DISPOSITION OF PAWNED PROPERTY

January 1, 2019

ROBERT C. PHILLIPS

Deputy District Attorney (Ret.)

 

Introduction:

         The Problem:

Mishandling of pawned property by law enforcement carries with it certain civil liability pitfalls.

When stolen property is pawned by the thief or other person not in legal possession of the property, and the pawnbroker pays money for the property without any knowledge or reason to suspect that the property lawfully belongs to another, law enforcement must consider the respective interests of the parties involved.

            The Issues: 

• Who gets the property? 
• Who suffers the financial loss? 
• What are law enforcement’s responsibilities and limitations in handling the property?

Reporting Requirements:  Licensed pawnbrokers (i.e., “secondhand dealers;” see B&P § 21626(a)) are legally required, pursuant to Business and Professions Code sections 21628 and 21630, to report detailed descriptions of pawned property to their local law enforcement agency.

B&P § 21625: 

It is the intent of the Legislature in enacting this article to curtail the dissemination of stolen property and to facilitate the recovery of stolen property by means of a uniform, statewide, state-administered program of regulation of persons whose principal business is the buying, selling, trading, auctioning, or taking in pawn of tangible personal property and to aid the State Board of Equalization to detect possible sales tax evasion.

Further, it is the intent of the Legislature in enacting this article to require the uniform statewide reporting of tangible personal property acquired by persons whose principal business is the buying, selling, trading, auctioning, or taking in pawn of tangible personal property, unless the property or the transaction is specifically exempt herein, for the purpose of correlating these reports with other reports of city, county, and city and county law enforcement agencies and further utilizing the services of the Department of Justice to aid in tracing and recovering stolen property.

Further, it is the intent of the Legislature that this article shall not be superseded or supplanted by the provisions of any ordinance or charter of any city, county, or city and county.

The District Attorneys of Riverside and Shasta Counties filed an action pursuant to B&P §§ 17200 et seq. (Unfair Competition Law, or “UCL”) to enjoin GameStop against noncompliance with the Secondhand Dealers Law (“SDL”) (B&P §§ 21625 et seq.).  GameStop filed a motion to remove the action from the County of Riverside pursuant to CCP § 394, claiming that the district attorney, as an official elected by the County of Riverside, was a local governmental entity.  The trial court denied the motion, and GameStop challenged that ruling by mandate petition.  The Fourth District Court of Appeal (Div. 2) denied the petition:  “A UCL action is brought in the name of the People of the State of California, to enforce a statewide legislative scheme aimed at reducing theft by regulating secondhand dealers.  In such a situation, an action brought by a district attorney, as a representative of the People of the State of California, to further the statewide polices of the SDL, are not actions brought by a county, or city, or county and city, within the meaning of section 394. . . .  The People of the State of California are not a local agency, within the meaning of subdivision (a) of section 394.”  (GameStop, Inc. v. Superior Court (Aug. 22, 2018) 26 Cal.App.5th 502.)

B&P § 21626:  “Secondhand Dealer” and “Coin Dealer,” Defined:

 

(a) A “secondhand dealer,” as used in this article, means and includes any person, copartnership, firm, or corporation whose business includes buying, selling, trading, taking in pawn, accepting for sale on consignment, accepting for auctioning, or auctioning secondhand tangible personal property. A “secondhand dealer” does not include a “coin dealer” or participants at gun shows or events, as defined in Section 478.100 of Title 27 of the Code of Federal Regulations, or its successor, who are not required to be licensed pursuant to Sections 26700 to 26915, inclusive, of the Penal Code, who are acting in compliance with the requirements of Sections 26500 to 26585, inclusive, and 27545 of the Penal Code, and who are not a “Gun Show Trader,” as described in Sections 16620 and 26525 of the Penal Code.

 

(b) As used in this section, a “coin dealer” means any person, firm, partnership, or corporation whose principal business is the buying, selling, and trading of coins, monetized bullion, or commercial grade ingots of gold, or silver, or other precious metals.

 

B&P § 21626.5:  Who are Not Secondhand Dealers:

 

“Secondhand dealer,” as used in this article, does not include either of the following:

 

(a) Any person who performs the services of an auctioneer for a fee or salary.

 

(b) Any person whose business is limited to the reconditioning and selling of major household appliances, provided all the following conditions are met:

 

(1) The person does not trade, take in pawn, accept for drop–off, accept as a trade–in, accept for sale on consignment, accept for auction, auction, or buy, except in bulk, the appliances.

 

(2) The person does not perform repair services for owners of appliances unless the appliance was purchased from the person.

 

(3) The person has never been convicted of the crime of attempting to receive or receiving stolen property or any other theft–related crime.

 

B&P § 21627:  “Tangible Personal Property” and “Significant Class of Stolen Goods,’ Defined.

 

(a) As used in this article, “tangible personal property” means all secondhand tangible personal property that bears a serial number or personalized initials or inscription or that, at the time it is acquired by the secondhand dealer, bears evidence of having had a serial number or personalized initials or inscription.

 

(b) “Tangible personal property” also means the following:

 

(1) All tangible personal property, new or used, including motor vehicles, received in pledge as security for a loan by a pawnbroker.

 

(2) All tangible personal property that bears a serial number or personalized initials or inscription and that is purchased by a secondhand dealer or a pawnbroker or that, at the time of the purchase, bears evidence of having had a serial number or personalized initials or inscription.

