STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

STATE OF FLORIDA, DIVISION )

OF FINANCE, )

)

Petitioner, )

)

vs. ) CASE NO. 77-1344

) DOMINION MORTGAGE CORPORATION )

and HOWARD R. DOWNES, Chairman, )

)

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 styled case on November 8, 1977 at Miami, Florida.

APPEARANCES

For Petitioner: Franklyn W. Wollett, Esquire

Office of the Comptroller The Capitol

Tallahassee, Florida 32304

For Respondents: Richard Bernstein, Esquire

Layne & Drill, P. A.

21 Southeast 1st Avenue Miami, Florida 33131

By Administrative Charges and Complaint filed June 16, 1977, the Division of Finance seeks to revoke or suspend the registration of Dominion Mortgage Corporation and Howard R. Downes, Chairman. As grounds therefor it is alleged that Respondent, after receiving a $15,000 deposit with a mortgage loan application and failing to procure a commitment for loan in accordance with the application, failed to return the deposit to the putative borrower in violation of Section 494.05(e) F.S.

Respondent was not present at the hearing; however, he was represented by counsel who moved for a continuance of the hearing because of the absence of Respondent Downes. As reason for the requested continuance it was alleged that Downes had been contacted the morning of the hearing and he advised his attorney that he could not appear at the hearing because he had grievous important matters which required his presence out of state. Granting of the motion was opposed by Petitioner.

A review of the record shows that this case was originally scheduled to be heard October 12, 1977 and that on October 3, 1977,, Respondent, by and through his attorney, had requested a continuance of that scheduled hearing on the grounds that Downes' presence was required outside the State of Florida on

October 12. By order dated October 10, 1977, the Motion for Continuance was granted and this case was rescheduled to commence on November 8, 1977. The Motion for Continuance presented at this hearing was denied.

By Notice to Produce at Hearing mailed November 2, 1977 the original of several documents presumably in the possession of Respondents were requested. The same documents had been noticed for production at the hearing originally scheduled to commence October 12, 1977. Upon demand for those documents, Respondent did not produce same, and moved to strike the notice on the grounds that he only received the Notice to Produce one or two days prior to the hearing and that provided insufficient time for him to procure the documents. The Motion to Strike was denied as was Respondent's objections to the admission into evidence of the various documents on the grounds that, since they were not the original documents, the best evidence rule was violated.

Thereafter two witnesses were called by Petitioner and 9 exhibits were admitted into evidence. From the evidence received I submit the following.

FINDINGS OF FACT

1. When served with the Charges, Respondent requested a hearing and received notice of the time and place of this hearing by and through his attorney.

   
   

2. By mortgage loan application dated August 8, 1973, Golf Paradise, Inc. by Evelio Rosell deposited $15,000 (Exhibit 3A) and a promissory note in the amount of $34,800 (Exhibit 3B) with Dominion Mortgage Corporation (DMC) as down payment for DMC to procure a mortgage in an amount of $4,980,000 at terms and conditions specified in the application.

   
   

3. No mortgage commitment complying with the terms of the application was presented by DMC to Golf Paradise, Inc.

   
   

4. After requests for return of the deposit, the promissory note was returned to Rosell, and a copy thereof on which Rosell wrote void was presented as Exhibit 3B. After several oral requests for return of the $15,000 payment, on October 7, 1974 Rosell submitted a written demand for return of the deposit (Exhibit 4). A second demand was submitted by letter dated November 4, 1974. (Exhibit 5).

   
   

5. By letter dated August 5, 1976, signed by Downes (Exhibit 2) DMC advised Rosell that DMC acknowledged the debt of $15,000 to Golf Paradise, Inc. and promised to pay $1,000 per month for the following 15 months commencing September 15, 1976. No payments were ever received by Golf Paradise, Inc. or Rosell.

