STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

FLORIDA REAL ESTATE COMMISSION, ) ex rel., HAROLD T. MOONEY, )

)

Petitioner, )

)

vs. ) CASE NO. 76-2003

) P. D. 2891

RANDALL J. CONLEY, )

)

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 style case on February 3, 1977 at Winter Park, Florida.

APPEARANCES:

For Petitioner: Manuel E. Oliver, Esquire

Staff Counsel

Florida Real Estate Commission 2699 Lee Road

Winter Park, Florida 32789

For Respondent: Herbert R. Swofford, Esquire

Post Office Box 6236 Orlando, Florida 32803

By Administrative Complaint filed July 2, 1976 the FREC, ex rel. Harold T. Mooney seeks to revoke, suspend, or otherwise discipline the real estate broker's license of Randall J. Conley. As grounds there for it is alleged that on or about November 25, 1975 Defendant made false representations regarding the equipment in a building he was attempting to lease to one Hicks, and thereby obtained a $200 deposit; that he failed to deposit such deposit in an escrow account; that upon demand by Hicks for return of his deposit he failed to account or deliver said deposit to Hicks; and that, by reason of the foregoing, Defendant has been guilty of a course of conduct or practices which show that he is so incompetent, negligent, dishonest or untruthful that the money, property, transactions and rights of those with whom he may sustain a confidential relation, may not safely be entrusted to him. The first three counts in the Complaint allege violations of Sections 475.25(1)(a), (i), and (c) F.S. while the fourth count alleges violation of Section 475.25(3) F.S.

At the commencement of the hearing, Defendant, by and through his attorney, renewed the Motion to Quash previously denied by the Commission and filed a document headed Objections to Hearing (Exhibit A) which appears to be predicated primarily on the Motion to Quash previously denied. Although Defendant argued that the Administrative Complaint did not fully apprise him of what he is required to defend against, no motion was filed to make the charges more

definite and certain. After the Objection to Hearing was denied four witnesses were called by Plaintiff, three witnesses were called by Defendant, and twenty- three exhibits were offered into evidence and all were admitted except Exhibit 7.

FINDINGS OF FACT

1. In June, 1975 Randall J. Conley, attempting to set his son and daughter-in-law up in business, arranged for them, with his help, to purchase Roger Sparks' business known as Sparky's Pizza. By Exhibit 6 dated June 17, 1975 the owner and lessor of the premises executed, with Randall M. Conley and his wife Sandra, a Consent to Assignment whereby the lease between the lessor and Mr. Spaghetti and Roger Sparks was assigned to the younger Conley and his wife and the previous lessees were released from further liability under the five year lease they had executed on April 30, 1974. (Exhibit 10)

   
   

2. By Collateral Assignment Note dated 6-2-75 Randall J. Conley, Randall

   M. Conley and Sandra Conley obligated themselves to pay the Florida Center Bank

   $9750 over a five-year period and pledged the equipment and fixtures in the pizza business as security therefor.

   
   

3. In October, 1975 Sandra, who had been operating the business, left for another job preparatory to separating from her husband. The business closed on November 1, 1975 and Defendant learned that the lessees were delinquent in the rent and payments on the chattel mortgage. Thereafter he attempted to sell the business.

   
   

4. In November, 1975 Charles Hicks, the owner of a small fast-food chain, while looking for a site for a franchisee, saw the empty Sparky's Pizza and ascertained that information on occupying the property could be obtained from Defendant. He called Defendant's office and was told the rent was $260 per month. Arrangements were made for Defendant to show him the property the same afternoon.

   
   

5. On November 25, 1975 Defendant showed Hicks and his putative franchisee, Ronald Beasley, the property. After being assured that the rental included the equipment and fixtures they agreed to accept an assignment of the lease if the lessor agreed and to bind the transaction Hicks gave Defendant a check for $200 made payable, at the request of Defendant, to Randall J. Conley. No written agreement was executed by the parties at this time. The check stated on its face that it was a deposit on lease of building here involved.

   
   

6. The following day Defendant called Hicks and told him that the lessor had agreed with the assignment and that he should bring a check for $7,000 to pay for the equipment, plus a check for the rent. Hicks objected to the purchase of the equipment and demanded return of his $200 deposit. Defendant refused to return the money and Hicks immediately tried to stop payment on the check. When he did so he learned that his check had been cashed by Defendant as soon as the bank opened that morning, November 26. After Hicks was unsuccessful in getting his deposit returned he reported the incident to the FREC and the complaint here under consideration was filed.

   
   

7. Defendant contends that he was operating as the owner of the lease and not in his capacity as a broker; that the consent to assignment of the lease did not result in an assignment; that by executing the collateral installment note he was part owner of the business; that when his daughter-in-law left and the

   business folded he acquired the leasehold by abandonment; and that he was entitled to retain Hicks' deposit of $200 as liquidated damages.

   
   

8. One witness called by Defendant testified that the bank's policy on chattel mortgage loans was that they would only make such loans to the owners of the business. However, he acknowledged that he did not handle the loan here involved and never saw any documents showing Randall J. Conley having an interest in the leased premises, the equipment and fixtures for which was the subject of the loan represented by Exhibit 9.

