A business found my cellphone, keeping it as collateral for damage they can't prove i did, read my SMS. legal?

It all depends on if you actually did break the light, if you did, you can't sue over invasion of privacy since YOU left it there and it was technically evidence since they have the right to find evidence AFTER an incident has happened. If you didn't, I don't believe they're allowed to look at photos and text messages if they're not law enforcement so you can counter-sue