An unequivocal and complete assignment extinguishes the assignor’s rights against the obligor and leaves the assignor without standing to sue the obligor.[i] However, when an assignment is made for collection or security, the assignor retains an equitable ownership. Therefore, the assignor may maintain an action for recovery.
The legal title to an insolvent assignor’s unexempt real estate vests in the assignee by virtue of the assignment. The assignee, however, takes the title only in trust for the benefit of the assignor’s creditors; no beneficial interest vests in him. When the trust has been executed or the insolvency proceedings finally end, if there remains any real estate not disposed of by the assignee, it reverts to the assignor by operation of law. A substantial interest of some kind in his/her real estate remains in the assignor after he has made an assignment for the benefit of his/her creditors.[ii]
[i] RBS Holdings, Inc. v. Gordon & Ferguson, Inc., 2008 U.S. Dist. LEXIS 23688 (S.D.N.Y. Mar. 26, 2008)
[ii] Northwestern Mut. Life Ins. Co. v. Murphy, 103 Minn. 104 (Minn. 1908)