Imagine a customer (John Doe) enters a pawn store (Ricke’s Pawnshop) to borrow money on a Rolex watch. After following the procedures required by state and federal laws, Ricke’s Pawnshop accepts the watch into pawn. Ricke’s issues John Doe a pawn ticket, tenders the loan amount, and safely stores the watch in pawn.
Prior to expiration of the redemption period, Bob Smith calls a local detective (Det. Good) and reports that his Rolex has been stolen. Det. Good reviews Ricke’s Pawnshop’s recent reporting records and sees a pawn transaction for a Rolex watch.
Within minutes, Det. Good arrives at Ricke’s pawnshop and demands to see the “stolen Rolex.” The manager of Ricke’s Pawnshop shows the watch to Det. Good who determines that it matches the one that was reported stolen.
Det. Good does not have a warrant, a police report, or even an item number, but he demands that the manager give him the pawned Rolex so he can give it to the “true owner,” Bob Smith. The manager protests and is threatened with arrest for obstruction of justice.
Faced with the options of going to jail or losing an item out of pawn, the manager decides to hand over the Rolex. Det. Good walks out into the parking lot and hands the watch to Bob Smith who is conveniently waiting for “his Rolex.” No police report is ever filed, no investigation or indictment takes place, and the pawn store has no chance for restitution. Further, Ricke’s must now be concerned about the customer, John Doe, returning to get the Rolex out of pawn.
No Court ever determined the true owner of the Rolex. Det. Good was the judge, jury, and executioner right there in the parking lot.
The manager of Ricke’s Pawnshop did not know that the store has a constitutional right to due process and that Det. Good cannot seize the watch and give it back to the person he believes to be the true owner. The manager did not realize that federal and state courts have consistently recognized that pawnbrokers have constitutionally protected property rights and security interests in the items they take into pawn.
As a result, Ricke’s Pawnshop had its due process rights violated, lost potential profits, has no chance for restitution, may have to deal with an angry customer, and is exposed to potential liability.
Know Your Rights
Unless pawnbrokers know how federal laws affect them, they will continue to face problems similar to Ricke’s Pawnshop with no recourse and no plans for dealing with such situations. As a legitimate business with constitutionally protected property and security interests, pawnbrokers have loaned money to pledgors for the items received in pawn. Releasing pledged property to anyone deprives the pawnbroker of his property and his security interest in the item.
In addition to the protections afforded under the Constitution, numerous other federal laws affect pawnbrokers. The breadth of federal regulation of the pawn industry has grown at an alarming rate.
The book Federal Laws Affecting Pawnbrokers can be purchased at lawofpawn.com. It gives information that helps pawnbrokers understand and comply with the laws affecting them and arm themselves with the protections afforded by these laws.
Kurt A. Offner Attorney at Law
Offner, Scott & Inzina, APLC (504) 264-1057