STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

FLORIDA REAL ESTATE COMMISSION ) ex rel. ROBERT L. BROWN, )

)

Petitioner, )

)

vs. ) CASE NO. 76-216

) Progress Docket No. 2707 THEODORE R. JOHNSON, ROY EDWIN )

SCHAEFER, RICHARD W. GODDARD, ) AND UNITED FARM AGENCY, INC. )

)

Respondents. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, K. N. Ayers, held a public hearing in the above styled cause on April 6, 1976 at DeLand, Florida.

APPEARANCES

For Petitioner: Louis B. Guttman III, Esquire

Associate Counsel

Florida Real Estate Commission 2699 Lee Road

Winter Park, Florida

For Respondent: Benjamin T. Shuman, Esquire United Farm 1319 West Colonial Avenue Agency, Inc. and Orlando, Florida, 32804 Richard W. Goddard

Theodore R. Johnson, representing himself c/o United Farm Agency, Inc.

1800 North Boulevard

Rt. 1 Box 130

DeLand, Florida 32730

Roy Edwin Schaefer, representing himself c/o Stout Realty, Inc.

500 East Highway 436 Casselberry, Florida 32707

By Administrative Complaint filed July 21, 1975, the Florida Real Estate Commission ex rel. Robert L. Brown, seeks to revoke, suspend, or otherwise discipline the Respondents' licenses and their right to practice thereunder. As grounds there for the Respondents are charged with fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing, trick, scheme or device, culpable negligence or breach of trust in a business transaction; and failure to maintain funds in an escrow account until disbursement there from was

authorized. All charges stemmed from one transaction involving a contract to purchase real estate handled by the DeLand office of United Farm Agency, Inc. (UFA). Six witnesses, including all Respondents, testified in these proceedings and 21 exhibits were admitted into evidence.

FINDINGS OF FACT

1. At all times here involved Theodore R. Johnson was a registered real estate salesman and managed the UFA office at DeLand, Florida. He has been a registered real estate salesman for more than 30 years. He was authorized to sign checks on the escrow account of UFA in DeLand.

   
   

2. At all times here involved Roy Edwin Schaefer was a registered real estate salesman and an associate of Johnson at DeLand.

   
   

3. At all times here involved Richard W. Goddard was a registered real estate broker and officer and Active Firm Member in UFA with offices in Orlando, Florida. He was the broker under whom Johnson and Schaefer worked. He supervises some 20 UFA branch offices in Florida north of Orlando. He visits the branch offices at frequent intervals (once or twice a week) and exercises general supervision over these offices headed by a salesman.

   
   

4. At all times here involved United Farm Agency, Inc. was a corporate registered real estate broker and maintained a district office in Orlando, Florida. The practice of UFA, which was in existence in 1971 to allow salesmen who head branch offices to disburse funds from their escrow account, has been changed. Now the signature of the broker is also required before funds can be disbursed from the escrow account.

   
   

5. On August 15, 1970 Schaefer obtained a listing agreement for UFA on property owned by Prentice L. and Vivian Glasgow in Pierson, Florida. This listing agreement provided, inter alia, that in the event there is a forfeiture of funds deposited, 1/3 of such forfeited funds would go to the seller and the balance paid to UFA as commission.

   
   

6. By Deposit Receipt and Agreement for Sale dated July 9, 1971 (Exhibit

   7) one Margaret C. Lord offered to buy the Glasgow property at the asking price and Glasgow accepted. Schaefer procured the buyer and the contract was drawn up in the UFA branch office in DeLand, apparently by Johnson and/or his secretary of some 30 years. During Schaefer's discussion with Mrs. Lord at her motel immediately prior to the drafting of the contract he observed some $4000 in cash she was carrying in her purse.

   
   

7. At the time Lord signed the contract she put up $1500 by check and stated she would have an additional $6000 transferred to her account by her broker and would present the additional $6000 within two or three days. No one who participated in the preparation of the sales agreement doubted her intention and ability to produce the additional earnest money deposit.

