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: do we have authority to refund the fines? The AG said yes, with the right legal hook.

The hook is Section 25-1-47(2), which authorizes municipalities to "pay and satisfy any negotiated settlement of a claim or any judgment, fine, or penalty" against the municipality. Mississippi has read Section 25-1-47 as authorizing settlement of valid claims even without a lawsuit being filed. The 2023 Holleman AG opinion summarized the test: the claim has to be (1) bona fide, (2) just, (3) not exempt from liability, and (4) one for which the municipality is legally obligated.

A claim by a person who paid fines that were not theirs to pay, because of a collection-agency error, looks like a paradigm case for Section 25-1-47 settlement. Whether the specific Guntown facts satisfy the four-factor test (was the payment really a mistake? was the resident really not the proper payor?) is a factual determination for the town's governing authority. The AG explicitly declined to make those factual calls.

The opinion is short and clean: yes, the town has authority to refund; here is the statutory hook; the actual decision is the town's.

What this means for you

If you are a mayor or city council member managing municipal collections

Section 25-1-47 is your tool for refunds tied to mistakes, especially mistakes made by third-party collection agencies you contract with. The decision-making structure should be:

1. Investigate the underlying facts. Was the bill correctly addressed? Did the right person pay? Did the right amount get paid? Document what you find.

2. Determine whether a valid claim exists. Is the resident bona fide entitled to the refund? Is the town legally obligated? Are there liability exemptions that would defeat the claim?

3. Vote on the minutes. If a refund is appropriate, the governing authority votes to settle the claim under Section 25-1-47 and authorizes payment.

4. Issue the refund. Pay it out and clean up the collection records.

If you do not vote it through formally, you create State Auditor exposure. The Section 25-1-47 path makes the refund a "negotiated settlement of a claim" rather than a free giveaway.

If you got dunned for a fine that wasn't yours and paid it

Write to the municipality explaining what happened. Request a refund and reference the Stuart II opinion (June 24, 2024) and Section 25-1-47. Provide whatever documentation you have showing you were not the proper payor (proof of residency starting after the fine date, ID showing you are not the named person on the original violation, etc.). The municipality is not required to refund every disputed payment, but if your claim is genuine, the legal authority is there.

If you are a third-party collection agency working for a Mississippi municipality

Address verification and identity verification are critical. Sending dunning letters to addresses where the named debtor no longer lives, and accepting payment from new residents, creates legal liability for the city and reputational liability for you. Build identity-verification steps into your process: confirm the recipient is the named debtor before accepting payment, especially when the address has been associated with multiple residents.

If you are a city attorney drafting a refund resolution

Cite Section 25-1-47(2) and frame the refund as a settlement of a valid claim. The 2023 Holleman opinion supplies the four-factor test (bona fide, just, not exempt, legally obligated). Document each factor on the resolution. Avoid framing the refund as discretionary goodwill, because that frames it as a donation, which would have constitutional problems.

Common questions

Q: What is Section 21-17-1(6) (the third-party collection authority)?
A: It is the statute authorizing Mississippi municipalities to contract with third-party collection agencies for the collection of delinquent fines, fees, and other obligations owed to the municipality. The agency keeps a percentage of what it collects, and the municipality gets the rest.

Q: What is Section 25-1-47?
A: It is a Mississippi statute authorizing the state, counties, and municipalities to settle and pay claims, judgments, fines, and penalties. The authority extends to negotiated settlements without requiring a lawsuit to be filed first. The 2023 Holleman opinion lays out when the authority can be used.

Q: Who decides whether a claim is "valid"?
A: The municipality's governing authority. The AG explicitly does not make these factual determinations. The governing authority has discretion, subject to State Auditor review and ultimately judicial review if it gets challenged.

Q: Can the town also recover the funds from the collection agency?
A: That is a separate question (a contract dispute between the town and the agency) and not addressed in this opinion. If the contract makes the agency liable for verification errors, the town might have a claim against the agency. But the resident's refund right runs against the town, not against the agency directly.

Q: What if the person who paid actually owed the fine but for a different reason?
A: That changes the analysis. The fine "paid in error" framework only applies if the payment was actually a mistake. If the payor owed a different unpaid obligation to the town, the town might be entitled to keep the funds (with appropriate accounting reallocation). Investigate before refunding.

Q: What if the original named debtor (the former resident) shows up later and pays the fine?
A: That is a different transaction. The town would collect the fine from the proper payor and would have already refunded the wrong payor. Make sure your records track that the original obligation has now been satisfied by the right person.

Q: Are there time limits on claiming a refund?
A: The opinion does not address statutes of limitations. General Mississippi limitations periods may apply (usually three years for most contract-style claims). Practically, most municipalities will refund recent mistaken payments without much friction; older claims may face more scrutiny.

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 2023 Holleman AG opinion (Nov. 3, 2023) synthesized the test: "The authority to settle a claim under Section 25-1-47 'does not require the filing of a lawsuit,' but 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."

The cross-references to § 7-5-25 (the AG's prospective-only mandate) and § 21-17-1(6) (third-party collection authority) anchor the procedural and contextual framework.

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