Florida Real Estate Commission v. McGregor, 46956

• Decision Date: 30 July 1976
• Docket Number: No. 46956,46956
• Citation: 336 So.2d 1156
• Parties: FLORIDA REAL ESTATE COMMISSION, Appellant, v. Mike McGREGOR, et al., Appellees.
• Court: Florida Supreme Court

Page 1156

336 So.2d 1156

FLORIDA REAL ESTATE COMMISSION, Appellant, v. Mike McGREGOR, et al., Appellees.

No. 46956.

Supreme Court of Florida.

July 30, 1976.

Rehearing Denied Oct. 8, 1976.

Frank A. Wilkinson, Orlando, and John Huskins, Winter Park, for appellant.

Thomas C. MacDonald, Jr. and D. Frank Winkles of Shackleford, Farrior, Stallings & Evans and James W. Kynes, Tampa, for appellees.

SUNDBERG, Justice.

This matter is before us on direct appeal from the Circuit Court of the Thirteenth Judicial Circuit in and for Hillsborough County, Florida. We have jurisdiction of the appeal pursuant to Article V, Section 3(b)(1), Florida Constitution, and Rule 2.1(a)(5)(a), Florida Appellate Rules, in that the circuit court initially and directly passed upon the validity of Section 475.01(2), Florida Statutes, ¹ by holding that such subsection is unconstitutional as applied to the appellees under the particular facts of the instant case.

On July 17, 1970, appellant Commission filed a complaint in the Circuit Court of Hillsborough County, seeking an injunction against certain actions of Mid-State Homes, Inc. and of its mortgage representatives ² which were alleged to violate Chapter 475, Florida Statutes, known as the Real Estate License Law. The complaint alleged that the mortgage representatives were willingly selling certain real property of Mid-State without a Florida real estate license. The complaint was dismissed with prejudice, and the Second District Court of Appeal, without considering the constitutionality of the instant statute, affirmed this dismissal at 254 So.2d 566. This Court, reviewing the case on certiorari, held that the Statute did pertain to Mid-State's mortgage representatives and quashed the decision of the District Court of Appeal, directing further proceedings in the Circuit Court. 268 So.2d 529. Upon remand the Circuit Court held a final hearing on the constitutional issue. Finding that Mid-State had been unable to hire licensed brokers to sell its property because of the peculiar job requirements involved, that court concluded that the statute was unconstitutional as applied to these defendants because it 'imposes a burdensome and discriminatory classification with no countervailing public benefit and without any reasonable relationship to the public welfare.' The facts upon which the Circuit Court predicated its judgment essentially are as follows:

Jim Walter Homes, Inc. sells and builds 'shell-type' homes on the buyer's real estate. The purchase is financed by the defendant-appellee Mid-State, which buys the receivables (note and mortgage) from Jim Walter Homes, Inc. Mid-State operates as a collection or mortgage servicing agency in collecting the receivables it purchases, nearly all of which involve mortgages on small homesteads located in rural areas and valued from $2,500 to $8,500. Currently, Mid-State owns about 3200 such accounts totalling approximately $29,000,000.

In the course of its business Mid-State may obtain title to real property by foreclosure or by deed in lieu of foreclosure. At any given time Mid-State has title to only ten to twelve such repossessed homes in the State of Florida. Of these ten to twelve repossessions, usually about half of the houses are sold as personalty after removal from the land while the remainder are sold by representatives of Mid-State. Based on stipulated facts it is established that the company has not utilized registered real estate brokers to sell these remaining repossessions because such brokers have been unwilling to handle this type of property, due to its location and to the small amount of commission available to a broker at standard Florida rates. Mid-State employs two field representatives to find purchasers for the properties. These representatives are not, and never have been, registered real estate brokers in Florida. They are each salaried employees of Mid-State's Tampa office. Each works for no other company and spends approximately 15% Of his salaried time attempting to locate purchasers for the repossessed properties. These individuals do not receive any commission or bonus from any sale of real estate, and their salaries are established without reference to specific property sales. They are not officers or directors of Mid-State but are salaried employees. These representatives generally canvass the counteryside in which a home is located to determine if anyone nearby might want to move into the house or might otherwise have an interest in it. They never advertise in their individual names but utilize only the corporate name in their newspaper advertisements and on signs posted on the subject property. Mid-State alleges that, if it had to rely on the conventional brokerage fee system, the houses would have to be abandoned or substantial losses incurred.

