RATTRAY v. SCUDDER (1945)

District Court of Appeal, Fourth District, California.

RATTRAY v. SCUDDER.

Civ. 3172.

Decided: July 31, 1945

Robert W. Kenny, Atty. Gen., and Carl S. Kegley, Deputy Atty. Gen., for appellant. Mack, Werdel & Bianco, of Bakersfield, for respondent.

This is an appeal from a judgment granting a peremptory writ of mandate annulling an order of defendant, Real Estate Commissioner of the State of California, which revoked the real estate broker's license of plaintiff, and from an order taxing costs.

Plaintiff had been a real estate broker for many years and at all times material here had held a State license as such. For about a year prior to October, 1943, he had been officing with and working out of the office of Edward A. Kelly, another licensed broker of Bakersfield.

John Leonard Humston, a 2nd Lieut. in the United States Army, was the owner of a court in the city of Bakersfield. He was stationed at Middletown, Ohio.

On January 19, 1943, on the letter head of Kelly & Son, petitioner Rattray wrote Humston a letter stating that ‘We have a client who is interested in purchasing property in this district, and thought you might wish to sell your property,’ and asking price and terms. Under date of February 4th, Humston replied stating the property was for sale for $13,000 and that a small second mortgage might be acceptable.

On February 11, 1943, Rattray wrote Humston that the property had been appraised by a competent appraiser; that there had been a heavy depreciation of the building and furniture; that a fair price would be $12,000; that ‘to this we would have to add the selling commission.’ A 60-day option dated February 15, 1943, was enclosed in favor of Kelly & Son giving them the right to purchase the property for $12,000. Humston inserted after the purchase price, ‘$10,000 cash, $2,000 at 8%’, signed the option and returned it.

Rattray inserted an advertisement in a Bakersfield paper offering the property for sale at $15,000. This was reduced to $13,500 in later issues. Edward L. Espey contacted Rattray and wanted to buy the property. He said he thought it was worth $12,500 but that he might pay $13,500 for it if he could be financed. He had very little money but had other property in Bakersfield. At least the first conversation between Rattray and Espey occurred some time in March, 1943, probably before March 20th.

On March 20, 1943, Rattray wrote Humston, who was then stationed at Fort Rosecrans in San Diego, in part as follows:

‘As the proeprty was purchased through this office, we are able to arrive at a more definite valuation than some other office who might not be as well posted as we are.

‘Our purpose for writing you this morning is to inquire whether you would consider $10,000.00 cash, as we have a prospect now who will likely purchase this property providing we can do some financing for him.

‘Since buying the property through this office some years ago, there has been a depreciation of 3% a year, which would total at least $2,000.00. We, therefore, believe that under present conditions you would be wise in accepting this cash offer, providing we are able to arrange the financing as hereinabove referred to.’

Under date of April 2, 1943, Rattray wrote Humston informing him that the customer had telphoned twice about the sale and urging Humston to accept $10,000 cash for the property. On April 6th, Humston telegraphed Rattray: ‘WILL TAKE TEN THOUSAND SEVEN FIFTY NET.’

Rattray telephoned Humston, probably three times about the sale. Descriptions of the two earlier calls are indefinite both as to time and subject matter. The third call was placed by Rattray at about 4:15 o'clock on the afternoon of April 15, 1943. This conversation is described by Humston as follows: ‘Well, the—he said he had a prospect to buy the property, and he had to know right away, and he could not get the money I asked for the property, and that $10,000 was the most he could get. And I said I would not accept that, and he said—I told him—he said he had the deal made, and suggested I go ahead and make—they act for me—to go ahead and make the deal, and I told him I would take $10,500, and he said he could not make a deal like that, and I finally said I would take $10,250, and he said if I accepted $10,250 I would have certain expenses to pay out of that. I said I would accept $10,250 but I would not pay any expenses out of it—in other words that is the least I would take, and he said that I would have to pay title transfer—something—$14. I told him I would not pay it. He said, ‘You wire me to the effect you will take $10,250 net’, and I did that that night, April 15th.'