 

(3) All tangible personal property that the Attorney General statistically determines through the most recent Department of Justice crime data, updated pursuant to Section 13010 of the Penal Code to constitute a significant class of stolen goods. A list of that personal property shall be supplied by the Attorney General to all local law enforcement agencies and posted on the Attorney General’s Internet Web site. That list shall be updated annually by the Attorney General, beginning January 1, 2016, to ensure that it addresses current problems with stolen goods.

 

(c) As used in this article, “tangible personal property” does not include any new goods or merchandise purchased from a bona fide manufacturer or distributor or wholesaler of the new goods or merchandise by a secondhand dealer. For the purposes of this article, however, a secondhand dealer shall retain for one year from the date of purchase, and shall make available for inspection by any law enforcement officer, any receipt, invoice, bill of sale, or other evidence of purchase of the new goods or merchandise.

 

(d) As used in this article, “tangible personal property” does not include coins, monetized bullion, or commercial grade ingots of gold, silver, or other precious metals. “Commercial grade ingots” means 0.99 fine or finer ingots of gold, silver, palladium, or platinum, or 0.925 fine sterling silver art bars and medallions, provided that the ingots, art bars, and medallions are marked by the refiner or fabricator as to their assay fineness.

 

(e) For purposes of this article, a “significant class of stolen goods” means those items determined through the Department of Justice’s most recent OpenJustice Web portal update to constitute more than 10 percent of property reported stolen in the calendar year preceding the annual posting of the list of significant classes of stolen goods.

 

B&P § 21627.5:  The California Pawn and Secondhand Dealer System: 

 

“CAPSS” means the California Pawn and Secondhand Dealer System, which is a single, statewide, uniform electronic reporting system that receives secondhand dealer reports and is operated by the Department of Justice consistent with Resolution Chapter 16 of the Statutes of 2010. The maintenance and operation of CAPSS is funded by the Secondhand Dealer and Pawnbroker Fund established pursuant to Section 21642.5.

B&P § 21628.  Reporting Requirements:

 

(a) Every secondhand dealer or coin dealer described in Section 21626 shall report daily, or no later than the next business day excluding weekends and holidays after receipt or purchase of secondhand tangible personal property, to CAPSS, all secondhand tangible personal property, except for firearms, which he or she has purchased, taken in trade, taken in pawn, accepted for sale on consignment, or accepted for auctioning, in accordance with the provisions of Section 21630 and subdivision (d). The report shall be legible, prepared in English, completed where applicable, and include only the following information:

 

(1) The name and current address of the intended seller or pledger of the property.

 

(2) The identification of the intended seller or pledger. The identification of the seller or pledger of the property shall be verified by the person taking the information, who may use technology, including, but not limited to, cameras or software, or both, to obtain information and verify identity remotely. The verification shall be valid if the person taking the information reasonably relies on any one of the following documents, provided that the document is currently valid or has been issued within five years and contains a photograph or description, or both, of the person named on it, and, where applicable, is signed by the person, and bears a serial or other identifying number:

 

(A) A passport of the United States.

(B) A driver’s license issued by any state or Canada.

(C) An identification card issued by any state.

(D) An identification card issued by the United States.

(E) A passport from any other country in addition to another item of identification bearing an address.

(F) A Matricula Consular in addition to another item of identification bearing an address.

 

(3) 

 

(A) A property description. The property description shall be a complete and reasonably accurate description of the property, including, but not limited to, the following: serial number, personalized inscriptions, and other identifying marks or symbols, owner-applied numbers, the size, color, material, and, if known by the secondhand dealer, the manufacturer’s pattern name. The property description shall include the brand and model name or number of the item if known to, or reasonably ascertainable by, the secondhand dealer. The property description shall include a plain text description of the item generally accepted by the secondhand industry. Watches need not be disassembled when special skill or special tools are required to obtain the required information, unless specifically requested to do so by a peace officer. A special tool does not include a penknife, caseknife, or similar instrument and disassembling a watch with a penknife, caseknife, or similar instrument does not constitute a special skill. In all instances where the required information may be obtained by removal of a watchband, then the watchband shall be removed. The cost associated with opening the watch shall be borne by the pawnbroker, secondhand dealer, or customer.

 

(B) A secondhand dealer shall utilize in the article field either an article field descriptor, the format of which shall be provided by the Department of Justice, or a properly spelled and non-abbreviated plain text descriptor commonly recognized and utilized by the pawn and secondhand dealer industry. The lack of an article field descriptor provided by the Department of Justice shall not be relevant to any determination as to whether the secondhand dealer has received evidence of authority to sell or pledge the property pursuant to paragraph (1) of subdivision (b) so long as the secondhand dealer reports an article field descriptor consistent with this subdivision.

 

(C) In the case of the receipt or purchase of a handheld electronic device by a secondhand dealer, the serial number reported pursuant to subparagraph (A) may be the International Mobile Station Equipment Identity (IMEI), the mobile equipment identifier (MEID), or other unique identifying number assigned to that device by the device manufacturer. If none of these identifying numbers are available by the time period required for reporting pursuant to this subdivision, the report shall be updated with the IMEI, MEID, or other unique identifying number assigned to that device by the device manufacturer as soon as reasonably possible but no later than 10 working days after receipt or purchase of the handheld electronic device.

 

(D) For the purpose of this paragraph, “handheld electronic device” means any portable device that is capable of creating, receiving, accessing, or storing electronic data or communications and includes, but is not limited to, a cellular phone, smartphone, or tablet.

 

(4) A certification by the intended seller or pledger that he or she is the owner of the property or has the authority of the owner to sell or pledge the property.

 

(5) A certification by the intended seller or pledger that to his or her knowledge and belief the information is true and complete.

