VRG CORPORATION V. GKN REALTY CORPORATION
Case Date: 05/18/1994
Docket No: none
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SYLLABUS
(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for
the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please
note that, in the interests of brevity, portions of any opinion may not have been summarized).
VRG CORPORATION V. GKN REALTY CORPORATION, ET AL. (A-31-93)
Argued October 26, 1993 -- Decided May 18, 1994
HANDLER, J., writing for a majority of the Court.
The issue on appeal is whether a real-estate broker, who earned commissions for obtaining long-term tenants for a shopping center owner, can impose an equitable lien on the rental income derived from
those tenants after the sale of the shopping center to a new owner who, although aware of the broker's
claim, had not agreed to be responsible for the commissions.
On October 24, 1985, VRG Corporation (VRG), a real-estate broker specializing in obtaining long-term tenants for commercial property, entered into an Exclusive Agency to Lease Agreement (agreement)
with Golden Reef Corporation (Golden Reef) and Perlman Enterprises, Inc., to assist in the development of
the Heather Croft Square Shopping Center. Catherine Backos, vice-president of VRG, negotiated the
agreement with Golden Reef. In her negotiations, Backos attempted to obtain full payment on a discounted
basis of all the commission due at the time of the shopping center's opening but Stuart Perlman, the
principal of Golden Reef, refused. Paragraph four of the agreement sets VRG's commission at six percent
of each monthly rental payment received from the tenants that VRG procured. Paragraph five provided for
the payment of $250,000 as an advance on commissions, which was then to be credited against monthly rents
at the rate of six percent. The agreement also bound the successors and assigns of the parties.
The shopping center opened in December 1986. VRG obtained long-term tenants for the center
and received from Golden Reef the $250,000 advance payment required under paragraph five of the
agreement. VRG calculated that the advance, credited against the six percent commissions from the monthly
rentals, would have been exhausted and payment based on the monthly rentals would begin in March 1992.
However, in February 1989, Golden Reef entered into a contract to sell the shopping center to GKN Realty
Corporation (GKN) for $9,800,000.
Backos testified that when she learned of the impending sale, she advised GKN's real-estate attorney
that VRG had an ongoing commission contract with Golden Reef and that, if the property were being sold,
there would be an ongoing obligation to pay the six percent of the leases that were in the shopping center.
Based on its discussions with Backos, GKN amended the original contract of sale with Golden Reef by
adding an indemnification provision, which provided that Golden Reef was to be responsible for payment of
any broker's commissions. According to Backos, Perlman told her that he would pay VRG its commission
the day after the closing and advised her not to attend the closing. Backos also claims that she told David
Nussbaum, vice-president of GKN, that if Golden Reef failed to pay the commissions due, VRG would look
to GKN for satisfaction. Nussbaum denies being so advised. Nussbaum also advised Backos not to attend
the closing because it might fall apart if she attended.
At the closing, Golden Reef assigned to GKN all of its rights in the leases procured by the VRG.
Golden Reef never made payment to VRG and, on July 11, 1989, VRG filed suit against Golden Reef and
GKN to recover its commissions. Golden Reef then filed a Chapter 11 bankruptcy petition, effectively
foreclosing VRG's claim for commissions against it.
The trial court determined that the broker was not entitled to an equitable lien and dismissed the
complaint. The Appellate Division reversed that judgment. The Supreme Court granted certification.
HELD: Under the circumstances of this case, an equitable lien cannot be imposed based on either an
express or implied contract, unjust enrichment or an assignment. Therefore, VRG cannot
impose an equitable lien on the rental income generated from long-term tenants after the sale of
a shopping center to GKN, who was aware of VRG's commission agreement with the prior
owner, but did not agree to be responsible for those commissions.
