Pg 17 Flashcards
(30 cards)
What are the major limitations on restitutionary remedies?
- tracing
– property transferred to a BFP
– voluntary conveyance
What is the most important limitation on restitutionary remedies?
Tracing
What is involved in tracing as a limitation on restitutionary remedies?
This is an expansion that allows the plaintiff to follow the wrongfully taken property into its new form.
If a defendant steals a bike from the plaintiff, and then exchanges the bike for a car, can the plaintiff use replevin to get the car?
No, because the car was not what was stolen from the plaintiff
If a defendant steals a bike from the plaintiff, and then exchanges the bike for a car, what is the theory that allows the plaintiff to get a constructive trust on the car?
Tracing. The bike has changed form into a car and the car is traceable to the bike. Through tracing you can get restitution of the traced property from the wrongdoer and also from a third-party as long as they were not a BFP
If defendant embezzled $50,000 from a bank and he uses the money to buy land, if the bank sues the defendant for conversion, what do they get?
- damages: they can get the $50,000 in damages from the defendant
- CT: or they can waive the tort and sue in assumpsit and seek a constructive trust on the land. They can easily trace the purchase of the land to the $50,000 that the defendant embezzled
If a defendant uses $20,000 out of $50,000 that he embezzled to buy a painting, and then he buys a car with the other $30,000, the person that he embezzled the money from can sue for what?
- damages: $50,000 in damages
– CT: or he can waive the tort and sue in assumpsit and have a constructive trust on both the painting and the car because both are traceable to the embezzled funds
If someone embezzles money and then uses it to go on a cruise, can the person that he embezzled from get a constructive trust or an equitable lien on the cruise?
No because the cruise is gone, so the money is not traceable to a new item
If someone steals money and then uses some of it to buy a tangible item but spends some of it on things that cannot be traced, what is the dilemma?
- whether to sue for the whole amount in DAMAGES but only be a GENERAL creditor
– or to waive the tort and sue in ASSUMPSIT and only get the dollar amount for the tangible item but as a SECURED creditor
If money was converted and then squandered, and not used to buy a property interest, because there is nothing that the defendant currently owns that is traceable to the money, what is the only form of relief that the plaintiFF would have?
An unsecured damages claim against the defendant for that amount
If a person converted money from the plaintiff and then he blew it all gambling in Vegas, would a P be able to get restitution?
No, because the defendant didn’t acquire any property interest, so the plaintiff’s only option would be to sue for damages in that amount
If a defendant commingles property that he wrongfully got with his own property, and then uses those comingled assets to buy something new, what happens?
Ie: if the defendant stole $10,000 from the plaintiff and put it in a bank account that has $5000 of his own money in it, it is easy to tell which money is whose. The plaintiff would not be able to get a constructive trust on the account because that would give ownership of the item to the plaintiff, and you can’t give the P $5000 that doesn’t belong to him. Instead the plaintiff could get an equitable lien on the account for $10,000.
When money has been wrongfully taken and then commingled in an account with the defendant’s own money, how do you classify withdrawals that are made from that commingled account and then used to make a tangible purchase?
You can trace with one of three different approaches:
– FIFO
– LIFO
– Modern Approach
What is the only time that you use LIFO, FIFO, etc.?
Only if there was commingling of wrongfully gotten funds with the defendant’s own funds and then a later withdrawal and a tangible purchase. If it doesn’t involve that exact situation, then just do a straight tracing analysis. The point of these is to figure out if the property can be traced to the wrongfully taken funds
LIFO & FIFO only apply to what?
Property purchases. If the funds were spent on something that is now gone, such as a vacation, then LIFO & FIFO do not apply. They only apply if money was commingled into an account and expenditures were made from that account. This is used to figure out whose money was spent
What does FIFO stand for?
First in, first out
What is the FIFO approach regarding tracing for property that was purchased out of a commingled account?
