CHAPTER XII

=PROPER HANDLING OF NOTES=

There are times when as explained in Chapter X, the full fee cannot be obtained in cash on the spot. When this occurs the only way out of the difficulty is to get the patient to sign a note. But never, when it can be avoided, allow the note to be made payable to yourself. Draw it to the order of the patient and have him endorse it. Also make it payable at a bank, the name of which is specified. This makes it negotiable and, if the financial standing of the maker is satisfactory, it will be readily discounted wherever he is known.

It is comparatively easy for the maker of a note payable to the order of a second party to evade payment, or at least greatly delay it, on the plea of “no value received.” It becomes doubly so in cases where the note is drawn in favor of a physician, or the maker lives in another state. When this occurs, and it cannot be shown that the paper has passed into the possession of an innocent holder for a bona fide consideration in the ordinary course of business, there will be trouble in collecting on it should the maker repudiate the obligation.

In such event collection, if made at all, must be enforced through the medium of a law suit. This necessitates service on the maker. If he can be found within the limits of the state in which the note was signed he can be sued there, but, as a general thing, this is a forlorn hope. As a general thing it necessitates a court action in the state where the maker resides, and this means a hearing before a jury of his own neighbors. In such cases a non-resident claimant has small chance of winning, no matter how just his claim may be. And this chance is still further reduced if he is a physician. Residents of other states do not look with favor upon non-resident doctors. Not only this, but as a general thing they think it their duty to assist a neighbor in evading payment of an obligation to a doctor who is not one of them.

Notes drawn in the manner described—made payable to the order of the signer and endorsed by him—are not so easily repudiated. In short the burden of proof, should a contest be made, is not on the holder but on the maker. When such a note passes into the possession of a third party the only question about collection is as to the financial worth of the signer. Under this latter condition notes of this kind are iron-clad.

When suit is brought on a note made to the order of a physician, and the plea raised of “no value received,” the holder must prove that full value was given and this is not always easy to do in cases of medical treatment. The patient may have been absolutely cured but, if he chooses to perjure himself and deny it who is going to prove the contrary? It will be invariably held that no one is so competent to judge of improvement, or lack of improvement, as the patient himself.

Law suits are uncertain, expensive and often long drawn out. Frequently even the winner is a loser. An easy way to avoid this annoyance and outlay is to have all notes made in the manner described.

Never hold your notes. Always discount them at the first opportunity. If they are made by men of means living in the town or county where you practice the local bankers will be glad to handle them at a fair rate of discount.

There is a specialist living in Chicago who occasionally makes professional trips into other states. On these trips he frequently has occasion to take a number of notes. His patients are mostly farmers, and these rarely carry cash. Just before leaving a town he will go to the local banker and introduce himself, saying:

“I’ve been doing a little business in the neighborhood and, contrary to my usual custom, have taken part of my fees in the form of notes. If you have a few moments to spare I would be thankful for your opinion as to their worth.”

He does not ask to have them discounted; does not try to dispose of them. The banker looks them over and comments on each somewhat as follows:

“H’m, that’s John Smith. He’s all right; good as gold. Owns 250 acres of fine land clear, and is prompt pay.

“Thomas Jones. Well, I’m not so sure about Jones. He’s good, but he’s slow, and will stand you off if he can.”

Thus he goes through the lot, commenting on the financial means and willingness to pay of each signer. When he has concluded the doctor gathers up the notes, replaces them in his wallet, chats for a moment about the weather and crop conditions, gives the banker a fine cigar, thanks him heartily for his courtesy, and turns to leave.

Country bankers make the most, if not all of their money by discounting the notes of their neighborhood farmers. They know the financial record of everybody within reaching distance. Men who are notoriously hard to collect from when the creditor is a stranger will pay the local banker without a murmur. They don’t want to “get in bad” with him because they want a good credit when they have occasion to borrow money. The result is that the local banker can collect in full on notes which in the hands of other holders would be worthless. They dislike to see notes made by their neighbors leave their bank. Almost invariably the banker will say:

“What are you going to do with that paper, Doctor?”

