STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

MICHAEL SCOTT SYMONS, )

)

Petitioner, )

)

vs. ) CASE NO. 86-2543

)

DEPARTMENT OF BANKING AND ) FINANCE, DIVISION OF SECURITIES, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the above matter was heard before the Division of Administrative Hearings by its duly designated Hearing Officer, Donald R. Alexander, on October 9, 1986 in Fort Lauderdale, Florida.

APPEARANCES

FOR PETITIONER: O'Bannon M. Cook, Esquire

101 North Monroe Street, Suite 1010 Tallahassee, Florida 32301

FOR RESPONDENT: Malcolm S. Greenfield, Esquire

The Capitol, Suite 1302 Tallahassee, Florida 32301-8054

BACKGROUND

This matter arose when respondent, Department of Banking and Finance, Division of Securities, issued proposed agency action on July 17, 1985 advising petitioner, Michael Scott Symons, that his application for registration under Section 517.12, F.S., as an associated person had been denied. The order of denial was sent by certified mail to Symons' personal (home) address reflected on the application. On August 12 the envelope containing the order was returned unclaimed to respondent. On August 19, respondent again sent a copy of its order by certified mail to Symons in care of his employer's address. This order required petitioner to request a formal hearing within twenty-one days, or he would be deemed to have waived his right to a hearing. The order was received by his employer on August 23 and was eventually given to Symons on September 20. Thereafter, he filed a request for formal hearing with respondent on October 1, 1985. His request was denied as not being timely by order dated October 16, 1985. Thereafter, petitioner appealed respondent's October 16 order. On June 27, 1986 the First District Court of Appeal remanded the matter for a fact- finding hearing on the broad issue of whether petitioner had timely requested a hearing. Symons v. Department of Banking & Finance, 490 So.2d 1322 (Fla. 1st DCA 1986). The matter was forwarded by respondent to the Division of Administrative Hearings on July 15, 1986, with a request that a hearing officer be assigned to conduct a formal hearing. At the request of respondent, no

hearing date was set until discovery was completed. Thereafter, by notice of hearing dated September 5, 1986 a final hearing was scheduled for October 9, 1986 in Fort Lauderdale, Florida.

At final hearing, petitioner testified on his own behalf, presented the testimony of James Weber and Edward Guthmann, and offered petitioner's exhibits 1-3. All were received in evidence. Respondent presented the testimony of William F. Reilly and offered respondent's exhibits 1 - 15. All were received in evidence.

The transcript of hearing was filed on October 30, 1986. Proposed findings of fact and conclusions of law were filed by respondent and petitioner on November 10, 1986. A ruling on each proposed finding of fact has been made in the Appendix attached to this order.

The issue is whether petitioner timely filed his request for a formal hearing in this cause with respondent.

Based upon all of the evidence, the following findings of fact are determined:

FINDINGS OF FACT

1. On March 19, 1985 petitioner, Michael Scott Symons, became employed as a financial manager with the brokerage firm of Easter Guthmann & Kramer Securities, Inc. (EGK) at 7200 West Camino Real Street, Suite 200, Boca Raton, Florida. In connection with his employment Symons filed an application for registration as an associated person of EGK with respondent, Department of Banking & Finance, Division of Securities (Division). The application was received by the Division on or about March 19, 1985 and was deemed to be complete on April 18, 1985.

   
   

2. On that portion of the application entitled "Personal History" Symons gave 5700 Grillet Place, S.W., Fort Myers, Florida 33907 as his home address. He identified EGK's address as being 7200 West Camino Real, Suite 200, Boca Raton, Florida 33433. Although Symons signed the application he stated that EGK had actually submitted the application on his behalf since it was a common practice for brokerage firms to do administrative work on behalf of their employees. This is consistent with an agency rule (3E-600.02(3), F.A.C.) which requires that a securities dealer file and countersign the application for registration on behalf of an associated person.

   
   

3. On March 24, 1985, or shortly after he began employment with EGK, Symons moved into an apartment at 6091 Boca Colony Drive, Boca Raton, Florida 33427. Approximately one month later, he began renting Post Office Box 3299 in Boca Raton. Symons did not inform the Division of these changes in address, or otherwise amend his application.

   
   

4. On or about July 12, 1985 a Division bureau chief spoke by telephone with the chief financial officer of EGK and asked if EGK would voluntarily withdraw Symons' application. Later that same day, an EGK vice-president telephoned the bureau chief and advised him the firm would not withdraw the application.

