sendmail errorless error

[urgrue <urgrue@xxxxxxxxx>]

i normally test our mail servers using a telnet to port 25. but 
something is very different about one mail server. our client hasnt 
complained so im assuming the mail server works. but if i telnet in, 
when i get to MAIL FROM: blah@xxxxxxxxxx, the response is simply:
553 5.3.0 blah@xxxxxxxxxxxxx >blah<@domain.com.

what does >this< mean?

any attempt to move on to RCPT TO: results in a need MAIL before RCPT 
error.

"blah" and "domain.com" are legitimate, genuine user/domain run by this 
mail server. this error does not happen if i "send" the mail as 
user@xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

its hard to look up an explanation of the error when there is no error 
message...
can anyone explain this?

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