STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

IN RE: THE BOND OF H.B. CANNING )

& ASSOCIATES, INC. ) CASE NO. 79-405

)

RECOMMENDED ORDER

Pursuant to notice, a hearing was held before Charles C. Adams, a Hearing Officer with the Division of Administrative Hearings, on Wednesday, February 21, 1979, in Room 103, Collins Building, Tallahassee, Florida, at 10:00 a.m.

APPEARANCES

David M. Hudson, Esquire Deputy General Counsel

Department of Business Regulation The Johns Building

725 South Bronough Street Tallahassee, Florida 32304

and Daniel P. Hagaman

140 Park Drive

Fort Oglethorpe, Georgia 30742

This case concerns the entitlement of those persons having business transactions with H. B. Canning & Associates, Inc., to collect the proceeds from the bond posted in behalf of H. B. Canning & Associates, Inc., under terms and conditions of Subsection 537.04(10), Florida Statutes (1977).

FINDINGS OF FACT

1. Prior to July 1, 1978, and at all times pertinent to this cause, H. B. Canning & Associates, Inc., in the person of Harold B. Canning, Jr., was the holder of a yacht and ship broker license under terms of Chapter 537, Florida Statutes. A copy of this license may be found as the State of Florida, Department of Business Regulation, Division of General Regulation Exhibit No. 1 admitted into evidence.

   
   

2. The Division of General Regulation, prior to July 1, 1978, had as one of its duties the regulation and licensure of yacht and ship brokers operating in the State of Florida. Under the terms of Subsection 537.04(8), Florida Statutes, all applicants for a broker's license or renewal of that license were required to post a surety bond issued by a company authorized to do business in Florida, and that bond amount was $5,000.00. The purpose of the bond was to protect those individuals who were dealing with licensees such as H. B. Canning & Associates, Inc.

   
   

3. If any person was of the opinion that he/she had been injured by the fraud, deceit or willful negligence of any yacht and ship broker or one of their salesmen or for reason that any broker or salesman failed to comply with the conditions of Chapter 537, Florida Statutes, an action could be brought in any court of competent jurisdiction to recover damages on the basis of the

   aforementioned potential allegations. Furthermore, in the event that a broker failed to pay a sum of money owed to any creditors arising out of business transactions of those creditors in which the yacht and ship broker was acting in that capacity, the Division of General Regulation was required to hold a hearing to determine the names of the creditors and to determine the amounts due unto them. These rights to recovery are set forth in Subsection 537.04(10), Florida Statutes. That subsection further states that the form of notice of hearing before the Division of General Regulation shall be as set out in a newspaper and magazine of general circulation devoted to news of yacht and ship business and that each creditor shall file a verified claim with the Division. Once these verified claims are considered, a demand can be made on the bond in behalf of the claimants whose statements have been filed with the Division of General Regulation. Furthermore, the Division would have the power to settle those claims with the surety company and may release said bond and order a discharge of further liability. Should the surety company refuse to pay the bond after that demand, then the Division of General Regulation may bring an action upon the bond in behalf of the creditors. (Although Chapter 537, Florida Statutes, has been repealed by Chapter 76-168, Section 3(1)(gg), Laws of Florida, Sections

   6 and 11 of that same statutory provision have allowed for the consideration of causes of action which accrued prior to the termination of the responsibility of the Division of General Regulation under Chapter 537, Florida Statutes. The effective date of repeal of Chapter 537, Florida Statutes, was July 1, 1978, and those actions which accrued prior to that date and are prosecuted prior to July 1, 1979, may be entertained by the Division of General Regulation.)

   
   

4. In this case in keeping with the terms and conditions of Subsection 537.04(8), Florida Statutes, H. B. Canning & Associates, Inc., made a bond in the amount of $5,000.00 through the surety, State Automobile Mutual Ins. Co. of Columbus, Ohio. A copy of that bond may be found as the Division of General Regulation Exhibit No. 2 admitted into evidence.

   
   

5. The Division of General Regulation was subsequently made aware of the claims of certain creditors against the licensee and on December 14, 1978, by written correspondence of their counsel forwarded the case to the Division of Administrative Hearings for consideration pursuant to Section 120.57(1), Florida Statutes.

   
   

6. The Division of General Regulation later filed a notice of a hearing to be conducted in Room 103, Collins Building, Corner of Gaines and Adams Streets, Tallahassee, Florida, at 10:00 a.m., Wednesday, February 21, 1979. This Public Notice indicated that consideration would be made of the claims of creditors against the bond which has been referred to herein. This Public Notice of hearing was made in a newspaper of general circulation devoted to the news of yacht and ship business and constitutes good and sufficient notice of that hearing. The Division of General Regulation Exhibit No. 3 admitted into evidence is a copy of that newspaper advertisement.

