Knowledgebase-Accepting Payment of Utility Bills in Pennies

Information Product

Title:Accepting Payment of Utility Bills in Pennies
Summary:MTAS was asked whether the city had to accept payment of utility bills in pennies.
Original Author:Hemsley, Sid
Product Create Date:04/22/2005
Last Reviewed on::07/12/2017
Subject:Finance; Finance--Municipal; Utilities--Finance; Utilities--Finance--Laws and regulations
Type:Legal Opinion
Legal Opinion: Accepting Payment of Utility Bills in Pennies public.doc

Reference Documents:

Text of Document: 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 "for 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 "It 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 "provide 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 "legal tender." It points out that with respect to coins as legal tender, "The 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.

But the annotation appears to be outdated and inaccurate with respect to the federal statutory definition of "legal tender." Under 31 U.S.C.A. 5103 "legal 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 'minor 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.


Sidney D. Hemsley
Senior Law Consultant


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