Escrow

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[2002-2 USTC ¶50,734] T. Whitney Strickland, Jr., Plaintiff v. Virginia Daire and the United States of America on behalf of the Department of the Treasury, Internal Revenue Service, Defendants

U.S. District Court, No. Dist. Fla. , Pensacola Div., 4:01cv153/RV, 9/30/2002 , 2002 U.S. Dist. LEXIS 20230.

[Code Sec. 6323 ]

Tax liens: Validity and priority against third parties: Escrow agent: Escrow agreement: Interpleader.--The government was not entitled to priority over the claim of an escrow agent with respect to funds from the settlement of a lawsuit that were held in escrow in connection with a federal tax lien against an individual. The government contended that it had priority over the escrow agent, who had brought an interpleader action for his fees, attorney's fees, and court costs, because he did not perfect a lien prior to perfection of the tax lien. However, the government was not entitled to the funds because the delinquent taxpayer could not recover them under the contractual provisions of the escrow agreement. The agreement provided that the agent was the first to be paid from the escrow funds, and the taxpayer had no property interest in that portion of the funds necessary to pay his fees and costs. The government could not levy on property in which the taxpayer had no interest.

[Code Sec. 6321 ]

Tax lines: Attorney's fees: Charging lien: Summary judgment.--The government was not entitled to summary judgment with respect to a claim by an attorney who created an escrow fund that she was entitled to superpriority to collect her fees from the fund. The funds arose from the settlement of a lawsuit and were held in escrow in connection with a federal tax lien against an individual. Although the government claimed that the attorney did not timely perfect her attorney's charging lien, the tax code does not require a charging lien before attorney's fees may be given priority, and an issue of fact existed as to whether the parties intended for the attorney's fees to be paid from any recovery obtained by the attorney on the taxpayer's behalf.

[Code Sec. 7430 ]

Attorney's fees: Creditor v. prevailing party.--The government was entitled to summary judgment with respect to a claim by an attorney who created an escrow fund that she was entitled to recover attorney's fees for defending an interpleader action. The attorney was a creditor of the taxpayer and, thus, not a prevailing party under Code Sec. 7430 .

T. Whitney Strickland, Jr., T. Whitney Strickland, Jr., P.A., Tallahassee, Fla., pro se. Richard Errol Johnson, Richard E. Johnson, P.A., Tallahassee, Fla., for Virginia Daire. Wendy K. Vann, Department of Justice, Washington , D.C. 20530 , for U.S.

ORDER

VINSON, Chief District Judge:

Defendant United States of America has moved for summary judgment (doc. 69).

Plaintiff filed this interpleader action pursuant to Title 28, United States Code, Section 2410. Defendants Daire and United States of America have conflicting claims over the funds being held in escrow by plaintiff Strickland, who also claims fees and costs from those escrowed funds. Except as otherwise stated, the parties agree that the following material facts are not disputed.

I. BACKGROUND

By December 18, 2000 , the Internal Revenue Service ("IRS") had assessed tax liabilities against O.C. Allen ("Allen") in the total amount of $87,074.06 for unpaid taxes in eight different tax years going back to 1989. ¹ This case involves $73,244.19 held in escrow by plaintiff Strickland. After the IRS attempted to levy on the funds, Strickland brought this interpleader action and deposited the funds into the registry of this Court.

The funds held in escrow resulted from the settlement of a lawsuit brought by Allen in 1998 against Michael J. Read and John D. Hallstrom in the Circuit Court of Leon County, Florida. Defendant Daire was Allen's attorney in that state court action, and Allen agreed to pay Daire's fees at a rate of $200 per hour, with "payment in full upon the conclusion of this matter." On October 7, 1999 , after mediation, Allen, Read, and Hallstrom reached a contingent settlement of their lawsuit, which required Read and Hallstrom to place $70,000 into an escrow account. This "Contingent Settlement Agreement" acknowledged that the IRS had filed a notice of levy against Allen, and payment of the escrow fund was contingent upon Allen settling with the IRS for $30,000, "or such other amount as [Allen] negotiates."

On October 12, 1999 , after the contingent settlement was reached, Daire presented Allen with a bill for $41,920 in attorney's fees and costs. The contingency upon which the "Contingent Settlement Agreement" was based--settlement of the amount due the IRS by Allen--was not timely resolved, so on December 30, 1999 , the parties to the state court litigation entered into an "Amendment to Settlement Agreement and Escrow Agreement." This second agreement names plaintiff Strickland as escrow agent and calls for dismissal of the case upon payment by Read and Hallstrom of $70,000 into the escrow account "to or for the benefit of [Allen]." The agreement also sets out a strict limitation upon payment of the escrow fund by the escrow agent:

2. Payment of Escrow Fund. Upon written notification from the IRS that all Notices of Levy including that certain Notice of Levy dated July 7, 1999, a copy of which is attached hereto as Exhibit "A", and associated tax lien have been fully satisfied, the Escrow Agent shall disburse the Escrow Fund to the IRS, and then to O.C. Allen, to the extent payment of the tax lien to the IRS does not exhaust the escrow fund.

Under this agreement, which remains in effect, the escrow agent cannot disburse funds to either the IRS or to Allen until the escrow agent first receives written notification from the IRS of full satisfaction of all Notices of Levy and associated tax liens of Allen's. In paragraph (3), the amended agreement specifically provides for the escrow agent's fees to be paid first from any interest accrued on the escrow fund, and then from the escrow fund itself. The second agreement also provides for the reimbursement of any expenses, including attorney's fees and costs, that the escrow agent may incur in any litigation, and paragraph (5) expressly authorizes the escrow agent to file an interpleader action to be fully indemnified for all costs of such an action, including reasonable attorney's fees. Pursuant to this amended agreement, the state court ordered the parties to comply with the settlement agreements and dismissed the action with prejudice on February 9, 2000 . On August 15, 2000 , Daire filed a verified petition in state court for an attorney's charging lien against the escrow funds [i]n the amount of $41,920.

