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Article 6
May 2013
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1951]
ing has never been held to be in this category. The choice of program
and set and the failure or success of a broadcaster has been left to
the public. The approval or rejection of the Commission's decision
will decide whether or not these same principles will apply to color
telecasts.
Whatever the decision of the court, and whichever system of
color television broadcasting is finally approved, the controversy
will at last have the finality of a decision of the United States Supreme Court. There will have been a substantial contribution to a
new field of law-television law. Under this law the industry will
grow and perfect itself. In this way there will best be served the
"public interest, convenience, or necessity."
X
MUST THIE
Introduction
PERRY).
Cardozo, J., in his customary aphoristic manner, expresses the same thought
in the following ways: "A constructive trust is, then, the remedial device
through which preference of self is made subordinate to loyalty to others."
[ VOL. 25
(1948).
6 Professor Scott feels that while a constructive trust may exist, the presence of an adequate remedy at law precludes its enforcement, 3 ScOTr 462.3.
Professor Bogert is of' the contrary opinion, and asserts that, "In a suit to
obtain a constructive trust, it is not necessary to prove the inadequacy of the
remedy at law." 3 BOGERT, TRUSTS AND TRUSTEES 472 (1946) (hereafter
cited7 as BOGERT).
AMES, CASES IN EQUITY JuRs cTIoN 44 (1904) ; also may be found in
CHAJEE & SIMPSON, CASES ON EQUITY 156-7 (2d ed. 1946):
"TRUSTS OF CHATTELS.-
1951]
54 (1926).
9See note 7 supra.
101 PomEaoY 277. See the dictum of Lord Eldon in Eyre v. Everett,
2 Russ. 381, 382, 38 Eng. Rep. 379 (1826) : "There are some cases in which
the Court entertains jurisdiction, though there would be a good defence at
law; but that is, because in those cases the matter was of such a kind that
there was an original jurisdiction belonging to this Court; and this Court
will not allow itself to be ousted of any part of its original jurisdiction, because a court of law happens to have fallen in love with the same or a similar
jurisdiction, and has attempted (the attempt for the most part is not very
successful) to administer such relief as originally was to be had here and
here only.'
[ VOL. 25
15 3 BOGERT
476.
16 Cf. Tucker v. Weeks, 177 App. Div. 158, 163 N. Y. Supp. 595 (1st Dep't
1917). In this type of case, the res is originally the subject matter of equitable relations and the adequacy of the legal remedy is immaterial against one
who takes part in a breach of trust with the trustee. See also 1 PERRY 217.
1951 ]
[(VOL. 25
an action in replevin would have afforded a complete remedy for their recovery. Or again if they have been sold there is an action for money had
and received resulting in a personal judgment for the proceeds. If the plaintiff has no information as to this sum it may acquire it . . . by an examination of the defendant. . . . Even though this be so is the plaintiff entitled to
still other relief in excess of what a court of law is competent to give? 26
and the comThis latter question was answered in the affirmative
27
plaint was held to state a good cause of action.
Constructive Trusts-Chattel Held by Wrongdoer
The hypothesis in the instant phase of the discussion is merely
this: the defendant, by his wrongful act, has acquired the legal title
to plaintiff's goods and the latter seeks their recovery. Again it
should be noted that the legal title must be in the defendant or there
can be no trust of any sort.28
Ordinarily, the plaintiff will have one or more legal causes of
action. May he nevertheless come into a court of chancery and obtain a constructive trust? The question is hardly academic. Equity
surely offers a more flexible procedure and if the remedy of constructive trust is available, the trustee will sustain all the losses and
account for all the profits resulting from dealing with the property,2 9
26 Fur and Wool Trading Co. v. George I. Fox, Inc., 245 N. Y. 215, 217,
156 N. E. 670, 671 (1927).
27 Accord, Falk v. Hoffman, 233 N. Y. 199, 201, 135 N. E. 243, 244 (1922),
where a constructive trust was impressed on the proceeds of stock fraudulently acquired from the plaintiff. The lower court had held for the defendant on the ground that the plaintiff's remedy at law was adequate. The language of the Court of Appeals, per Cardozo, J., is worth noting: "We think
that equity will intervene to declare the wrongdoers trustees ....
