Arizona Real Estate Dept. v. Arizona Land Title & Trust Co.

Decision Date24 December 1968
Docket NumberCA-CIV,No. 2,2
Citation449 P.2d 71,9 Ariz.App. 54
PartiesARIZONA REAL ESTATE DEPARTMENT, Appellant, v. ARIZONA LAND TITLE AND TRUST COMPANY, an Arizona corporation, Appellee. 499.
CourtArizona Court of Appeals

Gary K. Nelson, Atty. Gen., Darrell F. Smith, Former Atty. Gen., H. J. Lewkowitz, Special Asst. Atty. Gen., for appellant.

Boyle, Bilby, Thompson & Shoenhair, by Michael A. Lacagnina, Tucson, for appellee.

MOLLOY, Judge.

A superior court order directing payment of $10,000 to the appellee from the Real Estate Recovery Fund pursuant to A.R.S. § 32--2188 is challenged by the Arizona Real Estate Board in this appeal. The order arises in a civil action brought against a real estate broker for misappropriation of the moneys paid to satisfy a mortgage, held in the broker's name, but assertedly placed by the broker for his clients. The plaintiff is a title insurance company which was required to make the same payment again, in order to protect its insureds from loss.

The Real Estate Board was given notice of the instigation of the civil action in accordance with the controlling statute, 1 but did not intervene in the action. After the plaintiff secured default judgment against the broker, an application was made to the court for an order to charge the Real Estate Fund with the payment of the judgment up to the extent of $10,000, the judgment being in excess of that amount.

The Board's response to the application set forth three grounds in opposition. One ground, noncompliance with A.R.S. § 32--2188, subsec. C(7), although assigned as error has not been argued on appeal and therefore we deem it abandoned. Mozes v. Daru, 4 Ariz.App. 385, 420 P.2d 957 (1966).

The other two grounds raise the question of whether the acts upon which the judgment was based were such as to bring the judgment within the indemnity provisions of this legislation, i.e., whether they occurred on or after July 1, 1964, and whether they were the acts of a licensed real estate broker. The first defense made of the order entered below is that, by failing to intervene in the original civil action against the broker, the Board precluded itself from raising these questions. This requires an analysis of the procedural aspects of the subject statute.

The instant case is the third appeal taken to this court within a brief period of time from superior court orders directing such payments to be made. 2 We detect, from the procedural postures of the three appeals taken to this court, that there is considerable uncertainty as to the time and mode of determination of whether a particular loss is compensable from the Real Estate Fund. In State ex rel. Talley v. Jones, 8 Ariz.App. 173, 444 P.2d 730 (1968), we seemed to indicate that this issue should be resolved in the plenary action against the defendant-realtor (see 444 P.2d 732). On reflection, we are convinced that this is not the intent of the subject statute and that ordinarily the binding effect of the plenary action upon the liability of the compensation fund will be limited to the fact and the amount of the broker's liability, but not as to whether the claim giving rise to that liability is one falling within the provisions of this Act. 3

A.R.S. § 32--2188 (as amended) provides, in pertinent part:

'A. * * * When any aggrieved person commences action for a judgment which May result in collection from the real estate recovery fund, the aggrieved person shall notify the real estate board in writing to this effect at the time of the commencement of such action. The real estate board shall have The right to intervene in and defend any such action.

'B. When any aggrieved person recovers a valid judgment in any court of competent jurisdiction against any real estate broker, real estate salesman, For any act, representation, transaction, or conduct which is in violation of the provisions of this chapter or the regulations promulgated pursuant thereto, Which occurred on or after July, 1, 1964, the aggrieved person may, upon the termination of all proceedings, including reviews and appeals in connection with the judgment, file a verified claim in the court in which the judgment was entered and, upon ten days' written notice to the real estate board, may apply to the court for an order directing payment out of the real estate recovery fund, of the amount unpaid upon the judgment, subject to the limitations stated in this section.

'C. The court shall proceed upon such application in a summary manner, and, upon the hearing thereof, The aggrieved person shall be required to show: * * * 3. He has obtained a Judgment as set out in subsection B of this section, * * *.

'E. The court shall make an order directed to the real estate board requiring payment from the real estate recovery fund * * * If the court is satisfied, upon the hearing, of the truth of all matters required to be shown by the aggrieved person by subsection C of this section * * *.' (Emphasis added)

In attempting to implement this statute, trial courts are immediately faced with the problem of deriving from its verbiage the legislative intent as to the result intended when the Real Estate Board either exercises or fails to exercise its 'right to intervene' in the plenary action against a real estate licensee. We find clues to this intent in the words 'right' and 'intervene.' The former has more connotation of privilege than duty. The latter is a word with a well-established meaning in our procedural law.

