Pepper, T/A Ed Pepper and Associates ("Defendant" hereafter) on September 17, 1975. In Count I of the Complaint it is alleged that the Defendant received an automobile from a buyer as a part of the consideration in a real estate transaction and did not inform the seller in violation of Florida Statutes 475.25(1)(a). In Count II it is alleged that the buyer withdrew from the same transaction, but that the Defendant refused to return the automobile in violation of Florida Statutes 475.25(1)(c). In Count III it is alleged that by wrongfully converting the automobile in the same transaction to his own use, the Defendant committed a crime against the laws of the State of Florida and therefore violated Florida Statutes Section 475.25(1) (e). In Count IV of the Complaint it is alleged that in a separate real estate transaction, the Defendant purchased property from a seller and sold it on the same day to a buyer at a higher price, and is therefore guilty of dishonest dealing in violation of Florida Statutes Section 475.25(1)(a). In Count V it is alleged that in the same transaction involved in Count IV, the Defendant failed to inform the buyers that he had taken a second mortgage from the sellers, and that he is therefore guilty of dishonest dealing in violation of Florida Statutes, Section 475.25(1)(a). In count VI it is alleged that in the same transaction involved in Count IV, the Defendant received a profit on the transaction which amounted to an illegal commission in violation of Florida Statutes, Section 475.25(1)(c). In Count VII of the Complaint it is alleged that the Defendant has on two prior occasions been found guilty of misconduct that would warrant suspension of his registration under Florida Statutes Section 475.25(1), and that if he is found guilty of any of the counts of the Complaint his registration as a broker could be revoked in accordance with Florida Statutes Section 475.25(3). In VIII of the Complaint it is alleged that the Defendant
has shown through his course of conduct that he cannot sustain a confidential relation in accordance with Florida Statutes Section 475.25(3).
The Defendant filed an Answer to the Administrative Complaint on October 15, 1975. The final hearing was scheduled in accordance with a Notice of Hearing filed on December 31, 1975.
The Plaintiff called the following witnesses: Michael Scott Symons, the buyer in the transaction involved in Counts I, II, and III of the Administrative Complaint; William C. McDonald, the seller in the transaction involved in Counts I, II, and III of the Administrative Complaint; James P. Arthur, the office manager of a Fort Myers automobile agency; Nancy Lee Mann; Carl D. Dawson, the manager of Tamiami Abstract and Title Company; Calvin W. Bruce, and Helen M. Bruce, the buyers in the transaction involved in Counts IV, V, and VI of the Administrative Complaint; and Richard Led Barnum, the seller in the transaction involved in Counts IV, V, and VI of the Administrative Complaint. Plaintiff's Exhibits 1 - 17 were offered into evidence, and were received: The Defendant appeared as a witness on his own behalf. Defendant's Exhibits 1 - 7 and 9 - 14 were offered into evidence and were received. Defendant's Exhibit 8 was offered into evidence, but was not received. The parties were invited to file post hearing memoranda of law, but none have been received.
The Defendant was at all material times registered with the Florida Real Estate Commission as a real estate broker. (See: Plaintiff's Exhibit 7).
During June, July, and August, 1973, the Defendant acted as a real estate broker in negotiating a real property transaction between Michael Scott Symons and Bonnie Jo Symons as buyers, and William C. McDonald as seller. The Symons made an initial offer to purchase certain real estate owned by McDonald for $50,000. The Symons agreed to assume a first mortgage, to execute a purchase money second mortgage, and to pay $5,000 in cash. This offer was made in the form of a contract to purchase which was executed by the Symons on June 19, 1973. (See Plaintiff's Exhibit 1). At the time that this contract was executed, it was expressly understood between the Symons and the Defendant that
$2,000 of the $5,000 which was to be paid by the Symons to McDonald at the time of closing would be in the form of a 1967 Pontiac automobile. The automobile would be delivered to McDonald at the time of closing along with $3,000 in cash. The day after the contract was executed, the Symons delivered the automobile to the Defendant along with the evidence of title that they had in their possession.
McDonald rejected the Symons' first offer. He did not wish to take the automobile as a part of the down payment.
