Can a pop-up gold and jewelry buyer in Tennessee move purchased items to a separate storage facility during the 30-day holding period?

Subject

Opinion No. 11-69, Holding Period Location Requirements of Scrap Jewelry and Metal Dealer's Act of 1980, September 15, 2011

Plain-English summary

District Attorney General Mike Bottoms of Tennessee's 22nd Judicial District asked the AG about a then-emerging gold-rush problem: pop-up scrap jewelry and precious metals buyers. The business model was familiar in 2011. With gold prices spiking, traveling buyers would rent a hotel conference room, run advertising campaigns ("Get cash for your old gold!"), buy whatever walked in the door for the weekend, and then leave town with their haul. Local police saw this as a stolen-goods pipeline.

Tennessee's Scrap Jewelry and Metal Dealer's Act of 1980 has a 30-day holding period under Tenn. Code Ann. § 38-1-202(a). After a qualifying purchase, the buyer cannot sell, exchange, barter, melt down, or otherwise process the item for 30 days. The point is to give law enforcement a window to recover stolen property. The buyer is also required to register with the local police chief and sheriff under § 38-1-201(a).

DA Bottoms's question got at the loophole pop-up buyers were trying to exploit: could they buy at the temporary storefront, then move everything to an off-site storage facility for the 30-day waiting period, then leave town? That would let them clear out of the conference room and move to the next city without waiting 30 days locally.

The AG said no. The statute prohibits removing the items "from the place in which such business is conducted" during the 30-day period. "Such business" refers back to the activity described in § 38-1-201, namely "purchasing or otherwise dealing in antique, used or scrap jewelry and precious metals." So "the place in which such business is conducted" is the place where the buyer made the purchase, not somewhere else. A separate storage facility, where no purchasing or otherwise dealing occurred, is not "the place in which such business is conducted." Moving the items to off-site storage during the holding period violates the statute.

The AG anchored that reading in State v. Kirkland, 655 S.W.2d 140, 142 (Tenn. 1983), which described the holding-period rule as aimed at "prevention of illegal trafficking of stolen property, by requiring items that are high targets for theft to be held and subject to inspection at a place and time certain before being resold." If the items can simply migrate to a separate storage building, the inspection function fails. Police need to know where the items are.

The AG also cited the criminal-statute construction rule in Tenn. Code Ann. § 39-11-104: criminal statutes are construed "according to the fair import of their terms, including reference to judicial decisions and common law interpretations, to promote justice, and effect the objectives of the criminal code." The fair import of "the place in which such business is conducted" is the buying location.

Currency note

This opinion was issued in 2011. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

The Scrap Jewelry and Metal Dealer's Act has been amended over the years. Anyone running or prosecuting a present-day case should check the current text of Tenn. Code Ann. §§ 38-1-201 and 38-1-202 and any related local ordinances. Pop-up buyer regulation has also been the subject of additional legislative activity in many states.

Background and statutory framework

Registration. Tenn. Code Ann. § 38-1-201(a) requires any person, firm, or corporation purchasing or otherwise dealing in antique, used, or scrap jewelry and precious metals for resale (in original form or as changed by remounting, melting, reforming, remolding, or recasting, or for resale as scrap or in bulk) to register with the chief of police and sheriff of each city and county where the activity is conducted, subject to enumerated exceptions.

The 30-day holding period. Tenn. Code Ann. § 38-1-202(a): "[I]t is unlawful for any person or corporation engaging in the activity described in § 38-1-201 to sell, exchange, barter or remove from the place in which such business is conducted, or to change the form of any such items by remounting, melting, cutting up, or otherwise changing the form of any such items for a period of thirty (30) days from the date of purchase."

Statutory construction. Owens v. State, 908 S.W.2d 923, 926 (Tenn. 1995): ascertain and give effect to legislative intent without unduly restricting or expanding the statute's coverage. State v. Sliger, 846 S.W.2d 262, 263 (Tenn. 1993). State v. Collins, 166 S.W.3d 721, 726 (Tenn. 2005); State v. Wilson, 132 S.W.3d 340, 341 (Tenn. 2000): when statutory language is clear and unambiguous, legislative intent is derived from plain and ordinary meaning. Tenn. Code Ann. § 39-11-104: criminal statutes are construed "according to the fair import of their terms."

Statutory purpose. State v. Kirkland, 655 S.W.2d 140, 142 (Tenn. 1983): the holding-period rule helps prevent illegal trafficking of stolen property by requiring high-theft-risk items to be held at a place and time certain before resale.

Common questions

What if the dealer registers the storage facility location instead of the storefront?

The opinion does not address registering the storage facility itself. But the statutory language ties the holding-period location to "the place in which such business is conducted," meaning the place of purchase. Registering a separate location does not change where the purchase happened.

What if there is genuinely no room at the temporary storefront for 30 days of inventory?

The opinion does not address operational hardship. The statute imposes the constraint without exception. A dealer who cannot accommodate the 30-day holding period at the purchase location should not be running a pop-up buying operation in that location.

Does this apply to pawnshops and brick-and-mortar jewelers?

Pawnshops are subject to separate Tennessee statutes that include their own holding-period rules. Permanent brick-and-mortar jewelers and metals dealers covered by the Scrap Jewelry and Metal Dealer's Act are subject to the same holding-period rule, but the "place of business" question is straightforward for them.

