The plaintiffs, Candido D'Occhio, Donato Gaetani and Bertram Perlman, by writ, summons and complaint dated March 5, 1975, after due notice to the defendant commission, brought suit against William Braman Pease alleging that Pease, as a real estate salesman for Florida
The original complaint was brought in three counts, one for each of the plaintiffs. Upon receiving notice of the lawsuit, the commission intervened on May 2, 1975, whereupon the complaint was amended by adding a fourth count which repeated in reduced form the allegations against Pease and also contained additional allegations reflecting the interest of the commission. Thereafter, the plaintiffs moved for a subsequent order of notice to Pease by publication and, pursuant to court order, notice of the pendency of the action was published in the Hartford Courant on May 22, 1975.
On October 27, 1975, the court granted the plaintiffs' motion for default against Pease for failure to appear. On December 12, 1975, the court, Missal, J., after a hearing in damages, rendered a judgment upon default against Pease on behalf of the plaintiffs in varying amounts. No appeal was taken from this judgment.
On February 20, 1976, the commission filed an answer and several special defenses addressed to
On May 26, 1976, the plaintiffs filed in the Superior Court a verified claim, a copy of which had been served on the commission on May 20, 1976, seeking an order directing payment out of the Real Estate Guaranty Fund for amounts unpaid on their judgment against Pease. The commission filed an answer and several special defenses. The hearing, which was held after the entry of judgment in the plenary action, was limited by the trial court to the issue whether the activities of the parties came within the purview of General Statutes § 20-324e (b). The court, Wright, J., decided this issue in favor of the plaintiffs D'Occhio and Gaetani and against the plaintiff Perlman.
In its appeal the commission challenges the court's action in restricting the hearing to the question of whether the activities of the parties came within the purview of the Real Estate Guaranty Fund statute. It also claims that the judgment in the plenary action was invalid for lack of personal jurisdiction over Pease, that the transactions between the plaintiffs and Pease did not come within the purview of § 20-324a and that the plaintiffs' actions were not brought within the limitation period prescribed by § 20-324d. In his cross
The Real Estate Guaranty Fund; General Statutes §§ 20-324a through 20-324g;
Section 20-324g specifically limits the commission's right of intervention. The commission seizes on the phrase "intervene in or defend" contained
In the secondary action the commission filed a plea in abatement challenging the jurisdiction of the court on the ground that the judgment obtained in the plenary action was invalid for lack of jurisdiction over Pease. The court, Kelly, J., ruled correctly that the question whether the court had personal jurisdiction over Pease in the principal action went to the merits of the secondary proceeding and not to the court's jurisdiction to hear and determine the issues involved in that proceeding. The commission thereafter filed a special defense in which it alleged the invalidity of the judgment in the principal action for lack of jurisdiction over Pease due to a defective service of process. Although the trial court, Wright, J., limited the hearing in the secondary proceeding to the question whether the transactions between the plaintiffs and Pease came within the purview of the guaranty fund statute, because the validity of the judgment in the plenary action is an essential element which the plaintiff
The commission's claim that the judgment in the plenary action is invalid for lack of personal jurisdiction over Pease is without merit. The basis of the commission's claim is that service of the complaint by mail or publication did not conform with the requirements of the statute, in that service of the complaint was not made upon the secretary of the state nor did the copy of the complaint mailed to the defendant contain an endorsement by the officer that such service had been made and therefore was defective. Because Pease had engaged in business in this state and, after the transactions alleged in the complaint, had left the state for parts unknown, he could be subjected to personal jurisdiction under the long-arm statute, § 52-59b. This statute provides for the officer to serve a true and attested copy of the complaint upon the secretary of the state and to send to the defendant, by registered or certified mail, postage prepaid, a like true and attested copy with an endorsement thereon of the service upon the secretary addressed to the defendant at his last-known address. "The requirement that the copy be mailed to the defendant at his `last-known address' does not mean the last address known to the plaintiff but does mean the last address of the defendant so far as it is known, that is, by those who under the ordinary circumstances of life would know it." Hartley v. Vitiello, 113 Conn. 74, 80, 154 A. 255 (1931). Sending a copy by registered mail to Pease's wife, under the circumstances of the case, would satisfy the "last-known address" requirement. Id.
