GEARY, BERNADINE GEARY, and ) FLORIDA REAL ESTATE ENTERPRISES, ) INC., )
)
Respondent. )
)
Progress Docket No. 2875 )
)
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 case on April 1, 1977 at Miami, Florida.
APPEARANCES
For Petitioner: Bruce I. Kamelhair, Esquire Staff Attorney
Florida Real Estate Commission 2699 Lee Road
Winter Park, Florida 32789
For Respondents: Jack McGill, Esquire William J. Geary, Post Office Box 1744 and Florida Real Venice, Florida 33595 Estate Enterprises, Inc.
By Administrative Complaint filed July 2, 1976 the FREC, ex rel. Harold L. Clark, seeks to revoke, suspend or otherwise discipline the registration of William J. Geary, Bernadine Geary and Florida Real Estate Enterprises, Inc. As grounds therefor it is alleged that Respondents persuaded and induced Folmer and Rita Reich to trade or exchange their equity in vacant land for the purchase of a condominium unit; that Respondents advised the Reichs to discontinue making payments on agreement for deed assigned in exchange for the purchase of the condominium; that Respondents conspired with others in a plan or scheme whereby the public is invited or induced to trade their equities in property for other property; and that they committed an overt act to carry out such a conspiracy.
By reason of the alleged acts Respondents are charged with violations of Rule 21V-10.06 F.A.C. Sections 475.25(1)(a) and (d) F.S.
The other Respondents listed above are no longer registered with the Florida Real Estate Commission and all allegations in the Administrative Complaint against these Respondents other than the Gearys and Florida Real Estate Enterprises, Inc. was not pursued. Five witnesses were called by Petitioner and five exhibits were admitted into evidence. At the conclusion of Petitioner's case Respondent made a motion for a directed verdict. After hearing arguments on the motion Respondents were advised that the Hearing Officer did not have authority to grant a directed verdict but that in his opinion Petitioner had not presented a prima facie case and that a Recommended Order would be submitted recommending that the charges be dismissed.
Respondents were advised that they could still present evidence but they declined to do so.
FINDINGS OF FACT
At all times here involved Bernadine Geary was registered with FREC as a broker and Active Firm Member of Florida Real Estate Enterprises, Inc., a corporate broker, and William J. Geary was registered as a real estate salesman working for the corporate broker, Florida Real Estate Enterprises, Inc.
Florida Real Estate Enterprises, Inc. entered into a contract to sell Bird Bay Village Condominiums by providing a salesman, William J. Geary, at the site developed by Valencia Development Corp. Although the exact relationship between Bird Bay Village and Valencia Development Corporation was not clearly established it appears that the former handled the sales of the condominiums built by the latter and Bird Bay Village was a subsidiary of Valencia Development Corporation or they had common ownership.
During the latter part of 1974 meetings were held by representatives of Valencia Development Corporation and Atlantic Equities, Inc. to reach an agreement whereby the latter would refer its clients owning an interest in undeveloped Florida land to Valencia Development Corporation who would negotiate with these people to exchange their interest in land for condominiums in Bird Bay Village. The understanding reached between the negotiators was memorialized in Exhibit 1, a letter from Valencia Development Corporation to Atlantic Equities dated October 18, 1974. Therein Atlantic Equities agreed to refer their clients to Valencia Development and if they purchased a condominium Valencia Development would pay Atlantic Equities a commission. William J. Geary attended two meetings which resulted in the agreement described in Exhibit 1.
On November 22, 1974, Folmer and Rita Reich entered into a contract to transfer their equity in undeveloped land in Florida as down payment on a condominium at Bird Bay Village (Exhibit 5). William J. Geary negotiated the sale of the condominium to the Reichs.
No evidence was presented that any misrepresentations were made to induce this sale or that the Reichs were advised in any manner regarding continuation of payments on their contracts for deed representing their equity in the land exchange. They did exchange, or purport to exchange, an equity in real property for other real property or an equity therein.
CONCLUSIONS OF LAW
Section 475.25 F.S. provides in pertinent part:
The registration of a registrant may be suspended for a period not exceeding two years,
or until compliance with a lawful order imposed in the final order of suspension, or both, upon a finding of facts showing that the registrant has:
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, in this state, or any other state, nation or territory; or
(d) Violated any of the provisions of this chapter or any lawful order, rule or regulation made or issued under the provisions of this chapter...
The only specific allegations made in the Complaint involved the property exchanged by the Reichs. No testimony was
presented regarding this transaction and the only evidence presented was the contract (Exhibit 5) and Bird Bay's Lead Control Form (Exhibit 4) which shows that the Reichs were referred by Atlantic Equity. Accordingly no evidence was presented of any communication between Respondents and the Reichs in which misrepresentation, false promises, etc. could have been made.
Respondents are alleged to have violated Rule 21V-10.06 F.A.C. and thereby violated Section 475.25(1)(d) F.S. above quoted. Rule 21V-10.06 F.A.C. provides:
"Equity trading. Any plan or scheme whereby the public is invited or induced to trade their equities in property for other property or equities therein, or are otherwise induced or advised, to the advantage of another, to commit a breach of contract to purchase, or to pay for property already purchased, or are induced or advised to surrender equities in exchange for certificates or contracts to be
applied in the future on the purchase of other property, is declared to be a plan of
selling, by reason of which the interests of the public are endangered. Provided, however, that this section shall not apply to readjustment made with, or by the consent of, the vendor of the property in which
the equity-holder originally invested."
This rule defines equity trading to be a plan of selling by reason of which the interests of the public are endangered. It does not provide that equity trading is fraudulent or dishonest or that such trading is forbidden. At the most this is a declaration of policy and not a rule of prohibition.
In reaching this interpretation several rules of statutory construction are involved. In determining whether the rule is penal in nature one test is whether the injury sought to be redressed affects the public. 9 Fla. JUR CRIM. LAW s23. Here the rule on its face declares certain acts to endanger the interests of the public. Furthermore, since it is pursuant to this rule that petitioner proposes to take action against the licenses of the Respondents the rule is penal in nature and is therefore to be strictly
construed. State ex rel. Lee v. Buchanan 191 So.2d 33 (Fla. 1966) 9 Fla. JUR CRIM LAW 21. The rule does not provide that registrants shall not engage in equity trading. One cannot read the rule and determine what conduct is prescribed. By way of example, if a registrant could violate the rule and hence violate section 475.25(1)(d) F.S. by committing of the acts noted in the rule, a registrant's license could be suspended if he induced or advised a member of the general public to pay for property purchased.
From the foregoing it is concluded that Rule 21V-10.06 F.A.C. does not specifically proscribe or prohibit the conduct there declared to be that by which the interests of the public are endangered and therefore the commission of those acts noted in the rule does not constitute a violation of Section 475.25(1)(d) F.S. It is therefore,
Recommended that the charges against William J. Geary, Bernadine Geary, and Florida Real Estate Enterprises, Inc. be dismissed.
DONE and ENTERED this 29th day of April, 1977, in Tallahassee, Florida.
