*713Opinion

Here, as in the recent case of Business Title Corp. v. Division of Labor Law Enforcement (1976) 17 Cal.3d 878 [132 Cal.Rptr. 454, 553 P.2d 614], we confront an appeal from a judgment in an action in interpleader brought by an escrow holder who, acting pursuant to an appointment under the provisions of section 24074 of the Business and Professions Code,1 seeks to resolve conflicting claims to the proceeds from the sale of a liquor license. Also as in the former case, one of the parties claiming an interest in the proceeds is the United States of America (United States), seeking to enforce a federal tax lien arising out of an assessment against the seller of the liquor license. Here, however, it is the United States which appeals from an adverse judgment below. For reasons to be fully set forth we have concluded that certain crucial differences exist between the former Business Title case and that now before us, and that those differences require a result contrary to that urged by the United States. Accordingly, we affirm the judgment.

The facts are not in dispute. Hall-Thomas, Inc., entered into an agreement to sell its cocktail lounge business, including the on-sale general liquor license, to Frank and Genevieve Música. On December 10, 1971, preparatory to filing an application for transfer of the license with the Department of Alcoholic Beverage Control (department) (see §§ 24070-24073), the parties, pursuant to the provisions of section 24074,2 *714established an escrow with Business Title Corporation as escrow holder. Under the terms of the escrow instructions the total price (not including broker’s commission) was $63,000, of which $3,000 was to cover merchandise and inventory. Payment was to be made $10,000 in cash, approximately $14,000 through the assumption by buyers of an unpaid obligation of sellers, and the balance through a note secured by a junior security in fixtures and equipment. Escrow was to close “upon transfer of the liquor license to buyer by [department].” The instructions specifically provided that upon approval of the transfer the escrow holder was to distribute the proceeds out of the escrow in accordance with the provisions of section 24074.

After the opening of the escrow and the deposit of the necessary cash and documents therein by buyer notice to creditors was duly recorded and published. (See Cal. U. Com. Code §§ 6105, 6107.)

On January 31, 1972, the escrow instructions were amended to reflect that the seller, Hall-Thomas, Inc., had assigned the buyer’s note and security interest to Credit Managers of Southern California (Credit Managers) as trustee for the seller’s then unsecured creditors, and the escrow holder was instructed to remit these documents to the assignee at the close of escrow “together with residue of cash proceeds accruing to selling corporation, of [j/c] any. . . .”

Pursuant to the aforesaid notice to creditors several claims were timely received in the escrow, including one by defendant Los Angeles Hotel-Restaurant Employer-Union Welfare Fund (Welfare Fund) in the *715amount of approximately $10,000 for unpaid employer contributions for employee benefits. None of the claims was disputed by Hall-Thomas (see § 24074, final par.; fn. 2, ante).

On February 7, 1972, after the payment of applicable state taxes (see § 24049), the escrow holder received notice that transfer of the liquor license from Hall-Thomas to the Músicas had been approved. On February 17, pursuant to the relevant provisions of section 24074.1,3 notice was mailed to all creditors who had filed claims prior to transfer4 indicating the amount to be paid to each.5 Before delivery and disbursement of the property in escrow, however, it appears that the licensed premises were wholly destroyed by fire. When the buyers refused to make further payments on the deferred portion of the purchase price pending resolution of ensuing controversies between the parties to the escrow and their insurers, litigation was commenced. The escrow holder was thereupon requested to defer further action pending the outcome of this litigation.

*716On April 3 and April 27, 1972, after the occurrence of these events, federal tax assessments were made against the seller, Hall-Thomas, Inc., for unpaid withholding and payroll taxes in an amount over $19,000.6 Notice of liens relating to these assessments (see 26 U.S.C. § 6321) was served on the escrow holder and filed in the offices of the county recorder and the Secretary of State.

