Case Title: In re Palmer

Citation: 171 Vt. 464, 769 A.2d 623

Docket Number: 2000-234

State: vermont

Court: Vermont Supreme Court

Date: 2000-12-22T00:00:00Z

Document:
In re Palmer (2000-234); 171 Vt. 464; 769 A.2d 623 

[Filed 22-Dec-2000]

       NOTICE:  This opinion is subject to motions for reargument under
  V.R.A.P. 40 as well as formal  revision before publication in the Vermont
  Reports.  Readers are requested to notify the Reporter of  Decisions,
  Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801 of
  any  errors in order that corrections may be made before this opinion goes
  to press.

                                No. 2000-234

In re Shelley Palmer	                         Supreme Court

                                                 On Appeal from
                                                 Department of Banking, 
                                                 Insurance, Securities and 
                                                 Health Care Administration

                                                 December Term, 2000

Elizabeth E. Costle, Commissioner

Paul S. Gillies of Tarrant, Marks & Gillies, Montpelier, and John Thrasher, 
  South Royalton, for Appellant.

William H. Sorrell, Attorney General, and Phillips B. Keller III, Special 
  Assistant Attorney General, Montpelier, for Appellee.

PRESENT:  Amestoy, C.J., Dooley, Morse, Johnson and Skoglund, JJ.

       SKOGLUND, J.   Bail bondsman Shelley Palmer appeals from the decision
  of the  Commissioner of the Department of Banking, Insurance, Securities
  and Health Care Administration  revoking his insurance agent's license and
  fining him $10,000 for engaging in a pattern of financially  irresponsible,
  dishonest, and untrustworthy conduct.  We affirm.

       Palmer does not dispute the findings made by the Department's hearing
  officer and adopted  by the Commissioner, which reveal the following. 
  Palmer is a bail bondsman who was first issued  an insurance agent's
  license by the Department in August 1992.  After obtaining his license,
  Palmer  became the president, vice-president, and corporate treasurer of
  his business, Green Mountain Bail  Bonds, Inc.  From 1992 to 1999, Palmer
  was a bail bond agent for the International Fidelity 

 

  Insurance Company, a New Jersey corporation licensed to transact surety
  insurance in Vermont.   Under the producer's contract entered into by
  Palmer and Fidelity, Palmer was required, among other  things, (1) to
  observe all of the Department's rules and regulations; (2) to adhere to
  Fidelity's filed  premium rate, which was ten percent of the face amount of
  any bail bond that he wrote; (3) to take  collateral as security for bail
  obligations only in his capacity as a trustee for Fidelity; (4) to take a 
  mortgage as collateral only in the name of Fidelity; and (5) to use
  Fidelity's standard bail bond  application form when writing new business. 
  With respect to collateral given to secure a client's bail  obligations,
  the terms of Fidelity's application form permitted the company to use the
  collateral to  recoup losses or expenses resulting from a breach of the
  bond, but did not allow the company to  retain any excess proceeds after
  being reimbursed in full.

       Initially, Palmer complied with the terms of the producer's contract,
  but beginning in 1996 he  began engaging in practices that were contrary to
  his obligations to Fidelity under the agreement.   For example, beginning
  in 1996, Palmer began taking mortgage deeds as collateral in the name of
  his  business rather than in Fidelity's name.  Further, Palmer never
  informed Fidelity of his decision to do  so.  Nor did Palmer inform
  Fidelity or the Department of his decision to deviate from his contractual 
  obligation to adhere to Fidelity's filed premium rates.  Palmer also
  deviated from Fidelity's approved  premium rate by allowing clients to pay
  for bail bonds with personal property that was worth more  than the cash
  premium he could have lawfully charged, and by retaining surplus from the
  sale of that  property.  In 1999, Fidelity dropped Palmer as an agent
  because of his failure to acknowledge that he  was engaging in commercially
  unreasonable business practices.

       Palmer's unreasonable and unethical practices eventually came to the
  attention of the  Department.  The instant disciplinary proceeding stemmed
  primarily from Palmer's dealings with 

 

  two clients.  The first client, M.M., was jailed on April 4, 1997 on a
  burglary charge after he was  unable to make bail, which had been set at
  $1000.  When contacted by M.M., Palmer stated that he  would charge $200
  for the bond, and that M.M. could pay the premium within two weeks if he 
  executed a promissory note and provided collateral to secure both the
  premium and the principal  amount of the bail bond.  After learning that
  M.M had recently purchased a house for $28,500 from  insurance settlement
  funds, Palmer agreed to accept the house as collateral.  The next day,
  Palmer  brought eleven pages of documents to the correctional center for
  M.M. to sign.  The documents,  which had been prepared by Palmer and his
  attorney, included a promissory note in the amount of  $200, a mortgage
  deed and quitclaim deed to M.M.'s house in the name of Green Mountain Bail 
  Bonds, and a Fidelity bail bond application form containing amendments
  added by Palmer.  The  amendments provided that M.M.'s failure to pay the
  $200 premium on time or to comply with the  terms of the bail agreement
  would result in unconditional forfeiture of his house to Green Mountain 
  Bail Bonds.  Coupled with the quitclaim deed, the amendments allowed Palmer
  to take immediate  title and possession of M.M.'s property without resort
  to a judicial foreclosure proceeding and further  imposed no requirement on
  Palmer to sell the property at a foreclosure sale or to return the surplus 
  proceeds to M.M.