 

(6) A legible fingerprint taken from the intended seller or pledger, as prescribed by the Department of Justice. This requirement does not apply to a coin dealer, unless required pursuant to local regulation.

 

(7) A report submitted by a pawnbroker or secondhand dealer shall be deemed to have been accepted by the Department of Justice if a good faith effort has been made to supply all of the required information. An error or omission on the report shall be noted, and the reporting pawnbroker or secondhand dealer shall be notified of the error or omission by the Department of Justice. A reporting pawnbroker or secondhand dealer shall have three business days from that notice to amend or correct the report before being subject to any enforcement violation.

 

(b) 

 

(1) When a secondhand dealer complies with all of the provisions of this section, he or she shall be deemed to have received from the seller or pledger adequate evidence of authority to sell or pledge the property for all purposes included in this article, and Division 8 (commencing with Section 21000) of the Financial Code.

 

(2) In enacting this subdivision, it is the intent of the Legislature that its provisions shall not adversely affect the implementation of, or prosecution under, any provision of the Penal Code.

 

(c) Any person who conducts business as a secondhand dealer at any gun show or event, as defined in Section 478.100 of Title 27 of the Code of Federal Regulations, or its successor, outside the jurisdiction that issued the secondhand dealer license in accordance with subdivision (d) of Section 21641, may be required to submit a duplicate of the transaction report prepared pursuant to this section to the local law enforcement agency where the gun show or event is conducted.

 

(d) 

 

(1) The Department of Justice shall recognize and accept the properly spelled and non-abbreviated plain text property descriptors generally accepted in the pawn and secondhand industries provided by pawnbrokers and secondhand dealers, as has been the longstanding practice of chiefs of police and sheriffs when they had received paper reports from pawnbrokers and secondhand dealers.

 

(2) A report required of a secondhand dealer pursuant to this section shall be transmitted by electronic means to CAPSS by the secondhand dealer.

 

(3) Unless specifically identified in this section, the Department of Justice, chiefs of police, and sheriffs shall not require a secondhand dealer to include any additional information concerning the seller, the pledger, or the property received by the secondhand dealer in the report required by this section.

 

(4) If there is a future change to the reporting requirements of CAPSS that substantively alters the reporting standards provided by this article, those changes shall be implemented and operated in compliance with the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code). In implementing and operating a future change to CAPSS, the Department of Justice, chiefs of police, and sheriffs shall comply with Sections 21637 and 21638. Notwithstanding any other law, the Department of Justice shall not take any action with respect to the implementation, operation, or maintenance of CAPSS required by this chapter by adoption of an emergency regulation.

 

(5) On or before July 1, 2017, the Department of Justice shall convene a meeting with the Department of Technology to discuss issues pertaining to any proposed changes or upgrades to CAPSS required by this chapter. The Department of Technology may provide technological assistance for ongoing improvements, updates, or changes to CAPSS required by this chapter, as requested.

 

(6) A coin dealer shall report the information required by this section under the reporting standard described in paragraph (1) on a form developed by the Attorney General that the coin dealer shall transmit each day by facsimile transmission or by mail to the chief of police or sheriff. A transaction shall consist of not more than one item.

 

(7) For purposes of this subdivision, “item” shall mean any single physical article. However, with respect to a commonly accepted grouping of articles that are purchased as a set, including, but not limited to, a pair of earrings or place settings of china, silverware, or other tableware, “item” shall mean that commonly accepted grouping.

 

(8) Nothing in this subdivision shall be construed as excepting a secondhand dealer from the fingerprinting requirement of paragraph (6) of subdivision (a).

 

(e) Nothing in this section shall be construed to exempt a person licensed as a firearms dealer pursuant to Sections 26700 to 26915, inclusive, of the Penal Code from the reporting requirements for the delivery of firearms pursuant to Sections 26700 to 26915, inclusive, of the Penal Code.

 

Bus. & Prof. Code § 21630: 

 

(a)  A secondhand dealer or coin dealer shall electronically transmit to CAPSS no later than the next business day after the date of transaction excluding weekends and holidays or, if not then possible due to an electrical, telecommunications, or other malfunction, as soon as reasonable thereafter, the report of acquisition of tangible personal property as required by Section 21628.

 

(b)  Notwithstanding Section 21628, submission of a tangible property acquisition report is not required if the report of an acquisition of the same property from the same customer has been submitted within the preceding 12 months.

 

The above enables law enforcement to locate stolen property that is subsequently pawned, authorizing the preservation of such evidence for the benefit of an eventual prosecution while preserving the interests of the lawful owner, with the added benefit of providing an excellent tool for investigating burglaries and other thefts.

 

 

But, when the criminal investigation and prosecution is over, it often also creates a dilemma for law enforcement, being caught between competing claims for the return of the property (see beloew).

 

Bus. & Prof. Code §§ 21636, 21636.1: Non-Firearm Tangible Personal Property:

Effective 1/1/2019, the holding requirements for “non-firearm tangible personal property” in the possession of a secondhand dealer or coin dealer (e.g., a pawnbroker) was moved from existing B&P § 21636 to new (effective 1/1/2019) B&P § 21636.1, which had the effect of reducing from 30 days to 7 days that such property must be held by the pawnbroker before selling it.

        

B&P § 21636.1 applies to non-firearm tangible personal property as defined in existing B&P § 21627 as property with a serial number or personalized initials, including motor vehicles, received in pledge as security for a loan by a pawnbroker, and all personal property that the Attorney General statistically determines through crime data constitutes a significant class of stolen goods.

