Glinton v. AND R, INC. , 271 Ga. 864 ( 1999 )

Thompson, Justice.

Plaintiffs borrowed money from Georgia pawnbrokers at interest rates which exceeded five percent per month. Asserting the transactions were illegal and void because they violated the criminal usury statute, OCGA § 7-4-18,¹ plaintiffs brought suit against the pawnbrokers in the United States District Court for the Northern District of Georgia. The pawnbrokers moved to dismiss the complaint on the ground that the transactions are controlled by the statute regulating pawnbrokers, OCGA § 44-12-131, not the criminal usury statute. The district court agreed with the pawnbrokers and granted their motion to dismiss the complaint. Plaintiffs appealed to the United States Court of Appeals for the Eleventh Circuit, which certified the following questions:

A. Can the statutory scheme regulating pawnbrokers, be read harmoniously with the criminal usury statute, OCGA § 7-4-18, so that both apply to “pawn transactions” as defined in OCGA § 44-12-130 (3), or are such transactions meant to be governed exclusively by OCGA § 44-12-130, 131?

B. Is the permissible rate of interest and fees charged in “pawn transactions” as defined in OCGA § 44-12-130 (3) governed solely by OCGA § 44-12-131, or does the criminal usury statute, OCGA § 7-4-18, apply to modify allowable charges so that the interest charged in these transactions violates Georgia law?

Before we examine the pawnshop statute and the criminal usury statute,

[W]e first note that § 7-4-18 is a criminal statute. It thus must be construed strictly against criminal liability and, if it is susceptible to more than one reasonable interpretation, the interpretation most favorable to the party facing criminal liability must be adopted. [Cits.] This rule applies even though a criminal statute is being construed in a civil context. [Cits.]

Fleet Finance v. Jones, 263 Ga. 228, 231 (3) (430 SE2d 352) (1993). Keeping this rule in mind, we look to see whether the pawnshop statute and the criminal usury statute can be read harmoniously, or whether they conflict. We conclude that these statutes cannot be reconciled and that, when it comes to pawn transactions, the criminal usury statute is inapplicable.

We begin our analysis with the observation that nothing in the pawnshop statute indicates that the legislature intended for interest on pawn transactions to be limited to five percent per month. The plain language of the statute addresses interest and pawnshop fees in the aggregate, regardless of how the interest and fees are characterized and apportioned:

During the first 90 days of any pawn transaction or extension or continuation of the pawn transaction, a pawnbroker may charge for each 30 day period interest and pawnshop charges which together equal no more than 25 percent of the principal amount advanced.

OCGA § 44-12-131 (a) (4) (A). Thus, on its face, the pawnshop statute permits finance charges, which can consist of any combination of interest and pawn charges, at 25 percent per month for the first 90 days of the transaction.

Had the legislature intended to cap pawnshop transaction interest at five percent per month or less, it could have done so. In fact, the previous version of the pawnshop statute did just that. 1989 Ga. L. 819, 821. Differentiating between interest and charges in pawnshop transactions, that statute capped pawnshop interest at two percent per month and provided that the “pawnshop charge” could not exceed “one-fourth of the principal amount, per month, advanced in the pawn transaction.” Id.

Furthermore, in the current statutory scheme, a pawnshop can charge “additional interest” of 12.5 percent if a consumer wishes to redeem pledged goods within a 30-day grace period. OCGA § 44-14-403 (b) (3). This provision does not use the term “pawnshop charges” at all, and dispels the notion that the legislature intended for pawnshops to be governed by the criminal usury statute. After all, the 12.5 percent interest rate permitted in this instance is clearly at odds with our criminal usury law.²

Where statutes are in conflict, later statutes prevail over earlier statutes, Copeland v. State, 268 Ga. 375, 379 (490 SE2d 68) (1997); and specific statutes govern over more general statutes, Ga. Mental Health Institute v. Brady, 263 Ga. 591, 592 (2) (436 SE2d 219) (1993). The pawnshop statute was enacted long after the criminal usury-statute and it is more specific than the criminal usury statute. Thus, it is the pawnshop statute, not the criminal usury statute, which governs pawn transactions.

Questions answered. All the Justices concur, except Benham, C. J, dissenting, and Hunstein, J., not participating.

1 Subsection (a) of this Code section provides:

Any person, company, or corporation who shall reserve, charge, or take for any loan or advance of money or. forbearance to enforce the collection of any sum of money, any rate of interest greater than 5 percent per month, either directly or indirectly, by way of commission for advances, discount, exchange, or the purchase of salary or wages; by notarial or other fees; or by any contract, contrivance, or device whatsoever shall be guilty of a misdemeanor; provided, however, that regularly licensed pawnbrokers, where personal property is taken into their actual physical possession and stored by them, may charge, in addition to said rate of interest, not exceeding 250 at the time the property is first taken possession of by them for the storage of said property.

2 The statutes conflict in other ways as well. For example, the pawnbroker statute allows a pawnshop to charge a storage fee of $5.00 per day for a motor vehicle. OCGA § 44-12-131 (a) (4) (C) (ii). The criminal usury statute, on the other hand, limits the storage fee to 250 per transaction. OCGA § 7-4-18.