In re Moskovic

• Decision Date: 27 August 1987
• Docket Number: Bankruptcy No. 87 B 20315.
• Citation: 77 BR 421
• Parties: In re Joseph MOSKOVIC, Debtor.
• Court: U.S. Bankruptcy Court — Southern District of New York

77 B.R. 421 (1987)

In re Joseph MOSKOVIC, Debtor.

Bankruptcy No. 87 B 20315.

United States Bankruptcy Court, S.D. New York.

August 27, 1987.

Barr and Faerber, Spring Valley, N.Y., for debtor.

Angelo John Marino, New York City, for The Chase Manhattan Bank, N.A.

Jeffrey L. Sapir, Hartsdale, N.Y., trustee.

DECISION ON ORDER TO SHOW CAUSE SEEKING ORDER DIRECTING TRUSTEE TO PAY COMMISSIONS CLAIMED BY A REAL ESTATE BROKER

HOWARD SCHWARTZBERG, Bankruptcy Judge.

The Chapter 7 debtor, Joseph Moskovic, and his nondebtor spouse have moved for an order directing the trustee in bankruptcy to pay the commissions claimed by a real estate broker from the proceeds of the trustee's sale of their home before these proceeds are divided between the debtor's estate and his nondebtor wife.

The debtor filed with this court his voluntary petition for relief under Chapter 7 of the Bankruptcy Code on July 2, 1987. At the time of the filing of his petition, the debtor listed as an asset real property which he jointly owned with his nondebtor spouse, Hilda Moskovic, located in Spring Valley, New York and which was their residence. Prior to the filing of the Chapter 7 petition, the debtor and his wife had entered into a contract of sale dated April 21, 1987 whereby they agreed to sell the property for the sum of $220,000. The property was subject to three separate mortgages totalling approximately $141,000.

Paragraph 8 of the contract of sale specifically refers to the existence of a separate brokerage agreement which the debtor and his wife had entered into previously with Tap 'N See Realty Corp. and that the sellers agreed to pay the brokerage commissions with respect to the sale. Paragraph 8 reads as follows:

8. PURCHASER hereby states that PURCHASER has not dealt with any broker in connection with this sale other than Tap \'N See Realty Corp. and SELLER agrees to pay the broker the commissions earned thereby (pursuant to separate agreement).

(Emphasis added).

In paragraph 18 of the rider annexed to the contract of sale, the seller advised the purchaser that the debtor's wife, Hilda Moskovic, is a principal of the real estate broker to whom the brokerage commissions will be paid, namely Tap 'N See Realty Corp. The text of this paragraph is as follows:

18. Purchasers acknowledge that they have been advised that the seller, Hilda Moskovic, is a principal of Tap \'N See Realty Corp., the real estate broker herein.

The separate brokerage agreement which the debtor and his wife entered into provides that the broker will be paid a commission for obtaining a buyer for the property in question at the rate of 6% of the selling price up to the sum of $100,000 and 3% of the balance beyond $100,000.

Pursuant to an order to show cause dated July 10, 1987, the trustee applied to this court for an order permitting him to sell the real estate owned by the debtor and his wife for the sum of $220,000 to the purchaser named in the contract of sale dated April 21, 1987. In his supporting affidavit, the trustee stated that the real estate broker, Tap 'N See Realty Corp., will seek the sum of $9,600.00 as real estate commissions. The issue now is whether the sum of $9,600.00 claimed by the real estate broker should be treated as an administration expense or as a general unsecured claim. The Chase Manhattan Bank, N.A., a judgment creditor, objects to the payment of the brokerage commission from the proceeds of the sale and contends that Tap 'N See Realty Corp. is an unsecured, general creditor because the brokerage agreement was a separate agreement and not part of the contract of sale which the trustee was authorized to assume.

DISCUSSION

The contract of sale specifically refers to the brokerage agreement as a "separate agreement" entered into between the sellers of the real estate and the broker, Tap 'N See Realty Corp., with respect to which the sellers agreed to pay the brokerage commissions on the sale. Therefore, it is clear that the brokerage agreement is a separate agreement from the real estate contract which the trustee was authorized to assume. The case of In re Gardinier, Inc., 50 B.R. 491 (Bankr.M.D. Fla.1985) presents a similar factual pattern. The debtor entered into a prepetition transaction involving a parcel of real estate. The terms and conditions of the brokerage agreement regarding the sale were set forth separately at the end of the contract of sale and separately signed. Thereafter, the debtor filed a Chapter 11 petition and then sought...