f\ Cornell University M Library J ^.-oti^wrtsisiiaffir: WITH THE ASSISTAMCt OF J500 EXPERTS For the Retailer. For the Wholesaler, For the Installment House. For the Doctor For the Banker, For the Real Estate Man, For the Lawyer. For the Collecting Agency The oHginal of this book is in the Cornell University Library There are no known copyright restrictibri'sin the United States on the use of the text. http://www.archive.org/details/cu31924018849764 HP' Cornell University Library KF 1024.S56 V.I Collecting by letter, 3 1924 018 849 764 BOUGHT WITH THE INCOME FROM THE SAGE ENDOWMENT FUND THE GIFT OF 1891 a,j^3.iq.o Or.iim/i. The dateshowB when this volume, was taken. To.reu^ this book copy the call No. aud give to the lilirariaii. HOME USE RULES. All Books subject to Recall. Books not in use for instruction or research are returnable within 4 weeks. Volumes of periodtT cals and of pamphlets are held in the library as much as possible. For special purposes they are given out for a limited time, Borrowers should not use their liljrary privileges for the bene- fit of other persons. ; Students must re- turti all books before leaving town. OfRcers should arrange for the return of books wanted during their absence from town. Books ueMed by more than one person are held on the reserve list. Books of 'special va,Iue and gift books, when the giver wishes it, are not allowed to circulate. Readers are asked to report all cases of books n^arked or muti- lated. Do act deface books by marks and writlnsf. Collecting By Letter Volume I By William A. Shryer With the AssiAance of 3500 Experts Publishers Business Service Corporation Detroit, Michigan 1913 Copyright 1913 by William A Shryer All Rights Reserved ^1\ Contents. Collecting By Letter. Volume I. Chapter. Page. I. Collection of Retail Accounts by Mail. . 9 II. How to Make Mercantile Collections by Mail. Four Model Letters 15 III. How to Collect Instalment Accounts. Three Model Letters 25 IV. Collection of Physicians' Accounts. Eight Model Letters 35 V. Collection Profit for Attorneys 45 VI. Psychology of Dunning 55 VII. Psychology of Regular Payments, or The Importance of Habit 61 VIII. Psychology of Emotion 65 IX. The Collection Memory 71 X. Psychology of Reason 79 XL Psychology of Imagination 83 XII. Tracing Moved Debtors 87 XIII. The Use of Threats in Forcing Collec- tions. Postal Regulations 91 XIV. Court Cost Abuse 97 XV. Law of Collection Averages 103 XVI. Collection Business Psychology; Per- sonal Collections 107 XVII. Collecting From Government Employes. 115 XVIII. Collecting Through Garnishment 117 4 Contents XIX. Telephone Evidence 119 XX. The Criminal ( ?) Debtor 131 XXI. Collection Defenses 123 XXII. Statute of Limitations as a Defense. . . .135 XXIII. Bankruptcy as a Defense 131 XXIV. Statute of Frauds as a Defense 137 XXV. Infancy as a Defense 145 XXVI. Liability of Husband and Wife 151 XXVII. Set-Off and Recoupment 157 XXVIII. Exemption Statutes 165 XXIX. Fraudulent Conveyances 171 XXX. Practical Course on Money-getting Cor- respondence 179 XXXI. Collecting Through Skilled "Forward- ers" 194 Introduction. Through the entire fabric of modern business are woven the endless threads of credit and collections. Every business is founded on credit and supported by its collections. In direct proportion to the intelligence and understanding with which these two important fea- tures are dealt a business is successful. Certain principles and rules of action have grown out of the long practice of these important phases of trade, but we may claim for neither that it is an exact science. There is no dependable literature on either subject generally available for the average business man, although the Course on Scientific Collections pub- lished by The American Collection Service of Detroit covers the entire field exhaustively. This course was designed to train men in the collection agency field, and its distribution has been largely confined to men in this profession. This course may be secured by those interested in possessing a thorough treatment of this important subject, however, and the wealth of its col- lection instruction will be found highly profitable to any business man. The purpose of the present volumes is to afford an insight into the principles underlying collections by letter. From time to time various so-called books of collection letters have been jjublished, but aside from containing an unrelated mass of commonplace form letters of doubtful value, few have contained the slight- est degree of merit, or commended themselves to the intelligence of the thoughtful or aggressive business man. 6 Collecting by Letter The object of this book is a discussion of the subject of collections from a new angle, that of human mo- tives. The average business man views the accounts on his books as falling into Mvo general classifications, and neither view permits the highest degree of efficiency in handling this difficult subject. One view is that of the establishment which considers its accounts as unques- tioned assets, as stable as its stock on hand or its cash in bank. The other view is that of the suspicious mer- chant who looks on his debtors as highwaymen or thieves, to be hounded unmercifully and disciplined accordingly. The prevailing attitude of mind regarding collections has been entirely too one-sided an affair. The average merchant has failed to consider the problem from its human angle, and has concerned himself with practic- ally no analysis of the mental attitude of the debtor. As a result, many an account that never should have been allowed to become even doubtful has easily de- veloped into the desperate class, from which it has been but a short step to the collection graveyard. Any assistance that will permit the merchant to un- derstand principles will make easy their application to everyday business needs. This result is sought to be accomplished through examples, rather than through tiresome theory. Hundreds of letters, directly applic- able to practically all contingencies of ordinary collec- tion correspondence, will be found carefully arranged in logical sequence, but their most useful purpose is not that of supplying a needed form, but rather a helpful suggestion for the preparation of any special appeal. In addition to a careful survey of the motives under- lying payment of accounts, and the best methods of ap- pealing through them, several chapters have been devoted to an elementary discussion of the most im- introduction 7 portant mental phases of human action. The closing chapters of the book present an unusual series of tried collection forms. The latter are selected contributions from some 3,500 sources, the skilled representatives of the Co-operative Bureau of The American Collection Service having presented a great number of these suc- cessful and result-getting forms. The thanks of the author for the unselfish co-operation of these progres- sive collection men is extended here, though individual credit for each contribution will be found in its proper place. The material included in this work is divided into two volumes, that a logical division may be made be- tween that devoted to theory and that outlining actual practice. In the .first volume have been included a number of chapters on collection psychology. The collection of any account, aside from legal recoveries, being a strictly mental result, makes an understanding of the most important phases of mental action not only desirable, but also necessary. The treatment of the psychology of collections is necessarily brief. It i debtedness, the due-date, and attaching to the affidavit an itemized statement or memorandum of the account. This one formality is the only one required of the creditor, btit this is imperative, if he desires to share in the distribution of assets. In this connection it might be remarked that knowledge of the proceedings need not be brought to the creditor's attention by ac- tual notice. He may be charged with constrtictive notice ; that is to say, if the court convenes in the city 134 Collecting by Letter in which he resides, or if notices of the meetings of creditors and of the bankrupt's petition for final dis- charge be published in papers having a general circu- lation in his vicinity, or if the case is one which at- tracts attention and is discussed in papers circulating in his vicinity, he is presumed to have knowledge of the pending litigation and must file his proof of claim, or be barred from recovery as already pointed out. One of the chief requirements imposed upon the bankrupt who asks for a discharge is that he keep books of account which will show in full the exact condition of his business and which may be inspected at any time by the trustee or any other Court officer. He must file full and complete schedules of his assets and liabilities and turn over to the trustee all the prop- erty of whatever nature and description of which he may be possessed, or which may be held by anyone else for his use and benefit. Fraudulently concealing prop- erty may render his discharge void and may also render him liable to criminal prosecution. He must submit to examination under oath at any time by the trustee, the trustee's attorney, or anyone interested in the liti- gation. Should anything occur during the pending of the proceedings which in the opinion of any of the creditors or their attorneys should bar the bankrupt from his final discharge, this may be set up in a peti- tion to the court asking that the discharge be denied. It then becomes the duty of the bankrupt to answer the petition and show cause why his discharge should be decreed despite the petition. If these formalities are complied with and a final discharge granted the bankrupt, he then has a com- plete defense against any action which may be brought to enforce claims. It must be borne in mind, how- ever, that the bankruptcy proceedings and a plea of Bankruptcy as a Defense 135 former bankruptcy in any action to enforce a claim is wholly a matter of defense, and the burden is upon the bankrupt to establish his claim by competent evi- dence. Should a summons be issued against him and he fail to appear, a default judgment may be taken against him in the usual course. Should he answer the summons and fail to plead his former discharge in bankruptcy, judgment will be rendered against him. Should he plead his release in bankruptcy in order to establish his position it would be incumbent upon him to bring into court a certified copy of his discharge and to satisfy the court that the plaintiff had had the actual or constructive notice mentioned elsewhere in this article. If he can establish his position a verdict of no cause of action will be rendered in his favor. Otherwise a judgment will be rendered against him in favor of the plaintiff for the full amount of the claim. As to the methods to be pursued in collecting af. account once released by the bankruptcy proceedinga employ the same means suggested for collecting all account barred by the statute of limitations. Appe& to the debtor's honor, to his honesty, and to his ideait of justice and fair play; induce him in this way tc make a payment on the account or to make a promise in writing to take care of the matter at some future time. Once he does either of these things the account is revived and can be collected in the usual manner. There is no common "superstition" more prevalent among the ordinary run of debtors than that of ab- solute exemption from recovery, once a man has filed a petition in Bankrupty. This superstition prevails to a large extent even among lawyers, and hundreds of cases have come to our notice wherein the attorney for a bankrupt possessed only a most rudi- 136 Collecting by Letter mentary idea as to procedure in pleading a proper defense in such cases. But a small percentage of lawyers know enough to present proper proof in a suit at law where the defendant has at one time filed a petition in bankruptcy. We have known of several who presented as a defense that the defendant had filed a petition only, after allowing the time to pass within the limit of which an application should have been made for final discharge, but never had been. A number have been known to plead that a discharge in bankruptcy, wherein no mention had been made of the debt at issue, same having been overlooked or for- gotten by the debtor. One attorney even went so far as to attempt securing a restraining order from the United States Court, several years after said court had lost all jurisdiction over the debtor through his final discharge. Many debtors rely on a valid discharge in bank- ruptcy to protect them from any judgments in the future, ignoring any summons until too late. A judgm.ent against a bankrupt that has passed the limit of appeal operates against him absolutely, as he is barred from a remedy in equity, as "he who seeks equity must come with clean hands," and a bankrupt is not considered without flaw in a court of equity. The Statute of Frauds 137 Chapter XXIV. The Statute of Frauds as a Defense. At the outset of this chapter the writer desires to call attention to and emphasize a statement made in the article on The Statute of Limitations as a Defense, namely that these chapters are designed to cover only general propositions in general terms. Every state has its own statutes, differing more or less in wording and intent, and these statutes have been construed by the courts of the several states in the many decisions which are to be found in the reports. The statutes vary and the decisions are not in all instances har- monious. To attempt to classify and to reduce them to harmony in these short articles would be absolute folly and the idea of the writer is to cover general propositions and to answer some of the questions which most frequently confront the credit man and the commercial adjuster. Especially is this true in the present article on the statute of frauds. It is probable that no other branch of the law" has occa- sioned so much litigation as has this ; and it is also probable that in no other branch will one find the law in so unsettled and chaotic a condition. The statute of frauds was introduced in the English Parliament in 1673 and was finally passed in 1677, be- ing the 29th statute of Charles II, entitled "An Act For Prevention of Frauds and Perjuries." Its pur- pose was stated in the preamble to be "for prevention 138 Collecting by Letter of any fraudulent practices which are commonly en- deavored to be upheld by perjury and subordination of perjury." The wording of the statutes in this country leads one to believe "that this was the idea which actuated those who secured their enactment. The statutes as enacted by the various states each contain a number of provisions but practically the only ones which interest the commercial man are con- tained in the following section copied from the statutes of one of the states : In the following cases specified in this section, every agreement, contract or promise, or some note or mem- orandum thereof, be in writing and signed by the party to be charged therewith, or by some person by him thereunto lawfully authorized, that is to say ; 1 — every agreement that by its terms is not to be performed in one year from the making thereof; 2 — every special promise to answer for the debt, default or misdoings of another person ; 3 — every promise or undertaking made upon consideration of marriage, except mutual promise to marry; 4 — every special promise made by an executor or administrator to answer damages out of his own state. Of these provisions the one most frequently encountered is the 3nd, which in the Old English statute reads : "To charge the defendant upon any special prom- ise to answer for the debt, default or miscarriage of another person." A typical instance under this sec- tion would be the following very common one. A says to a merchant, "let B have certain goods and I will see that you are paid," or "if he doesn't pay you I will," or "I will see that you get your money al- right," or he says, "let B have certain goods and I will pay you." Later B fails to pay for the goods; he is not a responsible person, or in the language of the The Statute of Frauds 139 layman, he is "not collectible;" A is "collectible." In which of these instances, if any, can A be made to pay for the goods which were delivered to B? In only one of the four instances, the last, can A be held responsible for the goods. The reason is this ; in the first three instances the debt becomes the debt of B and only in the event of his failure to pay does the merchant have any occasion to look to A. In other words, A has promised to pay the debt of B if B does not; it is a promise to "answer for the debt of another" and falls within the statute. In the la^t ■in- stance A says "let B have the goods and I will pay for them;" in this case it becomes the debt of A. The merchant even though he may charge the goods to B on his books, is never obliged to look to him for his pay, but from the outset may look to A. There is no promise on the part of A "to answer for the debt of another" and the promise does not fall within the statute. This is a typical instance and an analysis of the situation will reveal the line of reasoning used by the courts and the reason why A is held liable in one in- stance and not in the others. The rule laid down is that a collateral agreement falls within the statute and must be in writing to be binding; an original agree- ment does not fall within the statute and need not be in writing to be binding. In the first three instances in the illustration, A's promise to pay was contingent upon B's failure to pay and is held to be collateral £fnd unenforceable ; in the last instance his promise is not contingent upon anything and is said to be orig- inal and enforceable. The language of the statute is per- fectly plain and in the illustration used the line of demarcation between an original and a collateral agreement is very plain. But instances occur in 140 Collecting by Letter which the line of demarcation is not so plain and to apply the principles stated to the many different sets of facts that are to be found is what occasions the difficulty and gives rise to the great amount of litiga- tion. Perhaps the simplest and best way of illustrating how the principle stated may be applied would be to show how it has been applied by the courts of last resort in matters that have come before them. The following cases are those that have been decided by the courts of the several states and may be said to be typical. Two instances which illustrate the matter of a labor claim are these from Vermont and Michigan respectively. In the former, A' wished to employ B ; B remarked to C that he did not know A, but that he would work for him if C would agree to pay him if A did not. C made this agreement. A failed to pay B and B sued C for his wages. The court held that the promise of C was a collateral agreement, contin- gent upon the failure of A to make payment, and was void since it was not in writing. In contrast to this is the Michigan case in which a logging contractor said to a sub-contractor: "I understand your men are worried for fear they will not get their money. You may say to them that if they will stay to the end of the season we agree to pay them every dollar that is coming to them." In this instance the court held that the promise of the contractor was an original un- dertaking, binding upon him and that the men could collect their money from him. Along the same line as the last decision is one in which a physician made several calls upon A ; B then promised the physician that he would be responsible for the services rendered. The court held that for the services rendered subse- quent to the agreement, B's promise was an original The Statute of Frauds 141 one and he was liable for their reasonable value. But for services rendered prior it was a collateral promise and not binding. The question of whether or not the oral promise of a widow to pay for her husband's nursing and care by a physician is binding has been before the courts and they have held that it is not. Her written promise would be binding, however. In distinction from this is the case in which A agreed to pay B's funeral expenses if B's son did not. B's son had never assumed any liability nor made any promise to pay. The court hejd that there was no debt against B's son and that the promise of A was original and binding. In the case of a promissory note it has been held in several instances that an oral promise to pay the note at maturity, in case the maker does not, is within the statute and void. However, numerous instances have arisen in which the payee of a note has transferred the note to a third person before maturity, either as part payment for something purchased or for cash, and has orally guaranteed the payment of the note. In these instances the courts have held that the prom- ise was an original and binding one. A verbal prom- ise to pay the debt of a minor has been held not to come within the statute for the reason that there must be a recognized liability which the guarantor assumes. A minor is incapable of contracting debts and a prom- ise is therefore not a promise to pay his debts but an original contract to pay one's own debt. The only other section of the statute which the credit man or the collection man is liable to encounter is the section relating to the promises of executors or administrators to answer damages out of their own estates. This means a promise by the executor or administrator to become personally responsible for the 142 Collecting by Letter debts of the decedent. In this instance the same gen- eral principles apply; to hold the administrator liable on an oral promise it must be clearly shown that it is an original undertaking on the part of the promissor ; otherwise it falls within the statutes and is void. These principles may be applied to every set of facts that may arise. As stated before, the difficulty lies in applying the principles to the facts. In any possible set of facts, analogous to the ones mentioned, there can be no recovery from the surety or guarantor unless the conditions of the statute are complied with. The statutes quoted provides that the agreements men- tioned would be void ; in this it differs from the orig- inal English statute and from many of the American statutes in that they provide, not that the agreement shall be void, but that no action shall be maintained unless the statute is complied with. The latter makes the statute a matter of defense and throws the bur- den of proof upon the defendant who must show that the statute was not complied with; while the former throws the burden on the plaintiff and he must show that the statutes have been complied with. In either instance the effect is the same in so far as it bars re- covery by the plaintiff. The written agreement must of course be based on a sufficient consideration the same as any other contract. It need not be a formal instru- ment but may be any "note or memorandum" "signed by the party to be charged therewith" expressing the intention of the parties. The only thing for the credit man to do is to see when he accepts a guaranty that it complies with the law, otherwise he is left without redress. The commercial adjuster, when he leceives such a claim and attempts to enforce it, should have a careful consultation with the client and see if the guaranty is such that a recovery can be had under the The Statute of Frauds 143 law as stated. If it can be had then proceed with it in the usual manner, pointing out to the debtor how he is liable ; if an action can not be maintained, return the account and cease working on it. It would not be criminal or fraudulent to attempt to secure an adjust- ment but would be a waste of time for which no re- muneration would be obtained. Infancy as a Defense 145 Chapter XXV. Infancy as a Defense. The law on the subject of infancy is fairly well set- tled; much more so than in any of the subjects prev- iously treated in this series of articles. General rules may be laid down which are statements of the law in practically every state in the Union ; the law is simple, comparatively well defined and in no instance does it lead one into any of the complex situations so com- mon under some of the branches of the law previously considered. The term "infant" as used in the law is practically synonymous with the "minor" of every day life ; in fact the two are used interchangeably. Webster's definition of an infant is "a child in the first period of life, beginning at his birth ;" a definition given by one of the courts is "one who has not attained his major- ity." The time when a person attains his majority is fixed by statute ; being the age of 21 in the case of a male, and varying in the case of a female, in some states the age of majority being fixed at 18 and in others at 21. Before attaining his majority or while he is an infant, a person is said to be under disability and is not held responsible by the law for his deeds. This freedom from responsibility extends to all his acts, and he is not held accountable for his torts or crimes to the same extent that a mature person is nor are contracts which he may make enforceable against him in the same way as are the contracts of an adult. It will not b? the purpose of this chapter to consider 146 Collecting by Letter the liability of an infant for his torts or crimes; but rather to show what is the effect of the contracts he may make, when they may be enforced against him, and also when his parents may be held liable for con- tracts which he may make. In what instances he is liable for debts he may contract or goods he may pur- chase and in what instances the father may be held liable. The freedom from liability which the law gives the infant is handed down to us from the days of the common law and is designed as a protection to the infant. At common law many persons were under disability. As the husband was considered to have absolute authority over the family, and as the prop- erty of the wife in most instances belonged to him, the married woman, "femme covert," as she was called had practically no capacity to enter into contracts or carry on business. People of unsound minds, idiots and lunatics, were given the protection which their in- firm condition demanded and their contracts could not be enforced against them. In like manner protection was granted the infant on account of his youth and in- experience, and his contracts in the majority of instances could not be enforced against him. The disabilities of a married woman have largely been removed by statute, this subject being taken up in a later article. But the protection afforded the infant by placing him under disability still exists. As a general proposition it may be said that con- tracts of an infant are voidable and not void. That is to say, the infant may avail himself of all rights and privileges thereunder if he sees fit and may enforce the contract against the party with whom he contracts. But should the second party attempt to enforce the contract against the infant he could in a majority of Infancy as a Defense 147 instances interpose a plea of infancy and he would have an absolute defense against any and all liability. A void contract could not be enforced by either party to it and it would stand in the law the same as though it had never been made. A voidable contract could be carried out and has the same status as any legal contract ; the sole difiference being that its enforcement can be avoided by one of the parties, hence the name voidable. As already stated the contract of an infant is in most cases voidable and not void. He may when he attains his majority ratify, either expressly or by implication, any contract made during infancy and it then becomes absolutely binding the same as though made by an adult in the first instance. But this is carrying us into the field of the practicing lawyer, rather than the iield