Tew, owners of the real estate described in the Administrative Complaint; Eugene F. Clement, executive Vice President of the Bay Bank and Trust Company of Panama City; Gregory A. Peaden, prospective purchaser of the property described in the Administrative Complaint and husband of the Respondent; Judy White, Mr.
Peaden's former secretary and real estate sales person for Respondent's firm; and Ann W. Howell, bookkeeper for Mr. Peaden since August 1983. Petitioner also introduced Petitioner's Exhibits 1 through 8.
Respondent testified in her own behalf and also presented the testimony of Bill R. Hutto, attorney for Mr. Peaden. Respondent also introduced Respondent's Exhibit A.
The parties have submitted posthearing proposed findings of fact pursuant to Section 120.57(1)(b)4, Florida Statutes. A ruling on each proposed finding of fact has been made either directly or indirectly in this Recommended Order, except where such proposed findings of fact have been rejected as subordinate, cumulative, immaterial, or unnecessary.
At all times pertinent to the issues herein the Respondent, Linda H. Abraham, was licensed by the State of Florida as a real estate broker under license number 0323486.
During the months of February and March 1983 Martha L. Tew owned a parcel of waterfront property located in Panama City Beach which was identified as being for sale by a sign on the property reflecting her husband's real estate company. Her husband was Ronald Eugene Tew and Mrs. Tew also held a salesman's license. Mr. Tew was contacted by Gregory A. Peaden, a contractor and developer in the Panama City Beach area on several occasions prior to March 1983 with offers to purchase the Tew property. The contacts with Mr. Peaden subsequently culminated in a contract dated March 8, 1983, between Greg Peaden, Inc., and the Tews in the amount of, initially, $180,000.00.
During the negotiations for the property, Mr. Peaden had introduced the Respondent to the Tews as his broker. When, at the time of Use contract, Mr. Peaden advised the Tews he wanted Respondent to get a commission for the sale, Mr. Tew refused to pay any commission indicating that Respondent had performed no service for him; that he, Tew, was a broker himself; and that he had no intention of paying any commission to the Respondent or to anyone, for that matter. After some further negotiation, a second contract was prepared and agreed upon wherein the contract price was raised to $189,000.00 and the Respondent's commission was to be paid with the additional money from Mr. Peaden.
The contract in question executed by the parties on March 8, 1983, reflected that the sum of $5,000.00 deposit was paid to Linda Abraham, Inc., by check. Mr. Tew contends that at this point he was led to believe that Respondent had the $5,000.00 check and, he contends, he would not have signed the contract if he had known that the check had not been delivered and placed in Respondent's escrow account.
The actual signing of the contract took place in Respondent's office, a mobile home which she shared with Mr. Peaden's business. This trailer home was described as having Mr. Peaden's office on one end, and Respondent's on the other, with the living-kitchen area in the middle used as a reception area for both businesses.
Mr. Peaden contends that once the contract was signed by the Tews, he gave a check drawn on one of his business accounts, that of Peaden and Guerino, a property management company he owned, to his secretary, Judy White, to deposit
in Respondent's escrow account and thereafter promptly forgot about the matter until the date scheduled for closing, two months in the future. Ms. white, on the other hand, contends that Mr. Peaden at no time gave her a check for
$5,000.00 to deposit to Respondent's escrow account. It is her contention that when she received the contract after it was signed, she, on her own, inserted the receipt portion on the bottom of the second page and signed as having received it merely to complete the contract. At the time, she contends, she did not know if the deposit was received from Peaden or not. She has never signed a contract like this before without a deposit and cannot give any other reason why she did it on this occasion. She is certain, however, that at no time did Mr.
Peaden ever give her a $5,000.00 check or tell her to draw one for his signature on March 8, 1983, or, for that matter, at any time thereafter. What is more, neither Mr. Peaden nor the Respondent, at any time after the signing of the contract and prior to her departure under less than friendly circumstances approximately a week or so later, ever asked her whether she had made the escrow deposit or discussed it with her at all. Ms. white contends that she left Mr.
