V.—: Conversion.

Conversion: relation of trover to trespass. Conversion, according to recent authority, may be described as the wrong done by “an unauthorized act which deprives another of his property permanently or for an indefinite time”. Such an act may or may not include a trespass; whether it does or not is immaterial as regards the right of the plaintiff in a civil action, for even under the old forms he might “waive the trespass”; though as regards the possibility of the wrong-doer being criminally liable it may still be a vital question, trespass by taking and carrying away the goods being a necessary element in the offence of larceny at common law. But the definition of theft (in the first instance narrow but strictly consistent, afterwards complicated by some judicial refinements and by numerous unsystematic statutory additions) does not concern us here. The “property” of which the plaintiff is deprived—the subject-matter of the right which is violated—must be something which he has the immediate right to possess; only on this condition could one maintain the action of trover under the old forms. Thus, where goods had been sold and remained in the vendor’s possession subject to the vendor’s lien for unpaid purchase-money, the purchaser could not bring an action of trover against a stranger who removed the goods, at all events without payment or tender of the unpaid balance.

But an owner not entitled to immediate possession might have a special action on the case, not being trover, for any permanent injury to his interest, though the wrongful act might also be a trespass, conversion, or breach of contract as against the immediate possessor. As under the Judicature Acts the difference of form between trover and a special action which is not trover does not exist, there seems to be no good reason why the idea and the name of conversion should not be extended to cover these last-mentioned cases.

What amounts to conversion. On the other hand, the name has been thought altogether objectionable by considerable authorities: and certainly the natural meaning of converting property to one’s own use has long been left behind. It came to be seen that the actual diversion of the benefit arising from use and possession was only one aspect of the wrong, and not a constant one. It did not matter to the plaintiff whether it was the defendant, or a third person taking delivery from the defendant, who used his goods, or whether they were used at all; the essence of the injury was that the use and possession were dealt with in a manner adverse to the plaintiff and inconsistent with his right of dominion.

The grievance is the unauthorized assumption of the powers of the true owner. Actually dealing with another’s goods as owner for however short a time and however limited a purpose is therefore conversion; so is an act which in fact enables a third person to deal with them as owner, and which would make such dealing lawful only if done by the person really entitled to possess the goods. It makes no difference that such acts were done under a mistaken but honest and even reasonable supposition of being lawfully entitled, or even with the intention of benefiting the true owner; nor is a servant, or other merely ministerial agent, excused for assuming the dominion of goods on his master’s or principal’s behalf, though he “acted under an unavoidable ignorance and for his master’s benefit”. It is common learning that a refusal to deliver possession to the true owner on demand is evidence of a conversion, but evidence only; that is, one natural inference if I hold a thing and will not deliver it to the owner is that I repudiate his ownership and mean to exercise dominion in despite of his title either on my own behalf or on some other claimant’s. “If the refusal is in disregard of the plaintiff’s title, and for the purpose of claiming the goods either for the defendant or for a third person, it is a conversion”. But this is not the only possible inference and may not be the right one. The refusal may be a qualified and provisional one: the possessor may say, “I am willing to do right, but that I may be sure I am doing right, give me reasonable proof that you are the true owner”: and such a possessor, even if over-cautious in the amount of satisfaction he requires, can hardly be said to repudiate the true owner’s claim. Or a servant having the mere custody of goods under the possession of his master as bailee—say the servant of a warehouseman having the key of the warehouse—may reasonably and justifiably say to the bailor demanding his goods: “I cannot deliver them without my master’s order”; and this is no conversion. “An unqualified refusal is almost always conclusive evidence of a conversion; but if there be a qualification annexed to it, the question then is whether it be a reasonable one”. Again there may be a wrongful dealing with goods, not under an adverse claim, but to avoid having anything to do with them or with their owner. Where a dispute arises between the master of a ferryboat and a passenger, and the master refuses to carry the passenger and puts his goods on shore, this may be a trespass, but it is not of itself a conversion. This seems of little importance in modern practice, but we shall see that it might still affect the measure of damages.

