Dollar Coin usage still allowable?

Discussion in 'US Coins Forum' started by alhenry92, Sep 5, 2012.

  1. mrbrklyn

    mrbrklyn New Member

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    15-25 - hardtime.
     
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  3. enochian

    enochian silver eater

    what do you mean?
     
  4. Lehigh96

    Lehigh96 Toning Enthusiast

    Come on man, you should know Ruben's sense of humor by now.
     
  5. Urban_Lawyer

    Urban_Lawyer Half dollar nerd

    No, no, no!

    The explanation of legal tender in the United States above is not correct. The United States does not have contingencies or exceptions to the legal rule of legal tender like Germany and many other countries do. The basic rule is: "If you have a valid debt, public or private, then coins and currency of the United States may be used to satisfy that debt and the creditor cannot refuse. If the creditor refuses, then the debt becomes legally unenforceable."

    What does this mean?

    If there is a (1) valid debt that is public or private (2) the coins and currency of the United States may be used to satisfy the debt (3) and if the creditor refuses, the debt becomes legally unenforceable.

    (1) -- The debt must be valid. If you go into a store and ask to purchase a bottle of soda there is no debt until the shop keeper agrees to sell to you. They can refuse your money legally because they are in essence refusing to sell you stuff and creating your debt. Contrast this with a restaurant. If the restaurant seats you, serves you, and gives you a bill then a debt has been created and they MUST accept legal tender. "Public and private" means all debts: tax debts, criminal fines, and private contracts.

    (2) -- Coins and currency of the United States. Any and all money issued by the United States from the civil war to the present is legal tender. You can spend a large size $1.00 legal tender note from 1862 to pay that restaurant bill just as lawfully as an Ike dollar.

    (3) -- Debt becomes unenforceable. This is where "legal tender" gets its teeth. Assume the restaurant refuses your $10.00 1907 gold certificate or $1.00 1887 Morgan silver dollar in payment of the bill. Then, AS A MATTER OF LAW, the restaurant cannot sue you in the future for payment. It is a complete and absolute defense to the lawsuit that the debtor / diner offered legal tender in full satisfaction of the debt and the creditor refused. This is a good incentive to take the darn $2.00 offered in payment.

    SOURCE:

    31 U.S.C. 5103 (2010).
    Julliard v. Greenman, 110 U.S. 421 (1884).
     
  6. goldmark

    goldmark Active Member

    Urban_Lawyer I thank you for this comprehensive answer.

    I would it be very grateful if you could answer answer another question for me: -If one is/comes in rightful posession of legal tender money, does this also include the transfer of ownership from indivuum/sovereign?
     
  7. Urban_Lawyer

    Urban_Lawyer Half dollar nerd

    Do you mean "if I get a $1.00 note or a 10 Euro note, does the money become 'mine' instead of the 'governments'?"
     
  8. goldmark

    goldmark Active Member

    Yes, I should have formulated it in a better way perhaps.
     
  9. Urban_Lawyer

    Urban_Lawyer Half dollar nerd

    Small caveat: this is going a little outside of my knowledge / professional experience, and the answer only applies to the United States, but here it goes --

    There are two issues here, (1) who owns the paper / coin the money is represented by and (2) do you ever take title in the representative money the coins and paper stands for?

    (1) -- In the United States (in a purely legal tender sense, not a collector's sense) title in the coins and paper remains in the issuing authority and does not vest in the holder. If you possess money, you are a "holder" and may pass the money for goods and services as you wish. However, you are prohibited by law (18 U.S.C. 333 (2010)) from defacing or destroying paper notes and, by administrative regulation, from destroying one cent coins and five cent coins (nickels) by melting, etc etc. There is a statute pertaining to "defacement," 18 U.S.C. 331 (2010), but this does not pertain to melting silver coins which remains (at least if you look at prosecution) legal. The benefit of holding title permits the recall of banknotes if necessary and keeps the government from having to replace millions of melted nickels at a loss.

    (2) -- Title in the money. I guess this depends on your definition, but legally the answer is no. You (at best) would have a license to use the representative money as you wish subject to law. The government has an interest in maintaining its currency supply for a variety of economic reasons and the actual, physical "money" works in different legal ways that do not compare to having title in the money. Example:

    Federal Reserve Notes: These are pieces of paper that are backed up by "collateral" held by the federal reserve. The collateral is usually debt from bonds, etc. held by the federal reserve. Because the collateral is not specific to each note, the holder cannot say "I hold a note that is a portion of bond no. 3820224 that was created on 8/4/10." The government has a HUGE amount of flexibility in controlling the money supply this way.