What's the criminal penalty for violating § 38-1-202(a)?

The opinion does not catalog penalties. Anyone facing prosecution should look at the act's enforcement provisions and any related laws on receiving stolen property.

Does the answer change if the storage facility is across the street?

The opinion does not draw distance-based lines. The statute talks about the place of business as a single location, not a multi-building campus. A dealer wanting to use separate buildings should expect a strict reading; "across the street" is not "at the place in which such business is conducted."

Citations

• Tenn. Code Ann. §§ 38-1-201, 38-1-201(a), 38-1-202(a)
• Tenn. Code Ann. § 39-11-104
• State v. Kirkland, 655 S.W.2d 140 (Tenn. 1983)
• Owens v. State, 908 S.W.2d 923 (Tenn. 1995)
• State v. Sliger, 846 S.W.2d 262 (Tenn. 1993)
• State v. Collins, 166 S.W.3d 721 (Tenn. 2005)
• State v. Wilson, 132 S.W.3d 340 (Tenn. 2000)

Source

• Landing page: https://www.tn.gov/attorneygeneral/opinions.html
• Original PDF: https://www.tn.gov/content/dam/tn/attorneygeneral/documents/ops/2011/op11-069.pdf

Original opinion text

September 15, 2011
Opinion No. 11-69
Holding Period Location Requirements of Scrap Jewelry and Metal Dealer's Act of 1980

QUESTION

Does a person violate Tennessee Code Annotated § 38-1-202(a) who makes qualifying purchases of jewelry and precious metals at a temporary storefront, and then, for the required thirty-day holding period, holds such items in a storage facility at a different location?

OPINION

Yes, because the plain language of Tennessee Code Annotated § 38-1-202(a) requires those who make qualifying purchases of jewelry and precious metals to hold such items, for the required thirty-day holding period, at "the place in which such business is conducted" rather than in a separate storage facility at a different location.

ANALYSIS

The Scrap Jewelry and Metal Dealer's Act of 1980 regulates certain acquisitions of jewelry and other precious metals. See State v. Kirkland, 655 S.W.2d 140, 142 (Tenn. 1983). Initially, with certain exceptions, any person, firm, or corporation purchasing or otherwise dealing in antique, used or scrap jewelry and precious metals, where the purchase is for resale in its original form or as changed by remounting, melting, reforming, remolding or recasting or for resale as scrap or in bulk, is required to register with the chief of police and sheriff of each city and county in which the activity shall be carried on. Tenn. Code Ann. § 38-1-201(a). The Act then requires, subject to limited exceptions, that such items be retained for thirty days before being resold, stating in pertinent part:

[i]t is unlawful for any person or corporation engaging in the activity described in § 38-1-201 to sell, exchange, barter or remove from the place in which such business is conducted, or to change the form of any such items by remounting, melting, cutting up, or otherwise changing the form of any such items for a period of thirty (30) days from the date of purchase.

Tenn. Code Ann. § 38-1-202(a).

Our review of this statute is guided by the principle of statutory construction to ascertain and give effect to legislative intent without unduly restricting or expanding a statute's coverage beyond its intended scope. Owens v. State, 908 S.W.2d 923, 926 (Tenn. 1995), citing State v. Sliger, 846 S.W.2d 262, 263 (Tenn. 1993). Where a statute's language is clear and unambiguous, legislative intent should be derived from its plain and ordinary meaning. State v. Collins, 166 S.W.3d 721, 726 (Tenn. 2005), citing State v. Wilson, 132 S.W.3d 340, 341 (Tenn. 2000). Further, the General Assembly has directed that criminal statutes "shall be construed according to the fair import of their terms, including reference to judicial decisions and common law interpretations, to promote justice, and effect the objectives of the criminal code." Tenn. Code Ann. § 39-11-104.

Section 38-1-202(a) clearly states that, during the thirty-day holding period, persons or corporations may not remove qualifying jewelry and precious metals "from the place in which such business is conducted." The plain meaning of Section 38-1-202(a) compels the conclusion that "such business" refers to "the activity described in § 38-1-201," namely "purchasing or otherwise dealing in antique, used or scrap jewelry and precious metals, where the purchase is for resale in its original form or as changed by remounting, melting, reforming, remolding or recasting or for resale as scrap or in bulk … ." See Tenn. Code Ann. § 38-1-201(a).

The place in which such a business is conducted thus cannot be construed as including a place, such as a separate storage facility, at which no "purchasing or otherwise dealing" in jewelry and precious metals occurred. The holding period at the location of the original sale arguably aids in the prevention of illegal trafficking of stolen property, by requiring items that are high targets for theft to be held and subject to inspection at a place and time certain before being resold. See State v. Kirkland, 655 S.W.2d at 142. Consequently, purchasing qualifying jewelry and precious metals at a temporary storefront and then holding such items at a separate storage facility at a different location for the thirty-day waiting period is not in accord with the regulatory requirements of Tennessee Code Annotated § 38-1-202(a).

ROBERT E. COOPER, JR.
Attorney General and Reporter

WILLIAM E. YOUNG
Solicitor General

AARON E. WINTER
Assistant Attorney General

Requested by:
The Honorable Mike Bottoms
District Attorney General
22nd Judicial District
P.O. Box 279
Lawrenceburg, TN 38464