   
   

5. On July 16, 1985, the Division prepared and dated an Order Denying Application for Registration as an Associated Person. The next day a Division attorney sent a copy by certified mail to Symons' at 5700 Grillett Place, S.W.,

   Fort Myers, Florida. Because Symons' wife had previously provided the post office with a change of address form the envelope containing the order was forwarded from Fort Myers to Post Office Box 3229 in Boca Raton. Certified mail notices were thereafter placed in the box on July 24 and July 31. However, the mail was never claimed. On August 8, 1985 the envelope was returned to the Division. It was received in Tallahassee on August 12, 1985. There is no evidence that Symons was aware the order had been mailed or that he deliberately failed to claim the letter. The agency attorney similarly assumed that Symons had not received a copy. Accordingly, it is found that at this point in time Symon had no knowledge that the July 16 order-was entered, and had been mailed to him in Fort Myers and Boca Raton.

   
   

6. On August 19, 1985 the Division attorney again sent a copy of the July

   16 order by certified mail to 7200 West Camino Real, Suite 200, Boca Raton.

   This was the address of EGK. According to the attorney, it was her intention to mail the order to Symons, and not his employer. The order contained the following pertinent language on page 5:

   
   

   Respondent is advised that Respondent may request a hearing to be conducted in accordance with the provisions of Section 120.57, Florida Statutes. A request for such hearing must comply with the provisions of Rule 28-5.201, Florida Administrative Code, and must be filed within twenty-one (21) days after receipt of this order. Otherwise, Respondent will be deemed to have waived all rights to such hearing.

   
   

7. The certified mail receipt for the envelope containing the order was apparently signed for by Charlie Shields, an EGK employee. 1/ It eventually reached the desk of EGK's chief financial officer, James Weber, in an unopened envelope on August 23, 1985. Weber opened the envelope and read the enclosed order. He noticed on page five of the order that there was a twenty-one day time frame in which an appeal of the agency denial could be made. Believing that the twenty-one day time frame began on July 16, Weber erroneously concluded that the time to request a hearing had already expired. This was probably because he had never before seen a denial order, and was not familiar with the procedures under Chapter 120, F.S.

   
   

8. Weber then showed the order to Edward Guthmann, a principal and vice- president of EGK. Guthmann telephoned an out- of-state attorney seeking advice on how to proceed, and sent a copy of the order to the attorney on August 23. The attorney did not take any action, and returned the order to Guthmann on an undisclosed dated between late August and the middle of September.

   
   

9. On September 17 Weber "came to the realization" that under any interpretation of the order the time frame in which to request a hearing had run. He then contacted petitioner's present counsel on September 17 to discuss obtaining legal representation for Symons. Symons has continued using that counsel since that time. A petition for hearing was eventually filed with respondent on October 1, 1985. This petition was denied by agency order entered on October 16, 1985 on the ground Symons had "constructive receipt and notice of the Denial Order at the time of its delivery by U.S. Certified Mail to Respondent's personal address on July 24 1985, and furthermore, deems Respondent

   to have received actual notice. . . on August 25, 1985, when the Denial Order was claimed and signed for at EGK's address as listed on the application."

   
   

10. Neither Weber or Guthmann informed Symons prior to September 15 that they had received the Division order, or that the document even existed. They also did not advise him that they had contacted an out-of-state attorney in August in an effort to obtain advice. In this regard, petitioner had not authorized them to take any action with respect to the denial order, or to seek the advice of an attorney.

    
    

11. Symons was unaware of the existence of the denial order prior to September 20, 1985 when he was shown a copy of the order by his employer. Had he been aware of the order prior to September 15, he would have filed a request for a hearing. Even though he did not specifically voice an objection to his employer opening his mail, Symons did not expressly authorize his employer to accept the order or any other notices from respondent. Indeed, Symons considered certified mail to be "a personal thing," and something that "an employer has (no) right to open."

    
    

    CONCLUSIONS OF LAW

    
    

12. The Division of Administrative Hearings has jurisdiction of the subject matter and the parties thereto pursuant to Subsection 120.57(1), F.S. (1985).

    
    

13. This proceeding has nothing to do with the merits of Symon's application to be registered as an associated person with EGK. Rather, it deals with the narrow question of whether Symons is deemed to have received notice of the denial order on August 23, 1985 when his employer received the order, on or about September 20, 1985 when he first was given a copy of the order. If he successfully passes muster on this issue, he still faces another hearing on the merits of his application. In the true sense of the word, then, Symons is having to exhaust all administrative remedies.

    
    

14. The agency's order of October 16 cited two bases for concluding that Symons had failed to timely request a hearing. First it concluded that Symons "had constructive receipt and notice of the Denial Order at the time of its delivery by U.S. Certified Mail to Respondent's personal address on July 24, 1984." Secondly, it concluded that "Respondent (had) received actual notice of the Denial Order on August 25, 1985, when the Denial Order was claimed and signed for at Easter, Guthmann's address as listed on the Application." However, in Symons v. State of Florida, Department of Banking & Finance, 490 So.2d 1322, 1323-24 (Fla. 1st DCA 1986), the court found the constructive notice theory to be "erroneously employed below," and therefore inapplicable to the instant case. Accordingly, the issue is whether Symons had actual notice of the order prior to September 20, 1985, when his employer first advised him of its existence. This raises the sub-issue of whether an agency relationship between Symons and EGK existed so that his employer could accept service on his behalf.