    United States Notes: These are rare but I have gotten them in change. This is a note from the U.S. treasury that is a "letter of credit." In US commercial law, a letter of credit is an instrument that unconditionally pledges collateral or assets for the bearer's use. Example: in the old days before electronic banking a person could get a letter of credit from a commercial bank, stating that the person has X amount of funds on deposit with the bank and the bank unconditionally promises to pay the funds to a certain entity if certain conditions are met. This was good if the old-time person wanted to conduct business in a foreign state or country where a check drawn on the bank would cause suspicion. The United States note says, in essence, the government has assets that are represented by the paper and the government unconditionally promises to pay any bearer these assets. Of course, you can't do that anymore, but you get the point.

    Old coins and certificates (gold and silver) represented / represent actual monetary metals. I guess arguably these would transfer title, but the government in practice still held possession on most of them.

    I honestly don't know what backs modern, non-precious coins.

    Hope that helps. I don't know how the Euro system works.
     
  10. zach67005

    zach67005 Active Member

    Do you remember this story?
    http://speakforchange.org/man-pays-medical-bill-with-thousands-of-pennies/
    http://gizmodo.com/5808881/man-pays-medical-bill-in-pennies-man-gets-a-ticket
    & I do believe that if stated in writing, merchants may refuse based on denom. Like Subway restaraunts & $50 bills, etc
     
  11. Urban_Lawyer

    Urban_Lawyer Half dollar nerd

    Sure I do. And it still jives with the definition of legal tender. The man was arrested for the way he used pennies to pay the bill, not because he used pennies to pay the bill. Nothing is stated that says he was charged for paying in pennies, just that he dumped them everywhere and created a headache for the merchant.

    Subway and millions of other vendors can refuse $50s and pennies as much as they want. If you try to pay for the sandwich, they'll take the sandwich away. No legal debt, no problem.
     
  12. goldmark

    goldmark Active Member

    I'm grateful for your answer it's very helpful and even with the legal monetary framework being outside of my expertise there are still a few distinctions I can make out.

    In Germany you do take ownership of the money you rightfully possess (you can burn your money, take it as toilet paper.....), the matter with taking title is more difficult to answer I assume. Your reference with taking title seems to be relevant only in a system that provides distinct representation, in difference to the modern fiat currencies being backed in principle by all goods and services provided. That there is explicit mention of backing by bonds for the FED dollars is somewhat strange, is this in extension or singular collateral?
     
  13. Urban_Lawyer

    Urban_Lawyer Half dollar nerd

    I'm not sure what you mean, but the Federal Reserve Act was amended in the 50s to remove the requirement that the notes be backed with "assets," and substituted the word "collateral." I imagine that had something to do with debt as property, versus requiring the federal reserve the hold real estate, etc. but I am not familiar with general accounting principles and why debt (as an account receivable) cannot be "assets" for purposes of currency.

    I assume the federal reserve could invest in real estate and back the money with that, but why bother? Debt is more liquid.
     
  14. mrbrklyn

    mrbrklyn New Member

  15. goldmark

    goldmark Active Member

    It centered around the practical nonsense of bonds being a claim which appear on the balance sheet as an activa yet it's transfered liability from the Fed's passiva to the Treasury as credit.
     
  16. Urban_Lawyer

    Urban_Lawyer Half dollar nerd

    Thanks for the links... that is very comprehensive website.
     
  17. Lon Chaney

    Lon Chaney Well-Known Member

    I would still say your definition doesn't invalidate mine. I was careful to use the word "purchases," instead of other debts, such as the Electric Bill. Maybe I should have said "merchandise," instead. But either way, my point was that all US money is legal tender, yet merchants can chose to do business in any trade items they wish: bullion, money (legal tender), foreign money, bundles of wood, whatever.
    And yes, I know, the trade unit needs to be agreed upon by both parties before the contract is entered into, or the trade unit defaults to legal tender.
    Legal tender is used mainly because everybody recognizes it, it's backed by our government (kind of), it's easily divisible, etc. Folks are comfortable doing business the easy way.
     
  18. BUncirculated

    BUncirculated Well-Known Member

    You can use any coin as currency because that's what they are, currency.
     
  19. Kentucky

    Kentucky Supporter! Supporter

    My head hurts!
     
  20. Kentucky

    Kentucky Supporter! Supporter

    I thought gold certificates were de-monitized.
     
  21. rickmp

    rickmp Frequently flatulent.

    Nope. Just made not redeemable for gold.
     
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