AGO Opinion 98027

Possession Requirements Under Nebraska Pawnbroker Statutes
Opinion 98027

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




Attorney General

Fredrick F. Neid

Assistant Attorney General