CONRAD MERSHON, JR., )
)
Respondent. )
)
RECOMMENDED ORDER
Pursuant to notice, the Division of Administrative Hearings, by its duly designated hearing officer, G. Steven Pfeiffer, held a puilic hearing in this case on October 14, 1975, in Winter Park, Florida.
APPEARANCES
For Petitioner: Ralph Fetner, Jr. and
Howard Hadley Orlando, Florida
For Respondent: George E. Adams
Orlando, Florida
The Florida Real Estate Commission, through its representative, Calvin V. Lane ("Plaintiff" hereafter), filed an information against Orlando Metro Realty, Inc. and C. Conrad Mershon, Jr. ("Defendants" hereafter) on November 12, 1974.
The hearing was scheduled to be conducted by Notice dated September 26, 1975. At the hearing Defendants filed a Motion to Quash. The grounds offered in support of the Motion to Quash have been considered, and the Motion is hereby DENIED.
The Plaintiff called no witnesses at the hearing, but offered as evidence transcriptions of deposition testimony of four witnesses. The deposition of George W. English, III, an attorney who represented the buyer in the transaction involved in this case, was received in evidence as Plaintiff's Exhibit number 1. The deposition of Henry J. Prominski, an attorney who represented the sellers in the transaction involved in this case, was received in evidence as Plaintiff's Exhibit number 2. The deposition of Charles Schiller Martin, the buyer in the transaction involved in this case was received in evidence as Plaintiff's Exhibit number 3. The deposition of Edye Lynn, the seller in the transaction involved in this case, was received in evidence as Plaintiff's Exhibit number 4. Eight separate exhibits are attached to each of the depositions, and these exhibits were received in evidence. Defendants objected to receipt of the depositions, arguing that no proper predicate was laid to establish that the witnesses were not available to testify at the hearing. At the time the depositions were taken, each of the witnesses resided outside of Orange County. See: Plaintiff's Exhibit number 1, pp. 2, 24; Plaintiff's Exhibit number 2, p.
3; Plaintiff's Exhibit number 3, p. 4; and Plaintiff's Exhibit number 4, p. 3. The depositions were taken on September 1975, approximately one month prior to the final hearing. Mr. Ralph Fener, an attorney for the Florida Real Estate Commission, stated that he had talked to each of the witnesses approximately two weeks prior to the time the depositions were taken, and that each of the witnesses indicated that it would be a hardship for them to have to appear in Orlando. No evidence was offered to establish the whereabouts of the witnesses or the residences of the witnesses on the date of the hearing. Florida Statutes, s. 475.32(3) provides that witnesses in proceedings before the Florida Real Estate Commission should not be required to attend hearings outside of the county wherein they reside, without their consent. Since the instant case was initiated prior to the effective date of Laws of Florida, Chapter 74-310 (which has now been codified as Florida Statutes Chapter 120), the provisions of s. 475 control the case even if said provisions conflict with Ch. 120. It is reasonable to conclude that witnesses who did not reside in Orange County one month prior to the hearing did not reside in Orange County on the date of the hearing. The depositions were received in evidence, and the objections were overruled.
Upon the conclusion of Plaintiff's case, Defendants moved to dismiss asserting that Plaintiff failed to sustain the burden of establishing any violation of Florida Statutes, Chapter 475. The motion was denied in limine, and has been carried with the case. Defendants called the Defendant C. Conrad Mershon, Jr. as their only witness. Defendants' Exhibit number 1 was offered into evidence and was received.
FINDINGS OF FACT
The Defendants are registered with the Florida Real Estate Commission as brokers. The Defendant Mershon is the President of the Defendant Orlando Metro Realty, Inc.
During May, 1971, the Defendant Mershon, acting as a real estate broker, negotiated a sale of land from Carolina Caribbean Corporation to Edye Lynn. The property is located in North Carolina, and the contract for sale was signed in an airplane between North Carolina and Florida. For reasons that are not relevant to this proceeding, Ms. Lynn became disenchanted with the transaction. The Defendant Mershon agreed to assist her in finding a purchaser.
On January 23, 1972, Charles Schiller Martin, signed a contract to purchase Ms. Lynn's property. The Defendants acted as brokers in securing the purchaser. The contract was signed in North Carolina. The contract was received in evidence, and is marked as Exhibit number 1 to each of the four depositions. Mr. Martin deposited the sum of $500 with the Defendant when he signed the contract. A copy of the cancelled check from Mr. Martin to the Defendants was received in evidence and is marked as Exhibit number 2 to each of the depositions. Ms. Lynn accepted Mr. Martin's offer.
Mr. Martin submitted the contract to his attorney, George W. English
III. On March 7, 1972 Mr. English wrote to Henry J. Prominski, an attorney who represented Ms. Lynn, requesting that several items respecting the property be forwarded to him. This letter was received in evidence and is marked as Exhibit number 5 to each of the depositions. On March 22, 1972, Mr. English wrote to Mr. Prominski informing him that Mr. Martin wished to cancel the contract to purchase. A copy of this letter was received in evidence, and is marked as Exhibit number 3 to each of the depositions. Mr. English advised Mr. Martin that marketable title could not be delivered, primarily because there were deed
restrictions applying to the property which were not mentioned in the contract for sale. Assessments for water, sewer, and road grading were cited by Mr.
