Brief Fact Summary. Prosser (Plaintiff) brought an action against Keeton (Defendant) in connection with his stolen watch. The trial judge held that Defendant, having obtained the watch in good faith, nevertheless was liable for conversion and ruled that Defendant had to either return the watch or pay Plaintiff the fair market value of the watch.
Synopsis of Rule of Law. The purchase of stolen property, even where the buyer was acting in good faith and was unaware the seller did not have valid title, constitutes conversion by both the seller and innocent buyer.
Issue. Is a purchaser liable for conversion where he acts in good faith and is not aware that the seller does not possess title to the merchandise in question?
Held. Yes. The court stated that a thief, not having valid title to the goods in his possession, cannot lawfully transfer such goods to a buyer. The transfer of good thus constitutes unlawful conversion and the buyer, even when acting in good faith is liable.
Discussion. The Restatement of Torts Section: 222A defines conversion as “an intentional exercise of dominion and control over a chattel, which so seriously interferes with the right of another to control it that the actor may justly be required to pay the other the full value of the chattel.” Public policy dictates that, because the inherent difficulties in requiring all purchasers to verify every transaction would cause complete inertia of the market system. The law require one who is guilty of conversion, even when acting in good faith, be held liable and thus required to either return the goods or pay the rightful owner reasonable value.