Court Opinion

ID: 9630694
Source: CourtListenerOpinion
Date Created: 2023-08-22 10:17:53.774395+00
Date Added: 2024-06-11T18:07:41.769759
License: Public Domain

Donald L. Corbin, Justice, dissenting. The majority holds that Ark. Code Ann. §§ 18-27-202 and -203 (1987) are un-constitutional as applied to Appellant Big Daddy’s Pawn Shop in mandating the Pawn Shop to return pawned, stolen property to its true owner, Appellee Ken Jameson, before a judicial determination of ownership had been made. In so holding, the majority concludes that (1) the Pawn Shop had an enforceable property interest as against the true owner, (2) that Jameson was a state actor, and (3) that the trial afforded to the Pawn Shop in the district court did not satisfy the requirements of due process. I disagree with these conclusions, and I respectfully dissent. In the first place, I disagree with the majority’s conclusion that the Pawn Shop had an enforceable interest in the stolen property, even as against the true owner. In my opinion, this conclusion conflicts with this court’s well-established law that a purchaser of stolen property, even if he acts in good faith, acquires no interest in the property against the true owner. As far back as 1853, in Phelan v. Dalson, 14 Ark. 79, this court recognized this principle: [I]t is clear that where property has been obtained from the owner by a felonious act, his unqualified ownership is not in the least changed, and he may peaceably take it, in whose hands soever he may find it. Id. at 82-83 (emphasis added) (citing Long on Sales, page 166-68, and cases cited therein). See also Russell v. Brooks, 92 Ark. 509, 122 S.W. 649 (1909). This principle was reinforced in Eureka Springs Sales Co. v. Ward, 226 Ark. 424, 290 S.W.2d 434 (1956), which held that the appellant was liable in conversion to the true owner for selling stolen cattle. In so holding, this court observed: The general rale — as regards all personal property except money and negotiable paper — is, that a purchaser from a thief acquires no title against the true owner, in the absence of limitations and estoppel (and neither of these is involved in this case). Id. at 427, 290 S.W.2d at 436 (emphasis added). See also Superior Iron Works v. McMillan, 235 Ark. 207, 357 S.W.2d 524 (1962) (holding that this state’s law is clear that title to stolen property remains in its rightful owner). This court then went on to cite the above holding in Phelan, as well as the following black-letter law: Even though such a purchaser may be treated as having title and the right to their possession as against everyone but the rightful owner, a sale by the thief or by any person claiming under the thief does not vest any title in the purchaser as against the owner, though the sale was made in the ordinary course of trade and the purchaser acted in good faith. Eureka Springs Sales, 226 Ark. at 428, 290 S.W.2d at 436-37 (emphasis added) (quoting 42 Am. Jur. 227). More recently, our court of appeals has reiterated this legal principle. In Midway Auto Sales v. Clarkson, 71 Ark. App. 316, 318, 29 S.W.3d 788, 789-90 (2000), the court of appeals cited this court’s decision in Eureka Springs Sales as standing for the proposition that “[a]bsent exigent circumstances, one who purchases from a thief acquires no title as against the true owner.” See also Buck v. Gillham, 80 Ark. App. 375, 96 S.W.3d 750 (2003); Beverage Prods. Corp. v. Robinson, 27 Ark. App. 225, 769 S.W.2d 424 (1989). The majority omits any mention of these holdings and, instead, relies on cases from other jurisdictions. In my opinion, those cases are factually distinguishable, in that they involve deprivations of the pawnshops’ property interests by the police or other governmental entities, not by the true owner. Only one of the cases cited, Rassner v. Federal Collateral Society, Inc., 299 Mich. 206, 300 N.W. 45 (1941), involved the true owner attempting return of the property. Even there, however, the government action was involved, in that a search warrant was issued authorizing immediate seizure of the stolen property by the police. The pawnshops in those cases were entitled to due process prior to being deprived of the property because their right to possession was superior as against everyone in the world, including the police, but the rightful owner. The distinction I make based on whom is seeking the return of the property was also made in two of the cases that the majority cites. In Wolfenbarger v. Williams, 11A F.2d 358 (10th Cir. 1985), the pawnbroker, Wolfenbarger, brought suit against three police officers, the city’s police department, the city itself, and the prosecuting attorney and his assistant prosecutor. The pawnbroker alleged