Opinion 90-36

This opinion represents the views of the Office of the State Comptroller at the time it was rendered. The opinion may no longer represent those views if, among other things, there have been subsequent court cases or statutory amendments that bear on the issues discussed in the opinion.

REAL PROPERTY TAXES AND ASSESSMENTS -- Payments (medium of payment - postdated checks)

REAL PROPERTY TAX LAW, §924; TOWN LAW, §§35, 37: A town tax collecting officer may accept a postdated check tendered as payment of taxes, and retain the same until its date before depositing. Should the tax collecting officer elect to refuse a postdated check, he or she should return it promptly to the person who tendered the check.

You ask whether a town tax collecting officer should return a postdated check tendered as payment of real property taxes by a taxpayer or retain the check for deposit on or after the date indicated on the check.

The general provisions of law applicable to the collection of town and county taxes are set forth in Article 9 of the Real Property Tax Law, (RPTL) and Article 3 of the Town Law. Most pertinent to this inquiry are sections 35(1) and 37(1) of the Town Law which require that "all sums of money received and collected [by the tax collecting officer] shall be deposited within twenty-four hours after receiving the same "(see also, Town Law, §36[1] which provides that the deposit of receipts by a town clerk who collects taxes shall be "as provided in subdivision one of section 35"). Neither the RPTL nor the Town Law make any reference to payment by postdated checks.

The only reported New York case in point of which we are aware was premised upon the then prevailing principle that a tax collecting officer could only accept payment in money. In McLanahan v City of Syracuse, 18 Hun 259, a property owner's agent delivered three checks on October 16, 1875, bearing that date. As there were no funds in the bank to pay the checks, the agent and the tax receiver agreed "that the same were not immediately to be presented for payment" (18 Hun, at 260) and the agent wrote in pencil on the checks when they were severally to be presented for payment. In concluding that the action of the receiver was in no way binding on the town, the court declared that:

[P]ayment of taxes must be made in the manner authorized by law, and ... any private arrangement between the officer authorized to collect the taxes and the taxpayer has no force, by way of operating to discharge the taxes. Any other rule would manifestly be attended with great public inconvenience. The payment of taxes must be made in money. (Sawyer v Springfield, 40 Vt., 305; Richard v Stogdale, 22 Ind., 74.) Consequently, the tax receiver, in this case, has no authority to receive the post payable checks of ... the plaintiffs' agent. (18 Hun, at 264; emphasis added).

Clearly, the court's conclusion was contingent upon the premise that the receiver was not authorized to accept payment by checks at all, let alone a postdated check.

In 1987 Opns St Comp 87-34, p 53, we expressed the opinion that tax collecting officers may not refuse to accept checks generally. Further support for this conclusion may be found in chapter 203 of the Laws of 1989 which added section 85 to the General Municipal Law to permit municipal corporations to impose a service charge on checks returned for insufficient funds. That payment of taxes by check was within the contemplation of that legislation is reflected in subdivision 2 of section 85 of the General Municipal Law, which provides that "[w]henever the account owing to the municipal corporation is for a tax, ... the charge authorized ... shall be included on whatever list of delinquent accounts is prepared for the enforcement of the lien" (see also, RPTL, §955[2] added by L 1989, ch 440, §10, effective July 1, 1991).

In contrast with a check, which is a draft drawn on a bank and payable on demand (Uniform Commercial Code [UCC], §3-104[2][b]), a postdated check is not payable on demand, but rather is payable on the date stated thereon (UCC, §3-114[2]). The fact that a check is postdated does not affect its negotiability (UCC, §3-114[1]); People v Hayes, 133 AD2d 934, 520 NYS2d 650). It is, however, an instrument described as being in the nature of a promise to discharge a present obligation at a future date, with the implication being that funds are not yet available (Azzarello v Richards, 198 Misc 723, 99 NYS2d 597; Control National Bank of Canajoharie v Paton, 109 Misc 2d 42, 439 NYS2d 619).

As was noted above, town tax collecting officers are statutorily obliged to deposit "all sums of money" received within 24 hours of receipt thereof (Town Law, §§35[1], 37[1]). As was also explained above, however, a postdated check is not payable on demand and is in the nature of a promise to discharge a present obligation at a future date. We also note that the courts have said that the implication of a postdated check is that funds are not yet available to satisfy it thereby making it difficult to consider such a check as a "sum of money" in this context. Therefore, it is our opinion that a postdated check is not a "sum of money" within the meaning of sections 35 and 37 of the Town Law until the date stated on the check and that the 24 hour period within which the check must be deposited does not begin running until that date.

With regard to whether a collecting officer has authority to accept a postdated check, we previously noted that the applicable statutes are silent with respect to postdated checks. The use of postdated checks in business transactions, however, has long been an accepted practice. One court has said in this regard:

The courts of this state have a long standing policy of encouraging the use of post-dated checks in the commercial world. In 1834 it was said that "drawing of post-dated checks is an every day occurrence in our commercial cities" Mohawk Bank v. Broderick, 13 Wend. 133 at 134-135. "Post-dated checks are instruments often used, and their nature and character are well understood by bankers and the trading community." Clark National Bank v. Bank of Albion, 52 Barb. 592 at 600 (1868); Bowen v. Newell, 8 N.Y. 190 (1853). [People v Gerber, 115 Misc 2d 222, at 225, 453 NYS2d 998, at 1000].

We recognize that the fact that a financial practice may be a custom in the commercial world does not necessarily mean that it is either statutorily or practically acceptable in the world of municipal finance. Nonetheless, because there is nothing in the applicable statutes which precludes the acceptance of postdated checks and because it is such a common practice, it is our opinion that a town tax collecting officer may accept a postdated check and retain the same until the date stated thereon before deposit. If the tax collecting officer elects not to accept a postdated check, he or she should return it promptly to the person who tendered the check.

September 24, 1990
Mary M. Nau, Receiver of Taxes
Town of Saugerties