Gerdes v. Gerdes, Adv. No. 3-83-0389

• Decision Date: 23 September 1983
• Docket Number: Adv. No. 3-83-0389,Bankruptcy No. 3-83-01105.
• Citation: 33 BR 860
• Parties: Conrad GERDES, Plaintiff, v. Delores V. GERDES, Citizens Federal Savings & Loan Association, Madison Aviation, A.E. Spears Service, Winters National Bank & Trust Company, Defendants. In the Matter of Conrad GERDES, Debtor.
• Court: U.S. Bankruptcy Court — Southern District of Ohio

33 B.R. 860 (1983)

Conrad GERDES, Plaintiff, v. Delores V. GERDES, Citizens Federal Savings & Loan Association, Madison Aviation, A.E. Spears Service, Winters National Bank & Trust Company, Defendants In the Matter of Conrad GERDES, Debtor.

Adv. No. 3-83-0389, Bankruptcy No. 3-83-01105.

United States Bankruptcy Court, S.D. Ohio, W.D.

September 23, 1983.

Thomas R. Noland, Dayton, Ohio, for plaintiff/debtor.

Frank M. Root, Dayton, Ohio, for defendant Delores V. Gerdes.

DECISION AND ORDER

CHARLES A. ANDERSON, Bankruptcy Judge.

PRELIMINARY PROCEDURE

This matter is before the Court upon "Complaint to Sell Real Estate Free and Clear of Liens" filed by Debtor on 6 June 1983. A pretrial order was entered conformably to a pretrial conference held 21 July 1983, and the Court heard the matter at a trial held 25 August 1983. The following decision is based upon the evidence adduced at the hearing, inclusive of uncontested facts incorporated in the joint pretrial order approved by the Court on 20 August 1983, and the record.

FINDINGS OF FACT

On 19 March 1979, Debtor and Defendant Delores V. Gerdes, Debtor's ex-wife, entered into a Separation Agreement whereby Debtor and his ex-wife each obtained as a part of a complicated property settlement an undivided one-half interest in the subject real property, known as the Brookville Airport or Airpark, as tenants in common. In pertinent part, the Separation Agreement also required Debtor to pay alimony to his ex-wife, as follows:

17. ALIMONY A. The Husband shall pay Wife, as and for alimony the sum of One Thousand Three Hundred Dollars ($1,300.00) per month for a twenty-year period. This amount shall be increased Sixty-five Dollars ($65.00) per month on each anniversary date hereafter. Said alimony shall be reduced each month by any payments made to Wife over and above her share of the mortgage payments on the leased real estate under leases with Brookville Airpark and Western Aviation. In the event the Wife\'s interest in the Brookville Airpark or Western Aviation is voluntarily sold, each alimony shall be reduced by the amount of the lease payment which she is to receive over and above her share of the mortgage payment. A voluntary sale, for purposes of this agreement, shall be any sale, other than a sale by judicial process.

B. Husband shall pay wife as alimony the sum of One Thousand Two Hundred Seventy-eight and 21/100 Dollars ($1,778.21) per month. Any payments to Citizens Federal made on the Brookville Airpark mortgage by the Husband or any amounts received by Wife by virtue of a certain lease with Brookville Airpark over and above the ten-thirteenths of the alimony set forth in Item A shall be a credit on this amount. Said alimony shall terminate upon the sale of the Brookville Airpark or the payment in full of the Citizens Federal mortgage.

C. Husband shall pay wife as alimony the sum of One Thousand Four Hundred Ninety-one Dollars ($1,491.00) per month. Any payments to Garber made on the Dahio Airpark mortgage by the Husband, or any amounts received by Wife by virtue of a certain lease with Western Aviation over and above the three-thirteenths of the alimony set forth in Item A shall be a credit on the amount. Said alimony shall terminate upon the sale of the Dahio Airpark or the payment in full of the Garber Mortgage. Wife agrees to join in refinancing mortgage at the end of ten years, if mortgage is current.

D. It is agreed and understood that all of the above payments shall be secured by a second mortgage on the husband\'s interest in the real estate occupied by Brookville Airport and Dahio Airport in the amount of Four Hundred Thousand Dollars ($400,000.00) which represents in the aggregate his alimony payments due hereunder.

E. Husband shall pay wife as and for permanent alimony, the sum of Fifteen Thousand Dollars ($15,000.00). This obligation may be discharged by the payments to the New Lebanon Bank of Fifteen Thousand Dollars ($15,000.00 due on a note secured by receivables of Western Aviation or by the release of the Wife on said note.

F. Husband agrees to pay or cause to pay the following obligations, and save the Wife harmless therefrom:

1. To The Florida Bank of Commerce a Fifty Thousand Dollars ($50,000.00) obligation secured by aircraft at Brookville Airpark.