   
   

8. The contract and the $1500 deposit check was held by Johnson for several days and when the additional deposit promised by the buyer was not forthcoming Johnson deposited the $1500 in the UFA escrow account and forwarded a report of sale to UFA (Exhibit 14). By acknowledgment of sale letter dated July 20, 1971, UFA acknowledged Johnson's report of sale and a $7500 deposit.

   
   

9. The contract provided buyer could take possession of the property July 17, 1971 and closing was set for October 11, 1971.

10. Neither Johnson nor Schaefer were able to again contact Mrs. Lord. Shortly after the contract was executed the Glasgows were advised that only

    $1500 had been deposited. After Johnson had been unable to contact Mrs. Lord he advised Goddard that only $1500 had been deposited, and by memo dated October 18, 1971 (Exhibit 19) Goddard advised UFA's home office.

    
    

11. The Glasgows were in the process of getting a divorce and Glasgow was anxious to consummate the sale. After checking several times with Johnson about the closing, Glasgow advised Johnson he needed money to move off the property (Glasgow's testimony) or that he needed money in connection with his divorce (Johnson's testimony). Early in the morning on August 25, 1971 Glasgow made an urgent request to Johnson for funds and Johnson wrote Glasgow a check for $500 on the escrow account because he, Johnson, did not have a personal check available at the time. The same morning Johnson obtained $500 from his wife and deposited this money in the escrow account. The escrow account was credited with $500 on August 25, 1971 and debited with $500 on August 31, 1971 when the check issued to Glasgow cleared. Johnson's testimony that he considered the

    $500 a personal loan to Glasgow was unrebutted and is supported by his deposit of a like sum in the escrow account as soon as the bank opened.

    
    

12. Shortly after the contract was executed, but before the $1500 check was deposited, Schaefer, without Johnson's knowledge, delivered a copy of the contract to Glasgow. The contract provided, inter alia, that if either the seller or the buyer fails to perform his part of the agreement he will forthwith pay as liquidated damages to the other party a sum equal to 10 percent of the agreed price of sale.

    
    

13. When Johnson's efforts to locate Mrs. Lord were unsuccessful and no response received to letters of August 28 and October 4, 1971, Johnson disbursed the balance of the funds in the escrow account on October 18, 1971. One check in the amount of $250 he paid to himself as reimbursement for his expenses in attempting to locate Mrs. Lord. The remaining $750 ($500 of the $1500 had already been given to Glasgow, but how the cash deposit of $500 made August 15 was withdrawn from the escrow account was not explained) was split between Johnson and UFA.

    
    

14. After the transaction fell through Glasgow moved back on his property. By letter dated October 20, 1972 (Exhibit 8) Glasgow filed a complaint with the Florida Real Estate Commission in which he referred to the liquidated damages provision of the contract (10 percent of purchase price) and the $7500 down payment which he alleged UFA had in escrow and had not paid to him. The investigation followed which led to the complaint filed herein.

    
    

    CONCLUSIONS OF LAW

    
    

15. Upon the above facts Respondents are charged with having been guilty of fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing, trick, scheme or device, culpable negligence, or breach of trust in a business transaction. There was no evidence whatsoever of any conduct of Schaefer, in the transaction here involved, which could be characterized as improper.

    
    

16. There was no dispute as to the facts involved in this transaction. Glasgow learned that Mrs. Lord had deposited only $1500 shortly after he signed the contract and during the period when all parties involved fully expected the additional $6000 to be deposited. Had the contract been written for a $1500

    earnest money deposit there is little doubt that it would have been accepted by the seller. The fact that the buyer offered, or was convinced, to put up an earnest money deposit of 17 percent of the purchase price only tended to make the possibility of default less likely on the part of the buyer. The buyer appeared willing and able to produce the additional funds within a very short time. Under the circumstances here involved it can hardly be said Johnson was guilty of fraud or dishonest dealing. Perhaps he exercised poor judgment in drafting a contract to show a $7500 deposit when he, in fact, had received only

    $1500, but the evidence is clear that this inaccuracy was believed to be of a temporary nature and was not done to deceive or mislead anyone with respect to this transaction.

