*1 Dist., Sept. No. 53939. First Div. [Civ. Three. 1984.] al.,
SIMON GARCIA et Plaintiffs Appellants, WETZEL,
HERBERT D. Defendant and Respondent.
Counsel Castro, Rowan & Gustafson Rowan, Howell & Hallgrimson James J. for Plaintiffs Appellants. J. Kornfield for
Irving Defendant and Respondent.
Opinion Garcia, wife, BARRY-DEAL, his Simon Garcia and Odelia appeal1 J. summary judgment favor of the Wetzel. We affirm the respondent on the basis that the judgment the intended the Legislature usury XV, 1, 6, provision (art. of the state Constitution amended Nov. 1, as clarified by Civil Code section 1916.1 §§ 2), to who, real estate brokers make unsecured principals, loans.
A summary judgment is if there is no triable issue of fact proper only and, law, as a matter the (Code entitled to moving judgment. party Proc., 437c.) Civ.
In reviewing we are limited the summary judgment, facts shown in the affidavits and those admitted and uncontested the We pleadings. determine only whether the facts so shown rise to a triable issue of give Moreover, fact. the construed, moving are while party’s strictly papers those of the are A opposing parties liberally construed. summary judgment is a drastic procedure caution, to be used with doubts as the propriety granting motion are resolved in favor of the the mo opposing party (Corwin Bureau, tion. v. Los Angeles (1971) 4 Newspaper Service Inc. rules, Viewing record in the of the above light pertinent Wetzel, are broker, facts as follows: real a licensed respondent on $18,122.99, May agreed: lend the sum appellants required to redeem appellants’ from foreclosure sale scheduled property for 1979; $14,000 to assume May loan of appellants’ existing The written property. agreement stated that were deposit receipt appellants 1The of appeal only summary judgment granted notice refers to the to respondent on 15, 1981, January on the appeal first cause of No was taken from the action. October third, second, sustaining order the demurrer on the and fourth causes of action. was speculation.
aware that Wetzel purchasing property “profit deed May dated by grant to Wetzel Appellants conveyed to repurchase prop- also agreement 30-day option provided $22,239.45, $4,000 Wetzel had more than erty paid. approximately amount, exercised this Appellants option, paid subsequently filed the On July they ceived a reconveyance $4,000 interest rate that the charge represented instant complaint alleging XV, 1 of the state Constitution. violation article was the in favor of summary respondent The basis of judgment One) so (Div. section 1. This of article retrospective application *4 1021, 1023-1024 (1982) held in v. Farr 132 Chapman Cal.App.3d [183 Co. 606], & Investment Orden v. Crawshaw citing Mortgage Cal.Rptr. 62], which (1980) 141, explained 145-146 Cal.Rptr. 109 Cal.App.3d [167 for an al i.e., rationale, provided remedies underlying previously no in the are in the nature of penalty, usurious contract legedly or forfeiture. statutory unenforced penalty state has a vested in an right Farr, 1021, nor However, 132 Cal.App.3d neither v. Chapman supra, whether question in this reached the any published authority 1, real estate bro- to licensed of article applies So far as pertinent, kers who make unsecured loans on their own accounts.2 li- by any person made or arranged loans “. . . exemption applies in in whole or State . and secured censed as real estate broker . . concedes (Italics added.) Respondent liens on real . . .”3 part by property, of this exemption. absence that the loan would have been usurious who, for statute, as . .a person estate broker is defined “. By compensation . . . does or , negotiates ... another or others: [1] (a) (Bus. sell, & real property. or offers to or offers ...” buys buy, [s]ells Code, (a), require Prof. two preliminary subd. italics a real estate broker ments be met to find as acting that must that a person must be acting her that he or she within the confines of his or license are (Froid working compensation. on behalf of someone else must Here, 461].) 839 Cal.Rptr. Fox 132 Cal.App.3d v. [183 Farr, supra, the court was satisfied that Chapman Cal.App.3d 2In v. 132 “ parents. for his ‘arranged’ by the broker the evidence indicated that the transaction was grant deed of the “secured” 3Respondent baldly asserts that the transaction was However, trust, note, security other document mortgage, promissory deed no Further, grant obligation survived the execution was ever executed. there was no (Cf. High (1960) Cal.Rptr. Cavanaugh Cal.App.2d deed. v. [6 spondent acted on his own and not on behalf of admittedly appellants, behalf $4,000. and he received as compensation (a),