There being both a basis for jurisdiction and adequate notice to meet constitutional requirements, the fact that the plaintiffs did not comply with the statutory requirements is an irregularity which did not render the notice inadequate. 1 Restatement (Second), Judgments § 2, comment e, illustration 4. Such irregularities may render the judgment voidable
The trial court, Bieluch, J., relying on Arizona Real Estate Department v. Arizona Land Title & Trust Co., 9 Ariz.App. 54, 449 P.2d 71 (1968), ruled that questions relating to the fact and amount of the agent's liability could be raised by the commission only in the principal action, but that questions relating to the liability of the fund, such as whether the transactions between the parties came within the purview of the statute, could be addressed in the secondary proceeding. The trial court, Wright, J., on the basis of this ruling, limited the trial in the proceeding that is the subject of this appeal
Subsection (c) of § 20-324e sets out six requirements which the applicant must satisfy in order to secure a recovery from the fund. First, he must show that he is not the spouse or personal representative of the spouse of the judgment debtor. Second, he must demonstrate that he has complied with all of the requirements of § 20-324e. Third, he must establish that he has obtained a judgment as set out in subsection (b) of this section. Finally, fourth, fifth and sixth, unless this requirement is dispensed with by the court, he must show that he has exercised due diligence in attempting to obtain recovery of his damages from the agent. The type of judgment set out in subsection (b) is one that is against a real estate broker or real estate salesman or the unlicensed employee of any such real estate broker for loss or damage sustained by reason of, inter alia, embezzlement or fraud.
The two proceedings contemplated by the guaranty fund statute serve separate functions. The plenary action against the agent establishes the fact and amount of his liability. Because this is an essential first step to securing a recovery from the fund the commission is required by statute, § 20-324e (a), to receive notice of the commencement of the action and is bound by the result. Arizona Real Estate Department v. Arizona Land Title & Trust Co., supra, 58-59. This is so whether or not the commission exercises its right of intervention. Id. "In the suit against the real estate broker or salesman, it is immaterial whether the factual predicates for recovery against the fund have occurred; we do not believe that this statute,
There are practical reasons why the plenary action should be treated as an ordinary action for conversion. Not every case brought against a broker for misappropriation necessarily involves recovery from the fund. The broker may successfully defend the suit or he may fully satisfy any judgment against him. In each of these situations intervention by the commission may entail a waste of commission resources. Furthermore, the introduction into the broker's trial of issues which are irrelevant to the broker's liability would only complicate that trial with little or no saving for the litigants or the judicial process. See note, "The Real Estate Recovery Fund: Constitutional and Procedural Critique of an Illinois Remedy," 56 Chicago-Kent L. Rev. 401 (1980).
The trial court was correct in reserving for the secondary action against the fund such factual issues as the status of the agent and the reason for the loss. Since those issues were adjudicated by the court in connection with its determination that the activities of the parties came within the purview of the statute, we address those issues at this point.
The parties stipulated that at all times relevant to this action Florida Unlimited, Inc., held a valid Connecticut license as a real estate broker and that William Braman Pease did not hold a valid Connecticut license either as a real estate salesman or broker. The trial court, applying the long recognized principle that the existence of an employeremployee relationship depends on whether the employer has retained the right to control the means and method of work; Spring v. Constantino, 168 Conn. 563, 573, 362 A.2d 871 (1975); found that
The trial court further found that D'Occhio's first contact with Florida Unlimited was in the spring of 1972, at which time he learned that the company had an exclusive franchise with Deltona Corporation to sell Marco Island properties in Connecticut. In July, 1972, he met Pease for the first time in his Florida Unlimited office. All additional meetings with Pease took place in that office. At all times Pease represented himself as being an agent of Florida Unlimited. D'Occhio was informed by others working for Florida Unlimited that he was the only person in the company who was dealing with industrial property in Florida and that he was the best salesman that they had. The employee representation was further supported by Pease's giving D'Occhio a business card giving the Florida Unlimited address as his business address.
Following a trip to Florida to see the property which Pease had in mind for him, D'Occhio purchased an interest in the property through Pease. He gave Pease a cashier's check for $10,000, and signed a participation agreement with Pease in the Florida Unlimited office. Although no reference to
With respect to Gaetani, the trial court found that Gaetani met Pease in the fall of 1972, at which time Pease again represented himself as an employee of Florida Unlimited. As with D'Occhio, Pease provided his client with a Florida Unlimited business card, organized a trip to Florida so he could see the land they were discussing, and provided him with brochures, all indications of his employee status with Florida Unlimited. Gaetani also received a wealth of information on Florida Unlimited and Deltona stationery, including annual statements and congratulatory letters.
Gaetani decided to purchase six lots. The purchase and sale agreements were completed by Pease in his Florida Unlimited office on Marco Island Development Corporation forms. On each of these documents Pease gave as his address the same address in West Hartford as that of Florida Unlimited. On the basis of these agreements Gaetani paid Pease $20,000.
