Also known as: minus soluto · partial payment · less than due
Written by attorneys — see sources below.
A status of partial payment under an installment land contract that protects the purchaser to the extent of payments made. The purchaser receives an equitable interest in the land while the prior unrecorded claimant obtains a lien securing the unpaid balance of the purchase price.
Madison Meyers contracted to buy a parcel from a seller and paid forty percent of the price before taking possession. An earlier unrecorded buyer then appeared. The court awarded title to Madison but granted the prior claimant a lien on the land to secure the unpaid balance of the purchase price.
Maria Morales and other royalty owners received suspense royalties from Phillips Petroleum after a rate dispute. They accepted the partial sums under protest while continuing to pursue the full interest owed. The acceptance did not waive their claim to the remaining balance.
Phillips Petroleum Company, a Delaware corporation with its principal place of business in Oklahoma, produced or purchased natural gas from leased land in 11 states during the 1970s. It sold most of the gas in interstate commerce at prices regulated by the Federal Power Commission, later the Federal Energy Regulatory Commission. Beginning in the mid-1970s Phillips proposed price increases. It collected higher amounts subject to refund with interest if disapproved. Phillips suspended royalty payments to lessors until final Commission approval. It paid the suspended royalties of $3.7 million in 1976, $4.7 million in 1977, and $2.9 million in 1978 without interest after the increases were approved. In 1979 the Commission began investigating overcharges. In 1983 it issued an opinion ordering refunds. Royalty owners Irl Shutts, a Kansas resident, and Robert and Betty Anderson, Oklahoma residents owning leases in Oklahoma and Texas, filed suit in Kansas state court seeking interest on the suspended royalties. They sought to represent a class of 33,000 royalty owners later reduced to 28,100 members after 3,400 opted out and 1,500 could not be notified. Fewer than 1,000 class members resided in Kansas and only about one-quarter of one percent of the leases were located there. The Kansas trial court certified the class under a state statute modeled on Federal Rule of Civil Procedure 23 on an opt-out basis. It sent first-class mail notice describing the action and the right to opt out. The court applied Kansas law to award interest at Commission rates followed by the Kansas post-judgment rate of 15 percent. After the Kansas Supreme Court affirmed, the United States Supreme Court granted certiorari in 1984.
View caseMina Mehta assigned insurance benefits to Shady Grove after receiving medical care. Allstate paid part of the assigned benefits. Shady Grove continued to seek the unpaid statutory damages through a class action despite the partial payment already received.
Shady Grove Orthopedic Associates, P.A., provided medical care to Sonia E. Galvez for injuries she suffered in an automobile accident. As partial payment for that care, Galvez assigned to Shady Grove her rights to insurance benefits under a policy issued in New York by Allstate Insurance Co. Shady Grove tendered a claim for the assigned benefits to Allstate, which under New York law had 30 days to pay the claim or deny it. Allstate apparently paid, but not on time, and it refused to pay the statutory interest that accrued on the overdue benefits at two percent per month. Shady Grove filed this diversity suit in the Eastern District of New York to recover the unpaid statutory interest. Alleging that Allstate routinely refuses to pay interest on overdue benefits, Shady Grove sought relief on behalf of itself and a class of all others to whom Allstate owes interest. The individual claim was worth roughly $500, which fell far short of the amount-in-controversy requirement for individual suits under 28 U.S.C. § 1332(a). The District Court dismissed the suit for lack of jurisdiction. It reasoned that N.Y. Civ. Prac. Law Ann. § 901(b), which precludes a suit to recover a penalty from proceeding as a class action, applies in diversity suits in federal court despite Federal Rule of Civil Procedure 23. Concluding that statutory interest is a penalty under New York law, it held that § 901(b) prohibited the proposed class action.
View caseMonica Morgan's company performed road work under a federal contract and received partial progress payments. Disputes over additional costs remained unresolved. The partial payments did not bar further claims for the unpaid balance under the contract.
In 1979, Seminole Electric Cooperative, Inc., a Florida corporation, borrowed over $1.1 billion from the Federal Financing Bank to construct a coal-fired power plant near Palatka, Florida. The loan was guaranteed by the Rural Electrification Administration. Construction of a 51-mile patrol road for the plant began in September 1979, but the original contractor faced difficulties obtaining suitable fill material in March 1981. William Conover, Seminole's procurement manager, contacted his friend Anthony Tanner, who owned a limerock mine, about using limerock overburden as fill. Seminole awarded contracts for fill material and road construction to Tanner's company in May 1981, paying approximately $1,041,800 and $548,000 respectively. Conover and Tanner had prior business dealings, including payments and a loan from Tanner to Conover. Federal authorities investigated the matter, leading to an indictment in June 1983 charging Conover and Tanner with conspiracy to defraud the United States and mail fraud. After a mistrial due to a hung jury, they were retried and convicted on most counts. The day before sentencing, Tanner filed a motion for a new trial based on information from juror Vera Asbul that several jurors consumed alcohol during lunch breaks and slept through afternoons. The District Court held a hearing but denied the motion to interview jurors, finding juror testimony inadmissible under Federal Rule of Evidence 606(b), and denied the new trial motion. While the appeal was pending, petitioners filed another motion supported by an affidavit from juror Daniel Hardy detailing extensive alcohol, marijuana, and cocaine use by jurors during the trial. The District Court denied this motion as well. The Court of Appeals for the Eleventh Circuit affirmed the convictions, and the Supreme Court granted certiorari.
View caseThe purchaser is protected only to the extent of payments made. A court may award title to a prior unrecorded claimant while granting the installment purchaser a lien on the property for the amount already paid.
No. Acceptance of partial payment does not automatically waive claims to the unpaid amount when the payment is made under protest or while litigation continues.
The lien secures repayment of the amount already paid by the installment purchaser. It attaches to the land and balances the prior claimant's title with the purchaser's out-of-pocket investment.
…because "payment of [the royalties due] to the plaintiff class members, instead of extinguishing the debt, constituted only a partial payment on an interest-bearing debt[,] [t]his situation invokes application of the so-called United States Rule,' which provides that in applying partial payments to an interest-bearing debt which…