759 F.2d 1155 (4th Cir. 1985), 84-1312, Gallaher v. City of Huntington

Docket Nº:84-1312.
Citation:759 F.2d 1155
Party Name:Ronald W. GALLAHER, d/b/a The Pawn and Coin Shop, Appellee, v. The CITY OF HUNTINGTON, Ottie Adkins, in his official capacity as Chief of Police for the City of Huntington, Robert Bailey, in his official capacity as Sheriff of Cabell County, West Virginia and John L. Cummings, in his official capacity as Prosecuting Attorney for Cabell County, West
Case Date:April 11, 1985
Court:United States Courts of Appeals, Court of Appeals for the Fourth Circuit
 
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Page 1155

759 F.2d 1155 (4th Cir. 1985)

Ronald W. GALLAHER, d/b/a The Pawn and Coin Shop, Appellee,

v.

The CITY OF HUNTINGTON, Ottie Adkins, in his official

capacity as Chief of Police for the City of Huntington,

Robert Bailey, in his official capacity as Sheriff of Cabell

County, West Virginia and John L. Cummings, in his official

capacity as Prosecuting Attorney for Cabell County, West

Virginia, and Chauncey Browning and Col. John W. O'Rourke

and John D. Rockefeller IV, Appellants.

No. 84-1312.

United States Court of Appeals, Fourth Circuit

April 11, 1985

Argued Oct. 30, 1984.

Page 1156

Janet Frye Steele, Asst. Atty. Gen., Charleston, W.Va., for appellants.

Gene W. Gardner, Huntington, W.Va. (Barrett, Chafin, Lowry & Hampton, Huntington, W.Va., on brief), for appellee.

Before PHILLIPS and MURNAGHAN, Circuit Judges, and BUTZNER, Senior Circuit Judge.

MURNAGHAN, Circuit Judge.

The temptation to steal still rears its ugly head. State governments understandably from time to time have to seek to introduce enhanced methods for detecting and preventing theft. The West Virginia legislature, in enacting in 1981 Sec. 61-3-51 of its Code has followed one recently developed course. 1 The statute is designed to impede the flow in commerce of stolen goods and thereby to diminish the likelihood that they will become more difficult to trace and to recover. 2

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Under a heading "Precious Metal and Gem Dealers; Records; Prohibited Acts," West Virginia Code Sec. 61-3-51 3 provides that anyone in the business of purchasing precious metals or gems other than for personal, family or household use (i.e. primarily for resale) shall secure from the seller sufficient proof of lawful ownership or a sworn affidavit of ownership (Sec. 61-3-51(a) ). 4 A record of each purchase must be entered in a permanently maintained book describing the item purchased and giving the date of purchase and name, residence and telephone number of the seller (Sec. 61-3-51(b) ).

The person in the business of purchasing precious metals or gems, during his, her or its normal business hours, shall make the record book available to inspection by any West Virginia law enforcement officer. A purchase under the statute must be reported in the same detail as required for the entry in the record book. The report must be made to the chief of police or sheriff within twenty-four hours of the purchase. The record book information must be preserved by the purchaser of a precious metal or gem for at least three years.

Physical removal from the possession of the purchaser, or alteration in any way of the form or substance of the metal or gem subject to the act is forbidden for a period of ten calendar days following the purchase (Sec. 61-3-51(c) ). However, transfer of title may occur in that ten day period, to be followed by delivery after the ten day period has elapsed. Violation of the law is made a felony subject to a sentence of not less than one nor more than two years in the penitentiary or not more than one year in jail or a fine of not less than $100 nor more than $5,000, or both (Sec. 61-3-51(e) ).

The appellee, Ronald W. Gallaher, a licensed pawn broker doing business as The Pawn and Coin Shop, has brought a declaratory action which seeks injunctive relief as well. 5 The district court made a declaration in Gallaher's favor that W.Va.Code Sec. 61-3-51 is unconstitutional because:

a) The various states' power to regulate the sale of and the dealing with gold has been pre-empted by the Congress of the United States;

b) West Virginia Code Sec. 61-3-51 violates the plaintiff's right to be free from unreasonable searches and seizures as guaranteed by the Fourth and Fourteenth Amendments to the United States Constitution;

c) West Virginia Code Sec. 61-3-51 is so vague, indefinite and ambiguous that it violates the guarantees of the Fifth and Fourteenth Amendments.

The attack launched by Gallaher concerns only the statute in its facial guise. Gallaher and three of his employees first were arrested in 1982, and charged with failure to comply with the statute with respect to the purchase of two sterling silver spoons and one sterling silver fork. However, the authorities of the City of Huntington, where the arrest had taken place, indicated an intention to present the case to a grand jury, and dismissed the information. Without waiting for grand jury action, Gallaher brought the present proceeding in the United States District Court for the Southern District of West Virginia. It has been stipulated that Gallaher engages in the buying and selling of gold and silver in interstate commerce.

First, Gallaher argues preemption by reason of a federal statute, the Gold Reserve Act of 1934, Pub.L. No. 73-87, Secs. 3,

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4, 48 Stat. 337, 338 (1934) which created conditions under which gold might be acquired and held. Sections 3 and 4 of the Gold Reserve Act of 1934 were repealed by Pub.L. 93-110, 87 Stat. 352 (1973), and amended by Pub.L. 93-373, 88 Stat. 445 (1974), whose stated purpose was to permit United States citizens to purchase, hold, sell, or otherwise deal with gold in the United States or abroad. 6 However, the federal statute, first limiting private dealings by United States citizens in gold and subsequently permitting such dealing, deals with apples while Gallaher contends, in effect, that it should cover oranges. The federal statute was concerned with monetary policy and whether gold might be used as currency or as a...

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