On February 27, 2001, the IRS served Strickland with a "Notice of Levy," asserting a lien against the escrow funds, as well as a "Release of Levy" as to $30,000 to be paid to Daire (apparently as a part of a negotiated settlement of her fee), and a request that Strickland pay the remaining $40,000 and accrued interest to the IRS. An accompanying letter from the IRS's Compliance Group Manager, Dennis L. Lister, indicated that all prior notices of levy were released. The letter made no reference to Strickland's fees as escrow agent. Strickland attempted to negotiate with the IRS regarding his fee and the IRS's payment instructions, but was unsuccessful. Strickland then filed this interpleader action on April 27, 2001 , and deposited the escrow funds into the registry of this Court. The IRS, through the United States , now moves for summary judgment, contending that it has priority over all of the funds.

II. DISCUSSION

A. Summary Judgment Standard

The Rules of Civil Procedure make it plain that a motion for summary judgment should be granted when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law." Rule 56(c), Fed. R. Civ. P. As the Supreme Court of the United States has instructed, "the plain language of Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265, 273 (1986). See also Morisky v. Broward County, 80 F.3d 445, 447 (11th Cir. 1996).

However, summary judgment is improper "if a reasonable fact finder could draw more than one inference from the facts, and that inference creates a genuine 1995). An issue is "material" if it might affect the outcome of the case under the governing law. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202, 211 (1986). It is "genuine" if the record taken as a whole could lead a rational trier of fact to find for the nonmoving party. See id.; see also Matsushita Electric Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538, 552 (1986).

The moving party bears the initial burden of "informing the district court of the basis for its motion, and identifying those portions of 'the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,' which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp., supra, 477 U.S. at 323, 106 S.Ct. at 2552, 91 L.Ed.2d at 274 (1986).

On a summary judgment motion, the record and all inferences that can be drawn from it must be viewed in the light most favorable to the nonmoving party. See Evans v. McClain of Georgia, Inc., 131 F.3d 957, 961 (11th Cir. 1997). However, conclusory allegations based on subjective beliefs are insufficient to create a genuine issue of material fact. See Leigh v. Warner Bros., Inc., 212 F.3d 1210, 1217 (11th Cir. 2000); Ramsey v. Leath, 706 F.2d 1166, 1170 (11th Cir. 1983). The nonmoving party must provide more than a mere "scintilla" of evidence supporting his position, for if the evidence is merely colorable, or is not significantly probative, summary judgment may be granted. Anderson, supra, 477 U.S. at 249-50, 106 S.Ct. at 2510-11, 91 L.Ed2d at 212; Johnson v. Fleet Finance, Inc., 4 F.3d 946 949 (11th Cir. 1993). Although the nonmoving party must designate "specific facts showing that there is a genuine issue for trial," the court must also consider the entire record in the case, not just those pieces of evidence which have been singled out for attention by the parties. See Hargett v. Valley Fed. Sav. Bank, 60 F.3d 754, 763 n.9 (11th Cir. 1995) (quoting Celotex Corp., supra, 477 U.S. at 324, 106 S.Ct. at 2553, 91 L.Ed.2d at 274, (1986)); Clinkscales v. Chevron USA, Inc., 831 F.2d 1565, 1570 (11th Cir. 1987). "Where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no 'genuine issue for trial.' " Matsushita Electric Indus. Co. v. Zenith Radio Corp., 475 U.S. at 587, 106 S.Ct. 1356, 89 L.Ed.2d at 552.

B. Analysis

When a taxpayer is delinquent in paying taxes, Section 6321 of the Internal Revenue Code places the government in the position of a secured creditor and empowers it to impose a tax lien on "all property and rights to property" belonging to the taxpayer. ² Section 6323(a) requires that "any person in possession of (or obligated with respect to) property or rights to property subject to levy upon which a levy has been made shall, upon demand of the Secretary, surrender such property or rights to property" to the Secretary. The threshold question in such a case is whether and to what extent the taxpayer has "property" or "rights to property" to which the tax lien could attach. Aquilino v. United States [60-2 USTC ¶9538 ], 363 U.S. 509, 512, 80 S.Ct. 1277, 4 L.Ed.2d 1365, 1368 (1960). State law governs the inquiry into the taxpayer's property or rights to property. ³ Id. ; United States v. Rodgers [83-1 USTC ¶9374 ], 461 U.S. 677, 683, 103 S.Ct. 2132, 76 L.Ed.2d 236, 246-47 (1983). Once it is established that a cognizable property interest exists, federal law then determines the priority of all existing liens. Aquilino [60-2 USTC ¶9538 ], supra, 363 U.S. at 513-14, 80 S.Ct. 1277, 4 L.Ed.2d at 1368-69.

(1) Priority of the United States with respect to plaintiff Strickland. Plaintiff Strickland, the escrow agent, contends that he is entitled to his fees as escrow agent, as well as to his attorney's fees and costs for bringing this interpleader action. The United States argues that it has priority over Strickland because Strickland did not perfect a lien prior to the perfection of the tax lien and cannot claim superiority with an attorney charging lien under Section 6323(b)(8) of the Internal Revenue Code. However, the Government's analysis of Strickland's rights to the escrow funds prematurely examines Strickland's rights under federal law. Before such an inquiry can take place, state law must be examined to determine Allen's rights to the escrow funds.

A federal tax lien under Section 6321 of the Internal Revenue Code "cannot extend beyond the property interests held by the delinquent taxpayer." Rodgers [83-1 USTC ¶9374 ], supra, 461 U.S. at 690-91, 103 S.Ct. 2132, 76 L.Ed.2d at 251. If "a delinquent taxpayer shares his ownership interest in property jointly with other persons, rather than being the sole owner, his 'property' and 'rights to property' to which the federal tax lien attaches under [Section] 6321, and on which federal levy may be had under [Section] 7403(a), involve only his interest in the property, and not the entire property." [83-1 USTC ¶9374 ], Id. at 690, 103 S.Ct. 2132, 76 L.Ed.2d at 251 (quoting United States v. Rodgers [81-2 USTC ¶9536 ], 649 F.2d 1117, 1125 (5th Cir. Unit A 1981)) (emphasis added) (internal citations omitted). The position of the United States is that the entire amount held in escrow constitutes "property and rights to property" of Allen. Strickland, on the other hand, contends that he has a priority contractual right to his escrow fees from the escrow fund that cannot be abridged. The briefs of the parties regarding this matter are not particularly helpful, but this is understandable considering the lack of relevant law. ⁴ Nevertheless, property interests are created and defined by state law, so state law must be examined. Butner v. United States , 440 U.S. 48, 55, 99 S.Ct. 914, 59 L.Ed.2d 136, 142 (1979).

