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Sender:
Lionel Smith
Date:
Mon, 17 Aug 1998 14:30:35 -0700
Re:
Bank overcharging customers

 

On 6 August, Allan Axelrod asked:

in english law [a] does a wronged bailor have an action against the bailee for the proceeds of the wrongfully transferred chattel: [b] does it get a special status in insolvency proceedings, [c] what is it called, and [d] to which large ground of recovery [tort contract quasi-contract, unjust enrichment] is it assigned?

I think most people would agree that the answer to [a] is "yes"; long-standing "waiver of tort" doctrine gives the plaintiff at least a personal claim. [B] is harder; I think that English/Commonwealth law is the same as US law on this point and a trust of the proceeds would arise (and it would probably be called a constructive trust, as in the US, but maybe it is really a resulting trust: see R. Chambers, Resulting Trusts (1997)). But others would disagree. As for [c]: (i) if the plaintiff were just seeking a personal accounting of the proceeds, then a practitioner using traditional language would probably say that the plaintiff was "waiving the tort and suing for money had and received to the use of the plaintiff" (yes, (s)he might really say that in England in 1998); an academic (depending on his or her religion) might say that the plaintiff was seeking personal restitution (or disgorgement) for wrongdoing; (ii) if the plaintiff were seeking a trust of the proceeds, then a practitioner using traditional language might say that the plaintiff was making "an equitable tracing claim", but the relief sought would be a declaration of trust and consequent relief (ie delivery of the trust property). [D] is not easy either. My view would be that the personal claim is a tort claim in which the plaintiff is seeking an alternative sanction (disgorgement of defendant's gain, rather than compensation of plaintiff's loss). On the other hand, the trust claim alleges ownership of a new subject matter and must provide some explanation for the source of that ownership. I think it is based on unjust enrichment, but (to put it mildly) the point is unsettled.

 

Lionel


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