STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

FLORIDA REAL ESTATE COMMISSION ) ex rel. GEORGE J. SAUNDERS, )

)

Petitioner, )

)

vs. ) CASE NO. 76-1195

) P.D. NO. 2862

MICHAEL L. WHITMAN, T/A )

MICHAEL L. WHITMAN REALTY, )

)

Respondent. )

)

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 styles case on October 1, 1076 at St. Petersburg, Florida.

APPEARANCES

For Petitioner: Richard J. R. Parkinson III, Esquire

Staff Attorney

Florida Real Estate Commission 2699 Lee Road

Winter Park, Florida 32789

For Respondent: John Turnbull, Esquire

319 South Garden Avenue Clearwater, Florida

RECOMMENDED ORDER

By Administrative Complaint filed June 3, 1976 the FREC ex rel. George J. Saunders seeks to revoke, suspend, or otherwise discipline the registration of Michael L. Whitman, t/a Michael L. Whitman Realty (Respondent or Whitman). One ground of the complaint alleges that Respondent as listing broker failed to account or deliver to the selling broker the selling broker's share of the commission when received by the Respondent. A second count in the complaint alleges that Respondent in the same transaction was guilty of concealment and breach of trust in a business transaction in accepting as part payment of the commission a promissory note made payable only to Respondent and without the knowledge and consent of the selling broker. Count two further alleges that by so doing Respondent formed an intent, design, or scheme to defraud the selling broker of one half of the balance of the real estate commission due to him and committed an over act in furtherance of such intent, design, or scheme.

Five witnesses, including Respondent, were called by Petitioner and ten exhibits were admitted into evidence. No additional evidence was presented by Respondent.

FINDINGS OF FACT

1. The facts here involved were not in dispute. Prior to February, 1973 Respondent, Michael L. Whitman, had a listing on the acreage here involved. On February 26, 1973 Gifford Realty Company procured a buyer for this property and an Option to Purchase was executed. (Exhibit1). This agreement provided that sellers would pay Whitman, for services rendered, a commission of 10 percent of the purchase price and Whitman was to divide the commission equally with Gifford.

   
   

2. Thereafter on April 27, 1973 the sellers and buyers entered into an agreement (Exhibit 2) to transfer the property from seller to buyer upon terms and conditions similar to the option, which terms and conditions are contained in Exhibit 2. One condition of the agreement, not relevant to the issues here involved, was that the buyer would be able to have the property rezoned to RPF- 15, which would allow multi-family dwellings to be erected thereon. When application for rezoning request for multi-family dwellings.

   
   

3. After general agreement between all parties the Agreement to Purchase the property was assigned to Pinellas County. On December 11, 1973 the original sellers and buyers executed an additional agreement (Exhibit 3) which modified Exhibit 2 respecting zoning, approved the assignment of the contract to the county, and provided for closing after August 1, 1974 but no later than August 7, 1974.

   
   

4. In the Agreement (Exhibit 5) between the original buyers and the county, the purchase of the property was contingent upon the county acquiring federal funds. When it subsequently became evident that federal funds could not be obtained the county elected to purchase the property in accordance with the terms of the original agreement a modified by the time of closing as contained in Exhibit 3.

   
   

5. During the period in 1974 prior to August, some question arose whether or not the county would purchase the property without the benefit of federal funds, and when the county representative proceeded to the scheduled closing on August 7, 1974, the sellers did not appear.

   
   

6. After changes of breach of contract were exchanged between the sellers and the county the closing of the transaction occurred on September 4, 1974. The sale price of the property was $792,4000 and the commission due thereon was

   $79,240.

   
   

7. Unbeknownst to Gifford, Whitman had agreed with the sellers to accept

   $20,000 case at closing and a promissory note for the remaining $59,240 of the commission payable over a five-year period. Following the closing Respondent Whitman forwarded to Gifford $10,000 and a copy of the promissory note payable to Whitman executed by the sellers. Gifford demanded payment of his full share of the commission ($39,620) forthwith. Alternatively he demanded that his share of the commission be paid in full fro the proceeds of the promissory note prior to Whitman receiving any commission. When these demands were rebuffed Gifford engaged an attorney who proposed litigation.

