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JESSICA HARRIS v. MISSISSIPPI REAL ESTATE COMMISSION AND J. DANIEL SCHROEDER

OCTOBER 29, 1986

JESSICA HARRIS
v.
MISSISSIPPI REAL ESTATE COMMISSION AND J. DANIEL SCHROEDER, ADMINISTRATOR



BEFORE HAWKINS, P.J., DAN LEE AND ANDERSON, JJ.

DAN LEE, JUSTICE, FOR THE COURT:

STATEMENT OF THE CASE

Jessica M. Harris appeals the revocation of her real estate broker's license by the Mississippi Real Estate Commission and the dismissal of her subsequent appeal by the Circuit Court of the First Judicial District of Harrison County.

 The Real Estate Commission based its action on a complaint leveled against Ms. Harris, Sheleese Realty Co., for which Ms. Harris was employing broker, and Parry V. Donaldson, a real estate salesman who was in Ms. Harris' employ. The Commission conducted a hearing February 18, 1981, on charges that Ms. Harris demonstrated bad faith, incompetency or untrustworthiness, or dishonest, fraudulent or improper dealing in violation of Miss. Code Ann. 73-35-21 (m) and that she violated Rule 6 of the Mississippi Real Estate Commission Rules and Regulations by failing to adequately instruct or supervise her salespersons.

 The Commission by order dated February 23, 1981, concluded in its findings of fact and conclusions that Ms. Harris had indeed violated the provisions and ordered that her license and the license of Sheleese Realty be revoked. Ms. Harris appealed the revocation of her license as provided by Miss. Code Ann. 73-35-25. On December 18, 1982, the circuit court dismissed the petition, finding the appeal to be without merit after reviewing the record and briefs of counsel. The circuit court ordered that Ms. Harris' appeal to this Court would be with supersedeas upon making a $1,500 bond. Ms. Harris posted bond and appeals to this Court assigning the following errors:

 1. The Mississippi Real Estate Commission erred in finding that the Appellant was guilty of violating 73-35-21 (M), Mississippi Code of 1972, revoking Appellant's real estate broker's license, such finding being arbitrary, capricious, unreasonable, and an abuse of discretion and not supported by substantial evidence.

 2. The Mississippi Real Estate Commission erred in finding that the Appellant was guilty of violating 73-35-21 (M), Mississippi Code of 1972, in that the Appellant was denied due process of law, as required under the 14th and 15th Amendments of the United States Constitution, the Constitution of the State of Mississippi and 73-35-23, Mississippi Code of 1972, Annotated, such finding being

 a denial of the fundamental principles of justice and fair play long known to the law.

 3. The Mississippi Real Estate Commission erred in finding that the Appellant was guilty of violating 73-25-21 (M), Mississippi Code of 1972, revoking Appellant's real estate broker's license, based on the unverified complaint of Eloise Burnside.

 There being substantial evidence to support the Commission's findings, we accordingly affirm.

 STATEMENT OF THE FACTS

 Jessica Harris ran Ebony Realty Co. in Gulfport. In early October, 1980, she met with Kay Street to talk about using Ms. Harris' real estate broker's license to open a branch office at a realty company Kay Street owned in Ocean Springs. The company could no longer be run by Kay Street because her broker's license had recently been revoked.

 Ms. Harris testified before the Commission that she learned through the friend of one of her employees at Ebony that some workers at Kay Street Realty Co. needed help. Later Kay Street called and set up a meeting with Ms. Harris. Parry Donaldson, a salesman who had worked with Kay Street, also attended this meeting. Ms. Harris stated Kay Street explained that her license had been revoked because she had a couple of judgments against her and she had mishandled some money. Kay Street told Ms. Harris that she would be able to reapply for a license after more schooling. She wanted Ms. Harris to take over the office for two months until someone who had worked previously at Kay Street Realty could take the December, 1980 broker's exam. Ms. Harris stated she had just wanted to help the people who had been working there from losing presently listed real estate.

 In exchange for her help, Kay Street and Ms. Harris agreed that Ms. Harris would receive ten (10) percent of commissions earned, Kay Street would receive forty (40) percent, and the individual salesperson would keep fifty (50) percent of the commission on each sale.

