Before the claim of conversion (theft by misappropriation), trespass (coercion by

misrepresentation and fraud) and/or trover (theft by non-remittance), the plaintiff in counter-claim,
needs to establish property (chattel) right and thus detinue (sur Trover) can be proven. This can
be accomplished by defining an instrument (Note and Mortgage) and how it comes into being (by
covenant, intent consideration and executed by signature), and that is how and why it is the
chattel of plaintiff. Plaintiff created a debt and placed that debt note into bailment with lender to
procure proceeds to purchase/refinance property. No right was given (thus, remained with
plaintiff) to “convert” said instrument for the profit and other purposes of bailee (“LENDER” and/or
assigns). Thus, when done constitutes Trover, which requires compensation equal to proceeds
tendered at time of conversion. But since no appropriate compensation was tendered to plaintiff,
a tort was committed, thus damages are sought (damages under detinue are return of “Note” in
specie[1]) (damages in conversion sur trover are purchase monies per ORC). [1]Additionally, and
prior to this action, the plaintiff should move the court to cause replevin; whereas the “NOTE” and
“MORTGAGE” should be given back to the plaintiff (to be deposited with third-party Trustee
and/or DTC participant for possible further negotiation) provisional to adjudication and
reconveyance of title, because of the counter/cross-claim of trespass, trover and/or conversion.
Plaintiff should also establish that notarized assignments are “Wagers of Law” (compurgation) or
hearsay and are irrelevant to case (as such assignments do not prove “holder-in-due course” for
one, and for two, may prove conversion and detinue sur Trover primaie facia.

Claims of Conversion:

1. Conversion by Taking

a. 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).

a. Case Analysis

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.
a. 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. The
contract of Bailment (the “Note” and “Mortgage”) does not, because of fraud voiding
contract and/or those unconscionable terms ab initio, give right of conversion to
“LENDER” and/or assigns. Thus vesting interest and property rights to
creator/creditor nunc pro tunc (asserted after adjudication of motions of voidable
terms).

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 good 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 property

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. Because the defendant (in
counter-claim) i.e. Holder-In-Due-Course is pursuing foreclosure remedy, causing
injury (cost of litigation, pain and suffering, purchase money, monies paid and
interest on all said monies), has joined themselves to the party to which plaintiff (in
counter-claim) is seeking damages.

5. Conversion by Wrongful Destruction

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
ensample; the cotton now cannot be used for the purpose of making quilts. As these
ensamples indicate, by the act of securitization (i.e. conversion) the “LENDER” has
changed the specie of the original “NOTE,” rendering it useless (either for further
negotiation or for any other rightful disposition) by the rightful owner/creator. Its
loss due to this form of destruction/conversion makes defendant (in counter-claim)
liable for just compensation per ORC).

Defenses In Conversion
In the case of conversion the defense 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.
A conversion occurs when a person does such acts in reference to the personal property of
another as amount, in view of the law, to his appropriating the property for himself.[21][22] The
action probably developed because there was no equivalent form of action in English law to the
Roman law rei vindicatio. This was an action in protection of one's property, whereby a claimant
could simply allege in court "that's mine!".[23] Early cases of conversion are to be found in 1479,
where reference to an even earlier action on the case is made when the defendant “converted”
the goods by changing their character, making clothes out of gold cloth.[24][25]

Trover as an extension of detinue and trespass

Actions in trover were often applied to cases where chattels had been placed in bailment, such as
goods transported on a ship, which were lost, used or stolen.
Trespass and trover were both actions founded upon possession. For many centuries, they were
alternative remedies for the wrongful taking of, or damage to chattels. There was a distinction
between the actions. In the theory of trespass, the plaintiff remained the owner of the chattel, with
the possession or property rights interrupted or interfered with. In this case, the plaintiff must
accept the chattel back when it was tendered. [9] Recovery was limited to any damage to the
chattel, or from the interruption of property rights (we seek recovery in trespass). The theory of
trover was that the defendant, by "converting" the chattel to his own use, had appropriated the
plaintiff's property, for which he was required to make compensation (we seek compensation and
damages in Trover at conversion). The plaintiff was not required to accept the chattel when it was
tendered back to him. He could recover damages for the full value of the chattel at the time and
place of conversion. The effect was that the defendant was compelled to buy the chattel at a
forced sale, carried out by means of an action in trover. [10][11]
In the time of Bracton, despite the generality of the writ, the bailor (defendant in
foreclosure/plaintiff in counter-claim) of a chattel could only bring this action against the bailee of
the chattel, or those who represent the bailee (“LENDER” and/or assigns) by testate or intestate
succession. Only two actions were available. The plaintiff could claim, "I lost the goods and you
found them."; or "I bailed the chattel to you." The first of these was called detinue sur trover This
was the new found haliday of Littleton. [12]
n those days, action in detinue sur trover could not lie against a third party. If a person bailed his
chattels to another, and that bailee wrongfully gave, sold or bailed the chattels to a third party, the
only action was against the original bailee. Liability to the third bailee was not transferable. In later
times, lawyers would talk of trover and bailment. In 1292, there was a slight tendency to regard
the detainer rather than the bailment as the gist of the action. [17] where is was stated "it is not
enough to say, 'you did not bail to me' [in defense], but one must add, 'and I do not detain it [use
of the chattel] from you.'" But there are other later cases which show that it is impossible or at
least extremely difficult for the bailor to fashion any count that will avail him against the third party.
The third party was called the "third hand". [18][19][20]
Sir William Holdsworth[21] described trover as an extension of detinue, which enabled not only a
bailor and a dispossessed owner, but also a third person, to whose use goods had been bailed,
to get full recognition of their interests.