Opinion
Joseph R. Marranzino, Leo Gemma, Jr., Denver, for plaintiffs-appellees.
Duke W. Dunbar, Atty. Gen., John P. Moore, Depty Atty. Gen., Robert L. Hoecker, Asst. Atty. Gen., Denver, for defendant-appellant.
ENOCH, Judge.
This is a review of a judgment entered by the Denver District Court which reversed the order of the Colorado Real Estate Commission (Commission), defendant-appellant, suspending for one year the real estate license of Ralph T. Cline, individually, and Cline & Hardesty, Inc., plaintiffs-appellees. We reverse the judgment of the court.
This case arose out of a proposed real estate transaction. In the fall of 1969, Patricia Kerr listed with Cline & Hardesty a certain piece of vacant property located in Denver. An agent employed by Cline & Hardesty located a potential buyer, Lemon Saks. The agent represented to Saks that the property could be zoned commercially and used for that purpose. Saks deposited $1,000 as earnest money with Cline & Hardesty and retained an attorney to insure that it was legally possible to proceed with his commercial plans. From his examination of the title abstract, Saks' attorney determined that a deed restriction limited the land to residential use only. Although it might have been possible to cure the defect, the attorney advised Saks that it would not be financially feasible. Saks' attorney sent a letter dated November 26, 1969, to Cline & Hardesty demanding the return of the $1,000 deposit. The letter advised that Saks had made it clear to Cline & Hardesty's agent that the purpose of the purchase was to erect a commercial building and that the agent had represented that, other than zoning restrictions that were subject to change, there would be no restrictions to his carrying out his intentions.
Kerr, the owner of the land, engaged her attorney to determine whether or not a suit for specific performance against Saks could be brought with a reasonable chance of success. Her attorney recommended that she not bring suit, under the circumstances, because of the restrictive covenant. Therefore, by a letter dated December 3, 1970, Kerr, through her attorney, made demand upon Cline & Hardesty to return the $1,000 to Saks. Cline & Hardesty did not tender a refund to Saks but instead engaged in 'negotiations' whereby the agency's attorney made periodic offers to refund a sum less than $1,000.
Charges resulting from the failure to refund the earnest money were filed against plaintiffs by the director of the Commission on April 15, 1971. In May 1971, within the week before the Commission hearing, $900 was tendered to and accepted by Saks. A hearing was held on May 18, 1971, before a hearing officer for the Commission, and on June 21, 1971, the hearing officer submitted his conclusions that plaintiffs had violated C.R.S.1963, 117--1--12(1)(h) in failing to remit, within a reasonable time, money in its possession which belonged to Saks, and had also violated C.R.S.1963, 117--1--12(1)(o) by conducting its real estate business in a manner so as to endanger the interest of the public. A one-year suspension of plaintiffs' license was recommended to the Commission. On June 24, 1971, the Commission affirmed the findings of the hearing officer and entered the order of suspension.
Plaintiffs filed a complaint for review with the district court and obtained an order for a stay of execution of the license suspension. Following a hearing before the district court on April 3, 1972, the district court found that although the findings of the Commission were supported by the evidence, the Commission's particular finding that the failure to refund was due to protracted negotiations between the attorneys negated the Commission's conclusion that plaintiffs kept the money beyond a reasonable period of time. Therefore, the suspension order was reversed by the district court on the theory that the Commission had exceeded its jurisdiction and abused its discretion.
The Commission contends on this review that the district court erred in ruling that the Commission's conclusions were not supported by its findings. We agree.
It is not uncommon in real estate transactions for the prospective purchaser to deposit earnest money with the real estate broker. The depositor, however, is entitled to recover the full amount of the deposit if it is shown that the conveyance failed either because of the seller's breach, or because of mutual rescission. Perino v. Jarvis, 135 Colo. 393, 312 P.2d 108. The broker is liable for the return of the deposit money in cases where the seller's title proved defective. Cox & Co. v. Borstadt, 49 Colo. 83, 111 P. 64. See also Annot., 38 A.L.R.2d 1382.
The pertinent finding of the Commission is as follows:
'6. That in part, the failure to refund the $1,000 down payment to Mr. Saks was due to protracted negotiations between attorneys representing the respondent Cline & Hardesty, Inc. and attorneys representing Mr. Saks, but such delay was unreasonable in that the respondent Cline & Hardesty, Inc. had no right or interest in the $1,000 down payment following the determination that neither party to the agreement relating to the subject property could be required to perform such agreement.'
This finding is not contrary to and does not preclude a conclusion that the plaintiffs had failed to remit the deposit in violation of the applicable statute. First, the finding only asserts that the delay in refunding the deposit was caused In part by the protracted negotiations. Second, when read as a whole, the clear import of this finding is that, although the negotiations might have reasonably delayed the refund for a while, they lacked any valid purpose after the letter of December 3, 1970, and further negotiations could not justify a delay beyond that date. Viewed in these terms, it is consistent with the Commission's conclusion that there had been a violation of C.R.S.1963, 117--1--12(1)(h) and of C.R.S.1963, 117--1--12(1)(o).
Thus, since the findings are supported by the evidence and, in turn, are consistent with the conclusions of the Commission, the trial court erred in setting aside the Commission's order. See School District #11 v. Umberfield, Colo.App., 512 P.2d 1166. (announced May 30, 1973.)
The judgment of the district court is reversed and cause remanded with directions to reinstate the Commission's order.
DWYER and SMITH, JJ., concur.