Conversion is the deprivation of another’s right to use or possess personal property. Note that the property at issue is not "real property” which, in turn, is usually defined as land and attached improvements on land. All other property is generally considered “personal property” or “chattels.” Rights to creative property and artistic creations involves protection of “intellectual property” and is discussed in our articles on copyright. Conversion is often defined as other interference of a person’s right to property without the owner’s consent and without lawful justification. Stevenson v. Economy Bank of Ambridge, 413 Pa. 442 (Pa. 1964). A conversion occurs when a person without authority or permission intentionally takes the personal property of another or deprives another of possession of personal property. It is a tort which allows the injured party to seek legal relief.
This article shall discuss the basic law involving conversion.
The Essential Law:
Conversion is considered the civil side of larceny, namely the improper taking of non real property from another without due authority. Conversion is the civil wrong done while larceny is the criminal act. See our article on Criminal Law. Unlike embezzlement, there is not necessarily a breach of trust though normally if there is such a breach of trust, actions for both embezzlement and conversion are brought against the defendant. If one suffers from the wrongful taking of property of any kind, one can complain to the police and ask that criminal charges be brought and/or one can commence civil suit for damages predicated on the tort of conversion.
The using of a thing without the license of the owner or a wrongful sale of it is a conversion. Clark v. Whitaker, 19 Conn. 319 (Conn. 1848). A legal action predicated on the tort of conversion may be maintained by persons having the immediate right to possession of the article converted. Owens v. Andrews Bank & Trust Co., 265 S.C. 490 (S.C. 1975).
A conversion may be committed by unreasonably withholding possession from one who has the right to it. The elements of conversion are:
- the plaintiff’s ownership or right to possession of the property;
- the defendant’s conversion by wrongful act inconsistent with the property rights of the plaintiff; and
Kasdan, Simonds, McIntyre, Epstein & Martin v. World Sav. & Loan Ass’n (In re Emery), 317 F.3d 1064 (9th Cir. Cal. 2003)
A person not in lawful possession of a chattel (non real property) may commit conversion by:
- intentionally dispossessing the lawful possessor of the chattel,
- intentionally using a chattel in his possession without authority so to use it,
- receiving a chattel pursuant to an unauthorized sale with intent to acquire for himself or for another a proprietary interest in it,
- disposing of a chattel by an unauthorized sale with intent to transfer a proprietary interest in it, or
- refusing to surrender a chattel on demand to a person entitled to lawful possession.
Baram v. Farugia, 606 F.2d 42 (3d Cir. Pa. 1979)
Conversion is an intentional tort. The intent that must be proven is the intent to exercise dominion and control over the plaintiff’s property in a manner inconsistent with the plaintiff’s rights. However, intent or purpose to do a wrong is not necessary to establish conversion, merely intent to seize the property. Chem-Age Indus. v. Glover, 2002 SD 122 (S.D. 2002). Thus, even if the defendant thought he or she had rights to the property, if they were wrong and intentionally seized it, they have converted the property wrongfully.
A conversion is usually proved in one of three ways:
- by tortuous taking;
- by any use or appropriation of the use of the person in possession, indicating a claim of right in opposition to rights of the owner; or
- refusal to give up possession to the owner on demand.
Litzinger v. Estate of Litzinger (In re Litzinger), 340 B.R. 897 (B.A.P. 8th Cir. 2006)
Since the act must be knowingly done, neither negligence, active or passive, nor a breach of contract, even though it results in injury to, or loss of, specific property, constitutes a conversion. It follows therefore that mistake, good faith, and due care are ordinarily immaterial and cannot be defenses in an action for conversion. Taylor v. Forte Hotels Int’l, 235 Cal. App. 3d 1119 (Cal. App. 4th Dist. 1991). This is important for the defendant to understand. If you knowingly take possession, that constitutes the tort even if you were wrong. It does not matter if you were negligent or if you felt you had a valid right to the property. It is not required to prove you wished to do wrong…only that you intentionally took possession and actually had no right to do so.
Wrongful conversion applies only to personal property. Personal property consists of every kind of property that is not real. Thus, an action for conversion generally lies only with respect to personal property and real estate is not subject to conversion. Waldron v. Rotzler, 862 F. Supp. 763 (N.D.N.Y 1994).