English as particularly onerous. The March 22 letter was followed on April 25, 1972, with another letter. This letter was received in evidence, and is identified as Exhibit number 4 to each of the depositions. Mr. English never made any direct demand upon Mr. Mershon for return of the $500 deposit to Mr.
Martin. He did make a demand upon Mr. Prominski. It is Mr. English's legal opinion that the seller could not deliver marketable title to the buyer.
Mr. Prominski, representing the seller, is of the opinion that marketable title was available to be delivered to the buyer. Mr. Prominski stated that his client did not default in her obligations under the contract.
Mr. Mershon opted to construe the purchase contract between Mr. Martin and Ms. Lynn as breeched by Mr. Martin. He forwarded $250 of the deposit to Ms. Lynn and retained $250 for himself. He explained his action in this regard in a letter to Mr. Prominski dated September 13, 1972. This letter was received in evidence, and is marked as Defendants' Exhibit number 1. This arrangement was apparently satisfactory to Ms. Lynn, and Mr. Prominski communicated Ms. Lynn's approval through a letter dated October 11, 1972. This letter was received in evidence, and is marked as Exhibit number 8 to each of the depositions.
Approximately three weeks prior to the time that Mr. Martin signed the contract to purchase the Lynn property, Mr. Mershon delivered copies of various reports to Mr. Martin, including the restrictions that would apply to the property, and the contract to purchase from Carolina Caribbean Corporation which had been executed by Ms. Lynn. At approximately the time that Mr. Martin signed the contract, Mr. Mershon advised him that title insurance was available. The Defendants acted as brokers in many transactions in the development in which the property involved in this case is located. They had obtained title insurance on many similar lots. Only in this case was there any objection to title. Prior to his distributing $250 of the $500 deposit to Ms. Lynn and his retaining the remaining $250, Mr. Mershon consulted with attorneys for Carolina Caribbean Corporation who advised him that the Martins had defaulted in their obligations. Mr. Mershon personally spent approximately $1,000.00 in transporting Mr. Martin from Florida to North Carolina.
Defendants did not seek the advice of the Florida Real Estate Commision respecting the disposition of the deposit monies, did not submit the issue to arbitration, did not interplead the parties, and did not otherwise seek an adjudication in a proper court.
No evidence was offered with respect to standards for determining the marketability of real property in North Carolina. No evidence was offered respecting the marketability of title to the land in this case, other than the opinions of Attorney English, Attorney Prominski, and Defendant Mershon.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the subject matter and parties to this action.
This action was Initiated prior to the adoption of Chapter 74-310, Laws of Florida. The provisions of Florida Statutes Chapter 475 therefore govern this proceeding. See: Florida Statutes s. 120.72(2).
The burden of proving that a licensed real estate broker has violated the Real Estate Licensing Law lies with the Florida Real Estate Commission, or its representative. State ex rel Vining v. Florida Real Estate Commission, 281 So.2d 487 (Fla. 1973)
Florida Statutes s. 475.25(1)(c) places upon a real estate broker the responsibility of disbursing personal property such as an earnest money deposit to the person entitled thereto upon demand. If the broker retains a deposit erroneously, or disburses a deposit to a party who is not entitled to it, when the proper party has made a demand for it, the broker is subject to having his license revoked. Shelton v. Florida Real Estate Commission, 121 So.2d 711 (2 DCA Fla. 1960).
If a broker is in doubt as to which of two or more competing interests is entitled to receive an earnest money deposit, he has the options to ask the Florida Real Estate Commission for its advice, or to submit the issue to arbitration, or to interplead the parties, or to otherwise seek an adjudication of the question in a proper court. Florida Statutes s. 475.25(1)(c). Failure of a real estate broker to follow one of these procedures does not in and of itself constitute any violation of the statute. The saving provisions are permissive rather than mandatory. Grieser v. Myers, 267 So.2d 673 (4 DCA Fla. 1972), cert. den 273 So.2d 766 (Fla. 1973). If, however, a real estate broker does not follow one of the saving procedures outlined in s. 475.25(1)(c) he bears the risk of disbursing the monies to the wrong party. If, without using one of the saving procedures, a real estate broker fails to disburse an earnest money deposit to the proper party who has made a demand for it, the broker is subject to having his license revoked. Grieser v. Myers.
The Plaintiff, representing the Florida Real Estate Commission, failed to establish in this case that the Defendants improperly disbursed the earnest money deposit. Insufficient evidence was offered to establish that the seller, Ms. Lynn, was unable to fulfill the contract, or that the buyer, Mr. Martin, did not default in his obligations under the contract as was believed by the Defendants. No evidence was offered to establish that the Defendants' distribution of the earnest money deposit was other than in accord with commonly accepted practice. Count One of the Complaint against the Defendants should be dismissed on account of the Plaintiff's failure to establish any violation of Florida Statutes s. 475.25(1)(c).
Plaintiff failed to establish that the Defendants improperly withdrew the earnest money deposit from an escrow account, or that the earnest money deposit was not immediately upon its receipt by the Defendants, placed in an escrow account. The fact that a real estate broker has disbursed an earnest money deposit to one or more competing interests and not to others does not constitute a violation of Florida Statutes s. 475.25(1)(i) unless the disbursement is erroneous. Rivard v. McCoy, 212 So.2d 672 (1 DCA Fla. 1968). Plaintiffs have failed to establish that the disbursement in this case was erroneous. Count Two of the Complaint against the Defendants should be dismissed on account of the Plaintiff's failure to establish any violation of Florida Statutes s. 475.25(1)(i)
