Gold v. Lomenzo
| Citation | 29 N.Y.2d 468,280 N.E.2d 640,329 N.Y.S.2d 805 |
| Parties | , 280 N.E.2d 640 In the Matter of David C. GOLD, Appellant, v. John P. LOMENZO, as Secretary of State of the State of New York, et al., Respondents. |
| Decision Date | 09 February 1972 |
| Court | New York Court of Appeals |
Emanuel Thebner, and Norman J. Mordkofsky, New York City, for appellant.
Louis J. Lefkowitz, Atty. Gen. (Winifred C. Stanley, and Ruth Kessler Toch, Albany, of counsel), for respondents.
This appeal addresses itself to the suspension of appellant's real estate broker's license on a finding by respondents that appellant had demonstrated untruthworthiness within the meaning of section 441--c (subd. 1) of the Real Property Law. 1
This administrative determination was predicated on charges filed by four clients who had utilized appellant's services in their search for rent-controlled apartments in Bronx County. A hearing was conducted on May 14, 1969 and the findings of fact made by respondents' hearing examiner reveal that in four instances appellant had exacted finders' fees which were far in excess of rates suggested by the Bronx Real Estate Board. These transactions may be stated in the following manner:
Alleged Bronx Real
Transaction Rent Commission Estate Bd. Rate
Day $87.50 $405 $78.75
Campbell 98.85 225 88.96
Rattler 81.25 160 73.12
Palmer 68.70 150 61.83
In the Day transaction, a specific finding was made that an extra commission of $300 over and above the basic commission of $105 had been required by appellant's salesmen because the apartment sought was considered desirable. 2 These sums had been paid in part by the client, but no receipt was given. At the time of the hearing all but $50 had been returned to the Days and an additional $150 in marked bills, which had been used by the Days in an unsuccessful criminal prosecution against two of appellant's salesmen for rent gouging.
In the Campbell and Palmer transactions, the tenants occupy apartments found by appellant and now claim that the commissions which they paid were excessive.
In the Rattler case, the tenant was never able to occupy the apartment which appellant found. Though she signed a lease and paid $311.85 for rent, security and commission ($160 of which was charged as commission), the apartment was unavailable on the date promised in the lease. Since she also had signed an apartment rental agreement, which provided that no refunds would be made if the apartment became ready within 30 days of the date promised and the apartment became available during that time, appellant refused to refund her money. The use of this 30-day provision was deemed improper by the hearing examiner.
With regard to the fees, the hearing examiner recognized that a broker could lawfully charge a fee in excess of the guidelines established by the Real Estate Board if legitimate services were involved. However, it was concluded that: 'The varied and excessive amounts collected, the absence of any established formula or basis for computation by the broker and the inability of the broker to demonstrate what extra or unique services were rendered over and beyond the normal services rendered by brokers in such transactions reflects that the excessive amounts collected in the guise of commissions were unrelated to services rendered and were in fact a bonus for preferential treatment in securing desirable apartments.'
As a result of these findings, appellant's license was suspended for three months commencing with August 15, 1969 or, in lieu thereof, a fine of $250 was imposed. It was further ordered that the said license was to be suspended indefinitely until appellant:
(1) filed proof that he had refunded amounts totaling $585.85 to the four complaining clients and returned $150 to the District Attorney of Bronx County; 3 and (2) filed statements with respondents that he had deleted the objectionable 30-day provision from the apartment rental agreement and would limit commissions in future transactions to one month's rent.
