What's the "use"? March 8, 2024

Don't deposit the check!

By Andy Delaney

This week's opinion explores whether depositing a check for a partial payment constitutes "acceptance and use" of payment for purposes of barring a challenge to necessity of the taking or the public purpose of a highway project. I swear I was trying to simplify there, but I'm not sure I made it. It's not quite a have-your-cake-and-eat-it-too situation, but the phrase does come to mind. 

The State of Vermont is reconstructing the I-89 interchange at Exit 16. In connection with this project, it determined it needed to take some land. It brought condemnation proceedings, which are required when those with property interests don't agree to the taking. In this case, those proceedings ultimately shook out so that two such entities were entitled to payment (I'm simplifying). The statute governing the proceedings provides that "use and acceptance" of a payment doesn't foreclose damages arguments, but does bar challenging necessity and public purpose determinations. After the trial court found that the State was entitled to condemnation, the State made payments. Defendant one put a payment in its operating account, and a couple months later, put the amount in a trust account and sent the State a check for the same amount. The State sent the check back. Defendant two deposited a couple checks. The trial court granted summary judgment to the State, reasoning that there was acceptance and use of payments (partial or not) and that the defendants no longer had the right to challenge the necessity or public purpose of the project. 

Defendants appeal arguing, in a nutshell, that depositing a check that is not spent does not constitute use and acceptance of the funds, and further, that it can't constitute acceptance and use because the State didn't pay the whole bill (both entities have more coming and intend to reject the payments). SCOV does not agree, reasoning that the partial acceptance and use of the funds creates a bar under the statute. And that brings us to the real question on appeal: whether depositing a check is "use" in this context. SCOV reasons that it is, explaining, "The payee’s account balance is altered 'by means of' the payment. The payment itself is 'expend[ed] or consume[d]' because the check, once deposited, is no longer a negotiable instrument. Thus, an interpretation of § 506(c) under which depositing a check is one 'use' of a payment is consistent with the plain and ordinary meaning of the term." SCOV "checks" the box and affirms. Agency of Transportation v. Timberlake Assoc., LLC, 2024 VT 14.