Business Professions Code section subdivision expressly . [a]nyone definition of a real broker who exempts “. directly with performs any the acts within the this chapter ref (Div. erence to his own (Italics added.) Two) . . .” As property . explained Robinson Murphy (1979) 96 Cal.App.3d 246], the above statute rule that a universally codifies accepted person dealing with his or her own broker. Fox, (Accord 832, 841-842.) Froid v. supra, Recently, Cal.App.3d v. Edmonds Merrifield 104], we characterized the loans as an that does taking activity a real require estate license. However, 1916.1,4 the Legislature added Civil Code section became effective on January §§ 2.) The new statute reads as follows: “The restrictions rates interest upon *5 contained Section of Article XV of the California Constitution shall not to loan or forbearance made or licensed arranged by as a real California, secured, estate broker by the State and or directly collaterally, whole or in liens on real ‘made part by term or arranged’ includes loan by person made licensed as a real estate broker as a others, an or principal and whether not the agent person is acting within (Italics the course and such license. scope
There is a in favor strong of the presumption Legislature’s interpretation of a state constitutional and provision, that if interpretation controlling (Methodist unreasonable. Saylor (1971) Sacramento v. Hosp. of 692-694
We find
Circuit,
and
persuasive
reasoning
discussion
Ninth
was faced with the
recently
Civil
interpretation
application
(In
Code section 1916.1
a substantially
(9th
similar situation.
re Lara
1984)
Cir.
applying that a conclusion 1459) Legislature’s that was bound accept it in his licensed capacity real estate broker need not licensed so, on the the Ninth Circuit relied In usury doing exemption apply. w5 (id., 1460- belo at pp. set forth legislative declaration purpose on the federal and 1461) argument predicated rejected equal protection re on a matter of In Lara While we are not bound state Constitutions. 4587- (2d 1971) (6 Witkin, pp. ed. Appeal, law Cal. Procedure § it here. no need to 4588), repeat its and see we find reasoning compelling, however, here is note, charged the interest rate We are constrained transaction, the Legis such By over annum. per permitting percent its lending attempt too may mortgage lature have far gone encourage in housing to consumers stimulate money make more available Pro (Ballot Pamp., section 1.6 the declared article dustry, purpose Amend, Const, voters, Statewide Special to Cal. with arguments posed 2).) (Nov. pp. (Prop. Elec. is affirmed. summary judgment
Scott, J., concurred. WHITE, I the Ninth Circuit’s P. I dissentas do not find persuasive J. 1984) re F.2d 1455 as to (9th protec in In Lara reasoning equal Cir. Lara, I, 7; IV, 371 F.2d at (Cal. Const., 16.) In supra, tion. art. art. usury the Ninth Circuit concluded that the had reasonable lending of a real estate broker’s unlicensed law *6 The of licensed brokers. because of this state’s extensive regulation basis Legislature Legislature 2 finds that the in legislation provides: of the 1983 “The 5Section (Res. in that people approving in the adopting ACA 52 Ch. Stats. and 1979 exempt an additional class Proposition as 2 in November of established measure persons by the State of California interest rate as real estate brokers limitations licensed education, by the on the basis of qualified on basis that real the estate brokers are examination, be revoked or real estate brokers can experience, and and that the licenses of involving dishonesty, fraud, deceit with perform or suspended real estate brokers acts if ” (Italics others, injure substantially substantially others. to themselves or or to intent benefit equity home Legislature sections 1695-1695.14 on the did enact Civil Code 6In 1, 1980.) Jan. The intent and eff. sales contracts. § necessary legislation provide homeowner with information of were each purposes “[t]o or home an the sale of his her to intelligent regarding decision to make an informed and safeguard to agreement expressed writing; be in require to that the sales equity purchaser; insure, foster, dealing encourage fair against hardship; public the deceit and financial to foreclosure; representations that tend to prohibit in to purchase in sale and of homes the terms; mislead; a prohibit to homeowners reasonable or restrict unfair contract afford protect preserve and to meaningful equity purchasers; sales to opportunity rescind , Code, (d)(1).) (Civ. subd. the of .” equities § home homeowners this state. to the available of license specifically pointed suspension sanctions and revocation for a unlicensed when these involved broker’s (Bus. or fraudulent dishonest or a crime moral dealings involving turpitude. Code, However, (b), & Prof. (m).) subds. as the (j) majority § ante, out do opinion correctly points at loans not page a real estate the irration- quire license. instant transaction demonstrates any transaction made or a ality by extending arranged a me, with real estate rational person broker’s license. To construction the statute would with to a exemption only person broker’s license within the of the license.