Further, personal property is the subject of conversion only if it is of a tangible nature or if it is tangible evidence of a title to intangible or real property. Money can be the subject of conversion if the money in question can be identified. Allen v. Gordon, 429 So. 2d 369 (Fla. Dist. Ct. App. 1st Dist. 1983)
The essence of a conversion is not the acquisition of property but the wrongful deprivation of that property from its true owner. Yaeger v. Magna Corp. (In re Magna Corp.), 2005 Bankr. LEXIS 1114 (Bankr. M.D.N.C. Mar. 14, 2005). And note that one who is lawfully in possession of property may nevertheless be liable for a conversion for exceeding the scope of authority for that lawful possession when the use seriously violates the true owner’s right of control.
To establish a conversion claim, a plaintiff must prove that:
- it had a possessory interest in the property,
- the defendants intentionally interfered with the plaintiff’s possession, and
- the defendants’ acts are the legal cause of the plaintiff’s loss of property.
A possessory interest in personal property is sufficient to maintain an action for conversion against one who sells that property without notifying the lawful possessor. Even though the lawful possessors do not have legal title, if s/he exercises control of it by taking possession of it and maintaining it for a period of time, his/her rights in the chattel may be sufficient.
Defenses to Conversion:
Defenses that are normally advanced for conversion are:
- Abandonment of property by plaintiff.
- Authority of law.
- Consent or approval of plaintiff.
- Statutes of limitation.
- Interest of defendant (e.g. defendant has rights to the property.)
- Lack of value of property.
- Nonexistence or lack of identity of property.
- Privilege.(In certain circumstances and under certain statutes, a defendant has the privilege to claim possession…storage facilities after proceeding along statutory lines, can seize stored property and are privileged to do so, for example.)
- Unlawful and illegal acts.
- Waiver, ratification, and estoppel. See our article on Contracts.
On the issue of abandonment, abandonment is the voluntary relinquishment of ownership so that the property ceases to be the property of any person and becomes the subject of appropriation by the first taker. In some jurisdictions, abandonment of property requires intent plus an act. A sufficient act is one that manifests a conscious purpose and intention of the owner of personal property neither to use nor to retake the property into his possession. The intention to abandon may be inferred from strong and convincing evidence, and may be shown by conduct clearly inconsistent with any intention to retain and continue the use or ownership of the property. Herron v. Whiteside, 782 S.W.2d 414 (Mo. Ct. App. 1989)
The fact that the plaintiff abandoned his/her property before the defendant took possession of it makes a complete defense. Johnson v. Northpointe Apartments, 744 So. 2d 899 (Alabama 1999); Weicht v. Suburban Newspapers of Greater St. Louis, Inc., 32 S.W.3d 592 (Mo. Ct. App. E.D. 2000); Rinden v. Hicks, 119 N.H. 811, 408 A.2d 417 (1979).
A plaintiff is entitled to damages equal to the full value of the chattel at the time and place of conversion. The measure of damages in conversion is the fair market value of the property at the time and place of the conversion. Vaughn v. Vaughn, 146 Md. App. 264 (Md. Ct. Spec. App. 2002).
The tort of conversion subjects the wrongdoer to liability to the possessor for the entire value of the chattel in addition to any special damages resulting from the conversion. This liability does not depend on the existence of the possessor’s responsibility to the owner for the loss of the chattel. Although the normal measure of damages for conversion is only the fair market value of the property at the time of the conversion as well as fair compensation for the time and money properly expended in pursuit of the property, emotional distress damages is also allowed in extreme circumstances. Spates v. Dameron Hospital Assn., 114 Cal. App. 4th 208 (Cal. App. 3d Dist. 2003). See our article on torts.
A person who knowingly or intentionally exerts unauthorized control over the property of another person commits criminal conversion. A person engages in conduct knowingly if, when he/she engages in the conduct, he/she is aware of a high probability that he is doing so. Computers Unlimited v. Midwest Data Sys., 657 N.E.2d 165 (Ind. Ct. App. 1995).
An essential element of the crime of criminal conversion is that the property must be owned by another and the conversion thereof must be without the consent and against the will of the party to whom the property belongs, coupled with the fraudulent intent to deprive the owner of the property. People v. Fielden, 162 Colo. 574 (Colo. 1967). It is not uncommon for a plaintiff to seek both criminal prosecution of the defendant and to file for civil relief concurrently. In such cases, punitive damages are also often sought.
While the economics of the case must be considered before commencing legal action, (see Buying Justice) the tort of conversion is one of the most common legal actions brought and involves everything from plaintiffs claiming wrongful taking of jewelry to actions against banks for wrongful repossession of property. It is common in actions for embezzlement and fraud and given the overcrowding of the criminal calendar and reluctance of overburdened district attorneys to prosecute, a good way for the wronged plaintiff to seek effective relief. The defendant must confront the fact that ignorance of true ownership is not a defense to other than criminal conversion but the defendant still has a large number of defenses to consider utilizing.