Howard v. Nicholls

• Decision Date: 16 October 1980
• Docket Number: CA-CIV,No. 1,1
• Citation: 621 P.2d 292,127 Ariz. 383
• Parties: Robert D. HOWARD, doing business as Howard Realty, Plaintiff-Appellant, v. Richard B. NICHOLLS, State Real Estate Commissioner of the State of Arizona, Defendant-Appellee. 4680.
• Court: Arizona Court of Appeals

Page 292

621 P.2d 292

127 Ariz. 383

Robert D. HOWARD, doing business as Howard Realty, Plaintiff-Appellant, v. Richard B. NICHOLLS, State Real Estate Commissioner of the State of Arizona, Defendant-Appellee.

No. 1 CA-CIV 4680.

Court of Appeals of Arizona, Division 1, Department B.

Oct. 16, 1980.

Rehearing Denied Nov. 19, 1980.

Review Denied Dec. 16, 1980.

Duecy, Moore, Robinson & Bennett by William F. Bennett, Scottsdale, for plaintiff-appellant

Robert K. Corbin, Atty. Gen. by Thomas I. McClory, Asst. Atty. Gen., Phoenix, for defendant-appellee.

OPINION

HAIRE, Presiding Judge.

On this appeal by the appellant real estate broker from a superior court decision affirming the revocation of his broker's license by the appellee Real Estate Commissioner, issues are raised (1) concerning the sufficiency of the evidence to support the revocation, and (2) questioning the propriety of the consideration by the appellee of evidence relating to appellant's participation in bogus land contract transactions occurring in 1971 or early 1972, more than five years prior to the initiation of the revocation proceedings.

At the time of the hearing before the Real Estate Department's hearing officer, the remaining charges against appellant consisted of alleged violations of A.R.S. §§ 32-2153 A(16) ¹ and 32-2153 B(4) ². Additional allegations relating to the violation of §§ 32-2153 A(1) and 32-2153 A(5) were dismissed prior to the presentation of evidence at the hearing.

In support of the alleged violation of § 32-2153 A(16), appellee presented evidence showing that on April 18, 1977, pursuant to a plea agreement, appellant had been found guilty in the United States District Court of the crime, misleading sales of securities, a misdemeanor, and was fined in the amount of $5,000. It was appellee's contention that this crime constituted a "crime of moral turpitude" so as to bring such conviction within the purview of § 32-2153 A(16).

The 1977 federal charge against appellant arose out of his participation in 1971 and early 1972 in certain bogus land contract transactions. The hearing officer's findings of fact and conclusions of law were as follows:

"FINDINGS OF FACT

"On April 18, 1977, Respondent Robert D. Howard was, on his plea of guilty, convicted of the offense of violating Title 15, USC Section 78j(b); 78(ff)(a); 17 C.F.R. Section 240.10(b)(5) the crime being 'misleading sale of securities' (Exhibit 1), and was fined in the amount of $5,000. Respondent admitted under oath at this hearing that he had procured signatures on 5 or 6 bogus land sales contracts at the request of his friend, Jacob Hood, who told Respondent he needed the documents to 'temporarily' deceive the Board of Directors of Western Land Sales Company, since (as President of that firm) Hood was under pressure from his board due to slow sales. Rather than destroying the contracts as he had pledged to Respondent he would do, Hood caused them to be sold to others, including one or more out-of-state buyers. Respondent further testified that he received no compensation for procuring the fraudulent documents, that he did not at the time realize his actions were contrary to the law and that, with respect to one of the contracts, he made payments on a lot covered by it to avoid injury to a third party purchaser. There was no proof offered as to the nature and extent of damages suffered by any of the parties to these transactions.

"CONCLUSIONS OF LAW

"Based on the foregoing Findings, the following Conclusions of Law are reached:

"1. The conduct of Robert D. Howard as recited in the Findings of Fact is in violation of A.R.S. 32-2153 A.16.

"2. In connection therewith, Respondent has not complied with the requirements of A.R.S. 32-2153 B.4.

"3. Such circumstances constitute grounds for suspension or revocation of Robert D. Howard's Broker's license."

Based upon these findings and conclusions, he entered the following recommendations:

"RECOMMENDATIONS

"Mr. Howard has been a real estate broker in this state for close to 18 years, which fact alone could lead those dealing with Respondent to regard him as a person possessed of substantial ethical standards and a degree of experience and competence to match his many years in his profession. Yet Mr. Howard wilfully generated a number of contracts purporting to be legitimate land sales agreements with buyers who didn't exist, knowing they would be used as valid and legally binding documents of substantial value by a friend in order to deceive the directors of the friend's company. Mr. Howard now urges that he did not know it was wrong to do so. Such conduct and attitude is in flagrant conflict with the standards required of persons licensed in this profession and a continuation of that circumstance represents a potentially serious threat to the clients of Respondent in particular and the public in general. Accordingly it is recommended that the Real Estate Broker's license of Robert D. Howard be revoked."

The federal information against appellant specifically charged him with "misleading sale of securities in connection with the transfer of real property", in violation of Title 15, United States Code § 78ff(a); 17 C.F.R. § 240.10(b)(5). This charge involved only one of the bogus land contract transactions, and the allegation was that appellant:

"... did use a means and instrumentality of interstate commerce and of the mails to send a payment check for eighty-four dollars and fifty-two cents ($84.52), and in sending the check did omit to state that the check did not come from Pellegrino and that the contract assigned was one which the defendant had created by having Pellegrino merely sign his name knowing that he was not obligated to make any payments on the contract...."

It is apparent from the hearing officer's recommendations that he relied much more heavily upon the background facts relating to the 1971-72 bogus land contract transactions than he did upon the specific facts alleged in the misdemeanor charge to which appellant plead guilty. ³ Because of this heavy reliance by the hearing officer, appellant in his arguments presented in this court has been forced to take somewhat inconsistent positions concerning the propriety of the admission into evidence of such background facts and the right of the hearing officer to rely thereon in making his recommendation of revocation.

At the base of appellant's arguments against the consideration of such acts by the hearing officer is the fact that these acts all occurred more than five years prior to the initiation of these proceedings, and thus were beyond the express five year limitation provision set forth in subsection A of A.R.S. § 32-2153. Therefore, appellant's argument continues, the hearing officer should not have considered these facts in making a recommendation relating to the alleged violation of § 32-2153 A(16). As we have previously indicated, there is some inconsistency in appellant's position in this regard. First, we note that in his answer to the complaint, it is appellant himself who, by specific averment, brought before the hearing officer the fact that the federal court order found that appellant:

"signed or procured signatures on real estate contracts and gave them to Jacob Hood to deceive Hood's Board of Directors...."

Likewise, in his opening statement before the hearing officer, appellant's counsel stated:

"our defense will be to go into the facts resulting in (appellant's) conviction of a misdemeanor in April of this year; to explain that the designation of the crime is certainly much more serious than (appellant's) involvement in that."

In his opening brief filed in this court, he argues that in determining whether the federal conviction involved "moral turpitude" so as to come within the provisions of § 32-2153 A(16), the hearing officer could not look solely to the name of the crime, but rather must look to the actual supporting facts involving appellant's participation, which was limited to the procuring of the bogus land contracts without knowledge that these contracts would be subsequently sold to other parties.

Under these circumstances, we hold that the hearing officer was not precluded by the five year limitation provisions in § 32-2153 A from considering the background facts involving the bogus land contracts in assessing the severity of the sanction to be imposed as a result of appellant's conviction. Not only were these facts introduced without any objection, but, in addition, appellant affirmatively...