v. PAWN KING, INC., et al., SC 18848

United States District Court for the District of Connecticut


      Pawnbrokers; Whether General Statutes § 21-44 Restricts “Rates of Interest” Chargeable by a Pawnbroker or more Generally Restricts the “Rates” Chargeable for the use of Money Obtained from a Pawnbroker in Connection with a Repurchase Transaction.  The plaintiff's decedent entered into several transactions with the defendant pawnbroker, selling items to the defendant at a percentage of their fair market value and reserving the right to repurchase the items for the original price paid plus a twenty percent monthly service charge.  Pursuant to General Statutes § 21-44, two percent is the maximum "rate" that a "pawnbroker or person who loans money on the deposit or pledge of personal property shall take or receive for the use of money loaned . . . exceeding fifty dollars in amount."  The plaintiff brought this action in federal court, claiming that the defendants violated § 21-44 by charging monthly service fees that were calculated at a rate that was in excess of the interest rate limit imposed on pawnbrokers by that statute.  The plaintiff relied on Rhodes v. City of Hartford, 201 Conn. 89 (1986), in which the court held that § 21-44 applies to repurchase transactions.  The defendants moved for summary judgment, contending that Rhodes was overruled legislatively by the 1997 amendment to § 21-44.  They claimed that by deleting the phrase "directly or indirectly," which previously had modified the language "take or receive," the legislature exempted repurchase transactions and their associated fees from the limits imposed by § 21-44.  In opposing summary judgment, the plaintiff argued that even if the transactions at issue were not subject to the limitations of § 21-44, they were nevertheless loans within the meaning of General Statutes § 37-4, which regulates the amount of interest that may be charged on consumer transactions and small loans.  The district court certified, and this court accepted, the following questions of law: "(1) Does General Statutes § 21-44 restrict 'rates of interest' chargeable by a pawnbroker, or does it more generally restrict the 'rates' chargeable for the use of money obtained from a pawnbroker in connection with a repurchase transaction? (2) Did the Connecticut legislature, in its 1997 amendment to § 21-44, exempt repurchase transactions and the attendant fees charged from the limits on rates received by pawnbrokers? (3) If so, are repurchase transactions, as described by the court in Rhodes v. City of Hartford, 201 Conn. 89 (1986), considered loans subject to the interest rate limits imposed by General Statutes § 37-4?"