   
   

6. Corporate records show that a $15,000 check from Golf Paradise, Inc. was placed in Dominion Mortgage Corporation Trust Account on August 9, 1973. These records further show that this amount, $15,000, was moved from the Trust Account in the Bank of Coral Gables on November 30, 1973 to the operating account and transferred to the Sun Bank of Miami.

   
   

   CONCLUSIONS OF LAW

   
   

7. Section 494.05, F.S. provides in pertinent part:

   
   

   1. The license of a licensee may be suspended

      for a period not exceeding two years . . . upon a finding of facts showing that the licensee has been guilty of.

      (e) Failure to account or deliver to any person any personal property such as money, fund, deposit, check, draft, mortgage 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 which is required by law, or, in the absence of a fixed time, upon demand of the person entitled to such accounting and delivery.

      * * *

      (3) If a licensee is a person other than an individual, it shall be sufficient cause for the suspension or revocation of a license that any officer, director or member of the licensed corporation . . . has so acted or failed to act as would be cause for suspending or revoking a license to such party as an individual."

      
      

8. Here, there was direct testimony of the complaining witness that he gave $15,000 to Dominion Mortgage Corporation as part payment for the procurement of a mortgage commitment, that DMC failed to produce a mortgage commitment in accordance with the conditions of the application, and that his demand for return of his deposit was not honored. Even if Respondents' objections to the various exhibits admitted into evidence would have been valid in a judicial proceeding, the exhibits nevertheless would have been admissible in these proceedings as hearsay evidence corroborating other evidence. Section 120.58(1)(a), F.S.

   
   

9. The primary concern of Chapter 494 F.S., the Mortgage Brokerage Act, in licensing brokers is contained in Section 494.04(4) F.S. which states in pertinent part:

   
   

   "The Department shall require such information with regard to the applicant as it may deem desirable, with due regard to the paramount interests of the public, as to the experience, background, honesty, truthfulness, integrity and competency of the applicant as to financial transactions involving primary and secondary mortgage financing . . .

   
   

10. By removing Rosell's deposit from the trust account and using same for operating expenses, Respondent placed itself in a position where it was unable to account and deliver upon demand the escrow funds to their rightful owner. This constitutes a violation of Section 494.05 F.S., above quoted, and constitutes one of the most serious violations that can be committed by a mortgage broker. From the foregoing it is concluded that Dominion Mortgage Corporation and Howard R. Downes are guilty of violating Section 494.05 F.S. as alleged.

11. Petitioner contends that the above acts of Respondent constitute a course of conduct providing grounds for revocation of license in accordance with Section 494.05(2) F.S. which provides:

"The license of a licensee may be revoked, if the application for the license is found to contain a material misstatement, or the licensee

demonstrates by a course of conduct negligence or incompetence in performing any act for which he is required to hold a license under this act, or if the licensee, for a second time, shall be found guilty of any misconduct which warrants

his suspension under subsection (1)."

The one transaction here involved does not constitute the course of conduct proscribed by the above quoted statute. Separate violations of the Mortgage Brokerage Act do not occur each day the deposit made by Rose 11 is wrongfully withheld. Here only one wrong was committed which is grounds for suspension of the license. Wrongfully withholding the deposit for an extended period of time does not change the one transaction into a course of conduct which would justify revocation of the licenses. It is therefore,

RECOMMENDED that the corporate mortgage broker's license of Dominion Mortgage Corporation and the mortgage broker's license of Howard R. Downes be suspended for a period of two years.

DONE and ENTERED this day of November, 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:

Franklyn W. Wollett, Esquire Office of the Comptroller The Capitol

Tallahassee, Florida 32304

Richard Bernstein, Esquire LAYNE & BRILL, P. A.

21 Southeast 1st Avenue Miami, Florida 33131

Eugene Cella, Esquire General Counsel

Office of the Comptroller The Capitol

Tallahassee, Florida 32304

Docket for Case No: 77-001344

Orders for Case No: 77-001344