Opinion
No. 79-585-BK-JAG-B
February 25, 1980
Former Bankrupty Act — Exemptions — Contract Obligations — Personal Services
An employment contract requiring the bankrupt to obtain new customers and to retain existing accounts was one for personal services within the meaning of the state's statute. Therefore, all payments owing after the petition date were exempt. See Sec. 47a(6) at ¶ 2373 and Rule 403 at ¶ 20,123.
[Digest of Opinion]
The issue presented in this case was whether the proceeds from a contract, accruing after the petition date, were exempt under the provisions of the state's statute. Florida Statute § 222.11 exempts payments which are due "for personal labor or services." Thus, it was the creditor's contention that the contract was actually for the sale of the bankrupt's business.
The bankrupt was a manufacturer's representative for approximately 100 vendors when he elected to sell the business to a corporation. The agreements provided for the payment of a share of all commissions received by the corporation, prohibited competitive activities, and required no personal services from the bankrupt. Subsequently, however, the contract in issue was executed, waiving all further rights under the previous contract for the sale of the business. The contract merely hired the bankrupt for five years to obtain new accounts and retain existing customers. The purpose of his employment was to rebuild the business. Under Florida law, § 222.11, Florida Statutes, applicable pursuant to Bankruptcy Rule 403, payment for personal labor is exempt. Accordingly, all payments received and to be received by the bankrupt under the contract at issue are not part of the bankrupt's estate. The court concluded that the contract was for personal services.