       M.M. was neither highly educated nor sophisticated in business
  matters.  He did not  understand the papers Palmer presented to him, and,
  in particular, did not understand that his failure  to pay $200 would
  result in the unconditional forfeiture of his home.  Notwithstanding his
  inability  to understand the documents, he signed them to get out of jail. 
  He told Palmer that he planned to  leave for Massachusetts immediately upon
  his release to attend court hearings pending in that state  and to visit
  his family.  On his bond application, he provided Palmer with the names,
  addresses, and 

 

  telephone numbers of his family members in the Boston area so that Palmer
  could contact him if  necessary.  Palmer told M.M. not to worry about
  paying the $200 premium immediately because  Palmer had the house as
  collateral.

       Because M.M. had received a notice from the district court clerk that
  his next scheduled court  appearance would be a May 13, 1997 calendar call,
  M.M. left for Massachusetts under the  assumption that he would not need to
  return to Vermont until then.  He failed to leave a  Massachusetts
  forwarding address with the court, however, and thus did not receive a
  subsequent  notice of a procedural conference in his burglary case set for
  April 15, 1997 to establish whether he  had legal representation.  When
  M.M. failed to appear for that hearing, the court issued a warrant for  his
  arrest and set an additional bail of $200, but did not initiate proceedings
  to forfeit M.M.'s bail, as  it could have done.

       On April 22, 1997, three days after the due date in the bail agreement
  had passed without  M.M. paying Palmer the $200 he owed him, Palmer took
  the unusual step of asking the district court  to set a hearing for
  forfeiture of M.M.'s bail.  Palmer did so because he believed that a
  forfeiture  order would strengthen his claim that M.M. had breached the
  bail agreement and thus forfeited his  right to his home.  Within the next
  few days, Palmer filed in the town land records the quitclaim deed 
  transferring ownership of the house to his business.  He then took
  possession of the house, removed  M.M.'s possessions, and changed the
  locks.  When M.M. returned on May 12, the day before his  scheduled
  calendar call, he telephoned Palmer and told him that he had been unaware
  of the April 15  conference.  Palmer then called the state police, who
  arrested M.M. on the outstanding warrant.

       The following morning, the district court offered to continue M.M.'s
  bail forfeiture hearing  until later that afternoon so that M.M., who was
  due to be transported from jail for a calendar call 

 

  appearance, could be present.  Palmer stated that he did not want to
  postpone the hearing.  He also  told the court that he could not explain
  M.M.'s nonappearance for the April 15 hearing and that he  had made every
  reasonable effort to contact M.M. but was unable to do so.  Palmer made
  these  statements to the court even though he had made no effort to contact
  M.M. through the  Massachusetts numbers M.M. had left with him, and  M.M.
  had only a day earlier explained to  Palmer why he had missed the hearing. 
  Nonetheless, Palmer made these misrepresentations for the  sole purpose of
  convincing the court to forfeit bail so that he could enhance his claim on
  M.M.'s  house.  Eventually, Palmer sold M.M.'s home furnishings and
  transferred ownership of the home to  him and his wife to use as collateral
  for a loan to pay off home improvements on his personal  residence, office
  equipment, and legal expenses.

       The other major incident that led to the instant disciplinary
  proceeding involved D.A., who  asked Palmer on May 30, 1998 to post a
  $25,000 bail bond to secure his release from prison.  D.A.  assented to
  Palmer's request that he execute a promissory note agreeing to pay the
  $2500 premium by  June 1, 1998.  To secure D.A.'s payment of the premium,
  Palmer required D.A. to provide his 1997  pickup truck as collateral. 
  Palmer added an amendment to the bond application form providing that  he
  could sell the truck without notice and retain any surplus if D.A.
  defaulted on his payments under  the promissory note.  As was the case with
  the corresponding amendment in M.M.'s bail application,  the language
  allowing Palmer to sell the truck and retain any surplus was inconsistent
  with the  language of the promissory note, which provided that a failure to
  make timely premium payments  would result in an assessment of interest and
  delinquency fees, but did not state that D.A. would  forfeit his truck.

       D.A. failed to pay the $2500 on June 1, and the next day Palmer sent
  him an invoice  demanding that he pay the overdue premium as well as a five
  percent late fee that was not yet due 

 

  under the terms of the contract.  On June 6 or 7, Palmer received a
  certified check for $2500 from  D.A., but he returned it without cashing
  it.  On June 9, at Palmer's request, the district court  discharged the
  bail bond that he had posted for D.A., thus ending Palmer's financial
  liability in the  case.  Three days later, Palmer sold D.A.'s truck at
  auction, netting $17,650.  Palmer kept the entire  amount and sent D.A. an
  invoice stating that the premium had been paid in full.  After D.A. 
  complained to the Department, Palmer and D.A. entered into a private
  settlement agreement under  which Palmer agreed to pay D.A. $28,000 in
  return for a release from liability.

       In addition to the two transactions described above, the hearing
  officer cited another incident,  in which Palmer was convicted of simple
  assault.  The victim of the assault, R.G., had agreed to act  as a
  guarantor on two bail bonds Palmer posted for R.G.'s nephew.  R.G. went to
  Palmer's home to  give Palmer paperwork that he hoped would allow Palmer to
  release him from financial liability on  his nephew's bonds.  R.G.
  identified himself when he arrived at Palmer's home, and Palmer asked  him
  to come in.  When R.G. entered Palmer's residence, Palmer pointed a
  semiautomatic pistol at  him.  Palmer was convicted of attempting, by
  physical menace, to place another in fear of imminent  serious bodily
  injury.  See 13 V.S.A. § 1023(a)(3).  We affirmed that conviction.  State
  v. Palmer,  169 Vt. 639,