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So long as the plaintiff only succeeds to whatever rights the defendant has, I am not sure there would be any difficulty, or any inconsistency in the law.

Eg if the defendant's rights are subject to forfeiture to the state, so too would be the plaintiff's once the trust was established. Or if a victim of the crime could recover from the defendant, presumably he could recover from the plaintiff as well. Such a plaintiff does not have the status of a bona fide purchaser for value without notice.

Lionel

At 02:04 PM 4/22/2003 -0500, 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 imitation 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
975 Bascom Mall
Madison, WI 53706-1399
(608) 263-0331 phone
(608) 262-5485 fax
http://www.law.wisc.edu

Faculty Fellow, 2002-2003 Academic Year
University of Chicago's
Center for the Study of Race, Politics and Culture
5733 S. University Ave.
Chicago, IL 60637
773 834-8734 (telephone)
773 834-2000 (fax)