For purposes of federal tax liens, the Government must step into the shoes of Allen, the taxpayer, and its rights to property can go no further than Allen's. Rodgers [83-1 USTC ¶9374 ], supra, 461 U.S. at 690, 103 S.Ct. 2132, 76 L.Ed.2d at 251. The Government's claim to the entire escrow fund would be stronger if it could be clearly established that Allen was entitled to all of the money in escrow. ⁵ However, the escrow is created by contract, and the funds held in escrow, including Allen's rights to the funds, are controlled by the contractual provisions of the escrow agreement. The contingent settlement agreement and its amendment appear to be valid and enforceable contracts under Florida law, and the state court appears to have ongoing jurisdiction to enforce the settlement agreement. The Government can levy upon the escrow funds only to the extent that Allen has a contractual property right in that fund, with all of its limitations.

The terms of the escrow agreement provide Allen with an interest in the escrow funds after Strickland is paid his escrow fees. ⁶ The United States dismisses this notion, arguing that the "Amendment to Settlement Agreement and Escrow Agreement provides that the full amount of the payment, $70,000, was to be paid 'to or for the benefit of O.C. Allen' " through the escrow agent. (emphasis added) However, this ignores all of the other detailed provisions and misconstrues this provision. All of the terms of the contract must be considered. The settlement agreement explicitly provides that Strickland "shall be entitled to a fee for its services hereunder, to be paid for from any interest accrued on the Escrow Fund and then from the Escrow Fund, if necessary. . . ." The escrow fund is created by the agreement and is subject to its complete conditions. Obviously, Allen cannot have rights to the "full amount of the payment," as the Government contends, if the escrow agreement provides that Strickland is first to be paid from the escrow fund for his services as an escrow agent. The terms of the agreement give Strickland a fee; if Allen cannot receive the Strickland fee portion of the escrow fund for himself, then the tax lien cannot be applied against it. Zell v. Cobb, 566 So. 2d 806, 809 (Fla. 3d DCA 1990) (until the happening of the event that would allow the amount held in escrow to be delivered to the promissee, the instrument deposited in escrow does not take effect as a fully executed contract). See Miller v. Alamo [92-2 USTC ¶50,524 ], 975 F.2d 547, 552 (8th Cir. 1992) ("Miller I") (as government lien can only attach to property in which the delinquent taxpayer had an ownership interest, tax lien cannot attach where state law does not grant the taxpayer an ownership interest). Cf. United States v. Bess [58-2 USTC ¶9595 ], 357 U.S. 51, 55-56, 78 S.Ct. 1054, 2 L.Ed.2d 1135, 1141 (1958) (tax lien cannot attach to proceeds of a life insurance policy insuring the life of a taxpayer, beyond its cash surrender value, because the taxpayer could not receive the proceeds himself, even though he possessed the right to direct to whom the proceeds would be paid).

The contract requires that Strickland be paid first, and Allen has no property interest in that portion of the fund necessary to pay Strickland's fees and costs. ⁷ See Miller I [92-2 USTC ¶50,524 ], supra, 975 F.2d at 552 (federal law would not permit a lien to be placed on funds where taxpayer had no rights to the funds, could not direct where they were paid, and could not expect to receive any part of the funds). That portion of the fund necessary to pay Strickland belongs to Strickland, not Allen, and the IRS, standing in Allen's shoes, cannot levy upon property in which Allen has no interest.

(2) Strickland's rights to attorney's fees and costs. The Government's argument that Strickland is not entitled to attorney's fees for bringing this action also must fail. The Government correctly points out that a stakeholder who brings an interpleader action is normally entitled to attorney's fees and costs for bringing the action, to be paid out of the fund, unless such an award would diminish the amount due on a tax lien. Cable Atlanta, Inc. v. Project, Inc. [85-1 USTC ¶9268 ], 749 F.2d 626, 627 (11th Cir. 1984); Millers Mutual Ins. Ass'n of Illinois v. Wassall [84-2 USTC ¶9621 ], 738 F.2d 302, 303 (8th Cir. 1984) ("It is well established that the Internal Revenue Code . . . prohibits an award of attorney fees where the effect of such an award would be to diminish the amount recovered by the United States under a prior [in time] federal tax lien"); Spinks v. Jones [74-2 USTC ¶9657 ], 499 F.2d 339, 340 (5th Cir. 1974) ("The judicial prerogative to award stakeholders their attorney's fees must give way to the supremacy of the federal tax lien law whenever an award would invade the amount subject to tax lien"); United States v. State Nat'l Bank of Connecticut [70-1 USTC ¶9209 ], 421 F.2d 519, 521 (2d Cir. 1970) ("a disinterested bank-stakeholder is not entitled to attorney's fees from a fund when the total amount in the fund is insufficient to satisfy prior federal tax liens"). In the absence of some agreement, the law authorizes the escrow agent to let a court decide his entitlement, as well as his attorney's fees and costs for having to do so. However, in this case, there is no stakeholder seeking an "award" of attorney's fees by virtue of bringing an interpleader action. Instead, the contract which creates the fund and sets conditions for rights to the fund by its terms authorizes the interpleader and expressly provides that Strickland is entitled to reimbursement for his attorney's fees and costs. Just as Strickland has a property right to his fee to be paid from the escrow account, he has a similar priority entitlement to his attorney's fees and costs, even if it reduces the amount available to Allen and the IRS under the federal tax lien--the contractual provisions determine Allen's interest (and derivatively, the IRS's). It appears that Strickland had a legal reason to bring this interpleader in accordance with the terms of the escrow agreement. Therefore, Strickland is also entitled to reasonable attorney's fees and costs for bringing this action, to be paid out of the escrow fund before Allen's interest can vest.

(3) Priority of the United States with respect to defendant Daire. To the extent that Allen has a cognizable property interest in the escrow fund after deducting amounts due Strickland for his services as escrow agent, federal law must be examined to determine the priority of all existing liens on Allen's property interest. Defendant Daire contends that her fee as the attorney creating the fund has superiority over the Government's tax liens. The Government argues that Daire did not timely perfect her attorney's charging lien. However, the Code does not necessarily require a charging lien before attorney's fees may be given superiority.