Some rem-
19511
the trust will be superior to the lien of attaching creditors,30 and the
plaintiff will have a preference as to the trust property in case of
insolvency.31 In addition, the plaintiff may benefit by the more inclusive definition of fraud in equity, 32 and may prevent the wrongdoer from demanding a jury trial.33 Without doubt these are advantages to be reckoned with and the problem may not be summarily
dismissed.
In most of the cases where equitable relief by way of constructive
trust is granted, the reason assigned is that the legal remedies are
inadequate. There would seem to be two situations in which the
fact that the remedies at law are inadequate, admits of no dispute:
where the chattel is unique 3 4 and where the defendant is insolvent3 5
In another class of cases-where the defendant-wrongdoer stands in
a fiduciary or quasi-fiduciary relation to the plaintiff,--the question
of inadequacy similarly constitutes no obstacle.30 Starting with the
last, it is well to briefly treat each of the three classes.
Whenever it is found that parties stand in a fiduciary or quasifiduciary relationship towards one another it inevitably follows that
equity stands alert keeping a jealous vigil. Historically, chancery
has undertaken to minutely scrutinize the actions of a party in whom
another has reposed trust to prevent imposition and selfish behavior
by the former. It is not surprising then, that the abuse of such a
relationship is a basis for a suit in equity without regard to the adequacy of the remedy at law.37 This attitude is well illustrated by
the English Case of Wood v. Rowcliffe 38 where the plaintiff delivered
some household furniture and effects to the defendant to be held by
her as agent. Instead, the defendant breaching her duty to her prin3o
McAllister v. Bailey, 127 N. Y. 583, 28 N. E. 591 (1891).
3
[ VOL. 25
. . .
not be immediately replaced by a common upholsterer." 39 In overruling the demurrer, the court made it clear that equity's intervention
where wrongful acts of fiduciaries are concerned, is not limited to
cases involving unique chattels. 40 Thus, it is apparent that a fiduciary
relationship is of itself sufficient to invoke the remedies of chancery.
Similarly, the mere fact that a chattel is unique makes the right
to resort to equity clear. Where the article has a special value so
that it cannot be duplicated in the market, money damages at law
will be inadequate exactly as in cases of land. Just as equity will1
give specific performance of a contract concerning such an article 4
and will decree specific reparation for a tort affecting it, 42 so too
1951 ]
[ VOL. 25
Scott cites no cases standing for his textual assertion, but before the conflict is discussed on principle the cases noted by Bogert
will be examined. Upon doing so, it is at once apparent that they
do not stand for a proposition as broad as his unqualified statement.
Three of the cases referred to concern situations where the owner
seeks to charge the substituted res. 49 In three others, the courts
paid particular attention to the fiduciary nature of the relationship
between the parties." Moreover, in two of the six cases, it is interesting to note, and it was remarked upon by the respective courts
that no objection to the jurisdiction of the equity court had been
raised below and it had not been claimed that there existed an adequate remedy at law. 51 Bogert then remarks that there are a number of cases which discuss an election by a wronged party between
a remedy at law and a constructive trust, and thus show that the
existence of the former is not exclusive of the latter. Of course,
these cases carry no imperative weight and furthermore a perusal reveals that any elective trust remedy in them, may likewise be explained on the theory of following the res,52 reaching the .product of
the res 53 or
on the fiduciary or quasi-fiduciary relationship between
54
the parties.