1. In this case, the imposition of an equitable lien cannot be based on an express or implied contract
theory. VRG and GKN did not explicitly agree that the broker's commission would be paid out of the rental
income generated by tenants of the shopping center. The terms of the agreement, specifically paragraph
four, specify only that VRG's compensation is both contingent on and measured by the rental income
received by Golden Reef and from the leases that VRG procured. Further, there is no intent or
understanding that the rents would be set aside or dedicated as security for future payments of VRG's
commissions; the interpretation placed on the agreement by the parties' conduct does not, under the
circumstances, establish an implied agreement that the rents would be pledged as security for payment of
commissions. Rather, VRG's actions were consistent with the understanding that its commissions were
unsecured, their payment was the obligation of Golden Reef and, accordingly, VRG sought to be paid out of
the closing proceeds, not out of dedicated future rents. Moreover, the record does not support a conclusion
that custom, practice or usage establishes a mutual intent to dedicate the shopping center's rental income as
security for the payment of VRG's commissions. (pp. 9-17)
2. There is no basis for the imposition of an equitable lien on a rental income grounded in the doctrine
of unjust enrichment. To establish unjust enrichment, a plaintiff must show that the defendant received a
benefit and that retention of that benefit without payment would be unjust. There is no evidence
demonstrating that GKN was unjustly enriched at the expense of VRG and that its property should now be
subject to a lien to enforce an obligation owed by Golden Reef. (pp. 17-19)
3. Golden Reef never assigned the broker's commission to GKN in conjunction with the sale of the
shopping center, nor did the leases or the assignment of the leases include or refer to the obligation to pay
commissions. Any notice of VRG's claim that was given to GKN did not, and could not, constitute a notice
of lien. Thus, an equitable lien cannot be imposed on the basis of an assignment. (pp. 19-22)
Judgment of the Appellate Division is REVERSED and the judgment of the Law Division is
REINSTATED.
JUSTICE STEIN, dissenting, in which JUSTICE CLIFFORD joins, is of the view that the Court
ignores the equitable roots of the doctrine of equitable liens and declines to recognize a lien in favor of
VRG, thereby disregarding the underlying equities among the parties. The Court's analysis imposes a too-heavy burden on the literal language of the commission agreement when the Court should have examined the
language in the context of the agreement as a whole. By linking its obligation to pay VRG's brokerage
commission with the collection of each installment of monthly rents under each of the leases procured by
VRG, Golden Reef effectively acknowledged its intention to pay VRG from the monthly rent collections,
although no express pledge of the rents as collateral is set forth in the agreement. In addition, the Court
emphasizes unduly the need for proof of unjust enrichment as a prerequisite for recognition of an equitable
lien apart from the express contract. However, general considerations of right and justice support the
imposition of an equitable lien on the shopping center rents in favor of VRG; VRG's claim in the context of
GKN's indefensible failure to assure that Golden Reef paid VRG's commission as a condition of closing
presents a classic example of the equitable-lien doctrine's capacity to provide relief that would not otherwise
be available in a suit for money damages.
CHIEF JUSTICE WILENTZ and JUSTICES POLLOCK, O'HERN and GARIBALDI join in
JUSTICE HANDLER's opinion. JUSTICE STEIN filed a separate dissenting opinion in which JUSTICE
CLIFFORD joins.
SUPREME COURT OF NEW JERSEY
VRG CORPORATION,
Plaintiff-Respondent,
v.
GKN REALTY CORP. and HEATHER
Defendants-Appellants,
and
GOLDEN REEF CORPORATION, PERLMAN
Defendants.
Argued October 26, 1993 -- Decided May 17, 1994
On certification to the Superior Court,
Appellate Division, whose opinion is reported
at
261 N.J. Super. 447 (1993).
Anne C. Singer argued the cause for
appellants (Blank, Rome, Comisky & McCauley,
attorneys; Ms. Singer and Peter J. Boyer, of
counsel).
Francis P. Maneri argued the cause for
respondent (Jubanyik, Varbalow, Tedesco, Shaw
& Shaffer, attorneys).
Steven S. Radin argued the cause for amicus
curiae International Council of Shopping
Centers (Sills, Cummis, Zuckerman, Radin,
Tischman, Epstein & Gross, attorneys; Mr.
Radin and Jeffrey H. Newman, of counsel;
Anthony J. Monaco, on the brief).
Arthur M. Greenbaum argued the cause for
amicus curiae New Jersey Association of
Realtors (Greenbaum, Rowe, Smith, Ravin &
Davis, attorneys; Mr. Greenbaum and Bruce D.
Greenberg, on the brief).
The opinion of the Court was delivered by
HANDLER, J.
This case arises out of the attempts of a commercial-leasing
broker to recover commissions for procuring tenants in a shopping
center. The legal issue presented is whether the broker, which
earned commissions for obtaining long-term tenants for the
shopping-center owner, can impose an equitable lien on the rental
income derived from those tenants after the sale of the shopping
center to a new owner who, although aware of the broker's claim,
had not agreed to be responsible for such commissions.
any sale of the property. In addition, the agreement bound the
successors and assigns of the parties.
the landlord to pay . . . the six percent commission on each of
the leases that [VRG] had obtained."
look to GKN for the commissions. At the closing, Golden Reef
assigned to GKN all of its right, title, and interest in the
leases procured by VRG.