that the defendants had violated her due-process rights by seizing allegedly stolen property from her without first affording her a hearing. In ruling in favor of the pawnbroker, the Tenth Circuit acknowledged Oklahoma law that, like ours, provided that (1) no one can confer a better title than he has, and (2) since the true owner of property cannot be divested of his or her ownership by a thief, “even an honest pawnbroker cannot hold stolen property as against the true owner.” Id. at 361 (emphasis added) (citing Adkisson v. Waitman, 202 Okla. 309, 213 P.2d 465 (1949)). These general principles did not mean that the pawnbroker had no constitutionally protected rights in the property as against the government defendants. The Wolfenbarger court did not stop with this analysis. It went on to implicitly hold that although the pawnbroker had an enforceable property interest against the government defendants, she would not have had an enforceable interest in the possession of stolen property against the true owner. This conclusion is apparent from the court’s discussion of the Oklahoma Supreme Court’s holding that even one who acquires stolen property from a thief could not hold the property against the true owner, but such purchaser “has a ‘qualified possessory interest’ and has ‘lawful possession against all the rest of the world.’ ” Id. at 361 (quoting Snethen v. Oklahoma State Union of the Farmers Edu. & Coop. Union, 664 P.2d 377, 381 (Okla. 1983)). The court then recited the Oklahoma Supreme Court’s distinction of “legal” and “lawful” property interests: A legal interest is enforceable against the whole world. A good-faith purchaser for value acquires an interest that is lawful and enforceable against all the world but the legal owner. Although it is only a qualified possessory interest, it is lawful and enforceable to a very large extent. Id. at 362 (emphasis added) (quoting Snethen, 664 P.2d at 381). Based on this discussion, I believe that had the dispute been between the pawnbroker and the true owner, rather than the government, the Wolfenbarger court would have concluded that the pawnbroker did not have an enforceable interest in the stolen property. In another case cited by the majority, Wacksman v. Harrell, 174 Ohio St. 338, 189 N.E.2d 146 (1963), the Ohio Supreme Court invalidated city rules allowing the police to sequester and seize allegedly stolen property from a pawnbroker without a proper and valid warrant. In so holding, however, the court noted that “[i]t is well established that one who purchases or acquires property from a thief in good faith has a right to the possession thereof against everyone except the rightful owner.” Id. at 340, 189 N.E.2d at 148 (citations omitted). The court also noted that should the pawnbroker wish to contest the alleged true owner’s title to the property, “the pawnbroker is entitled to test ownership and possessory rights in a civil action if he so elects.” Id. at 342-43, 189 N.E.2d at 150. In the present case, it is the property’s true owner, not the government, that seeks return of the property from the Pawn Shop. Under our long-standing case law, the Pawn Shop cannot acquire any interest in stolen property, even if it purchased the property in good faith, as against the true owner. I would agree with the majority’s holding that the Pawn Shop was entitled to due process based on its possessory interest had the issue been the Pawn Shop’s interest versus that of the police. However, because the Pawn Shop cannot acquire any interest, by possession or title, in the stolen property as against the true owner, there is no property interest for which due process would apply. The second point on which I dissent is from the majority’s conclusion that Appellee Jameson is a state actor due to his “joint participation” with the police in attempting to have his property returned. Apparently, this joint participation results from Jame-son’s actions in (1) reporting the theft of his property to the police, and (2) relying on the police to find the property and then alert him when it was found. Under this holding, any citizen who files a police report and then expects the police to do its job automatically becomes a state actor, for purposes of determining whether procedural due process is required. The implications of this holding are obviously far-reaching. Finally, I disagree with the majority’s conclusion that sections 18-27-202 and -203 are unconstitutional as applied to the Pawn Shop, because the Pawn Shop was not provided due process prior to being deprived of its possessory interest in the stolen property. As far as I can discern from the majority opinion, the act that impaired the Pawn Shop’s interest was not the