'Payment in full'

[snopes]

Comment: The story goes:
A man sent a check to a city (I heard Detroit) for $1.00 to the City. In
the memo section he wrote;
"Payment in Full for Tiger Stadium" (or whatever stadium was in the City.)
The City Clerk cashed the check without looking closely at what it was
for, or without caring, which made it a legal and binding contract.
The Courts upheld the check as a binding contract of sale and the City had
to purchase it back from the man for several million dollars.

[dfresh]

I heard the same thing about this guy, and how he ended up with Newsweek Magazine for $1.

[diddy]

Originally Posted by dfresh

I heard the same thing about this guy, and how he ended up with Newsweek Magazine for $1.

Not quite 1 dollar:

But make no mistake, Harman's pocket change purchase of Newsweek—he paid $1, plus the assumption of liabilities for the magazine

Bolding mine - I have read that he aquired about 70 million in debt.

[hoitoider]

The classic one is when a house is for sale for $1 but you have to move it. I was under the assumption there has to be an amount other than $0 for it to be a sale or else it would be considered a gift.

[Jay Temple]

This was also the basis of an episode of Night Court. I forget what the check was supposed to "purchase", but he ended up with the property tax liability.

[diddy]

Originally Posted by Jay Temple

This was also the basis of an episode of Night Court. I forget what the check was supposed to "purchase", but he ended up with the property tax liability.

I believe it was for the Brooklyn Bridge if memory serves.

[Bryan With a 'Y']

The fundamental problem with the OP being, of course, that the low-level functionary who actually handled the check would have had to have the authority to independently negotiate and enter into contracts disposing of massively expensive city property.

Not in the job descriptions of most admins.

[diddy]

Right - the sale would be null and void since the person processing the check you not have the authority to sell the property. You might as well have given me a check to sell my parents house (writing paid in full) when I happened to there over the weekend. No ammount of money that you give me (in my name or not) provides me with the authorization to sell that property.

[KingDavid8]

I'm going from memory, here, so don't hold me to this...but I seem to recall an episode of one of the court shows ("Judge Judy" or "People's Court" or something) which dealt with this issue. The customer was unsatisfied with a service that was provided, so he gave the business a check for half of the payment, and wrote "paid in full" in the notes. The business cashed the check, then demanded the other half of the payment. The business won, with the judge saying that "paid in full" doesn't count unless the payee agrees that it does. But because there was no agreement (and simply accepting the check doesn't automatically mean that there is one), the "paid in full" means nothing. Again, I'm going from memory, so I'm not certain that this was how it went. And it could have been state-specific, and not the case everywhere, as sometimes happens on these shows.

David

[snopes]

The sale would be null and void since the person processing the check you not have the authority to sell the property.

Plus, the contract is non-specific. The city could send the payer a picture of Tiger Stadium and says that's what they assumed his payment was for.

[Thrifty]

Originally Posted by diddy

I believe it was for the Brooklyn Bridge if memory serves.

It was a few things on that episode of Night Court. The guy (played by Stephen Root) was in court for obstructing a public thoroughfare. His defense was that it wasn't public; he owned the Brooklyn Bridge. He also owned the Statue of Liberty (which is where he was living) and later in the episode bought the courthouse.

Later on, the city decided they liked this turn of events, because they would save on maintenance costs. Root couldn't come close to paying the related bills, so he tried to sell the properties back to the city. When they didn't want them, he took out classified ads trying to sell them to foreign countries. The city didn't like this, and bought the properties back.

Silly premise, but then again Night Court was a silly show.

[diddy]

Originally Posted by Thrifty

Silly premise, but then again Night Court was a silly show.

Yes, it was a silly show - but it was a comedy of course and that was what made it kinda fun.

[Il-Mari]

Originally Posted by snopes

Plus, the contract is non-specific. The city could send the payer a picture of Tiger Stadium and says that's what they assumed his payment was for.

I wonder if there's even a legal precedent where only a short note on a check - without any kind of other verbal or textual contact between the parties involved - could even be counted as a proper 'contract' by the courts?

