § 6332(c) requires. I would not permit collection of the revenues to be delayed on first appearance of each such question in each jurisdiction where, as here, the question is not really close, the party had access to competent legal advice, temporary sacrifice of the funds and pursuit of other remedies against the Government would not represent any hardship, and the IRS proceeded deliberately and gave ample notice of its intention and the sound view of the law on which this was based.
I would affirm the judgment of the District Court.