Following the termination of the aforementioned litigation the instant action in interpleader was filed by the escrow holder on July 10, 1975, the plaintiff requesting that it be discharged from liability and dismissed from the action upon depositing the interpleaded properly with the court, and that it be awarded costs of suit and attorney’s fees incurred in the action pursuant to the provisions of Code of Civil Procedure section 386.6.7 Named as parties defendant were the United States, Welfare Fund, Credit Managers, and several other parties including the buyer and seller. However, all named defendants except the United States and Welfare Fund filed disclaimers of interest in the interpleaded property.8 Each of the latter defendants claimed “first priority” to the funds on deposit in escrow (see fn. 5, ante), the United States on the ground that sections 6321 to 6323 of the Internal Revenue Code of 1954 (26 U.S.C. §§ 6321-6323) accorded its tax liens priority over both the Welfare Fund’s claim and the escrow holder-interpleader’s claim for attorney’s fees and costs,9 and the Welfare Fund on the basis of the priorities set forth in section 24074 (see fn. 2, ante). It was argued by the interpleader and the Welfare Fund that because the transfer of the subject license had taken *717place prior to the federal assessments, and because the seller no longer had any “property” or “rights to property” in the proceeds derived from the transfer at the time the federal lien arose, the lien did not attach to such proceeds.

At the conclusion of trial the court, apparently at the request of counsel for the United States, deferred closing argument and judgment until the decision of this court in Business Title Corp. v. Division of Labor Law Enforcement, supra, 17 Cal.3d 878 (hereafter referred to as Business Title T) was rendered. Upon the finality of that decision argument was heard and the case submitted.

The trial court agreed with the position taken by the Welfare Fund. In its findings of fact and conclusions of law, filed simultaneously with the judgment on October 28, 1976, it found and concluded “That at the time of the United States of America’s assessment and later filing of notice of tax lien, there was no property or rights to property belonging to the delinquent taxpayer herein to which the United States of America’s lien could attach then being held by the plaintiff interpleader escrow company.”10 Judgment was entered discharging and dismissing the interpleader, awarding it out of the interpleaded fund the sum of $1,471 for attorney’s fees and costs incurred in the action, and awarding the residue of the cash proceeds to the Welfare Fund.11 The United States appeals from the judgment.

*718The argument of the United States may be briefly summarized. The instant case, it is urged, is wholly controlled by our decision in Business Title I and the principles upon which it was based. There, the government asserts, we held that upon the transfer of a liquor license in escrow the proceeds become the property of the seller, and that as long as such proceeds “repose in escrow” (see 17 Cal.3d at p. 888) prior to actual distribution they remain subject to the attachment of a federal tax lien. The fact that the lien here in question arose subsequent to transfer— whereas in the former case it arose prior to transfer and, indeed, prior to the opening of escrow—is urged to be wholly without significance. The important fact, the United States urges, is that the lien arose while the proceeds were still “reposing in escrow” prior to actual distribution. The state scheme of “priorities” set forth in section 24074, in the government’s view, can no more effect the operation of these principles in the instant case than it could effect their operation in the situation involved in Business Title I.

It is quite true that in Business Title I we indicated that section 24074, unlike section 24049, “confers no power to defeat the transfer of the license” but rather “merely directs the priority in which the proceeds derived from the transfer (after approval by the Department) shall be distributed.” (17 Cal.3d at p. 887.) Accordingly, we suggested that section 24074 had no effect on the property rights arising on transfer—and that even if it purported to have such an effect its efficacy for this purpose would be open to question in light of the requirements of federal law in light of the supremacy clause of the United States Constitution. (Id., at p. 887, fn. 10.) Thus, in summarizing our conclusion we stated: “[T]he proceeds in escrow following approval of the transfer by the Department belong to the vendor licensee subject to the lien claims priority as established by federal law, when one of the claims is a federal tax lien. ” (Id., at p. 889; italics added.) We have no occasion in the instant case to reexamine these determinations, and we decline to. do so.12 We do have occasion, however, to address the question of their application in the circumstances of the instant case, which differ markedly from those in Business Title I in the aspect indicated by the language from that case which is italicized immediately above.

