Question Analysis
In 2004, Mary and Frank orally agreed to jointly purchase (purchase money resulting trust) a small storefront space in City for $80,000. Mary contributed $40,000 of her own money. (Restitution) Frank contributed $40,000 he had embezzled from his employer, Tanner. Mary and Frank agreed to put the property in Frank's name alone because Mary had creditors seeking to enforce debts against her. They further agreed that Frank would occupy the property, which he planned to use as an art studio and gallery. They also agreed that, if and when he vacated the property, he would sell it and give her one half of the net proceeds. He then occupied the property.
In 2005, Tanner discovered Frank’s embezzlement and fired him.
In 2012, Frank sold the property, obtaining $300,000 in net proceeds. (constructive trust and equitable lien) Frank offered to repay Mary her $40,000 contribution, but Mary demanded $150,000. (fair market value for converting the entire property. Money damages) Mary and Tanner each sued Frank for conversion.
At trial, the court found Frank liable to both Mary and Tanner for conversion. (This is a intentional tort remedies question. Laches-7 years have passed since embezzlement occurred.)
1. What remedy or remedies can Mary reasonably obtain against Frank for conversion, what defenses (if any) can Frank reasonably raise, and who is likely to prevail? (#1) Discuss.
2. What remedy or remedies can Tanner reasonably obtain against Frank for conversion, what defenses (if any) can Frank reasonably raise, and who is likely to prevail? (#2) Discuss.
This question is similar to July 2003 #2 question.
Outline
#1 M v. F
1. Legal Damages for Intentional Tort of Conversion
(1) Compensatory damages- Fair market value
(2) Punitive damages- willful conversion
2. Legal Restitution- Unjust enrichment
(1) Money restitution
3. Equitable restitution
(1) Constructive Trust
1) wrongful act
2) Legal title to convey
3) Inadequate legal remedy
4) Property can be traced
(2) Equitable lien
1) wrongful act
2) Legal title
3) Inadequate legal remedy
4) Property can be traced
4. Defenses
(1) Statute of Frauds
(2) Unclean hands
#2 T v. F
1. Legal Damages for Intentional Tort of Conversion
(1) Compensatory damages- Fair market value
2. Legal Restitution- Unjust enrichment
(1) Money restitution
3. Equitable restitution
(1) Constructive Trust
1) wrongful act
2) Legal title to convey
3) Inadequate legal remedy
4) Property can be traced
(2) Equitable lien
1) wrongful act
2) Legal title
3) Inadequate legal remedy
4) Property can be traced
4. Defenses
(1) Laches