Gallaher v. City of Huntington

• Decision Date: 11 April 1985
• Docket Number: No. 84-1312,84-1312
• Citation: 759 F.2d 1155
• Parties: 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.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 1155

759 F.2d 1155

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.

Argued Oct. 30, 1984.

Decided April 11, 1985.

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

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 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 substitute therefor. Those concerns are not affected one way or the other by the West Virginia statute. It instead attempts to forestall unauthorized asportation of another man's property, a matter preeminently addressed under the police power of local authorities, whether authorities of the state of West Virginia or of its municipalities and counties.

Law enforcement against theft was in no way an objective of the federal statute. Preemption is a matter of congressional intent. Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230, 67 S.Ct. 1146, 1152, 91 L.Ed. 1447 (1947); Jones v. Rath Packing Co., 430 U.S. 519, 525, 97 S.Ct. 1305, 1309, 51 L.Ed.2d 604 (1977). Where an exercise by a state of its police power is attacked there is a presumption against a congressional intention to preempt in the absence of a clear and manifest expression by Congress favoring it, or an evident public purpose which would be forestalled were preemption not found to have occurred. Ray v. Atlantic Richfield Co., 435 U.S. 151, 157, 98 S.Ct. 988, 994, 55 L.Ed.2d 179 (1978). See Joe Flynn Rare Coins, Inc. v. Stephan, 526 F.Supp. 1275, 1279 (D.Kan.1981). Nothing here suggests an intention of Congress to preempt the state of West Virginia from regulating the traffic in and sale of property, in order to cut down on thefts thereof. Nor is there any indication of a manifest necessity for preemption in that area. We conclude, therefore, that the West Virginia statute retains full force and vitality.

The second contention raised by Gallaher is that Fourth Amendment rights are inevitably infringed because the statute requires maintenance of a record book which, without a warrant, must be available for inspection by law enforcement officers at all times during normal business hours. The argument is based on decisions of district courts in Florida and Kansas. ⁷

We recognize that search warrants are required in most cases for administrative searches of business premises. Marshall v. Barlow's, 436 U.S. 307, 98 S.Ct. 1816, 56 L.Ed.2d 305 (1978); Camara v. Municipal Court, 387 U.S. 523, 87 S.Ct. 1727, 18 L.Ed.2d 930 (1967). The general rule, however, is not without exception. Colonnade Catering Corp. v. United States, 397 U.S. 72, 90 S.Ct. 774, 25 L.Ed.2d 60 (1970) (Granting agents of Alcohol and Tobacco Tax Division of the Internal Revenue Service authority to inspect facilities of licensed liquor dealers without a warrant); United States v. Biswell, 406 U.S. 311, 92 S.Ct. 1593, 32 L.Ed.2d 87 (1972) (Upholding the validity of a warrantless search for firearms or ammunitions dealer). The greater latitude to conduct warrantless inspections of commercial property "reflects the fact that the expectation of privacy that the owner of commercial property enjoys in such property differs significantly from the sanctity accorded an individual's home, and that this privacy interest may, in certain circumstances, be adequately protected by regulatory schemes authorizing warrantless inspections." Bionic Auto Parts and Sales, Inc. v. Fahner, 721 F.2d 1072, 1078 (7th Cir.1983). The fourth amendment requires, however, that any such intrusion be reasonable. "[T]here can be no ready test for determining reasonableness other than by balancing the need to search against the invasion which the search entails." Camara, supra, 387 U.S. at 536-37, 87 S.Ct. at 1734-35.

The question, therefore, becomes one of whether the law's well-recognized exception to the warrant obtention requirement for certain types of administrative searches extends to the warrantless search of the record book at issue here. ⁸ Although the state of West Virginia has not previously regulated the transfer of precious metals and gemstones, as it has firearms, W.Va. Code Sec. 61-7-9 (1984), or liquor, W.Va. Code Sec. 60-4-1, et seq. (Supp.1984), here, not altogether surprisingly, we run into the age-old argument that it has not been done before and, therefore, should not be permitted now. However, each of those trades subject to the warrant requirement exception (e.g., firearm vendors, liquor merchants) must have existed at one time before the first attempt to create a Fourth Amendment exception for them. So, too, for precious metals and gem stones, which all possess the characteristics of substantial value and come in ornamental guises easy of alteration through melting down, redesign or breaking up, a beginning must be made. From the occasion of the big bang which initiated the existence of the universe, there has been a first time for...