II
equitable lien "may be created by express executory contracts
relating to specific property then existing, or property to be
afterward acquired." Temple v. Clinton Trust Co.,
1 N.J. 219,
226 (1948); see also 53 C.J.S. Liens § 6, at 464 (1987) ("As a
general rule, any express executory contract whereby one party
clearly indicates an intention to charge or appropriate some
particular property, real or personal, therein described or
identified, as security for a debt or other obligation, or
whereby one party promises to assign, convey, or transfer the
property as security for such a debt or obligation, creates an
equitable lien on the property so indicated."). It may also be
founded on "the dictates of equity and conscience, as where a
contract of reimbursement could be implied at law and enforced by
the action of assumpsit, or in certain cases where contribution
or reimbursement is enforceable in equity, including those
involving fraud and mistake." Temple, supra, 1 N.J. at 226.
"The whole doctrine of equitable liens or mortgages is founded
upon that cardinal maxim of equity which regards as done that
which has been agreed to be, and ought to have been, done."
Rutherford Nat'l Bank v. H.R. Bogle Co.,
114 N.J. Eq. 571 (Ch.
1933); see Hadley v. Passaic Nat'l Bank,
113 N.J. Eq. 548, 551
(Ch. 1933).
123 N.J. Eq. 524, 529 (Ch. 1938); Myers v. Forest Hill Gardens
Co.,
103 N.J. Eq. 1 (Ch. 1928), aff'd,
105 N.J. Eq. 584 (E. & A.
1929); American Pin Co. v. Wright,
60 N.J. Eq. 147 (Ch. 1900),
aff'd,
85 N.J. Eq. 219 (E. & A. 1901). Our courts today,
however, recognize that a contract to pay for services out of a
designated fund gives the party performing the services an
equitable lien on that fund when it comes into existence. "Where
one promises to pay for services rendered out of a fund created
in whole or in part by the efforts of the promisee, a lien in
favor of the promisee will attach to the fund when it comes into
existence." Hoffman, supra, 63 N.J. at 77; see Camden Safe
Deposit and Trust Co. v. Atlantic Properties, Inc.,
10 N.J. Misc. 59, 59-60 (Ch. 1931). Nevertheless, the language purporting to
express such an understanding must itself be clear. See Wilson
v. Seeber,
72 N.J. Eq. 523 (Ch. 1907).
obligation appears, and the property or thing
intended to be given, charged, or pledged is
sufficiently described or identified, then
the equitable lien or mortgage will follow as
of course.
[Rutherford Nat'l Bank, supra, 114
N.J. Eq. at 574 (citations
omitted).]
Hence, "[w]hile the form which an agreement shall take in order
to create an equitable lien or mortgage is quite immaterial,. . .
[discerning] the final intent and purpose" is critical in equity.
Id. at 571; see also Eisenhardt v. Schmidt,
27 N.J. Super. 76
(Ch. Div. 1953) (noting that important element in whether to
impose equitable lien is not form of agreement, but parties'
intentions).
III
of the parties. Courts use a number of interpretive devices to
discover the intention of parties to a contract. "'These include
consideration of the particular contractual provision, an
overview of all the terms, the circumstances leading up to the
formation of the contract, custom, usage, and the interpretation
placed on the disputed provision by the parties' conduct.'"
Jacobs v. Great Pacific Century Corp.,
104 N.J. 580, 582 (1986)
(quoting Kearny PBA Local No. 21 v. Town of Kearny,
81 N.J. 208,
221 (1979)).
[261 N.J. Super. at 456.]
The contract itself does not express the intent found by the
Appellate Division. VRG and GKN did not explicitly agree that
the broker's commission would be paid out of the rental income
generated by tenants of the shopping mall. Paragraph two of the
agreement states that "[i]n consideration of the services to be
rendered by Broker, Owner grants to VRG the exclusive agency to
procure tenants for the Center." "As compensation for Broker's
acceptance of this agency and its diligent efforts to procure
tenants for the Center," paragraph four provides,
The terms of the agreement thus specify only that VRG's
compensation is both contingent on and measured by the rental
income received by Golden Reef from the leases that VRG procured.