 The complaint against Ms. Harris stemmed from a real estate transaction gone sour involving Parry Donaldson and a potential home buyer by the name of Eloise Burnside. Mrs. Burnside and her husband had looked at a home in Jackson County. Mrs. Burnside said she and her husband were told

 by Parry Donaldson that the house was about to be foreclosed upon but they could purchase it for the amount needed to bring it out of foreclosure, was approximately $2,600. The Burnsides met Parry Donaldson and the seller, Terry Marshall, at a bank November 10, 1980 and signed a contract. The contract lists a deposit of $2,500 received as earnest money towards purchase. The contract states that the purchaser would assume a loan in the amount of $31,500. The contract listed a commission earned of $500 payable by the owner at closing. However, the contract did not comply with Commission rules in several respects. Mrs. Burnside testified that instead of paying the $2,500 designated as earnest money at the contract signing the Burnsides paid only $900 by cashier's check made payable to Parry Donaldson. Two other payments were made later thereby aggregating a total deposit of $1,020. The contract had Parry Donaldson's signature on the line designated for the signature of an additional seller. Donaldson testified this was strictly an accident because he was unfamiliar with the form. There is no signature acknowledging the receipt of the deposit money nor the name of Ms. Harris as broker or the name of Sheleese Realty Company.

 The complaint against Donaldson alleged that he failed to turn the $1,020 over to his broker. Investigator Hardwick testified that Donaldson told him that he kept the $1,020 and did not turn it over to anyone at Sheleese Realty. Donaldson later testified that he did turn the money over to Kay Street. Donaldson later repaid the entire amount to the Burnsides after the Burnsides filed false pretense charges against him because they learned that no one at the mortgage company knew of the Burnsides' contract to assume the mortgage.

 The Burnsides' contract was entered into without Jessica Harris' knowledge. For some reason apparently unrelated to Mrs. Burnsides' complaint, Investigator Hardwick met with Ms. Harris and the sales personnel on November 18, 1980 (eight days after the Burnsides signed their contract) for the purpose of auditing Sheleese Realty's escrow account. Hardwick testified that "[i]t was learned at that meeting, that the salesman in that office had received `earnest money' and had been taking listings, and had . . . conducted other real estate business without informing Ms. Harris and she expressed surprise upon learning that at that time." The office was closed as a result of this meeting and Ms. Harris promptly turned over the agency license and the licenses of her salespersons to the Commission.

 It is not clear from the record made before the

 Commission as to what happened to escrow money accepted by Donaldson and other salespersons. Ms. Harris had opened a company escrow account and told Kay Street and the company receptionist that they could make deposits of any earnest money the company took in. Ms. Harris was the only person who could sign checks on the account, but no money was ever deposited.

 Ms. Harris said she did not check out Kay Street with the Real Estate Commission before entering into the agreement because she thought if any of Kay Street's indiscretions had been major the Commission would have said something. She did know that Kay Street had some personal judgments against her, but she did not inquire about them since they did not relate to the business. Commission member Harry Joachim stated that as a matter of public record, Kay Street was $50,000 short in her company escrow account at one time.

 Ms. Harris thought the Sheleese Realty Co., named for Kay Street's daughter, had never really opened for business because no one was ever in the office when she stopped by. She learned the company was not financially stable when the telephones were cut off because the bill had never been paid. "The bank account was there to put money in, the deposit slips were there, there was everything there that . . . that I could help them with." Ms. Harris said she realized she was responsible for the actions of her sales persons, but "these are grown people, and you expect them to be honest. . . . And if they're not honest with you, you can't be responsible."

 The Commission issued its findings of facts and conclusions of law February 23, 1981, finding Ms. Harris violated Rule 6 of the Mississippi Real Estate Commission Rules and Regulations and Miss. Code Ann. 73-35-21 (m) (Supp. 1985). This appeal followed. DISCUSSION OF LEGAL ISSUES

 I.

 Was the Commission's Decision Arbitrary, Capricious, Unreasonable and an Abuse of Discretion Not Supported by Substantial Evidence?

 There appears to be no dispute concerning the standard of review. This Court in Eidt v. City of Natchez. 421, So.2d ...


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