|
Introduction:
Conversion as an economic tort has been largely prevalent in the
contemporary society and therefore it has given rise to plethora
of problems that affect the society at large, in general and the
affected person in particular. This forces us to think over and to
understand the intricacies of this particular type of
economic tort.
It is one of very few torts in which the element of intention is
relevant.
This article
deals with the study of Conversion as a branch of Economic Torts
and in doing so it deals with the different aspects related to
conversion. It takes into account the essentials which are
required to make a particular act, an act of conversion, the
problems arising out of conversion in litigation, the defences
regarding the conversion, the question of law evolving in
conversion etc. This project also deals with the comparison of
conversion and trespass and their apparent difference existing in
the society. Conversion also known as trover consists in willfully
and without any justification dealing in goods in such a manner
that another person, who is entitled to immediate use and
possession of the same is deprived of that. It is dealing with the
goods in a manner it is inconsistent with the right of the owner.
The same must have been done with an intention on the part of the
defendant to deal with the goods in such a way that amounts to
denial of the plaintiff’s right to it. Refusing to deliver the
plaintiff’s goods, putting them to one’s own use or consuming
them, transferring the same to the third party, destroying them or
damaging them in a way that they lose their identity, or dealing
with them in any other manner which deprives the plaintiff to its
use and possession are some of the examples of the wrong.
For example,
In M.S.
Chookaligam v. State of Karnataka
, the respondent Forest Department of the State Government,
purchased 206 rosewood logs from the petitioner and refused to pay
for the same for nine years, in spite of repeated demands. It was
held by the court that the conduct of the respondents in retaining
the amount to which the petitioner is entitled in spite of the
demands, amounts to conversion. The Karnataka High Court directed
the respondents to pay to the petitioner the sum of money
equivalent to the value of 206 logs of rose wood with interest @
6% from the date of delivery of logs until the payment of the
value, and costs of Rs. 2000.
This project
is an honest attempt to analyze the position of conversion as a
tort and its impact on the law and legal system and as to how the
law has moulded itself according to the different cases that has
come before it. It becomes obvious from the different cases, which
have been dealt with in this project. This project also takes into
account the intricacies involved with this particular aspect of
law and tries to answer them as far as possible.
What Is
Conversion?
Definition:
A conversion is an act, or complex series of acts, of willful
interference, without lawful justification, with any chattel in a
manner inconsistent with the right of another, whereby that other
is deprived of the use and possession of it. It is also called as
trover.
Conversion is an act of ‘Willful interference.’ This expression
implies the element of intention, which refers to the intentional
commission of the act, which is termed as conversion.
An act of conversion may be committed:
# When the property is wrongfully taken.
# When it is wrongfully parted with.
# When it is wrongfully sold.
# When it is wrongfully retained.
# When it is wrongfully destroyed.
# When there’s a denial of the wrongful owner’s right.
The definition
mentioned above is a precise introduction of what conversion
really is. It consists of the basic elements that make an act the
‘act of
conversion’.
The basic elements mentioned in the definition can be dealt in the
following manner under the heading ----- essentials of conversion.
The following diagram illustrates the relation of the property vis-
a -vis the true owner and the cheater:
A (Real owner)
B (Cheat) C
(Possession of property)
Essentials Of Conversion
According to the definition mentioned above, we can infer that two
elements can be said to have been intertwined into it. It can be
arranged as under: -
a) Conversion
would be caused if the chattel belonging to another person is
interfered with in a manner, which is inconsistent with the rights
of that person entitled to that chattel.
b) Another
essential is that the intention of the other party interfering
with the chattel comes into the way so as to deny that person’s
(owner’s or immediate possessor) right or to assert one’s own
rights which is, in fact, inconsistent with the rights of the
person or in assertion of that right.
Modes Of
Conversion
Conversion can be committed in many ways. The major ways in which
conversion can be committed are as follows: -
1.
Conversion by Taking
Since the owner is entitled to the use of his property all the
times, a person is said to be guilty of Conversion if he takes the
chattel out of the possession of anyone else (the owner) having
the intention of exercising a permanent or temporary dominion over
it. In case if a person wrongfully takes possession of another’s
goods, then it is at the risk of the possessor since he is liable
to either return or pay for the chattel in all circumstances. In
this regard it becomes essential to note that the demand for
chattel is not needed for its return to its rightful owner. In
these circumstances it becomes the duty of the person in whose
custody the chattel is, to return it to its owner. Legally
speaking, in these cases the duty of care is on the person who is
having the chattel with him.