    
    

17. UFA and Goddard are charged with violation of Section 475.25 (1)(i)

    1. which provides in pertinent part:

       
       

       "(1) The registration of a registrant may be suspended for a period not exceeding two years . . . upon a finding of fact showing that the registrant has:

       * * *

       1. Failed, if 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 . . . or, deposit said funds

    in a trust or escrow bank account main- tained by him with some bank located and doing business in Florida, wherein said funds shall be kept until disbursement thereof is properly authorized, . . ."

    
    

18. Here Johnson was the agent of the UFA and had authority to act on behalf of UFA in handling the escrow account. By holding the $1500 deposit for some 6 days while waiting for the promised additional $6000, UFA, by virtue of the agency relationship with Johnson, was guilty of a technical violation of the above-quoted provision.

    
    

19. Similarly when Johnson wrote a check to Glasgow on the escrow account prior to the time disbursement of those funds were properly authorized, this also constituted a violation of the above-quoted statute, despite the fact that personal funds were deposited in the account before the check could possibly be presented for payment.

    
    

20. It is to be noted that the procedure of UFA which permitted a salesman branch manager to disburse funds from the escrow account has been discontinued. Now such funds can be disbursed only if the check on the escrow account is countersigned by the broker.

    
    

21. From the foregoing it is concluded that UFA and Johnson were guilty of technical violations of the real estate license laws. It is further concluded that these violations involve no wrongful intent and, in fact, caused no one any loss. It is therefore,

RECOMMENDED that Theodore R. Johnson and United Farm Agency, Inc. be issued letters of admonition. It is further RECOMMENDED that the charges against Richard W. Goddard and Roy Edwin Schaefer be dismissed.

DONE and ENTERED this 12th day of May, 1976, in Tallahassee, Florida.

K. N. AYERS Hearing Officer

Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida

================================================================= AGENCY FINAL ORDER

================================================================= FLORIDA REAL ESTATE COMMISSION

ROBERT L. BROWN,

Petitioner,

vs. PROGRESS DOCKET NO. 2707

VOLUSIA COUNTY

THEODORE R. JOHNSON, DOAH CASE NO. 76-216 ROY EDWIN SCHAEFER,

RICHARD W. GODDARD and UNITED FARM AGENCY, INC.,

Defendants.

/

FINAL ORDER

At a regular meeting of the Florida Real Estate Commission held at its Executive Headquarters in Winter Park, Florida, on July 19, 1976,

Present: Edgar L. Schlitt, Chairman John R. Wood, Vice Chairman Maggie S. Lassetter, Member

Appearances: Louis B. Guttmann III, Esquire

Attorney for Plaintiff

Benjamin T. Shuman, Esquire

Attorney for United Farm Agency, Inc. and Richard W. Goddard

Richard W. Goddard, Defendant Theodore R. Johnson, Defendant

No appearance by or for Roy Edwin Schaefer

This matter came on for Final Order upon the Examiner's Recommended Order and Exceptions filed by the plaintiff and by defendant United Farm Agency, Inc., together with the record and oral arguments of counsel for the plaintiff and counsel for Defendants, United Farm Agency, Inc. and Goddard, and statements made by defendant Johnson, and the Commission being fully informed, and upon due consideration thereof, finds:

1.

That according to the records of the Commission, the last address defendant Theodore R. Johnson has registered with the Commission is as a salesman, Rt. 5, Box 408, DeLand, Florida 32720; the last address defendant Roy Edwin Schaefer has registered with the Commission is as a salesman, 227 South Leon Avenue, DeLand, Florida 32720; the last address defendant Richard W. Goddard has registered with the Commission is as a broker, c/o United Farm Agency, Inc., 4440 North Orange Blossom Trail, Orlando, Florida 32804; and the last address defendant United Farm Agency, Inc. has registered with the Commission is as a corporate broker, 4444 North Orange Blossom Trail, Orlando, Florida 32804.

2.

That the Examiner's "Findings of Fact" contained in the Recommended Order are supported by competent, substantial evidence in the record and should be adopted by the Commission.

3.