Section 6321 of the Internal Revenue Code creates a lien in favor of the Government over the "property and rights to property" owned by a delinquent taxpayer. The relative priority of such a tax lien as opposed to competing liens is determined under federal law. Litton Indus. Automation Systems, Inc. v. Nationwide Power Corp. [97-1 USTC ¶50,236 ], 106 F.3d 366, 371 (11th Cir. 1997). Generally, a "first in time--first in right" rule applies when determining the priority of competing liens under federal law. Capuano v. United States [92-1 USTC ¶50,163 ], 955 F.2d 1427, 1433 (11th Cir. 1992). However, Section 6323 provides that a tax lien imposed by Section 6321 is not valid "with respect to a judgment or other amount in settlement of a claim or of a cause of action, as against an attorney who, under local law, holds a lien upon or a contract enforceable against such judgment or amount, to the extent of his reasonable compensation for obtaining such judgment or procuring such settlement. . . ." 26 U.S.C. §6323(b)(8) (emphasis added). Section 6321 provides such a superiority because an attorney who procures such a judgment or settlement amount which benefits the taxpayer ultimately provides a benefit to the IRS.

A "contract enforceable against such judgment or amount" ordinarily would apply to any contract which would allow the attorney to enforce payment against the ultimate recovery under state law. See, e.g., Warner v. United States [95-2 USTC ¶50,560 ], 1995 U.S. Dist. LEXIS 15391, 1995 WL 693188 (E.D. Ark. September 19, 1995). Daire and Allen reached an oral agreement regarding Daire's representation of Allen, and the essential terms of this agreement were set out in a retaining letter on March 24, 1998 , signed by both Daire and Allen. This is the contract applicable here. It provided that Daire would bill $200 per hour for her services in the litigation against "Mr. Hallstrom and Mr. Reed" [sic], and that Allen would pay that hourly fee. It specifically provided for "payment in full upon the conclusion of this matter."

Several things about the contract between Daire and Allen are important. First, the retaining letter was not a general retainer--instead, it only applied to Allen's litigation against Hallstrom and Read. The letter also referenced the fact that the hourly fees were to be paid "in full upon the conclusion of this matter." This is unusual because fees billed on an hourly basis are normally paid throughout the course of the litigation, not at the conclusion of the matter. Additionally, at the time of this agreement, the IRS had already assessed numerous tax liabilities against Allen, indicating that Allen was probably not financially able to pay his attorney during the course of the litigation. Daire was undoubtedly aware of all this. Daire was being paid an hourly fee and not on a contingent basis. Therefore, Allen would be obligated to pay Daire, regardless of whether Allen ultimately prevailed in the litigation. For that reason, it would appear that the letter did not specifically provide that payment would be from the recovery--to do so would foreclose Daire's right to payment if Allen should lose--but there is evidence in the record which supports the conclusion that the parties intended for Daire's fees to be paid from any recovery if there was a recovery. Such an agreement would give Daire superiority over the Government pursuant to Section 6323 by virtue of an enforceable contract. ⁸ This creates a genuine issue of material fact, precluding summary judgment.

(3) [(4)] Daire's claim for attorney's fees and costs in this interpleader. Finally, the Government argues that Daire is not entitled to attorney's fees or costs for defending this interpleader action. The Government argues that the "American Rule" applies in this case, that there is no statutory authority to permit an entitlement of fees in this action, and that a statutory award of attorney's fees cannot reduce the amount to be recovered by the IRS under a federal tax lien.

The traditional "American Rule" provides that attorney's fees are not awardable to the prevailing party in an action--each party must bear its own costs and attorney's fees. Marek v. Chesny, 473 U.S. 1, 8, 87 L.Ed.2d 1, 105 S.Ct. 3012, (1985). However, Section 7430 of the Internal Revenue Code acts as an exception to the American Rule and provides for an award of attorney's fees to a "prevailing party" "in any admin istrative or court proceeding which is brought by or against the United States in connection with the determination, collection, or refund of any tax, interest, or penalty under this title. . . ." 26 U.S.C. §7430(a). A "prevailing party" is "any party in any proceeding to which subsection (a) applies (other than the United States or any creditor of the taxpayer involved). . . ." 26 U.S.C. §7430(c)(4) (emphasis added). The Government respond that Daire cannot collect under Section 7430 because she is a "creditor of the taxpayer." To the extent that her fee is not entitled to exemption under Section 6328(b)(8), it appears that the Government is correct. Similarly, it appears that in the absence of a contractual authorization of such fees and costs from the escrow fund (and I find none with respect to Daire), there is no other authority entitling her to fees and costs for this litigation. Therefore, the United States is entitled to summary judgment on this issue. ⁹

III. CONCLUSION

For the foregoing reasons, defendant United States of America's motion for summary judgment (doc. 69) is GRANTED only with respect to Daire's claim for attorney's fees and costs for defending this interpleader action; it is otherwise DENIED.

DONE AND ORDERED.

¹ On November 19, 1990 , the IRS assessed tax liabilities against defendant Allen in the amount of $29,151.18 for tax year 1989. A tax liability in the amount of $22,462.39 was assessed on November 30, 1992 , for tax year 1991. A lien in the amount of $347.80 was assessed on December 5, 1994 , for tax year 1993. A tax liability in the amount of $7,623.75 was assessed on November 25, 1996 , for tax year 1995. A tax liability in the amount of $6,081.00 was assessed on November 24, 1997 for tax year 1996. A tax liability in the amount of $2,435.40 was assessed on November 23, 1998 , for tax year 1997. A tax liability in the amount of $8,137.64 was assessed on September 20, 1999 , for tax year 1998. A tax liability in the amount of $10,834.90 was assessed on December 18, 2000 , for tax year 1999. The total of $87,074.06 does not include further interest and statutory additions that may have accrued subsequent to the dates of assessment. Notices of the federal tax liens were filed as follows: On September 17, 1991 , for 1989 liabilities; on November 9, 1993 for the 1989 liabilities, and 1991 liabilities; on July 31, 1997 , for the 1995 tax liabilities; on August 3, 1998 , for the 1993 and 1996 tax liabilities; and on May 6, 1999 for the 1997 tax liabilities. Apparently, no notices were filed for the 1998 and 1999 tax years.

² Section 6321 of the Internal Revenue Code 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 thereof) shall be alien in favor of the United States upon all property and rights to property, whether real or personal, belonging to such person.