In August, 1973, Gaetani received a letter from Pease stating that payment had been made on the land. The letterhead used was that of Broome & Co. The participation agreement between them
The court concluded that while Pease was acting as an employee of Florida Unlimited when their dealings began, as shown by the acknowledgments by Florida Unlimited and Deltona of Gaetani's purchases, he was no longer acting in that capacity by the time the participation agreement was signed. Thus there were two transactions. The first concerned the purchase and sale agreements which resulted in the $20,000 payment, at which time Pease was using the Florida Unlimited address, business cards and stationery, and the second involved the $5000 payment wherein Pease was using Broome & Co. for his business name. The court concluded that the first transaction came within the purview of the statute whereas in the second transaction Pease was acting as an independent contractor.
Respecting Perlman, the court found that although Perlman met Pease in his Florida Unlimited office and did business with him there, there was no conclusive evidence that Pease was acting as an employee of Florida Unlimited at the time Perlman paid him $23,000. There is no indication of an employee relationship with Florida Unlimited
"On appeal, it is the function of this court to determine whether the decision of the trial court is clearly erroneous. See Practice Book, 1978, § 3060D. This involves a two part function: where the legal conclusions of the court are challenged, we must determine whether they are legally and logically correct and whether they find support in the facts set out in the memorandum of decision; where the factual basis of the court's decision is challenged we must determine whether the facts set out in the memorandum of decision are supported by the evidence or whether, in light of the evidence and the pleadings in the whole record, those facts are clearly erroneous." Pandolphe's Auto Parts, Inc. v. Manchester, 181 Conn. 217, 221-22, 435 A.2d 24 (1980). Applying the foregoing standard, we cannot conclude that the trial court's decision was clearly erroneous in any of the cases. In the cases of D'Occhio and Gaetani, although the commission focuses on the participation agreements as the inducement for the transfer of money that was ultimately embezzled by Pease, the court found that in D'Occhio's case the entire payment and in Gaetani's case $20,000 of the $25,000 was paid for the purchase of Marco Island properties. At no point in its brief does the commission argue that the court's findings of fact are not supported in the evidence or that the conclusions do not flow legally and logically from these facts.
The commission claims that D'Occhio's
The statute of limitations in the guaranty fund statute; § 20-324d; is addressed to the action brought against the real estate agent. "The general rule is that where a statute gives a right of action
Section 20-324d is a limitations statute based on the accrual of a cause of action. "Applied to a cause of action, the term to accrue means to arrive; to commence; to come into existence; to become a present enforceable demand." Eising v. Andrews, 66 Conn. 58, 64, 33 A. 585 (1895). With certain exceptions not pertinent here, in cases involving the misappropriation of funds of another, the right of action will accrue at the time of the defalcation; State ex rel. McClure v. Northrup, 93 Conn. 558, 563, 106 A. 504 (1918); unless the statutory period is extended as a result of fraudulent concealment; General Statutes § 52-595; in which case the cause of action will not accrue until its existence is discovered
There is no error in the cases of Gaetani and Perlman; there is error in the case of D'Occhio, the judgment in this ease is set aside and a new trial is ordered limited to the question whether the plaintiff brought his action against Pease within the time limitations prescribed by General Statutes § 20-324d; if, upon this issue, the court finds that the action against Pease was brought within the time limitations of § 20-324d, judgment is to be rendered that the plaintiff recover of the defendant commission the amount of damages found due him in the judgment appealed from; but if, upon this issue the court shall find that the action was not so brought, then judgment is to be rendered finding the issues for the commission.
In this opinion the other judges concurred.
"[General Statutes] Sec. 20-324b. FEE PAYABLE TO FUND. Any person who receives a real estate broker's or real estate salesman's license for the first time shall pay an additional fee of twenty dollars in addition to all other fees payable, which additional fee shall be credited to the real estate guaranty fund, provided in no case shall any real estate broker or salesman be required to pay said fee of twenty dollars more than once."
"[General Statutes] Sec. 20-324c. LEVEL OF GUARANTY FUND. CREDITS TO GENERAL FUND. Said commission shall maintain said real estate guaranty fund at a level not to exceed two hundred seventy-five thousand dollars and to this intent moneys received under section 20-324b shall be credited to said guaranty fund whenever the fund balance is below two hundred seventy-five thousand dollars and any such moneys may be invested or reinvested in the same manner as funds of the state employees retirement system, and the interest arising from such investments shall be credited to the general fund. Any moneys received under said section 20-324b not required to maintain said real estate guaranty fund balance shall be deposited to the general fund. All moneys in the guaranty fund in excess of two hundred seventy-five thousand dollars, on May 19, 1976, shall be transferred by the treasurer to the general fund."
"[General Statutes] Sec. 20-324d. LIMITATION OF ACTIONS. NO action may be commenced to recover damages under sections 20-324a to 20-324j, inclusive, which might subsequently result in an order for collection from said guaranty fund, later than two years from the accrual of the cause of action thereon."
