D.C. BAR 2020 CONFERENCE – DISCOVER MORE AT https://www.dcbarconference.org

Washington Lawyer

Legal Spectator: Pawnshops, Pearls, and Basic Black

From Washington Lawyer, March 2002

By Jacob A. Stein

spectator What to do with old law school casebooks? They remain on the shelf, unopened, despite the fact that they take up needed space. Such books have nostalgic staying power. Nevertheless, the time comes when they must be taken down, put in a box for storage in the garage with instructions to your executor to throw them out.

While acting on my own advice and putting the books away, my Personal Property casebook, dark blue, heavy and bruised, caught my eye because of a bookmark at Easterly v. Horning, 30 U.S. App. D.C. 225, decided in 1908. The case deals with a dispute involving title to personal property. The defendant, George D. Horning, operated a Washington pawnshop. The plaintiff, Easterly, alleged that Horning should have known that the woman who pawned jewelry with Horning was not the true owner of the jewelry. She wanted the jewelry back. Horning, who lent $300 against the jewelry as security, defended by saying he was a "bona fide pawnee for value."

The Horning pawnshop was still in business up to a few years ago. It had moved long ago from downtown Washington to Rosslyn, Virginia, where the pawnshops found northern Virginia a more hospitable place. The Horning pawnshop recently closed down in favor of renting the space to a restaurant that is utilizing the pawnshop memorabilia.

In the 1940s there were pawnshops huddled around 9th and E streets NW. Two of them disappeared to make way for the FBI building. The window display of these shops was intriguing. Saxophones, clarinets, accordions, banjos, guitars, portable typewriters, trays of fraternity and class rings, cuff links, studs, diamond rings, ruby rings, rhinestone rings, bracelets, antique medals, electric razors, clocks, watches, radios, phonographs, and silver photo frames.

The merchandise on display came into the pawnshop as security for a much needed loan that was to be redeemed at a fixed date by bringing in the pawn ticket and paying the loan and paying the additional strong interest rate. If the borrower defaulted, the security became the property of the pawnshop. As stated in Easterly, the pawnshop owner became a bona fide pawnee for value.

Why do people resort to pawnshops that charge such a high rate of interest? Banks will not make quick loans secured by used musical instruments. Banks want unencumbered real estate. The friendly port of call for those in need of cash right away is the friendly pawnbroker.

Pawnshops have been around a long time to fill this need. One commentator sums it up this way: "If we desire to trace with minuteness the history of pawnbroking, we must go back to the earliest ages of the world, since the business of lending money on portable security is one of the most ancient of human occupations."

It takes talent to run a pawnshop. The two ways of making money—having the borrower pay off the loan with interest or having the borrower default and then selling the security at a profit—must be balanced against the ways of losing money. The pawnbroker loses if he lends more than the security is worth. This requires a knowledge of the market value of portable security, of all the things I saw in the pawnshop windows near 9th and E.

Pawnbrokers must also be on the alert to make sure that the person who brings in the goods is the real owner. If the pawnbroker does not get good title, he has no legal right to keep the security that covers the loan. Most states require the pawnbroker to report to the police every item that is pawned. This gives the police a check on efforts to dispose of stolen goods.

Pawnbrokers show up in novels and movies. There are the novels in which the hero, a talented but unsuccessful writer, runs out of money. He takes his typewriter to the pawnshop to get money to buy food and drink. Just days before he will lose the typewriter unless he pays up, he gets a letter from a publisher who wants to buy the manuscript. In the movie The Lost Weekend Ray Milland, playing the role of an alcoholic writer, is a frequent visitor to the corner pawnshop. Dostoevsky’s Crime and Punishment turns on Raskolnikov’s murder of a woman who runs the pawnshop.

The chance finding of a lost pawn ticket provides a handy literary device. Try this.

A rich-too-quick Wall Street broke—we’ll call him J.P. Leaverage—is carrying on a love affair with another rich-too-quick broker’s wife. J.P. makes a killing on the stock market. He decides to celebrate by buying his girlfriend a beautiful pearl necklace. When he presents it to her, and after the oohs and ahs, she asks how she will explain this to her insanely jealous husband. J.P. says to tell him it’s a fake. She says it won’t work. Her husband has a jeweler’s eye.

J.P. has a backup plan. "We’ll go to the pawnshop, pawn the necklace, and you’ll take the pawn ticket to your husband and tell him you found it and you want him to redeem it." She follows orders.

Two days later her husband calls her at home and tells her to drop by his office. He has been to the pawnbroker. She will like what he got.

She puts on the basic black dress that goes with the pearls and goes to the office. Her husband shows her two silver candlesticks. "Aren’t these beautiful? Somebody must have really needed money to pawn these." He then calls to his secretary and says, "My wife and I are going to dinner. Would you wrap the candlesticks that are in the front room and have them sent to my house."

The secretary walks into the room and says, "I certainly will." She is wearing a beautiful string of matched pearls.

Jacob A. Stein may be reached by e-mail at [email protected].