of the credit department. Our concern is with the contracts that can be enforced against the infant and his parents and it is to them that we will turn our attention. As a general proposition it may be stated that an infant can be held liable only for necessaries. The rule has been laid down by one well known authority to be that "infants may avoid all contracts which may be prejudicial to them, but are bound by all reasonable contracts for their maintenance and education." This is a very good statement of the law and expresses the law as it exists in most of the states today. But even then there must be a clear showing that the goods purchased were necessaries. The same court which laid down the rule quoted above has held that when an infant resides at home, is under the care of the father and is supported by him that the infant is not liable for necessaries even though the father is poor and unable to pay for them. It was held in this case that the plaintifif must show a refusal or neglect 148 Collecting by Letter of the father to furnish them. We are of the opinion however that the last case goes a little further than the majority of the courts go in relieving an infant from liability. In accord with the rule first stated is an opinion from another state in which it is held that "an agreement by a minor for necessaries is binding on the minor as far as it has been executed by the parties, if it be not so unreasonable as to be evidence of fraud or undue advantage." As to the liability of the father for necessaries fur- nished an infant it may be said that it is the duty of the parent to support the infant, especially while the infant is living at home and giving his services to par- ents. This matter has been regulated in most of the states by statutes, and where it has, it simply remains for one to consult the statutes of his own state. But where no statutes have been passed the matter rests on the common law theory. Under the common law the weight of authority seems to be that the legal liability of the parent rests upon implied authority from him to purchase necessaries. Under the common law the parent is not liable, for anything only necessaries nor is he liable for necessaries if he supplies them or stands ready to do so. His judgment is also respected as to what constitutes necessaries except in so far as the articles furnished may relieve the infant from ac- tual want. If the infant voluntarily leaves home and works for wages which he himself collects, the father will not be liable for necessaries unless the authority of the father to the infant to make the purchase is conclusively shown. But where the infant is driven away from home the authority of the father to the child is presumed. In all instances a promise by the father to pay for necessaries is binding and if he per- mits another to furnish necessaries, not objecting but Infancy as a Defense 149 rather advising and consenting, it is presumed that he undertook and promised to pay a reasonable price therefor. What constitutes necessaries depends a great deal on the facts of the particular case. What would be necessaries in one case would be luxuries in another. In all instances anything which removes the infant from absolute want is a necessary ; this would include food, shelter, sufficient clothing to protect the body, medical attention when it is necessary, etc. The standard of what would constitute necessaries would rise as the station in life of the parties advanced. In the cases of an infant whose associates were wealthy, or whose environment necessitated a greater expendi- ture than would be necessary to relieve him from ac- tual want, clothing, lodgings and possibly jewelry of such character as that worn by his associates, would probably fall under the head of necessaries. In all instances such an education as would be usual in one's station in life would be considered a necessary. Another situation which one meets more or less fre- quently is the case of an infant who is engaged in busi- ness. This occasionally gives rise to some rather com- plex situations. But they are seldom encountered by the credit man. The rights and liabilities of an in- fant partner are frequently before the courts and have given rise to considerable litigation. As a general rule an infant is not liable on his partnership contracts any more than he is on any other contract. One case which was before one of our Supreme Courts for decision, was that of an infant who had bought a horse to use on a farm. The plaintiff sought to establish that as the infant was engaged in farming, the horse with which he was doing the work was a necessary. However, it appeared from the testimony that the infant rented 150 Collecting by Letter the farm from his mother and in the agreement she was to furnish all tools and horses. The court ac- cordingly denied the plaintiff's claim on the ground that the horse was not a necessary as the agreement was that the mother was to furnish them. It re- frained from deciding whether or not had the infant agreed to furnish the horses, the horse would have been necessary. This case serves to illustrate condi- tions which occasionally rise when attempts are made to hold the infant liable for necessaries, even though his purchase may not be anything to supply his bodily needs. The protection afiforded the infant and his freedom from liability undoubtedly work injustice in a great many cases ; an infant may contract obligations which, if he be unscrupulous, he may avoid paying by estab- lishing the fact that he was an infant when the obliga- tion was contracted. Probably more injustice is avoided by the protection as it makes it almost impos- sible for an unscrupulous adult to defraud the infant by dishonest practice. One of our courts has said that one who deals with an infant does so at his peril for the infant can enforce the contract while the other person can not. To be on the safe side it is better never to enter into a contract with an infant unless one is practically certain of his honesty and integrity. His honesty is by far the best protection one may have in dealing with him as the plea of infancy in a ma- jority of cases is an absolute answer to any claims on the part of the other person, no matter how unscrupu- lous or dishonest the actions of the infant himself may have been. Liability of Husband and Wife 151 Chapter XXVI. Liability of Husband and Wife. It frequently happens that a study of the history of any institution and the conditions under which it has developed will disclose its fundamental ideas and theories and give a logical explanation of things which to the casual student would look like mere arbitrary rules. This is essentially true in the case of marriage. How the family came to exist as a social unit is not known. Several theories are advanced but they are theories pure and simple and lack conclusive evidence to establish them. The "Horde" theory, which is held by some, maintains that in the days of savagery and barbarism clans would be formed for the reason that "in union there is strength." The women would pre- pare the food and clothing while the men hunted game and fought the battles with the neighboring clans. It also maintains that the men and women of any particular clan lived together like a drove of ani- mals and that finally the instinct of male jealousy led each man to choose one woman as his own and that this was the primitive family. Other theories are ad- vanced, but however the idea first originated, certain it is that from the earliest historical times we find the clans and tribes divided into families. The modern marriage, that is a monogamous mar- riage, is essentially a Christian institution. It is men- tioned in the second chapter of Genesis and both mar- riage and divorce are mentioned throughout the Old and New Testaments. None of the people of early 152 Collecting by Letter historical times knew marriage as it exists today. Marriage was contracted by the parties at their pleas- ure and they divorced themselves the same way. Un- der early Hebraic law a mafi could send his wife away whenever he liked. The same conditions existed in Greece. In Rome the parties could mutually agree to separate and that ended the marital relation. Later their agreement had to be made in writing and signed in the presence of several witnesses but it was valid even though there was no reason for it. In England we find the modern conception of marriage existing at a very early time. The common law recog- nized the Christian marriage, that is monogamous mar- riage, which could not be dissolved at the pleasure of the parties. Blackstone says that the law considers marriage in no other light than a civil contract. This view is not held by modern authorities, however, and it is doubtful if it was ever a correct statement of the law. A more correct view, substantiated by the great weight of authority, is that marriage is a status based on and growing out of contract. The Supreme Court of the United States has said : "Marriage is an institu- tion founded upon mutual consent. The mutual con- sent constitutes tiie contract, and the marital relation is founded upon and springs out of the contract." It is unnecessary for the purpose of this chapter to enter into a discussion of who may and who may not con- tract marriage; or of what constitutes a valid mar- riage, and what a void or voidable marriage. We are more concerned with some of the incidents of the mar- riage. The law has always resorted to a legal fiction and recognized a theoretic unity between husband and wife. The husband and wife are one and at the com- mon law the husband is the one. This may sound like Liability of Husband and Wife 153 a crude attempt at jest but it is an absolute statement of fact anci in this statement may be found an ex- planation of the law of husband and wife from the earliest common law times to the present day. Under this theoretic unity the legal existence of the wife was suspended during marriage and merged into the ex- istence of her husband. Her services belonged to him absolutely ; any and all personal property which she might own at the time of the marriage became his sole property, while the title to r-eal property which she might own vested in him during the marriage. If the husband died first the wife became legally alive and her real estate became hers again to do with as she saw fit, but her personal property had become part of the estate of her husband, and was gone from her forever. It naturally follows that as the legal ex- istence of the wife was suspended during marriage she could not make a legal contract. Many of . the disabilities of married women have been removed by statute, and we will now consider some of the rights and liabilities of the parties under both the Common Law and the Enabling Statutes as they are called. The liability of the husband for debts contracted by his wife both before and after marriage gives rise to most of the questions which arise under this subject. One rule of law which was universally recognized at common law, and which is still recognized, is that in- asmuch as the husband took the wife with her estate and fortune so he took her with her debts and liabili- ties. In other words the husband was and is liable for all debts contracted by the wife prior to her mar- riage. This is true even in the case where the hus- band is an infant. This presents a somewhat anom- alous situation but the law again resorts to legal fiction and says that he stands not as an infant but as a mar- 154 Collecting by Letter ried man. It really amounts in some instances to hold- ing him liable on a contract made by the wife on which he could not be held liable if he had made it himself. A second instance in which^the husband is held liable is for necessaries furnished the wife during cohabita- tion. What was said on the subject of necessaries in the previous chapter on Infancy is applicable to this case. The liability of the husband is based on an im- plied agency, or implied authority from the husband to buy the necessaries. As was pointed out in the chapter on Infancy no arbitrary standard can be set as to what constitutes necessaries; it is a relative term. The word necessary as used in this connection is in a wa) interchangeable with the word suitable. And so food, clothing, jewelry and whatever else may be deemed suitable to the parties' position in life are deemed nec- essaries for which the husband is liable. In this con- nection it might be well to call attention to the fact that it is the apparent position of the parties and not what may be discovered to be their actual position that is considered. When the husband and wife have ceased to live together the situation is not so simple and the dealer who furnishes the wife necessaries seems to be thrown more or less on his inquiry. The law seems to be that where a wife leaves the husband on account of his misconduct, and through no fault of her own, that she is still his wife and he is bound to support her to the extent of paying for necessaries supplied; but where she leaves the husband under circumstances where he is blameless and the fault is hers he is not liable. And the dealer is bound to show in enforcing the liability against the husband that the fault was his and not the wife's. Turning to the wife's liabilities we may say that the Liability of Husband and Wife 155 wife is never liable for the husband's debts; in fact, in many States she is forbidden by statute to bind her separate estate for her husband's debts. And we may say as a general proposition that it is the duty of the husband to support the family and she is never liable for necessaries which may be furnished them. This latter statement is subject to some exceptions, how- ever. The credit may have been given to the wife and not to the husband and then the husband cannot be held liable. For illustration, the wife might own property and the husband own none ; the dealer would be willing to extend credit to her and would