hold placed on the property by the police, but rather, was Jameson’s act of executing an affidavit and presenting it to the Pawn Shop. Indeed, the majority takes great pains to state that it does not conclude that the police’s hold, in and of itself, deprived the Pawn Shop of its use or possession of the property. If the hold itself does not constitute an impairment, however, it is difficult to understand how the mere act of presenting an affidavit combined with this non-impairing hold constitutes an impairment. To the contrary, Jameson’s affidavit apparently had no impact-on the Pawn Shop’s interest, given the fact that it continued to possess the property. In reality, both the police’s hold and Jameson’s affidavit had no more impairing effect than a pretrial temporary restraining, which could have legitimately been issued by any court to maintain the status quo until ownership could be determined. Thus, in my opinion, there was no impairment resulting from Jameson’s actions or the police’s hold until after the issue of ownership was adjudicated in district court, when the court ordered the Pawn Shop to return the property to Jameson. As such, I cannot agree that the Pawn Shop did not receive due process prior to being deprived of its interest in the property. The facts of this case are distinguishable from those in Fuentes v. Shevin, 407 U.S. 67 (1972), Wolfenbarger, 774 F.2d 358, and Florida Pawnbrokers & Secondhand Dealers Ass’n, Inc. v. City of Fort Lauderdale, 699 F. Supp. 888 (S.D. Fla. 1988). In each of those cases, the police actually seized the property prior to any judicial determination of ownership. Similarly, the holdings in Wacksman, 174 Ohio St. 338, 189 N.E.2d 146, and Rassner, 299 Mich. 206, 300 N.W. 45, are distinguishable in that although the police had not actually seized the property from the pawnbrokers, the laws in question provided for the automatic seizure. I do not believe that the holdings in those cases warrant the holding reached by the majority in this case, that the Pawn Shop’s due-process rights were violated by the application of sections 18-27-202 and -203. Moreover, I believe that the statutes, in general, provide for due process, i.e., an adjudication of ownership, prior to depriving pawnbrokers of any alleged stolen property in its possession. Section 18-27-202 provides that upon presentation of an affidavit of ownership by the true owner, the pawnbroker shall return the stolen property. If, however, the pawnbroker fails or refuses to turn over the property, i.e., because the pawnbroker contests the affidavit of ownership, the owner must file suit against the pawnbroker, where the issue of ownership will be judicially determined. See section 18-27-203(a). Unlike the laws at issue in the cases relied on by the majority, our statutes do not provide for the immediate seizure of the property in the event the pawnbroker questions the affidavit of ownership. Rather, they plainly provide that the owner must seek a determination of ownership from the courts before there may be any deprivation of the property. This clearly satisfies the constitutional requirement of due process. Furthermore, the due process afforded to the pawnbroker is in no way lessened by the fact that section 18-27-203(b) provides a penalty to the pawnbroker (requiring it to pay all reasonable expenses if the true owner is successful in establishing ownership), because such penalty may only be imposed after a judicial determination of ownership. In sum, I must dissent from the majority’s opinion because I believe that the Pawn Shop received due process under the circumstances of this case. In fact, I believe it received more process than it was due, under our well-settled case law that a pawnbroker acquires no interest in stolen property as against the true owner. I completely agree with the sentiment expressed by the Kansas Court of Appeals regarding the risk that pawnbrokers take that property offered as security for a loan is stolen: Because the pawnbroker is the one who deals with the thief, he or she should bear the risk of accepting stolen property. The pawnbroker’s remedy in this case is to find the thief and recover against the thief for breach of warranty of title [.] In Re: Two (2) Bose Speakers, Serial No. 121098, 17 Kan. App. 2d 179, 183, 835 P.2d 1385, 1388 (1992). In my opinion, justice will not be served by remanding this now five-year-old case to afford the Pawn Shop yet another bite at the apple, while simultaneously requiring the true owner, Jameson, who has already been victimized by the theft, to jump through more hoops before he may finally obtain the return of his property. Accordingly, I dissent. Hannah, J., joins in this dissent.