Can a Mississippi town refund municipal fines that a third-party collection agency mistakenly collected from the wrong person?

Plain-English summary

The Town of Guntown contracts with a third-party collection agency to collect delinquent fines under Mississippi Code Section 21-17-1(6). The agency sent a collection letter to a property address, addressed to a former resident who used to live there. The current resident at that address (a different person) received the letter, and for whatever reason paid the delinquent fines. The collection agency forwarded the funds to the town. Then someone figured out the letter was supposed to go to the former resident, not the current one, and the current resident asked for a refund.

Town counsel asked the AG whether the city has authority to refund fines collected under Section 21-17-1(6) that were paid by mistake. The AG said the town has authority to settle valid claims under Section 25-1-47, but the specific factual question is the town's to answer.

Section 25-1-47(2) authorizes a municipality, in the discretion of its governing authorities, to "pay and satisfy any negotiated settlement of a claim or any judgment, fine, or penalty." The opinion adopts the test from the 2023 Holleman opinion: settling a claim under Section 25-1-47 "does not require the filing of a lawsuit," but the claim must be valid, meaning bona fide and just, not exempt from liability, and one for which the city is legally obligated.

The AG expressly declined to decide whether the Guntown payment was actually a mistake or whether the resident has a valid claim. Under Section 7-5-25, the office opines only on prospective questions of law, cannot validate or invalidate past action, and does not make factual determinations. So whether this claim can be settled is left to the town's governing authorities.

What this means for you

Mayors and city council members

The opinion holds that the town has authority under Section 25-1-47 to settle valid claims, which can include refunding mistakenly paid fines, once the governing authorities determine the town is legally obligated for the claim and the claim is not exempt from liability. It does not decide whether the Guntown payment was a mistake or whether this resident has a valid claim; the AG calls that a factual determination for the town's governing authorities and outside the scope of an opinion.

Residents who paid a fine in error

For a resident in this position, the opinion confirms the town has a legal mechanism (Section 25-1-47) to refund mistakenly paid fines, but it leaves the factual question, whether a given payment was a mistake and whether the claim is valid, to the town's governing authorities. The AG made no finding on those facts.

Municipal attorneys

The opinion identifies Section 25-1-47(2) as the settlement authority and adopts the Holleman standard for a valid claim: it must be bona fide and just, not exempt from liability, and one for which the city is legally obligated, and settlement does not require that a lawsuit be filed. Under Section 7-5-25, the AG opines only on prospective questions of law and neither validates past action nor makes factual determinations, so it left the application of that standard to the town.

Common questions

What is Section 25-1-47?
The opinion describes it as the authority for a municipality to pay and satisfy a negotiated settlement of a claim, judgment, fine, or penalty. The AG, following Holleman, reads it to allow settlement of a valid claim without first filing a lawsuit.

Did the AG decide the Guntown resident gets a refund?
No. The AG said whether the fine was paid in error and whether the resident has a valid claim is a factual determination for the town's governing authorities, outside the scope of an official opinion under Section 7-5-25.

Who decides whether a claim is valid?
The municipality's governing authorities. The opinion holds that once the city determines it is legally obligated for the claim and the claim is not exempt from liability, it can refund or settle the claim under Section 25-1-47.

Does settling a claim require a lawsuit first?
No. Quoting Holleman, the opinion states the authority to settle a claim under Section 25-1-47 "does not require the filing of a lawsuit," provided the claim is a valid one.

Can the town recover the funds from the collection agency?
The opinion does not address that. It answers only the town's authority to refund a mistakenly paid fine under Section 25-1-47.

Background and statutory framework

Section 25-1-47(2):

Any municipality of this state is hereby authorized and empowered, within the discretion of its governing authorities, to pay and satisfy any negotiated settlement of a claim or any judgment, fine, or penalty which may be made, assessed, or levied by any court against any municipal agent, officer, servant, employee, or appointee as a result of any actions of such municipal agent, officer, servant, employee, or appointee while acting as such.