³ As the Eleventh Circuit explained in United States v. Ruff [97-1 USTC ¶50,130 ], 99 F.3d 1559, 1563 (11th Cir. 1996):

A court assessing a levy on a taxpayer's intangible interest in property held by third parties must determine first the nature of the taxpayer's interest in the property. This is a question of state law. . . . Once the court has determined that a delinquent taxpayer has rights to property, federal law determines whether the custodian of the property is obligated to surrender the property to the IRS.

(quoting United States v. Metropolitan Life Ins. [89-1 USTC ¶9362 ], 874 F.2d 1497, 1500 (11th Cir. 1989)).

⁴ After extensively researching the issue, I have found no cases directly on point. There are a few cases involving a tax levy upon escrowed funds in which the escrow agent's fees were denied because the escrow agreement failed to provide for such compensation. See, e.g., United States v. J.H.W. & Gitlitz Deli & Bar, Inc. [80-2 USTC ¶9743 ], 499 F.Supp. 1010, 1016 (S.D. N.Y. 1980) ("Because the escrow agreement under which [the escrow agent] held the fund provided only for payments to [the grantee], [(the escrow agent] has no right to draw upon the fund to compensate him for his escrow services"). Here, the document establishing the escrow fund plainly provides for such fees, as well as for costs and attorney's fees involved in interpleader.

⁵ Of course, even if Allen was entitled to all of the funds held in escrow, the IRS cannot simply levy on the funds held in escrow because of the provisions of the escrow agreement. Placing funds in escrow indicates that the transfer of ownership of the funds to the promissee cannot occur until the happening of a conditional event. See Mizuna, Ltd. v. Crossland Fed. Savings Bank, 90 F.3d 650, 659 (2d Cir. 1996). While the IRS may have priority over Allen's interest in those escrow funds, Allen does not have "property or rights to property" with respect to the escrow fund until the escrow's conditions are met. If the conditions that allow the funds to be distributed never occurs, Allen's interest in those funds will never vest and the IRS will not be able to levy upon those funds. See note 7, infra.

⁶ The agreement plainly gives priority in payment from the escrow fund to the agent's fees and costs. Without such priority, no reasonable person would assume the responsibilities of escrow agent under the circumstances known to exist when the escrow was established.

⁷ Reading the terms of the settlement agreement literally, it is not entirely clear whether the IRS has any claim to the amount held in escrow. As it stands, Allen has no right to the funds held in escrow because the terms of the original contingent settlement agreement provided that the settlement creating the res is made "provided that the Internal Revenue Service (IRS) agrees to resolve its tax notice levy regarding plaintiff within $30,000, or such other amount as plaintiff negotiates with the IRS," i.e., no settlement unless the condition is met. The amendment to the settlement agreement removes that condition to the settlement, but creates another (apparently unintended) condition to any payment from the fund: that payment of the escrow fund may not commence until the tax liens "have been fully satisfied." Thus, under these specific contractual terms, Allen has no right to the funds held in escrow until the tax levies and liens are first satisfied. If the IRS cannot first satisfy its tax lien against Allen, then no funds may be disbursed to either the IRS or Allen, and Allen's (and the IRS's) rights to the funds held in escrow will not vest. Theoretically, it appears that Strickland could hold the funds in escrow indefinitely, and simply apply the interest earned periodically to his fees.

⁸ The Government argues that Daire did not have the understanding that her fees would come directly from the recovery in the case. The Government cites to a deposition where Daire stated that she understood that she would be paid regardless of whether Allen "achieved anything from this at all" and from "whatever source of funds he had." However, this testimony does not necessarily mean that Daire did not expect to be paid from the recovery, if there was one. Payment in full upon "conclusion" necessarily implies that the payment will be made from the recovery at the conclusion of the case, if there was a recovery. However, if there was no recovery, Allen would still be required to pay Daire from whatever source of funds he may have.

⁹ Daire also seeks to hold the IRS to its written agreement to have her fee to the extent of $30,000 paid to her. It is clear that the IRS did so agree and it does not deny it. Instead, it simply asserts the principle that equitable estoppel cannot be applied against the Government in its sovereign capacity. This order does not address that issue, which is reserved for trial. I do note that the Government's failure to stand by its agreement now exposes it to the full amount of Daire's fees and costs ($41,920), plus interest, as well as Strickland's fees and costs--which may leave nothing for the IRS.

 

 

[54-1 USTC ¶9363]First National Bank of Nevada, Reno, Nevada, a National Banking Association, Plaintiff v. Hank Greenspun, d.b.a. Las Vegas Morning Sun, et al., Defendants, United States of America, Intervener

In the United States District Court for the District of Nevada, No. 989, March 16, 1954

Lien for taxes: Priority among creditors.--Various defendants were claimants of portions of a fund which had been deposited with a bank in escrow under a sales agreement whereby a delinquent taxpayer sold his bubiness, executing an affidavit purporting to be a list of all his creditors, but actually excluding several creditors, including the United States. No part of the sum, under the escrow agreement, was to be paid the vendor until certain obligations defined by the agreement were complied with. Thus, it was held that the service of a writ of garnishment did not entitle one of the creditors to a preferred position since, at the time of service, the bank was not indebted to the vendor. The Court then determined that the bank had first claim for attorneys' fees and costs, and that the United States and the Employment Security Division of the State of Nevada had priorities on their claims and were to be paid before payment to the general creditors, whether or not listed in the affidavit. Judgment was entered accordingly.

Leo A. McNamee and John McNamee, El Portal Bldg., Las Vegas, Nev., for plaintiff. Taylor & Gubler, 401 Fremont St. , Las Vegas , Nev. , for defendants Maxwell Kelch and Laura Kelch. George L. Vargas, Ryland Bldg., Reno , Nev. , for defendant Employment Security Department. Craven & Bennett, Reno, Nev., for defendant Young Electric Sign Co. Calvin M. Cory, Las Vegas, Nev., for defendant Las Vegas Land & Water Co. David Zenoff, 300 Fremont St., Las Vegas, Nev., for defendant Glaser Bros. Milton W. Keefer, Cornet Bldg., Las Vegas, Nev., for defendant Mrs. H. W. Kieren. James M. Connors, 444 Market St., San Francisco 11, Calif., for defendants Board of Trade of San Francisco and S & W Fine Foods. Ralli, Rudiak & Horsey, Las Vegas , Nev. , for defendant Herman M. Greenspun. Hawkins, Cannon & Coulthard, Williams Bldg., Las Vegas, Nev., for defendants Jerry E. Masek, Wm. G. Cosulas, Martin Greenstein, Southern Nevada Telephone Co., Southern Nevada Power Co., Nevada Beverage Co., and DeLuca Importing Co. John S. Halley, First Nat. Bank Bldg., Reno, Nev., for defendant Saviers Electrical Products Corp. C. D. Breeze, 109 So. Third St., Las Vegas, Nev., for defendants Boyle Midway, Inc., and Market Varieties Co. Miles N. Pike, United States Attorney, Reno, Nev., for the United States as Intervenor.

