Boschee, Matter of

Decision Date29 March 1984
Docket NumberNo. 10567,10567
Citation347 N.W.2d 331
PartiesIn the Matter of Gailyn BOSCHEE and Northern Realty, Inc. NORTH DAKOTA REAL ESTATE COMMISSION, Appellant, v. Gailyn BOSCHEE and Northern Realty, Inc., Appellees. Civ.
CourtNorth Dakota Supreme Court

Dean F. Bard, Sp. Asst. Atty. Gen., Bismarck, for appellant; argued by Dean F. Bard, Bismarck.

Lundberg, Conmy, Nodland, Lucas & Schulz, Bismarck, for appellees; argued by Patrick A. Conmy, Bismarck.

PEDERSON, Justice.

This case is before us for review pursuant to the Administrative Agencies Practice Act, Ch. 28-32, NDCC. The North Dakota Real Estate Commission (hereinafter Commission) suspended the real estate broker licenses of Gailyn Boschee and Northern Realty, Inc. on the grounds that they had made false promises and engaged in conduct constituting dishonesty or fraudulent conduct contrary to the provisions of Secs. 43-23-11.1(1)(c) and 43-23-11.1(1)(v), NDCC. 1 The trial court, on its review of the Commission's decision, entered judgment vacating the suspension. We reverse for the reasons stated herein and remand for entry of judgment affirming the suspension.

We will summarize the background facts to provide a better understanding of our disposition of this appeal. Boschee is, and at all pertinent times was, individually licensed as a real estate broker. He also is, and was, sole owner of Northern Realty, Inc., the possessor of a corporate real estate broker's license, and the sole owner of B & L, Inc., a construction company engaged in the development of real estate. Under the circumstances of this case, for reasons which will be explained more fully later in this opinion, we will attribute all conduct to Boschee without distinguishing whether any particular act or comment is that of B & L, Inc., Northern Realty, Inc., or Gailyn Boschee.

Boschee developed and constructed Westwood Village Condominiums in the 1100 block of Jefferson Avenue in Bismarck and sold unfinished units to the various complainants in the proceeding before the Commission, orally promising that the units would be completed. The major complaint concerned the parking lot and access to the garages, which Boschee had promised would be paved at the time the units were sold to the complainants and for as long as four years thereafter. Some of the promises, particularly those relating to the paving, were made as part of the sales pitch to buyers and some were made after the units were sold, when Boschee knew, or had reason to know, that his growing financial plight made it unlikely that he could fulfill those promises. He did not disclose his financial situation, which he attributed to the economy and to his divorce, until he was unable to complete even the minor $7,000 paving project. The complainants finally arranged to have the paving done and paid for it themselves.

At the hearing before the Commission, some of the complainants testified that they assumed they were dealing with Gailyn Boschee as an individual, not as an agent of Northern Realty or B & L, Inc. The only times Boschee specified which hat he was wearing was when he referred to liability for certain acts. At no point in his testimony did he claim that he had distinguished his various capacities when he dealt with the complainants. Any disclosure to that effect may have been irrelevant, in any event, because Sec. 43-23-11.1(1)(v), NDCC concerns a licensed broker's conduct in a capacity "within or without the pursuit of his licensed privilege."

The Commission found that Boschee had made false promises to the complainants that he would install paving, and that the promises were made to induce the complainants to buy their units. (Finding of Fact IV 2; Finding of Fact V 3; Finding of Fact VI 4; Finding of Fact VII 5.) In adopting a code of ethics for realtors, the Commission has not defined "false" promises or "dishonesty or fraudulent conduct." See Chapter 70-02-03, N.D.Admin.Code. The Commission held, however, that the false promises resulted in injury to the complainants, a violation of Sec. 43-23-11.1(1)(c), NDCC, and that Boschee had engaged in conduct which was dishonest or fraudulent, a violation of Sec. 43-23-11.1(1)(v), NDCC. (Conclusion of Law II 6; Conclusion of Law III 7.) Pursuant to its authority under Sec. 43-23-11.1(1), the Commission suspended the licenses of Boschee and of Northern Realty for thirty days.

Boschee appealed the Commission's decision to the district court, specifying the following grounds as required by Sec. 28-32-15, NDCC: 8

"1. The decision is in violation of the constitutional rights of the appellants.

"2. The provisions of Chapter 28-32 have not been complied with.

"3. The conclusions and decisions of the agency are not supported by its findings of fact."

