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Question 1

What are the major limitations on restitutionary remedies?

Answer 1

• tracing
  – property transferred to a BFP
  – voluntary conveyance

Question 2

What is the most important limitation on restitutionary remedies?

Answer 2

Tracing

Question 3

What is involved in tracing as a limitation on restitutionary remedies?

Answer 3

This is an expansion that allows the plaintiff to follow the wrongfully taken property into its new form.

Question 4

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?

Answer 4

No, because the car was not what was stolen from the plaintiff

Question 5

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?

Answer 5

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

Question 6

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?

Answer 6

• 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

Question 7

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?

Answer 7

• 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

Question 8

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?

Answer 8

No because the cruise is gone, so the money is not traceable to a new item

Question 9

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?

Answer 9

• 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

Question 10

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?

Answer 10

An unsecured damages claim against the defendant for that amount

Question 11

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?

Answer 11

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

Question 12

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?

Answer 12

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.

Question 13

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?

Answer 13

You can trace with one of three different approaches:
– FIFO
– LIFO
– Modern Approach

Question 14

What is the only time that you use LIFO, FIFO, etc.?

Answer 14

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

Question 15

LIFO & FIFO only apply to what?

Answer 15

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

Question 16

What does FIFO stand for?

Answer 16

First in, first out

Question 17

What is the FIFO approach regarding tracing for property that was purchased out of a commingled account?

Answer 17

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

Question 18

What does LIFO stand for?

Answer 18

Last in, first out

Question 19

What is involved in the LIFO approach when there has been a withdrawal and a purchase of a physical item from a comingled account?

Answer 19

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

Question 20

What is the modern approach when there has been a purchase made from a withdrawal from a commingled account?

Answer 20

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

Question 21

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?

Answer 21

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

Question 22

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?

Answer 22

• 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

Question 23

What happens when property that was wrongfully gotten is transferred to a bona fide purchaser?

Answer 23

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

Question 24

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?

Answer 24

No, because a thief cannot deliver good title

Question 25

If you have a Picasso painting and your friend has a Matisse painting and you trade, and then your friend sells his painting to someone else for $20,000, and you find out that yours is a fake, so you sue to have the contract cancelled and the Picasso returned, what happens?

Answer 25

It was sold to a bona fide purchaser, so you cannot recover the Picasso. You have other remedies against your friend, but you cannot get that item back from the bona fide purchaser.

Question 26

If there is a disparity between the price of an item and its market value, does that affect whether someone is a bona fide purchaser or not?

Answer 26

No, it doesn’t allow a conclusion that the buyer didn’t give value, but it is persuasive evidence that he had notice that the title was deficient

Question 27

If someone voluntarily conveys a benefit to someone else, even by mistake, can he get restitution?

Answer 27

No

Question 28

What is the exception for when someone voluntarily conveys a benefit to someone else that allows them to get restitution?

Answer 28

Restitution can be gotten if the defendant had a meaningful choice about whether to accept the gift or not. I.e.: if the plaintiff is a painter and contracts to paint a house, and he accidentally pains the wrong house and when the owner comes home he’s happy about the paint job but not willing to pay for it, the plaintiff has no right to recovery because he conferred the benefit with no reasonable expectation of payment. This owner didn’t have a choice to accept the painting because he wasn’t home when it happened and the paint cannot be returned. But if the plaintiff was a landscaper that put in flowers accidentally in the wrong yard and the owner refuses to let the plaintiff take the flowers out once he discovers it, that refusal lets the plaintiff seek a restitutionary remedy like replevin of the plans. If a benefit is conferred on an unwilling defendant who has no choice in whether or not to accept it, the court will deny restitution

Question 29

In what kind of situations would a volunteer get restitution even when the defendant didn’t have a choice about whether not to accept the volunteer’s services?

Answer 29

If a lady helps a lost kid by paying for his emergency treatment, the parents must give restitution even though they didn’t have a choice to accept it or not, because of necessity the savings to the parents would be unjust enrichment

Question 30

What is the limitation on restitutionary remedies called “offsetting the benefit“?

Answer 30

If defendant’s tortious conduct causes legal harm to the plaintiff or his property as well as a benefit to the harmed interest, the value of that benefit is subtracted as mitigation of damages. I.e.: if the defendant stole $5500 worth of timber from the plaintiff’s yard, but then builds a barn that increased the market value of the plaintiff’s land by $5000, this increase is deducted from the award to the plaintiff. So the plaintiff would only get $500 as an award.