April 22, 2005
Dear Sir:
You have the following question: Can the utility department refuse to accept the payment
of utility bills in pennies? In the case at issue, a person paid in pennies a utility bill of over $50
at the time the utility department was closing, causing utility workers to work overtime to count
the pennies.
The answer is generally yes.
I assumed there would be a multitude of cases on your question. Surprisingly, I found
only one case, an unreported Ohio one involving a person who attempted to pay a municipal fine
of $128.00 in pennies. In State v. Carroll, 1997 WL 118064 (Ohio App. 4 Dist.), the Court
upheld the municipal court=s refusal to accept the pennies. The plaintiff argued that under 31
U.S.C.A. ' 5103, United States coins are legal tender Afor all debts, public charges taxes and
dues,@ and for that reason the city was required to accept the pennies as payment of the fine.
Without pointing to any case law, the Court simply concluded that AIt defies logic and common
sense that this Congress intended such a wooden and broad application of the statute beyond the
control of the payee regardless of the circumstances.@ [At 4-5] The Court reasoned that under
the law authorizing the clerk to collect and issue receipts for the payment of fines, etc., the clerk
could Aprovide a reasonable procedure for the place, time and manner of accepting fines
consistent with the efficient operation of the clerk=s office.@ [At 5]
Actually, the court clerk in that case did not refuse to accept the pennies as payment of
the fine; she refused to accept them unrolled and unbowed.
Subsequently, I found a brief annotation on what constitutes legal tender at 31 ALR 246
[which I reprieved from West law and is supposedly current as of June, 2004] on what constitutes
Alegal tender.@ It points out that with respect to coins as legal tender, AThe minor coins of the
United States are legal tender for any amount not exceeding 25 cents in any one payment. Act
Feb. 12, 1873, Rev. Stat. ' 387, Comp. Stat. ' 6574, 6 Fed.Stat. Anno. 2d. ed. p. 298.@
That annotation points to Martin v. Rhode Island Co., 78 A. 548 (R.I. 1911), in which it
was held that notwithstanding that statute, a streetcar operator was not required to accept from a
prospective passenger five pennies in payment of his fare when the fare fox would accept only
nickels, also reasoning that the carrier was entitled to establish reasonable rules and regulations
governing the payment of fares. In that case, the streetcar operator had even tried to give the
prospective passenger a nickel for the five pennies.
April 22, 2005
Page 2
But the annotation appears to be outdated and inaccurate with respect to the federal
statutory definition of Alegal tender.@ Under 31 U.S.C.A. 5103 Alegal tender@ is
United States coins and currency (including Federal reserve notes
and circulating notes of Federal reserve banks and national banks)
are legal tender for all debts, public charges, taxes, and dues.
Foreign gold or silver coins are not legal tender for debts.
Amendments to the antecedent of that statute have done away with the language related to
Aminor coins of the United States,@ and the limitation on the number of minor coins one is
obligated to accept as legal tender.
But the reasons supporting the courts=s decisions in both State v. Carroll and Martin v.
Rhode Island Co., above, remain intact under 31 U.S.C.A. 5103. Surely, that statute cannot
mean that people are entitled to pay more than very small debts with pennies. A $50 utility bill
paid in pennies involves the counting of 5,000 pennies! Larger utility bills, which are obviously
common, would, if paid in pennies, involve the counting of huge numbers of those coins. Either
situation would permit the use of 31 U.S.C.A. 5103 to reach an absurd result. On the grounds of
common sense, one cannot successfully argue that one can pay a grocery bill, or a utility bill, of,
say, $200 with pennies, on the ground that pennies are legal tender. Such a payment would
involve the counting of 20,000 pennies. Activities of that kind would bring commerce and
government to a halt.
I suspect the acceptance of even federal reserve notes are subject to reasonable rules and
regulations. For example, I doubt that in the case of a business that owed a utility bill of, say,
$5,000, the utility would be required to accept that payment in $1 bills. The acceptance of large
bills is even limited by businesses and governments. It is not uncommon for them to refuse in
some circumstances to accept such notes of over $20, or $50.
Needless to say, the utility probably ought to have a written policy regarding the
limitations on the taking of pennies for the payment of utility bills.
Sincerely,
Sidney D. Hemsley
Senior Law Consultant