Here, knew the amount and that Wetzel was appellants charged engaged in the transaction for Thus would have speculation. difficulty appellants fraud,1 that Wetzel’s loan showing involved or deceit2 with dishonesty, intent3 to Thus, benefit substantially himself and them. even if the injure transaction was a breach of Union Wyatt Mortgage (see fiduciary duty v. Co. 45]), rarely invoked Golde Fox sanction of license revocation (e.g., 167, 177 864]) does sufficient not provide pro- tection for consumer transactions like instant one. Code, (Civ. transaction met the of a loan statutory definition 1912)4 Code, (Civ. 1915).5 with interest Direct is not primary lending
function brokers, of real estate but other entities who are exempted 1098, ante, 1See section Legislation quoted the 1983 footnote majority opinion. 2Fraud can be provides either actual or constructive. Civil Code section 1572 relevant fraud, part: acts, any by party “Actual . . . following consists of the committed contract, connivance, thereto, or with party his with intent or to induce to deceive another true, fact, him to by enter into the suggestion, contract: 1. The as a that [f] true; true, one who does believe it to be suppression . . . which is [^i] H] fact; [|] having knowledge one promise or belief intention 4. A made without it; of performing Any other act fitted deceive.” [fl Civil Code section part provides: 1573 in relevant “Constructive fraud 1. In consists: [f] which, intent, duty advantage breach of actually gains without an fraudulent fault, [|] . . . specially 2. In such act or omission as the law declares to fraudulent, respect without to actual fraud.” fact, suggestion, 3A “deceit” defined Civil Code section 1710 either “1. The as *7 true, true; assertion, by of that which is not one who does 2. not believe it be [f] fact, true, by ground believing is one who has no reasonable for it be fact,
true; it, suppression by bound to gives one who is disclose or who [t] likely information of other facts which are fact; mislead for of communication of that want A promise, performing 4. made without intention of it.” [H] pertinent, money 4Civil Code provides: so far as “A loan of contract another, by agrees which one money delivers sum of and the latter return a future time a sum equivalent that which he borrowed. ...” compensation 5Civil pertinent, Code section so far as as: “. . the defines interest . forbearance, money.” . parties . . fixed for the . . ... rates interest because their usury provision precisely the Leg- consistent with are Such an comprehensively regulated. approach The first statute interest rates. islature’s concern with continuing limiting 184.) Carter v. Sea- (See this kind was enacted in 1861. 758].) (1949) general P.2d board Fin. Co. 33 Cal.2d 574-577 [203 Lynch, v. Merrill (See not been McConnell usury laws have repealed. Pierce, Smith, & 33 Cal.3d Fenner Inc. as to all
Further, why rational basis Wetzel failed to has provide awith bro- (not any person transactions those otherwise only regulated) (Cf., Riebe v. ker’s license from the usury provisions. should exempt Budget 654] Financial Corp. Const., XX, of personal prop- art. exemption former Cal. [justifying the lesser on the basis of brokers interest allowed them erty higher of investigation costs afforded security greater administration].) this state also Other lenders and licensees regulated scope enjoy beyond do not a similar transactions I of equal protection por- their licenses. would strike down grounds to any the usury exemption tion of Civil Code section 1916.1 which extends In this broker’s license. transactions not within the of a real estate greed. consumers must be society, protected law, the instant loan I would conclude that as matter Accordingly, transaction from the usury provision. was exempt denied Court was for a hearing by Supreme
Appellants’ petition J., should Bird, that the opinion petition November C. was of be granted.