2. A Twelve Thousand Five Hundred Dollar ($12,500.00) obligation secured by wrecked aircraft at Brookville Airpark.

Also pertinent to the decision herein, the Agreement further provides, in relevant part, (in another section designated as 17) as follows:

17. Husband agrees to pay One Thousand One Hundred Dollars ($1,100.00) of the existing Master Charge indebtedness at the Ohio State Bank.

18. Husband shall pay to wife the sum of Thirty-five Thousand Dollars ($35,000.00). This obligation may be discharged by payment to Estell Spears of a certain note which represents the purchase of his interest at Dahio Airport, provided, however, that upon the sale of the Dahio Airport real estate, Husband shall receive the first Twenty Thousand Dollars ($20,000.00) of equity in the property, if any.

19. It is agreed and understood that each party hereto shall assume one-half of the liability on the following debt. A Ten Thousand Dollar ($10,000.00) note to the New Lebanon Bank.

20. Wife agrees to name the children of the parties, share and share alike, as beneficiaries of Lutheran Brotherhood Life Insurance Policy No. 1435919 in the face amount of Fifteen Thousand Dollars ($15,000.00) and policy No. 1627842 in the face amount of Twenty-two Thousand Seven Hundred Fifteen Dollars ($22,715.00), and Husband agrees to pay the premium thereon in the amount of Three Hundred Twenty-four and 40/100 Dollars ($324.40) on Policy No. 1435919, and Policy No. 1627842 in the amount of Five Hundred Fifty-four Dollars ($554.00). Wife shall retain as and for her own security, the other life insurance policies in the face amount of Twenty-two Thousand Six Hundred Dollars ($22,600.00), which are presently held in her name.

Wife upon written request of the Husband, shall assign ownership of the policies where she has agreed to name the children beneficiaries.

The Separation Agreement became effective upon incorporation in and issuance on 26 March 1979 of a Judgment and Final Decree of Divorce by the Common Pleas Court of Montgomery County Ohio, Division of Domestic Relations, in case number 78-DR-2042.

The monetary amounts to be paid and the leases referred to in the Separation Agreement were negotiated on the basis of an "Affidavit of Income and Expenses" required by and filed in the state Domestic Relations Court as a standard procedure required by that Court and by consideration of the needs of Defendant herein for immediate support and maintenance funds and real estate mortgage installment payments for which she was jointly liable with Plaintiff herein. The 20-year end limitation contemplated that Defendant would be eligible for social security payments if an acceptable buyer for the premises could not be obtained. She was approximately 40 years of age upon their separation, and had received a high school education.

The parties at the time of the marriage brought no individual assets to the union. The Debtor had achieved marked success in the aircraft business, and was duly licensed to operate certain aspects of the airport businesses for which the proposed buyer is not qualified. The buyer would employ Debtor if the sale is consummated to operate the included ongoing flight school and the charter airplane business. The income from these operations is the principal potential for the future success of the airpark being sold and the Plaintiff Debtor would receive undisclosed compensation after the sale.

The proposed sale would not realize sufficient cash funds to pay for Defendant's undivided interest as tenant in common. As the total purchase consideration is only $60,000.00 in cash and the assumption of the existing first mortgage, the wife would in effect be required to finance a portion of the purchase. There is no evidence adduced that she would be released of her existing liability on the mortgage assumed. The Sale Agreement also stipulates "Conrad Gerdes to hold a second mortgage on balance at 10% interest amortized over 20 years to balloon in 10 years."

On 21 March 1979, Debtor's ex-wife duly recorded the mortgage securing her alimony rights as created in ¶ 17(D) of the Separation Agreement. It is undisputed that the mortgage contains an accurate and sufficient legal description of the subject Brookville Airport and also of a second "airport," known as the Dahio Airport which is also equally and jointly owned by Debtor and his ex-wife pursuant to the Separation Agreement. The mortgage lien was requested by the Defendant and granted because the alimony funded by lease payments would put her at the mercy of a business to which she had surrendered her interest.

On 9 May 1983, Debtor filed a Petition under 11 U.S.C. Chapter 11. Debtor duly scheduled his one-half interest in the subject airport and his ex-wife's lien thereon.

On 6 June 1983, Debtor filed the instant Complaint requesting that the Court order sale of the entire Brookville Airport pursuant to 11 U.S.C. § 363(h). Debtor also requests that this Court determine that the obligations incurred by Debtor in paragraphs 17 (presumably both paragraphs 17), 18, 19, and 20 of the Separation Agreement are not in the nature of alimony, maintenance or support, and therefore are not excepted from discharge under 11 U.S.C. § 523(a)(5) or otherwise.

The parties agree that the value of the subject Airport is greater as a going concern, and also that partition of the property, even if possible, would reduce the aggregate value of the property. The instant Complaint was prompted by Defendant's refusal to consent to the proposed sale of the Airport to a third-party buyer now sub judice. The sale, arranged by Debtor, provided for sale of the parties' Brookville...