Opinion
No. 83-65.
February 23, 1984. Rehearing Denied May 23, 1984.
Appeal from the Department of Professional Regulation, State Real Estate Commission.
Robert G. Petree and Robert O. Marks of Bornstein, Petree, Cooper Marks, Orlando, for appellant.
Bruce D. Lamb, Tallahassee, for appellee.
This case involves how section 475.25(1)(d), Florida Statutes (1981), which requires a real estate licensee to account and deliver held property, applies to a real estate broker who withholds a commission due a salesman and holds it as a setoff against a claim for damages the broker has against the salesman.
While employed by appellant Gerald Golub, a real estate broker, Michael Senia, a salesman, earned part of a commission that was payable monthly. Senia left Golub's employment and Golub retained as a setoff further commission payments due Senia claiming Senia took property belonging to Golub and that Senia had wrongfully caused Golub to suffer legal damages as to a later real estate sale. Senia complained to the Florida Department of Professional Regulation (DPR), and DPR directed Golub to send Senia and DPR an accounting of commissions due Senia. Later DPR filed an administrative complaint against Golub and a hearing examiner found Golub's failure to give Senia or DPR an accounting or delivery of the commission due Senia violated the provisions of section 475.25(1)(d), Florida Statutes (1981), and that even if Golub had good faith reasons to not deliver Senia's commission Golub was required to exercise one of the three escape procedures in the statute. Accordingly, DPR fined Golub $1,000 and suspended his license for 90 days and he appeals.
Our examination of the relevant statute leads us to believe that it was originally intended to protect the public from an unscrupulous licensee who failed to account for and deliver property which had come into his hands (usually as escrowed funds) and which the licensee did not own or have the legal right to retain. Cannon v. Florida Real Estate Commission, 221 So.2d 240 (Fla. 4th DCA 1969), cert. den., 226 So.2d 817 (Fla. 1969), held that the statute did not apply where, as here, a broker withholds commissions from a salesperson because the broker claims a setoff against the commissions. After Cannon the legislature amended the first of the three sentences in the relevant statutory sub-section to cause it to also relate to the failure of a licensee to account or deliver to another licensee.
The first sentence of section 475.25(1)(d) states in part that a licensee may be disciplined for failure to account or deliver, upon demand of any person entitled to such accounting and delivery, personal property which is not the licensee's property or which he is not in law or equity entitled to retain under the circumstances. Because of the word "and" in the phrase "accounting and delivery" a violation of this statute occurs only if the person demanding the accounting or delivery was entitled to the delivery. However, the second and third sentences of this statutory sub-section provides for "escape procedures" that a licensee must utilize to avoid the accounting and delivery when the licensee "entertains doubt" as to entitlement of one demanding an accounting or when faced with conflicting demands for the property. The appealed order adopts the position that Golub was required to resort to the escape procedures or promptly provide the requested accounting. However, those sentences relating to the escape procedures relate only to conflicting claims to "escrowed property," to which it repeatedly refers, such as was involved in Grieser v. Myers, 267 So.2d 673 (Fla. 4th DCA 1972), cert. den., 273 So.2d 766 (Fla. 1973), and not to contested commission fees as is involved in this case. See Fleischman v. Dept. of Professional Reg., 441 So.2d 1121 (Fla. 3d DCA 1983).
As it was not established that Golub was not legally entitled to retain the commission as a setoff it was not established that Senia was entitled to delivery of the commissions and as the commissions were not "escrowed property" Golub was not required to use one of the escape procedures. Therefore, Golub was improperly disciplined and the appealed administrative order is reversed and set aside. Once there is a judicial determination that a broker is not entitled to retain non-escrowed property then this statute is authority to discipline the broker for a failure to account and deliver the property to any person, including a salesman, who is entitled to its possession.
REVERSED.
MILLER, ROBERT P., Associate Judge, concurs.
FRANK D. UPCHURCH, Jr., J., dissents with opinion.
I respectfully dissent. In my opinion the construction of the statute by the majority serves only to defeat the obvious intent of the Legislature. As pointed out by the majority, the Legislature amended the predecessor to section 475.25(1)(d) after Cannon v. Florida Real Estate Commission, 221 So.2d 240 (Fla. 4th DCA 1969), to also relate to the failure of a licensee to account or deliver to another licensee. This subsection now reads as follows:
(1) The board may deny an application for licensure or renewal, may suspend a license for a period not exceeding 10 years, may revoke a license, may impose an administrative fine not to exceed $1,000 for each count or separate offense, or may issue a reprimand, if it finds that the licensee or applicant has:
* * * * * *
(d) Failed to account or deliver to any person, including a licensee under this chapter, 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, any personal property such as money, fund, deposit, check, draft, abstract of title, mortgage, conveyance, lease, or other document or thing of value, including a share of a real estate commission, or any secret or illegal profit, or any divisible share or portion thereof, 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. However, if the licensee, in good faith, entertains doubt as to what person is entitled to the accounting and delivery of the escrowed property, or if conflicting demands have been made upon him for the escrowed property, which property he still maintains in his escrow or trust account, the licensee shall promptly notify the board of such doubts and shall promptly:
1. Request that the board issue an escrow disbursement order determining who is entitled to the escrowed property; or
2. With the consent of all parties, submit the matter to arbitration; or
3. By interpleader or otherwise, seek adjudication of the matter by a court.
If the licensee promptly employs one of the escape procedures contained herein, and if he abides by the order or judgment resulting therefrom, no administrative complaint may be filed against the licensee for failure to account for, deliver, or maintain the escrowed property. . . .
Subsection (d) of the quoted statute provides for suspension, revocation, reprimand or fine if the board finds a licensee has failed to account or deliver at the time agreed upon or required by law.
In my view, the majority's conclusion will emasculate the statute because all the licensee will have to do is assert that the person demanding the accounting is owed nothing. Then, the majority says, the person must secure a judicial determination that the broker is not entitled to retain non-escrowed property and only then is the statute authority to discipline the broker. To illustrate: the owner of several apartments retains a broker to supervise her property, collect the rents, and pay expenses. The broker is not heard from. The owner asks for an accounting. The broker responds saying nothing is due because the taxes, insurance, and his commission exceed the rents collected. The majority says the owner must first secure a judicial determination that she is entitled to a delivery. But, in my opinion, the failure to account constitutes a violation of the statute because clearly the owner is entitled to delivery, if the accounting reflects anything due. Obviously, if the accounting reflects nothing owed, there is no requirement to deliver. The broker's duty under the statute is the same in either event.
I suggest that the words "accounting and delivery" must be interpreted as meaning, if, as revealed by the accounting, a delivery is due. The statute requires nothing more than what reputable brokers do as a matter of course. They account to those with whom they deal regarding funds received or disbursed.
Here, Golub refused to account to Senia. There is no doubt that they had a business association and Senia was entitled to an accounting. In my opinion, Golub was in violation of the statute. I would affirm.