Peaden's employ because he expected her to perform certain functions she was unwilling to do. When she left his employ, she did not feel there was any unfinished business that needed her immediate attention. To the best of her recollection, there were no sales contracts or deposits left in or on her desk - only bills.
According to Respondent, the $5,000.00 deposit by Mr. Peaden was to stay in her escrow account. She understood Mr. Peaden was going to arrange with the bank to borrow the entire cash payment called for under the contract, including the deposit, and when that was done, it was her intention to give him back his $5,000.00 check. Under these circumstances, the amount in escrow would never be paid to the sellers but would be returned to Mr. Peaden and the Tews would receive the entire cash amount called for by the contract from the proceeds of the bank loan. Respondent also indicated that this procedure had been followed at least once, in a prior transaction. Under the circumstances, it is clear that no deposit was ever received from Mr. Peaden nor was it placed in Respondent's escrow account. Therefore, the contract, dated on March 8, 1983, was false in that it represented a $5,000.00 deposit had been received.
The check for $5,000.00 dated March 8, 1983, payable to Linda Abraham, Inc. and drawn by Mr. Peaden on the Peaden and Guerino account with the stub admitted to show the date of issuance, does not establish that it was written on March 8, 1983, as contended. This check, number 1349, comes after two other checks, 1347 and 1348, which bear dates of April 4 and September 7, 1983 respectively. Mr. Peaden's explanation that the checks were drafted out of sequence is non-persuasive. Of greater probative value is the fact that neither Mr. Peaden nor Respondent bothered to review their bank statements on a regular basis. The check in question was drawn on an account not related to the construction and development business of Greg Peaden, Inc. Further, examination of Respondent's escrow account reflects that there were approximately eleven transactions over a three year period even though, according to her, she handled numerous other closings as well as this. Her explanation is that in most cases the attorney handling the closing served as escrow agent even though she was the sales broker. Her explanation is not credible. This appears to be a classic situation of movement of accounts to satisfy a particular end.
The contract called for closing of the sale to be held on or before May 8, 1983, in the office of Panama Title Company. May 8, 1983, fell on a Sunday. As a result, the closing would not have been held that day, but it was not held the following day, Monday, May 9, 1983 either. Mr. Peaden admits that he had not checked with Panama Title prior to May 9 to see if everything was prepared
for the closing. Instead, he contacted the title company for the first time at approximately noon on May 9. Apparently he received disquieting information because he thereafter called his attorney, Mr. Hutto, and asked him to check with the title company to see if and when the closing would be held. Mr.
Hutto's inquiry reflected that the title insurance binder was ready but the closing statement and the package were not because the title company required a copy of the contract. At this point Mr. Peaden immediately had a copy of the contract delivered to the title company but later that day was advised that the closing still could not be held because of the failure to provide a survey. Mr. Hutto indicates that the reason given was that the release clauses called for in the contract required the survey to be furnished though he did not necessarily agree with that. In any event, closing was not held on May 9.
At this time both Mr. Peaden and Respondent allegedly became concerned about the $5,000.00 deposit. Admittedly, neither had concerned themselves with it from the time of the signing of the contract. At this point, Mr. Peaden indicates that he examined his bank records which failed to show the deposit being made and his subsequent search of Ms. White's desk finally revealed the check, undeposited, still there. On May 11, 1983, a $5,000.00 deposit was made to the account on which the deposit check was drawn and on the same day, May 11, 1983 check number 1349, in the amount of $5,000.00 was presented against the account.