Opinion, Findings of Fact and Conclusions of Law

FOLEY, District Judge:

This action of interpleader is brought under and pursuant to the provisions of 28 U. S. C. A. §1335. The plaintiff, First National Bank of Nevada , Reno , Nevada , a National Banking Association, is located in and conducts business in the State of Nevada . Diversity of citizenship exists in that some of the defendants are citizens of the State of Nevada , others of the State of California , one of the State of Utah , and one is a citizen of the State of New Jersey .

Plaintiff, among other things, alleges that it had in its custody and control the sum of $7,000 from which sum plaintiff paid certain preferred creditors leaving a balance of $3,664.98, which sum plaintiff has deposited with the Registry of this Court. Plaintiff joins as defendants parties known by it as claimants of portions of said fund to the end that those entitled to share therein might be determined.

At the pre-trial conference the complaint was considered as amended so that the amounts alleged to be claimed by each of the different claimants would be the amount set forth in their respective answers; and it was also a part of the pre-trial Order that the petition to be made a defendant and answer of Boyle-Midway, Inc., a corporation, be considered as an answer to plaintiff's complaint.

At the trial, among other things, it was stipulated that the claims of the United States, Employment Security Department of the State of Nevada, and Maxwell Kelch and Laura Belle Kelch will not accrue interest from and after the time of the trial and it was agreed that the United States and the Employment Security Department of the State of Nevada were entitled to priority over other creditors. At the trial it was stipulated that all counterclaims filed in the action should be confessed as to amount and liability. The remaining issues to be determined are the claimed priorities of the defendants Maxwell Kelch and Laura Belle Kelch and the amounts to be allowed to each of the creditors.

Defendants Maxwell Kelch and Laura Belle Kelch assert that they have a prior and senior lien upon the money now on deposit in the Registry of the Court. It seems to be conceded that the defendants Kelch, as judgment creditors, are entitled to a priority claim if a lien was created on the fund by virtue of their levy of attachment and of execution.

For convenience in the consideration of the various contentions of the creditors we will refer to them as follows: "Claimants represented by Attorneys Hawkins, Cannon & Coulthard; Milton W. Keefer; and Taylor & Gubler, the last named representing Maxwell and Laura Belle Kelch. Other creditors filing answers and represented by other attorneys will be considered with the Hawkins, Cannon & Coulthard group.

It was agreed that the various contentions of the claimants should be presented to the Court in respective memorandums to be filed by Attorneys Taylor & Gubler, Hawkins, Cannon & Coulthard and Milton W. Keefer.

In their memorandum on behalf of Maxwell Kelch and Laura Belle Kelch, Taylor & Gubler urge the Court to distribute the fund of $3,664.98 to claimants in the following order: The United States; Employment Security Department of the State of Nevada ; Maxwell and Laura Belle Kelch; and the residue, if any, to general creditors.

Hawkins, Cannon & Coulthard suggest to the Court that the fund should be divided in the following order: The United States; Employment Security Department of the State of Nevada; the claims of other creditors included in Exhibit "B" attached to the complaint called "Affidavit by Seller as to Creditors," which was purported to have been made by Frank Dio Dato in an attempted compliance with the Bulk Sales Law of the State of Nevada, to the exclusion of Maxwell and Laura Belle Kelch and other creditors not named in said Exhibit "B".

Milton W. Keefer, Esq., in his memorandum, seems to agree with Hawkins, Cannon & Coulthard as to the order of distribution of the fund.

The various defendants have recognized the material allegations of the complaint as true.

[Facts]

It appears that on October 20, 1951 , defendant Dio Dato entered into an escrow agreement with W. M. Mendelsohn and Henry J. Schopen, a co-partnership, involving the sale of Dio Dato's business known as the Standard Market including all of the stock of merchandise, fixtures and supplies thereof to the said co-partnership. As stated in said escrow agreement, Mendelsohn and Schopen deposited with plaintiff Bank the sum of $7,000, the escrow agreement containing among other things the recital that the purpose of this escrow is to sell the Standard Market to the buyers for a consideration of $7,000 and in effect provided that said sum of $7,000 should be made available to the seller after strict compliance with the Nevada Bulk Sales Law.

On November 1, 1951 , Dio Dato executed an affidavit purporting to be in compliance with the Nevada Bulk Sales Law, §§ 6816-6820, Nevada Compiled Laws, 1929, containing a list of all creditors of said Frank Dio Dato. This list omitted several creditors including the United States and Maxwell Kelch and Laura Belle Kelch.

Throughout these proceedings it is taken as true that on the 24th day of November, 1951, defendants Maxwell Kelch and Laura Belle Kelch instituted an action in the Eighth Judicial District Court of the State of Nevada, in and for the County of Clark, against Frank Dio Dato, resulting in a judgment against defendant Dio Dato in the sum of $1,031.88. Subsequent to the filing of said action and on November 24, 1951 , an attachment was regularly and duly issued in the action which resulted in said judgment and said attachment was served upon the plaintiff, which at the time of such service had in its possession the said sum of $3,664.98. The plaintiff Bank responded to said service of attachment by its return to the effect that the Bank was not indebted to defendant Dio Dato in any sum whatsoever. Thereafter, a writ of execution was served upon the plaintiff Bank to which a return was made that it was not indebted to Dio Dato. Upon the foregoing proceedings, the attachment, subsequent judgment and execution, the Kelches base their claim of priority.

