Special Tracing Rules for CoMingled Accounts

Question 1

Premise: D commingles into a bank account and withdraws some but not all of the money.

Answer 1

Answer: Lowest Intermediate Balance Rule (Part 1)
So long as the amount in the account exceeds the amount of misappropriated funds from P, all of P’s money is still in the account.
If the balance in the account falls below the amount of misappropriated funds, D is presumed to have withdrawn D’s own funds first. Whatever is left in the account belongs to P.

Question 2

Premise: D commingles into a bank account and withdraws some but not all of the money and THEN REPLENISHES.

Answer 2

Answer: Lowest Intermediate Balance Rule (Part 2)
Presumption that any replenishment of the account is NOT a restoration of the P’s money, unless D actually intended to do so.

Question 3

Smushiness comes in:

If π horse worth 1000, but earned $ at races

Answer 3

but for, my horse…… ill gotten gained.

Question 4

Analysis if transmutation in fact pattern:

Answer 4

1) is there unjust enrich?
- –gov by: — ; —:
2) Is there inadeq?
- -pardee stuff
3) Tracing
- -use any 3 rules
4) Which FORM of RESTITUION APPROP?
- -const trust; equit lein; subrogation

Question 5

When the property has gone up in value?

Answer 5

THEN ask for a constructive trust

“here, likely π pick const trust….”here $ is ill-gotten and traceable to condo.”

Question 6

You don’t want to own it but want to retain your right to sue for the remaining value

Answer 6

equitable lien
(get $ when sold) &(still can sue for deficiency)

Question 7

For a court to imply A constructive trust

Answer 7

there needs to be FRAUD & TRACING

Question 8

2 approaches to Const trust

bankruptcy

Answer 8

Maj: Const trust exists at TIME of FRAUD
rationale–court doesn’t want to be used to facilitate unjust/fraud
min:

Question 9

on exam

Answer 9

just identify is was COMINGLING==>

avail balance rule may apply

Question 10

Subrogation

Answer 10

(Theory) where one party steps into the shoes of another party to assert rights that party has against another. This is common with insurance companies who may pay an insured for a loss and then seek to recover the amount paid by asserting claims the insured has against a third party.

Question 11

Multiple creditors–who has priority?

if $ has changed hands & can be traced into a DEBT–>

Answer 11

π retains formal creditors rights