Wrongful Conversion

Question 1

Wrongful conversion

General rule

Answer 1

True owner does not lose title when property is stolen

Question 2

Who can the owner go after in a wrongful conversion?

Can go after BFP for what and why?

Answer 2

BFP: For return of item without compensation

• Rationale: somebody must lose and courts usually favor original victim over innocent purchaser…

• 1) to induce buyers to investigate or act reasonably in purchases and
• 2) the innocent person who most easily could have prevented the problem or misunderstanding must suffer the loss

Question 3

Who can the owner go after in a wrongful conversion?

Can go after the WC for what and why?

Answer 3

Wrongful Converter: True owner may elect to get either Repelvin and damages or Trover

• 1. Replevin and perhaps damages

Replevin: item returned to owner’s possession
Damages: equal to the fair market value of the chattel at time of conversion; also may be used when the item is returned but damaged so additional monetary damages are req’d

or. ..
- 2. Trover: item not returned, suit for monetary damages. More likely when the item has reduced in value significantly

Based on fair market value measured at time of wrongful conversion

Question 4

Bona Fide Purchaser may acquire good title in three situations:

Answer 4

• 1. Goods obtained by fraud
• 2. Money and negotionable instruments
• 3. Entrustment/Ensuing Doctrine

Question 5

Wongful Converters and Bona Fide Purchasers acquire only this type of interest and why

Answer 5

Acquire only simple possessory interest:

The right to continue possession against all except someone who has a better right to possession, i.e. true owner

Rationale: to maintain peaceable order in society

Question 6

Can a wrongful converter convey title by selling the property to a bona fide purchaser?

What is the reasoning?

Answer 6

Wrongful converter (WC) cannot convey title by selling property to a bona fide (good faith) purchaser

• Rationale: no person can transfer better title than he has
• BFP (bona fide purchaser) = acted in good faith and without notice that wrongdoer did not have good title

Question 7

What type of interest do the WC and BFP and why?

Answer 7

• WC and BFP do however acquire simple possessory interest – the right to continue possession against all except someone who has a better right to possession, i.e. true owner

• Rationale: to maintain peaceable order in society

Question 8

• Voidable title doctrine

What does it do and why?

Answer 8

• This conveys voidable title in wrongdoer (true owner may rescind) but then if wrongdoer sells to BFP they receive good title and will prevail over original owner
• Rationale: the courts, faced with two innocent parties having to suffer a loss, law puts the loss at the feet of the true owner since she was the one who helped created the situation by transferring title to the wrongdoer
• True owner could still have recourse against wrongdoer if she can find him

Question 9

• Money and negotiable instruments

Answer 9

• BFP prevails over original owner
• Rationale: commerce would be paralyzed if the recipient of money or other forms of payment bore the burden of investigating payer’s title
• Ex. thief steals cash, buys a mink coat, and sells it to GFP

Question 10

• Entrustment / entrusting doctrine

What is it,

Why,

And what does it not cover?

Answer 10

• Where owner entrusts possession of goods to a merchant who deals in goods of that kind

• Entrusting = any delivery or acquiescence in retention of possession regardless of any conditions expressed between parties or if procurement would be considered theft
  • If merchant sells stolen goods to BFP in the ordinary course of business
  • BUT this exception does not cover pawn shops (UCC) because usually governed by special state statutes and regulations
  • E.g. owner takes diamond necklace to a jeweler solely to have it appraised and jeweler then sells necklace to a customer who happened to see it in the shop
  • Only remedy for owner is against the merchant for damages