 

B&P § 21636.1 also provides that a secondhand dealer or coin dealer may sell property after only 5 days if the sale is recorded in the dealer’s book of records, and if the record of sale includes the buyer’s name, address, and telephone number or email address or electronic address for receiving text messages. In documenting the sale, the dealer does not have any duty to verify the accuracy of the information provided by the buyer.  The pawnbroker is required to retain this information for 21 days, making it available for inspection by a local law enforcement agency during the 21 days. If law enforcement notifies the dealer within the 21-day period that the property has been reported stolen, the record of sale and all information contained in it shall be provided to law enforcement upon written request by the agency.  

 

Legal Interests in Stolen, Pawned Property:

 

Who Has an Interest in Stolen/Pawned Property?  The courts tell us that there may be three (or, sometimes even more) parties who have a potential legal or possessory interest in pawned property.  (Wolfenbarger v. Williams I (10th Cir. 1985) 774 F.2nd 358, 361-362; G & G Jewelry, Inc. v. City of Oakland (9th Cir. 1993) 989 F.2nd 1093, 1096-1098.)

 

                        The “Pledgor” (i.e., the one pawning the property);

 

The thief, or other person who has knowingly received stolen property, obviously, has no real, defensible legal right to reclaim the property and has therefore been largely ignored in the case law.

 

If the one who pawns the property unknowingly received stolen property, he or she may also have a legitimate interest in the property.

 

In order to obtain the return of property seized, a person must show satisfactory proof of ownership; a requirement difficult for the thief to satisfy.  (See P.C. § 1413(b), and People v. Superior Court (McGraw) (1979) 100 Cal.App.3rd 154.)

 

                        The “Pledgee” (i.e., the one receiving the property, in good faith, for value);

 

The pawnbroker, however, as the “pledgee,” at least where he purchases the property for value and in good faith, has a “lawful,” albeit qualified, possessory interest, enforceable against everyone else in the world other than the legal owner.  (See B&P § 21628(h)) 

 

                                                See also P.C. § 484.1, below.

 

The “Victim” of a Theft:  Where the pawned property is later shown to have been stolen, the “true owner” obviously has an interest. 

 

 

The owner, with “title” to the stolen property, has a “legal interest” which is enforceable against the whole world.  (Sanders v. City of San Diego (9th Cir. 1996) 93 F.3rd 1423, 1426-1427.)

 

While a thief may be able to deprive a victim of “possession” of his or her property, he cannot deprive the victim of his or her “title” to the property.

 

Interest of the Pawnbroker:  The law is quite clear that even one who acquires stolen property from a thief, at least when purchased for value and in good faith, has a lawful and enforceable property interest in such property.  (See B&P § 21628(h); G & G Jewelry, Inc. v. City of Oakland, supra; Sanders v. City of San Diego, supra.)

 

But note, every swap meet vendor (per B&P § 21661), “and every person whose principal business is dealing in, or collecting merchandise or personal property” (including their agents, employees and representatives), “who buys or receives any property of a value in excess of four hundred dollars ($400) that has been stolen or obtained in any manner constituting theft or extortion, under circumstances that should cause the person . . . to make reasonable inquiry to ascertain that the person from whom the property was bought or received had the legal right to sell or deliver it, without making a reasonable inquiry,” is guilty of a felony (wobbler).  (Emphasis added; P.C. § 496(b))

 

The same section provides for misdemeanor punishment if the property is worth $400 or less.

 

Note also P.C. § 484.1(a), making it a “theft” for a person to knowingly give the pawnbroker or secondhand dealer false information or false verification as to his true identity or as to his ownership interest in property or his authority to sell the property, for the purpose of obtaining money or other valuable consideration, and does in fact receive money or other valuable consideration, from the pawnbroker or secondhand dealer.

 

P.C. § 484.1(b) provides for restitution being made to the pawnbroker or secondhand dealer.

 

 

P.C. § 484.1(c) requires the probation department to notify the pawnbroker or secondhand dealer (or “coin dealer,” which is not referred to under subsections (a) or (b)) of the time and place for sentencing. 

 

See also P.C. § 1191.1:  Right of victims to appear at sentencing and address the court concerning restitution.

 

Interference with the Interest of the Pawnbroker:  Law enforcement officers who take it upon themselves to return stolen property to the victim of a theft, believing that as between the victim and the pawnbroker, the victim has the stronger claim to the property, are ignoring the pawnbroker’s rights and subjecting themselves to serious civil liability.  (G & G Jewelry, Inc. v. City of Oakland, supra; Sanders v. City of San Diego, supra; Wolfenbarger v. Williams II (10th Cir. 1987) 826 F.2nd 930; Zeltser v. City of Oakland (9th Cir. 2003) 325 F.3rd 1141.)

 

While the officer may be perfectly correct in believing that the victim of a theft has a superior interest in the stolen/pawned property, it is for the courts to decide this issue.  Statutes have been enacted, as described below, for the purpose of defining the rights and interests of the parties in such property, and must be complied with.

 

Pawnbrokers have a right to procedural due process (i.e., notice and an opportunity to be heard) before a court can order that stolen property in their possession and subject to a 90-day hold under B&P § 21647(a), be returned to the purported owners of the property.  (People v. Hernandez (2009) 172 Cal.App.4th 715.)

 

Pawnbroker's Attempts to Interfere with Seizure of Stolen Property by Law Enforcement:

 

Necessity for a Search Warrant:  It is not uncommon for the pawnbroker to insist that a law enforcement officer have a search warrant before seizing property from his or her business. 

