Opinion ID: 2369105
Heading Depth: 1
Heading Rank: 1

Heading: The 3800 Grantley Road Case

Text: On June 19, 1958, Carter and his wife entered into a contract to purchase this property from the Eutaw Realty Corporation, the capital stock of which was owned equally by Bernstein and Shaw, who, as herein stated, are partners in Manning-Shaw, the brokers in the transaction. It is this contract that is the main topic of this litigation. The property was sold for $18,000 subject to an annual ground rent of $120. According to the terms of the contract $500 had been paid prior to its execution, $550 was payable within two days and $1950 on or before the expiration of thirty days. The balance of $15,000 was to be financed by a standard land installment contract with weekly payments of $37.50. Carter was making only $54.62 a week but claimed his income was $70. His wife, who had an undetermined number of children, was employed as a domestic. At the time the contract was signed, the purchaser had small equities in several other properties. Through Manning-Shaw, also acting as brokers, he had previously placed a $500 deposit on another house under a contract still in effect when the Grantley Road contract was made. Shaw claimed it was understood that the prior contract had been canceled, but there was testimony that Carter and his family claimed it as their home for some time after June 19. Manning-Shaw produced mortgage loan applications to show that loans had been applied for and rejected shortly after the contract for 3800 Grantley Road had been executed. The $500 allegedly paid prior to the signing of this contract was a credit transaction on the books of Manning-Shaw for that amount held in escrow by them as a deposit on the previously executed contract for the other property. Carter, however, paid $550 on June 21, 1958, and $850 on September 13, 1958. These transactions were verified by ledger entries in the bank account of Manning-Shaw. The complainants, who resided across the street from and next door to 3800 Grantley Road, testified that after the sold sticker had been affixed to the sign nothing seemed to be done with respect to the property and that it appeared to be unoccupied. On one occasion another neighbor saw Carter doing some work around the house and upon advising him that the electricity should be turned on to provide current for the sump pump, he replied that he would see the boss. Carter also stated, according to the neighbor, that he did not know who had bought the house. A woman police sergeant testified that when she had gone to the property on January 31, 1959, and on subsequent visits, she found Carter's wife and eight children occupying the kitchenette where a gas stove afforded the only heat in the house. Hunger and lack of clothing were also noted. But a photograph, introduced by Manning-Shaw, showed Carter sitting with an agent of the brokers in a well furnished living room in the house. There was also evidence that the sales agent who had made the sale had not, as late as the end of 1958, received a commission on the sale although both he and the realty company admitted a commission was due him. Manning-Shaw claimed they paid the salesman through a drawing account and in round figures, not in specific commissions. But their records indicated that previously he had been paid exact commissions by them for the specific properties which he had sold. Another witness, posing as a buyer after placement of the sold sticker, had been informed by another sales agent of Manning-Shaw that the property was not sold at that time. Manning-Shaw claimed the agent had said the sale might not go through and that the prospective buyer could have it if the pending sale was not consummated. On this evidence the commission made five findings of fact to the effect: (i) that the sales agent had not received a commission for making the sale; (ii) that another agent had offered to sell the property to a prospective buyer two months after the purported sale had been made; (iii) that the purchaser was still under contract to purchase another property through the same brokers when he purportedly purchased 3800 Grantley Road; (iv) that there were several unexplained discrepancies between the purported contract of June 19 and the transaction allegedly consummated on September 19, in which the required down payment was made less and the weekly payments were made smaller; and (v) that there had not been a normal occupancy of the property by the purchaser. The commission further found that it was difficult to give credence to the explanations of Bernstein and Shaw; that the testimony of Shaw, who was most familiar with the transaction, was vague and indefinite; and that the testimony of Carter was contradictory and inconsistent and entitled to little weight. Therefore, the commission, having concluded that the alleged sale was not bona fide, found the brokers had violated § 224(b) of Art. 56 [continued and flagrant course of misrepresentation], (j) [misleading and untruthful advertising] and (s) [bad faith and improper dealing]. Section 255(g) of Article 41, supra, provides: The court may affirm the decision of the agency or remand the case for further proceedings; or it may reverse or modify the decision if the substantial rights of the petitioners may have been prejudiced because the administrative findings, inferences, conclusions, or decisions are: (1) In violation of constitutional provisions; or (2) In excess of the statutory authority or jurisdiction of the agency; or (3) Made upon unlawful procedure; or (4) Affected by other error of law; or (5) Unsupported by competent, material, and substantial evidence in view of the entire record as submitted; or (6) Against the weight of competent, material and substantial evidence in view of the entire record, as submitted by the agency and including de novo evidence taken in open court; or (7) Unsupported by the entire record, as submitted by the agency and including de novo evidence taken in open court; or (8) Arbitrary or capricious. While it appears that the scope of judicial review by a trial court of the findings, inferences, conclusions and decisions of administrative agencies under the statute has been broadened to some extent, it is clear that the statute did not intend that the court should substitute its judgment for the expertise [1] of those persons who