- Il-Mari

[GenYus234]

Originally Posted by Il-Mari

I wonder if there's even a legal precedent where only a short note on a check - without any kind of other verbal or textual contact between the parties involved - could even be counted as a proper 'contract' by the courts?

I've gotten a number of "offers" to sign up for some sort of service where the offer includes a check. The check will often say something like "By cashing this check, you agree to sign up for our service." It may be a case of them just hoping no one knows that isn't binding, but I don't think they'd risk actual money without some sort of legal standing.

[keokuk]

Originally Posted by Il-Mari

I wonder if there's even a legal precedent where only a short note on a check - without any kind of other verbal or textual contact between the parties involved - could even be counted as a proper 'contract' by the courts?

I think there are some situations where short notes on a check can have some sort of effect, such as if a person's lease is expiring and the note briefly describes the terms of the new month-to-month lease (such as to state that the tenant will not accept an increase in rent), but those situations are really rare for precisely the reason you describe.

It seems to me that the situation described in the OP would easily fall in the Statute of Frauds and prevent the "contract" from being enforceable. (Assuming that there even is a contract...)

[Flagg]

I used to work in the written correspondence department of a credit card bank. We regularly got letters from people saying they wrote, "Paid in full," or something like that on their last payment check, and that by cashing it we were legally bound to clear the rest of their debt. The letters often had a smart-alecky, neener neener neener, tone to them. Some of them came with printouts of newsletters showing legal precedent for their claims.

It never worked, obviously, but it was common enough that we had a standard form letter made up by the legal department that we sent to these people that politely told them they were full of crap.

OT: Another slightly less common ploy that came with newsletter printouts was something about the customer declaring themselves or their property to be a sovereign nation that didn't recognize debts from companies based in foreign lands. We had a form letter for that as well.

The relevant section of the UCC:

§ 3-311. ACCORD AND SATISFACTION BY USE OF INSTRUMENT.

* (a) If a person against whom a claim is asserted proves that (i) that person in good faith tendered an instrument to the claimant as full satisfaction of the claim, (ii) the amount of the claim was unliquidated or subject to a bona fide dispute, and (iii) the claimant obtained payment of the instrument, the following subsections apply.
* (b) Unless subsection (c) applies, the claim is discharged if the person against whom the claim is asserted proves that the instrument or an accompanying written communication contained a conspicuous statement to the effect that the instrument was tendered as full satisfaction of the claim.
* (c) Subject to subsection (d), a claim is not discharged under subsection (b) if either of the following applies:
o (1) The claimant, if an organization, proves that (i) within a reasonable time before the tender, the claimant sent a conspicuous statement to the person against whom the claim is asserted that communications concerning disputed debts, including an instrument tendered as full satisfaction of a debt, are to be sent to a designated person, office, or place, and (ii) the instrument or accompanying communication was not received by that designated person, office, or place.
o (2) The claimant, whether or not an organization, proves that within 90 days after payment of the instrument, the claimant tendered repayment of the amount of the instrument to the person against whom the claim is asserted. This paragraph does not apply if the claimant is an organization that sent a statement complying with paragraph (1)(i).
* (d) A claim is discharged if the person against whom the claim is asserted proves that within a reasonable time before collection of the instrument was initiated, the claimant, or an agent of the claimant having direct responsibility with respect to the disputed obligation, knew that the instrument was tendered in full satisfaction of the claim.

The bolded, italicized, underlined and otherwise highly conspicuous portions are why this ploy does not work. The dispute as to amount owed has to be real and the person accepting the check has to be a person authorized to settle the dispute. The payment processing department is likely not "authorized to settle" and the "gotcha now I don't owe you nothin' no more" cause of dispute is generally not recognized by courts. While the UCC is not in and of itself law, being a model code put forth by academics not legislators, it forms the basis of most State's Commercial codes and most States have this provision or a similar one in effect. In Ohio (my state of practice) it is 13 O.R.C 1303.40, and is pretty much exactly as it appears in the UCC.

[keokuk]

Wouldn't the UCC be inapplicable here since it involves real property and not goods?