 

Contrary to older federal authority (See Wolfenbarger v. Williams II, supra, at pp. 934-937.), no search warrant is needed to seize the property if that property is in “plain sight” while the officer is at a place he or she has a lawful right to be; e.g., inspecting pawned property pursuant to authority granted under Financial Code section 21206.  (G & G Jewelry, Inc. v. City of Oakland, supra, at pp. 1099-1101, and fn. 4; see also Christians v. Chester (1990) 218 Cal.App.3rd 273, 276-277; seized ring displayed in a case in plain view.)

 

 

“(T)he Fourth Amendment permits the warrantless seizure of merchandise from a pawnbroker for investigatory purposes where (1) the police officer is lawfully on the premises, (2) the pawnbroker is required by statute to produce the pawned property for inspection, and (3) the examination of the property reveals that there was probable cause to believe it was stolen.”  (Sanders v. City of San Diego, supra, at p. 1427.)

 

Municipal Codes commonly require a pawnbroker to produce pawned property for inspection by a law enforcement officer.  (E.g., See San Diego Muni Code, § 33.1101.)

 

See also Financial Code section 21206; granting law enforcement authority to inspect pawned property.  (G & G Jewelry, Inc. v. City of Oakland, supra, at pp. 1099-1101, and fn. 4.)  It is unknown whether this section can be interpreted to excuse the lack of a search warrant.

 

However, note Zeltser v. City of Oakland, supra, where the Court made reference to the need for a valid search warrant “or an applicable exception.”

 

The pawnbroker, therefore, may not have a right to insist upon a search warrant, nor to deny an officer access to the property for purposes of inspecting it.

 

Also, if a search warrant is used, note that pursuant to P.C. § 1536, the property may not be disposed of without a court order.  The thief’s plea of guilty before a judge to the theft of the property from the victim, by itself, neither constitutes a court determination that the stolen property belongs to the theft victim nor an authorization for the release of that property to the victim without complying with the statutory procedures described herein.  (Zeltser v. City of Oakland, supra.)

 

Agreement to Return Property:  Pawnshops may demand that officers who attempt to seize pawned property first sign an agreement to return the property to the pawnbroker when no longer needed in a criminal prosecution.

 

The form commonly used purports to determine who will be responsible for the attorneys’ fees should the pawnbroker be forced to sue to protect his interests.

 

Attached to this form might be another form entitled “Notice to Seizing Officer.”  This single-page document, listing some very authentic looking case law and legal mumbo-jumbo, is also to be signed by the “seizing officer.”

 

Neither form, at least that is in common usage at the time of the writing of this outline, accurately describes the law.  Both forms are written for no other purpose than to give the pawnbroker an unfair, and legally unsupportable, advantage over the person who truly owns the property in issue.

 

 

Pawnbrokers may not legally insist upon a law enforcement officer signing either or both forms as a condition to seizing stolen property.

 

Pawnbroker's Criminal Liability:  When a law enforcement officer seeks to take stolen property from a pawnbroker, it may be a criminal violation (e.g., P.C. § 148; “Interfering with an Officer in the Performance of his Duties”) for the pawnbroker to refuse to provide the property upon demand.  (Christians v. Chester, supra.)

 

The officer need only remember that, pursuant to Financial Code section 21206.7 (see below), he or she must provide a receipt for the items seized.  If seized pursuant to a search warrant, a copy of the required “receipt and inventory” would serve this purpose.

 

See also B&P § 21465, making it a misdemeanor to violate any of the provisions of this article.

 

Disposition of Lost, Stolen, or Embezzled Property upon Completion of a Criminal Investigation and/or Prosecution:

 

Rules:

 

#1:  The law enforcement officer is not to take sides in any dispute between those claiming the right to title and/or possession of lost, stolen, or embezzled property. 

 

#2:  The officer’s only concern is to first make sure the property is available for any related criminal prosecution.  After that, absent a court order, the status quo should be maintained, leaving the owner and pawnbroker to either reach some sort of agreement between themselves or to litigate the issue in the courts.  (G & G Jewelry, Inc. v. City of Oakland, supra, at pp. 1096, 1098; Zeltser v. City of Oakland, supra.)

 

Available Alternatives:  Pending a criminal prosecution of the person who stole and/or pawned the property, other than when a pawnbroker merely turns over property voluntarily, the law enforcement officer has two ways he or she may proceed; place a hold upon, or seize, the property (See Zeltser v. City of Oakland, supra, for a detailed description of the two alternatives):

 

Business and Professions Code section 21647(a):

 

Subd. (1):  If a peace officer has probable cause to believe that property, except coins, monetized bullion, or “commercial grade ingots,” as defined in B&P § 21627(d), in the possession of a licensed pawnbroker or second hand dealer, is lost, stolen or embezzled, the peace officer may place a hold on the property for a period not to exceed 90 days.

 

Subd. (2):  A 90-day hold issued pursuant to this section:

 

1.  Is created upon the receipt by a licensed pawnbroker or secondhand dealer of a written notice by a peace officer that contains the following:

 

1. An accurate description of the property being place on the 90-day hold.
2. An acknowledgment that the property is being placed on hold pursuant to this section and denoting whether physical possession will remain with the licensed pawnbroker or secondhand dealer or will be taken by the law enforcement agency instituting the 90-day hold.
3. The law enforcement agency’s police report or department record number, if issued, for which the property is needed as evidence.
4. The date the notice was delivered to the licensed pawnbroker or secondhand dealer that shall initiate the notification period set forth in subds. (c) and (g).

2.  Shall not exceed a period of 90 calendar days, but may be renewed as provided in subpara. (C).

 

3.  May be renewed as often as is required for a criminal investigation or criminal proceeding by any peace officer who is a member of the same law enforcement agency as the peace officer placing the hold on the property.

