The Power Of Pattern

Some years ago, I objected to a person’s discharge in bankruptcy on the ground that he had committed fraud in submitting his credit application. The application was submitted to the creditor on a pre-printed form that had lines for revealing all debts at the time the loan was made. When applying for credit he revealed two or three debts only, but when the note was not paid, he produced a financial statement with numerous other debts that were not disclosed when the loan was made. The man testified at trial that several years before, when the application was submitted, he told the person who approved the loan that not all debts were reflected on the application because there was no room on the form.

I state this example for all business people to make a point. If this loan officer tells the truth, she must testify that she has no recollection of making this loan or taking this application, unless by some miracle she remembered. In this case, she did not. How can her testimony be used to prove her employer’s case that this man intentionally omitted disclosing a pot full of additional debt?

The answer is magic, and it is the only answer that can be given. She must be able to truthfully say that, “We have a standing policy (hopefully in writing) that no application will be accepted unless all debts are revealed. If someone tells me there is not enough room on the form to list all debts, I obtain a separate sheet of paper and ask him to disclose additional debts on that sheet. That is the rule and I never vary from the rule.” The above statement is the only answer that can be given if that witness is to have any credibility on this issue at all.

If you are a notary, you have been asked a dozen times to notarize something for someone who has traveled out of town and left behind a signed document for you to notarize because he could not find a notary in the middle of the night. That person probably has no idea that he has asked you to vary a rule, and in fact, to break the law. Particularly in real estate, you are not likely to be challenged about a notary on a document until years after the fact. Unless you only take acknowledgments occasionally, you are not likely to remember a particular instance that happened years before. The only way you will ever defend yourself from an allegation that a notary was improperly placed on a document is to be able to truthfully say that you know the rule, you know the law, and you do not vary from the rule, even for your best client or friend.

Witnesses are required when some documents are signed. A witness must be in the room and be aware of the action when the document is signed. Countless times I have had parties to a document tell me that there were no witnesses when the document was signed, even though later it shows up signed by two witnesses and notarized. The lack of witnesses makes a deed void. Those who make a practice of calling in witnesses or notaries after the documents are signed are inviting disaster. That is especially true if the witnesses (or notaries) are not at any time even present in the same room with the signer. Better, years later, to be able to truthfully say, “I know the rule and I know it was followed in this instance because I never vary from the rule.”

Your fax procedure should be in writing. The courts have dealt, sometimes badly, with questions of whether a page was sent, presumably received, or sent but not received. Have a written policy. Your only defense may one day be that you have that policy and that you do not vary from the policy.

One other reminder: I think I will remember what we talked about – if we talked this morning. Before that, you take your chances. After time has passed, unless you record all of your conversations, there is only one defense to someone who thinks you were untruthful. That is to say with credibility that, “I respect your memory of that, but I have a personal rule about lying. I know I did not lie to you because I do not vary from the rule.”

Without meaning to sound maudlin, maybe who we are is decided by what rules we follow, and how willing we are to make exceptions.

Good luck with your journey.

Mike Chesser, Chesser and Barr, 1201 Eglin Parkway, Shalimar, FL 32579