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JOHN PUTT AND GENEVA PUTT v. RAY SEWELL CO.

DECEMBER 04, 1985

JOHN PUTT AND GENEVA PUTT
v.
RAY SEWELL CO., INC.



BEFORE WALKER, SULLIVAN AND ANDERSON

ANDERSON, JUSTICE, FOR THE COURT:

The appellants, John and Geneva Putt, were held liable for purchases made on an open account. They appeal their liability and the question of whether the appellee is entitled to attorney's fees pursuant to Mississippi Code Annotated, Section 11-53-81 (1972), where there has not been strict compliance with the requirements of that statute. We affirm on the issue of liability and reverse the ruling of the lower court awarding attorney's fees.

John and Geneva Putt operated a discount clothing business called "The Clothes Barn" from 1974 through the latter part of July 1978. The appellee, Ray Sewell Co., Inc., a family owned Georgia corporation, began selling clothing in 1975 to John and Geneva Putt on an open account.

 Sometime in August 1978, John and Geneva Putt allegedly sold the business to their daughter, Becky Melvin McLemore. The store was not advertised for sale and was sold to Becky without written or published notice to any creditors, including Ray Sewell Co., Inc. Becky paid $40,000 for the inventory and assets (less than its actual value)

 with a loan co-signed by her father John Putt. Putt also pledged his own personal $45,000 certificate of deposit as security and gave Becky $1,000 with which to open her store account. No bill of sale was ever executed. There was no written lease agreement between Becky and John Putt, but they had agreed orally that she would pay $300 per month rent after six or seven months. During the entire two and one-half year occupancy of the store, she only paid $300 for rent. John Putt admitted having put his money into the business and having advised Becky in the operation of the business. He was authorized at one time to sign checks on the store account. Geneva Putt periodically assisted Becky in the operation of the store after the sale.

 It is disputed as to whether Ray Sewell Co., Inc. was subsequently orally informed of the sale by John and/or Geneva Putt. Nevertheless, the store became indebted to Ray Sewell Co., Inc.'s company for more than $8,000.

 In January 1981, Becky abandoned the store leaving a note, asking her father to take it over and handle liquidation and whatever final business there might be. John and Geneva Putt then took over the actual operation of the store again and liquidated all the assets. Putt paid certain of the creditors what was due, including $500 sent to Ray Sewell Co., Inc. He then used the remainder of most of the $20,000 earned in liquidation to reduce the indebtedness of his note at the bank.

 In September 1981, the appellee, Ray Sewell Co., Inc. filed suit against John Putt and Becky Melvin McLemore for the amount due, interest, attorney's fees and all costs. John Putt answered separately and generally denied the indebtedness. Becky McLemore did not respond and a default judgment was taken against her on January 19, 1982. On April 20, 1982, the appellee filed a motion to amend and included Geneva Putt, alleging that she was active in the operation of the business.

 At trial, the appellants, John and Geneva Putt, were held liable on the account. After careful examination of the record, this Court affirms on the question of liability. This Court discussed at length the composites of a joint venture in Hultz v. Tillman No. 55,113, decided November 20, 1985, and not yet reported. There we stated:

 What is essential to any intent to form a joint venture is the idea that the parties are engaging in the undertaking with both

 parties owning the venture, with a right of mutual control, and joint obligations and liabilities. Joint Ventures are possible in a myriad of circumstances, as shown by the fertile imagination of entrepreneurs. Usually some capital and some skill is needed, sometimes a great deal of the former and little of the latter is needed, sometimes the reverse, and sometimes both. As a rule there is a venture involved in which there may be losses; as a rule there will be some expenses involved. As joint venturers the parties, having a community of interest, ownership and control in the undertaking, would most naturally have some discussion and understanding of some sort on expenses and possible losses, how they shall be borne and repaid.

 Obviously, John Putt provided the capital and advice, while Becky and Mrs. Putt provided the skill and labor needed in the actual operation. Putt also invested money to help meet expenses and certainly suffered loss in the failure of the business. There was more than sufficient evidence for a reasonable jury to find the existence of a joint business venture between the parties.

 The more troublesome issue is that of attorney's fees. The appellee made demand for payment upon the appellant, John Putt, by sending him a copy of the declaration and itemized statements of account via certified mail the day after the complaint was filed against him. Geneva Putt personally received no such demand at all.

 After the jury verdict in this cause, the appellee moved orally for attorney's fees to be set by the court pursuant to MCA 11-53-81 (1972). Over appellants' objection a hearing was conducted by the court wherein the appellee presented proof of reasonableness of the fees and notice to John Putt. Following the hearing the ...


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