constitute the administrative agency from which the appeal is taken. Cf. Maryland Racing Commission v. McGee, 212 Md. 69, 80, 128 A.2d 419, 425 (1957). See also Marino v. City of Baltimore, 215 Md. 206, 222, 137 A.2d 198, 205 (1957). Generally, when the entire record shows that the findings of fact and conclusions of law are supported by competent, material and substantial evidence taken before the agency and such de novo evidence, if any, as may be taken by the court, and such findings and conclusions are not against the weight of such evidence, it is the function of the court to affirm the order of the agency or remand the case for further proceedings if that be necessary. On the other hand, if the court should find that the substantial rights of a petitioner for review have been prejudiced, by one or more of the causes specified in § 255 (g) (1)-(8) [of Art. 41], because of an administrative finding, inference, conclusion or decision, then it is the function of the court to reverse or modify the order. In this case [3800 Grantley Road], the brokers contend that the exercise by the commission of its statutory functions was against the weight of the evidence in that they claim the affirmative evidence of good faith  shown by the execution of the original contract and the final consummation of the substituted transaction made three months later, the payments on account of the purchase price and the declined applications for mortgage loans  could not be overcome by the showing of negative evidence of bad faith, or the inferences deducible therefrom. They further contend that the weight of such evidence did not support the conclusions of law reached by the commission. Ordinarily it is true, of course, that when the bona fides of a formal contract is attacked for the purpose of having it canceled or modified, the burden to show that it was not made in good faith is upon those who attack it. Abrahams v. King, 111 Md. 104, 111, 73 Atl. 694, 696 (1909). It is also true, as it is in court proceedings, that the burden of proof is generally on the party asserting the affirmative of an issue before an administrative body. 42 Am. Jur., Public Administrative Law, § 131. Thus, in this case, there is no doubt that the complaining property owners had the burden throughout of proving the alleged violations of the prohibitory provisions of the real estate code. 2 Davis, Administrative Law, § 14.14 (1958). But we are of the opinion that the complainants sufficiently met that burden. In a case such as this, where it was the bona fides of the acts of the real estate brokers which was under attack  not for the purpose of canceling or modifying the contract but for the purpose of showing the brokers had misrepresented the transaction by claiming the contract was valid when in fact it was not  there was no reason why the commission in the exercise of their skill and judgment, as they were specifically empowered to do by § 252(d) [of Art. 41], should not also consider, together with the positive evidence, the so-called negative evidence  that the sales agent had not been paid his commissions; that the purchaser with limited means was still bound at the time under a previous contract to purchase another property; that the discrepancies between the original contract and the substituted transaction were not explained; and that there had not been a normal occupancy of the premises  and the inferences deducible from such negative evidence. There was also no reason why the commission could not consider the circumstances of the parties, their credibility as witnesses, the dealings between them prior to the execution of the contract of sale and their subsequent acts and declarations, in deciding whether or not the brokers had violated one or more of the prohibitory provisions charged in the complaint. Moreover, there was also the positive testimony of a neighbor to the effect that the purported purchaser, after the date of the purchase, had denied buying the property and, on the same occasion, had referred to the brokers, or one of them, as his boss, as well as the positive testimony of the prospective buyer to the effect that another sales agent had shown him the property as being for sale when it had purportedly been sold, which evidence, though disputed, the commission may well have believed. Furthermore, under the facts and circumstances in this case, the commission was not obliged to accept the explanations of Bernstein, or of his associate, with respect to the bona fides of the transaction. The statute specifically provides that an administrative agency may admit and give probative effect to evidence which possesses probative value commonly accepted by reasonable and prudent men in the conduct of their affairs. Section 252(a) [of Art. 41]. There was no contention that the evidence in question did not meet this test. With respect to the weight of the evidence, it is true, of course, that a mere surmise or conjecture that it was sufficient would not be enough. The comparative degree of proof by which a case must be established is the same in an administrative as in a civil judicial proceeding, i.e., a preponderance of the evidence is necessary, but proof beyond a reasonable doubt is not required. 42 Am. Jur., Public Administrative Law, Section 132. On the record from the commission in this case, the trial court found that the findings and conclusions of the commission on the evidence before it were not arrived at in contravention of the standards stated in paragraphs (5), (6) or (7) of Section 255 (g), supra, and that such evidence supported the decisions of the commission. We think the record sustains the trial court. The order of the lower court in the 3800 Grantley Road case will therefore be affirmed. The brokers also complained that the lower court erred in not receiving the proffered documentary proof that a commission had been paid for making the sale. Such additional evidence is not receivable unless the court is satisfied that it is material and that there were good reasons for failure to present it in the proceeding before the agency. Section 255(e) [of Art. 41]. But, even if we assume, without deciding, that it should have been received as de novo evidence, it would not have destroyed, even if it had been believed by the court, the effect of the other findings of fact on which the commission also based its conclusions of law.