The district court determined that fraud or misrepresentation had to be shown by clear and convincing evidence, and that there was no evidence in the record to support the Commission's findings. Accordingly, it vacated the Commission's decision. The Commission then appealed the district court's decision to this court, claiming that the district court erred in its scope of review.

In North Dakota Real Estate Commission v. Allen, 271 N.W.2d 593, 594 (N.D.1978) this court concluded that:

"Because the North Dakota Real Estate Commission is an administrative agency, our review of its decision is controlled by Chapter 28-32, N.D.C.C., the Administrative Agencies Practice Act."

The Legislature, via Sec. 28-32-21, NDCC, 9 has directed this court to make the same review as the district court is required to make under Sec. 28-32-19, NDCC. Therefore, we do not, in the usual sense, review the district court's decision, but, rather, we review the agency's decision on the record developed in its proceedings and under the same standard of review used by the district court.

The first question we must address concerns scope of review. Does the district court (and, subsequently this court) review only the items specified by the appellant or may it review all the items enumerated in Sec. 28-32-19? The Commission contends that because Boschee's notice of appeal, filed pursuant to Sec. 28-32-15, does not specify as error the question of whether or not the findings of fact are supported by a preponderance of the evidence, the district court erred by exceeding the scope of review demanded by Boschee.

To support its contention, the Commission cites Haugland v. North Dakota Employment Security Bur., 218 N.W.2d 181, 184 (N.D.1974) and Application of Otter Tail Power Company, 169 N.W.2d 415 (N.D.1969). Those cases do not settle the question of whether or not the scope of review in the district court and in the Supreme Court is limited to issues specified as grounds for appeal pursuant to Sec. 28-32-15.

The Legislature has, since 1974, made significant changes in the provisions of Sec. 28-32-19. These changes occurred after the adoption or amendment of Sec. 28-32-15. The requirement in Sec. 28-32-19 that "... the court shall affirm the decision of the agency unless it shall find any of the following ... [six items] present," does not conflict with the provisions in Sec. 28-32-15. The Commission is correct in arguing that on appeals of administrative agency decisions, courts may consider only those grounds specified pursuant to Sec. 28-32-15. The grounds specified must, however, come within the provisions of Sec. 28-32-19:

"1. The decision or determination is not in accordance with the law.

"2. The decision is in violation of the constitutional rights of the appellant.

"3. Provisions of this chapter [28-32] have not been complied with in the proceedings before the agency.

"4. The rules or procedure of the agency have not afforded the appellant a fair hearing.

"5. The findings of fact made by the agency are not supported by a preponderance of the evidence.

"6. The conclusions and decision of the agency are not supported by its findings of fact."

Boschee specified items (2), (3) and (6) as grounds for appeal.

We recently had occasion to summarize our previous holdings concerning the standard of review for appeals from decisions of administrative agencies. See Application of Nebraska Public Power Dist., 330 N.W.2d 143 (N.D.1983). We noted that in an appeal which has first been appealed to the district court and then to this court, we review the agency's decision and look to the record compiled before the agency itself. Application of Nebraska, 330 N.W.2d at 146. We further pointed out the following standards which apply equally to the district court's review and to this court's review: (1) we do not make independent findings of fact or substitute our judgment for that of the agency, but determine only whether a reasoning mind could have reasonably determined that the factual conclusions were supported by the weight of the evidence, Power Fuels, Inc. v. Elkin, 283 N.W.2d 214, 220 (N.D.1979); (2) we exercise restraint when we review administrative agency findings, Asbridge v. North Dakota State Highway Com'r, 291 N.W.2d 739, 744 (N.D.1980); (3) it is not the function of the judiciary to act as a super board when reviewing administrative agency determinations, Barnes County v. Garrison Diversion, Etc., 312 N.W.2d 20, 25 (N.D.1981); and (4) we will not substitute our judgment for that of qualified experts in the administrative agencies, Bank of Hamilton v. State Banking Bd., 236 N.W.2d 921, 925 (N.D.1976).

We have already stated that the Commission concluded that Boschee had made false promises "of a character such as to influence, persuade, or induce" some of the complainants, to their injury or damage, and that Boschee's conduct constituted "dishonesty or fraudulent conduct." Having determined the proper scope of review, we now must apply those standards to the dispositive questions:

(1) Does the decision of the Commission violate Boschee's constitutional rights? Section 28-32-19(2).

(2) Have the provisions of Chapter 28-32 been complied...

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