When on May 10, 1983, Mr. Peaden and Respondent went to Mr. Hutto's office the primary reason for the visit was because Mr. Peaden had heard that the Tews were planning to sell the property in question to someone else at a price much higher than that agreed upon for the sale to Peaden. At this point Mr. Hutto indicated that if Peaden so desired, Hutto could "fix up the contract to jam up the works" until he could do something about it. His examination of the contract revealed that it was not recorded or acknowledged and under the laws of Florida, acknowledgment is required in order for a contract to be recorded. Hutto asked the Respondent if she had seen the parties sign the contract and when she said that she had, he had his secretary prepare a jurat. Unfortunately, his secretary prepared an affidavit type notary jurat rather than an acknowledgment and Hutto quickly admits that he did not look at it when it was given back to him. He says that if he had, he would have had it changed but in any event, without looking at what was given him, he gave it to the Respondent with the implication, at least, that she should notarize it and have the contract recorded. According to Hutto, Peaden, and the Respondent, the sole purpose for notarization and recordation was to preserve the status quo to protect Mr. Peaden's interest in the property so that the matter could be adjudicated in a lawsuit which was soon to be filed.
Respondent contends she never intended any misconduct throughout this transaction nor did she do any of the things alleged in the Administrative Complaint. She contends she never saw the check which Mr. Peaden allegedly gave to his secretary for deposit to her escrow account. She merely assumed that it was given and never checked to insure that it had been placed in her account. She does not know why Mr. Peaden did not give her the check. When she took the contract to the Tews, she was operating under the assumption that the check had been received but did not verify this to insure that it had. She contends that since she represented the buyer, her duties were limited to insuring that he performed and this made it simple. She did not check on him because she had had so much experience with him, him being by far her largest account, if he said something, she believed him and when the contract was executed, she merely instructed the secretary, Judy White, to make the file and did not check on it again.
As to the recordation and the notarization after the fact, she acted upon the advice of counsel, she states, and did what was suggested to her by Mr. Hutto. It should be noted, however, that Mr. Hutto did not represent her but instead represented Mr. Peaden and while because of her long-standing relationship with him and Mr. Hutto, she may have felt safe in relying on his advice, the fact remains that Hutto was not her attorney.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties and the subject matter of this proceeding.
In Count One of the Administrative Complaint, Petitioner alleges that Respondent is guilty of fraud, misrepresentation, concealment, false pretenses, dishonest dealing by trick, scheme or device, culpable negligence, or breach of trust and with aiding, assisting, or conspiring with a purchaser in such misconduct in violation of Section 475.25(1)(b), Florida Statutes.
This provision permits the Petitioner to discipline a license when it finds that the licensee:
Has been guilty of fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme, or device, culpable negligence, or breach of trust in any business transaction in this state . . . ; has violated a duty imposed upon him by law or by the terms of a listing contract. . . ; has aided, assisted, or conspired with any other person engaged in any such misconduct. . . .
The matter forming the basis for this alleged violation relates to the Respondent's presenting a contract reflecting that a deposit had been received by her without advising the seller that the deposit had not been received and deposited into her escrow account.
The evidence here is most convincing and clearly shows that the Respondent totally abrogated her responsibilities as a licensed real estate broker and is guilty of the grossest negligence in not insuring that the deposit which appeared on the contract had in fact been given and was deposited to her escrow account. It is obvious that Respondent trusted Mr. Peaden who subsequently became her husband. By her own admission, she was aware of situations where he had purchased land without putting any of his own money into the purchase by reflecting a deposit on the contract which was held in her account until the down payment was made and was subsequently returned to Mr. Peaden when all money, including that represented by the deposit, came from borrowed funds. It is not at all difficult to carry this one step further and conclude, reasonably, that knowing that this would be done, no check was ever written or deposited until after the failure of the closing. Had the sale gone through as scheduled, no one would have been the wiser. By the same token, if Mr. Peaden had not decided to contest the failure of the Tews to go through with the sale, it would have made no difference, and again, the failure of the deposit would never have come into issue. It is, however, quite obvious that no deposit was ever placed.