The issue presented on this appeal is whether subsection 475.01(2), Florida Statutes, is unconstitutional as sought to be enforced against appellees. The Circuit Court answered this query in the affirmative and we concur.

Appellant maintains that subsection 475,01(2), Florida Statutes, is neither unconstitutional vel non nor as it is applied to the appellees. Appellant cites State ex rel. Davis v. Rose, 97 Fla. 710, 122 So. 225 (1929), as dispositive of the issue because in that case this Court upheld the constitutionality of a law enacted in 1927 which was substantially identical to the statutory provision here under consideration. The Rose court viewed the Real Estate License Law as a proper exercise of the police power of this state for the protection of the buying public from incompetent or unethical realtors. We have no quarrel with the holding in Rose, supra, because clearly the Legislature in the exercise of its police power has the authority to regulate those engaged in the real estate profession to protect the public from the consequences of unethical or substandard conduct. As pointed out by appellant, in the public interest ³ this Court exercises the same authority and jurisdiction over members of the legal profession. However, the precise question presented in this appeal was not before the Court in the Rose case, Supra, and, therefore, that decision is not dispositive of the issue here presented.

By subsection 475.01(2), Florida Statutes, the Legislature has granted several exceptions from its definition of a 'real estate broker' and a 'real estate salesman', each of which by further provisions of Chapter 475, Florida Statutes, are required to be licensed. Chief among these exceptions are (i) 'a person who shall deal with property in which he is a part owner, unless said person shall receive a larger share of the proceeds or profits from the transaction than his proportional investment therein would otherwise justify, such excess share being directly or indirectly the result of the service of buying, selling, exchanging or leasing said property' and (ii) 'one officer of every corporation engaged in the sale of its own properties who shall be its president unless otherwise provided in its charter or bylaws, if said corporation shall not otherwise be classified as a real estate broker or a salesman.' The threshold question, then, is whether the exception in the case of corporations constitutes a reasonable classification when applied to appellees while they are engaged in the activities of which appellant complains. As pointed out in McLaughlin v. Florida, 379 U.S. 184, 85 S.Ct. 283, 13 L.Ed.2d 222 (1964), in order for a statutory classification not to deny equal protection, it must rest on some difference that bears a just and reasonable relation to the statute in respect to which the classification is proposed. Stated otherwise, there must be a logical connection between the classification involved and the stated purpose to be achieved by the statute, in this case protecting members of the general public who are involved in real estate transactions. As applied to these appellees and their particular activities we discern no such logical connection.

It is necessary ordinarily to regulate a real estate broker of salesman because misrepresentations of misconduct on his part cannot necessarily be visited upon the person or entity he represents. A member of the public who is injured by the acts or representations of a broker or salesman does not necessarily have recourse to the principal whom the broker or salesman represents. See, E.g., Shelton v. Florida Real Estate Comm'n, 120 So.2d 191, 193 (2d D.C.A.Fla.1960). But when one deals with the employee of a corporate owner of property the conduct of such employee is the responsibility of the employer under the doctrine of respondeat superior. While sanctions which can be imposed by the Florida Real Estate Commission upon an errant broker or salesman obviously are necessary to protect the public because of his peculiar legal status and duties, ⁴ no analogous argument can be maintained successfully where an injured third party has direct recourse to the owner for the actions of the employee.

Even if the foregoing argument were not persuasive, the assertion by the appellant that the statutory scheme of subsection 475.01(2), Florida Statutes, protects the public in real estate transactions with a corporate owner of real estate is not efficacious. As pointed out by the appellees, exceptions to the licensing requirements of Chapter 475 exist in the case of partners and corporate presidents. This is purely arbitrary from the standpoint of any standard of character of fitness applicable to partners or corporate officers. There is no rational basis for a presumption that a president or other officer designated by the corporation has some unique quality which better suits him or her to deal with the public in transactions involving corporate real estate. It is apparent that the Legislature recognized that an individual has the constitutional right to deal with his own real property without the intervention of...