That the Plaintiff's Exceptions to the Examiner's Recommended Order should be adopted by the Commission as they relate to the following findings:

1. That the Defendant, Richard W. Goddard, as broker and active firm member of defendant United Farm Agency, Inc. was responsible for the maintainance of the escrow account and disbursement of the monies therefrom, and is guilty of failure to maintain escrow monies in a trust or bank or escrow bank account until disbursement was properly authorized in violation of Subsection 475.25(1)(i), Florida Statutes, and that for this violation the Defendant, Robert W. Goddard, should be given an unpublished reprimand.

   
   

2. That the Defendant, Theodore R. Johnson, by reason of his disbursement of $500,00 from the escrow account prior to the time disbursement of those funds were properly authorized is guilty of a breach of trust in violation of Subsection 475.25(1)(a), Florida Statutes, and that for said violation he should be given a strong public reprimand.

   
   

3. That the charges against the Defendant, Roy Edwin Schaefer, should be dismissed with a letter of caution.

   
   

   4.

   
   

   That the Commission should accept that portion of the Conclusions of Law of the Hearing Officer wherein he found that the Defendant, United Farm Agency, Inc., was guilty of failing to maintain the earnest money in the trust or escrow bank account until disbursement thereof was properly authorized in violation of Subsection 475.25(1)(i), Florida Statutes, and that for said violation a private reprimand should be imposed.

   5.

   
   

   That the Recommended penalty of the Hearing Officer that Defendants, Theodore R. Johnson and United Farm Agency, Inc., be issued letters of admonition should be rejected by the Commission.

   
   

   6.

   
   

   That the Defendants' Exceptions to the Examiner's Recommended Order should be denied.

   
   

   IT IS THEREFORE ORDERED:

   
   

   1. That the "Findings of Fact" made by the Hearing Examiner and contained in his Recommended Order be, and the same are hereby, adopted as the Order of the Commission;

      
      

   2. That the Defendants' Exceptions to the Examiner's Recommended Order be, and the same are hereby, overruled and denied;

      
      

   3. That the Plaintiff's Exceptions to the Examiner's Recommended Order are hereby accepted but only as they specifically relate to the following determinations:

      
      

      1. That the Defendants, United Farm Agency, Inc. and Richard W. Goddard, be, and they are hereby, adjudged guilty of violating Sub- section 475.25(1)(i), Florida Statutes, under COUNT TWO of the Administrative Complaint; that the Defendant, Theodore R. Johnson, be, and he is hereby, adjudged guilty of violating Subsection 475.25(1)(a), Florida Statutes, under COUNTS ONE and TWO of the Admini- strative Complaint; that the Defendant, Roy Edwin Schaefer, be, and he is hereby,

         adjudged not guilty of violating Subsection 475.25(1)(a), Florida Statutes.

         
         

   4. That for such violations, the Defendants, United Farm Agency, Inc. and Richard W. Goddard, be, and they are hereby, privately reprimanded and admonished that any future violations of the Florida Real Estate License Law will subject them to a more severe penalty. That said reprimands shall not be published in the "Florida Real Estate Commission News and Report".

      
      

   5. That for such violation, Defendant, Theodore R. Johnson, be, and he is hereby, reprimanded and admonished that any future violations by him of the Florida Real Estate License Law will subject him to a more severe penalty.

DONE AND ORDERED at Winter Park, Florida, this 22nd day of July, 1976.

Edgar L. Schlitt Chairman

John R. Wood Vice Chairman

Maggie S. Lassetter Member

I HEREBY CERTIFY that I mailed a copy of the foregoing Order to Theodore R. Johnson, Rt. 5, Box 408, DeLand, Florida 32720; Roy Edwin Schaefer, 227 South Leon Avenue, DeLand, Florida 32720; and Benjamin T. Shuman, Esquire, 1319 West Colonial Drive, Orlando, Florida 32804, Attorney for United Farm Agency, Inc. and Richard W. Goddard, by United States registered mail this 22nd day of July, 1976.

C. B. Stafford Executive Director

NOTICE TO DEFENDANT:

This Order shall become effective on the 21st day of August, 1976.

However, you have a right of review by an Appellate Court, if you desire.

Docket for Case No: 76-000216

Orders for Case No: 76-000216