AGO Opinion 98027
Possession Requirements Under Nebraska Pawnbroker Statutes
DATE: June 19, 1998
SUBJECT: Possession Requirements Under Nebraska Pawnbroker Statutes
REQUESTED BY: James A. Hansen, Director Department of Banking and Finance
WRITTEN BY: Don Stenberg, Attorney General
Fredrick F. Neid, Assistant Attorney General
This is in response to your request for an opinion of the
Attorney General relating to the "possession" requirements for
pawnbroking transactions under Nebraska Statutes. Reportedly, the
transaction you have inquired about involves a lending arrangement
with an automobile pledged as security for the underlying loan.
The lender has not taken actual and physical possession of the
automobile but has taken possession of the automobile certificate
of title. The specific question you pose is whether a pawnbroker
must "have physical possession of an automobile to fulfill the
requirements of 'possession' under Neb. Rev. Stat. § 69-201, or may
a pawnbroker maintain 'possession' by simply holding an automobile
title and nothing more?"
Under the limited facts you describe, we believe that a
pawnbroker is required to have actual possession of the automobile
in order for the lending arrangement to constitute a pawnbroking
transaction under Nebraska law. The term "pawnbroker" is defined
under Neb. Rev. Stat. § 69-201 (1996) to mean:
Any person engaged in the business of lending money upon
chattel property for security and requiring possession of the
property so mortgaged on condition of returning the same upon
payment of a stipulated amount of money, or purchasing
property on condition of selling it back at a stipulated
price, is declared to be a pawnbroker for the purpose of
sections 69-201 to 69-210. (Emphasis added).
In the first instance, the express language of the statute is
looked to in order to determine its meaning. The language of
§ 69-201 is direct and clear, that a pawnbroker is a person engaged
in the business of lending money upon chattel property and
requiring possession of the mortgaged property. In construing a
statute, a court determines and gives effect to the purpose and
intent of the legislature as ascertained from the language of the
statute, considered in its plain, ordinary, and popular sense.
Nickel v. Saline County School District No. 163, 251 Neb. 762, 559
N.W.2d 480 (1997); Becker v. Nebraska Accountability and Disclosure
Comm., 249 Neb. 28, 541 N.W.2d 36 (1995). Thus, application of the
statutory language, taken in its plain, ordinary, and popular
sense, establishes that possession of the mortgaged property is a
requirement of a pawnbroking transaction.
Further, the very nature of a "pawn" transaction is the
delivery of personal property to another in pledge, or as security
for a debt or sum borrowed. And, such transactions are generally
viewed as that sort of bailment when goods or chattels are
delivered to another as security for money borrowed by the bailor.
Delivery and possession of the personal property securing the loan
or debt is the essence of a pawnbroking transaction. While the
courts in Nebraska have not had occasion to consider the question
you have raised, other jurisdictions for the most part are in
unanimity that a pawn transaction requires possession of the
property pledged as security for the loon. See, i.e., Cash Inn of
Dade, Inc. v. Metropolitan Dade County, 706 F. Supp. 844 (S.D.Fla.
1986) (Defining a pawnbroker as one that loans money on the
security of property pledged in his keeping).
You have noted that in one particular case, Blackman v.
Downey, 624 So. 2d 1374 (Ala.1993), the court concluded that
money-lending transactions involving the transfer of automobile
certificates of title for the purpose of giving security are pawn
transactions. This conclusion was reached because the Alabama
Pawnshop Act, Ala. Code 1975 §§ 5-19A-1 to 5-20 (Supp. 1992), did
not exclude automobile certificates of title from the definition of
"pledged goods" under the provisions of the Act. We do not think
the holding of this case is applicable to pawnbroking transactions
in this state. The Nebraska statutes, §§ 69-201 to 69-210, require
possession of the property pledged in a pawnbroker transaction.
Further, the Nebraska statutes do not define the terms "property"
or "pledged goods" so as to include automobile certificates within
the meaning of property for purposes of pawn transactions.
We have noted that the United States District Court for the
Southern District of Alabama has had occasion to consider the
question whether holding automobile certificates of title in
lending transactions constitutes pawn transaction under the Alabama
Pawnshop Act. In Pendleton v. American Title Brokers, Inc., 754 F.
Supp. 860 (S.D.Ala. 1991), the U.S. District Court found that
holding automobile certificates of title as collateral for loans
did not constitute a pawnbroker transaction. The Pendleton court
noted that the defendant in the case did not retain possession of
the collateral as security for its loans but rather makes its money
by renting its customers their own vehicles. Thus, the court found
that the activity engaged in was not that of a bona fide
In view of the statutory provisions and case authorities set
out above, it is our opinion that the possession requirements of
§ 69-201 necessitate actual possession of the chattel property, the
automobile, that constitutes the mortgaged property in a pawnbroker
Fredrick F. Neid
Assistant Attorney General