The circumstances behind the check, the account on which it was written, the failure of either Mr. Peaden or Respondent to check for a period of two months to determine if the deposit was made, all combine to establish if not fraud, at the very least, culpable negligence and as the statute provides, it is immaterial that the Tews sustained no damage or loss as a result of this incident.
In Count Two, Respondent is charged with a violation of Subsection 475.25(1)(k), Florida Statutes, and thereby, the aforementioned Section 475.25(1)(b), as well.
Subsection (k) requires 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 to
deposit such funds in a trust or escrow account maintained by him . . . wherein the funds shall be kept until disbursement thereof is properly authorized.
This would be a violation if the money had been received by the Respondent. However, no money was ever received by Respondent and she could not, therefore, place into escrow any funds which she did not receive. Petitioner having alleged in Count One, subparagraph 8, of the Administrative Complaint, that Respondent did not receive the $5,000.00 deposit, it cannot also charge her with failing to place said money in her escrow account.
In Count Three of the Administrative Complaint, Respondent is alleged to have aided, conspired, and joined in a malicious act to effect the title to property in violation of Section 475.42(1)(j), Florida Statutes, and also with violating Section 475.25(1)(b), Florida Statutes by altering the original contract by adding a notarial jurat not present on the original contract.
Turning to the first of the two above allegations, subparagraph (j) of Section 475.42 states that:
No broker or salesman shall place . . . upon the public records of any county any contract,
. . . or other writing which purports to effect the title of, or encumber, any real property if the same is known to him to be false, void, or not authorized to be placed of record, or not executed in the form entitling
it to be recorded, . . . maliciously or for the purpose of collecting a commission, or to coerce the payment of money . . . , or for
any unlawful purpose.
The evidence here shows that the original contract entered into between the Tews and Mr. Peaden was not notarized at the time of execution though it was then witnessed. For all intents and purposes, the contract was considered by both parties to be valid and binding, though no action was taken to effect the closing as was called for therein for whatever reason. The evidence also established that when it became clear to Mr. Peaden that the Tews did not intend to go through with the conveyance, he, along with Respondent,
went to see his attorney who advised, as a legal stratagem, that Respondent then notarize the contract so that it could be recorded. The recordation was for the purpose of encumbering the property and hindering any conveyance by the Tews to someone other than Mr. Peaden.
Even though Mr. Hutto, the attorney, recommended this action and even participated in it he was not representing the Respondent and the umbrella of his advice to his client, Mr. Peaden, does not give shelter to any unauthorized act by the Respondent here who was not his client.
The evidence also shows that the Respondent was present when the parties signed the original contract and that under the provisions of Section 696.01, Florida Statutes, an acknowledgment under oath is necessary for the contract to be recorded. Though she observed the parties execute the contract, Respondent did not take a formal acknowledgment sufficient to allow her to legitimately indicate thereon as a notary that an acknowledgment was made and she has thereby violated the terms of her notary commission.
However, it was not she who accomplished the actual recordation but instead, Mr. Peaden, who was her client, and it is clear that it is not she who suggested that the recordation be done. Even if she had suggested it or done it, however, the evidence does not support the conclusion that it was done maliciously to collect a commission, to coerce the payment of money, or for any unlawful purpose. Petitioner presented no evidence to offset Mr. Hutto's testimony as to the legitimacy of the recordation here for the purpose of placing a cloud on the title as a part of his tactics in the impending suit between Mr. Peaden and the Tews.
In light of the above discussion regarding the unauthorized acknowledgment, however, this constitutes misrepresentation in a business transaction and is thereby a violation of Section 475.25(1)(b).
On the basis of the above, it can be seen that the evidence is sufficient to establish Respondent's guilt of Count One and a part of Count Three, both of which represent violations of Section 475.25(1)(b). The question that remains is what disciplinary action would be appropriate for these violations. Section 475.25(1) authorizes the commission to revoke a license, suspend it for up to 10 years, impose an administrative fine not to exceed