Case Analysis:
M’
Combie v. Davies
In this case, the property of another person was taken by
assignment from an agent who had no authority to dispose it off,
and the person taking it refused to deliver it up to the principal
after notice and demand by him. It was held by the court that it
was a case of conversion.
At this point
it becomes necessary to mention that a mere taking away of the
chattel without the element of intention to exercise such a
dominion cannot be said to be a conversion. It is simply because
if a person does not have the intention to harm another person it
is not fault on his part, since the fault arises only when there
is a duty of care and in such cases duty of care does not exist or
even if it exists, it is not relevant. Therefore, in such cases
the conversion is not said to have been committed.
2. Conversion
by Detention
It is said to have been committed when it is adverse to the owner
or other such persons who are entitled to possession. This
suggests that the person interfering must have shown that an
intention to keep the thing in defiance of the plaintiff. This
means that being merely in possession of a chattel without title
is not a conversion and therefore there is no tort at all.
Here it is necessary to note that if a bailee merely holds over
after the end of the period for which the chattel was bailed to
him, as distinct from acting in a manner totally repugnant to the
terms of the bailment, he may be liable for a breach of contract
but it must be noted that he may not necessarily be guilty of
Conversion. Therefore we can infer from the above statement that
if a person finds a lost chattel he cannot be sued in a
conversion, even if he keeps it for a long time, unless by
refusing to give it up or in some other way he shows an intention
to detail it adversely to the owner. It should also be kept in
mind that a denial of possession does not always cease to be a
contract because it is accompanied by some sort of excuse (like
trade union difficulties etc).
3. Conversion
by Wrongful Delivery
In this case the question of lawful justification is in the
picture and according to this principle every such person is
guilty of conversion who without lawful justification deprives a
person of his goods by delivering them to someone else, so as to
change the possession. In this regard the case of
Hollins v.
Fowler
is significant.
Case
Analysis:
Hollins
v Fowler
Facts:
In this case, the defendant, a cotton broker obtained possession
of thirteen bail’s of the plaintiff’s cotton from one B and sold
the same further, receiving only his own commission. B had
obtained these goods from the plaintiffs by fraud, but the
defendant, had absolutely no knowledge of the same.
Judgment:
In this case Hollins was liable in Conversion to Fowler, even
though he had acted in good faith and obtained only a broker’s
commission from Micholls & Co. Therefore we can infer that an
auctioneer who sells and delivers stolen property or property
subject to a bill of sale is liable to the true owner or to the
bill of sale holder, even though ignorant of any such adverse
title, and even though he has already paid over the proceeds to
his own client.
But in this
regard it is also possible that a bailee of goods for safe custody
is not liable if he, or his servant, honestly but mistakenly
delivers the goods to someone who is not entitled to them, at
least if the contract of bailment so provides.
4.
Conversion By Wrongful Disposition or By Parting With Goods
If a person gives some other person the right to title of a good,
which belongs to somebody else without lawful justification, that
person would be deemed to be guilty of conversion. There have been
cases where a person in possession of goods of which he has no
title can however effectively, though wrongfully, so dispose of
them by sale, pledge or otherwise that he confers a god title to
them on someone else. Such disposition amounts to conversion as
against the true and original owner because by the creation of
such adverse title, he has been deprived of his proper Case
Analysis:
In
Syeds v. Hey
it was held by the court, that the givers and the receivers would
be liable as joint tort feasors. If a person takes another’s horse
to ride, and leaves him at an inn, that is a conversion, for
though the owner may have his horse back, he has to pay for its
keeping.
This leads us
to believe that law takes into account the harm or damage caused
to the person i.e. the sufferer has a greater significance into
the eyes of law. It is simply because under the torts, it becomes
difficult to compensate an affected person since neither is there
a contractual relationship nor is there any other way out by which
he can retrieve for the damages caused to him. In such cases the
affected person would never have any other choice but to suffer.
It would lead to chaos in the society and the very existence of
law would be at stake. Therefore, taking into consideration the
position of the party at loss, the law takes the recourse to
compensate such persons to maintain the justness and
reasonableness of the society. While doing so, the indirect loss
being caused to the third party is negated. Though it does not
appear very reasonable, but the Courts have always chosen the
lesser evil to exist, if it is mandatory to make a choice. Hence,
the Courts should not be blamed in this regard for any
apparent
injustice.