   
   

8. When the first annual installment on the note was due and paid to Whitman, Gifford demanded his share (Exhibit 9). By this time Whitman, too, had engaged the services of an attorney who advised Whitman to withhold disbursement of the note payment received until Gifford agreed to settle the dispute other than by litigation.

   CONCLUSIONS OF LAW

   
   

9. Section 475.25(1) F.S. provides in pertinent part that the registration of a registrant may be suspended for a period not exceeding two years upon a finding of fact showing that registrant has:

   
   

   1. Been guilty of fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing, trick, scheme or device, culpable negligence of breach of trust in any business transaction. . . .

      (c) Failed to account or deliver to any person, including registrants under this chapter, any personal property including

      a share of a real estate commission . . .

      which has come into his hands and which is not his property, or which he is not in law or equity entitled to retain, under the circumstances. . .

      
      

10. Here Whitman occupied a fiduciary relationship not only with the seller of the property, but also with the cooperating broker, Gifford. He was Gifford's agent to receive the latter's share of the commission. As agent he is not allowed to assume any position inconsistent with his duty to be loyal to his principal;. State ex rel. Harris v. Gautier, 146 So. 562, 147 So. 240, 846 (Fla. 1933). By accepting an unsecured promissory note for Gifford's share of the commission without first disclosing his intent to do so to Gifford and obtaining Gifford's permission violated the duty of a fiduciary. The duty of an agent to make full disclosure to his principal of all material facts relevant to the agency is fundamental to the fiduciary relation of principal and agent. 3 AmJur 2d Agency s.200 and cases there cited. The fact that Whitman may have been a gratuitous agent does not relieve him from liability for misfeasance.

    
    

11. By refusing to disburse half of the commission received in 1975 to Gifford, Whitman was in violation of s.475.25(1)(c) F.S. above quoted. The fact that Whitman was advised by his lawyer to withhold his disbursement, while a mitigating factor, is not a valid ground for failure to disburse these funds to Gifford. If Whitman had any questions regarding Gifford's right to one half of that part of the commission received in 1975, Section 475.25(1)(c) F.S. provides that he may refer the question to the Real Estate Commission for determination and thereby relieve himself from liability of having action taken against his license. Here it appears that the purpose of withholding Gifford's part of the commission was to induce Gifford to enter into a settlement of Gifford's claim. There is not a valid reason for withholding Gifford's share of the commission.

    
    

12. From the foregoing it is concluded the Respondent Whitman had a duty to disclose to Gifford his intent to accept payment of part of the commission earned on this transaction in the form of a promissory note. By failure to do so he violated the trust impose din him in his fiduciary capacity as the agent for Gifford to receive Gifford's part of the commission. It is further concluded that by failing to deliver to Gifford his portion of the commission when received in 1975 Whitman violated Section 475.25(1)(c) F.S. It is therefore,

RECOMMENDED that the registration of Michael L. Whitman t/a Michael L. Whitman Realty be suspended for a period of sixty (60) days.

DONE and ENTERED this 26th day of October, 1976 in Tallahassee, Florida.

K. N. AYERS, Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 3230

Filed with the Clerk of the Division of Administrative Hearings this 26th day of October, 1976.

COPIES FURNISHED:

Richard J. R. Parkinson III, Esquire Staff Attorney

Florida Real Estate Commission 2699 Lee Road

Winter Park, Florida 32789

John Turnbull, Esquire

319 South Garden Avenue Clearwater, Florida

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions to this Recommended Order. All agencies allow each party at least 10 days in which to submit written exceptions. Some agencies allow a larger period within which to submit written exceptions. You should contact the agency that will issue the final order in this case concerning agency rules on the deadline for filing exceptions to this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the final order in this case.

Docket for Case No: 76-001195

Orders for Case No: 76-001195