1. Why did Ring need to have the check delivered to the town within a certain time frame?

2. Was the signature of the issuer enough for the transfer of the check?

3. Was the check indorsed and payment made to the town?

Thorton Ring was behind on his property taxes for his property in Freeport, Maine. When he received a check payable to his order from Advest, Inc., in the amount of $11,347.09, he wrote the following on the back of the check: “Payable to Town of Freeport Property Taxes 2 Main St.”; he sent it along with a letter to the town offices. The letter included the following: “I have paid $11,347.09 of real estate taxes and request the appropriate action to redeem the corresponding property.” Ring did nothing further and his property was then liened by the tax clerk. Ring objected because he had paid the taxes. The town argued that the check was not indorsed and Ring thus had not paid the taxes in time to avoid the lien. The lower court found for the town and Ring appealed.

JUDICIAL OPINION

CLIFFORD, J.… The filing of a tax lien certificate with a registry of deeds by a town creates a tax lien mortgage to secure the payment of outstanding taxes. The tax lien mortgage continues to exist until the taxes are paid or until the lien is terminated by operation of law. A taxpayer has an eighteen month period following the filing of the tax lien certificate to redeem the property by paying the outstanding taxes, plus interest and fees. If the taxes, interest, and fees are not paid within eighteen months after the date of filing, the tax lien mortgage is deemed to have been foreclosed. Because the Town filed the tax lien certificate with the registry of deeds on September 7, 1995, Ring had to redeem his property by March 7, 1997. Ring delivered a check to the Town in January of 1997. The Superior Court, however, concluded that the check did not constitute payment of the outstanding taxes:

With an endorsement, Freeport would have been able to cash the check; without the endorsement, it is doubtful that Freeport could have cashed it. The Court concludes that the unendorsed check delivered by Thornton Ring to Freeport was not a tender of payment, and Freeport was not required to accept it as payment of any of the outstanding taxes. With respect to a check that is made payable to the order of a specific person, negotiation occurs, and the person receiving the check becomes a holder of a negotiable instrument, if possession of the check is transferred and the check is indorsed by the transferor.

An indorsement is a signature of someone other than the maker, or some other designation identifying the indorser, that is made on an instrument for the purpose of negotiating the instrument.

The check Ring sent to the Town was issued by Advest, Inc., payable to the order of Thornton D. Ring. Because it was payable to Ring’s order, the check could only be negotiated by Ring through indorsement and transfer of possession. Ring’s signature, however, does not appear on the back of the check. The words that do appear on the back of the check—“Payable To Town of Freeport[/] Property Taxes[/]2 Main st[.]”—do not identify Ring. The words only indicate to whom the instrument should have been payable had the check been properly indorsed. Thus, the writing is an incomplete attempt to create a special indorsement. A special indorsement is an indorsement that identifies a person to whom the indorser is making the check payable. See id. The special indorsement still must be signed or otherwise indorsed by the person to whom the check was originally payable. Although Ring could attempt to prove that the words were intended to indorse the instrument in a judicial proceeding brought by the Town to gain payment of the check, payment for purposes of redemption in tax lien cases cannot be contingent upon proof at a judicial proceeding. ………………..