 

4.  Permits a peace officer to either take physical possession of the property as evidence, consistent with a peace officer’s right to a plain view seizure for a criminal investigation or criminal proceeding, or to leave the property in the possession of the licensed pawnbroker or secondhand dealer as a custodian on behalf of the law enforcement agency.

 

5.  Requires the licensed pawnbroker or secondhand dealer to maintain physical possession of the property placed on hold and prohibits the property’s release or disposal, except pursuant to the written authorization signed by a peace officer who is a member of the same law enforcement agency as the peace officer placing the hold on the property.

 

6.  Terminates when the property is no longer needed as evidence in a criminal investigation or criminal proceeding, at which time the property shall be disposed of pursuant to Subd. (b)

 

7.   Shall not be applicable to secure lost, stolen, or embezzled property found in the possession of an unlicensed pawnbroker or secondhand dealer that has not duly and correctly reported the acquisition pursuant to B&P § 21628.  In such a circumstance, a peace officer, having probable cause to believe the property found in the possession of an unlicensed pawnbroker or secondhand dealer is lost, stolen, or embezzled, may seize the item or items consistent with the authority granted the peace officer under the Penal Code or any other law.

 

B&P Code § 21647(b):

 

Subd. (1):  Whenever property that is in the possession of a licensed pawnbroker or secondhand dealer, and that has been placed on hold pursuant to this section, is required by a peace officer in a criminal investigation, the licensed pawnbroker or secondhand dealer, upon reasonable notice, shall produce the property at reasonable times and places or may deliver the property to the peace officer upon the request of any peace officer.

 

Subd. (2):  If property placed on hold pursuant to this section is physically surrendered or delivered to a law enforcement agency during the period of the hold, the hold and the pawnbroker’s lien against the property shall continue.

 

B&P Code § 21647(c):  Whenever a law enforcement agency has knowledge that property in the possession of a licensed pawnbroker or secondhand dealer has been reported as lost, stolen, or embezzled, the law enforcement agency shall, within two business days after placing the hold on the property pursuant to this section, notify in writing the person who reported the property as lost, stolen, or embezzled of the following:

 

Subd. (1):  The name, address, and telephone number of the licensed pawnbroker or secondhand dealer who reported the acquisition of the property.

 

Subd. (2):  That the law neither requires nor prohibits payment of a fee or any other condition in return for the surrender of the property, except that when the person who reported the property lost, stolen, or embezzled does not choose to participate in the prosecution of an identified alleged thief, the person shall pay the licensed pawnbroker or secondhand dealer the “out-of-pocket” expenses paid in the acquisition of the property in return for the surrender of the property.

 

Subd. (3):  That if the person who reported the property as lost, stolen, or embezzled takes no action to recover the property from the licensed pawnbroker or secondhand dealer within 60 days of the mailing of the notice, the licensed pawnbroker or secondhand dealer may treat the property as other property received in the ordinary course of business.  During the 60-day notice period, the licensed pawnbroker or secondhand dealer may releases the property to any other person.

 

Subd. (4):  That a copy of the notice, with the address of the person who reported the property as lost, stolen, or embezzled deleted, will be mailed to the licensed pawnbroker or secondhand dealer who is in possession of the property.

 

B&P Code § 21647(d):  When property that is in the possession of a licensed pawnbroker or secondhand dealer is subject to a hold as provided in subd. (a), and the property is no longer required for the purpose of a criminal investigation or criminal proceeding, the law enforcement agency that placed the hold on the property shall release the hold on the property and return the property to the licensed pawnbroker or secondhand dealer from which it was taken if the law enforcement took physical possession of the property.

 

The statute (as written prior to 1/1/2014) does not require, but rather “authorizes,” the pawnshop owner to return the property to the person reporting it stolen.  (G & G Jewelry, Inc. v. City of Oakland, supra, at p. 1097.)

 

The parties are free to attempt to negotiate the conditions under which the property will be returned, or settle the issue in civil court.  (Zeltser v. City of Oakland, supra.)

 

B&P Code § 21647(e):  If a pledgor seeks to redeem property that is subject to a hold, the licensed pawnbroker shall advise the pledgor of the name of the peace officer who placed the hold on the property and the name of the law enforcement agency of which the officer is a member.  If the property is not required to be held pursuant to a criminal prosecution the hold shall be released.

 

B&P Code § 21647(f): Whenever information regarding allegedly lost, stolen, or embezzled property is entered into the Dept. of Justice automated property system or automated firearms system, and the property is thereafter identified and found to be in the possession of a licensed pawnbroker or secondhand dealer, the property shall be placed on a hold pursuant to this section and P.C. § 11108.5.

 

B&P Code § 21647(g):  If the hold, including any additional hold, is allowed to lapse, or 60 days elapse following the delivery of the notice required to be given by subd. (c) to the person who reported the property to be lost, stolen, or embezzled without a claim being made by that person, whichever is later, the licensed pawnbroker or secondhand dealer may mail under a certificate of mailing issued by the United States Post Office, addressed to the law enforcement agency that placed the property on hold, a written request to delete the property listing from the Dept. of Justice automated property system or automated firearms system, as is applicable. Within 30 days after the request has been mailed, the law enforcement agency shall either cause the property listing to be deleted as requested or place a hold on the property.  If no law enforcement agency takes any further action with respect to the property within 45 days after the mailing of the request, the licensed pawnbroker or secondhand dealer may presume that the property listing has been deleted as requested and may thereafter deal with the property accordingly, and shall not be subject to liability arising from the failure of the removal of the property listing from the Dept. of Justice automated property system or automated firearms system.  