The opinion quotes the 2023 Holleman opinion (Nov. 3, 2023) for the standard: the authority to settle a claim under Section 25-1-47 "does not require the filing of a lawsuit," but the claim must be valid, "i.e., both bona fide and just, not exempt from liability, and for which the City is legally obligated."

The opinion also relies on Section 7-5-25 (the AG opines only on prospective questions of law and cannot validate or invalidate past action, citing the 2008 Magee opinion) and notes the delinquent fines were collected under the third-party collection authority in Section 21-17-1(6).

Citations

• Miss. Code Ann. § 21-17-1(6)
• Miss. Code Ann. § 25-1-47
• Miss. Code Ann. § 25-1-47(2)
• Miss. Code Ann. § 7-5-25
• MS AG Op., Holleman (Nov. 3, 2023)
• MS AG Op., Magee (Aug. 29, 2008)

Source

• Landing page: https://attorneygenerallynnfitch.com/divisions/opinions-and-policy/recent-opinions/
• Original PDF: https://attorneygenerallynnfitch.com/wp-content/uploads/2024/06/A.Stuart-II-June-24-2024-Refunding-Fines-Paid-in-Error.pdf

Original opinion text

June 24, 2024
Andrew W. Stuart II, Esq.
Attorney, Town of Guntown
Post Office Box 1266
Tupelo, Mississippi 38802-1266
Re: Refunding Fines Paid in Error

Dear Mr. Stuart:
The Office of the Attorney General has received your request for an official opinion.

Background
According to your request, a citizen received a letter from a third-party collection agency that contracts with the city of Guntown ("City") to collect delinquent fines pursuant to Mississippi Code Annotated Section 21-17-1(6). The citizen paid the delinquent fines to the collection agency, who then rendered the applicable funds to the City. It was later discovered that the letter was addressed to the former resident at the payor's address.

Question Presented
Does the City have the authority to refund fines collected under Section 21-17-1(6) that were paid by mistake?

Brief Response
A municipality has the authority to settle valid claims pursuant to Section 25-1-47 if the municipality determines that it is legally obligated for the claim and the claim is not exempt from liability. Whether the claim for the alleged mistakenly paid fines described in your request can be settled pursuant to Section 25-1-47 is a factual determination to be made by the governing authorities of the City and is outside the scope of an official opinion.

Applicable Law and Discussion
Pursuant to Section 7-5-25, this office may only opine on prospective questions of law. An Attorney General's opinion can neither validate nor invalidate past action. MS AG Op., Magee at *1 (Aug. 29, 2008). Further, we do not make factual determinations by official opinion. Thus, we offer no opinion on whether the referenced fine was paid in error or whether the citizen has a valid claim against the City as further discussed below.

Section 25-1-47(2) provides:

Any municipality of this state is hereby authorized and empowered, within the discretion of its governing authorities, to pay and satisfy any negotiated settlement of a claim or any judgment, fine, or penalty which may be made, assessed, or levied by any court against any municipal agent, officer, servant, employee, or appointee as a result of any actions of such municipal agent, officer, servant, employee, or appointee while acting as such.

While the authority to settle a claim under Section 25-1-47 "does not require the filing of a lawsuit," the claim must be a valid one, i.e., both bona fide and just, not exempt from liability, and for which the City is legally obligated. MS AG Op., Holleman at 2 (Nov. 3, 2023) (internal citations omitted). Once the City makes the factual determination "that it is legally obligated for the claim and such claim is not exempt from liability," the City can refund or settle the claim for the alleged mistakenly paid fines pursuant to Section 25-1-47. Holleman at 2 (internal citations omitted).

If this office may be of any further assistance to you, please do not hesitate to contact us.

Sincerely,
LYNN FITCH, ATTORNEY GENERAL
By: /s/ Beebe Garrard
Beebe Garrard
Special Assistant Attorney General