Conversion (law)

Many questions concerning joint ownership in enterprises such as a partnership belong in equity, and do not rise to the level of a conversion.

Traditionally, a conversion occurs when some chattel is lost, then found by another who appropriates it to his own use without legal authority to do so.

If one claims an unjust enrichment, the person who has another's property may always raise a change of position defense, to say they have unwittingly used up the assets they were transferred.

These probably involved cases when the finder of lost goods did not return them to the rightful owner, but used them himself or disposed of them to someone else.

Trover resolved the old procedural problem of wager of law which had developed as a form of licensed perjury, which made detinue unattractive to an honest plaintiff suing a dishonest defendant.

[27][28][29][30] As a technical factor, the defendant was not permitted to deny losing and finding, so the only issues to be litigated were those of the plaintiff's right to possession and the conversion as an existent fact.

With losing and finding no longer essential, trover became the standard remedy for any form of interference with a chattel.

[26] In 1756, Lord Mansfield stated in Cooper v Chitty (1756) 1 Burr 20, 31; 97 ER 166, 172: [W]henever trespass for taking goods will lie, that is, where they are taken wrongfully, trover will lie.Similar results are seen in other cases from the time.

Trover, which involved lost goods or those placed in a bailment, necessitated full replacement damages.

[43][44][45][46][47] In the absence of contravening evidence, the measure of damages for conversion of a negotiable instrument usually is taken to be its face value.

[49][50] Therefore, it has been generally accepted that an action for conversion lies for every species of personal property which is the subject of private ownership, whether animate or inanimate.

[56] Both tangible items and intangible property can be the subject of a claim for conversion under United States law.

In English law, however, the recent case of OBG Ltd. v. Allan [2007] UKHL 21 held intangible property cannot be the subject of a claim for conversion.

[61][62] Unpublished and published manuscripts, whether copyrighted or not can be the subject of a conversion, as can paintings, pictures, photos, letters, business books, pamphlets, newspapers and the like.

[63][64][65] Insurance policies, stock certificates, bills of lading, securities, bonds and commercial paper can be converted.

[66][67][68] The general rule is that an action for conversion lies only with respect to personal property, and cannot apply to real estate.

[69][70] The distinction between "movables" (not associated in any way with real estate as such nor necessary to its enjoyment) and "immovables" (such as buildings and often including spare parts or even potentially but not usually mobile tools or devices or systems) arises from the principle of lex situs, by which the governing law for immovables is that where the land is located, regardless of where a will is probated or contract made or executed.

[84] The defendant is answerable for the conversion, no matter how good his intentions were, or how careful he has been, or how apparently well-founded was his belief that his tortious act was right.

[88] A person may be liable for conversion even though he was reasonably mistaken in thinking the facts to be such as would give him a legal right to the goods.

[107] A bailee, agent, or servant who re-delivers to his bailor, principal, or master is not liable for conversion unless the person entitled to immediate possession had made an adverse claim upon him.

[113] Placing furniture or other goods in storage to prevent damage or theft is also not a conversion per se, if proper notice of its location is given to the owner.

[121] In 1704, it was stated in Baldwin v Cole: The very denial of goods to him that has a right to demand them is an actual conversion, and not only evidence of it.

According to the Restatement (Second) of Torts, one who uses a chattel in a manner which is a serious violation of the right of another to control its use is subject to liability to the other for conversion.

[140] The owner of a partial interest in property may be liable for converting the same, where he wrongfully takes it out of the possession of another, or does some other act amounting to a conversion.

[151][152] A tender is not required where it is no longer within the power of the defendant to perform his part of the agreement out of which the debt arose.

The Restatement (Second) of Torts indicates these damages can consist of:[175] It is a generally recognized rule that interest lost from the conversion is recoverable.

Ordinarily, the defendant is not allowed to deduct maintenance and upkeep expenses which would normally accrue taking care of the converted property.

However, the mere offering of the converted property does not necessarily dismiss all damages which may have occurred based on the original tort.

Mere questions of ownership within partnerships and some contract law do not arise to the level required for an action in conversion.

A judgment is for the title and ownership of the property at the time of the conversion, and does not necessarily effect subsequent transactions which may have occurred.