Emilco

The case of Emilco involves a dispute regarding the creation of a trust over a chose in action assigned to a creditor from a company in liquidation. The creditor had agreed to remit the net proceeds of recovery to the liquidator for the benefit of the company's creditors. The central legal issue was whether this agreement constituted a trust for the creditors, and if so, whether the creditor's promise not to assign the chose without consent was significant. Additionally, the case examined whether the creditor, upon becoming bankrupt, could assign the debt back to the discharged bankrupt and whether this assignment would affect the trust.

The court held that the creditor's agreement to remit the net proceeds of recovery to the liquidator created a trust for the benefit of the company's creditors. The promise not to assign the chose without consent was deemed significant as it demonstrated an intention to create a trust. The court also found that the distinction between the company and the liquidator was relevant, as the liquidator acts as a representative of the creditors and is distinct from the company itself. Furthermore, the court considered the statement of purpose to be a key factor in determining the existence of the trust.

In conclusion, the court found that the creditor's agreement did create a trust for the benefit of the company's creditors. The creditor's promise not to assign the chose without consent, the distinction between the company and the liquidator, and the statement of purpose all contributed to this decision. The court also determined that the debt, upon the creditor's bankruptcy, vested in the official trustee, and the creditor's status as a creditor against the company was lost. The subsequent discharge from bankruptcy did not restore the debt or creditor status, and the official trustee could not assign the debt to the discharged bankrupt.