City National Bank and Trust Company appeals from a judgment of the United States District Court for the Western District of Missouri. It contends that the trial court erred in holding that the United States was entitled to indemnification for checks paid by the United States upon presentment by the Bank with prior endorsements guaranteed. The decision of the trial court is reported at 349 F. Supp. 1188 (W.D.Mo.1972).

The following facts are undisputed. Fletcher Davis, a retired soldier, received disability payments from the United States commencing on November 30, 1946. He died February 27, 1954, in the Veteran's Administration Hospital in Wadsworth, Kansas. Notice of his death was given to the Central Office of the Veteran's Administration in Washington, D.C., on March 5, 1954. Application for burial allowance was made to the Veteran's Administration and an award was made. No notice of Davis' death, however, was given to the Department of the Army Financial Center, Retired Pay Division, either by the Veteran's Administration or Davis' family, nor was the Retired Pay Division otherwise informed of Davis' death.

After his death, the Department of Army continued to issue Treasury checks payable to Fletcher Davis. Each of these checks was cashed at the Grand Avenue Bank by Georgia Mae Davis, Davis' 'common-law' wife. Mrs. Davis later admitted to endorsing Fletcher Davis' name on the checks.

The Grand Avenue Bank endorsed the checks to the City National Bank and Trust Company which, in turn, presented the checks to the United States Treasury Department for payment. Both banks guaranteed all prior endorsements on each check.

On February 16, 1967, the Veteran's Administration received, by an anonymous telephone call, information that Davis was dead and that Georgia Mae Davis was cashing the Treasury checks. After investigation, this information was communicated to the Department of the Army, retired Pay Division, on March 10, 1967. On April 20, 1967, the Treasury was requested to stop payment on the checks. The Treasurer thereupon made three sets of reclamation demands upon City National. When the demands were not honored, the United States brought an action against City National1 to recover $16,413, the amount of seventy-two pension checks submitted by City National to the government in the previous six years with guarantees of prior endorsements.2

The District Court entered judgment in favor of the United States. It held that National Metropolitan Bank v. United States, 323 U.S. 454, 65 S. Ct. 354, 89 L. Ed. 383 (1945), controlled and that under its teachings, the negligence of the United States in failing to discover fraud prior to the guarantee of the genuineness of prior endorsements did not absolve City National from liability where the prior endorsements had been forged. It alternatively held that the United States was entitled to recover on the warranty implied in federal law, see, e.g., United States v. Bank of America National T. & S. Ass'n, 288 F. Supp. 343 (N.D.Cal.1968), aff'd, 438 F.2d 1213 (9th Cir.), cert. denied, 404 U.S. 864, 92 S. Ct. 54, 30 L. Ed. 2d 108 (1971), and on the warranty required by a Treasury regulation, 31 C.F.R. 360.4 (1967).3

City National contends on appeal that: (1) National Metropolitan Bank is no longer controlling; (2) the Uniform Commercial Code has now been adopted by Forty-nine of the fifty states and should be looked to as the 'new national law of commerce;' and (3) the Code, particularly 3-406,4 precludes the United States from asserting the forgery as its negligence substantially contributed to the making of the unauthorized signatures.5

We cannot agree that 3-406 of the Code is determinative of the rights of the parties in this case. National Metropolitan Bank v. United States, supra 323 U.S. at 458, 65 S. Ct. 354, and Clearfield Trust Co. v. United States, 318 U.S. 363, 366, 63 S. Ct. 573, 87 L. Ed. 838 (1943), require a contrary result. Both of these cases noted that Treasury regulations govern the payment and endorsement of government checks.6 These regulations require a party presenting a Treasury check to the government to guarantee that all prior endorsements on the check are genuine, and they grant the Treasurer the right to demand a refund if that guarantee is breached.7 The regulations are largely decisive in determining the relationships between City National and the government and supplant other sources of legal standards. Cf., Free v. Bland, 369 U.S. 663, 82 S. Ct. 1089, 8 L. Ed. 2d 180 (1962); United States v. Shimer, 367 U.S. 374, 81 S. Ct. 1554, 6 L. Ed. 2d 908 (1961); Federal Crop Ins. Corp. v. Merrill, 332 U.S. 380, 68 S. Ct. 1, 92 L. Ed. 10 (1947).

There remains the question of whether the government should be estopped from enforcing the Treasury regulation here because of its negligence in issuing checks to a deceased payee. City National urges that we engraft such an exception to the regulation. It cites United States v. First Nat. Bank of Chicago, 138 F.2d 681 (7th Cir. 1943), and United States v. National Rockland Bank, 35 F. Supp. 912 (D.Mass.1940), in support of its position. These cases do support City National's contention that the government should be estopped by its negligence, but their validity was seriously weakened-- if not destroyed-- by the Supreme Court in National Metropolitan Bank. Certiorari was explicitly granted there to resolve the conflict between First National and Washington Loan and Trust Co. v. United States, 77 U.S.App.D.C. 284, 134 F.2d 59 (D.C.Cir. 1943), and the Supreme Court resolved the conflict by taking a position contrary to that taken by the Seventh Circuit in United States v. First Nat. Bank of Chicago, supra.

We are not persuaded that the authority of National Metropolitan Bank, with respect to the problem discussed here, has been eroded by the passage of time or the adoption of the U.C.C. by fortynine states. See, United States v. Bank of America National T. & S. Ass'n, supra 438 F.2d at 1214. The Court there stated:

* * * We cannot find that the Supreme Court has itself, since 1945, written anything which might cause us to conclude with reasonable assurance that its Metropolitan decision is no longer viable. This being so, we think that Metropolitan must now control the disposition of this appeal.

See also, United States v. National Bank of Com. in New Orleans, 438 F.2d 809 (5th Cir.), cert. denied, 404 U.S. 828, 92 S. Ct. 64, 30 L. Ed. 2d 57 (1971), United States v. Philadelphia National Bank, 304 F. Supp. 955 (E.D.Pa.1969).

We accept the general proposition that the federal government, in its commercial transactions, should be treated as other business entities, see, United States v. First National Bank in Ogallala, Neb., 470 F.2d 944 (8th Cir. 1973), but we cannot extend such treatment here in the light of the Treasury regulations and the decision of the Supreme Court in National Metropolitan Bank. If a change is desired, Congress can enact a new statute, the Treasury regulations can be revised or the Supreme Court can overrule National Metropolitan Bank.

We affirm.