   
   

7. The hearing was held to consider the claims of creditors against the bond of H. B. Canning & Associates, Inc. Prior to that hearing, the surety, State Automobile Mutual Ins. Co. of Columbus, Ohio, was made aware of the date, time and place of the public hearing and is believed to have notified H. B. Canning & Associates, Inc.

   
   

8. At the hearing the cases of two claimants were presented. One claim was presented in writing by having the counsel for the Division of General Regulation place into the record a Final Judgment of one Dwight Coombs, Plaintiff vs. H. B. Canning & Associates, Inc., Defendant, in Case No. 78-2841

   CA(1) 01 G, in the Circuit Court of the 15th Judicial Circuit, in and for Palm Beach County, Florida. This copy was certified and was accompanied by a letter addressed to the Florida Department of Business Regulation, Division of General Regulation from John D. Kurtz, Esquire, as counsel for Dwight Coombs. The Final Judgment and copy of the Kurtz letter may be found as Division of General Regulation Exhibits No. 4 and 5, respectively, admitted into evidence in the course of the hearing.

   
   

9. The second claim offered in the course of the hearing was in the person of Daniel P. Hagaman, who appeared and offered testimony and documentary evidence.

   
   

10. The Exhibit No. 4 by the Division of General Regulation demonstrates that H. B. Canning & Associates, Inc., owes $3,251.52 to Dwight Coombs by reason of a claim arising out of a transaction in which H. B. Canning & Associates, Inc., was acting in the capacity of a broker and misappropriated funds of Coombs in contravention of Chapter 537, Florida Statutes. Likewise, this Final Judgment proves that the claim accrued prior to July 1, 1978.

    
    

11. Daniel P. Hagaman, through his testimony and documentation which is found in the Hagaman Exhibits 1 through 12, established that he had given a deposit for the purchase of a boat from H. B. Canning & Associates, Inc. in a transaction in which that organization acted as a broker. The testimony further establishes that the sale was not consummated and that H. B. Canning & Associates, Inc., should have reimbursed the $3,000.00 and failed to do so, under a claim prior to July 1, 1978.

    
    

12. Under the circumstances, it would not appear that either the Coombs claim or the Hagaman claim would have priority. Therefore, Coombs and Hagaman are entitled to a pro rata share of the $5,000.00 bond amount premised on the amount owed to them, which is $3,251.50 for Coombs and $3,000.00 for Hagaman.

    
    

    CONCLUSIONS OF LAW

    
    

13. The Division of Administrative Hearings has jurisdiction in this cause.

    
    

14. Upon consideration of the facts herein, it is concluded as a matter of law that H. B. Canning & Associates, Inc., owes Dwight Coombs an amount of

    $3,251.50 and Daniel P. Hagaman an amount of $3,000.00, as creditors upon claims arising out of transactions in which H. B. Canning & Associates, Inc., acted in a capacity as a yacht and ship broker licensed in the State of Florida.

    
    

15. It is further concluded, that Coombs and Hagaman are entitled to pro rata shares of the $5,000.00 bond made by H. B. Canning & Associates with the surety, State Automobile Ins. Co. of Columbus, Ohio. Finally, the State of Florida, Department of Business Regulation, Division of General Regulation is entitled to execute and deliver a release of the bond for the benefit of Dwight Coombs and Daniel P. Hagaman in a pro rata amount according to the debt owed by

H. B. Canning & Associates, Inc., to Dwight Coombs and Daniel P. Hagaman and to discharge State Automobile Mutual ins. Co. of Columbus, Ohio, from further liability under the bond.

RECOMMENDATION

It is recommended that the State of Florida, Department of Business Regulation, Division of General Regulation make a pro rata disposition of the bond amount of the bond of H. B. Canning & Associates, Inc., through the surety, State Automobile Ins. Co. of Columbus, Ohio, in a pro rata amount for the benefit of Dwight Coombs and Daniel P. Hagaman, premised upon the amount owed to those parties, and do so by the method of an execution and delivery of a release of said bond, which further discharges State Automobile Mutual Ins. Co. of Columbus, Ohio, of liability.

DONE AND ENTERED this 15th day of March, 1979, in Tallahassee, Florida.

CHARLES C. ADAMS

Hearing Officer

Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32304

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 15th day of March, 1979.

COPIES FURNISHED:

David M. Hudson, Esquire Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32304

John D. Kurtz, Esquire Hustad & Kurtz

388 South Military Trail

West Palm Beach, Florida 33406

Daniel P Hagaman

140 Park Drive

Fort Oglethorpe, Georgia 30742

H. B. Canning & Associates, Inc.

40 Southeast First Avenue Boca Raton, Florida 33432

State Automobile Mutual Ins. Co. of Columbus, Ohio

Branch Claims Office 1010 South Dixie Highway

Lake Worth, Florida 33460

Attention: Sharon Rogers, Claims Adjuster

Docket for Case No: 79-000405

Orders for Case No: 79-000405