   
   

9. Defendant had advertised the sale of the lease in the newspaper and therein indicated the assignee of the lease would be required to assume payments on the equipment. Neither Hicks nor Beasley ever saw any such advertisement.

   
   

   CONCLUSIONS OF LAW

   
   

10. Section 475.25 F.S. provides in pertinent part:

    
    

    "(1) 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:

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

       any business transaction.

       (c) Failed to account or deliver to any person. any personal property such as money. . . or other document or thing of

       value. . . 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, and at the time which has been agreed upon or is required by law, or in the absence of a fixed time, upon demand of the person entitled to such accounting and delivery.

       (i) 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 with a title company or banking institution located and doing business in Florida, or, deposit said funds in a trust or escrow bank account maintained by him with some bank located and doing business in Florida, wherein said funds shall be kept until disbursement thereof is properly authorized. . . .

       
       

       (3) The Registration of a registrant may be revoked if the registrant shall, for a second time, be found guilty of any misconduct that warrants the suspension under subsection (1)

       of this section, or if he shall be found guilty of a course of conduct or practices which show that he is so incompetent, negligent, dishonest, or untruthful that the money, property, transactions and rights of investors or those with whom he may sustain a confidential relation, may not safely be entrusted to him."

       
       

11. The Consent to Assignment, Exhibit 6, was operative on its face to assign the lease held by Mr. Spaghetti and Roger Sparks to Randall M. and Sandra Conley. Upon their acceptance of the demised premises the Conleys assumed all obligations under the lease. The term of the lease that they assumed commenced July 1974 and ran for five years. Accordingly in June, 1975 the Conleys accepted a lease with four years remaining thereon. At the time Hicks verbally agreed to assume the lease it still had more than three and one half years to run. Since the interest in the property represented by the lease was for a period longer than one year it comes within the provisions of Statute of Frauds,

    725.01 F.S. and the verbal agreement between Hicks and Defendant is unenforceable because it was not in writing and signed by the party to be charged.

    
    

12. Accordingly, even if the Defendant had not made misrepresentations to Hicks regarding the equipment and fixtures, he would not have been authorized to retain Hicks' deposit as liquidated damages.

    
    

13. Defendant's contention that he was acting as lessee or owner of the lease, and not as an agent for the lease holder, is without merit. The fact that he was required to sign the note secured by a chattel mortgage on the equipment and fixtures did not obligate him to make lease payments under the assignment for which he did not sign as a party. His voluntary agreement to make the rental payments after the business closed, plus back rental payments stemmed solely, according to his own testimony, from the fact that he was liable for the chattel mortgage payments and had no place else to store the equipment and fixtures.

    
    

14. Here Defendant was contacted as a real estate broker and although Hicks' check was made out to Defendant personally rather than to an escrow account this was done solely at Defendant's request. This did not change the nature of the transaction or Defendant's legal position in this transaction.

    Not being a lease holder Defendant could act only as agent for the lease holder. As such he received the $200 deposit as a broker and was required by the Real Estate License Law to place this money in escrow. One cannot easily shed the duties and responsibilities of a registrant simply by choosing to act as an individual owner rather than as a registrant, particularly when one has no legal standing with respect to the leasehold.

    
    

15. Absent a written agreement between Hicks and Defendant representing the leasehold interest in the real property here involved, any otherwise valid claim Defendant had to this deposit would be unenforceable under the circumstances here involved.

    
    

16. Furthermore Defendant cannot resort to self help by retaining the $200 deposit to enforce his claim of liquidated damages. Absent a contractual provision, providing for liquidated damages upon default of one party to a contract, no right to claim liquidated damages exists.

17. With respect to the equipment and fixtures there was certainly no meeting of the minds regarding payment for these items. Even if Defendant did tell Hicks he would have to assume the obligation to pay for the equipment and fixtures (as he claims and as Hicks and Beasley both deny) certainly this was not understood by Hicks as the events of the following day amply demonstrate. Just as soon as Hicks learned of these additional conditions he notified Defendant of his non-concurrence therewith and demanded return of his deposit. At that time he was entitled to a return of his deposit. 33 Fla. Jur. 160 Vendor and Purchaser.

    
    

18. Here we are concerned with one and only one transaction although Defendant is charged thereby with violation of three provisions of Section 475.25(1) F.S. This does not constitute a course of conduct as contemplated by Section 475.25(3) F.S. above quoted.

    
    

19. From the foregoing it is concluded that Defendant Randall J. Conley is guilty of violating Sections 475.25(1)(a), (c), and (i). It is further concluded that he is not guilty of violating Section 475.25(3) F.S. It is therefore,

RECOMMENDED that the registration of Randall J. Conley be suspended for a period of six (6) months.

DONE and ENTERED this 25th day of February, 1977, in Tallahassee, Florida.

K. N. AYERS, Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304

(904) 488-9675

COPIES FURNISHED:

Manuel E. Oliver, Esquire Florida Real Estate Commission 2699 Lee Road

Winter Park, Florida 32789

Herbert R. Swofford, Esquire 1212 East Colonial Drive Orlando, Florida 32803

Docket for Case No: 76-002003

Orders for Case No: 76-002003