    
    

15. Initially, respondent's suggestion that Symons concealed his domicile from respondent, and was attempting to evade service of process, is rejected. 2/ The remainder of respondent's arguments center upon a purported agency relationship between EGK and Symons. It contends that EGK was acting within the general scope of its authority, and that Symons is accordingly bound by the acts of his agent when it accepted delivery of the denial order on August 25, 1985. It adds that Symons has subsequently ratified all acts of his agent. Whether

    the above scenario equates to express or implied actual notice, or some other legal theory, is not addressed by respondent.

    
    

16. Petitioner counters by pointing out that there are two kinds of actual notice: express, based on direct information, and implied, which includes notice inferred from the fact that a person has the means of knowledge, and a duty to use it. He posits that neither was present here. He also asserts that the burden is on respondent to prove an agency relationship, and that the evidence does not establish such a relationship, or that EGK (as agent of Symons) had authority, actual or apparent, to bind the principal.

    
    

17. Although not specifically argued in its proposed order, the undersigned assumes that respondent is first contending Symons had implied actual notice of the denial order when an EGK employee signed for and received the certified mail on August 23, 1985. Implied actual notice is based on the premise that a person has no right to shut his eyes or ears to avoid information and then say he has no notice. In other words, it is insufficient to remain willfully ignorant of a thing readily ascertainable when the means of knowledge is at hand. To charge a person with notice of information which might have been learned by inquiry, the circumstances must be such as should reasonably suggest inquiry. Symons, 490 So.2d at 1324. Here the circumstances do not lend themselves to a conclusion that it would have been reasonable for Symons to make inquiry as to the existence of denial order issued by the agency. Indeed, there is no evidence that Symons knew that an agency decision was-expected in July, 1985, that his employer would attempt to resolve the agency's denial of the application without advising him, or that his employer would even accept delivery of the order and conceal its existence. Therefore, it is concluded that Symons did not "remain willfully ignorant of a thing readily ascertainable when the means of knowledge (were) at hand," Sapp v. Warner, 105 Fla. 245, 141 So. 124, 127 (1932), and that no implied actual notice can be imputed to petitioner.

    
    

18. Respondent next suggest-that an agency relationship between EGK and Symons existed, that such an agency existed by reason of law, and that EGK was acting within the scope of its authority when it accepted delivery of the denial order on August 23. From this, respondent implies (but does not specifically state) that the employer's acceptance of the order was the equivalent of Symon's acceptance. 4/ Initially, it is noted that the burden of proving an agency relationship rests upon respondent. Pinon v. International Harvester Co., 390 So.2d 154 (Fla. 3rd DCA 1980). To satisfy this burden, respondent points out that under Rule 3E-600.02(3) F.A.C., a securities dealer must file and countersign the application for registration on behalf of an associated person. Therefore, it asserts that an agency relationship was formed for the purpose of gaining licensure for Symons. The undersigned agrees and concludes that an agency relationship between the two was formed for this purpose. Even so, it must be determined whether the employer's act in accepting the denial order was within the scope of that agency. The agent's (EGK) authority to bind his principal may be express or implied (apparent), and depends on the circumstances in the case. The specific rule governing the agent's power to bind his principal was set forth in American Ladder & Scaffold Co. v. Miami Ventilated Awning Mfg. Co., 161 So.2d 699, 700 (Fla. 3d DCA 1964) as follows:

    
    

    The power of an agent to bind his principal may rest on real or actual authority conferred in fact by the principal or may be founded on apparent or ostensible authority arising when the

    principal allows or causes others to believe the agent possesses such authority, as where the principal knowingly permits the agent to assume such authority or where the principal by such actions or words holds the agent out as possessing it.

    
    

    Since Symons did not expressly authorize EGK to accept on his behalf certified mail from respondent, such authority, if it exists, must "be founded on apparent or ostensible authority." American Ladder, 161 So.2d at 700. To establish apparent authority, three elements must be present: (a) a representation by the principal (Symons); (b) reliance on that representation by a third party (the Division); and (c) a change in position by the third party in reliance upon such representation to his detriment. Orlando Executive Park, Inc. v. Robbins, 433 So.2d 491, 494 (Fla. 1983); Smith v. American Automobile Insurance Co., 11 FLW 1762 (Fla. 3rd DCA July 29, 1986) In the instant case, by allowing EGK to file his application, the Division might reasonably conclude this to be a representation that EGK was Symons' agent for purposes of licensure. However, there is no evidence that the Division relied on that representation. Indeed, the facts show to the contrary since the Division attorney who mailed the denial order first mailed it to Symons' old home address in Fort Myers, and then sought to mail it to him personally (and not his employer) at the only other address reflected on the application. Further, there is no evidence that the Division detrimentally changed its position in reliance on that representation. This being so, it must be concluded that EGK did not have apparent authority to accept a copy of the denial order intended for Symons.

