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Zachariae v. Division of New Jersey Real Estate Commission

Decided: December 5, 1958.

RICHARD A. ZACHARIAE, APPELLANT,
v.
DIVISION OF THE NEW JERSEY REAL ESTATE COMMISSION IN THE DEPARTMENT OF BANKING AND INSURANCE, RESPONDENT



Price, Hall and Gaulkin. The opinion of the court was delivered by Hall, J.A.D.

Hall

Appellant, a licensed real estate broker, brings this appeal to review an order and determination of the Real Estate Commission (R.R. 4:88-8(a)) finding him guilty of conduct demonstrating bad faith and unworthiness in violation of R.S. 45:15-17(e).

This statute empowers the Commission, upon its own motion or the verified written complaint of any person, to investigate the conduct of any real estate broker, salesman or any person who assumes to act as such and authorizes suspension or revocation of license where the licensee is deemed to be guilty, inter alia , of "any conduct which demonstrates unworthiness, incompetency, bad faith or dishonesty." The penalty here imposed was suspension of license for four and one-half months, the execution of which has been stayed pending this appeal.

The sole question involved is the sufficiency of the proofs before the Commission to support its findings of fact on which the ultimate conclusion of guilt was based. Appellant contends the evidence was inadequate. He does not contend that, if there were sufficient evidence to support the findings, the conduct thereby demonstrated would not amount to unworthiness or bad faith as these statutory terms have been construed. Goodley v. New Jersey Real Estate Commission , 29 N.J. Super. 178 (App. Div. 1954).

On a review of facts determined by an administrative agency, a judicial tribunal is confined to the question of whether the findings are supported by substantial evidence, i.e. , such evidence as a reasonable mind might accept as adequate to support the conclusion (In re Application of Hackensack Water Company , 41 N.J. Super. 408, 418 (App. Div. 1956)) or, to express it differently, whether the evidence furnished a reasonable basis for the agency's action (In re Greenville Bus Co. , 17 N.J. 131, 138 (1954)). In applying this settled principle in a case involving review of findings of the Real Estate Commission, this court said: "* * * we do not interfere with the finding if it is supported by adequate evidence." Middleton v. Division of the New Jersey Real Estate Commission , 39 N.J. Super. 214, 219-220 (App. Div. 1956). So the evidence and proceedings must be examined within this framework.

Appellant and his son-in-law, Frank L. Hanle, also a licensed broker, had been partners in the real estate business at Ship Bottom, Ocean County, for a number of years before 1954. They did business under the rather strange partnership designation of appellant's own name, "Richard A. Zachariae." In May 1954 Shadow Lawn Savings and Loan Association of Long Branch desired to retain the services of a competent real estate broker to act on its behalf in connection with placing and completing mortgage loans in southern Ocean County. The contemplated work involved appraisals of properties for which such loans were sought, as well as inspection reports on construction progress and completion. The association contacted Zachariae and, at its

request, he made an appraisal and submitted his qualifications and references. After favorable investigation by the association, he was engaged to do the work in the area at an agreed rate. For a brief period he personally made and signed the appraisals and reports.

Thereafter all the work was done and all the documents signed by Hanle in his individual name and with no reference to the partnership or Zachariae. The latter exercised no supervision over Hanle or his work and had no familiarity with it. Over a three-year period there were over 400 mortgage applications on which Hanle made such appraisals plus a much larger number of compliance inspections. Payments were made throughout by checks to the order of Richard A. Zachariae which were deposited in the partnership bank account.

In August 1957 a formal complaint was made before the Commission, at the instigation of the association, charging that three inspection reports made by Hanle in 1956, on the basis of which mortgage escrow funds were released to the borrowers, were false as to the extent of completion of the dwellings certified therein and that two appraisals made by him, on the strength of which the amounts of mortgage loans were determined, were grossly excessive in the recited square-foot floor area of the buildings. Hanle and a third broker named Wallace (not connected with the Zachariae partnership), who was the mortgagor and profited to the extent of $2,000 through the release of escrow monies as a result of one of the false inspection reports, were charged in the complaint with making false promises or substantial misrepresentations and conduct demonstrating unworthiness, incompetency, bad faith or dishonesty in violation of the statute. Zachariae was similarly charged on the sole basis "that he should have had knowledge of the conduct of the business conducted in his office by his partner and son-in-law."

A joint hearing was held with respect to Hanle and Zachariae. (We are not advised of the disposition of the charges against Wallace). The former was found guilty of unworthy ...


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