Small v. Smith

• Decision Date: 23 March 1971
• Citation: 16 Cal.App.3d 450,94 Cal.Rptr. 136
• Court: California Court of Appeals Court of Appeals
• Parties: James Wellington SMALL, Petitioner and Appellant, v. Burton E. SMITH, as Real Estate Commissioner, etc., Defendant and Respondetn. Civ. 36998.

Page 136

94 Cal.Rptr. 136

16 Cal.App.3d 450

James Wellington SMALL, Petitioner and Appellant, v. Burton E. SMITH, as Real Estate Commissioner, etc., Defendant and Respondetn.

Civ. 36998.

Court of Appeal, Second District, Division 4, California.

March 23, 1971.

Rich & Ezer and Mitchel J. Ezer, Beverly Hills, for petitioner and appellant.

Evelle J. Younger, Atty. Gen., Arthur C. deGoede and Michael L. Abrams, Deputy Attys. Gen., for defendant and respondent.

ORDER

IRWIN, Judge. ^*

Good cause appearing, the certification for non-publication of the opinion in this case, filed on March 23, 1971, is vacated; it is ordered that said opinion is one suitable for publication under Rule 976 of the California Rules of Court.

Petitioner's license as an inactive real estate broker was revoked pursuant to Business and Professions Code, sections 10177(j) and 10177(f) for dishonest acts. ¹ The revocation was pursuant to the recommendations and proposed decision of a hearing officer after an administrative hearing which was duly held on the 15th of May, 1969. Thereafter petitioner sought a writ of mandate to order the commissioner to reinstate appellant's real estate broker's license. The superior court denied the writ and this appeal followed.

We must affirm the judgment denying the writ for the reasons hereinafter set forth.

The Facts

In 1953 William Porter and Willabel Porter purchased twenty acres of unimproved land in San Bernardino County. On December 20, 1961, the Porters entered into an installment sales contract whereby the Porters agreed to sell and convey this land to appellant and his wife, the Smalls, for $15,000 with $500 down and payments of $135 a month starting February 1, 1962. Paragraph A of this agreement set forth the following: 'In addition to the said $135.00 payments the buyer herein shall pay an additional $100 per month for a period of 10 months or until such time as an additional $1,000.00 has been paid on the principal balance of this contract over and above the said $135.00 per month payments. Property to be escrowed when said $1,000.00 has been paid and buyer shall assume existing trust deed on said property and execute a 2nd trust deed and note in favor of seller equal to the amount of difference between the existing trust deed and balance of this contract in escrow.' The Smalls paid the $500 down payment, the $1,000 in special payments and $6,000 besides, for a total of $8,300.

On or about October 8, 1965, the Porters released the west ten of the twenty acres to the Smalls in accordance with the contract. Title to the remaining acreage was never transferred. No escrow was opened as set out in paragraph A of the original agreement nor did the Smalls request it. Had this been done, the Smalls would have had to assume an existing trust deed and execute a second trust deed and note. The Porters conceded their obligation to convey under the terms of the agreement. The Smalls continued to make payments of the Porters on their original purchase contract through December 1965. On March 2, 1966, the Porters mailed a notice of intention to declare forfeiture to the Smalls for their default, asking for back payments covering January, February and March 1966. On June 1, 1966, the Porters mailed the Smalls, by certified mail, a notice of forfeiture which was delivered to appellant on June 6, 1966.

On July 6, 1962, the Smalls had sold two and one-half acres of the aforesaid unconveyed ten acres to William A. Lundgren under an installment sales contract for $7,950, with $1,000 down and payments starting August 1, 1962, at $100 a month through December 1962 and on January 1, 1963, at $73 a month until paid in full.

After the Porters' forfeiture occurred on June 6, 1966, appellant collected from Lundgren eight $70 payments, which were then delinquent. The last such payment made was on June 19, 1967 and had become due on June 1, 1966, six days before erceipt by appellant of the notice of forfeiture. Appellant never asserted against Lundgren any right of forfeiture under the Lundgren-Small agreement. After March 2, 1966, when appellant already had received the Porters' notice of intention to declare a forfeiture, he collected from Lundgren $280 on March 13, 1966, $70 on March 17, 1966, and $70 on April 26, 1966.

In early 1967, the Porters sold the remaining ten acres (including the Lundgren two and one-half acre parcel) to Thomas Johnson and wife. Appellant never refunded any money to Lundgren and Lundgren never received title to the land in question. Lundgren sued Small and alleged that he paid $4,400 on the agreement.

In the Porter-Small-Lundgren transactions, appellant acted as principal and not as broker.