    
    

19. Since Symons did not receive a copy of the denial order until on or about September 20, 1985, he had twenty-one days in which to timely request a hearing. By filing his petition on October 1, 1985 he has satisfied the conditions in the denial order, and is entitled to an administrative hearing on the merits of his application.

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that a final order be entered finding that petitioner timely

requested an administrative hearing to contest respondent's denial of his

application for registration as an associated person.

DONE and ORDERED this 4th day of December, 1986 in Tallahassee, Leon County, Florida.

DONALD R. ALEXANDER

Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 4th day of December, 1986.

ENDNOTES

1/ Even though the agency attorney knew that Symons had not signed the mail receipt, she made no further inquiry to determine if Symons had actually received the order, or if EGK had authority to receive his mail.

2/ Petitioner would have no incentive to do this since he cannot begin selling securities until licensed by the state. By evading service, he would be postponing a decision on his application, something clearly detrimental to his interests.

3/ This assumption coincides with the legal theories advanced by respondent to support its October 16 order in the Symons appeal.

4/ The undersigned has again assumed that respondent is advancing the same theory that it used in the Symons appeal.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 86-2543

Petitioner

1. Covered in finding of fact 1.

2. Rejected as being unnecessary.

3. Covered in finding of fact 5.

4. Covered in finding of fact 5.

5. Covered in finding of fact 9.

6. Covered in finding of fact 5.

7. Covered in finding of fact 5.

8. Covered in finding of fact 11.

9. Covered in findings of fact 5 and 11.

10. Covered in finding of fact 6.

11. Covered in finding of fact 6.

12. Covered in footnote 1.

13. Covered in footnote 1.

14. Covered in footnote 1.

15. Covered in finding of fact 7.

16. Rejected as being unnecessary.

17. Covered in finding of fact 7.

18. Covered in finding of fact 8.

19. Covered in finding of fact 9.

20. Covered in finding of fact 10.

21. Covered in finding of fact 11.

22. Covered in finding of fact 10.

23. Covered in finding of fact 11.

24. Covered in finding of fact 10.

25. Covered in finding of fact 10.

26. Covered in finding of fact 11.

27. Covered in finding of fact 11.

Respondent

1. Covered in finding of fact 1.

2. Rejected as being unnecessary.

3. Covered in finding of fact 1.

4. Covered in finding of fact 2.

5. Covered in finding of fact 2.

6. Covered in finding of fact 2.

7. Covered in finding of fact 2.

8. Covered in finding of fact 3.

9. Covered in finding of fact 3.

10. Covered in finding of fact 3.

11. Covered in finding of fact 3.

12. Covered in finding of fact 3.

13. Covered in finding of fact 3.

14. Covered in finding of fact 3.

15. Covered in finding of fact 4.

16. Covered in finding of fact 4.

17. Covered in finding of fact 5.

18. Covered in finding of fact 5.

19. Covered in finding of fact 5.

20. Covered in finding of fact 5.

21. Covered in finding of fact 5.

22. Covered in finding of fact 5.

23. Covered in finding of fact 5.

24. Covered in finding of fact 6.

25. Covered in finding of fact 6.

26. Covered in finding of fact 7.

27. Covered in finding of fact 8.

28. Covered in finding of fact 8.

29. Covered in finding of fact 9.

30. Rejected as being unnecessary.

31. Covered in finding of fact 9.

32. Rejected as being irrelevant.

33. Covered in finding of fact 11.

34. Covered in finding of fact 11.

COPIES FURNISHED:

O'Bannon M. Cook, Esquire

101 North Monroe Street Suite 1010

Tallahassee, Florida 32301

Malcolm S. Greenfield, Esquire The Capitol, Suite 1302 Tallahassee, Florida 32301-8054

Charles Stutts, Esquire General Counsel

Plaza Level, The Capitol Tallahassee, Florida 32301-8054

Honorable Gerald Lewis Comptroller, The Capitol Tallahassee, Florida 32301-8054

Mr. Michael S. Symons

6371 LaCosta Drive, Apartment 203 Boca Raton, Florida 33433

Docket for Case No: 86-002543

Orders for Case No: 86-002543