5. Conversion
by Wrongful Destruction
It is a very interesting branch of Conversion wherein any such
person is deemed to be guilty of Conversion who willfully consumes
or otherwise destroys a chattel belonging to another person
without lawful justification. At this point it is necessary to
mention that a mere damage which falls short of actual destruction
cannot be said to have amounted to Conversion. This means that the
destruction caused to the chattel of the party be such that either
the identity of that article is deformed or it is no longer of the
same use as that it can be normally used.
Case Analysis:
In Richardson v Atkinson , the defendant drew out some wine out of
the plaintiff’s cask and mixed water with the remainder to make
good the deficiency. He was held liable of the conversion of the
whole cask, as he had converted the parts of its contents by
taking them away and the remaining part by destroying their
identity.
This suggests
that the objects cannot be used in the same manner, as is
generally used. This is detrimental to the owner of the chattel
and in this regard it becomes necessary to mention that since his
right to exercise ownership has been interfered with, he is liable
to be compensated for the loss suffered.
It can be
better understood from the fact that the identity of a good is
changed when grapes are converted into wine and cotton is woven
into clothes. In doing so, though the material is not lost but the
identity of the original good is lost i.e. in the above example,
the cotton now cannot be used for the purpose of making quilts.
6.
Miscellaneous Forms of Conversion
According to this branch of Conversion every person is guilty of
Conversion who causes the loss of a chattel by any act of willful
interference without lawful justification and which has not been
dealt in the different sections mentioned above.
There are
cases where conversion can be said to have been committed even if
there is no physical possession of goods by the defendants, but it
has been done in such a way that there is an absolute denial or
repudiation of the plaintiff’s rights
Some
Closely Related Issues To Conversion
[A]
Title of Plaintiff
In this kind of issue the plaintiff must have “rights to the
goods” and herein they must show that their rights of enjoyment of
that property have been interfered with.
In such cases the action can be maintained only if he can show
that at the time of defendant’s act he fulfilled the following
requisites: -
a) The plaintiff had the ownership as well as the possession of
the goods.
b) The plaintiff had only possession of that good.
c) The plaintiff had immediate right to possess them, but without
either ownership or actual right of possession
In this regard
the language of law is very ambiguous and it has been obvious in
more than one cases. Though it is the law but in several cases it
has been said,
the plaintiff
must have a right of property in the thing and a right of
possession and that unless both these rights are there the action
will not lie.
If right to property stands for ownership, this creates an unclear
picture and might lead one to conclude that no one can sue for
Conversion except an owner in possession at the date of the
alleged Conversion. But it is not so because in case of a bailee,
he only has the possession and not ownership but still the bailee
is in a condition to sue a third party for Conversion. This leads
us to conclude that even that person who has mere possession of
the good on the date of conversion can, in normal circumstances,
sue and so can one who has no more than a right to process.
It can be
understood from the example of a master who has given some goods
to his servant to take care of. In this case the servant is a
bailee and it can be simply said that he possesses the right to
exclusive keeping of the good. This suggests that if goods are
delivered to him to hand to his master, the servant has the
possession of those goods until he has done some act that
transfers it to his master.
Another
example in this regard is interesting wherein a shop assistant has
possession of money paid to him by a customer until he puts it in
the till. Till that moment, the master has the right to possess
only.
[B] Jus Tertii
This maxim stands for the meaning that the third party has a
better right to that property than the plaintiff. This maxim comes
into the picture when law recognises that possession is a
sufficient ground for claim for recovery of personal property and
therefore the question of how far the defendants be allowed to
raise the issue of JUS TERTII becomes pertinent.
This brings
into light several questions like that of refusal to admit this
maxim which will ultimately allow recovery by plaintiff who may
have himself wrongfully dispossessed the true owner and also
exposes the wrongdoer to the risk of more than one liability i.e.
multiple
liability.
Contrastingly, it can be argued that a person who has disposed
another should have no right to raise such issues relating to the
relationship between the dispossessed and some other party having
a claim over the goods. It is because there is a serious risk of
abuse and of the perpetual prolongation of actions. It was also
the norm that if the plaintiff was in the possession at the time
of the conversion, the defendant could not institute the jus
tertii claim. He could have instituted the claim only if he was
acting on behalf of or under the authority of the true owner of
the goods.