The Appellate Division found that the contract as a whole
embraced such an understanding, which, it stated,
[261 N.J. Super. at 456-57.] The contract, however, does not import an agreement "to a pledge of [the rental] income as a source of payments of VRG's commissions." Paragraph 4 of the agreement provides that VRG's "commission for each tenant" is "equal to six (6%) percent" of the rent. Further, the commission is to be payable on a "monthly basis . . . by [Golden Reef] to [VRG] within ten (10) days after receipt by [Golden Reef] of the subject monthly rental payment." Thus, the contract language makes clear that the rents are used only as a measure of the amount and timing of commission payments, not as their source or security. Cf. Wilson, supra, 72 N.J. Eq. at 531 ("[T]he language is clear. Schauble [client] agreed to pay Wilson [attorney] one-third part of whatever money shall be paid to or received by Schuable by way of compromise, &c. The language is not to pay a sum equal to one-third, but to pay the one-third part."). Hence, the trial court correctly determined that "the parties agreed on a formula for calculating
the compensation due VRG for its services" and that the provision
for compensation in the contract constituted "a simple
calculation" and "merely a payment schedule."
Perlman, according to Backos, referred to the long-term
agreement as an "annuity." Backos described her future
commissions based on future rents as "a six percent income stream
from [the] property." However, those characterizations do not
import the intent or understanding that the rents were to be set
aside or dedicated as security for future payments. Rather, as
stated by the trial court: "Just because the parties agreed to
base VRG's remuneration on the percentage of rental payments
received does not demonstrate an intention to hold the tenant's
rent as payment for VRG's services."
the rents were to be pledged or dedicated as security for payment
of commissions. See 53 C.J.S. Liens § 5, at 462 (1987) (noting
that an equitable lien may be created without an agreement based
on "considerations of right and justice" that arise from "the
conduct and dealings of the parties"). Any such putative
understanding is negated by the fact that VRG did not seek to
enforce such an understanding when it learned of the sale of the
shopping center. Rather, its actions were consistent with the
understanding that its commissions were unsecured, their payment
was the obligation of Golden Reef and, accordingly, it sought to
be paid out of the closing proceeds, not out of dedicated future
rents. Thus, as put by the trial court, "[A]ll along VRG looked
to Golden Reef for payment, even after closing. VRG was under
the impression that all commissions were to be paid at the
closing by Golden Reef."
be paid from the proceeds of the sale."). In this vein, some
courts have emphasized the reasonable expectations of the
parties. See, e.g., Cohen v. Estate of Sheridan,
218 N.J. Super. 565, 566-67 (Ch. Div. 1987) (determining that brokers that
procured buyer of real property had equitable lien for their
commissions on sale proceeds owed to seller at closing).
accept payment over a period of time." Thus, the record
discloses open and level bargaining by both parties. In the
words of the trial court: "[T]he parties were free to negotiate
any basis for payment." And so, a court would be "hard pressed"
to justify imposing an equitable lien based on either an express
or implied contract theory. See ante at __ (slip op. at 18).
B.
Wallia,
211 N.J. Super. 231, 243 (App. Div. 1986); Callano,
supra, 91 N.J. Super. at 109; Russell-Stanley Corp. v. Plant
Industries, Inc.,
250 N.J. Super. 478, 510 (Ch. Div. 1991). The
unjust enrichment doctrine requires that plaintiff show that it
expected remuneration from the defendant at the time it performed
or conferred a benefit on defendant and that the failure of
remuneration enriched defendant beyond its contractual rights.
Associates Commercial Corp., supra, 211 N.J. Super. at 244; see
Callano, supra, 91 N.J. at 105; St. Paul Fire & Marine Ins. Co.
v. Indemnity Ins. Co.,
32 N.J. 17, 22 (1960).
property of GKN, i.e., its rental income from the shopping
center. GKN, in paying fair market value for the shopping
center, did not receive an unexpected benefit or undeserved
windfall because Golden Reef later broke its promise to pay VRG's
commissions. See Associates Commercial Corp., supra, 211 N.J.
Super. at 244. There simply is no evidence in the record to
demonstrate that GKN was unjustly enriched at the expense of VRG
and that its property should now be subjected to a lien to
enforce an obligation owed by Golden Reef.
