Case Information
*1 The Attorney General of Texas
JIM MATTOX November 5, 1984
Attorney General Building
Supreme Court P. 0.60x Austin. TX. 78711. 2546 Telex 910/674.1387 Telecopier 5121475-0266 5121475.2501 [12546] P. 0. Box 2107 Office of Consumer ::redit Austin, Cordnissioner Coaunissioner Texas 707 58 Opinion No. JM-225 Re: of article tion and division
What transaction within constitutes 5069-51.12, V.T.C.S. the meaning of a pawn the separa- Dear Mr. Kelley : 714 Jackson. Suite 700 Dallas. TX. 752024506 2141742.6944 You have requested our opinion regarding the applicability of a
portion of article 5069-51.12. V.T.C.S.. to certain types of pawn transactions. The :?ertinent portion of the statute provides: 4624 Alberta Ave.. Suite 160 El Paso, TX. 799052793 915/533-34s4 No pawnbroker shall separate or divide a pawn
transact01 into two or more transactions for the HOUS,O~. TX. 77002-3111 [71312235668] JO1 Texas. Suite 700 purpose or with the effect for an aa.ount financed equal to the total of the pawn service amounts f lnanced in the resulting charge in excess of that authorized of obtaining a total transactions.
606 Broadway. Suite 312 V.T.C.S. art. 5069-.i:1.12. Lubbock. TX. 794013479 608/747-5236 While the statute prohibits charging more than one service charge
for splitting tranlractions, it does not prohibit making two trans- 4309 N. Tenth. Sutte S actions as long as 11n1y one service charge is assessed. A dispute has McAllen. TX. 76501.16R5 arisen over the meaning of what is a divjsion or separation of a pawn 5121662.4547 and whic!z transactions violate the statutory prohibition.
The pawnbrokers asso,ciation argues that “separation and division of a 2W Main Plaza, Suite 600 pawn transaction” occurs only when there is a separation or division San Antpnip. TX. 162052797 of a matched set of silverware of a single unit of collateral. or a rifle with attached For example, in its view, the pledge telescopic
sight would constitute a single The opposing viewpoint is that the statutory prohibition oo division applies A” Equal OPPOrtuniiYl when several items are pawned at the same time. For example, AfWnntive Action EFP~OVP~
pledge of a watch and a ring when pawned at the same time could not be divided into two different charges were assessed greater th&n the amount which might be charged if the watch and ring secured ona! transaction. 5069-51.01, et seq., V.T.C.S.. the Texas Pawnshop Act,
was enacted in 1971 and continued a long history of governmental regulation of pawnbrokers. See Tex. Gen. Laws 1874, ch. CVII. Il. et at 153, 8 H. Cammel. Laws of Texas 155 (1898); V.T.C.S. art6. *2 Hr. Sam Kelley (J+225)
6146-6165 (1925); V.T.C.S. art. 6165b (1963); V.T.C.S. art. 5069-1.01, r Few of the Texas Pawushop Act ‘8 provisions are new. et seq. (1967).
The part of article 5069-51,,12 with which we are coocemed had its in legislation passed in 1963 and 1967. In the first of these, roots the Texas Regulatory Loan Al%, which was repealed in 1967, article 6165b. section 17(a)(7) pro%,ided in pert:
No licensee shall :induce or permit any person, or husband and wife, to be obligated, directly or indirectly, uoder more than one (1) loan contract f uoder this Act at the same time for the purpose, a higher or with the effect, of obtaining authorized charg;e than would otherwise be permitted by this fet. . . .
In 1967. legislation coincerned with consumer credit included
No licensee shall induce or permit any person, or husband and wife, to be obligated, directly or uode:: more than one loan cootract indirectly.
uoder this chapl:er at the same time
purpose, or with the effect, of obtaining a higher authorized charl;e otherwise be permitted by this chapter; but such limitation oot apply . . . to pledged loans made pursuant to Artici,k 3.17. . . . (Emphasis added).
V.T.C.S. art. 5069-3.15.(j). 5069-3.17 specifically dealt with pawnbrokers.
Clearly, the legislature in 1963 sought to prevent lenders from dividing a loan transaction into two or more small loans so as to earn higher interest. Pawnbrok,rrs were apparently included as “lenders.” Although pawnbrokers were explicitly exempted from this prohibition legislature reir.stated limitation in slightly altered form with the passage of the Texas Pawnshop Act. The obvious purpose of thia section of the Pewcshop Act and its predecessor statute was to prevent lenders from charg:.ng excessive fees by taking collateral and dividing it among two or more loans instead of securing one loan.
With the passage of the 1971 Texas Pawnshop Act, this prohibition once again applies to pawnbroker,s.
“Pawn transaction” is not defined in the Texas Pawnshop Act, but there is no prohibitioo against allowing more than one item of collateral to secure a loai, and article 5069-51.10 indicates that “pawn transaction” can refer to a loan secured by more than one piece of collateral. *3 (JM-225)
Art. 5069-51.10. favn Ticket time the Pen
The pawnbroker, at deliver to is mtered, pledgor a memorandum or ticket on which shall be set forth
(a) The name c.n.d address of the pawnshop; (b) The name and address of the pledger and pledgor’s description or the distinctive number license or military from pledger’s driver’s identification;
(c) The date of the. transaction; (d) An identiF:ication and description of the pledged goods, ?ncluding serial numbers
reasonably availatze* e-9
(e) The amourt of cash advanced or credit extended to the p:.edgor, designated as the ‘Amount Financed’;
(f) The amount of the pawn service charge, designated as the ‘Finance Charge’;
(g) The total amount (the Amount Financed plus the Finance Charg;) which must be paid to redeem the pledged goods% the maturity date, designated as the ‘Total of Payments’; (h) The ‘Annu.3~1 Percentage Rate,’ computed
accordance with the regulations issued by Federal Reserve Board of the United States pursuant to the Twth-in-Lending Act. Title I, Act of May 29, 1968, Public Law 90-321.. 82 Stat. 146, as amended;
(i) The matur::ty date of the pawn transaction; (j) A s.tatement: to the efiect that the pledgor is not obligated ED redeem the pledged goods, and that the pledged goods may be forfeited to the pawnbroker sixty - days after the specified maturity date. (Emphasis i;lded). The statutory requf,renent that a tjcket be made up at the time the pawn transaction is enl:artid into and that the ticket contain an
identification and description of the pledged goods including serial numbers clearly implies more than one irem of collateral can be used *4 (JFI-225) to secure the transaction. ,+e also article 5069-51. Il. which states -7 that a pledger shall have nc, obligation to redeem goods or make any payment on a pawn transaction. Thus, the statutory prohibition on division app:.ies when several separate and distinct items are pawned at the same time.
j;UMMARY We conclude that article 5069-51.12. V.T.C.S., prohibits pawnbrokers from splitting pawn trans- actions the purpose of charging a total service charge greater than the service charge on one transaction. It does not prohibit splitting if greater charges are not
assessed on more zhan one transaction
he assessed ‘on a single A single pawn transaction ma.y be secured by more than one item of collateral.
JIM MATTOX Attorney General of Texas TOM GREEN
First Assistant Attorney General
DAVID R. RlCBARDS
Executive Assistant Attorury General
RlCK GILPIN
Chairman, Opinion Committee
Prepared by Bradley Seals
Assistant Attorney General
Al’PROVED:
OPINION COMMITTEE
Rick Cilpin. Chairman
Colin Carl
Susan Garrison
Tony Guillory
Ji.m Uoellinger
Bradley Seals
Nancy Sutton
Bruce Youngblood