extend credit directly to her. Then the husband cannot be held liable. As to the contracts which a married woman may make in regard to her own separate estate this is en- tirely statutory. As already pointed out a married woman had no capacity to contract at common law. Her disabilities have been removed in all the States by statute but as the statutes of the various States differ and have been construed differently by the courts a study of the statutes and decisions is the only way to get positive information. It may be said, however, that so far as her personal property is con- cerned the wife may do with it as she may see fit and is liable for all contracts she may make in regard to it. For instance, if she owns a carriage she may sell it and give good title; or she may contract with a workman to repair it and she is liable for his pay. As to her real property the situation is not so simple. As already pointed out, she cannot be held for her husband's debts nor in some States can she bind it to secure his debts. It is well settled that the legislation has not resulted in a complete emancipation of the property rights of married women and there is a line 156 Collecting by Letter of cases which holds that to entitle a wife to her es- tate she must keep it separate from her husband's; that if she allows it to be mingled with her husband's property and lets him use it as his own she may lose her rights as against her husband's creditors. The Supreme Court of the United States has held that in a contest with the husband's creditors the burden is upon the wife to show by affirmative proof that the property which she may claim as her own was paid for out of her separate estate. The law is not well settled in regard to this matter and in many other instances the statutes and decisions lack uniformity. For instance, some States allow a married woman to become surety, while others do not; some hold that she may become a partner with her husband in busi- ness, while others hold that she cannot. But these matters are not of great importance in this connection. By way of summary we may say that the husband is liable for debts contracted by his wife prior to their marriage. After the marriage he is bound to support her and is liable for necessaries furnished her unless she has left him through no fault of his. As to the wife we may say that she is rarely liable for her hus- band's debts, and that she is never liable for neces- saries furnished the family unless the credit is ex- tended directly to her. At the common law sIte had no capacity to contract, but she has been given power by statute to make contracts in regard to her separate estate and that so far as the statutes have removed her disabiliies she may make contracts and the con- tracts are valid. The only way to tell how far mar- ried women's disabilities have been removed in any particular State is to consult the statutes and decisions of that State. Set-off and Recoupment 157 Chapter XXVII. Set-off and Recoupment. In this chapter we are considering a subject which in its very nature is very much more technical than any of those previously considered. The subjects treated in former articles, while technical in their application, have certain general principles which could be applied by the layman as well as the lawyer and it is not neces- sary to go into court to apply the principles set forth in the former articles. Set-off and recoupment, how- ever, have to do solely with the defendant's rights after an action has been started in court and only in the most general way can the rules be applied outside of a court proceeding. The ordinary use of the terms as though they were synonymous, is somewhat mis- leading. Recoupment was known by the common law and had a meaning vastly different from the meaning of the term set-off which is a statutory defense and was unknown to the common law. The president of one of our great universities once remarked that laws grow the same as walks were built on the campus. Students would go across the campus by a certain route until a path was worn, which would demonstrate the need of a walk, and the walk would be forthcoming. So, he stated, it was in the develop- ment of law. Conditions would be found that would demonstrate that existing laws were inadequate; the need for the laws would be shown and the laws would be forthcoming, either by legislative enactment, by in- 158 Collecting by Letter corporation in court decisions, or by development through popular usage and custom. So it is in the case of set-off and recoupment; it shows a steady growth and development from the time when its need first became apparent in the common law practice. In the common law there were fixed and arbitrary rules to which all cases were made to conform. In many instances exigencies would arise which none of the laws were adequate to meet. It was the custom to apply a rule which most nearly conformed to the case and great injustice was often done. So a system de- veloped whereby the common law rules were to be changed and modified to meet the particular cases that might arise. Out of this system of modification and relaxation developed the Court of Chancery and there were also developed many changes in the common law practice, among which changes was the defense of re- coupment. The word recoupment is derived from the French word "recouper," meaning "to cut again." It is a term difficult to define accurately and most of the au- thorities have been content to give a description rather than a definition of the word. It signifies a cutting off or keeping back of part of the plaintiff's claim in satis- faction of cross claim or demands of the defendant growing out of the same transaction or contract on which the plaintiff's claim is founded. In its original sense it amounted merely to a right of reduction from the plaintiff's claim on the ground that his damages were not as high as he alleged. The circumstances under which it might arise were multitudinous. For illustration : A leased a house to B ; A made certain covenants to repair. He failed to make the repairs and B was damaged as a result of the failure ; B then failed or refused to pay the rent, The common law Set-off and Recoupment 159 remedy for this state of affairs was two separate ac- tions ; one by A against B for his rent, and one by B against A for damages for the failure to make repairs. Each might get judgment against the other ; one might have property from which the judgment against him might be collected, the other would have nothing and the judgment against him would never be paid. This worked injustice and at the same time made two suits necessary where one would suffice. It has always been the policy of the law to avoid a multiplicity of suits; so to avoid the injustice that often arose and at the same time to obviate the necessity of having two law suits where one was sufficient, a system of recoup- ment was developed and established. It existed at first merely by virtue of recognition by the common law judges and through the intervention of the Court of Equity; later it was established by statutory enact- ment. One authority has said that "recoupment looks through the whole contract, treating it as an entirety, treating the things done, and stipulated to be done, on one side, as the consideration for the things done, and stipulated to be done, on the other. When either party seeks redress for the breach of stipulations in his favor, it sums up the grievances, on each side, instead of the plaintiff's side only, strikes a balance and gives the difference to the plaintiff, if it be in his favor." At common law and under the early statutes a judg- ment could not be found for the defendant even though his claims against the plaintiff should be found to exceed the amount of the plaintiff's claim against him. This has been modified by statute, however, in most, if not all of the states and the defendant can now recover a judgment on his cross action In gen- eral, the modern law of recoupment may be said to be 160 Collecting by Letter embraced in the following rules: (1) The defend- ant's claim of recoupment must arise out of the same contract or subject matter as does the plaintiff's claim. (2) The claim of the defendant must be one on which he could maintain a separate action. For in- stance, if a minor should buy a horse from him and should later sue to recover back the purchase price of the horse he could not recoup for the use of the horse. since he could not maintain an action against the minor for its use. (3) Some authorities hold that his xlaim must be one which existed at the time the plaintiff's suit was instituted; while others hold that it may be one which arises any time before plead- ing. The weight of authority seems to be that the claim must exist at the time suit was started. (4) The defendant must elect whether or not he will set up a claim by way of recoupment or in a separate ac- tion. When he makes such an election it is final and should he be defeated in his claim he cannot after- wards institute a separate action to establish it. The matter is res ad judicata and any further action is .barred, either by separate action or claim of recoup- ment. (5) The defendant assumes the burden of proof and must establish his position according to the rules of evidence the same as he would if he were plaintiff in a separate suit. (6) The practice on the defense of course, varies in different states. In Mich- igan, where issue is joined by a plea of the general issue and notice of any special defense such as "Ac- cord and Satisfaction," "Failure of Consideration," etc., the rule is that notice of a claim of recoupment must be given the plaintiff and this is the general rule, varying with the practice in the several states. The circumstances under which a claim of recoup- ment may be made are numerous, but a few illustra- Set-ofif and Recoupment 161 tions will suffice to give the general idea of it. The illustration already given of recoupment by a tenant for the landlord's breach of his covenants to repair is a typical one. So also in an action for rent, the ten- ant may show that the lease comprehended lands which were not included and that he was damaged thereby. In an action for wages the employer may show that the employe did not work for the stipulated length of time and that he was damaged; that he did not do his work in a workman-like manner; that the contract has not been fully completed; that the em- ployee was negligent in the use of the employer's property and damaged it ; or that he did not use rea- sonable skill in the performance of his work. In an action for the purchase price of goods the defendant may show breach of warranty or damage arising from the failure of the plaintifif to ship the goods at the spe- cified time. In an action to recover for the price of building a house the defendant may show that the building was not completed at the time mentioned in the contract and that he lost rent thereby. Many other illustrations might be given but these are typical and are most frequently encountered. Set-off is a statutory defense which did not exist at the common law and it follows that a study of the statute giving the defense is the only way to thor- oughly master it. Unless positively embraced within the statute the claim will be denied and the defendant left to a separate action. It is a development from re- coupment, but differs from it in several important par- ticulars. The most radical difference is that the claim of set-off need not rise out of the same transaction. If A sues B for rent, B can claim by way of set-off that A owes him for labor performed, or for goods sold him or money loaned him ; he can, in fact, set-off 162 Collecting by Letter practically any claim growing out of contract. A sec- ond difference between set-off and recoupment is that in a case of set-off the amount of the defendant's claim must be liquidated or be capable of being ascertained by calculation. But any claim which must be passed on by a court and jury to ascertain its amount cannot be a matter of set-off. In recoupment the claim need not be liquidated. The Supreme Court of one of the states has been given as a definition of a liquidated claim one in which "some specific amount, or some specific data from which such amount can be calculated by an ordinary mathematical process, shall have been arrived at ;" in any other event the claim is not liqui- dated and is not a subject of set-off. There are various provisions in the statutes of set- off of the several states which are more or less similar and in many instances are practically identical. The most general requirement is that the claim of set-off must arise on contract or judgment. If the demand to be set-off be a judgment it makes no difference on what cause of action it was recovered. The clajm must be actually due the defendant in his own right, either in the first instance or by a bona-fide assign- ment. It must be due at the time the plaintiff's action is commenced and must exist against him or his as- signor if he is suing on a contract assigned to him. Unlike recoupment, the defendant is not left to his election by many of the statutes but must plead his claim if he has a valid set-off or be thereafter barred from asserting jt. As in the case of recoupment, as it has been modified by statute, judgment may be ren- dered for the defendant if his claim exceeds that of the plaintiff. Most of the statutes require that the defendant give notice of the defense of set-off when he intends to avail himself of it. The defendant as- Set-off and Recoupment 163 sumes the burden of establishing his claim the same as he would in a separate action. If the reader desires to ascertain the exact condition of the law in his own state he must consult the statutes and decisions of that state. The main propositions are set forth here, however, and a little study along the lines laid down will disclose the law in any state. Exemption Statutes 165 Chapter XXVIII. Exemption Statutes. For the first time in these chapters on defenses, we are considering a subject which does not date back to common law, nor does it even date back to the early English Statutes. The early idea was that a debtor MUST pay his obligations or be severely punished. His duty to pay was considered paramount to every other consideration, and not only all his property and earnings, but even his person were subject to execu- tion to satisfy his debts. The only thing at which the law stopped was the taking of human life. A man could not be killed for failure to pay his debts but he could be confined in the foul, ill-kept prisons of the time and unless he came into some money by inheri- tance or otherwise, or his friends assisted him in pay- ing the obligation, he could be kept there until he died. And not only did the debtor sufifer, but his family could be deprived of everything but the scantiest wearing apparel. They could be deprived of home, food, tools and all the wherewithal with which to earn a livelihood. In short, the creditor, if he so desired, could be as cruel and grasping as Shylock and the law would assist him to get his "pound of flesh." It naturally follows that the statutes of exemption enacted by the various states are in derogation of the common law. They were passed largely from mo- tives of humanity and benevolence, but were also dic- tated somewhat by what we may term public policy. 