Rattray detailed the conversation as follows: ‘I told Lt. Humston that I was unable to sell his proeprty for the price he had placed upon it, and the only way we could get him $10,000 cash would be to buy it ourselves. He said ‘I won't accept it: I will accept $10,500, if that is all you will give.’ I said ‘We will not pay $10,500; we will pay $10,000.’ He said, ‘Will you pay $10,250?’ I said ‘Will you accept $10,250?’ ‘Yes', he said, ‘I think I will.’ I said ‘Will you confirm that by wire?’ that was the entire conversation as I recall.'

Humston telegraphed Rattray; ‘WILL TAKE TEN THOUSAND TWO HUNDRED AND FIFTY NET CASH WITHIN THIRTY DAYS.’ The following appears on the face of the telegram: ‘1943 Apr 15 PM 11 47,’

Rattray testified that he telephoned Espey early on the morning of April 16th and informed him that Kelly was buying the property and would sell it to him; that about 9:30 or 10 o'clock that morning he instructed the Title Insurance and Trust Company to prepare escrow instructions; that between 12 o'clock noon and 1 o'clock p.m. he took espey to the office of the title company where he signed the instructions agreeing to buy the property for $13,500 and deposited a check for $400 on account.

In a letter dated April 15, 1943, the title company sent Humston escrow instructions and a deed, also dated April 15, 1943, conveying the property to Edward A. Kelly. This deed was acknowledged by Humston and his wife in San Diego April 23, 1943. The escrow instruction signed by Humston and his wife were dated April 23, 1943, and were received by the title company April 27, 1943.

Espey signed a promissory note dated April 16, 1943, for $12,500 payable in instalments to Steve Ceccarelli and Margherita Ceccarelli. This note was secured by a deed of trust, bearing the same date, on the property involved here and other property belonging to Espey. The acknowledgment on the deed of trust was dated April 14, 1943, and was executed by Emmett E. Wilson who was manager of the title company. Mr. Wilson had no material record of this acknowledgment. He testified that the deed of trust was actually signed and acknowledged by Espey on April 19, 1943; that the date, April 14, in the certificate was due to a mistake of the stenographer who filled in the blanks. Another employee of the title company corroborated this testimony.

The escrow instructions executed by Espey were dated and signed by him on April 16, 1943. They referred to the purchase of the property, the Ceccarelli note and deed of trust, and a chattel mortgage on the furniture in the court. The escrow instructions of Edw. A. Kelly were dated May 7, 1943. They referred, among other things, to a note of Espey to Kelly for $700 secured by a second deed of trust on the property in question here.

Mrs. Ceccarelli paid $7100 of the $12,500 loan on April 16, 1943, and the balance of $5400 on April 30, 1943.

The letters giving statements of disbursements of the funds in the escrow were dated May 17, 1943. They show that the total cash paid into escrow was $13,496.65; that Humston received $10,250 for his property; that Kelly received $2326.25 in cash besides the $700 promissory note. The evidence shows that Kelly paid Rattray over $900, being half of the net cash profit on the transaction.

Steve Ceccarelli, a resident of Mojave, California, was called as a witness. He testified that Kelly and Frank Simon (a broker who officed with Kelly) had handled loans for him for many years; that his wife was in Bakersfield and was contacted by either Kelly or Simon about the loan subsequently made to Espey; that she favored the loan but would not finally approve it until ceccarelli had seen the property; that one morning Simon drove from Bakersfield to Mojave and took Ceccarelli back to Bakersfield where he looked at the property and approved the loan. The date of this trip is not fixed in the record but we know that it involved two tedious journeys through the Tehachapi Mountains. If all these things happened on the morning of April 16, in time to permit Espey to make his deposit and sign his escrow instructions during the noon hour on that day there was dispatch and speed involved that was unusual.

The foregoing facts are all gleaned from the transcript of the evidence taken before the deputy commissioner who tried the charges filed by Humston against Rattray. Upon this evidence the commissioner concluded that Rattray had been guilty of dishonest dealings with Humston in violation of subdivision ‘f’ of section 10176 of the Business and Professions Code, St.1943, p. 841, and revoked his license.

Rattray then filed this action in the superior court seeking a writ of mandate to compel the commissioner to revoke the order cancelling his license and to restore the same. The only evidence introduced in the superior court action was the transcript of the proceedings before the commissioner.