In many cases the refusal to deliver on demand not only proves but constitutes the conversion. When this is so, the Statute of Limitation runs from the date of the refusal, without regard to any prior act of conversion by a third person.

By a conversion the true owner is, in contemplation of law, totally deprived of his goods; therefore, except in a few very special cases, the measure of damages in an action of trover was the full value of the goods, and by a satisfied judgment for the plaintiff the property in the goods, if they still existed in specie, was transferred to the defendant.

Acts not amounting to conversion. The mere assertion of a pretended right to deal with goods or threatening to prevent the owner from dealing with them is not conversion, though it may perhaps be a cause of action, if special damage can be shown; indeed it is doubtful whether a person not already in possession can commit the wrong of conversion by any act of interference limited to a special purpose and falling short of a total assumption of dominion against the true owner. An attempted sale of goods which does not affect the property, the seller having no title and the sale not being in market overt, nor yet the possession, there being no delivery, is not a conversion. If undertaken in good faith, it would seem not to be actionable at all; otherwise it might come within the analogy of slander of title. But if a wrongful sale is followed up by delivery, both the seller and the buyer are guilty of a conversion. Again, a mere collateral breach of contract in dealing with goods entrusted to one is not a conversion; as where the master of a ship would not sign a bill of lading except with special terms which he had no right to require, but took the cargo to the proper port and was willing to deliver it, on payment of freight, to the proper consignee.

Dealings under authority of apparent owner. A merely ministerial dealing with goods, at the request of an apparent owner having the actual control of them, appears not to be conversion; but the extent of this limitation or exception is not precisely defined. The point is handled in the opinion delivered to the House of Lords in Hollins v. Fowler by Lord Blackburn, then a Justice of the Queen’s Bench; an opinion which gives in a relatively small compass a lucid and instructive view of the whole theory of the action of trover. It is there said that “on principle, one who deals with goods at the request of the person who has the actual custody of them, in the bona fide belief that the custodian is the true owner, or has the authority of the true owner, should be excused for what he does if the act is of such a nature as would be excused if done by the authority of the person in possession, if he was a finder of the goods, or intrusted with their custody.” This excludes from protection, and was intended to exclude, such acts as those of the defendants in the case then at bar: they had bought cotton, innocently and without negligence, from a holder who had obtained it by fraud, and had no title, and they had immediately resold it to a firm for whom they habitually acted as cotton brokers, not making any profit beyond a broker’s commission. Still it appeared to the majority of the judges and to the House of Lords that the transaction was not a purchase on account of a certain customer as principal, but a purchase with a mere expectation of that customer (or some other customer) taking the goods; the defendants therefore exercised a real and effective though transitory dominion: and having thus assumed to dispose of the goods, they were liable to the true owner. So would the ultimate purchasers have been (though they bought and used the cotton in good faith), had the plaintiffs thought fit to sue them.

Acts of servants. But what of the servants of those purchasers, who handled the cotton under their authority and apparent title, and by making it into twist wholly changed its form? Assuredly this was conversion enough in fact and in the common sense of the word; but was it a conversion in law? Could any one of the factory hands have been made the nominal defendant and liable for the whole value of the cotton? Or if a thief brings corn to a miller, and the miller, honestly taking him to be the true owner, grinds the corn into meal and delivers the meal to him without notice of his want of title; is the miller, or are his servants, liable to the true owner for the value of the corn? Lord Blackburn thought these questions open and doubtful. There appears to be nothing in the authorities to prevent it from being excusable to deal with goods merely as the servant or agent of an apparent owner in actual possession, or under a contract with such owner, according to the apparent owner’s direction; neither the act done, nor the contract (if any), purporting to involve a transfer of the supposed property in the goods, and the ostensible owner’s direction being one which he could lawfully give if he were really entitled to his apparent interest, and being obeyed in the honest belief that he is so entitled. It might or might not be convenient to hold a person excused who in good faith assumes to dispose of goods as the servant and under the authority and for the benefit of a person apparently entitled to possession but not already in possession. But this could not be done without overruling accepted authorities.