166 Collecting by Letter Not only was it cruel to the debtor and his family to deprive them of all means of livelihood, but by de- priving a man of his liberty, or even taking away those things on which he was dependent to earn money, it made him a pauper and a public charge and deprived him of all means of paying his debts should he desire to do so. Being entirely a statutory matter the only way in which positive information could be given would be to list here all the items of property which the statutes of the diflferent states exempt from execu- tion. This is manifestly impossible and the only way one can get the information is to consult the statutes of his own state and find just what is exempt and what is not exempt from execution. As a general proposition it may be said that the ex- emption laws of no state will allow a man to be de- prived of his liberty or the means of earning his liveli- hood. Body execution can be had in most of the states, it is true, but only in certain cases, and then more as a punishment for some tort or wrongful act. For illustration, if a man should make false repre- sentations to a merchant as to his credit and the amount of property he owned for the purpose of se- curing goods on credit, the merchant could, in most states, bring a capias action against him under which he could be imprisoned; so if a man bought personal property under a contract of sale in which the title remained in the seller until the goods were paid for and should then dispose of them or conceal them, the vendor could take out body execution on the judg- ment. In most of the states an action against a man for seduction or breach of promise to marry may be so brought as to give a right to imprison him in case the judgment obtained is not paid. But in all these instances the imprisonment is more as a punishment Exemption Statutes 167 for the wrong and the fact remains that a man cannot be deprived of his liberty for a contract debt. As to the property which a man may hold exempt from execution it is enumerated in the statutes and the statutes of no two states are alike. However, ex- empt property does fall into certain general classes. One of the most common exfemptions gives the tools which a man uses in his trade. Under this would be included the tools of a carpenter, mason, blacksmith or any mechanic. It would be confined, however, to such tools as he needed to earn his livelihood and would riot enable a carpienter, for instance, to hold several hundred dollars' worth of carpenters' tools as exempt. Nor could he hold them under this statute if he had abandoned the carpenter trade. A statute somewhat analogous to this one, but broader in its ap- plication, includes practically all the tools, implements and appliances which any man may use in his business or vocation. Under the statutes in this class are us- ually included the farm implements of a farmer; the library and instruments of a professional man; the piano or other musical instrument used by a music teacher upon which she relies for support. In this case, as in the case of the statutes just considered, the article or property claimed as exempt must be actually used by the debtor in his business to fall within the statute. Closely allied to these two statutes, and hav- ing in mind the same general proposition of not de- priving a man of his means of livelihood, is another class of statutes which make exempt from execution, teams, wagons, horses, etc. While the statutes differ somewhat in their wording and are construed some- what differently by the courts, the same general idea runs through them and the horses held to be exempt are such horses as a farmer uses on his farm or a 168 Collecting by Letter teamster or truckman uses in his business, and such wagons or vehicles that are used in the same way. Another line of statutes which have to deal more with the comfort and conveniences of a man and his family make household furniture up to a certain value exempt; they also include wearing apparel, food and provisions of certain value or sufficient to last a cer- tain period of time. For the same reason the head of the family has certain exemption in the wages he has earned; some states giving him, free from garnish- ment, all the wages he may have coming if they are needed for the support of his family, while all states give him an exemption of at least a certain per cent, of them. Then there are general statutes exempting particu- lar things which do not fall under any classification. An illustration of this would be a Michigan statute which makes a sewing machine used in the home ex- empt. In most states a man has a certain amount of personal property exempt irrespective of its use. Likewise a merchant frequently has a certain amount of stock exempt. Farmers are usually given sufficient seed to enable them to plant their crops. Most states have a homestead exemption consisting of a certain amount of land in the country or a house and lot of not to exceed a certain value in the city. As already stated, a study of the statutes of one's own state is the only way to learn what is liable to execution and what is not. It is undoubtedly true that the exemption laws are many times abused and that they enable many a dis- honest debtor to escape payment of obligations he is well able to pay. On the other hand, they prevent a grasping creditor from depriving a man and his fam- ily of all their comforts and means of livelihood. The Exemption Statutes 169 creditor can use judgment in the matter of extending credit and in this manner prevent serious losses to him- self. On the whole the exemption laws may be said to be good and to work substantia! benefit even though the privileges they confer, like all other privileges, are sometimes abused. Fraudulent Conveyances 171 Chapter XXIX Fraudulent Conveyances. Credit is the life of trade. It is essential to the continued preservation of business that the giving of credit be made safe and that those willing to give it should be protected. Creditors are, therefore, a fav- ored class under the law. In the days of ancient Rome, an insolvent debtor might be sold into slavery or put to death. If he had several creditors, they might dismember his body. Ever since those harsh days, civilization has recog- nized the necessity of safeguarding the interests of the creditor, who supplies the lifeblood for the arteries of trade. But, because of the hardship worked by such severe statutes upon the right-meaning but unfortunate debt- or, slavery and the deatli penalty as punishment for insolvency have long since disappeared. With the mitigation in the severity of the punish- ment, many debtors, no longer fearful, began to at- tempt to defraud their creditors by conveying away the real or personal property which would have been subjected to the payment of their debts. The com- mon law in England protected creditors under these circumstances and the famous statute of the 13th Elizabeth, which provided that all conveyances or dis- positions of property, real or personal, made with the intention to defraud creditors should be null and void as against creditors, was declaratory of the common 172 Collecting by Letter law. Nearly all of the states of the Union have passed laws following this statute. What is a fraudulent conveyance? The great au- thority, Chancellor Kent, daclared a conveyance to be fraudulent when its object or effect is to defraud an- other, or when the intent with which it is made is to avoid some duty or debt due by or incumbent upon the party making the transfer. The intention is of the first importance. Unless a conveyance is made with a good intent and upon a bona fide consideration, it is fraudulent. If fraud be present, the manner in which a debtor seeks to transfer his property is of no importance. The use even of sheriff's deeds, the assignment of a note, life insurance policy or patent right, the giving of a deed of trust or a mortgage, a fraudulent judg- ment or a fraudulent attachment are equally unavail- ing to effect a fraudulent transfer. Even the pur- chase of property with the debtor's money in the name of a third person is held fraudulent, although such a purchase is not literally a transfer of property. If the debtor conducts a business in his wife's name, or in that of any other third person when the business is in fact his own, the fraud renders the property ac- quired or used in the business subject to the payment of his debts. What is the effect of a fraudulent conveyance? In most of the states, the effect of such a transfer is that it is absolutely void as to creditors and subsequent bona fide purchasers both in equity and at law, if they see fit to impeach it. But as between the parties to the transfer, it is binding. The creditor who wishes to impeach a fraudulent conveyance must be able to show that he has been in- jured, and that he is an existing creditor — that is to Fraudulent Conveyances 173 say, one vi'ho has obligations against the debtor at the time of the transfer, although his claims may not have matured, nor been reduced to judgment until after the transfer. As a general rule, a general creditor (that is, one who has no special security) must first establish his debt by a judgment and acquire a lien upon the prop- erty by the necessary steps. But in order to avoid the circuity and delay occasioned by the rule requiring the complainant in equity first to recover a judgment at law, it is now provided in many of the states that a creditor at large may file a bill in chancery to subject to the payment of his debts any property that has been fraudulently transferred, or conveyed by his debtor, so that only one suit is necessary to obtain the proper relief in these jurisdictions. Of course, a creditor by a decree in chancery for a specific sum of money is entitled to the same relief against the fraudulent conveyances of his debtor as a creditor by a judgment at law. The law regards the legal title which the debtor has once possessed to be his still, so far as his creditors are concerned, in spite of any transfer he may have made in fraud of them. The law considers that such a transfer has no power to divest him of his legal title. Therefore, a creditor of the fraudulent grantor ma)- conduct himself and treat the property as if the deed had never existed. If his claim has been reduced to judgment, he may levy his execution upon the prop- erty and subject it to sale for the satisfaction of his debts. In some cases it has been held that this may be done without reference to the question whether the debtor possesses other property, or whether there are other defendants having property liable to the same judgment. In cases where the creditors' claim has 174 Collecting by Letter not been reduced to a judgment, he may, as a provi- sional remedy levy an attachment for which the fraud- ulent conveyance is a sufficient ground. The case is different wj,th land purchased by the debtor and the title to which has been taken by a third party in fraud of creditors. Here, the debtor's inter- est in such land constitutes an equitable and not a legal asset, and in some of the states it is held that such land cannot be sold as the property of the debtor, since there has never been any legal title in him. Where the debtor has had title and fraudulently disposed of it, there is something for the judgment lien to take hold of and the execution to operate on, but not where the debtor has never had title. In such a case, the creditor's remedy is in equity. There are some states, however, in which it is held that an execution may be levied upon such equitable interests, and that the pur- cha.jer may go into court of chancery to perfect the title obtained under the sale. Where property has been transferred by a number of conveyances as a result of acquiescence in a plan to defraud the creditors of the grantor, all those who par- ticipated in the fraud may be joined as parties in a single action to set aside the conveyance, although the defendants set up and claim different interests in sep- arate parcels, and although each is charged only with fraud in his own purchase. It is not enough to have a good case; one must be able to prove it. The evidence is always of the most vital importance. On account of the nature of fraud- ulent conveyances^the elusive character of fraud — the greatest difficulty encountered in such cases is that of obtaining the evidence necessary to prove the facts alleged. The fundamental rule as regards the burden of Fraudulent Conveyances 175 proof is that it falls upon him who alleges a fact. Therefore