An intervenor takes a case as he finds it, Pintek v. Superior Court, 78 Ariz. 179, 277 P.2d 265 (1954); 67 C.J.S. Parties § 70, and is not permitted to enlarge the scope of the proceeding or raise new issues, thereby retarding the process of the main action. Succession of Delesdernier, 184 So.2d 37 (La.App.1966); Mondale v. Commissioner of Taxation, 263 Minn. 121, 116 N.W.2d 82 (1962); State ex rel. State Farm Mutual Auto. Ins. Co. v. Craig, 364 S.W.2d 343 (Mo.App.1963); Barnett v. Bodley, Okl., 348 P.2d 502 1959); Jackson v. Bd. of County Comm'rs for Pennington County, 76 S.D. 495, 81 N.W.2d 686 (1957). In the suit against the real estate broker or salesman, it is immaterial whether the factual predicates for recovery against the Fund have occurred; we do not believe that this statute, permitting intervention, mandates that these issues, completely collateral to that plenary action, be injected into it.

Nor do we believe that the language of subsection C, '(t)he court shall proceed * * * in a summary manner * * *' negates the conclusion that issues involving the liability of the Fund are not to be determined in the plenary action. The term 'summary manner' means only that the court proceed without delay or formality in a short, concise, and immediate proceeding. 4 Williams v. Motor Vehicle Accident Indem. Corp., 49 Misc.2d 972, 268 N.Y.S.2d 837 (1966); Joseph v. City of Austin, 101 S.W.2d 381 (Tex.Civ.App.1936). See also In re Wells' Estate, 187 Or. 462, 212 P.2d 729 (1949); State ex rel. Daugherty v. Rose, 167 Tenn. 489, 71 S.W.2d 685 (1934); Cox v. Dixie Power Company, 81 Utah 94, 16 P.2d 916 (1932). The legislature did not intend diminution of rights by the summary nature of the proceeding but rather sought to achieve expedition. Bergen County v. S. Goldberg & Company, 39 N.J. 377, 189 A.2d 4 (1963).

Subsection E of A.R.S. § 32--2188 authorizes the court to order payment, if, at the hearing on the application for such order, '* * * the court is satisfied * * * of the truth of all matters required to be shown by the aggrieved person by subsection C of this section * * *.' One of the matters required to be shown is that the aggrieved person has obtained '* * * a judgment As set out in subsection B of this section * * *.' (Emphasis added.) Thus, we see that it is not Any judgment against a real estate broker which is compensable from the Real Estate Fund, but only the type of judgment specifically described in subsection B. See Continos v. Parsekian, 68 N.J.Super. 54, 171 A.2d 663 (1961); Tschider v. Burtts, 149 N.W.2d 710 (N.D.1967); Pearson v. State Unsatisfied Judgment Fund, 114 N.W.2d 257 (N.D.1962).

By particularizing the requirement that the Board be notified of the pendency of the principal action, we believe that the legislature intended, however, that the original action have some binding effect upon the Fund. Public policy favors a minimum of litigation, and it is our view that the legislature intended that the Board be precluded from questioning the amount and fact of liability of the realtor as established in the principal action after it should fail to exercise its right to intervene or after it should intervene and be unsuccessful in its attempted defense of that action. The petitioner is only required to prove that he has obtained a valid Judgment, not that the judgment is based on valid grounds. Hence, absent jurisdictional defects, it is our view that only when the Real Estate Board intervenes in the principal action can it question the propriety of the judgment against the broker or salesman.

In this action, the Board is not attempting to controvert the liability of the broker, but only to argue that the judgment obtained was not one of those protected under this Act. This it was not foreclosed from doing by its failure to intervene.

We now address ourselves to the question of whether the petitioner sufficiently satisfied the statutory requirement that he 'show' that this judgment was obtained on the basis of conduct which (1) occurred after July 1, 1964, and (2) was that of a real estate broker acting as such. The statute does not delineate the mode of proof but, we believe, by analogy to motion practice, affidavits may suffice, Lincoln-Mercury-Phoenix, Inc. v. Base, 84 Ariz. 9, 322 P.2d 891 (1958), or the court, in its discretion, may permit the reception of oral testimony. Skouland v. Skouland, 201 Cal.App.2d 677, 20 Cal.Rptr. 185 (1962...

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