"[General Statutes] Sec. 20-324e. PROCEDURE. (a) When any aggrieved person commences any action under sections 20-324a to 20-324j, inclusive, for a judgment which may result in collection from said guaranty fund, the aggrieved person shall notify said commission in writing to this effect at the time of the commencement of such action. Said commission shall have the right to enter an appearance, intervene in or defend any such action.
"(b) When any aggrieved person recovers a valid judgment in the superior court against any real estate broker or real estate salesman or the unlicensed employee of any such real estate broker for loss or damages sustained by reason of the embezzlement of money or property, or money or property unlawfully obtained from any person by false pretenses, artifice, trickery or forgery or by reason of any fraud, misrepresentation or deceit by or on the part of such real estate broker or salesman or the unlicensed employee of any such real estate broker, such aggrieved person may upon the final determination of, or expiration of time for appeal in connection with, any judgment, file a verified claim in the superior court for the judicial district of Hartford-New Britain or in the superior court for the judicial district in which the aggrieved person resides or the superior court in which such judgment was entered and, upon ten days' written notice to said commission, may apply to such court for an order directing payment out of said guaranty fund of the amount unpaid upon the judgment, subject to the limitations stated in section 20-324a and the limitations specified in this section.
"(c) The court shall proceed upon such application in a summary manner, and, upon the hearing thereof, the aggrieved person shall be required to show: (1) He is not a spouse of the debtor, or the personal representative of such spouse; (2) he has complied with all the requirements of this section; (3) he has obtained a judgment as set out in subsection (b) of this section, stating the amount thereof and the amount owing thereon at the date of the application; (4) he has caused to be issued a writ of execution upon said judgment and the officer executing the same has made a return showing that no personal or real property of the judgment debtor liable to be levied upon in satisfaction of the judgment could be found, or that the amount realized on the sale of them or of such of them as were found, under the execution, was insufficient to satisfy the judgment, stating the amount so realized and the balance remaining due on the judgment after application thereon of the amount realized; (5) he has made all reasonable searches and inquiries to ascertain whether the judgment debtor is possessed of real or personal property or other assets, liable to be sold or applied in satisfaction of the judgment; (6) that by such search he has discovered no personal or real property or other assets liable to be sold or applied, or that he has discovered certain of them, describing them, owned by the judgment debtor and liable to be so applied, and that he has taken all necessary action and proceedings for the realization thereof, and that the amount thereby realized was insufficient to satisfy the judgment, stating the amount so realized and the balance remaining due on the judgment after application of the amount realized.
"(d) Whenever the aggrieved person satisfies the court that it is not practicable to comply with one or more of the requirements enumerated in subdivisions (4), (5) and (6) of subsection (c) of this section and that the aggrieved person has taken all reasonable steps to collect the amount of the judgment or the unsatisfied part thereof and has been unable to collect the same, the court may in its discretion dispense with the necessity for complying with such requirements.
"(e) The court shall make an order directed to said commission requiring payment from the real estate guaranty fund of whatever sum it shall find to be payable upon the claim, pursuant to the provisions of and in accordance with the limitations contained in this section and section 20-324a, if the court is satisfied, upon the hearing, of the truth of all matters required to be shown by the aggrieved person by subsection (c) of this section and that the aggrieved person has fully pursued and exhausted all remedies available to him for recovering the amount awarded by the judgment of the court.
"(f) If said commission pays from said fund any amount in settlement of a claim or toward satisfaction of a judgment against a licensed real estate broker or real estate salesman pursuant to an order under subsection (e), the license of the broker or salesman shall be automatically revoked and no such broker or salesman shall be eligible to receive a new license until he has repaid in full, plus interest at the rate of four per cent a year, the amount paid from said guaranty fund on his account. A discharge in bankruptcy shall not relieve a person from the penalties and disabilities provided in this subsection.
"(g) If, at any time, the money deposited in said guaranty fund is insufficient to satisfy any duly authorized claim or portion thereof, said commission shall, when sufficient money has been deposited in said guaranty fund, satisfy such unpaid claims or portions thereof, in the order that such claims or portions thereof were originally filed, plus accumulated interest at the rate of four per cent a year."
"[General Statutes] Sec. 20-324f. PENALTY FOR FALSE OR UNTRUE CLAIM. Any person filing with the commission any notice, statement or other document required under the provisions of section 20-324e which is false or untrue or contains any material misstatement of fact shall be fined not less than two hundred dollars."
"[General Statutes] Sec. 20-324g. PROCEDURE FOR COMMISSION. When said commission receives notice, as provided in section 20-324e, it may enter an appearance, file an answer, appear at the court hearing, defend the action or take whatever other action it may deem appropriate on the behalf and in the name of the defendant and take recourse through any appropriate method of review or appeal on behalf and in the name of the defendant."