if a party desires to set aside on the ground of fraud a deed valid upon its face, the burden is upon him to show the fraud. Fraud will never be presumed and wherever, the circumstances are as consistent with honesty as with dishonesty, a transaction will be upheld. The complainant must therefore prove the fraudulent intent of the grantor and notice thereof of the grantee, in cases where the grantee paid an ade- quate price for the property, or wh^re other matters _ are brought out tending to prove the transfer bona fide. A presumption of fraud may arise in many ways, and such a presumption makes it incumbent upon the person claiming under an attacked conveyance to show the bona fide character of the transaction. A frequent instance is where an insolvent conveys property to a near relative — although the mere circumstance that the parties are nearly related will not alone raise an inference of fraud. And where the vendor has re- mained in possession of personal property, a presump- tion of fraud is raised, so that it becomes necessary for the vendee to substantiate the fairness and. good faith of the sale, for change of possession is an ele- ment in and a natural consequence of the sale of per- sonal property. As to the consideration, the burden of proving it falls upon the grantee or those claiming the benefit of the deed, in those states where the deed or the recital of the payment of consideration therein is not evi- dence of such payment as against a stranger, or a creditor of the grantor attacking the conveyance as fraudulent. But where a deed is considered prima facie evidence of a consideration as against creditors, the burden, of course, rests upon those who impeach 176 Collecting by Letter it, who must show want or inadequacy of consideration and that its object was to hinder, delay or defraud creditors. Generally, after the fraudulent intent has been shown, it devolves upon the grantee to show that value was given. * Post-nuptial settlements, where the husband is in- debted, are very suspicious and are presumed volun- tary. They are void as to existing creditors, unless those claiming under them can show that they were made for a valuable consideration. In the case of near relatives, the grantee must prove the considera- tion or the previous existence of the indebtedness for which the conveyance was made. After the creditor has shown fraudulent intent, the grantee, claiming to be a bona fide purchaser must show that he gave value and that he was without notice of the grantor's fraud. But this fraudulent intent — how can it be shown? Men's motives are not susceptible of direct and posi- tive proof. They can only be arrived at by a proper consideration of acts and declarations. Fraud is rarely perpetrated openly, but is surrounded by all the pre- cautions that can be taken to prevent discovery and exposure. Its operations are circuitous and great sagacity and industry are required to expose them. Therefore, it is necessary that great latitude in the evi- dence should be permitted. Any evidence tending to show inability on the part of the grantor to meet his obligations is admissible in order to show that he was in embarrassed circumstances. Circumstantial evi- dence even is admitted to prove fraud. As it is a fundamental principle of law that every- one is presumed to intend the natural and inevitable consequences of his own act, if a debtor executes a deed which must necessarily defraud his creditors, his declaring that he did not intend it to have that efifect Fraudulent Conveyances 177 is of no avail, as it is contradicted by the evidence of his own act. There are numerous instances which experience has shown so frequently accompany sales, conveyances and transfei-s intended to hinder and defraud creditors that they are known as badges of fraud. They vary, as man's ingenuity in evil varies. Where they occur, if they are sufficient in number and importance and are not explained, they will be sufficient grounds for believing a transaction void. Where, for example, as a part of the contract for the sale of land, it is agreed that the vendor shall re- tain the use and possession of the property conveyed for a definite or indefinite period of time, this, unex- plained, is the reservation of a benefit to the grantor, and renders the conveyance void. Again, if when a chattel is sold, it is agreed as part of the bargain that the vendor shall still have a right to use the thing gold, such a reservation is inconsistent with an absolute sale and avoids it. The conduct of a sale in an unusual way, and not in the ordinary course of business is a badge of fraud. An unusual degree of secrecy, an excessive effort to give the transaction the appearance of fairness, the buying of property for which the purchaser has no apparent use (as in the case in which a lawyer bought a stock of broom-corn), buying a stock of merchandise without taking an inventory, these are badges of fraud. And inadequacy of consideration, the inability of the maker of a conveyance to produce any memoranda of the antecedent debts which he claims constituted the consideration, a sale of goods upon long and unusual credit, a failure to take security, where the vendee pays nothing — these are further examples of badges of fraud. 178 Collecting by Leter No matter how much a man may feel inclined to make presents of value to his family or friends, the law will not allow him to do so, when by so doing he lessens his ability to pay ^xisting creditors, for it is one of the fundamental rules of ethics and the basis of the law of fraudulent conveyances that "a man must be just before he is generous." Hints on General Letter Writing 179 Chapter XXX. Important Hints on General Letter Writing. While it is a very general presumption that the busi- ness man knows a good business letter when he sees it, and is able to construct one himself, it is a regrettable fact that so few understand the essential principles of a model business communication. Before attempting to construct his own collection letters from the many suggestions contained in Volume two, many a business' man will find it desirable to master a few general principles, even a review of which may be found desirable for the letter writer of more than ordinary experience. Considering that an elementary exposition of letter writing itself will not be amiss, we have incorporated in this chapter a num- ber of valuable points on the general subject. To those of considerable experience the information may sug- gest little not before practiced, but to those without an actual experience in letter writing of any kind the entire chapter will be valuable. The rules governing the construction of a forceful, logical business letter have been evolved from economi- cal necessity. The rules of general English composi- tion should apply as much as possible in the construc- tion of the body of any letter. The demands of busi- ness economy, however, permit a diversity of style lim- ited only by the good writer's versatility. The object of every business letter is to tell, unmistakably, what 180 Collecting by Letter its writer intends to say. It is a vital thing in a letter to tell your story in as few words as possible and STOP. A business letter is divided into three parts. First: The opening. * Second : The body. Third : The close. Long usage has made certain forms of opening and closing a business letter a conventional thing. It is nevertheless a most uncommon occurrence to receive a letter that does not lack some essential detail in its composition. Although a wide latitude is allowable in the body of any letter there are certain forms that should be observed in the opening of every, letter. These forms are more or leSs arbitrary, but are based on a real business economy. THE OPENING. The first step in writing any business letter is to properly date it. A business letter need not necessarily be w)"itteh on printed stationary, but the best impres- sion presumes the possession of a business connection sufficiently important to warrant its use. Every printed letter-head should have a date line. The date line is not necessarily a printed line, but is the space following the name of town and state. The latter should appear below the body of the letter head and slightly to the right, as follows : Detroit, Mich. The date on a letter should be so written that no error can arise as to the exact date. Wherever the space on date line permits, the date should be written in full, and not abbreviated. The names of short months should never be abbreviated. The year should always be plainly written, as business letters are in- Hints on General Letter Writing 181 tended to be filed for reference and an error or con- fusion as to the date may at any time cause complica- tions. The date should be written as follows : Detroit, Mich., June 1, 1909. Never use apostrophes or possessive marks in writ- ing a table. The following is an objectionable form. Do not use it : Detroit, Mich., Jun. 1st, '09. The following is also a bad form. Do not use it : Detroit, Mich., 6—1— '09. Always use the numeral for the day of the month, as 2, 10 or 25, and not 2nd, 10th, or 25th. The reason for this is more easily appreciated by examining any old letters, the date lines of which have been written and not typewritten. The date when properly written shows at a glance, whereas following the day of the month with nd, th, rd, etc., often makes it necessary to closely study the writing to establish the correct date. After correctly dating a letter the form of address should be properly observed. There are two very important reasons for correctly addressing every letter. The first is based on its effect on the man or firm receiving it. The man to whom you write a letter is invariably annoyed by any misspelling or abbreviation in his name. Therefore, in answering any letter care- fully copy the name, in full, from the letterhead of your correspondent. If he uses no printed letterhead copy his name exactly as he signs himself. Nearly every man is somewhat sensitive in this regard, foolish as it may appear, and as the purpose of every letter is to impress, a good impression should not be spoiled by carelessness. If a man's name is Charles, and he so 182 Collecting by Letter spells it, do not address him as Chas. If you know his first name to be Charles never address him as C. If he uses his initials to sign his own letters, address him so. If he signs his name C. A. Brown, address him C. A. Brown and not Chas. Brown, or Charles A. Brown, even if you know his name is Charles. The second reason for correctly addressing every letter is that of obtaining a perfect carbon for filing. A carbon copy of every typewritten letter should be made and filed properly under the name of the man to whom it is addressed. It is, therefore, important to follow the name with the full street address wherever it is known. This is a rule that many do not follow. Many business men dictate a letter and allow the address to be put on the envelope alone. This is a bad plan, as original letters may be lost or misplaced and future reference to a carbon copy will then show no identifying feature except the name of town or city. A correct address is as follows : Mr. Charles A. Brown, 218 Fort Street, Detroit, Michigan. Dear Sir:— The above is a strictly conventional form of address. A more compact form is favored by the writer, but such changes are purely matters of opinion. To my mind an easier written and neater style is the follow- ing: Mr. Charles A. Brown, 2ia Fort Street, East, Detroit, Michigan. Dear Sir:— The matter of margins is also a matter of personal opinion or habit. Some use very wide margins irre- spective of the length of letter, but unless elite type is Hints on General Letter Writing 183 used the most common margin is an inch on each side of the body, the first paragraph starting ten spaces (on a typewriter) from the left. The matter of saluta- tion, in a strictly business letter, should be confined to one or two forms. Start your letter after the address with either "Dear Sir" or "Gentlemen," as the case may be. My very dear Sir, Honored Friend, Dear Gentlemen, My dear Sirs, or any of several dozen fanciful salutations are absolutely unnecessary, a waste •of time and usually in questionable taste. The saluta- tion has absolutely no use whatever, and no signific- ance is attached to it except by lovers. Therefore in all cases use either Dear Sir or Gentlemen. After correctly addressing your letter the next step should be to start it in a businesslike fashion. As almost every letter refers to something that went be- fore, you should establish a definite time relation, wherever possible. If you are answering a letter, reference should be made to the date on which the letter was written to which 'yours is a reply. The opening paragraph of a business letter should be as brief as possible, and tell something. In my opinion the very best form is as follows : "I have received your letter of the 15th inst." For a great many years it was considered objection- able to use a personal pronoun except when necessary. This prejudice occasioned the wide use of the partici- pial construction, as : "Replying to your letter of the 15th inst.," etc. Either form is strictly correct. As the opening paragraph should introduce the sub- ject matter and at the same time identify the exact date of letter to which you reply I consider covering both advisable, as follows : 184 Collecting by Letter "Your letter of the 15th requesting information as to procedure in several cases received, and will be an- swered point by point by me." Or, "I am glad to receive your letter of the 15th reporting such good progress." Do not say, "I beg to acknowledge your favor of recent date." There are a great many expressions that have been worn out by over-conventional use. Avoid all stilted phrases as much as possible and instil as much indi- viduality in your opening paragraph as you can. There are a number of opening phrases that should be