There is no dispute as to the accuracy of the foregoing statement of facts. Appellant was not present at the commissioner's hearing and offered no evidence there or in the trial court. ² Based on the above facts, the commissioner concluded that 'The receipt and acceptance by respondent (appellant here) Small of payments made by Lundgren under his installment sales contract subsequent to the receipt of the notice of forfeiture were dishonest acts.'

Appellant now contends (1) his claim of right to the Lundgren payments precludes a license revocation; (2) the Real Estate Commissioner's failure to find a nexus between the dishonesty with which he is charged and his fitness to hold a broker's license voids the revocation of his license; (3) the standard under which his guilt was determined is uncertain; and (4) he was denied equal protection of the law.

In reviewing the decision of the commissioner, in administrative proceedings such as this, the trial court exercises its independent judgment to determine whether the commissioner's findings are supported by the weight of the evidence. (Bixby v. Pierno, 4 Cal.3d 130, 93 Cal.Rptr 234, 481 P.2d 242, Feb. 23, 1971; Dare v. Bd. of Medical Examiners (1943) 21 Cal.2d 790, 136 P.2d 304; Laisne v. Cal. St. Bd. of Optometry (1942) 19 Cal.2d 831, 840, 123 P.2d 457; Drummey v. State Bd. of Funeral Directors, etc. (1939) 13 Cal.2d 75, 85, 87 P.2d 848.)

The determinations made by the trial court must be accepted by the Court of Appeal if they are supported by substantial evidence. This court is obligated to consider the evidence in the light most favorable to the commissioner, giving to the judgment the benefit of every reasonable inference and resolving all conflicts in its favor. (Crawford v. Southern Pacific Co. (1935) 3 Cal.2d 427, 429, 45 P.2d 183; Manning v. Watson (1952) 108 Cal.App.2d 705, 712, 239 P.2d 688.) Findings of fact and conclusions of law were not requested of the trial court and, therefore, were waived. (Cal.Rules of Court 232(c).) Thus, findings necessary to support the judgment will be implied and if there is any substantial evidence to support the judgment, it must be affirmed. (Lane & Pyron, Inc. v. Gibbs (1968) 266 Cal.App.2d 61, 65, 71 Cal.Rptr. 817.) Here, the judgment of the superior court must necessarily be based upon implied findings which include (a) dishonesty of the appellant; and (b) lack of a good faith claim of right.

Appellant argues that he had a legitimate right in good faith to retain Lundgren's payments received by him in 1966 and 1967 because Lundgren's failure to make payments on time caused the forfeiture of appellant's rights under the Porter-Small contract, to his damage by more than $4,400, the amount he had received from Lundgren. The contention is without merit. As already noted, appellant was not personally present and no evidence was offered or received, either before the commissioner or the trial court, supporting his present contentions. After the March 2, 1966 notice of intention to forfeit by Porter and before actual forfeiture, appellant had received $420 from Lundgren which he could and should have used to avoid the forfeiture if he were acting in good faith. ³ After forfeiture on July 6, 1966, appellant received and retained $560. Yet at no time did appellant notify Lundgren of the forfeiture or even attempt to enforce any of his rights under the Lundgren-Small sales contract because of any default by Lundgren. How his silence and inaction in this respect after his own default can constitute a good faith claim to receive payments for property he did not own and could never convey is beyond comprehension.

Appellant's attempt to claim some kind of defense based on equitable setoff for the first time on appeal is likewise without merit. (Serenko v. Bright (1968) 263 Cal.App.2d 682, 688, 70 Cal.Rptr. 1; Bohn v. Watson (1954) 130 Cal.App.2d 24, 37, 278 P.2d 454.)

Appellant's reliance upon Hogg v. Real Estate Commissioner (1942) 54 Cal.App.2d 712, 714, 129 P.2d 709, 710, is misplaced. In that case there was substantial evidence by the licensee to show good faith. The court said: 'It is our opinion that the undisputed facts of the case support the position so taken by appellant.' In the case at bench, the implied finding of the trial court is to the contrary.

The holding in Morrison v. State Board of Education (1969) 1 Cal.3d 214, 82 Cal.Rptr. 175, 461 P.2d 375, does not apply here. In that case the court was called upon to determine whether private noncriminal activity unrelated to the employment of a school teacher was "immoral or unprofessional conduct' or 'moral turpitude" indicating an unfitness to teach. The court held that it was incumbent upon the administrative agency to determine if the charged conduct indicated unfitness to teach. In the instant case, the Legislature has determined specifically that 'fraud or dishonest dealing' constitute grounds for suspension or revocation. The term 'dishonesty' has been defined in the scope of real estate disciplinary proceedings as follows: "Dishonesty' necessarily includes the element of bad faith. As defined in the dictionaries and in judicial decisions, it means fraud, deception, betrayal, faithlessness. (Citations.) As put by the court in ...