C.
such a lien is required, the notice cannot confer greater
obligations than those that inhere in or arise out of the
assigned contract. See McCann, supra, 65 N.J. at 313 (rejecting
broker's argument that there is implied in every contract between
seller and broker the provision "that a buyer impliedly agrees
with the broker that he will pay the commission if the broker
cannot legally collect it from seller"); Sisco v. New Jersey
Bank,
151 N.J. Super. 363 (Law. Div. 1977), aff'd in part, rev'd
in part,
158 N.J. Super. 111, 117 (App. Div. 1978) (observing
that notice of claim is different from notice of equitable lien);
see also Fiberchem, Inc. v. General Plastics, Corp.,
495 F.2d 737
(9th Cir. 1974) (holding that exclusive sales representative of
bankrupt manufacturer entitled to recover commissions on sales
procured by representative from assignee of manufacturer with
notice of commission agreement).
paid by tenant to owner or owner's assignee, which lease also
provided that if tenant purchased the property, the tenant agreed
to pay a broker's commission of five percent of the purchase
price and, further, bound "successors and assigns," was
enforceable against party who bought property and took assignment
of lease, even though property was later sold to tenant);
Goldstein, supra, at 28 ("When property is sold, the obligation
of the seller to pay a commission does not follow the purchaser
and rest upon the latter's shoulders as a liability. The
obligation to pay commission is personal.").
Consequently, under the circumstances, an equitable lien
cannot be imposed on the basis of an assignment.
IV
Chief Justice Wilentz and Justices Pollock, O'Hern and
Garibaldi join in Justice Handler's opinion. Justice Stein has
filed a separate dissenting opinion, in which Justice Clifford
joins.
VRG CORPORATION,
Plaintiff-Respondent,
v.
GKN REALTY CORP. and HEATHER
Defendants-Appellants,
and
GOLDEN REEF CORPORATION, PERLMAN
Defendants.
__________________________________
STEIN, J., dissenting.
rental payment, commencing after the $250,000 advance had been
"earned," the monthly commission payments to VRG being due within
ten days after each rental payment was received by Golden Reef.
Thus, although VRG had earned its commission by obtaining signed
leases, its right to payment -- except for the advance -- was
contingent on Golden Reef's receiving each monthly rental payment
from every tenant procured by VRG. The initial terms of the
leases ranged from five to twenty years.
VRG instituted this action against GKN, seeking to impose an
equitable lien on the monthly rental payments from tenants it had
obtained to secure payment of its earned but unpaid commission.
The Court summarizes the essential elements of the equitable-lien
doctrine, recognizing that such liens may be created either by
express agreement between the parties or on the basis of right
and justice according to "'the dictates of equity and conscience,
as where a contract of reimbursement could be implied at law * *
*.'" Ante at ___ (slip op. at 6-7) (quoting Temple v. Clinton
Trust Co.,
1 N.J. 219, 226 (1948)). After identifying the
established grounds for imposition of an equitable lien, however,
the Court ignores the equitable roots of the doctrine and
declines to recognize a lien in favor of VRG, primarily because
the commission agreement does not specifically pledge the rental
payments as collateral for VRG's commissions. In my view, the
Court disregards the underlying equities among the parties and
diminishes the equitable considerations that prompted chancery
courts to create and apply the doctrine of equitable liens.
I
assist Golden Reef and Perlman Enterprises with the development
of a shopping center. In addition to assisting with the design,
financing, and zoning approvals necessary to develop the project,
VRG procured tenants and negotiated long-term leases for Golden
Reef and Perlman Enterprises pursuant to an Exclusive Agency to
Lease Agreement. Paragraphs four and five of the agreement
address the issue of VRG's commissions, outlining the method of
calculation of the commissions as well as the timing and
contingencies associated with payment of the commissions.
Paragraph four provided in relevant part:
leased space in the Center and commences to
pay monthly base rental. Such payments of
Two Hundred Fifty Thousand and No/100
($250,000.00) Dollars shall be credited
against the commissions due [VRG] pursuant to
paragraph 4 above and [Golden Reef] shall not
be obligated to make any payments to [VRG]
pursuant to paragraph 4 above until such time
as said credit of Two Hundred Thousand Fifty
and No/100 ($250,000.00) Dollars has been
exhausted. VRG obtained the tenants for the shopping center, and Heather Croft Square opened in December 1986. VRG received the $250,000 advance payment pursuant to paragraph five of the
agreement. Crediting the $250,000 payment against the six-percent commissions from the monthly rentals, VRG calculated that
the $250,000 advance would be "earned" in March 1992, at which
time VRG would begin receiving six percent of the monthly gross
base rentals.