The Defendant notified the Symons that McDonald had rejected their offer. The Defendant then informed the Symons that he would take the automobile as a part of the commission which would be due to him from McDonald, and that they should offer to purchase the property for $50,000, with the automobile serving as a part of the Defendant's commission. He advised the Symons that for tax reasons McDonald would want the purchase price to be reflected as $48,000, with the automobile not appearing as a part of the transaction even though it would be taken by the Defendant as a portion of his commission. The Symons then made a second offer to purchase the property in the form of a contract to purchase. (See: Plaintiff's Exhibit 3). The purchase price was reflected as
$48,000. The Symons agreed to assume an existing first mortgage, an to execute
a purchase money second mortgage. Five thousand ninety dollars would be paid by the buyers to the seller at the time of closing. When they executed this agreement, the Symons delivered a $1,000 deposit to the Defendant. (See: Plaintiff's Exhibit 4). The Defendant loaned the Symons $600 in order that they could make this deposit. The Symons gave the Defendant a note for this amount. (See: Defendant's Exhibit 1).
When he presented the Symons' second offer to McDonald, the Defendant did not advise McDonald that the automobile would play any part in the transaction. McDonald was not told that the automobile would serve as a portion of the Defendant's commission or that the buyers thought that they were making an offer for $50,000 which included the automobile as a part of the Defendant's commission. McDonald ultimately accepted the Symons offer as reflected in Plaintiff's Exhibit 3.
Some time during August, 1973, Mr. Symons and Mr. McDonald had a conversation during which Symons learned that McDonald was not aware that the automobile was playing any part in the transaction, and McDonald learned that the automobile was st 11 a factor in the transaction. The Symons then opted to withdraw from the transaction. (See: Plaintiff's Exhibit 5, Defendant's Exhibit 3). Mr. Symons acknowledged that he was at least in part at fault for withdrawing from the contract, and he, anticipated that his $1,000 deposit would be forfeited.
Prior to the time that Symons and McDonald communicated with one another about their respective understandings of the transaction, the Defendant used the Pontiac automobile as a trade-in on another automobile. The Defendant was credited $600 as a trade-in allowance. This automobile transaction was undertaken in the name of Nancy Lee Mann. Ms. Mann was dating the Defendant at that time, and acted as a straw person in the transaction in order to allow the Defendant to obtain financing of a new automobile. (See: Plaintiff's Composite Exhibit 6, and
Defendant's Exhibit 2).
After the transaction between the Symons and McDonald failed to close, the Defendant distributed $500 to McDonald and $700 to the Symons. (See: Defendant's Exhibits 9 and 12). He also returned the $600 note to the Symons. The automobile was no longer in the possession of the Defendant.
The Symons had delivered $1,000 and the automobile to the Defendant. The Defendant had loaned them $600 in order to make the $1,000 deposit. When the transaction failed to close, the Symons received $700 and the promissory note. The Symons apparently agreed, albeit reluctantly to forfeit the $1,000 deposit. They thus received $1,300 for their automobile, which was the approximate market value of the automobile.
When the transaction failed to close McDonald received $500, which represented half of the Symons' forfeited deposit.
During the course of the transaction, the Defendant received $1,000 and the automobile. Six hundred dollars of the $1,000 was actually his own money. He ultimately disbursed $1,200. He was therefore out-of-pocket $800 on the transaction, but he retained the automobile for which he had already received $600 as a trade-in allowance on another automobile.
During June and July, 1974, the Defendant negotiated a real estate transaction involving Richard and Ruth Ann Barnum, Calvin W. and Helen M. Bruce,
and himself. The Barnums were seeking to sell their residence through another real estate broker. Their listing was placed on a Multiple Listing Service. On June 19, 1974, the Defendant located a potential purchaser of the Barnums property, Edward E. and Lisabeth L. Sharpe. The Sharpes offered to purchase the property for $25,000. The offer was made in the form of a contract to purchase which was executed on June 19, 1974. The Barnums refused the offer and informed the Defendant that they would accept $26,000. The Barnums crossed out references to $25,000 on the contract that the Sharpes had executed and wrote in
$26,000. The Sharpes rejected the $26,000 offer. The Defendant then decided to purchase the property from the Barnums for $26,000. He erased the Sharpes' names from the contract and inserted his own name. (See: Defendant's Exhibit 11). The contract reflects that it was made on June 19, 1974, but it was actually executed by the Defendant on June 20, 1974. The Defendant told the Barnums that he was purchasing the home for himself, and that he might move his father into the home or rent it. The transaction between the Barnums and the Defendant closed on July 2, 1974. (See: Plaintiff's Exhibits 10, 11, 12)
Prior to June 19, 1974, the Defendant had acted as a real estate broker in seeking to find a home for purchase by Calvin W. and Helen M. Bruce. He had shown the Bruces through at1east a half dozen homes, but the Bruces were not satisfied with any of them. Some time prior to June 23, 1974, the Defendant left a message for the Bruces at their motel in Fort Myers. The Bruces were not in town and received the message to see the Defendant when they returned. On June 23rd, the Bruces returned to Fort Myers, contacted the Defendant, and were shown the Barnum's home. Mr. Pepper showed them no other homes on that date. The Bruces liked the home and agreed to purchase it from the Defendant for
$27,500. The Contract to Purchase was executed on June 24, 1974. The Bruces were not informed that the Defendant had agreed to purchase the home only four days previously, nor that the transaction between the Defendant and the Barnums had not yet closed. The transaction between the Defendant and the Bruces closed on July 2, 1974 only hours after the transaction between the Barnums and the Defendant closed.
