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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 ConversionAccording 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 ConversionConversion can be committed in many ways. The major ways in which conversion can be committed are as follows: -
1. Conversion by TakingSince 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.
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 DetentionIt 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 DeliveryIn 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.
Hollins v Fowler
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.
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 GoodsIf 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 DestructionIt 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.
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 PlaintiffIn 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 ConversionThough 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 ConversionIn 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. LienIt 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 TransitThe 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 PropertyIn 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.
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.
Moorgate Mercantile Co v. FinchFacts:
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.
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.
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.
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