The
development of the law in this regard can also be assessed from an
Act passed by the British legislature. The Act is known as Torts
(Interference with Goods) Act, 1977. After this Act, the defendant
is entitled to show that a third party has a better right than the
plaintiff with regard to all or any part of the interest claimed
by the plaintiff or in right of which he sues the other party. The
Act also gives us an insight of the fact that the law of
conversion is still evolving and in the light of this Act and
therefore it is pertinent to note that the onus on the defendant
increases and it is substantially important that the position of
the defendant in this regard weakens. It is done with an aim to
strengthen the position of the affected party, since it would be
reasonable on the part of law to provide relief to that party.
This would help maintain the justness and peace in the society.
[C] Status of
the Finder
The position of the finder of a chattel is very interesting in the
eyes of law. According to the law a finder of the chattel has a
title to keep it with himself against everyone, only if the two
exceptions mentioned herein are not satisfied.
These two exceptions are: -
a) In the case
of a rightful owner, if the finder willfully appropriates the
chattel in the question, then he is committing the tort of
Conversion. In this case the finder is not only guilty of
conversion but also of theft. In such a situation he can be
absolved only if he is in the belief that the owner cannot be
discovered by taking reasonable steps. In such a situation, the
finder is under a situation, according to law, to be punished.
b) It is
interesting to note that in some cases the occupier of the land on
which the chattel is found is allowed to have a superior title
than that of the finder. In this regard it becomes pertinent to
note the case of Parker v British Airways Board the law in such
cases was comprehensively dealt with by the Court. It was clear
that the occupier of the land has the superior title in the
following cases: -
#
Where the finder is a trespasser on the land.
# Where the property is in the land or attached to the land.
# Where the occupier of premises on which the chattels are
found and before the findings an intention to exercise control
over the premises and the things, which may be upon the land or,
in it is obvious or manifested.
In such
situations, the burden of proof rests upon the occupier. But it is
interesting to note that in some cases the things are very obvious
and the facts are so clear that it can be said that the matter
speaks for itself, and it becomes easy to decide the case.
Distinction
Between Trespass And Conversion
Though trespass and conversion appears to be very similar but on
minute observations it becomes clear before us that substantial
difference exists between these two legal phenomenon. The
distinction between the two can be dealt as under:
A) Trespass is
a wrong to the actual possessor and therefore a person in
possession cannot commit it whereas conversion is a wrong to a
person entitled to the immediate possession of the chattel.
However, in some cases, a person who is entitled to the immediate
possession of the chattel is allowed to sue in trespass also, so
that the conversion may include trespass, but it is not necessary.
This suggests that the trespass is considered as a subset of
conversion in many cases, if not all.
B) Trespass is
defined as the damage or interference with the chattel or property
of the other without intending to exercise an adverse or unlawful
possession. Contrastingly, a conversion is defined as a breach
made adversely in the continuity of the owner’s dominion over the
goods. In this case the goods may not be hurt or destroyed.
C) In
trespass, the force and direct injury is inflicted whereas in
conversion the person having the right to have it is deprived of
either the goods or its use.
Defenses In
Conversion
In the case of conversion the defence can be put under the
following headings. It is so because the cause arises under
different headings or parts of law and therefore it becomes
necessary to place the defences category wise. These categories
are as under.
1. Lien
It deals with both the general and special (particular) cases. In
this case it becomes important to note that demand and refusal are
not evidence of conversion where the party has the lien upon the
chattel. It means that a mere demand of the chattel from the
bailee and its refusal on the part of the bailer won’t amount the
act to be the act of conversion.
2. Right Of
Stoppage In Transit
The defendant contends this defence when the issue of sale of
goods is involved i.e. when a good is sold by a person in such a
way that the original owner of that good suffers the damage making
him unable to exercise his right to enjoy that property. Here the
defendants can contend that the goods have in the transit of the
final act committed i.e. for what a person is being held for, he
is not the final holder of that chattel but is merely a medium or
a single entity of a larger chain or that he is not the final
beneficiary of the being committed.
3. Denial of
Plaintiff’s Right of Property
In this particular defence, the defendant argues that the chattel
in question belongs to him and that the plaintiffs have no right
over it. This means the possession of the property by the
defendants is summarily denied in this case. In this regard the
institution of jus tertii becomes important. It is applicable when
the plaintiff was not in the possession of the property but had
only the rights to possess and it is used by the defendant to save
himself. In case where the plaintiff was in possession of the
goods at the time of conversion, the defendant cannot institute a
claim for jus tertii.
