Court Opinion

ID: 9738503
Source: CourtListenerOpinion
Date Created: 2023-08-26 19:54:59.010642+00
Date Added: 2024-06-11T07:24:06.532927
License: Public Domain

Corrigan, P.J.
(dissenting). I dissent from the majority opinion because I reluctantly must conclude that our Supreme Court’s recent decision in People v Lee, 447 Mich 552; 526 NW2d 882 (1994), controls the outcome of this case. I believe the majority’s limitation on the application of Lee to criminal usury cases construes Lee too narrowly.
In Lee, the complainant, Lonnie May, approached the defendants, Jeffrey Lee and David Miller, for a loan. As security for the loan, May *310offered his Rolex watch. The defendants did not want to loan May money,1 but offered to buy the watch for $2,600 and then resell it to him in thirty days for $3,250. Believing the watch to be worth five or six thousand dollars, May agreed to the "sale” and option to repurchase the watch. May was under no obligation to repurchase the watch. At the end of the thirty-day period, May could not tender the $3,250. The defendants offered May a second option for $625 to extend his right to repurchase the watch for another thirty days.
The circuit court found that the underlying transaction amounted to either a loan or a pawn and that it was usurious. This Court summarily affirmed the judgment of the circuit court in People v Lee, unpublished memorandum opinion of the Court of Appeals, decided April 22, 1993 (Docket Nos. 149014 and 149015). In rejecting the circuit court’s ruling, the Supreme Court held that no loan existed because May was under no obligation to repurchase the watch.2 Id. Thus, no probable cause existed to support a violation of the usury statute, MCL 438.41; MSA 19.15(51). Lee, supra at 564.
The majority opinion distinguishes Lee on the basis that it involved a criminal prosecution for usury. I cannot agree. I believe that the definition of a loan announced in Lee governs this case. The majority, relying on the Supreme Court of Connecticut’s reasoning in Rhodes v City of Hartford, 201 Conn 89; 513 A2d 124 (1986), opines that Folands’ business falls within Michigan’s pawnbroking statute, MCL 446.203; MSA 19.583, whether or not repurchase agreements constitute loans. However, in determining that the plaintiff’s *311business amounted to pawnbroking, Rhodes held that repurchase transactions, in substance if not in form, are loans. Rhodes, supra at 96. Consequently, a determination whether Folands’ business falls within Michigan’s definition of pawnbroking necessarily turns on whether repurchase agreements are loans. Accordingly, I conclude that Lee controls our disposition of this case.
Applying Lee, I would hold that Folands’ business does not constitute pawnbroking because Folands’ customers are not obligated to repurchase the precious metals or gems pursuant to either repurchase option available.
I also believe that Lee construed these loan transactions too narrowly. Customers who "sell” their valuables at a price substantially less than they are worth with an option to repurchase the same for a substantially higher price are actually pledging their property as security for a loan, i.e. pawnbroking.3 Although no obligation technically exists under the repurchase option, the customer who sells property for less than it is worth must repurchase the item or forgo the property at a significant loss. The "option” is in reality no option at all; the customers are virtually forced to repurchase by the inequities inherent in the transaction. Indeed, Folands applied for a pawnbroker license in 1992, but had not obtained it at the time of this litigation. Thus, Folands could not legally pawn precious metals or gems or loan money. Instead, it utilized the repurchase option to subvert the pawnbroker statute. Nevertheless, because of Lee, I am compelled to conclude that Folands is not a pawnbroker.
I would reverse. _

 May testified that Lee wanted to avoid the legal ramifications of operating as a pawnbroker.

 Chief Justice Cavanagh dissented and was joined by Justices Boyle and Griffin.

 See Caudle v City of Fayetteville, 315 Ark 276; 866 SW2d 410 (1993); Rhodes v City of Hartford, 201 Conn 89; 513 A2d 124 (1986); City of Wanatchee v Johnston, 68 Wash App 697; 846 P2d 547 (1993).