vs. ) CASE NO. 75-1558
MARTHA M. O'BRIEN, )
Respondent. )
THIS CAUSE came on to be heard, after due notice to the parties, in Miami, Florida, on October 29, 1975, before the undersigned Hearing Officer.
For Petitioner: Joseph A. Doherty, Esquire
For Respondent: Silver S. Squarcia, Esquire
Whether or not Respondents' registration as real estate brokers should be suspended for an alleged violation of Section 475.25(1)(i), Florida Statutes.
On or about the middle of March, 1974, Anne Land, a saleswoman for Respondent real estate brokers, met one Timothy B. Howe who had responded to an advertisement in the newspaper concerning the purchase or lease of a home at 185 West Sunrise Avenue, Coral Gable, Florida. After viewing the premises, Mr. Howe decided to lease the property and his attorney prepared a lease in the total sum of $7,200 for one years rent. This proposal was submitted to the owner of the house, Mrs. Joanne Kealy, but upon the advice of counsel, she declined the proposal. Several days later, Howe decided to purchase the home. He signed a standard sales contract, dated March 26, 1974, which provided for a total purchase price of $72,500.00, payable under the following terms:
"The sum of $1,800.00 by check hereby deposited in escrow with Magruder Realty, Inc., as escrow agent, in part payment of the purchase price and as a security deposit for
the faithful performance of this contract by Purchaser, and the remainder of the purchase price shall be paid as follows: Upon acceptance of this contract the purchaser to deposit with Magruder Realty, Inc., an additional $5,400.00. Purchaser to assume existing mortgage for approx. $38,816.00 with Coral Gables Federal Svgs and Loan Association and the seller to give to the purchaser a second mortgage for balance of approx.
$26,500.00 at 8 1/2 percent for 12 years or less with no pre-paid clause penalty..."
The contract was signed by Land as witness and also in behalf of the seller and also as an escrow agent of Magruder Realty, Inc. The document was not acknowledged before a notary public (testimony of Lands Petitioner's Exhibit 1).
Land contacted the owner who was out of state at the time and asked her to indicate her acceptance of the offer by telegram. The owner did so on March 29, 1974. The evidence is conflicting as to the circumstances surrounding the disposition of the deposit check for $1,800.00. Land testified that she gave the check to Joseph P. Magruder on March 26 or 27 as was her practice in handling deposits, but said nothing about holding the check. Mr. Magruder, on the other hand, testified that at the time she gave him the check, she said Mr. Howe desired the check be held until the total down payment of $7,200.00 was received from a trust account, and that he therefore put the check in the transaction folder and gave the folder back to her to retain. His statement of the reason for not depositing the check in an escrow account immediately is supported by subsequent events and by the fact that the check was not actually deposited until a subsequent date, which was contrary to his normal office practice (testimony of Land, Magruder, O'Brien; Exhibit 2).
Subsequent conversations between Land and Howe during the latter part of March and early April were to the effect that Howe's mother was sending funds for the balance of the down payment. On April 4, Land talked to Howe by telephone and he asked for the escrow account number of Magruder Realty, Inc., in order that his mother could send the additional $5,400.00 and/or $7,200.00. Land asked Respondent O'Brien, who was in the office at the time, for the firm's escrow account number and passed it on to Howe. On the same day, Land went on vacation in North Carolina and did not return to the office until April 15th.
At that time, Magruder informed her that the additional funds had not been received from Howe and that although he had tried to reach him on the telephone he had been unsuccessful. Because of the difficulty in reaching Howe as to payment of the balance of the down payment, Magruder deposited the $1,800.00 check in his escrow bank account on April 17, 1974. It was not honored by the Howe's bank because Cristina I. Howe, his wife, had issued a stop payment order on the check on April 15. On March 26, 1974, the date the check was drawn, the Howe bank account was overdrawn by 26 (testimony of Land, Magruder, O'Brien, Garcia; Petitioner's Exhibits 2 & 6; Respondent's Exhibit 1).
Although Respondents claimed that the Florida Real Estate Commission had disposed of the instant allegation by its letter of censure dated February 10, 1975, which referenced file CD15240, it was determined by the Hearing Officer that this letter involved other transactions and not the one under consideration at the hearing (Petitioner's Composite Exhibit 5).
CONCLUSIONS OF LAW
Respondents are alleged to have violated Section 475.25(1),(i), Florida Statutes, which provides as follows:
"475.25 Grounds for revocation or suspension. (1)(i) Failed, if a broker, to immediately place, upon receipt, any money, fund, deposit, check or draft, entrusted to him by any person dealing with him as a broker, in escrow with a title company or banking institution located and doing business in Florida, or, deposit said funds in a trust or escrow bank account maintained by him with some bank located and doing business in Florida, wherein said funds shall be kept until disbursement thereof is properly authorized, . . ."
Timothy I. Howe did not comply with Petitioner's witness subpoena to appear at the hearing and Respondent requested his presence, it was considered unnecessary that the hearing be adjourned pending any action to enforce the subpoena, even though he undoubtedly could have shed light upon the conflict in the testimony as to his alleged instructions to saleswoman Land concerning disposition of the
$1,800.00 check. Even assuming he had indicated his desire to have his check retained by Respondents pending the receipt of other funds, this in itself would not have warranted Respondents complying with the request. To have done so would have been in derogation of the terms of the sales contract which specifically provided that the check had been deposited in escrow with Magruder Realty, Inc. as escrow agent, as a security deposit for the faithful performance of the contract. When the deposit was made, all parties evidently considered that a binding offer had been effected. Additionally, it is immaterial that Howe had insufficient funds in his bank account at the time he wrote the check to cover it if it had been deposited at that time. If, in fact, Howe told Land to hold the check and this information was passed on to Magruder, it should have put him on notice there was a strong likelihood that funds were not then available for payment of the check and he should have declined to accept it under such circumstances.
The evidence establishes that Joseph P. Magruder received from his agent, Anne M. Land, a check in the sum of $1,800.00 entrusted to her by Timothy
I. Howe who was dealing with her as an agent of Magruder Realty, Inc., and that Joseph P. Magruder failed upon receipt of this check to immediately place it in escrow with a title company or banking institution located and doing business in Florida or in a trust or escrow bank account maintained by him with some bank located in and doing business in Florida, in violation of Section 475.25(1)(i), Florida Statutes.
Although violation of the cited statutory provision provides grounds for suspension of the registration of Respondents, it is considered that under the circumstances of the offense and in the absence of any showing of bad faith, dishonesty, or actual financial loss to the customer brought about by the actions of Magruder, suspension of registration would be unduly harsh. However, Respondent Joseph P. Magruder should be reprimanded for failing to adhere strictly to the escrow requirements of the statute. Inasmuch as this was a personal dereliction on the part of Mr. Magruder and was not participated in by Martha M. O'Brien, she should not be subject to adverse action.
It is recommended that the Florida Real Estate Commission issue a private written reprimand to Joseph P. Magruder, registered real estate broker, for violation of Section 475.25(1),(i), Florida Statutes.
DONE and ENTERED this 28th day of November, 1975, in Tallahassee, Florida.
THOMAS C. OLDHAM
Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304
Joseph A. Doherty, Esquire 2699 Lee Road
Silver S. Squarcia, Esquire Suite 832, Seybold Building