On this evidence the trial court found as follows: ‘It is true that at neither of said hearings was there any evidence that the plaintiff herein was acting as the agent for the complainant John L. Humston; it is true that said John L. Humston never agreed to pay any commission to the plaintiff herein for any of the services of the plaintiff; it is true that the complainant John L. Humston on February 15, 1943, executed to the plaintiff herein and his associates an option to purchase the real property of the complainant; it is true that at no time pertinent herein did the relationship of principal and agent ever exist between the plaintiff herein and the said complainant John L. Humston; it is true that at no time herein did any relationship of trust and confidence ever exist between the plaintiff herein and the complainant John L. Humston; it is true that the plaintiff herein in handling the transaction referred to in the complaint of said John L. Humston filed with the defendant herein was not guilty of any conduct which constituted fraud or dishonest dealing and had not acted or conducted himself in any manner which would have warranted the denial of his application for a license or for the renewal of his then existing license.’

Section 10176 of the Business and Professions Code provides in part as follows:

‘The commissioner may, upon his own motion, and shall upon the verified complaint in writing of any person, investigate the actions of any person engaged in the business or acting in the capacity of a real estate licensee within this State, and he may temporarily suspend or permanently revoke a real estate license at any time where the licensee within the immediate preceding three years, while a real estate licensee, in performing or attempting to perform any of the acts within the scope of this chapter has been guilty of any of the following: * * *

‘(f) Any other conduct, whether of the same or a different character than specified in this section, which constitutes fraud or dishonest dealing.’

Were it not for the case of Schomig v. Keiser, 189 Cal. 596, 209 P. 550, we would have no hesitancy in holding that on the evidence before it, the trial court should have found that Rattray had been guilty of dishonest dealings with Humston in beating down the asking price for the property by concealing the true facts and by misrepresentations, and should have sustained the commissioner in revoking his broker's license. There seems to be little reason to doubt that the Ceccarelli loan had been approved and the sale to Espey for $13,500 thereby assured before Rattray telephoned Humston at about 4:15 o'clock on the afternoon of April 15th. At least these things must have happened before Rattray received Humston's telegram of acceptance. The letter of the title company and the deed conveying the property to Kelly, both dated April 15, sent to Humston with the escrow instructions, as well as the evidence in the case, make this conclusion reasonably certain.

However, this conclusion does not enable us to reverse the judgment. The trial court found in effect that the relation of principal and agent never existed between Humston and Rattray and that Rattray did not act in his capacity as broker in his dealings with Humston. This finding has evidentiary support and may not be questioned on appeal. In Schomig v. Keiser, supra, the Supreme Court held that in order to justify the commissioner in revoking a license, the broker must have been acting in that capacity as agent for the injured party. The trial court's finding on the question of agency and the decision of the Supreme Court seem decisive of this appeal.

The balance of the finding to the effect that the conduct of Rattray would not warrant the denial of his application for a license or an application for its renewal, has no place in the findings. It goes far beyond the issues of the case. The law governing the issuance of a license differs materially from that controlling the revocation of a license. The applicant for a license must produce evidence that he ‘is honest, truthful and of good reputation’, Sec. 10150, Business and Professions Code, so those characteristics become material when a license is to be issued. Certainly, in his dealings with Humston, Rattray used the truth with frugality. That fact might assume importance in the mind of the commissioner should Rattray again apply for a broker's license as his old license has long since expired. Glick v. Scudder, Cal.App., 160 P.2d 90.

Another reason for affirming the judgment, although no point is made of it by counsel, may be found in the fact that the complaint filed by Humston with the commissioner does not seem to be verified as required by section 10176 of the Business and Professions Code.

The memorandum of costs filed by Rattray included an item of $139.45 for copies of the transcript of the proceedings before the commissioner. As these transcripts were apparently produced and paid for by rattray the cost of preparing them was recoverable by him as he prevailed in the action. Dare v. Board of Medical Examiners, 21 Cal.2d 790, 136 P.2d 304.

The judgment and order are affirmed.

MARKS, Justice.

BARNARD, P. J., concurs.