[Bank Not a Debtor]

It will be noted that the money deposited with and pursuant to the escrow agreement was not deposited by Dio Dato but by the co-partners Mendelsohn and Schopen. No part of that sum was to be paid to Dio Dato until the obligations defined by the escrow agreement had been complied with and then only in the event that there was a residue after payment of creditors in compliance with the Bulk Sales Law, and if there was no debt due, the fund could not be reached by garnishment. Reinhart v. Hardesty, 17 Nev. 141. However, a lien was not created.

7 C. J. S. 186, Attachment, §1:

"Generally speaking, garnishment is but a form of attachment looking to the impounding of debts due a defendant in a civil action for the recovery of money, pending the rendering of final judgment therein, in effect the same as physical property capable of delivery is seized to that end by ordinary attachment. A garnishment, however, differs from an attachment in that in garnishment usually there is no actual seizure of the property and no specific lien is acquired thereon. The result is that, while seizure of property under attachment may cause its entire loss or considerable injury, garnishment merely impounds the property in the garnishee's possession and maintains its status quo until determination of the main action."

In Steineck v. Haas-Baruch Co., Cal. App., 288 P. 1105, the Court held:

"[2] 'The term garnishment, as used today, means a proceeding or process whereby the property, money or credits of one person, generally called the debtor, and in the possession of or owing by another, generally designated the garnishee, are applied to the payment of the debt of the debtor, by means of process issuing against the debtor and the garnishee. Garnishment is, therefore, an attachment of the effects of the defendant in the garnishee's hands, differing in no essential respects from attachment by levy, except, as is said, that the plaintiff does not acquire a clear and full lien upon the specific property in the garnishee's possession, but only the right to hold the garnishee personally liable for it or its value.' 13 Cal. Jur. 3; Finch v. Finch, 12 Cal. App. 274, 107 P. 594, 598. 'The right to maintain garnishment proceedings exists only where the defendant or party against whom judgment has been rendered would have had a cause of action under the practice at common law in debt or indebtedness assumpsit, against the garnishee.' 13 Cal. Jur. 3, 4;[citing cases]. However, this rule has been somewhat extended, as may be seen by examining Brainard v. Rogers, 74 Cal. App. 247, 239 P. 1095, 1096, which, among other things, holds: 'Moneys which are owing the debtor, though not yet due, are subject to garnishment, because the term "owing" includes an immature as well as a mature obligation.'

"[3] The limits as well as the basis of a garnishee's liability to an attaching creditor is stated inAmerican Exchange National Bank v. Superior Court, 29 Cal. App. 8, 11, 154 P. 279, 280, as follows: 'A garnishee's liability in the case of a debt due from him is grounded upon and is limited by his liability to the defendant in the principal action whereby the latter has, at the time of the garnishment, a cause of action, present or future, against him. Drake on Attachment (7th Ed.) §463.' This principle is clearly illustrated in Marshall v. Wentz, supra [Cal. App., 153 P. 244, 246]. The District Court of Appeal in that case, among other things, said: 'In Hassie v. G. I. W. U. Congregation, 35 Cal. 378, it is said: "If, at the time the attachment was served upon the garnishee, the defendant in the attachment could have maintained against him, under the practice at common law, an action of debt or indebitatus assumpsit, then the liability of the garnishee is transferred from the defendant to the plaintiff in the attachment suit." * * * "Whenever there is a legal liability the law creates a promise upon which an action of assumpsit will lie.'" However, it may be said that the liability of the garnishee is to be determined as of the time of the service of the writ. [Citing cases.] The garnishee will only be held for the debts then owing at the time of the service of the writ. [Citing cases.] Therefore, any right that appellant may have had against respondent became fixed as of the date of the levy of the attachment."

It cannot be said that the plaintiff Bank at the date of the service of the writ of attachment or garnishment was indebted to defendant Dio Dato or had in its possession money or property belonging to Dio Dato.

[No Preferred Position]

From the foregoing it appears that the defendants Kelch have no preferred position in regard to the distribution of the fund deposited in the Registry of the Court.

In the Steineck v. Haas-Baruch case, just quoted from, the fund there in question had been deposited with the Bank by the defendant. Here the money was deposited by the co-partners Mendelsohn and Schopen and the said $7,000 or a portion thereof would become the property of defendant Dio Dato only in the event that the obligations of the escrow agreement were fully complied with. The total amount of claims listed in Dio Dato's Bulk Sales Affidavit plus the amount of the lien of the United States in the sum of $1,351.87 would aggregate more than the $7,000 deposited with the Bank in escrow.

The amount of money acknowledged by the plaintiff to be in its possession before deposit with the Registry of the Court was in the sum of $3,664.98. That the amount to be here distributed is the sum of $3,664.98, and no more, is admitted in the answers of all the defendants except that defendant Employment Security Department of the State of Nevada, from want of information or belief, denies that the amount of the fund is $3,664.98.

This amount of $3,664.98, sought here by creditors of defendant Dio Dato, is part of the proceeds of the sale by him of the business, stock and fixtures described in the escrow agreement. The parties defendant omitted from the Bulk Sales list or affidavit of Dio Dato have elected to pursue the proceeds of the sale rather than attack the validity of the same on the grounds of non-compliance with the Bulk Sales Law of Nevada. The plaintiff here, in possession of money, found itself confronted by adverse claims of creditors of defendant Dio Dato. Some of the defendant creditors say that only the creditors named in Dio Dato's Affidavit, Exhibit "B" attached to the complaint, are entitled to share in the fund on deposit with the Registry of this Court, namely, the sum of $3,664.98. To so hold would render the Bulk Sales Law an instrument of fraud and make it possible for a vendor, who has not complied fully with the provisions of the Bulk Sales Law, to prefer certain creditors and exclude others from participating in the proceeds of the sale. All of the defendant creditors here are entitled to share in the fund now in court. Creditors listed in the affidavit cannot participate to the exclusion of those omitted by the defendant Dio Dato.

After deducting the sums of $205.18 as costs and $250 as attorneys' fees, heretofore allowed plaintiff by Order entered September 28, 1953 , the residue of the fund deposited in court by the plaintiff, namely, $3,209.80, is to be shared in by the defendants as hereinafter indicated.

The claim of the United States of America in the sum of $1,351.87 is prior in right and claim to the claims and charges of any of the other defendants or creditors and the next in order of priority is the claim of Employment Security Department of the State of Nevada . After the payment of the above two claims, the residue of the fund should be prorated on a percentage basis among the other defendant creditors.