Leases; there are no ongoing obligations to
pay any leasing or brokerage commissions
under the Leases; and, there are no leasing
or brokerage agreements in effect with
respect to the Leases; except with respect to
certain leasing commissions which may be due
VRG Corporation, for which Seller hereby
agrees to defend, indemnify and hold Buyer
harmless from all liabilities, claims, causes
of action, damages, costs, losses and fees
(including attorney's fees) incurred by Buyer
in connection with any such commission to VRG
Corporation.
Nussbaum testified that after discussions with VRG and the
principals of Perlman Enterprises concerning VRG's claim for
unpaid commissions, that section was amended to include reference
to VRG's commissions.
for bankruptcy several months later and has refused to pay VRG
its commissions.
II
The equitable-lien doctrine traces its origins to the
difference between remedies in contract actions traditionally
provided at common law, which were typically pecuniary and
personal, and equitable remedies, which generally were directed
against some specific property or fund as contrasted with the
right to recover a sum of money out of the defendant's general
assets. 4 John N. Pomeroy, A Treatise on Equity Jurisprudence
express or implied, which either deal with or
in some manner relate to specific property,
such as a tract of land, particular chattels
or securities, a certain fund, and the like.
It is necessary to divest one's self of the
purely legal notion concerning the effect of
such contracts, and to recognize the fact
that equity regards them as creating a charge
upon or hypothecation of the specific thing,
by means of which the personal obligation
arising from the agreement may be more
effectively enforced than by a mere pecuniary
recovery at law.
[Ibid.]
The law is well settled that an equitable lien "may be
created by an express contract which shows an intention to charge
some particular property with a debt or obligation," 51 Am. Jur.
2d Liens § 25 (1970), or it may be created without agreement
based on general considerations of right and justice arising from
the conduct and relations between the parties. Pomeroy's, supra,
§ 1239; 53 C.J.S. Liens § 5 (1987).
[Pomeroy's, supra, § 1235.]
Nevertheless, because of the doctrine's equitable origins, no
specific formula or language is mandatory before an agreement may
be construed to create an equitable lien:
The form which an agreement shall take
in order to create an equitable lien or
mortgage is quite immaterial, for equity
looks at the final intent and purpose rather
than at the form. If an intent to give,
charge or pledge property, real or personal,
as security for an obligation appears, and
the property or thing intended to be given,
charged or pledged is sufficiently described
or identified, then the equitable lien or
mortgage will follow as of course.
[Rutherford Nat'l Bank v. H.R. Bogle & Co.,
In addition, independently of any express agreement, an
equitable lien "may arise by implication out of general
considerations of right and justice, where, as applied to the
relations of the parties and the circumstances of their dealings,
there is some obligation or duty to be enforced." 53 C.J.S.
Liens, supra, § 8. Our cases have consistently recognized the
distinctly equitable foundation on which recognition of equitable
liens is predicated:
[Rutherford Nat'l Bank, supra, 114 N.J. Eq. This Court applied the equitable lien doctrine in In re Hoffman, 63 N.J. 69 (1973), to afford a basis for recovery to an
accountant who had prepared and filed amended tax returns for the
decedent based on a promise that the accountant's fee would be
paid out of the proceeds of any refund received. The decedent's
estate was insolvent, and the claims of judgment creditors
entitled to priority exceeded the available funds. The
accountant was merely a general creditor, not having reduced his
claim to judgment. Nevertheless, we imposed an equitable lien on
the tax refund to the extent of the accountant's fee, recognizing
the inequity of permitting the judgment creditors to derive the
entire benefit of the fund created by the accountant's efforts:
* * * * None of the parties has disputed that Robert Hoffman intended to pay the fee of Brooks from the amount received through the tax refund. Since the fund was created by the efforts of Brooks, we think that his claim falls within the definition of an equitable lien. Accordingly, before others
receive the benefit of his efforts, equity
requires that Brooks' claim be satisfied.
[Id. at 77-78.]
III
The Court first concludes that neither the express terms of
the commission agreement between VRG and Golden Reef nor evidence
concerning the intent of the parties "establish[es] an implied
agreement that the rents were to be pledged or dedicated as
security for payment of commissions." Ante at ___ (slip op. at
15). The Court observes that the language of the agreement
"makes clear that the rents are used only as a measure of the
amount and timing of commission payments, not as their source or
security." Ante at ___ (slip op. at 12). |