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MAGNOLIA FARM SERVICES, INC. v. TUNICA OIL COMPANY

SEPTEMBER 28, 1983

MAGNOLIA FARM SERVICES, INC.
v.
TUNICA OIL COMPANY, INC.



EN BANC

BROOM, PRESIDING JUSTICE, FOR THE COURT:

Attorney's fees accrued for filing suit on an open account is the chief feature of this suit, appealed from the Circuit Court of Tunica County, the Honorable Elzy J. Smith, circuit judge, presiding. Plaintiff/appellee Tunica Oil Company, Inc., filed suit against Magnolia Farm Services, Inc., defendant/appellant, pursuant to Mississippi Code Annotated 11-53-81 (Supp. 1982), and the jury found for the appellee and awarded an attorney's fee of $3,108.60, which is 25% of the amount owed on the account when suit was filed against Magnolia Farm Services,

Inc. (appellant herein). We reverse.

 Appellee, Tunica Oil Company, Inc., a farm supply merchant, had previously extended credit to appellant (Magnolia) on a 30-day basis, and when appellant's account became several months delinquent in 1981, appellee attempted to contact appellant. Resolution of the issue over the telephone failed, so on February 10, 1982, appellee sent appellant a demand letter (certified mail) pursuant to Mississippi Code Annotated 11-53-81 (Supp. 1982), which letter appellant received February 16, 1982. Mr. Sands, appellee's president, testified that he next heard from appellant on February 20, when appellant's bookkeeper, Marsha Brademan, called. Sands testified that Brademan agreed to send a check for $5,000 within the next four or five days and the balance by March 10. Sands further testified that on or about March 12, appellee attempted to contact appellant but was informed that the bookkeeper was in Texas and had the checkbook with her, but that upon her return the money would be paid. Finally, in April, appellee turned the account over to an attorney for collection.

 Appellant's bookkeeper, Brademan, testified that the conversation in which she agreed to immediately send $5,500 and the balance soon thereafter occurred during the week of April 19. She also testified that the checks aggregating $5,500 were hand-delivered on April 27.

 On April 30, 1982, appellee began this litigation by filing its complaint upon open account with affidavit as to correctness for the remaining balance of $12,434.63. Process upon appellant's registered agent was accomplished May 5, 1982, and on June 7, 1982, appellant forwarded a check to appellee in the amount of $12,467.79, the full amount due plus accrued interest. Telephone conversations between counsel resulted in an agreement that the funds be accepted in liquidation of the account with the understanding that the question of whether appellee was entitled to attorney's fees, and if so the amount thereof, would be reserved for court trial.

 At trial, as to the issue of attorney's fees, appellee's president testified that it had retained its attorney on a contingent fee contract to collect the balance of the account. A member of the Tunica County bar testified that he usually undertook the collection of open accounts on a 1/4th, and sometimes 1/3rd, contingent fee basis. He also testified that a maximum of seven or eight hours would be necessary to complete the task of collecting on an open

 account. The witness charges an hourly rate of $50 to $65 per hour.

 After hearing this testimony, the trial court found that a reasonable fee for an open account of the size involved in the suit would be $3,108.66: 1/4th of the $12,434.63 sued for.

 Appellant first argues that, inasmuch as no judgment for the principal amount due on the account was ever actually rendered, appellee was not entitled to attorney's fees under Mississippi Code Annotated 11-53-81 (Supp. 1982). Enacted by the Mississippi Legislature in 1980, 11-53-81 provides in pertinent part:

 11-53-81. Recovery of attorney's fees in suit on open account.

 When any person fails to pay an open account within thirty (30) days after receipt of written demand therefor correctly setting forth the amount owed and an itemized statement of the account in support thereof, that person shall be liable for reasonable attorney's fees to be set by the judge for the prosecution and collection of such claim when judgment on the claim is rendered in favor of the plaintiff. . . . (Emphasis added).

 Statutory interpretation is the issue before us. 11-53-81 provides two contradictory interpretations which are asserted by each party. According to appellant's view, a plaintiff is not entitled to attorney's fees unless suit is brought for collection of the account, goes through trial, and to final judgment. On this basis it is urged that attorney's fees should not be awarded where subsequent to the filing of the complaint and service of process, but before formal entry of judgment by the court, the defendant tenders payment of the principal amount due on the account. Adopted by the appellee and the court below is the interpretation which results from a broader reading of the statute. According to this rationale, the legislature" intended 11-53-81 as a measure of relief to creditors and states clearly in its contents the time for payment to avoid its action [is] `within 30 days of receipt of written demand therefor.\rquote "*fn1

 Careful reading of 11-53-81 discloses the language under consideration examined in isolation, the first half of the first ...


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