“Take it back to Chicago, and hold it until it is due, I suppose,” replies the doctor. “I don’t know what else to do with it.”

“I’ll discount some of it for you, if you wish.”

“Well, I wouldn’t mind selling it if I don’t have to pay too much of a share.” (This in an indifferent manner, as if he didn’t care whether he sold the notes or kept them.)

“Let me see them again,” the banker will say, ninety-nine times out of a hundred.

The doctor hands them over, and the banker sorts out some of the best, remarking, “I’ll take this lot at 8 per cent.”

“Oh, no. I don’t care to dispose of them in that way. It’s a case of all or none. I might better take a chance on them all than to have the best culled out.”

It usually ends in the banker taking the entire lot at 10 per cent. He will collect every dollar on them, and the doctor has got rid of a lot of paper on which he would have hard work in getting half of its face value. This plan seldom fails when carried out in the right way.

There is one class of notes on which the signers rarely make a contest. These are the ones given in payment for sexual treatment. A physician is, as a rule, safe in taking a note under these conditions as he can usually collect the full amount. Men are delicate about this trouble and don’t want their friends and neighbors to know what they have been treated for. To resist payment means a law suit in which the physician will go on the stand and, under the questioning of his attorney, bring out the fact that John Jones, the maker of the note, gave it in payment of treatment for prostratitis, or some other sexual ailment. Pressed for details he lays bare the whole facts of the case to the intense mortification of Jones.

The doctor, of course, could decline to answer such questions on the ground that it would be a violation of the confidence existing between a physician and his patient, but he doesn’t want to do so. He’s there to collect that note, and in furtherance of this purpose he has posted his attorney in advance as to the questions to be asked.

Most men of sense know this and will pay their notes, regardless of whether they have been helped or not, rather than submit to the humiliation which they know will be heaped on them when the doctor takes the stand.

The hardest notes to collect are those given in payment for the treatment of ailments other than sexual disorders. But even these, if made out in the manner outlined in the opening part of this chapter, can be realized on in full. Suppose a man living in Iowa gives a note of this kind to a Chicago physician. The latter discounts it immediately at his local bank which takes it, not because the maker is known, but on account of the doctor’s endorsement. Just before maturity the note is forwarded to the maker’s local bank for collection. The local banker notifies the maker that it holds the note, which will be due on such a day. What does the maker do? Why, he antes, of course. The note is in the hands of his local banker, a person with whom he is anxious to preserve his credit. In such a case, with the note drawn to the order of the signer and endorsed by him, there can be no plea of “no value received.” Besides, the obligation is in the hands of an innocent holder before maturity.

Beware of collection agents who want to take your claims on a percentage commission. Most of them will deal with you honestly at first on small accounts, and then get away with the entire proceeds of a big claim. A few years ago a Chicago physician gave a number of ordinary bills to a local collection agency for which he was to receive the amount of the collections less 25 per cent., the agency to stand all costs. The agency did good work, made satisfactory settlements, and finally the doctor gave them a note for $700 which he held against a man in another state. It was to be collected on the same basis—25 per cent. After several months of delay the agency advised the doctor that a compromise could be made at $400. The doctor authorized its acceptance. More months rolled by, and, being unable to get word of any kind from the agency, the doctor wrote direct to the local banker in the town where the maker of the note lived. The banker replied, saying that the note had been paid in full ($700 and interest) several months before, and it was then in his possession cancelled.

Since then this physician has had his own collector, under bond from a guarantee company, and gets whatever money may be taken in by him. It is possible that the physician might have prosecuted the agency, but here again he would have been in a dilemma. If he brought a criminal action it would not get him any money, and if he proceeded civilly the members of the agency were execution proof—they had nothing which could be levied upon. In either event, in order to prove payment, he would have to bring the banker here at his own expense—provided he was willing to come—so he concluded to drop the matter and accept it as a costly lesson.