This treats the money that was first deposited into the commingled account as the first money withdrawn. I.e.: if the defendant embezzled $10,000 from a bank and he put it into an account that already had $10,000 of his own money in it, then he withdrew $5000 and bought wine, and withdrew $6000 to go to Vegas. The first money in the account was the defendant’s $10,000, so the wine belongs to the defendant. The $5000 for Vegas was also the defendant’s, but the other $1000 is part of the bank’s embezzled money. The account’s total is now $9000, and all of that can be traced to the embezzled money, so the bank gets a constructive trust on the account
What does LIFO stand for?
Last in, first out
What is involved in the LIFO approach when there has been a withdrawal and a purchase of a physical item from a comingled account?
The last money that was deposited into the comingled account is the first money that was withdrawn from it. I.e.: if a defendant embezzled $10,000 from a bank and he put it into an account that already had $10,000 of his own money in it, then he withdrew $5000 to buy wine, and $6000 to go to Vegas, the last money that was put in the account was embezzled. So when the defendant withdrew $5000 for the wine, that was the bank’s money. So they can get a constructive trust on the wine, because it is traceable to the embezzled money. The first $5000 of the $6000 that went to Vegas is also the bank’s embezzled money, and the extra $1000 is the defendant’s money. So the leftover $9000 in the account is also the defendant’s money. The bank cannot get a constructive trust or an equitable lien on the account since that money is not traceable to the bank
What is the modern approach when there has been a purchase made from a withdrawal from a commingled account?
This allows the plaintiff to classify withdrawals from the account in the way that best preserves his intent. I.e.: if a defendant embezzled $10,000 from the bank and put it into an account that already had $10,000 of his own money in it, then he withdrew $5000 to buy wine, and withdrew $6000 for a trip to Vegas, you can treat the wine withdrawal as the bank’s money. So you can get a constructive trust on the wine. Then treat the Vegas withdrawal as the defendant’s money, so the remaining $9000 in the account, $5000 of which belongs to the bank, allows the bank to get an equitable lien on it for $5000. Every time there’s a withdrawal from the account, the plaintiff can decide whose money it was
What is involved in the lowest intermediate balance rule as a majority rule to figure out what to do when there has been a purchase of a physical item made after a withdrawal from a commingled account?
This is the majority rule regardless of the approach that is used to figure out commingling and it says that the maximum amount of funds in the commingled account that can be claimed by the plaintiff is the lowest balance the account falls to between the date of commingling and the date of suit. This applies to FIFO, LIFO, and the Modern Approach
If a defendant embezzled $10,000 from a bank and deposited in into an account that already had $10,000 of his own money in it, totalling $20,000, and then he withdraws $12,000 for a cruise, and then he gets a $10,000 inheritance, how does the lowest intermediate balance rule affect the FIFO approach, LIFO approach, and modern approach?
- FIFO: the defendant’s money which is first in the account is the first taken out, so the $10,000 of the $12,000 taken out for the cruise was the defendant’s money, and $8000 left in the bank account was the bank’s money. Because of the lowest intermediate balance rule, the lowest amount that the bank account fell to was $8000, so that is the max amount that the bank can put an equitable loan on the account for.
- LIFO: the bank’s money was the first that was put in the account, so the first $10,000 of $12,000 withdrawn for the cruise was the bank’s money. So nothing would be left in the account that would be traceable to the bank
– Modern Approach: the bank treats the cruise withdrawal as being the defendant’s $10,000, and only $2000 of the bank’s money, so the remaining $8000 in the account is traceable to the bank. This allows the bank to get an equitable lien
What happens when property that was wrongfully gotten is transferred to a bona fide purchaser?
If the buyer pays value for the property and takes without notice of its wrongful acquisition, then it cannot be reached by the plaintiff anymore, even if it can be traced back to the plaintiff. The idea is that a bona fide purchaser has superior title to the property, so the transfer to him defeats tracing
Anytime that anyone gets property from a thief, can they ever be considered a bona fide purchaser even if they paid value and had no notice that the item was stolen?
No, because a thief cannot deliver good title
