Rhoades v. State Real Estate Com'n, 32731

• Decision Date: 12 May 1950
• Docket Number: No. 32731,32731
• Citation: 42 N.W.2d 610,152 Neb. 701
• Parties: RHOADES et al. v. STATE REAL ESTATE COMMISSION.
• Court: Nebraska Supreme Court

Page 610

42 N.W.2d 610

152 Neb. 701

RHOADES et al. v. STATE REAL ESTATE COMMISSION.

No. 32731.

Supreme Court of Nebraska.

May 12, 1950.

Syllabus by the Court.

1. The appeal of a holder of a real estate broker's license from an order of the State Real Estate Commission, provided for by section 81-884, R.S.1943, requires the institution of an action in the district court within ten days and a determination thereof upon the issues raised by the pleadings in that court.

2. In such a trial in the district court the court has authority to inquire into the subject matter of the complaints set out in the pleadings, including, if alleged, that the findings of fact made by the commission were contrary to the weight of the evidence.

3. Such an action is equitable in nature and will be tried as any other civil action where the statute does not prescribe the procedure to be followed or limit the scope of the determination to be made.

4. Where a finding adverse to a license holder has been made which reflects upon the character and standing of the licensee, the claim on appeal that the adverse finding and order were wrongfully entered raises a justiciable issue, even if the license has expired or the disciplinary order satisfied.

5. Section 81-881, R.S.1943, provides that the State Real Estate Commission has authority upon sworn complaint in writing to investigate the actions of a real estate broker, and has the power to revoke or suspend a license issued under this act when such broker has been found guilty of unfair trade practices as provided for in said section.

6. Section 81-882, R.S.1943, provides that before the State Real Estate Commission may revoke or suspend a real estate broker's license the commission shall give the holder of the license a notice in writing containing the exact statement of the charges against him and the date and place of hearing. In the absence of giving such notice, the State Real Estate Commission has no power to conduct a hearing against a holder of a real estate broker's license for the purpose of revoking or suspending such license.

Clarence S. Beck, Attorney General, Robert A. Nelson, Asst. Atty. General, for appellant.

Fraser, Connolly, Crofoot & Wenstrand, Omaha, for appellees.

Heard before SIMMONS, C. J., CARTER, MESSMORE, CHAPPELL, WENKE, and BOSLAUGH, JJ.

MESSMORE, Justice.

This is an appeal from a decree of the district court for Douglas County reversing an order of the State Real Estate Commission which order suspended the real estate broker's licenses held by D. Jay Rhoades, referred to as D. J. Rhoades, and the American Mortgage Corporation, appellees herein, for a period of six months, and directed the commission to reinstate the appellees in good standing from the date such order was rendered.

It appears from the record that on February 21, 1947, G. E. Mundt, known as George E. Mundt, and Alma M. Mundt, his wife, filed a complaint with the State Real Estate Commission against D. J. Rhoades, a real estate broker. This proceeding was therefore commenced prior to the effective date of Laws 1947, Chapter 316. The complaint is long and involved. The substance of it is as follows: G. E. Mundt, the owner of a farm, listed it for sale with the American Mortgage Corporation which was represented in this transaction by D. J. Rhoades. When the farm was listed for sale the listing agreement specifically designated that the owner would give possession of the farm March 1, 1948. D. J. Rhoades, in negotiating the sale of the farm, falsely and fraudulently represented to the complainants that the purchasers were acquainted with the complainants' tenants and had made proper arrangements with the tenants to surrender possession of the farm on March 1, 1947. Complainants relied on the false and fraudulent representations so made by D. J. Rhoades and believed the same to be true when in fact such representations were false. By virtue of such false representations, the complainants were required to employ counsel to assist them in the matter.

Section 81-881, R.S.1943, provides that upon the sworn complaint in writing being filed with the State Real Estate Commission, the commission is authorized to investigate the actions of any real estate broker or any real estate salesman, and has the power to revoke or suspend any license, issued under this act, when the broker or salesman has been found guilty of unfair trade practices. The section then enumerates what constitutes unfair trade practices. Without detailing this section of the statutes in such respect, an examination of the section warrants the conclusion that the complaint filed against D. J. Rhoades before the State Real Estate Commission was sufficient to charge him with unfair trade practices.

