the trades were claimed to have taken place without authorization by Horne, the vast majority were admittedly either initiated by Horne or approved by him after Bergquist offered a suggestion. Still further, the facts fail to disclose that the pattern of trading that took place in Horne's account was inconsistent with his investment objective. Although that objective was stated to be "capital appreciation," the fact emerges clearly from the evidence that Horne was willing, if not eager, to trade in highly speculative securities. This willingness to speculate, particularly in view of the fact that Horne was a man of substance able to commit capital to speculative uses, indicates that his actual objective was not long term appreciation but rather short term profits. The absence of a written statement to this effect does not detract from this finding.
Against this background, it is impossible to conclude that defendants committed fraud on plaintiff in connection with the admittedly extensive trading that took place in his account.
B. duPont committed conversion by wrongfully retaining Horne's bonds and later disposing of them.
The essence of conversion is an interference with another's property that is so substantial as to justify treatment as a forced sale of the property. W. Prosser, Law of Torts 80-81 (4th ed. 1971). Conversion takes place where defendant has "come rightly into possession" of plaintiff's property and "then refuses to surrender" it. Id. at 89. See also Boiseau v. Morrissette, 78 A. 2d 777 (D.C. 1951). Here the evidence shows that in April 1970, before Horne began dealing with Bergquist at duPont, Horne deposited approximately $20,000 worth of A.T. & T. stock to be sold and used to purchase an equal amount of A.T. & T. bonds. On June 8, 1970, the order was executed and duPont placed the bonds in Horne's cash account. At this point, Horne was the rightful owner of the bonds and had a right to possess them. But duPont thereafter transferred the bonds into a bond margin account, where they were commingled with other securities held by the brokerage firm. Despite repeated demands by Horne that the bonds be delivered to him, duPont retained possession, eventually selling them sometime in 1973. At no time after the bonds were purchased in 1970 did Horne receive any of the interest paid on them. Nor has Horne ever received the proceeds from the sale of the bonds although, it should be noted, Horne may have received the benefit of the proceeds and paid interest insofar as duPont applied these sums against the debt which Horne allegedly incurred as a result of his margin trading. This debt has yet to be proved.
These events reveal that Horne was the rightful owner of the A.T. & T. bonds and that duPont converted them. The measure of damages for conversion is generally determined by treating the wrongful act as a sale of the converted property, entitling the rightful owner to the market value of the converted property as of the date of conversion. This rule is designed to compensate the owner for the "natural consequence and proximate result" of the tort. Boiseau, supra, 77 A. 2d at 780. In this case, an accurate measure of compensatory damages is the face value of the bonds plus the accumulations of unpaid interest as of the date in 1973 when duPont sold the bonds. This measure of damages readily lends itself to making the wronged party whole. Punitive damages, on the other hand, are not appropriate under the circumstances in that no bad faith on the part of duPont is evident from the record.
As stated, duPont has filed a counterclaim against Horne to recover approximately $25,000 as a debt allegedly incurred by Horne in connection with his margin trading. This counterclaim is essentially the mirror image of Horne's claim for conversion. Trial on the counterclaim was postponed pending resolution of the principal claims. Given that fact, judgment on the conversion claim must be put off until evidence is taken on duPont's counterclaim, or until the case is otherwise disposed of.
The foregoing opinion shall constitute the findings of fact and conclusions of law in this matter.
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