avoided. Do not say : "I beg- "I would say— "In reply to same — "Your valued favor — "Your welcome letter — "Am glad to hear from you — "Your kind letter— "Your letter to hand — "Your esteemed letter — "Yours received — "Contents noted — Never write anything in a letter you are not. sure is correct. If you have any doubt to as the correctness of the phrase or word, avoid it. Confine your opening paragraph to establishing the date of connection be- tween your letter and its occasion for being written, and a simple statement of what you propose writing in the body of the letter. The more simple your form of opening paragraph the safer you will be, and the more sure of correctly expressing your meaning and intention. Hints on General Letter Writing 185 The Body of a Letter. In order to write strong, forcible business letters some knowledge of English composition is absolutely necessary. A letter may be written by one possessing little kpowledge of the most correct English and, fur- thermore, may be strong and to the point, but it is never as forcible as one observing correct composition values. In learning to write effective business letters the forms and usages observed in elegant narrative are not essential, nor are the same rules followed. A business letter is not expected to exhibit the polished, even flow of expression -so necessary to correct narrative style. A business letter is presumed to eliminate everything foreign to the subject under discussion. It should be as short in all cases as a complete statement of essen- tials will allow. Business men are too busy to admire an elegant flow of words unless every word tells some- thing. However, a certain uniformity of logical expression should be cultivated. The best method of acquiring a strong style is to practice. Write. a certain letter deal- ing with the definite expression of some actual subject. One most frequently demanding business letters is the best. , After writing it once carefully study it sentence by sentence. Try to rewrite each sentence in an en- tirely different manner, and still retain the exact mean- ing. In the practice of this exercise you will soon note that what you really expected to write in the first place was not at all what you did write. Polish each sent- ence time after time if necessary until every one ex- presses exactly what you mean to say and in the very best manner. A slight amount of practice will soon convince you that there is ample room for improve- ment. The more you practice improving, the easier it 186 Collecting by Letter will become. In a short time you will find it possible to think ahead almost the whole length of an ordinary letter, and be able to write every sentence with small waste of words or effort. The matter of strong*logical, forceful style is abso- lutely dependent on practice and study. Every busi- ness man should force himself to both study and practice. No one is in possession of the exact thoughts that every business man wishes to communicate, and with the cultivation of the art himself he is able to do better than any one he may be able to employ. Although style can be learned only through practice, form and appearance are easily acquired, and should be the first steps mastered. As almost every business letter is now written on a typewriter we will assume in the discussion that follows that such a method of expression is the one at your command. The business man, in writing his own letters or in dictating, should insist on a uniform style of expres- sion and appearance. A uniform margin should always be followed. The best margin on a typewriter is ten spaces, and all paragraphs should be indented the same distance from the margin of the letter, as the letter is to the outside of the letter sheet edge. Notehead paper should always be written in single space. In using long letterheads a short letter should always be written double space. The spaces between paragraphs depend a great deal on the length of the letter, but ordinarily twice the spacing distance should be observed between paragraphs as that used in the letter itself. A one-page letter is always desirable for ordinary letters. For that reason single spacing proves most effective and useful. It is a great annoyance to the reader of a business letter to have a long letter run Hints on General Letter Writing 187 over to a second page. It is harder to read, harder to answer and more troublesome to file. Cultivate the habit of saying all you have to say on one page. This is possible in all but very rare excep- tions. The exceptions are usually occasioned by the violation of one of the most important rules now being enforced by business houses of any consequence. This rule is that no business letter shall discuss more than a single subject. It is an excellent plan to learn and practice this rule. If you wish to write to one person on a number of subjects write a single letter covering each subject. This is particularly important in the collection business. In the latter it is exceedingly bad form to write about a dozen or more claims in the same letter. Write a dozen short notes if necessary, but learn to write about one subject and only one subject in a single letter. By following this rule the general mastery of good business letter form is much easier. It is a simple matter to acquire the habit of correct paragraphing and correct punctuation when but a single subject is discussed in one letter. A paragraph should deal with one single phase of the subject under discussion. A paragraph may consist of but one sent- ence. If that sentence tells all you wish to say about one certain portion of your subject make a paragraph of it, but do not start a new paragraph until a logical stopping place is reached. By this do not understand that a letter dealing with one subject should be a one paragraph letter. Long paragraphs are not desirable, and at times should be cut in parts rather than have a letter both unsightly and hard to read. It is much easier to correctly paragraph your letters by practicing with short sentences. A sentence must not deal with more than a single idea. Long sentences, 188 Collectinsr bv Letter to except when composed by experts, are invariably in- volved. An involved sentence is worse than none at all, because a confused meaning is worse than none. Confine yourself to simple short sentences, and be very sure in any single paragraph that each sentence follows the other logically, carrying out the meaning with no confusion. One of the most common errors leading to confusion of meaning is changing the tense of verbs. A rule to be thoroughly learned is that in any sentence but one tense is to be used throughout. You must not say, "I talked with the cashier and he says the account bal- ances." Say, "I talked with the cashier and he said the account balanced." In practicing and even in actual letter writing you should never be without a dictionary. Never use a word whose meaning is not absolutely clear to you. In practicing never fail to look up any word whose mean- ing confuses you. In practice never use a word you are not sure of, and if no means of investigation are convenient use some other word you know answers the purpose. Practice, and practice alone, assures proficiency, and it is well worth hard work and a great deal of it, for every business man is forced to depend on good letters to get business, to keep it, and to expand it. The Close of a Business Letter. Having discussed the elementary requirements of a proper introduction, as well as the essential points to be considered in relation to the body of a good business letter, we will discuss a few well recognized principles in a manner sufficiently explicit to make unnecessary any future reference to the close of general business correspondence. In it we will assume that two classes of letters mainly concern you. One is composed of Hints on General Letter Writing 189 communications to friendly correspondents, and the other to indifferent or hostile recipients. Unless, a letter is for the purpose of driving home an unpleasant truth or with the avowed object of en- forcing an unwelcome demand it should be the object of the writer to close it as courteously as possible. In remembering a letter or being moved to act on account of it the emphasis depends on the skill displayed by the writer in the body of any communication. A personal feeling of either good will or hostility may be most consummately effected through a skillful wording of the closing paragraph. As last impressions are ordin- arily most persistent it is desirable to cultivate a style of closing that will insure a favorable after-effect. All good business letter writers for this reason will be found employing a form of closing tending to ac- centuate this result. For the most part it is considered purely formal and conventional to close a letter by some courteous set phrase. The real basis for the polite ending is so much more vital than conformity to convention that the excuse for it should be under- stood and employed to the full, that a more effective result may consistently obtain. With this thought in view cultivate a form of close as individual as possible and make it a point to inject as much real cordiality in your last paragraph as the subject or its importance will justify. As the salient points to be discussed in any letter should be succinctly outlined in the body a single sentence is sufficient to courteously end any business letter. It is wise to avoid the habit of using a single set phrase, however appropriate it may seem for ordinary occasions. Vary your closing paragraphs as much as possible, and refer to some idea contained in the body wherever feasible. The following are good examples of the idea men- tioned : 190 Collecting by Letter "Assuring you of my desire to co-operate in every possible way to perfect our mutual interests in this question, I remain, Yours respectfully." "Trusting that you fully appreciate my de- sire to forward your best interests in this settle- ment, I hope to receive an early authorization to continue the campaign outlined. Yours truly." "You may be assured of my desire to bring this discussion to a speedy termination that your wishes may be fully realized without prejudice to my own conception of the rights at issue. Respectfully." "I wish to express my appreciation of your efforts to bring about such a satisfactory realiza- tion of our joint plan, and at the same time place at your disposal any future assistance it may be within my power to afford. Yours respectfully." Be as simple and direct in your closing paragraph as possible. In many cases the subject discussed is neither pleasant nor open to any proffers of good will or co-operation. In such cases close your letter in a diplomatic fashion. It is often possible to create a feeling of respect and even good will by expressing a regret that no occasion for either appears to be war- ranted. An example of such an ending is expressed by such a close as the following: "I regret that' your position on this subject pre- vents a more cordial reception of my gratitude, and trust that future developments will fully justify my reluctance to accede to your present request. Yours truly." "Much as I condemn the inevitable results of such a standas that taken by you I hope that on future occasions we may find more grounds in common. Yours truly." Hints on General Letter Writing 191 The idea to be emphasized in these two forms of closing is that in the absence of a direct purpose to antagonize for a well-considered end every letter is the better for a courteous expression in the final sentence. Even a non-committal, conventional close is preferable to a brusque or careless winding up of any letter of the slightest importance. Practice this, bearing in mind that ordinary courtesy does not mean a flattering "jolly" or an empty phrase. Inject a little real good will and the results will well repay the effort. The matter of a graceful or well-turned close is a matter of practice, but as in the opening paragraph, there are certain forms and usages that should be learned. The most simple rules should goven the "last words." A business letter should ordinarily end with one of a very few well recognized combinations of two words. "Yours truly," "Yours respectfully" or "Re- spectfully" are always safe. The use of any other phrase is not ordinarily either good form or safe. Neither of these three really mean anything, nor should you attempt in so closing every business letter to con- vey any special meaning. You are supposed to say everything in the letter itself. Never use "Yours" or "Truly." Under no circum- stances use "Your obedient servant," or "Ever yours," or any one of some hundreds of similar fanciful or bombastic endings. Confine yourself to the three men- tioned. "Yours truly," "Yours respectfully" or "Re- spectfully" may always be used with perfect good form, and only in very rare cases may any other be consistent with good taste or good form. In a strictly formal business letter where you are not 192 Collecting by Letter writing as an individual, but rather as a representative of a firm or business, «ign THE BROWN CO. Per W. A. Brown, DepartmenfManager. In such case sign the full name of the business and indicate your official capacity. If writing in a certain capacity for any business where it is desirable to have an answer directed to you be very certain that your name is sufficiently legible' to allow perfect direction. If you are writing strictly for the firm it is not at all necessary to sign your name in any capacity, the signa- ture, "The Brown Co.," being sufficient, or your initials as "Per W. A. B." serving ample identification. In order to identify the letter at some future date, as well as the stenographer, it is well to always have the typist place in the loWer left hand corner her initials follow- ing your own, as "W. A. B.