In re Kosting, 37140.

• Court: U.S. District Court — District of Connecticut
• Writing for the Court: Harry M. Lessin, Norwalk, Conn., for respondent
• Citation: In re Kosting, 350 F.Supp. 1071 (D. Conn. 1972)
• Decision Date: 31 October 1972
• Docket Number: No. 37140.,37140.
• Parties: In the Matter of Gertrude S. KOSTING.

350 F. Supp. 1071

In the Matter of Gertrude S. KOSTING.

No. 37140.

United States District Court, D. Connecticut.

October 31, 1972.

Buddy O. H. Herring, Westport, Conn., for petitioner.

Harry M. Lessin, Norwalk, Conn., for respondent.

MEMORANDUM OF DECISION

NEWMAN, District Judge.

This is a petition for review by Randolph Vidal, a real estate broker, of the referee's order denying a priority claim or charge on the assets of the bankruptcy estate for petitioner's commission on the sale of the bankrupt's house.

The referee found the following facts. On May 15, prior to bankruptcy, the bankrupt entered into an exclusive agency agreement with Daphne Bayles, a real estate broker, giving Bayles the exclusive right for ninety days to sell the bankrupt's real estate situated at 35 Long Lots Road, Westport, Connecticut, at a commission rate of 6% if sold either at a price of $56,000 or at a figure acceptable to the bankrupt. This selling listing was offered by Bayles to Vidal, another real estate broker, on a sharing basis, which meant that if Vidal accomplished a sale of the property he would be entitled to 70% of the commission and Bayles would receive 30%. Vidal's office produced William and Elizabeth McCusker as buyers for the property at a price of $52,500, and on July 24, 1971, the McCuskers signed an instrument entitled "Purchase Agreement" on which the bankrupt also signed her approval, which stated that there was received from them a "binder deposit" of $525.00 on the purchase of the property with a contract to be signed on or before August 3, 1971 and the closing to be held on or before August 20, 1971. The bankrupt did not execute a formal contract with respect to this sale, but on August 6, 1971 she filed a voluntary petition in bankruptcy which initiated the bankruptcy proceeding now under review. On October 6, 1971, the trustee in bankruptcy filed a petition reciting that the McCuskers desired to consummate a purchase of the real estate and requesting that he be authorized to sell it to them for $52,500. After a duly noticed hearing, the referee entered an order authorizing the trustee to sell the property for this price, and the sale was consummated.

The referee, in reviewing petitioner's claim, found as conclusions of law that Vidal became entitled to his commission under the exclusive agency agreement by July 24, 1971, when the binder agreement was executed, and that his commission was based solely on services rendered up to this date. This gave Vidal only a general claim against the bankruptcy estate: under state law his claim was not a secured one, nor under bankruptcy law was it a priority claim entitled to priority in payment over the claims of general creditors. Finally, the claim was not deemed an administrative expense —which would give it priority status —because (a) the services he performed to earn the commission were fully rendered to the bankrupt prior to bankruptcy and were not rendered after bankruptcy to the trustee in bankruptcy, and (b) the exclusive agency agreement under which he acted and earned a commission was fully executed on his part prior to bankruptcy and did not constitute an executory contract which could be claimed to be assumed by the trustee in bankruptcy and under which services in earning the commission could be claimed to be rendered to the trustee.

In seeking to set aside the referee's order, petitioner contends that the services rendered by him to the estate after the declaration of bankruptcy were not given significance by the referee. These services, which petitioner states included substantial efforts to maintain the McCuskers as ready buyers and to keep their mortgage commitment in force despite its expiration twice during the period between the signing of the binder and the closing were, petitioner argues, crucial to permitting the trustee to accomplish the closing and, under a number of theories, entitle petitioner's claim to his commission to receive priority status. At oral argument, the trustee admitted that Vidal performed some significant services to the estate in bankruptcy with regard to bringing about the closing, although the precise nature and scope of these services were not detailed. Assuming, arguendo, that such instrumental post-bankruptcy services were rendered, the issue here is whether such services entitle petitioner to have all or some portion of his commission treated as a priority claim.

Vidal's first ground for asserting that his commission should be paid as a priority claim is that the trustee assumed the contract made by the bankrupt with the petitioner through his continued dealings with petitioner's office regarding the sale of the bankrupt's house. The referee properly found, however, that Vidal's commission was fully earned when the binder agreement was executed. Whether or not a closing was ultimately consummated, Vidal's commission would still have been due him, and he was not required to maintain the McCuskers as ready buyers. See Finch v. Donella, 136 Conn. 621, 626, 73 A.2d 336 (1950). The petitioner presents no cases which suggest a contrary conclusion. Thus the contract was fully executed by Vidal before bankruptcy, and the subsequent services cannot, therefore, be deemed to have been rendered under it; the trustee, to the extent he may have accepted such services, cannot be said by this act to have assumed or adopted this contract.

Petitioner next contends that the services he rendered subsequent to the filing of the petition in bankruptcy—if not his entire commission¹—are entitled to priority status as an administrative expense. Normally, such services performed on behalf of the estate in bankruptcy by accountants, realtors, and the like are accorded such status. 3A Collier on Bankruptcy § 62.11. The trustee argues, however, that in the instant case no compensation can be paid Vidal because he failed, prior to rendering services to the estate, to obtain an order from the bankruptcy court authorizing them and establishing a rate of compensation for them as required by General...