Gold v. Lomenzo, 29 N.Y.2d 468 (1972)
The term “untrustworthiness” in statutes regulating real estate brokers is not unconstitutionally vague and allows for administrative discretion in determining professional misconduct, provided that the imposed disciplinary conditions are reasonable and related to the broker’s professional activities.
Summary
This case addresses the suspension of a real estate broker’s license based on a finding of “untrustworthiness” under New York Real Property Law § 441-c. The broker, Gold, was found to have charged excessive finder’s fees to clients seeking rent-controlled apartments. The court upheld the constitutionality of the term “untrustworthiness” as a standard for professional conduct, finding it sufficiently definite to inform brokers of permissible activities. However, it modified the conditions imposed on the license suspension, deeming the limitation of future fees to one month’s rent arbitrary and unreasonable, while upholding the requirement to refund excessive fees.
Facts
Four clients filed complaints against Gold, a real estate broker, alleging that he charged excessive “finder’s fees” for locating rent-controlled apartments. In one instance, an extra commission of $300 was charged on top of the basic commission because the apartment was considered “desirable.” In other cases, tenants claimed the commissions paid were excessive. In one instance, a tenant was unable to occupy the apartment but was denied a refund due to a 30-day clause in the rental agreement.
Procedural History
The Department of State suspended Gold’s real estate broker’s license. Gold sought an injunction in federal court, challenging the constitutionality of Real Property Law § 441-c. The federal court initially denied the injunction but was reversed on appeal. The federal court then deferred to state court proceedings. Meanwhile, the Department of State revoked Gold’s license. Gold pursued an Article 78 proceeding in state court, challenging only the suspension order, not the revocation. Special Term dismissed the petition, and the Appellate Division dismissed Gold’s appeal as academic. Gold appealed to the New York Court of Appeals.
Issue(s)
1. Whether the term “untrustworthiness” in Real Property Law § 441-c is unconstitutionally vague.
2. Whether the Department of State has the authority to impose conditions on the duration of a license suspension.
3. Whether the specific conditions imposed on Gold’s license suspension were reasonable and within the Department of State’s authority.
Holding
1. No, because the term “untrustworthiness” is sufficiently certain to real estate brokers to apprise them of the scope of permissible activities.
2. Yes, because given the general power to suspend licenses, there is an inherent power to impose reasonable conditions related to the broker’s professional activities.
3. Partially. The requirement to refund excessive fees was reasonable, but the condition limiting future fees to one month’s rent was arbitrary and beyond the Department of State’s authority.
Court’s Reasoning
The court reasoned that the term “untrustworthiness” is similar to “unprofessional conduct” in other regulated professions and is sufficiently certain to inform real estate brokers of permissible activities. The court recognized the need for administrative discretion in setting standards of professional conduct. The court stated, “It is apparent from the context in which the term ‘untrustworthiness’ appears in the statute that the Legislature intended the Secretary of State to be vested with a wide discretion in determining what should be deemed untrustworthy conduct.” While the Department of State cannot fix fees, it can consider the amount of fees in evaluating complaints. The court cited People v. Greenwald, 299 N.Y. 271 (1949), emphasizing that brokers cannot exact tribute from prospective tenants based on the representation of securing an advantage over others. The court held that the Department of State has the power to impose reasonable conditions on license suspensions related to the broker’s professional activities. However, conditions must be reasonable. The court found that the condition limiting future fees was “confiscatory” and placed Gold in an “uncompetitive position.” While Gold could be required to refund excessive fees, the Department of State could not arbitrarily limit fees in future transactions.