As a part of the purchase price that he paid the Barnums, the Defendant gave the Barnums a second mortgage in the amount of $5,000. As a part of the purchase price paid by the Bruces to the Defendant, the Bruces agreed to execute a second mortgage to the Defendant in the amount of $5,750. The Defendant at no time advised the Bruces that they were taking the property subject to his second mortgage to the Barnums. The Bruces did not learn of this second mortgage until approximately one year after the transaction closed.
After the two transactions closed, the Defendant-received very little cash, but he did receive a small profit.
On December 20, 1966, the Florida Real Estate Commission suspended the Defendant's registration as a real estate broker for a period of 60 days, based upon the Defendant's being found guilty of violating Florida Statutes Sections 745.25(1)(a) , (c), (See: Plaintiff's Exhibit 8).
On June 3, 1974, the Florida Real Estate Commission suspended the registration of the Defendant as a real estate broker for a period of 90 days, based upon the Defendant being found guilty of a violation of Florida Statutes Section 475.25(1)(a). (See: Plaintiff's Exhibit 9).
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the subject matter aid the parties to this action.
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)
The action of the Defendant in the McDonald-Symons transaction in receiving an automobile from the buyer without advising the seller that the automobile was a part of the transaction constitutes a violation of Florida Statutes Section 475.25(1)(a). The Defendant should be found guilty of the allegations contained in Count I of the Administrative Complaint filed by the Plaintiff.
Insufficient evidence was offered at the hearing to establish that the Defendant in the McDonald-Symons transaction refused to return the automobile, or an equivalent value to the buyer. It appears from the evidence that the buyer acceded in forfeiting the $1,000 earnest money deposit, and that the $700 cash and $600 note that he received from the Defendant constituted adequate compensation for the automobile. Count II of the Complaint against the Defendant should be dismissed.
Insufficient evidenced was offered at the hearing to establish that the Defendant in the McDonald-Symons transaction converted the Pontiac automobile to his own use. It is apparent from the evidence that the buyer delivered title to the automobile to the Defendant, and was ultimately compensated for the automobile. Count III of the Administrative Complaint filed by the Plaintiff against the Defendant should be dismissed.
The Defendant was guilty of fraud, misrepresentation, concealment, false pretenses, dishonest dealing, trick, scheme, and breach of trust in the Barnum-Pepper-Bruce transaction in purchasing property from the Barnums and selling it to the Bruces at a higher price in violation of Florida Statutes Section 475.25(1)(a). Th Defendant should be found guilty of the allegations contained in Count IV off the Administrative Complaint filed by the Plaintiff.
The Defendant was guilty of fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing, trick, scheme, and breach of trust in the Barnum-Pepper-Bruce transaction by failing to inform the Bruces that he had executed a second mortgage in favor of the Barnums. The Defendant should be found guilty of the allegations contained in Count V of the Administrative Complaint filed by the Plaintiff.
The profit that the Defendant received in the Barnum-Pepper-Bruce transaction was received in violation of the Defendant's fiduciary obligations to the Barnums and to the Bruces. The profit amounts to an illegal commission. The Defendant should be found guilty of the allegations contained in Count VI of the Administrative Complaint filed by the Plaintiff.
The Defendant having been found guilty of misconduct that warrants suspension of his registration as a real estate broker under Florida Statutes Section 475.25(1) on two previous occasions, is subject to having his registration evoked. Florida Statutes Section 475.25(3)
By his course of conduct in this and other cases, the Defendant has shown that he is so dishonest and untruthful that the money, property, transactions and rights of those with whom he may sustain a confidential
