In City of Houston v. First City, 827 S.W.2d 462 (Tex. App.--Houston 1st Dist 1992, writ denied), the taxpayer sent checks in payment of delinquent property taxes and specified on the check stubs and a letter accompanying them instructing the City to apply the payments only to tax, interest and certain penalties and withhold payments under categories that were in dispute. Id. at 468, 472.
The Court held that the City tacitly agreed to the conditions stated on the checks, along with the accompanying transmittal letters, when it accepted the payments, thereby creating an implied contract. Id. at 473.
In City of Houston, the Court noted that the checks were tendered in the context of an existing dispute between the City and First City concerning First City's tax obligations, and that the check stubs and transmittal letters contained clear conditions addressing the application of the payments to certain categories and not others. Id. at 472.