The opinion of the court was delivered by: McMILLEN, District Judge.
Both parties have filed motions for summary judgment in this
case, plaintiff seeking to set aside and enjoin the enforcement
of a tax levy against Unique Industries, Inc. and defendant
United States of America as counterplaintiff seeking to enforce
its tax levy by foreclosing its liens against defendant Unique
Industries, Inc. We find and conclude that Unique's principal
executive office was located in Illinois which requires that
defendant's motion for summary judgment should be granted.
The controversy arose in the following manner. Internal Revenue
Service filed tax liens in DuPage County, Illinois against Unique
Industries beginning July 10, 1979. Unique Industries' total tax
indebtedness reached $152,726.20 plus statutory penalties and
interest, which is the amount of its counterclaim. Plaintiff
began buying Unique Industries' accounts receivable on June 18,
1979, and obtained a total of $723,166.90 in collections.
Plaintiff was served with a notice of levy by I.R.S. on November
9, 1979, and had acquired the accounts receivable prior to that
time. However, it had constructive notice of the government's
liens which had been filed with the Recorder of Deeds of DuPage
County on July 10, 1979.
The applicable statute, 26 U.S.C. § 6323(f), protects a
commercial financing transaction such as the plaintiff had with
Unique Industries in this case up to the 46th day after the tax
lien has been filed. The forty-sixth day after July 10, 1979, is
August 25, 1979, and plaintiff collected approximately $400,000
of Unique Industries' accounts receivables after that date.
Therefore, if the tax liens were properly filed, the counterclaim
of the Internal Revenue Service becomes valid and enforceable up
Subparagraph (f) of § 6323 provides in pertinent part as
(f) Place for filing notice; form. —
(1) Place for filing. — The notice referred to in
subsection (a) shall be filed —
(2) Situs of property subject to lien. — For
purposes of paragraph (1), property shall be deemed
to be situated —
(B) Personal property. — In the case of personal
property, whether tangible or intangible, at the
residence of the taxpayer at the time the notice of
lien is filed.
For purposes of paragraph (2)(B), the residence of a
corporation or partnership shall be deemed to be the
place at which the principal executive office of the
business is located. [Emphasis added.]
Plaintiff argues, first, that its contract with Unique
Industries predated any tax lien filed by I.R.S. and that it had
no actual knowledge of the one filed in DuPage County on July 10,
1979, or any other subsequent lien filed by the federal
government. However, actual notice or knowledge of a tax lien is
not required under § 6323. Plaintiff had forty-five days to
discover the lien, which is a reasonable period of grace for a
factoring corporation to protect itself. If a lien is properly
filed in accordance with the laws of the State of Illinois, as
was done in the case at bar, then all parties, at least in this
state, have constructive notice of the lien. Although plaintiff
claims that notices of liens subsequently filed in California
were not in accordance with the laws of that State, this
contention becomes irrelevant if the principal executive office
of Unique Industries was in Illinois. Indeed, the government does
not contend that liens were properly filed in California.
It should be noted that the phrase "principal executive office"
was enacted into § 6323 on July 25, 1958, modifying the phrase
"residence of the taxpayer." The case relied upon by plaintiff,
United States v. Jane B. Corp., 167 F. Supp. 352 (D.Mass. 1958),
was decided under the old language of § 6323 which is no longer
applicable. It thus becomes a question of the meaning of the
phrase "principal executive office," and this is generally
understood to mean "the head office, the place where the
principal officers generally transact ...