Untitled Texas Attorney General Opinion ( 1961 )

THE A'ITORNEYGENERAL
OF TEXAS
April 4, 1961
Honorable Dan Brazil Opinion No. WW-1033
County Attorney
Angelina County Re: Whether an attorney, In fil-
Lufkin, Texas ing suit in the Small Claims
Court, in behalf of business-
es, corporations and other
people who are able to pay
attorney's fees, etc., would
be considered a collection
agent under Section 2 of
Article 246Ca of Vernon's
Dear Mr. Brazil: Civil Statutes.
We are in receipt of your letter dated February 19,
1961,
requesting an opinion as to whether an attorney, in
filing suit in the Small Claims Court, in behalf of busi-
nesses, corporations and other people who are able to pay
attorney's fees, etc., would be considered a collection
agent under Section 2 of Article 246Ca of Vernon's Civil
Statutes.
With reference to this question, Section 2 of Article
246Ca of Vernon's Civil Statutes reads as follows:
"The Small Claims Court shall have and
exercise concurrent jurisdiction with the
Justice of the Peace Court in all actions for
the recovery of money only where the amount
involved, exclusive of costs, does not exceed
the sum of Fifty Dollars ($50), except that
when the claim is for wages or salary earned,
or for work or labor performed under any con-
tract of employment, the jurisdictional amount,
exclusive of costs, shall not exceed One Hundred
Dollars ($100). Provided, however, that no
action may be brought in the Small Claims Court
by any assignee of such action or upon any
assigned claim or by any person, firm, partner-
ship> association or corporation engaged, either
- .
Honorable Dan Brazil, Page 2 (WW-1033)
primarily or secondarily, in the business of
lending money at interest, nor by any collec-
tion agency or collection agent. Provided
further, however, that nothing in this Act
shall prevent the bringing of any action by a
legal heir or heirs on any account or claim
otherwise within the jurisdiction of these
Courts."
A "collection agency" is defined in Volume 7A of Words
and Phrases as follows:
"A 'collection agency,' which is defin-
ed as a concern which collects all kinds of
claims for others and to whom it renders
accounts, guarantees to use its best endeavors
to collect the claims and to select a competent
and reliable attorney when suit is necessary,
for whose negligence, dishonesty, or unauthoriz-
ed acts it will save the creditor harmless.
McCarthy v. Hughes, 88 A. 984, 985, 36 R.I. 66,
Ann. Cas. 1915 D, 26."
Under Section 2, Article 246oa, Vernon's Civil Statutes,
an attorney is not prohibited from representing businesses,
corporations and other people in the Small Claims Court un-
less the businesses, corporations or other people are engaged
in lending money at interest,and unless the action is upon
any assigned claim or by any collection agency or collection
agent.
If the collection of claims for businesses, corporations,
or other people is a mere incident of the practice of law, an
attorney, in filing suit in the Small Claims Court in behalf
of his client would not be considered a collection agent and
would have every right to represent the businesses or corpora-
tions in the Small Claims Court, if such claims are not exclud-
ed under Section 2. If, on the other hand, a licensed attorney
or attorneys operate a collection agency as an independent
business rather than as a necessary incident to the practice of
law, then, we must hold that the attorneys would be considered
collection agents or owners of a collection agency.
There is a clear distinction between the profession of
law and the business of conducting a collection agency. In
. -
Honorable Dan Brazil, Page 3 (WW-1033)
the case of State Bar of California v. Superior Court in
and for Los Angeles County, 278 Pac. ,432,at page 437, the
Court in its opinion stated:
11t the practice of the law is the'doing or ~per-
harming services in a court of justice, in any
manner depending therein, throughout its various
stages, and in conformity to the adopted rules
of procedure. But in a larger sense it includes
legal advice and counsel, and the preparation of
legal instruments and contracts by which legal
rights ?re secured, although such matter may 01~;
may not be depending in a court.' . . ."
And in the case of Kendrick v. State, 120 So. 142, by the
Supreme Court of Alabama, the practice of law is clearly
distinguished from the operation of a collection agency.
The following is quoted from the opinion of the Court:
II
. . To practice law is to exercise the calling
.
or profession of the law, usually for the purpose
of gaining a livelihood, or at least for gain. To
engage in the business of collecting claims by z-
mand or negotiation out of court is not to practice
law. There is no more necessary relation between
the two than there is between the practice of law
and scores of other things which lawyers, in common
with other folks, must do in order to be able to
follow their different vocations. The act under
consideration, section (d), involves a radical
change of meaning in the collocation of words,
'practice law'. To collect claims out of court,
that is, without recourse to legal remedies, and to
practice law connote very different things to the
lay mind, and we have stated the steps necessary to
the making of a licensed lawyer, in order to show
how broad is the technical difference between the
two. The opinion in Ex parte Cowert, supra, pre-
sents a close analogy. The language of that case
. we think may be fairly paraphrased as follows:
rjo'man . . . declaring that regularly licensed
attorneys alone have authority to practice law,
would for a moment conceive the proposition to
involve an inhibition against the collection of
claims by demand or negotiation out of,,courtby
anyone but a licensed attorney. . . . (Emphasis
added)
Honorable Dan Brazil, Page 4 (WW-1033)
You are, therefore, advised that attorneys representing
businesses, corporations and other people In the Small Claims
Court in actions not excluded under Section 2, Article 246Oa,
are not considered collection agents so long as the collections
are incidents of the practice of law as opposed to an indepen-
dent business for the collection of claims.
SUMMARY
An Attorney who files suit in the Small
Claims Court in behalf of businesses,
corporations and other persons, who are
able to pay attorney's fees is not by
reason of these facts a collection agent
under Article 2460a, Vernon's Civil
Statutes.
Yours very truly,
WILL WILSON
Attorney General of Texas
,A~%~&
Iola Barron Wilcox
Assistant
1BW:mm
APPROVED:
OPINION COMMITTEE
W. V. Geppert, Chairman
W. Ray Scruggs
Grundy Williams
Joe Allen Osborn
Lawrence Hargrove
REVIEWED FOR THE ATTORNEY GENERAL
BY: Leonard Passmore