Thereafter, on July 29, 1969 appellant was served with an order of suspension. Respondents granted a 10-day extension and the suspension became effective on August 25, 1969. Instead of surrendering his license, as required by section 441--c (subd. 2) of the Real Property Law, appellant commenced a proceeding in the United States District Court for the Southern District of New York in which he sought an injunction restraining the suspension of his license and a statutory court to consider the constitutionality of section 441--c of the Real Property Law. The application was denied (Gold v. Lomenzo, D.C., 304 F.Supp. 3), but on appeal, the United States Court of Appeals for the Second Circuit reversed on the ground that appellant's contention that respondents' limitation on the level of his commission was confiscatory presented a substantial constitutional question which required a three-Judge court (Gold v. Lomenzo, 2 Cir., 425 F.2d 959). On remand, the statutory court noted that the instant article 78 proceeding was pending in the State courts and concluded that it should withhold decision until appellant had exhausted his State remedies (Gold v. Lomenzo, D.C., 314 F.Supp. 871).
It appears that while the Federal proceeding was Sub judice, respondents--on notice to appellant and after a hearing at which he chose not to participate--issued an order revoking appellant's license. The determination was made as of October 31, 1969, the normal expiration date of the license, and seems based on a finding of untrustworthiness in that appellant had failed to surrender his license and had continued to engage in brokerage business after he had been suspended. For reasons which are not explained, the article 78 proceeding now before us, though commenced on November 18, 1969, fails to question the revocation order and instead, limits itself to the suspension order.
Special Term, finding that appellant's arguments, with regard to the constitutionality of section 441--c of the Real Property Law, and the propriety of the administrative action employed by respondents, were wanting in substance, dismissed the petition. The Appellate Division unanimously dismissed, 35 A.D.2d 1054, 316 N.Y.S.2d 830, as academic, appellant's appeal to that court upon the ground that the order of suspension had been superseded by the order of revocation. It was added, however, that were it to reach the merits, it would have confirmed the administrative decision except insofar as it purported to limit the commissions which appellant could charge in future transactions.
Respondents suggest that the Appellate Division properly dismissed the appellant's appeal as academic. Relying--as did the court below--on Matter of Daub v. Board of Regents (33 A.D.2d 964, 965, 306 N.Y.S.2d 869, 870), it is argued that in view of the fact that appellant failed to secure judicial review of the revocation order, and instead limited this article 78 proceeding to the suspension order, only abstract questions are presented. Daub is inapposite since no question as to superseding orders was presented therein. In that article 78 proceeding, unlike the one at bar, review of a revocation order was sought. The matter was deemed academic because the petitioner had died. As the court wrote: (Id., p. 965, 306 N.Y.S.2d p. 870.).
It is, of course, true that a realistic problem of similar magnitude is presented in this appeal. The record in the revocation proceeding is not before us. Thus, even if we were to find fault with the order of suspension, we would have no power to disturb the order of revocation. Therefore, unless we were to declare unconstitutional the statute under which both the suspension and revocation were ordered, appellant will have to wait one year from the date of the revocation order before he can apply for relicensing (Real Property Law, § 441--c, subd. 4). Nevertheless, and notwithstanding these practical limitations, it is our view that the revocation and suspension orders were intertwined to such a degree so as to preclude adoption of a conclusion that the revocation order rendered the questions raised in this article 78 proceeding academic. In any event, there is ample authority that a matter, although settled as between the parties, will not be considered academic when the underlying questions are of general interest, substantial public importance and likely to arise with frequency (Matter of Bell v. Waterfront Comm., 20 N.Y.2d 54, 61, 281 N.Y.S.2d 753, 759, 228 N.E.2d 758, 762; East Meadow Community Concerts Assn. v. Board of Educ., 18 N.Y.2d 129, 133, 272 N.Y.S.2d 341, 344, 219 N.E.2d 172, 174; Matter of United Press Assns. v. Valente, 308 N.Y. 71, 76, 123 N.E.2d 777). The questions presented in this appeal, particularly those which relate to the propriety of the conditions which respondents imposed in the suspension order, fall into this category and, it was error for the Appellate Division to dismiss the appeal. Given such a conclusion, our ordinary course would be to remit to the Appellate Division for a determination of the merits. However, inasmuch as the Appellate Division opinion reveals that the merits were considered below, we may reach the substantive issues presented.
Appellant argues that section 441--c of the Real Property Law is...
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