 

B&P Code § 21647(h):  A licensed pawnbroker or secondhand dealer shall not refuse a request to place property in their possession on hold pursuant to this section when a peace officer has probable cause to believe the property is lost, stolen, or embezzled.  If a licensed pawnbroker or secondhand dealer refuses a request to place property on hold pursuant to this section, the property may be seized with or without a warrant.  The peace officer shall issue a receipt, as described in Fin. Code § 21206.7, left with the licensed pawnbroker or secondhand dealer.  The property shall be disposed of pursuant to procedures set forth in Fin. Code § 21206.8, which shall apply to both licensed pawnbrokers and secondhand dealers under this section.

 

“The police can either place a hold on the property, take possession of the property upon voluntary delivery by the pawnbroker, or seize the property and provide the receipt required by (Financial Code) section 21206.7.”  (G & G Jewelry, Inc. v. City of Oakland, supra, at pp. 1101-1102; 59 Ops.Cal.Atty.Gen. 195 (1976); Christians v. Chester, supra.)

 

Financial Code section 21206.7 provides that whenever property is taken from a pawnbroker by a peace officer that is alleged to be stolen, the officer “shall” give the pawnbroker a receipt for the property which contains a description of the property, the reason for the seizure, and the names of the pawnbroker and the officer.

 

When property is seized pursuant to section 21647(b), instead of subjected to a 90-day hold pursuant to section 21647(a), disposal of the property after termination of a criminal prosecution related to the property must be done under the terms of Financial Code section 21206.8.  (Sanders v. City of San Diego, supra, at pp. 1429-1430.)

 

This procedure has been held to be sufficient to protect the pawnbroker’s due process rights.  (Sanders v. City of San Diego, supra, at pp. 1429-1433.)

 

Fin. Code § 21206.8:  See below.

 

B&P Code § 21647(i):  If a search warrant is issued for the search of the business of a licensed pawnbroker or secondhand dealer to secure lost, stolen, or embezzled property that has been placed on hold, the hold shall continue for the duration that the property remains subject to the court’s jurisdiction.  Notwithstanding any other law, when the use of the property seized for a criminal investigation or criminal proceeding has concluded, the property shall be disposed of pursuant to subd. (d).

 

B&P Code § 21647(j):  If a civil or criminal court is called upon to adjudicate the competing claims of a licensed pawnbroker or secondhand dealer and another party claiming ownership or an interest in the property that is or was subject to a hold pursuant to this section, the court shall award possession of the property only after due consideration is given to the effect of Com. Code § 2403.

 

B&P Code § 21647(k):  A licensed pawnbroker or secondhand dealer is not subject to civil liability for compliance with this section.

 

Case Law:

 

Note that these statutory procedures provided under B&P 21647 do not purport to resolve ownership (i.e., “title”) of the property.  They only dictate who is entitled to “possession” while ownership is resolved.  If the pawnbroker declines to return the property to the owner, as is his right, it is incumbent upon them to resolve the issue of ownership by negotiation or in the civil courts.  (G & G Jewelry, Inc. v. City of Oakland, supra, at pp. 1096, 1098.)

 

 

For a law enforcement officer to unilaterally take stolen property from a pawnbroker being held pursuant to B&P § 21647(a) and return it to the true owner, despite the best of intentions, is a Fourteenth Amendment “due process” violation of the pawnbroker’s qualified interest in the property, short-circuiting the statutory procedures set forth in section 21647(c), and will subject the officer to potential civil liability in the federal courts.  (Wolfenbarger v. Williams I, supra, at pp. 362-365; G & G Jewelry, Inc. v. City of Oakland, supra, at pp. 1097-1098; Sanders v. City of San Diego, supra, at p. 1426; Zeltser v. City of Oakland, supra; see also 42 U.S.C. § 1983.)

 

If an officer takes it upon him or herself to “award” the property to the victim, the officer will not be able to claim even a “qualified immunity” (which he/she is normally entitled to when “reasonable” mistakes are made) should he or she later be sued by the pawnbroker.  (Wolfenbarger v. Williams II, supra, at pp. 931-934.)

 

In performing discretionary functions, governmental officials are only shielded from liability for civil damages insofar as their conduct does not violate clearly established statutory and constitutional rights of which a reasonable officer should have known. 

 

Given the pawnbroker’s well-established constitutionally protected interests in at least possession of the property, and California’s statutory procedures for determining the right to ownership as between the true owner and the pawnbroker, California peace officers cannot claim ignorance of the pawnbroker's rights to the pawned property.  (Ibid.)

 

 

Therefore, a law enforcement officer’s legal duty under the relevant statutes is to do no more than inform the parties when the property is no longer required as evidence, allowing the owner and pawnbroker to resolve their respective possessory rights through agreement or by the judgment of a civil court.  (See also G & G Jewelry, Inc. v. City of Oakland, supra.)

 

Pawnbrokers have a right to procedural due process (i.e., notice and an opportunity to be heard) before a court can order that stolen property in their possession and subject to a 90-day hold under B&P § 21647(a), be returned to the purported owners of the property.  (People v. Hernandez (2009) 172 Cal.App.4th 715.)