Redelivery by bailees. A bailee is prima facie estopped as between himself and the bailor from disputing the bailor’s title. Hence, as he cannot be liable to two adverse claimants at once, he is also justified in redelivering to the bailor in pursuance of his employment, so long as he has not notice (or rather is not under the effective pressure) of any paramount claim: it is only when he is in danger of such a claim that he is not bound to redeliver to the bailor. When there are really conflicting claims, the contract of bailment does not prevent a bailee from taking interpleader proceedings. This case evidently falls within the principle suggested by Lord Blackburn; but the rules depend on the special character of a bailee’s contract.

Abuse of limited interest. Where a bailee has an interest of his own in the goods (as in the common cases of hiring and pledge) and under colour of that interest deals with the goods in excess of his right, questions of another kind arise. Any excess whatever by the possessor of his rights under his contract with the owner will of course be a breach of contract, and it may be a wrong. But it will not be the wrong of conversion unless the possessor’s dealing is “wholly inconsistent with the contract under which he had the limited interest,” as if a hirer for example destroys or sells the goods. That is a conversion, for it is deemed to be a repudiation of the contract, so that the owner who has parted with possession for a limited purpose is by the wrongful act itself restored to the immediate right of possession, and becomes the effectual “true owner” capable of suing for the goods or their value. But a merely irregular exercise of power, as a sub-pledge or a premature sale, is not a conversion; it is at most a wrong done to the reversionary interest of an owner out of possession, and that owner must show that he is really damnified.

The technical distinction between an action of detinue or trover and a special action on the case here corresponds to the substantial and permanent difference between a wrongful act for which the defendant’s rightful possession is merely the opportunity, and a more or less plausible abuse of the right itself.

The case of a common law lien, which gives no power of disposal at all, is different; there the holder’s only right is to keep possession until his claim is satisfied. If he parts with possession, his right is gone, and his attempted disposal merely wrongful, and therefore he is liable for the full value. But a seller remaining in possession who re-sells before the buyer is in default is liable to the buyer only for the damage really sustained, that is, the amount (if any) by which the market price of the goods, at the time when the seller ought to have delivered them, exceeds the contract price. The seller cannot sue the buyer for the price of the goods, and if the buyer could recover the full value from the seller he would get it without any consideration: the real substance of the cause of action is the breach of contract, which is to be compensated according to the actual damage. A mortgagor having the possession and use of goods under covenants entitling him thereto for a certain time, determinable by default after notice, is virtually a bailee for a term, and, like bailees in general, may be guilty of conversion by an absolute disposal of the goods; and so may assignees claiming through him with no better title than his own; the point being, as in the other cases, that the act is entirely inconsistent with the terms of the bailment. One may be allowed to doubt, with Lord Blackburn, whether these fine distinctions have done much good, and to wish “it had been originally determined that even in such cases the owner should bring a special action on the case and recover the damage which he actually sustained”. Certainly the law would have been simpler, perhaps it would have been juster. It may not be beyond the power of the House of Lords or the Court of Appeal to simplify it even now; but our business is to take account of the authorities as they stand. And, as they stand, we have to distinguish between—

Conversion by estoppel. A man may be liable by estoppel as for the conversion of goods which he has represented to be in his possession or control, although in fact they were not so at any time when the plaintiff was entitled to possession. And he may be liable for conversion by refusal to deliver, when he has had possession and has wrongfully delivered the goods to a person having no title. He cannot deliver to the person entitled when the demand is made, but, having disabled himself by his own wrong, he is in the same position as if he still had the goods and refused to deliver.