This action came on regularly for trial without a jury and the Court, having heard and considered the testimony and the cause having been submitted for decision, now finds the facts and states conclusions of law as follows:

Findings of Fact

1. That the allegations contained in Paragraph I of the complaint are true.

2. That this action is brought under and pursuant to the provisions of 28 U. S. C. A. §1335. That at the time of the bringing of this action the plaintiff deposited the sum of $3,664.98 in the Registry of this Court; that of said sum it was determined by the Court that plaintiff was entitled to $250 for services of attorneys in this action and the sum of $205.18 for costs here incurred.

3. That under date of October 20, 1951 , defendant Frank Dio Dato entered into an escrow agreement with W. M. Mendelsohn and Henry J. Schopen, a co-partnership, which escrow agreement is in the form set forth in the writing, a copy of which is attached to plaintiff's complaint and marked Exhibit "A". That the subject matter of said escrow agreement was the sale to said Mendelsohn and Schopen, for the sum of $7,000, of a certain business known as the Standard Market located at 602 South 5th Street, Las Vegas, Nevada, together with all of the stock of merchandise, fixtures and supplies connected therewith.

That on the first day of November, 1951, defendant Dio Dato delivered to said W. M. Mendelsohn and Henry J. Schopen a verified statement purporting to show the names of all of the creditors of the said Dio Dato doing business under the name of Standard Market, together with their addresses and the amounts owing and which shall become due and owing to each of said creditors, a copy of which statement is annexed to the complaint herein marked Exhibit "B".

That the said Dio Dato omitted from said list of creditors the claims of certain defendants herein including the claim of Maxwell Kelch and Laura Belle Kelch, and the claim of the United States of America.

That upon the receipt by the said W. M. Mendelsohn and Henry J. Schopen, a co-partnership, of the said verified statement and in accordance with said escrow agreement, the said W. M. Mendelsohn and Henry J. Schopen paid to the plaintiff, First National Bank of Nevada, the sum of $7,000 as and for the purchase price of the business known as the Standard Market with instructions to the plaintiff to pay over the amount of said purchase price to defendant Dio Dato after deducting therefrom and causing to be paid to the creditors named in the said verified statement the amount owing to said creditors.

That thereupon the plaintiff paid certain preferred creditors mentioned in said verified statement, namely, Blaine Johnson and Guy L. Ostensen, and a labor claim in the sum of $200, leaving in the hands of the plaintiff the sum of $3,664.98.

That at the trial it was stipulated that all counterclaims as filed in the action should be confessed as to amount and liability; that the names of the creditors and the total amount of said claims are as follows:

United States of America

 ...................         $1,480.30

Employment Security Department of

the State of 

Nevada

 ........................            317.29

Boyle-Midway, Inc. .........................             41.46

Market Varieties Co. .......................            362.19

Young Electric Sign Co. ....................          2,407.68

Saviers Electrical Products Corporation ....             45.86

Mrs. H. W. Kieren ..........................            289.00

S. & W. Fine Foods, Inc. ...................             43.55

Board of Trade of 

San Francisco

 ............            460.90

Glaser Bros., Las Vegas, Inc. ..............            729.74

Jerry E. Masek, William G. Cosulas,

and Martin Greenstein, d/b/a Las

Vegas Distributing Company .................            475.05

De Luca Importing Co., Inc. ................            178.27

Southern Nevada Telephone Co. ..............              4.96

Southern Nevada Power Co. ..................            186.81

Las Vegas
 
Land

 and Water Company ...........             16.25

Herman N. Greenspun d/b/a Las Vegas

Sun ........................................            364.90

Western Cigar Co. ..........................            220.03

Nevada Beverage Co. ........................            551.46

Maxwell Kelch and Laura Belle Kelch ........          1,134.21

TOTAL ......................................         $9,309.91

 

4. That the sum of $250 is a reasonable attorneys' fee to be paid to plaintiff for its attorneys in the prosecution of this action and that plaintiff's costs incurred herein is the sum of $205.18.

5. That it was agreed at the trial that the United States and the State of Nevada had priorities on their claims and should be paid before payment to general creditors.

6. That the defendants, Maxwell Kelch and Laura Belle Kelch, did not, by virtue of the service of the writ of attachment issued November 24, 1951 , or by virtue of the service of the writ of execution issued on the 3rd day of January, 1952, acquire a lien on said fund or a right to priority of payment therefrom.

Conclusions of Law

As conclusions of law from the foregoing facts, the Court decides:

"1. That the sum of $3,664.98, heretofore deposited with the Registry of this Court, should be paid and distributed as follows:

                                               Claim                    Fund

                                                                   $3,664.98

[1] First National Bank of

Nevada

, for attorneys'

fees and costs ...................          $ 455.18

[2] 

United States of America

 .....          1,480.30

[3] Employment Security

Department of the

State of 

Nevada

 ..................            317.29

                                           $2,252.77               -2,252.77

BALANCE OF FUND ..................                                 $1,412.21

 

That after payment of the foregoing, the balance of said fund should be prorated to the remaining defendant creditors on a percentage basis as follows:

                                                 Amount                Fund to

                                                Allowed         Be Distributed

Southern Nevada Power Co. .........             $ 35.20              $1,412.21

Boyle-Midway, Inc. ................                7.80

Market Varieties Co. ..............               68.10

Young Electric Sign Co. ...........              452.62

Saviers Electrical Products

Corporation .......................                8.62

Mrs. H. W. Kieren .................               54.40

S. & W. Fine Foods, Inc. ..........                8.20

Board of Trade of 

San Francisco

 ...               86.30

Glaser Bros., Las Vegas, Inc. .....              137.15

Jerry E. Masek, William G.

Cosulas, and Martin Greenstein,

d/b/a 

Las Vegas

 Distributing

Company ...........................               89.25

De Luca Importing Co., Inc. .......               33.45

Southern Nevada
 Telephone

Co.
 ...............................                1.00

Las Vegas
 
Land

 and Water

Company ...........................                3.12

Herman N. Greenspun d/b/a

Las Vegas

 Sun .....................               68.65

Western Cigar Co. .................               41.40

Nevada Beverage Co. ...............              103.70

Maxwell Kelch and Laura

Belle Kelch .......................              213.25

TOTAL .............................         $1,412.21"

 

LET JUDGMENT BE ENTERED ACCORDINGLY.