4. Distress
It is another defence where goods are taken under a distress or
under an execution. This means that if the goods were taken away
or it interfered with the enjoyment of the property of the other,
it was not deliberate but it was done so because of something
really more important in the ordinary sense. This could also be
stated that law could accord more value to the other act than the
negative act of conversion on the part of the defendant.
Therefore, it is a strong defence in the eyes of law.
5. Sale in
Market Overt
Taking into consideration the English Law, sale of goods in market
overtly gives a good title to the purchaser. Such a purchaser
cannot be sued for conversion if he parts with the goods or
refuses to give them up on demand, but the seller can be sued if
he has no title. Though this doctrine is not applicable in India,
but sections 27, 28, 29 and 30 of the Indian Sale of Goods Act
govern such cases.
Question Of
Law Evolving In Conversion
After going through different aspects related to conversion and
analyzing the pertinent cases, one can analyse the fact that the
law puts before itself some questions and that while answering
these questions, the evolution of law is occurring in this branch
of Economic Torts. Many contentions, disagreements, apparent
injustice etc does seem to reflect from the decisions of the
Courts in different cases, but still taking the larger perspective
into the mind the Courts have been successful in maintenance of a
reasonable and just society where peace could prevail and its
members could remain in harmony. It becomes clearer when we study
some cases, which is being mentioned hereunder.
The first in
the line is the famous and landmark case of
Moorgate
Mercantile Co v. Finch.
Case
Analysis:
Moorgate Mercantile Co v. Finch .
Facts:
The defendant used the plaintiff’s car to transfer unaccustomed
watches. The car was seized and forfeited by the custom officials
under the Custom and Excise Act, 1952.
Judgment:
Forfeiture of the car was held to be the natural; and probable
consequence of the defendant’s act and he was deemed to have
intended the same and as such the defendant was liable for
conversion.
In this case though the decision was delivered against the
defendant for the act of conversion but even after the decision it
does seem very awkward to know that a person is being punished for
another person to whom neither he had seen nor had he to do
anything. Moreover in this case the question of Privity Of
Contract also comes into the picture i.e. the defendants had a
contract with another person and therefore common legal sense
suggests that the defendants should have been exonerated.
Apart from it,
the essential of conversion is intention to harm or interference
with the enjoyment of other’s property. In this case, since the
defendant didn’t know that the goods belonged to the car company
and therefore the unknown identity should not have been allowed to
sue, since there is no any such
intention
involved against the car company.
This and
various other questions remain ambiguously answered and therefore
it is said that the law in this regard is still evolving and it is
trying to answer all such difficult questions that arises from
time to time.
Similarly, the
case of
Lord v. Price
also appears to be relevant in this regard. In this case the Court
said that the action cannot be maintained without a right of
present possession of the goods and therefore plaintiffs cannot be
entertained.
Comparing this
case to that of the initial case of Moorgate case, we find that
the latter case is older and therefore the principles of Common
law has been implied into the case in an orthodox manner whereas
the latter case deals with the problem in a more systematic and
scientific way. This leads us to believe that the evolution of law
is occurring and is desperately trying to solve the ambiguities
involved in the problems related to this specific branch of
Economic Torts i.e. Conversion.
Conclusion
After going through the different attributes of Conversion viz.
the essentials, the defences, the characteristics, the comparison
and differentiation from the trespass which can be submitted for
Conversion etc., we finally come to the conclusion that the tort
of conversion forms a significant type of Economic Tort and that
the society needs to adjust to these types of torts since these
are very much common. The critical analysis of the Court’s
decisions in this regard leads us to believe that though intention
in this regard is very essential, but in many cases it is negated
to uphold the claims of the plaintiffs, since the justness in the
society is of utmost importance.
Conversion as
an economic tort has been largely prevalent in the contemporary
society and therefore it has given rise to plethora of problems
that affect the society at large, in general and the affected
person in particular.
Conversion being a tort in which intention can be an object of
issue it becomes a bit complex for the court at times to come to a
logical judgment.
|
Conversion- an "Intentional" Tort
More
Articles:
The
author can be reached at: ayushsharma@legalserviceindia.com /
