Conversion is unlawfully taking or using someone’s property in a way that prevents the lawful owner from enjoying the full rights and benefits of ownership. This article explains conversion law in Minnesota and answers some common questions.
What Is the Definition of Conversion?
In simple terms, conversion is unlawfully taking or keeping someone else’s property. Conversion is civil law; the criminal equivalent to conversion would be theft.
The Minnesota Supreme Court defined conversion as “an act of willful interference with the chattel, done without lawful justification, by which a person entitled thereto is deprived of use and possession.” Larson v. Archer-Daniels-Midland Co., 32 N.W.2d 649, 650 (Minn. 1948).
Another court defined conversion as
unauthorized assumption in exercise of the right of ownership over goods or personal chattels, belonging to another, to the alteration of their condition or the exclusion of the owner’s rights. Any unauthorized act which deprives an owner of his property permanently or for an indefinite time.
In general, under Minnesota law, conversion is defined as an act of willful interference with the personal property of another which is without justification, or which is inconsistent with the rights of the person entitled to the use, possession or ownership of the property. The statute of limitations for a conversion claim is generally six (6) years from the time of any wrongful act over another’s property.
What Are the Elements of Conversion?
The elements of conversion as laid out by the Minnesota Supreme Court are as follows:
Element 1: Property Ownership
In order for the plaintiff to be successful in a conversion claim, there must be evidence that the plaintiff has a right to the property that was converted. A special interest or limited title usually will not be enough to sustain a conversion claim.
The property does not need to be tangible property. The Minnesota Supreme Court has held that both tangible and intangible property can be converted.
Element 2: Interference with Ownership without Legal Justification
The second element of conversion is an act of willful interference without legal justification. In order to prove this second element of conversion, the plaintiff must show evidence that the defendant’s action represented an exercise of the right of complete ownership and dominion over the property to the total exclusion of the rights of the plaintiff, or some other act done that destroys the property or changes its character or in some way deprives the owner of it permanently or for an indefinite period of time. Intent is necessary in order to satisfy this element. In other words, the plaintiff must prove that the defendant had an intentional exercise of dominion or control over the property. The plaintiff usually will not succeed in a conversion claim if there is merely evidence of negligence without any inference of intent.
What is a Simple Example of Conversion?
A classic example is the case McKinley v. Flaherty, 390 N.W.2d 30 (Minn. App. 1986). In that case, the plaintiff stored some personal property at an apartment that her friend rented. The friend was eventually evicted from the apartment. However, the friend left the plaintiff’s property behind after she left. The plaintiff attempted to contact the defendant landlord numerous times in order to get her property back. Over the course of two years, the plaintiff wrote 35 letters and called 25 times in order to retrieve her property. The plaintiff finally sued the defendant (landlord) for conversion. The Court of Appeals agreed with the plaintiff, holding that because the defendant was in possession of the property for over two years, “he has clearly converted the property.”
What are Defenses to Conversion?
There are a number of defenses to a conversion claim by a plaintiff. First, a plaintiff cannot recover for conversion if he or she had knowledge of or consented to the conversion. And the consent from the plaintiff doesn’t have to be verbal direct consent. Consent can be inferred from the plaintiff’s actions.
Another defense available to a defendant is if the defendant shows that the property in the defendant’s possession was given to the defendant by the plaintiff as compensation.
Not considered a defense to a conversion claim is any defense that the defendant did not have possession of the property at the time the action was commenced. In other words, even if the defendant returned the chattel or property in question, it doesn’t necessarily erase a defendant’s liability under a conversion cause of action.
Are Damages Required in a Conversion Claim?
Damages are an essential part of any conversion claim, meaning if a plaintiff has no damages, the plaintiff has no case. In a conversion lawsuit, damages may be determined by examining the value of the property at the time of conversion plus interest from that time. McKinley v. Flaherty, 390 N.W.2d 31 (Minn. App. 1986).
Interestingly, the point of any conversion claim is not necessarily for the plaintiff to regain possession of the property, but to obtain damages for the property’s actual conversion. The plaintiff does not have to accept the return of the property as a settlement to any conversion claim. The plaintiff can still recover actual damages even if the goods or property are returned to the plaintiff.
Can I Seek Punitive Damages If I Win?
Maybe. The court can award punitive damages up to 100% of the value of the property that is stolen from you. However, not all conversion is considered “stealing.”
A plaintiff who prevails on a claim of conversion may seek punitive damages that are in addition to the value of the converted property under Minnesota statute which provides that “[a] person who steals personal property from another is civilly liable to the owner of the property for its value when stolen, plus punitive damages of either $50 or up to 100% of its value when stolen, whichever is greater.” See Minn. Stat. § 604.14, subdiv. A.
What is the Statute of Limitations for Conversion?
The statute of limitations for a conversion claim is six years from the time of any wrongful act over the plaintiff’s property. See Minn. Stat. § 541.05, subdiv. 1(5).
If fraud is involved in a conversion claim, meaning that a conversion is fraudulently concealed from the plaintiff, then the statute of limitations does not begin to run until the plaintiff discovers the fraud. See Minn. Stat. § 541.05, subdiv. 1(6).
What is Criminal Conversion?
Criminal conversion is essentially theft. Courts generally look to the criminal theft statute to determine whether a defendant’s conduct amounts to theft. The criminal-theft statute defines theft as transferring, concealing, or retaining property “intentionally and without claim of right . . . with intent to deprive the owner permanently of possession.”
The intention necessary to subject to liability one who deprives another of the possession of his chattel is merely the intention to deal with the item so that such dispossession results. It is not necessary that the actor intend to commit a conversion. Notably, acting in ‘good faith’ is not a defense to a claim of conversion. Further, the disposition of property consented to by the owner is not a conversion of that property under Minnesota law. However, personal property may be converted without causing physical damage or destruction of the property. In a situation in which the property is destroyed, conversion may be shown only if the destruction was intentional.
In general, the law of conversion is also applicable to personal property also applies to negotiable instruments. The statute governing the conversion of checks expanded the definition of conversion under a former statute to include the common law definition, but did not preserve a separate common law remedy for negotiable instrument conversion. Note that a bank is not liable for conversion of checks that an employee steals from her employer and deposits into her account if the employer entrusted the employee with responsibility for handling money, and the bank acted in good faith and with due care.
What Are Examples of Conversion?
Here are some simple examples of civil conversion:
- Sally borrowed some of Dave’s tools. Some time passed, and Dave asked for his tools back. Now Sally claims they are hers. Sally unlawfully converted Dave’s tools.
- Kevin watched Jane’s dog for a year. Jane’s dog had puppies that sold for $1,000 each. Kevin put the money from the sale of the puppies into his bank account. Jane sues Kevin for conversion claiming that the money proceeding from her dog belongs to her.
- Kim is the trustee of her family’s trust. Kim wrongfully uses some of the trust money to buy herself a car. Kim is liable for conversion. Kim unlawfully converted trust money into a personal asset.