Industrial Incomes Limited v. Maralta Oil Company Limited

Industrial Incomes Limited v. Maralta Oil Company Limited

The written assignments and express instruction to deposit and distribute proceeds in a separate bank account, first to drilling costs and then to creditors up to a fixed aggregate, created an enforceable express trust; the assignee held funds as trustee and was liable for failure to account and for unpaid creditors, and set-offs for payments and purchases of claims are allowable only to the extent actually paid.

Citation
[1968] SCR 822
Parties
Plaintiff Respondent: Maralta Oil Co. Ltd.; Defendant Appellant: Industrial Incomes Limited
Court
Supreme Court of Canada
Jurisdiction
Canada
Judgment Date
26 June 1968
Procedural Posture
Civil Appeal (trusts) / Supreme Court of Canada on Appeal From Supreme Court of Alberta, Appellate Division
Outcome
Appeal and cross-appeal dismissed
Legal Topics
Express Trust, Trust for Creditors, Mechanics' Lien, Assignment of Proceeds, Separate Bank Account, Set Off
Source Language
English
Trusts Property Equity Civil Procedure Express Trust Trust for Creditors Mechanics' Lien Assignment of Proceeds +2 more

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Parties

Maralta Oil Co. Ltd.

Plaintiff Respondent

Industrial Incomes Limited

Defendant Appellant

Procedural Posture

Civil Appeal (trusts) / Supreme Court of Canada on Appeal From Supreme Court of Alberta, Appellate Division

Legal Issues

  1. 1 Whether the assignment of a 30% interest in net production created an express trust enforceable by the beneficiary or creditors
  2. 2 Whether a purported trust for creditors is enforceable absent notice or assent by the creditors
  3. 3 Whether the assignee’s failure to keep a separate account defeated the trust or entitled it to treat funds as its own

Ratio Decidendi

The written assignments and express instruction to deposit and distribute proceeds in a separate bank account, first to drilling costs and then to creditors up to a fixed aggregate, created an enforceable express trust; the assignee held funds as trustee and was liable for failure to account and for unpaid creditors, and set-offs for payments and purchases of claims are allowable only to the extent actually paid.

Court Disposition

Appeal and cross-appeal dismissed

Orders

  • Appeal and cross-appeal dismissed
  • Judgment for respondent in amount 19781.70