-G. M." Letters between friends dealing strictly with busi- ness-subjects or business letters in which no formality is desired are sometimes ended by the name and" ad- dress. In such cases the opening is a simple saluta- tion, as, "Dear Mr. Brown : — " At the close, "Sincerely yours," or "Yours sincerely," is supplemented in the lower left hand corner by : To Mr. James Brown, \%5 Dearborn Sb, Chicago, Illinois. W. A. B.-G. M. Such closing. forms are unusual, and while perfectly correct, are not as desirabre for general correspondence as the usual forms of closing above outlined. Never write or stamp at the close of a letter, "Dic- tated but not re-read." It is the height of business discourtesy, although employed by many firms that Hints on General Letter Writing 193 should know better. It implies one of three things. First, that the writer wishes to avoid possible respon- sibility for his statements, by leaving a loophole through which some stenographer may be forced to take the blame; second, that the writer considers the letter of too little importance to correct, or third, that the writer wishes to impress the recipient with an exaggerated sense of the former's tremendous corre- spondence. Neither is flattering or in good taste. In closing this discussion of the elementary essen- tials of business correspondence it i^ fitting to mention the favorable effect of a neatly worded, carefully stamped letter. Fold every letter with scrupulous accuracy, see that it is properly addressed before seal- ing, and place the stamp in the upper right hand corner where it belongs. Ragged folding, careless enclosures and stamps askew in the middle of an envelope create an unfavorable impression before a letter is even opened. Every letter should serve a purpose, or not be written. That purpose should be to strengthen the influence of the writer, and to that end strive to add, rather than detract, from the sum total of your influence. 194 Collecting by Letter Chapter XXXI. Collecting Through Skilled "Forwarders." The most efficient body of forwarders in the United States and Canada, without any question, is the Co- operative Bureau of The American Collection Service. Its organization and development will be described in this chapter, in connection with a. brief review of the essential factors of the forwarding situation. Bodies of forwarders are, of course, necessary ele- ments in the collection field for the handling of outside or foreign business. There are a number of forward- ing mediums; many of them composed exclusively of attorneys, others of collecting and reporting agencies, and a number combining attorneys and agencies. Lists of these are published periodically. Some are bonded, others are not. The only purpose accomplished by bonding is to guarantee the safety of all funds actually collected, but there can be no real guarantee as to efficiency of service. The collection service afforded through the average forwarders' lists is not of a very high grade. One reason for this lies in the fact that representation is purchasable for a certain sum, cover- ing a stated period, without the necessity of complying with any requirements except of a general nature. It should not be inferred from this that there are no good forwarding lists. There are, but their number is small in comparison with the whole. A compendium of those which can be regarded as reliable is appended to Chapter Five. Collecting Through Forwarders 195 The unsatisfactory general situation as to the hand- ling of forwarded business by lists of attorneys and others, was impressed forcibly upon the Shryer Mer- cantile Agencies of Chicago and Detroit. Both offices had large volumes of foreign business, and the poor results from the use of forwarders led to the formu- lation of a plan whereby absolutely dependable service could be secured. The strength of the plan was in its entire simplicity. It was to train men, through correspondence instruction, in the elements of scientific collecting, to act as foreign representatives for the Shryer Mercantile Agencies. These men were to be taught the successful Shryer collection methods, so as to insure their efficiency in the collection of accounts entrusted to them. The plan was put into operation in 1907. The original idea of sending students business em- braced making every graduate a correspondent of The Shryer Mercantile Agency, as well as a local collector for his section. At the same time it was designed to handle all forwarding claims for the student body through the same medium. At that time and for several months no adequate conception of the vast volume of this stream of business was entertained. On enrolment every student was sent such business in his city as needed attention for The Shryer Mercantile Agency's clientage. Every student in turn sent in direct all "Foreign" bills needing attention. The large volume of forwarding business secured by students throughout the country soon made this man- ner of "Clearing" unwieldy. It also entailed a certain amount of delay that often interfered with quick and effective action, such as the nature of many important claims demanded. Students and graduates were con- stantly sending in to us direct such an increasing flow 196 Collecting by Letter of business as to make some adequate method' of handling it imperative. The conception of forming a Co-Operative Bureau to receive and handle this busi- ness suggested itself, ^nd plans' for its establishment as a "permanent adjunct to membership in the Service were submitted to students and graduates alike. Their enthusiastic reception of the idea convinced us of the practicability of the suggestion, and a working system was soon adopted. It was decided to afford every student a membership in the Bureau, thus giving him the services of a skilled medium for the collection of all out of town accounts that came into his hands. In order to furnish him with a quick method of getting his claims into action as sopn as received, plans were effected for publishing an "official organ" of the Bureau. This Official Organ was entitled the "Quarterly Dir- ectory," as it was published every three months, with each revision showing the new agencies established since the date of the latest Directory. This plan was continued for over two years and resulted in a reputa- tion for the Bureau that enrolled among its users some of the largest forwarders of collection business in the country, in addition to its constant use by the entire Bureau membership. During the life of the Quarterly Directory the Bureau membership grew so fast in both influence and numbers that a more frequent pubhca- tion became imperative, and in March, 1910, the Directory was changed from a Quarterly to a Monthly. It now appears every month in Business Service maga- zine. Every member represented in the Monthly Directory thus has his business placed before the read- ers of Business Service every month, and through this enviable publicity receives forwarding business the value of which may be well imagined. Business Ser- Collecting" Through Forwarders 197 vice numbers among its subscribers a large number of business firms who take the magazine for no other purpose than to avail themselves of the Directory List, through which they are able to send business and get results more effectively than through any other channel. Every reader of Business Service is entitled to use the List for forwarding purposes, but no one except American Collection Service graduates are entitled to representation in it. Outsiders can not secure the publication of their names in the Directory. Any member failing to give an honest, efficient service at all times can not continue as a representative. No such collection medium can be secured anywhere, and the demand for the current issues of the magazine for it alone completely exhausts every issue a few days after each is published. Representatives secure two-thirds of the commission earned by the forwarder through whom he secures the business, the forwarder being en- titled to one-third. The commissions run from 10 per cent, to 50 per cent., the average commission being 25 per cent. The requirements for Bureau membership and direc- tory representation are exacting to a degree. It is necessary that the student be well qualified in every particular to handle collections of every class and to render prompt, honest and intelligent service. Upon completing the course, every student makes application for membership and representation by filling out a blank which calls for the following : Agency title ; full address, street and number, city, county and state ; four references, including three from clients and one from a bank. He must then affirm with his personal signature, first, that he has actively conducted a collection busi- ness for at least three months. This insures practical 198 Collecting by Letter experience, that the man may know just how to handle the business and that he is equipped to give the right kind of service. Second, he binds himself to acknowl- edge the same day receiised, all collections sent to him through the directory of the Bureau; and third, that he will answer within three days every request for information regarding business sent to him. These insure immediate acknowledgement and prompt re- ports. These features are more important than would appear at first glance. The "good old-fashioned" methods ignored acknowledgments and reports, conse- quently leaving and keeping the creditor in the dark regarding the disposal or progress of his accounts. This unsatisfactory and unbusinesslike element has been eliminated on all business handled through the Co-Operative Bureau. Fourth, he promises faithfully to remit every dollar collected within ten days of its recovery. It is hardly necessary to dwell upon the evil of delayed, and in extreme cases, withheld, remit- tances. Co-Operative Bureau service is singularly free from this factor, not alone because of the stringent requirement to which every member must subscribe, but on account of the fine class of men from whom they are recruited as well. Fifth, he must affirm that he has in his possession no funds belonging to any Co-Operative Bureau member. This needs no detailed explanation, as it is in line with the preceding require- ment. Sixth, he agrees to forfeit representation for any breach of good business conduct in connection with any forwarded business. This final clause is con- strued in a broad sense to cover any infraction of established ideas of business ethics and conscientious operation as well as the preceding regulations. Every issue of the Bureau Directory carries at the head a notice requesting users of the list to notify Collecting Through Forwarders 199 immediately the Complaint Department of any .derelic- tion on the part of a member in the handling of busi- ness sent to him through the Directory. An immediate investigation follows, and if it is found that the Bureau member in question has been at fault on any count, representation is withdrawn permanently. If neces- sary, such further action is taken as may be indicated by the circumstances. Great pride is taken in the fact that complaints have been very few in number and in most cases of a comparatively trivial nature, ad- justed quickly to the satisfaction of all concerned. The high efficiency and prompt, satisfactory collec- tions are due to the fine equipment of the members in ha^•ing been trained by The American Collection Ser- vice system, and the high class of the men themselves. They are interested in the work through publicity in the leading business publications, such as System, and the standard periodicals. The campaign is aimed to attract ambitious and energetic men. Even were the members not disposed to work along recognized busi- ness lines in the handling of accounts sent to them they would be dissuaded from such a course through fear of losing the privilege of representation. As this representation is productive in every case of a large and profitable volume of the best class of collections, it is too valuable a privilege to be risked for slight tem- porary gain of a questionable nature. Every detail of the organization and development of the Co-Operative Bureau has been worked out so care- fully and surely that it has grown to be, without any doubt, the best medium for the United States and Canada on collection business. Every important city and town in the United States is covered, as well as the important points in Canada. The Bureau has established representatives in the following foreign 200 Collecting by Letter countries : Mexico, Philippine Islands, Porto Rico, England, Australia, New Zealand, Bermuda, and stu- dents will shortly be entered to membership from Japan, China, India and South Africa. "The sun never sets on the Co-Operative Bureau." Even though the list is exceptionally thorough as it is now con- stituted, a constant effort is being maintained to in- crease its numbers and the points covered. It is distinctly to the best interests of every business house or person with outside collections to use the list of the Bureau exclusively, as through no other channel is there the possibility of securing as good service. As has been noted above, the list is published in the monthly issues of Business Service Magazine. A regular subscription to the magazine would be advis- able as changes and additions are made each month and to secure the best results it is well to have the up-to-date list at hand for ready reference. It must be remembered, in this connection, that the directory list is only one feature, though important, of the Maga- zine. Each issue contains editorials and ably-written articles on active collection questions, with discussions by experts, and valuable suggestions along every line of collections. Business Service Magazine is edited by W. A. Shryer. The subscription price is $1.00 for the year. Subscription should be sent to the Subscrip- tion Department, Business Service Magazine, 1000 King Building, Detroit, Mich. KF 102l<- S56 Author Vol. Shryer, William A Title Copy Collecting by letter Date Borrower's Name