*719In Business Title I the federal tax lien arose and was perfected prior to the date of the transfer of the license.13 Although observing that “federal law rather than state law determines the priority of competing liens where one of them is a tax lien asserted by the United States [citations]” (17 Cal.3d at p. 884; fn. omitted), we concluded that “ ‘[t]he threshold question in this case, as in all cases where the Federal Government asserts its tax lien, is whether and to what extent the taxpayer had “property” or “rights to property” to which the tax lien could attach.’ ” (Id., at p. 885, quoting from Aquilino v. United States (1960) 363 U.S. 509, 512 [4 L.Ed.2d 1365, 1368, 80 S.Ct. 1277].) This question, we held—following clear federal authority—was a matter of state, not federal law. In view of the circumstances there before us we determined that the taxpayer-seller, at the point when the federal lien arose (i.e., before transfer) still retained “property” or “rights to property” in the license to which the federal lien could attach. (See also Golden v. State of California, supra, 133 Cal.App.2d 640, 642-645.) Upon transfer of the license, and the passage of title therein to the buyer, the lien attached to the proceeds derived therefrom, and at that point, we held, the matter of priority to such proceeds became a matter of federal law, according to which the federal lien was paramount.

In the instant case, on the other hand, the facts are quite different. Here the escrow had been opened, notice to creditors had been recorded and published, all claims had been received (none of which was disputed by the taxpayer-seller), requisite state taxes had been paid, transfer of the license had occurred, and notice to claimant creditors of the amount proposed to be paid to each (§ 24071.1) had been sent—all before the federal assessments had occurred and the federal lien had been perfected. It appears likely, in fact, that but for the fire on the licensed premises and the request for delay in distribution which flowed therefrom (see text following fn. 5, ante) the proceeds would have been disbursed in accordance with the section 24074.1 notice before the federal assessment took place. In these circumstances we believe that a result different from that reached in Business Title I must follow.

Here the federal tax lien had not come into existence at the time of the transfer of the subject liquor license following department approval. It is therefore clear that from that moment forward the *720taxpayer-seller had no “property” or “rights to property” in the license to which the federal lien could attach. (Cf. Doyle v. Coughlin (1974) 37 Cal.App.3d 911, 915-918 [112 Cal.Rptr. 701].)14 It is equally clear for this reason that the federal lien, not having attached to the seller’s property interests in the license, was not at the moment of transfer eligible to participate in the distribution of the proceeds. Here the distinction between this case and Business Title I assumes particular significance. In that case, where the federal tax lien was among the claims in existence at the moment of transfer, the following principle, already quoted above, was held to control: “[T]he proceeds in escrow following approval of the transfer by the Department belong to the vendor licensee subject to the lien claims priority as established by federal law, when one of the claims is a federal tax lien.” (17 Cal.3d at p. 889, italics added.) The same principle cannot, however, control here, for the federal tax lien had not even come into existence at the time of transfer.15

In spite of the foregoing, however, it is manifest that when the federal lien did come into existence it attached to whatever “property” or “rights to property” that the seller retained in the yet-undistributed proceeds, *721and that upon attachment its priority was governed by federal law. The fundamental question in this case, therefore, is whether, at the moment the federal lien came into existence, the seller-taxpayer retained any property or property rights in the proceeds. That question, as we have indicated (see text following fn. 13, ante), is to be decided according to state, not federal law. We therefore look to the statutory provisions governing the subject escrow to determine it.