 

Situation #1:  Theft victim claims his/her property:

 

 

Under the terms of Financial Code section 21206.8, stolen or embezzled property taken from a pawnbroker shall not be delivered to anyone else claiming ownership until after the pawnbroker is given notice by the officer of the owner’s claim and the pawnbroker fails to make a claim on the property within 10 days of such notification.  (Fin. Code, § 21206.8(b))

 

3. Note:  P.C. § 1413(b) gives the pawnbroker 15 days (from the date of receipt of the notice) to respond to a notice of the owner’s claim to the property.  (See below)

 

Just as when the property is subjected to the 90-day hold, whenever there are competing claims (i.e., between the theft victim and the pawnbroker), the parties must seek to resolve the matter between themselves or submit the issue before a judge.  For instance:

 

4. P.C. §§ 1408 to 1410 provide for a judicial determination by “the magistrate before whom the complaint is laid, or who examines the charge against the person accused of stealing or embezzling it” (§ 1408), or “comes into the custody of” (§ 1409), or “before which a trial is had for stealing or embezzling it” (§ 1410), to determine who gets the property.  (See Sanders v. City of San Diego, supra, at p. 1431, fn. 12; and People v. Chabeear (1984) 163 Cal.App.3rd 153.)

 

5. Also, where sections 1408 et seq. are not used, P.C. § 1413(b) ostensibly gives “the clerk or person in charge of the property section” of a law enforcement agency in possession of stolen or embezzled property the power to determine who gets the property (See “Prosecutor’s Brief; Special Issue:  The Retention and Return of Property,” Vol XVIII, Number 4), but only after:

 

• Receiving satisfactory proof of ownership from the one claiming to own the property;

 

• The “owner” presents proper personal identification;

 

• The clerk makes a photographic record of the property;

 

• The person claiming ownership signs, under penalty of perjury, a declaration of ownership; and

 

• The person from whom custody of the property was taken is given;

 

• • A notice of a claim of ownership (with a copy of the owner’s proof of ownership);

 

• • 15 days from receipt of notice to respond, asserting a claim to the property; and

 

• • A reasonable opportunity to be heard as to why the property should not be delivered to the person claiming ownership.

 

6. The property clerk’s determination, however, is without prejudice to the parties’ right to seek a review of the clerk’s decision before the judge before whom the criminal case was heard.  (P.C. § 1413(b) & (c); Sanders v. City of San Diego, supra, at pp. 1431, 1434.)

 

If an insurance company has already reimbursed the theft victim, that company would seem to have some interest in the stolen property in the place of the victim, and be entitled to litigate its right to restitution.  (See People v. Birkett (1997) 54 Cal.App.4th 1438.)

 

 

                                    Situation #2:  Theft victim does not claim the property:

 

If no one else comes forward to claim the property, the pawnbroker from whom the property was taken must be given notice and allowed three months to claim the property before the officer may dispose of the property as otherwise provided by law.  (Fin. Code, § 21206.8(c))

 

See also P.C. § 1411(a); “Disposition of Unclaimed Property,” which says that where efforts to locate the owner of lost, stolen, or embezzled property are not successful the property must be returned to the pawnbroker or secondhand dealer from whom it was taken when it is no longer needed for a criminal proceeding.

 

Per P.C. § 1411(b), provides that subd. (a) does not govern the disposition of property held by a pawnbroker and placed on hold by a peace officer pursuant to B&P § 21647 unless the licensed pawnbroker or secondhand dealer refuses to consent to a B&P § 21647 hold on the property, or a search warrant for the business of the licensed pawnbroker or secondhand dealer has resulted in the seizure of the property.

 

In All Other Cases:  The disputed ownership of property not determined to have been stolen, and which is not evidence in any criminal prosecution, or arguably, in any situation not covered by the above statutes, will have to be determined in civil court.  (See Sims v. Superior Court (1985) 172 Cal.App.3rd 1065; $70,000 recovered from a vehicle when Sims, denying any knowledge of the money, was arrested, after which no criminal charges were filed.)

 

Other Case Law:

 

In a commercial burglary involving the successful pawning of stolen goods, the relevant value for Proposition 47 purposes is that of the property received in exchange for the stolen goods, and, under Proposition 47, the applicant seeking to reduce a burglary conviction to a shoplifting one bears the burden of proving the value of the property taken or intended to be taken.  Defendant could not prevail on her application pursuant to Proposition 47, (P.C. § 1170.18(f)), to designate her pawnshop burglary conviction as a misdemeanor shoplifting because she failed to introduce any evidence, either in her application or at the hearing on her application, to establish that the value of the property she received from the pawn shop was less than or equal to $950 (which, had she done so, would have allowed her felony conviction to be reduced to a misdemeanor).  (People v. Pak (2016) 3 Cal.App.5th 1111.) 

 

Fin. Code § 21206.8 (Amended as of 1/1/2014):  Lost Property:

 

Amendments to this section now provide the following:

 

This section, that applies to stolen and embezzled property taken from a pawnbroker by a peace officer, prohibiting the peace officer from returning the property to the original owner (i.e., the crime victim) unless the provisions of this section are complied with, is expanded to include lost property as well.

 

A person claiming ownership of pawned property must file a written statement with the person having custody of the property (i.e., the police agency that seized stolen property from a pawnbroker). The statement must be signed under penalty of perjury and state the factual basis for the claim of ownership. The person with custody of the property is to provide a copy of the claim to the pawnbroker.

 

The court, in adjudicating competing claims of a pawnbroker and a person claiming ownership, must give due consideration to the effect of Commercial C. § 2403.

 

Note:  Com. Code § 2403 provides that a purchaser of goods acquires all title that the transferor had power to transfer.

 

At least 30 days before a hearing to adjudicate competing property claims, the person with custody of the property (typically a police agency) must deliver to the pawnbroker a copy of the police report, with appropriate redactions, substantiating the basis of the seizure of property from the pawnbroker.

 

Note:  Other statutes relating to pawn brokers have been similarly amended: B&P § 21647, P.C. § 1411, and P.C. § 11108.5.