Case Name: In the Matter of Butterly & Green, Inc., et al., Petitioners, v. John P. Lomenzo, as Secretary of State of the State of New York, Respondent
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1973-12-10
Citations: 43 A.D.2d 707
Docket Number: 
Parties: In the Matter of Butterly & Green, Inc., et al., Petitioners, v. John P. Lomenzo, as Secretary of State of the State of New York, Respondent.
Judges: 
Reporter: Appellate Division Reports
Volume: 43
Pages: 707–713

Head Matter:
In the Matter of Butterly & Green, Inc., et al., Petitioners, v. John P. Lomenzo, as Secretary of State of the State of New York, Respondent.

Opinion:
Proceeding by licensed real estate brokers and salesmen, pursuant to CPLR article 78 to review respondent's determination dated January 26, 1973, which, after a hearing, (1) held (a) that petitioners had demonstrated untrustworthiness as such licensees (Real Property Law, § 441-e) and (b) that the corporate petitioner had also violated subdivision 5 of section 442-e of the Real Property Law (failure to supply information) and (2) imposed (a) a penalty of a 30-day suspension of petitioners' licenses or, in the alternative, a fine of $50 upon each of the petitioners and (b) a further and indefinite suspension of the licenses of the corporate petitioner and its representative broker, petitioner Klines, pending submission of proof satisfactory to respondent that there has been compliance with two specified requirements concerning their advertising. Petition granted to the extent that the determination is modified, on the law, (1) by annulling so much thereof as imposed the further and indefinite suspension of the licenses of petitioners Butterly & Green, Inc. and Norman Klines, with the related requirements concerning advertising, and (2) by reducing the other penalties (suspensions, with fines as alternatives) to a reprimand to each petitioner. As so modified, determination confirmed, without costs, and matter remanded to respondent for issuance, service and filing of the reprimands as provided in subdivision 2 of section 441-e of the Real Property Law. Subdivision 5 of section 442-e of the Real Property Law requires that licensed real estate brokers or salesmen who come under investigation by respondent shall, on the latter's request, supply'any information requested as to business practices or methods. In the case at bar, petitioners Butterly & Green, Inc. and Klines concededly refused to give respondent information requested of them by an investigator of respondent. While this was a technical violation of the law, it is clear that the refusal was premised on the advice of counsel in the light of the fact that a prior unrelated proceeding was pending for which petitioners' records had already been subpoenaed. Furthermore, in refusing the request, these petitioners referred the investigator to their counsel. In our view, since the information requested appears to have been the subject of another legal proceeding, these petitioners were not acting unreasonably in relying upon the advice of counsel, particularly where the investigator was asked to see their counsel (see Matter of Kreitseh v. Department of State of State of N. Y., 28 A D 2d 721). With respect to that part of the determination which imposed a further and indefinite suspension upon the corporate petitioner and its representative broker, apparently because of the nature of their advertising, we note that the affidavit of complaint did not charge that these petitioners had engaged in selective advertising. In the absence of notice of such a charge, it was error for respondent to rely upon any matter concerning such advertising and to impose a penalty seemingly related thereto (Matter of Drago v. Lomenzo, 36 A D 2d 742). While the finding of respondent as to demonstrated untrustworthiness is supported by substantial evidence, we believe that that finding cannot, by itself, support the penalties imposed, that, therefore, the penalties were excessive and an abuse of discretion, and that a reprimand as to each petitioner would have been appropriate. Hopkins, Acting P. J., Christ, Brennan and Benjamin, JJ., concur;