The real estate broker D. J. Rhoades was given notice as a holder of a real estate license by the State Real Estate Commission in conformity with section 81-882, R.S.1943, and hearing was had before the commission as provided for in the abovecited section of the statutes. On March 27, 1947, after hearing was had, the State Real Estate Commission rendered an order suspending the real estate broker's licenses of D. J. Rhoades and the American Mortgage Corporation as of that date, for a period of six months. D. J. Rhoades and the American Mortgage Corporation, in compliance with section 81-884, R.S.1943, filed an appeal bond in the amount of fifty dollars with the commission, and filed an original action in the district court as provided in said section.

The petition filed in the district court for Douglas County by the American Mortgage Corporation and D. J. Rhoades alleges the following: That the complaint upon which the order of the commission is based does not charge D. J. Rhoades with any violations of the provisions of section 81-881, R.S.1943, as required by sections 81-862 to 81-887, R.S.1943, and does not contain any finding or determination that the plaintiffs, or either of them, have been guilty of any violation of the provisions of section 81-884, R.S.1943, and such order of the commission is null and void. The petition also alleges that no notice was served upon the American Mortgage Corporation as required by section 81-882, R.S.1943, and no evidence was offered against such corporation, and it was not charged with the violation of the Real Estate Commission Act or any sections thereof. The petition further alleges that the acts of the commission in all respects, with reference to revoking the real estate licenses of D. J. Rhoades and the American Mortgage Corporation, were arbitrary, unreasonable, and capricious, and prays for an order canceling the order suspending the real estate licenses on the record of the commission and ordering the commission to reinstate the appellees in good standing as real estate brokers within this state, for such other relief as may be just and equitable, and for costs expended.

The answer of the State Real Estate Commission constitues a general denial of the plaintiffs' petition that the proceedings had before the commission were illegal, unreasonable, or arbitrary, and prayed the court to determine that the order rendered by the commission be sustained.

By stipulation of the parties the transcript of the proceedings before the State Real Estate Commission, the exhibits introduced in the hearing before the commission, and the evidence taken before the commission, together with the order rendered by the commission, were received in evidence in the instant case. No further evidence was taken before the district court.

Hearing was had in the district court for Douglas County. The district court entered a decree July 6, 1949, setting aside and vacating the order of the commission, and directing the commission to cancel or remove the order of suspension from its records, and to reinstate the plaintiffs as real estate brokers in good standing within the State of Nebraska as of and from March 27, 1947. The commission filed a motion for new trial. Upon the overruling of the motion for new trial, the commission appeals.

There was no notice served on the American Mortgage Corporation or D. J. Rhoades as its president, or any proper officer of the corporation legally required to accept notice, as contemplated by section 81-882, R.S. 1943. The complaint filed against D. J. Rhoades individually did not so indicate. At the hearing before the real estate commission no defense was presented by the American Mortgage Corporation. It is clear from the afore-cited section of the statutes that notice shall be given the holder of a real estate broker's license. The statute in this respect is mandatory. No notice having been served upon the American Mortgage Corporation as required by law, it was not a party to the litigation before the State Real Estate Commission nor the district court, and the State Real Estate Commission was in error in suspending its real estate broker's license. Under the circumstances, we deem no citation of authority necessary insofar as this phase of the case is concerned.

For convenience in summarizing the evidence we will refer to George Emil Mundt as Mundt; to his wife as Alma Mundt; to D. Jay Rhoades as Rhoades; to the State Real Estate Commission of Nebraska as the commission; to Edward E. Fritz, a tenant, as Fritz; to Mathilda Fritz as Mrs. Fritz; to the tenant Henry Frederick Thun as Thun; to William Henry Rutledge as Rutledge; and to Jay B. Smiley as Smiley.

The record discloses that Mundt held title in his own name to 234 and a fraction acres of farm land in Sarpy County. He retired from farming in 1940, and moved to Papillion, Nebraska. By oral agreement he rented to the Fritzes 154 acres, and 80 acres to Thun, the leases to run from March 1, 1946, to March 1, 1947. Mundt had been acquainted with Rhoades since 1945. Rhoades was engaged in the real estate, loan, and mortgage business and was desirous of listing Mundt's farm land for sale. On October 31, 1946,...