"A more satisfactory explanation for these [illegality] cases, I would venture, is that to allow recovery in these cases would be to allow recovery for what is illegal. It would put the courts in the position of saying that the same conduct is both legal, in the sense of being capable of rectification by the court, and illegal. It would, in short, introduce an inconsistency in the law. It is particularly important in this context that we bear in mind that the law must aspire to be a unified institution, the parts of which -- contract, tort, the criminal law -- must be in essential harmony. For the courts to punish conduct with the one hand while rewarding it with the other, would be to "create an intolerable fissure in the law's conceptually seamless web": Weinrib, supra, at p. 42 [Weinrib, Ernest J. "Illegality as a Tort Defence" (1976), 26 U.T.L.J. 28].

We thus see that the concern, put at its most fundamental, is with the integrity of the legal system.

THOMAS W MITCHELL wrote:

This is Thomas Mitchell from the University of Wisconsin Law School. I am a third-year assistant professor teaching Remedies (amongst other subjects)

I have a question regarding constructive trusts. I have not received a definitive answer to this question from a number of people I have asked. Most had no idea. I also could find no case on point.

Here goes:

A plaintiff who is granted a constructive trust usually has the option to trace into investments the wrongdoer has made. Of course, such a plaintiff will often do this when the investments have appreciated in value.

A student asked me if a plaintiff in these cases can trace into the proceeds of an illegal investment that the defendant has made. For example, I can imagine a case where the defendant is a cocaine dealer. He steals cash from the plaintiff to purchase several kilos of cocaine at a wholesale price that he then sells at a huge markup on the retail market. For this question, there is no limitation due to unclean hands (in other, we are dealing with an innocent plaintiff as opposed to a plaintiff is really an employee of the defendant cocaine dealer because allowing such a plaintiff to trace into the illegal proceeds would be a great way to launder the proceeds).

For this question, please assume that the plaintiff is not the government. So this is not a seizure/forfeiture case. Any guidance would be much appreciated.

Thank you,
Thomas

Thomas W. Mitchell
Assistant Professor
University of Wisconsin Law School
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Madison, WI 53706-1399
(608) 263-0331 phone
(608) 262-5485 fax
http://www.law.wisc.edu

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Jason Neyers
Assistant Professor of Law
Faculty of Law
University of Western Ontario
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