         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
