November 17, 2016
I.O.U. or Do You?
On November 16, 2016, the Minnesota Supreme Court just released an opinion that would appear to be odds with legal advice given by the esteemed law office of SailorsAllen.
The court held: You don’t need to pay your old property taxes.
Before you rip up the check or cancel that order of pennies to send in to pay the balance, here is how we got here. The hero in this story is Ms. Schouweiler. In February of 2015, she issued a check to the Wabasha County Auditor/Treasurer for past-due property taxes in the year of 2014 in the amount of $1,969.07. The check was not honored by her bank, which returned it for insufficient funds. The County Auditor/Treasuer mailed her a notice saying she had five days to make a valid payment to which she did not. Schouweiler was charged with issuance of a dishonored check, Minn. Stat.§ 609.535, subd. 2. Schouweiler challenged the probable cause underlying the complaint and moved to dismiss it, arguing that her check fit within the statutory exception for “a check given for a past consideration,” id., subd. 5. The district court agreed and dismissed. The Court of Appeals reversed that decision and the MN Supreme Court took the case.
The Supreme Court reviewed the case by looking at the statute, which is a good place to start.The dishonored check statute provides:
“Whoever issues a check which, at the time of issuance, the issuer intends shall not be paid, is guilty of issuing a dishonored check.” Minn. Stat. § 609.535, subd. 2
But, the legislature carved out an exception:
“This section does not apply to a postdated check or to a check given for a past consideration, except a payroll check or a check issued to a fund for employee benefits.” Id., subd. 5.”
Schouweiler argued that her check was for past consideration and therefore, subject to the exception in subdivision 5. In order to argue her point, she quoted a Wisconsin Court of Appeals decision that interprets a dishonored- check statute nearly identical to Minnesota’s statute, Schouweiler argues that the past- consideration exception includes “checks given either for services already performed or for goods already received.” See State v. Archambeau, 523 N.W.2d 150, 151-52 (Wis. Ct. App. 1994) (quoting 66 Op. Wis. Att’y Gen. 168, 174 (1977)). To be fair, I would be skeptical of using anything from Wisconsin to make a point unless it is a point about spotted cow. The State, for some reason, disagreed with Ms. Schouweiler and her fancy Wisconsin case. They say that paying property taxes is a statutory obligation, to which I picture the attorney reciting the Pledge of Allegiance right after making that argument. We talked about pledges in a different post here: https://sailorsallenlaw.com/2016/09/13/hello-world/
So the argument upon paying property taxes or not paying property taxes will be decided upon what is the meaning of the “past consideration?” We interpret a statute “as a whole so as to harmonize and give effect to all its parts, and where possible, no word, phrase, or sentence will be held superfluous, void, or insignificant.” Jackson v. Mortg. Elec. Registration Sys., Inc., 770 N.W.2d 487, 496 (Minn. 2009) (quoting In re United Health Grp. Inc., 754 N.W.2d 544, 563 (Minn. 2008)); see also Minn. Stat. § 645.16 (2014). The Supreme Court clearly does not analyze this blog if they think no word is superfluous.
In ordinary, nonlegal speech, the word “consideration” means a payment given as compensation for a good or service. See Webster’s Third New International Dictionary of the English Language Unabridged 484 (2002). You give me 15 3 dollars and I will burn you a Pitbull greatest hits CD. I just discovered the strike-through feature if that not already obvious. “Past,” of course, refers to something that has “existed or occurred in an earlier time.” The American Heritage Dictionary 1290. A check given for a past consideration” would then refer, according to its common and ordinary meaning, to a check given as payment for something of value received in the past. Consideration is an act or forbearance that induces a contractually binding promise (3 dollars for Pitbull music). See Consideration, Black’s Law Dictionary (10th ed. 2014). But when the act or forbearance was given before the return promise was made, the act or forbearance is called “past consideration. See id. Because “past consideration” does not actually induce a return promise, a promise for “past consideration” is not legally binding. See 4 Richard A. Lord, Willison on Contracts § 8.11 (4th ed. 2008).
The surrounding text of subdivision 5 shows that the Legislature intended for the phrase “past consideration” to be given its ordinary meaning, not its technical meaning. Stated in full, subdivision 5 provides: “This section does not apply to a postdated check or to a check given for a past consideration, except a payroll check or a check issued to a fund for employee benefits.” Minn. Stat. § 609.535, subd. 5 (emphasis added). The two parts of that exception are: (1) it does not apply to a check given for past consideration and (2) it does not apply to payroll checks or checks that fund employee benefits. The MNSC says that employee’s pay and benefits are bargained for at the time the employment agreement is made. They are not past consideration. By saying this they cannot give effect to each word of the statute unless the phrase “past consideration” is interpreted according to its common and ordinary meaning. Therefore, they held that with the exception for a “check given for a past consideration” in subdivision 5 refers to any check given in payment for a good or serve was received in the past. Such a check
The two parts of that exception are: (1) it does not apply to a check given for past consideration and (2) it does not apply to payroll checks or checks that fund employee benefits.
The MNSC says that employee’s pay and benefits are bargained for at the time the employment agreement is made. They are not past consideration. By saying this they cannot give effect to each word of the statute unless the phrase “past consideration” is interpreted according to its common and ordinary meaning. Therefore, they held that with the exception for a “check given for a past consideration” in subdivision 5 refers to any check given in payment for a good or serve was received in the past. Such a check does not give rise to criminal liability under the dishonored check statute.
The State did not give up and argued the old absurd result argument. Saying that be relying on its common and ordinary meaning that effectively eliminates criminal liability for checks that are issued for delayed or past-due payments, which is an absurd result. What is the common and ordinary meaning of “absurd?” Minnesota Statute § 645.17(1) assumes the legislature did not intend to be absurd. So the legislature created a statute saying that the legislature tries not to be absurd when it creates statutes. Which can be interpreted as absurd; I wish the same leniency was applied to my high school papers.
The MNCS reasoned that the legislature may have intended to only criminally punish the issuance of a worthless check that actually induced the other party to provide a good or service to the issuance of the check. So your 3 dollar check for the Pitbull CD bounced. They also reasoned that the legislature may have thought the physical presence of the check at the time of the exchange would be more likely to induce the immediately delivering the goods or service instead of a mere promise. Give me the disc to play in my Discman and I will get you back later. They want to discourage that, apparently?
Finally, the MNSC reasoned the relationship between Schouweiler and Wabasha County doesn’t change. She still owes them money. To which she can say “the check is the in mail.”
The last thing that was discussed was that property owners have a statutory obligation to pay taxes, see Minn. Stat. § 272.01, subd. 1 (2014), and it is undisputed that tax payments fund government services. Schouweiler argued that her check for property taxes reimbursed the county for government services received only during the previous year. The State contends that county services are received on an ongoing basis and not entirely received in the past. Government services, can’t stop, won’t stop, argues the State. What is the post office’s creed? Rain, snow….. but the Legislature created an exception for checks issued for “a past consideration.” Minn. Stat. § 609.535, subd. 5. When used before a noun or a noun phrase, the word “a” denotes “a single but unspecified person or thing.” The American Heritage Dictionary at 1. So they are literally defining the short word in the English language. The use of the word “a” before the phrase “past consideration” shows that the Legislature required only a good or a service to have been received in the past for a check to be exempt from criminal liability under the dishonored check statute. Because some of the government services funded by a property tax payment had already occurred by the time Schouweiler’s check for past-due taxes issued, her check was “a check given for a past consideration.”
So bottom line, Schouweiler wins and until the legislature changes the law (which will be imminent) you may be able to tell the State you are going to your taxes like this:
