vs. ) CASE NO. 80-2041
JOSEPH J. KOWITT, )
Respondent. )
Pursuant to notice this cause came on for administrative hearing before P. Michael Ruff, Hearing officer of the Division of Administrative Hearings, on March 11, 1981 in Miami, Florida.
For Respondent: Joseph J. Kowitt, pro se
2030 South Ocean Drive Apartment No. 1227
By administrative complaint filed November 3, 1980 the Petitioner seeks to revoke or suspend the license of the Respondent or otherwise discipline the Respondent, charging that the Respondent has been guilty of fraud, misrepresentation, concealment, false pretenses, dishonest dealing by trick, scheme or device, culpable negligence or breach of trust in a business transaction in violation of Subsection 475.25(1)(h), Florida Statutes (1979) and has been guilty of operating as a real estate broker without a current license in violation of Subsection 475.42(1)(a), Florida Statutes (1979). Specifically, the Respondent is charged with receiving a check in the amount of $500 for an alleged commission payment due to his involvement in the sale of a parcel of property when he was not an active licensed real estate broker or salesman as he in renal red to be to receive such a commission. He is charged with falsely holding himself out to be the holder of a current real estate broker's license at the time the actions took place which resulted in his receiving the said $500 alleged commission or referral fee." The essential issue is thus whether the Respondent was validly licensed on the date the $500 was disbursed to him and concomitantly, whether he misrepresented his licensure status on or before that date for the purpose of obtaining the fee.
The Petitioner presented two witnesses and nine exhibits. The Respondent presented one witness and three exhibits. All exhibits were received into evidence.
The Respondent, Joseph J. Kowitt, is now a licensed real estate
broker-salesman, having been issued License No. 0048987. At all times pertinent to this proceeding the Respondent was registered and licensed by the Florida Real Estate Commission or the Board of Real Estate, respectively, as a non- active real estate broker. The Respondent's registration certificate bore an effective date of October 1, 1978 and an expiration date of September 30, 1980.
Some time prior to October 9, 1979, Mrs. Frieda Frank of Silver Spring, Maryland, was contacted by Mr. Douglas Bradshaw, a broker-salesman in the employ of Powis Properties, Inc., a corporate real estate broker of Boca Raton, Florida, to ascertain her interest in selling two unimproved lots in Palm Beach County, Florida. Mrs. Frank, the owner of the property, indicated to Mr. Bradshaw that he should coordinate activities involved in effecting a sale through her cousin, the Respondent. Mrs. Frank had previously instructed the Respondent to attempt to sell the two lots for her for a certain minimum price. The Respondent was contacted by Mr. Bradshaw either shortly before or shortly after he contacted the seller of the property, Mrs. Frank, but after the Respondent had placed signs on the property indicating it to be for sale by the owner, with the Respondent's telephone number depicted thereon. Upon being contacted by Mr. Bradshaw or Powis Properties, Inc., the Respondent explained that he was not the owner of the property, but that he represented his cousin, Mrs. Frank, who lived in Maryland. The result of the conversation was that the Respondent agreed to give Mr. Bradshaw an "open listing" and the Respondent requested that he be reimbursed for any expenses born personally in preparing for and effecting a sale, indicating that this was his cousin's wish also.
There is no evidence to reflect the precise amount of expenses incurred by the Respondent in attempting to sell his cousin's property, his testimony simply consisting of statements to the effect that he had erected four or five signs on the property during the course of the year preceding the sale and had incurred gasoline expenses traveling between the property in Palm Beach County and his home in north Dade County.
On approximately October 9, 1979 Powis Properties, Inc. secured an offer to purchase the subject property in the amount of $27,000 and communicated that offer to the seller. She indicated to Mr. Kowitt that a $30,000 sales price would be acceptable, including a 10 percent brokerage fee for Powis Properties who had secured the prospective buyer. At approximately this point in time an agreement was reached between Mr. Kowitt, the Respondent, and Powis Properties, Inc. whereby Mr. Kowitt would receive $500 for his services rendered in effecting the sale and which would he paid to him at the closing of the sale of the two subject lots. This arrangement is reflected in the Respondent's own Exhibit 2, although the Respondent maintained the fee arrangement agreed upon was merely for reimbursement of his expenses incurred in preparing the property for sale and was not a referral fee, as Mr. Stingene of Powis Properties had represented in the letter which is Exhibit Two. The Respondent, however, in the face of the Petitioner's showing that a flat fee of $500 was paid with the understanding of the Petitioner's chief witness that it was for a referral or for "services rendered," offered no concrete evidence to establish what his alleged expense items consisted of nor their respective amounts.
A purchase offer was redrawn at the required price of $30,000 in accordance with the seller's wishes and accepted by the seller. The transaction proceeded to closing on October 28, 1980. Approximately three days prior to the closing date, Powis Properties, Inc. inquired of the Registration Division of
the Board of Real Estate regarding the status of Mr. Kowitt's registration as a realtor and was informed that he held an inactive status at that time. Powis Properties, Inc. communicated this information to Mr. Kowitt who indicated that his registration renewal application was in process and apparently such was not yet reflected in the records of the Board of Real Estate. Powis Properties, through Mr. Powis or Mr. Stingene, then requested that he evidence his valid registration at the closing in order to receive the subject $500 fee. Powis Properties then drew a check of $500 payable to Mr. Kowitt and authorized its sales agent who would be present at the closing to deliver the check to Mr.
Kowitt upon his establishing proof of his registration or otherwise inform him that the fee would have to be held in escrow until he could establish the fact of his active registration.
At the closing Mr. Kowitt delivered to the salesman representative of Powis Properties, Inc. a photocopy of registration Certificate No. 0048987 indicating on its face the status of "active broker" and based upon that representation, the sales agent delivered to Mr. Kowitt the $500 check which he later negotiated. Petitioner's Exhibit 7, which was unrefuted, reveals that the Respondent held Certificate No. 0048987 which is a non-active broker's certificate issued October 21, 1976 with an expiration date of September 30, 1980. Petitioner's Exhibit 8 was not contradicted and reveals that the Respondent applied for a renewal as a broker-salesman on October 27, 1979, the day prior to the subject closing. After amending his application to that for a broker-salesman certificate, since he did not maintain an office, a broker- salesman certificate was issued to the Respondent with an effective date of November 6, 1979, although with a date of issuance of December 20, 1979 (Exhibit 9). The dates reflected on Exhibit 9 corroborate the Petitioner's showing (in Exhibit 5) that it is the policy of the Board that a registration certificate reflect the effective date to be the date the request was received by the Board in proper form, as opposed to the date of mailing. At the closing the Respondent represented that he was an active broker by the display of a xerox copy of his registration certificate with the above number and expiration date of September 30, 1980. Be acknowledges and admits that he altered the copy of the certificate to remove the prefix "non" from his ostensible designation as an active broker, but the Respondent contends that he informed the representative of Powis Properties at the closing that he had been assured by "someone" with the Board of Real Estate that he could consider himself an active broker upon posting of his renewal application and fee.
Shortly after the closing, Mr. Powis or his agent examined the ostensible broker certificate copy supplied them by the Respondent. Upon the belief that the copy of the broker certificate was irregular when compared to other broker certificates which simply state "broker" rather than "active broker" (as the subject one did after the alteration) inquiry was made by phone to the Registration Division of the Board regarding the Respondent's true status. The Board informed Powis Properties that Mr. Kowitt at that time continued to be a non-active broker. Powis Properties then immediately notified Mr. Kowitt of the circumstances and made demand that he return the $500 fee. After a period of days or weeks had elapsed without satisfactory response from Mr. Kowitt, the subject complaint initiating these proceedings was filed by Powis Properties with the Board of Real Estate. Finally, a meeting was held on November 19th between the Respondent and Powis Properties or its agent or representative, at which time the Respondent could not yet supply concrete evidence of his registration as an active broker or broker-salesman, although the application for active status remained pending. Thus, Powis Properties, Inc. continued to maintain its claim against the Respondent for return of the
$500 fee and the Petitioner initiated these proceedings.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties and the subject matter of this proceeding.
Section 475.25(1)(b), Florida Statutes (1979), provides in pertinent part that the Board may suspend or revoke a license or otherwise fine or issue a reprimand to a licensee if it finds that the licensee is guilty of fraud, misrepresentation, concealment, false promises, false pretenses, dishonesty, dishonest dealing by trick, scheme or device, culpable negligence or breach of trust in any business transaction. Subsection (h) provides that it shall be a ground for imposition of the above disciplinary measures if a licensee or applicant has:
Shared a commission with or paid a fee or other compensation to a person not properly licensed as a broker, broker salesman, or salesman under the laws of this state for the referral of real estate business clients, prospects
or customers or for any one or more of the services set forth in Section 475.01(3), Florida Statutes (1979) . . .
Section 475.41 provides that: ". . . no contract for a commission or compensation for any act or service enumerated in Section 475.01(3) shall be valid unless the broker or salesman shall have complied with this Chapter in regard to registration and renewal of the certificate at the time the act or service was performed." (Emphasis supplied).
Section 475.42(1), Florida Statutes (1979) provides:
VIOLATIONS. (a) No person
shall operate as a broker or salesman without being the holder of a valid and current license there for.
These provisions, when read and considered in para materia, evidence an obvious intent by the Legislature in enacting them that no person shall operate as a real estate broker or salesman without being the holder of a valid current license and that no person shall be entitled to any compensation, be it termed commission or otherwise, for any act or service performed in an effort to sell or further the sale of a parcel real estate, unless that person is validly and currently licensed as a broker or salesman at the time any of such services are rendered. There is no question that the $500 sought and obtained by the Respondent from Powis Properties, Inc. was compensation for services rendered in furtherance of the sale of the subject real estate, whether it be termed commission, referral fee, compensation, payment of expenses or otherwise. The entire body of the Petitioner's unrefuted evidence, particularly the testimony of Mr. Powis, reveals that the parties envisioned the money paid the Respondent to be in the nature of a fee for the Respondent's aid in advertising, preparing for, and effecting the sale and generally representing the seller's interest. The Respondent presented no evidence to show how the entire $500 could represent a mere reimbursement of expenses paid out of his own pocket other than his self-
serving statement that he had put up several signs and incurred some gasoline expense in traveling to and from the subject property. It must be concluded, therefore, that the payment of $500 to the Respondent was compensation for referring the listing to Powis and for his aid and services in consummating the sale of the property rendered both before and after the listing with Powis and including participation in the closing.
There is no question and indeed the Respondent admitted that he held no active and current license at the time he entered the arrangement with Mrs. Frank, at the time he made efforts to sell the subject lots nor at the time of the closing. Although it is true that the Respondent, on the day prior to the closing, mailed in his check and application for renewal of his license as an active broker, his broker-salesman's license was not ultimately effective until November 6, 1979 and was actually issued in December. Petitioner established through Mr. Powis' testimony, as well as Exhibit 5 that, without exception the Board of Real Estate only considers and represents to its licensees or applicants, that a license is active or renewed when the fee and application therefor are received by the Board and the effective date of licensing accordingly entered in its records. Thus, the Respondent could not have been actively licensed on the date of closing when the $500 was transferred to him. The Respondent's stated belief that he felt himself to be actively licensed upon posting the renewal application and accompanying fee check the day prior to closing is belied to a great extent by the fact that he still proceeded to alter his copy of his certificate which read "non-active broker" by removing the prefix "non" so that it read "active broker" for purposes of demonstrating his entitlement to the $500 to the agent of Powis Properties, Inc. The Respondent did not establish by any competent, substantial evidence why, if he truly believed himself to be actively licensed by posting the renewal application in the mail, he did not merely display the non-active certificate and then explain to the representative of Powis Properties that it was no longer a true representation of his licensed status since he had mailed in the application to renew it. This was not done, however, nor did the Respondent avail himself of the legally sufficient alternative of assuring the representative of Powis Properties that the application for renewal of his active certificate was in process and that the $500 agreed to be due him could be placed in an escrow account until the Board of Real Estate furnished evidence that his active status had been effected, which procedure Powis had freely offered to afford him.
Thus there is no question that the Respondent was not currently and actively licensed as a broker or broker-salesman at the time of the closing and did in fact engage in an intentional misrepresentation by virtue of his alteration of the copy of the certificate in an effort to convince Powis Properties to pay him the subject $500 check. Even if the Respondent in good faith believed that he was automatically clothed with a renewed active status upon posting his application in the mail the day prior to the closing he still, by doing so, had not successfully negotiated the obstacle posed by Section 475.41, Florida Statutes, inasmuch as he had not complied with this Chapter in regard to issuance and renewal of the license at the time the act or service was performed" and by the Respondent's own testimony the act or service performed for which he deemed himself due the $500 occurred well before the closing when he first began his efforts to secure a sale of his cousin's property.
Accordingly, it must be concluded that the Respondent's hurried attempt to reactivate his licensure the day prior to the closing indicates that he had knowledge of the illegality of accepting any compensation whatever regarding efforts expended in obtaining the sale of a piece of real estate without being properly licensed. Because of the constraints of Section 475.41
and cases interpreting that section, the authority cited above, as well as the evidence propounded in the Petitioner's case in chief, coupled with the Respondent's admissions concerning when he applied for re-licensure and his alteration of his copy of his certificate, the conclusion is inescapable that he knowingly and intentionally misrepresented his licensure status on the critical date of October 28 which was the date of closing of the sale of the pertinent property and the date he would be able to obtain the $500 pursuant to such misrepresentation. See Hughes vs. Chapman, 272 Fed.2d 193 (1960), Wegmann vs.
Mannino, 253 Fed.2d 623 (1953) Cert. denied Supreme Court 37, 358 U.S. 824, 3
L.Ed.2d 63, Rehearing denied 79 Supreme Court 151, 358 U.S. 896, 3 L.Ed.2d 123. Thus the Respondent is in violation of Section 475.25(1)(b) in that he knowingly and intentionally misrepresented his licensure status in order to obtain the subject compensation of $500 and further violated Section 475.41 in that he contracted or otherwise agreed for compensation for his assistance in negotiation and consummation of the sale of the subject real estate without being a licensed broker or salesman. Concomitantly the Respondent is guilty of a violation of Section 475.42(1)(a) in that he operated as a real estate broker or salesman without being the holder of a valid or current registration certificate.
In mitigation of the foregoing conclusions regarding the Respondent, it must be pointed out that this Respondent has been a licensed real estate broker in excess of 25 years and has never been the subject of any disciplinary proceedings and in this situation made a diligent, although belated effort to reactivate his licensure such that he would comport with the requirements of Chapter 475 and thus qualify to receive the $500 fee. It is unfortunate that the Respondent did not avail himself of the alternative offered by the payor of merely escrowing the $500 at the closing for later disbursement upon his showing that the Board had indeed reactivated his licensure. A number of significant court decisions involving prosecutions of this type have established that suspension, and especially revocation, is a severe penalty which should be sparingly and cautiously employed due its profound effect on the ability of an accused to earn his livelihood. Thus, in Brod vs. Jernigan, 188 So.2d 575 (Fla. 2nd DCA 1966) the Court held:
Chapter 475 vests in the Florida Real Estate Commission a broad discretionary power and authority to supervise a privileged business of real estate broker and to deal firmly with those engaged in it, even to the point of taking away their means of livelihood by
revocation or suspension of license. But such potent administrative weapons must always be reasonably and cautiously, and even sparingly, utilized. Administrative processes of the Commission should be aimed
at the dishonest and unscrupulous operator, one who cheats, swindles, or defrauds the general public in
handling real estate transactions . . .
The Court then opined that the Respondent's act in that case of failing to timely deposit a $100 earnest money deposit in his escrow account was only a strictly technical violation and an isolated one and did not relate to
any dishonest or fraudulent acts or conduct on the part of the Respondent in his dealings with the public. The Court's view was that Chapter 475 was never intended to be used as a basis for suspension or revocation proceedings under circumstances such as those. The Court ultimately imposed a private written reprimand. So to, in Kopf vs. Florida Real Estate Commission, App., 379 So.2d 1327 (1980) , it was held that a fraudulent representation in a single real estate transaction does not constitute a "course of conduct" warranting revocation of the license, that a "course of conduct" must be considered to be fraudulent representations in more than one transaction. In Pauline vs. Borer,
274 So.2d 1 (1973), the Court stated that a one-year suspension of a broker's registration was too harsh and unusual where the broker failed to make a required disclosure to the seller regarding an offer received. The Court felt that the1 fact that the offending broker himself immediately called the problem to the attention of the Commission and asked for advice upon how to proceed belied the propriety of imposing such harsh punishment as a one-year suspension. Similarly, the Respondent here attempted to obtain a correct licensure status but unfortunately was somewhat late in doing so. Here, as in the Kopf and Pauline decisions, supra, as well as the Brod decision, supra, where the violation is only an isolated instance and somewhat technical in nature, suspension or revocation is clearly too harsh and unusual a punishment and public censure would be a more appropriate penalty for the Board to exact. See also, Lawrence vs. Florida Real Estate Commission, App., 207 So.2d 470 (1968).
Thus, it is concluded that the Respondent is guilty of the violations of the above authority charged and should be publicly reprimanded therefor.
Having considered the foregoing Findings of Fact and Conclusions of Law, the evidence in the record, as well as the candor and demeanor of the witnesses, it is
RECOMMENDED that the Respondent, Joseph J. Kowitt, be found guilty of a violation of Section 475.25(1)(b) Florida Statutes (1979), as well as Section 475.42(1)(a), Florida Statutes (1979), and that the penalty of a public written reprimand be imposed on the Respondent.
DONE AND ENTERED this 18th day of May, 1981 in Tallahassee, Leon County, Florida.
P. MICHAEL RUFF, Hearing Officer Division of Administrative Hearings The Oakland Building
Filed with the Clerk of the Division of Administrative Hearings this 18ths day of May, 1981.
Joseph J. Kowitt
2030 South Ocean Drive Apartment No. 1227