Section 24074 (fn. 2, ante) clearly contemplates and provides that the seller has the right to dispute any creditor’s claim which is duly filed in the escrow prior to the transfer of the license. If he exercises this right the escrow holder, upon transfer of the license, must so notify the claimant, at which point the latter has the right to file an action at law and, within 25 days, to attach that portion of the proceeds which he claims,16 at which point it appears to be contemplated that the matter of rights in the property so attached shall be the subject of the legal proceedings outside of escrow. (See In re Leslie (9th Cir. 1975) 520 F.2d 761, 763.) If the seller does not, however, exercise his right to dispute one or more of the claims filed prior to transfer, then the escrow holder, within 10 days of transfer, is required to advise the filing creditors of the amount he proposes to pay each (whether it be the full amount claimed or, in the case where insufficient assets remain in the escrow to pay all creditors in full, some pro rata amount) and the date on or before which such payment will be made. (§ 24074.1, subd. 3; fn. 3, ante.) Payment or distribution is to be made “within a reasonable time” after transfer. (§ 24074, final par.; fn. 2, ante.)

We reach the following conclusions on the basis of the foregoing statutory scheme: Whatever “property” or “rights to property” the seller may have in the proceeds because of his power to dispute claims of creditors filed prior to transfer,17 such rights are extinguished when, as here (1) he does not dispute any claim so filed, and (2) the assets remaining in escrow at the time of transfer are insufficient to pay the claims in full. At that point he loses all power to establish a claim to any portion of the proceeds and the matter of distribution becomes wholly one between the creditors and the escrow holder. (See Cohn v. Gramercy Escrow Co. (1977) 65 Cal.App.3d 884 [135 Cal.Rptr. 688].) For these *722reasons we hold that the trial court properly determined that “at the time of the United States of America’s assessment and later filing of notice of tax lien, there was no property or rights to property belonging to the delinquent taxpayer herein to which the United States of America’s lien could attach then being held by plaintiff interpleader escrow company.”18

We are not persuaded that the cases of Gough v. Finale (1974) 39 Cal.App.3d 777 [114 Cal.Rptr. 562] and In re Leslie, supra, 520 F.2d 761 require a different result. In Gough it does not appear when the transfer took place, and in Leslié it is not indicated whether or not the proceeds were sufficient to pay the claims of all timely filing creditors in the 24074 escrow. In any event we do not believe that principles applicable in the case of a voluntary filing of bankruptcy by the seller-taxpayer are necessarily applicable in cases involving the attachment of a federal tax lien.

The conclusion we have reached—that under state law the seller had no “property” or “rights to property” in the proceeds to which the federal lien could attach when it arose—renders it unnecessary for us to consider the additional contention, raised by the Welfare Fund in its reply to the United States’ supplemental brief, that under the federal law of priority the federal lien had it attached to the proceeds, was nevertheless not paramount because the interests of creditors had by that time become “choate” within the meaning of United States v. New Britain (1954) 347 U.S. 81 [98 L.Ed. 520, 74 S.Ct. 367]. (See generally Plumb, Federal Liens and Priorities—Agenda for the Next Decade (1967-1968) 77 Yale L.J. 228, 605, 1104.)

The judgment is affirmed.

Tobriner, J., Clark, J., Richardson, J., and Newman, J., concurred.

I concur in the well-reasoned opinion of the court, and agree that these facts differ from those in Business Title Corp. v. Division of Labor Law Enforcement (1976) 17 Cal.3d 878 [132 Cal.Rptr. 454, 553 P.2d 614].

If the circumstances had been identical we could have considered overruling Business Title Corp. I. The results of that ill-considered opinion have been tragic to working men and women, whose legitimate claims for wages accruing prior to the sale of a business must be subordinated to the demands of the federal government. (Id., at p. 889 (dis. opn. by Mosk, J.).)

Business Title Corp. I was a blow to employees and their right to be compensated for services rendered. The error of this court has now been compounded: believing itself bound by our ruling on the law, the Legislature in 1977 amended Business and Professions Code section 24074 so that hereafter in the list of priorities the claims of the federal government statutorily rank ahead of claims for unpaid wages of employees.

Although it is still my opinion that both legally and socially the priorities have been inverted, I must concede that rejection now of our earlier case would amount to little more than locking the barn door post horse. Fortunately the court has discovered a factual detour in the instant case.

Bird, C. J., concurred.