Thus, it is plain that the breadth of Bogert's assertion is not
justified even by his own authorities. He has indicated no case, nor
has the writer of this note found any case, in which a constructive
trust was impressed on non-urnique personalty in its original form
in the hands of a solvent, non-fiduciary wrongdoer. The dicta and
decisions to the contrary are, on the other hand, quite abundant.55
49 Anderson, Meyer & Co. v. Fur & Wool Trading Co., 14 F. 2d 586 (9th
Cir. 1926); Fur & Wool Trading Co. v. George I. Fox, Inc., 245 N. Y. 215,
156 N. E. 670 (1927) ; Falk v. Hoffman, 233 N. Y. 199, 135 N. E. 243 (1922).
See discussion supra under subheading Constructive Trusts-The Substituted
Res.
50
Lupton v. American Wholesale Corp., 143 Md. 333, 122 Atl. 315 (1923)
(employee holding funds rightfully owing to his employer) ; Boston v. Santosuosso, 298 Mass. 175, 10 N. E. 2d 271 (1937) (mayor received monies for
having collusive judgment entered against city); Brown v. Father Divine, 173
Misc. 1029, 18 N. Y. S. 2d 544 (Sup. Ct.), aff'd, 260 App. Div. 443, 23 N. Y.
S. 2d 116 (1st Dep't 1940) (religious leader holding belongings of follower).
1951]
2d 81 (1947).
But cf. Morris v. Vyse, 154 Mich. 253, 117 N. W. 639 (1908),
where although the court expressly held insolvency to be unnecessary, the facts
presented
a problem of following the res.
56
RESTATEMENT 160, comment c; Note, 37 Ky. L. J. 113 (1948).
67
See Note, 14 Tax. L. REV. 252 (1936), for a discussion of the construc-
EgUITY
(1909), quoted in
6 (2d ed. 1946), defines the early chancery jurisdiction by the fol-
[ VOL. 25
a trust will be impressed in the former case but not in the latter;
and unfortunately, it is equally clear that the reasons for equitable
intervention in the former case have been assumed rather than stated.
What greater equities exist in favor of a plaintiff-owner whose
chattel has been transferred by a wrongdoer than in favor of an owner
whose chattel is retained in specie? Certainly the wrongdoer has been
unjustly enriched in both cases. Likewise, a legal remedy is available
to both plaintiffs, and the damages, if adequate in one case are every
bit as adequate in the other. If we are to adopt the view that the
constructive trust is created by the defendant's wrongful act,6 2 a trust
arose in each of the foregoing examples. To say that where the
res has been parted with, the trust will be enforced to make the defendant accountable for any gains or losses he sustains is begging
the question. The same objection may be raised to any greater
analogy that is made between that case and express trusts. Nor can
it be said that in that case a plaintiff would have greater difficulty
from an evidentiary standpoint; for, supposing the wrong to be a
fraudulent acquisition, the same elements make out the legal cause
of action no matter what the form or location of the chattel at the
time suit is brought. Thus, on principle, Bogert's position seems
quite sound. His stand is further buttressed by the realization that
by putting the more flexible and efficacious trust remedy beyond the
reach of the normal plaintiff, equity tacitly acknowledges a right of
private confiscation whereby one individual, merely by paying legal
damages equal to the market value of the non-unique chattel may
retain it as against the true owner, who, for reasons of his own,
would not have voluntarily parted with it either at that time or at
that price.
Any suggestion that to enforce the trust in every case would
convert many actions for replevin, and fraud and deceit to suits
in equity with a resultant overcrowding of the equity calendars does
not go far in refuting the foregoing considerations. But, in view
of the fact that the holdings are conclusively opposed to impressing a
trust where the property remains in the wrongdoer's hands, it would
seem that at present, all that may be anticipated is a modification
with respect to the degree of inadequacy that is to
of this attitude
63
be required.
See notes 45 and 46 supra.
See, e.g., Falk v. Hoffman, note 27 supra; Fur and Wool Trading Co.
v. George I. Fox, Inc., note 26 supra, and language of the court quoted in
the text. These were both cases of reaching the substituted res and although
they do evidence a judicial attitude, no case has been found in which such an
attitude appears, which does not fit in one of the four classes (uniqueness,
fiduciary relationship, insolvency, substituted res) discussed above. See also
Note, 171 A.- L. R. 429 (1947). It is interesting to note that in WALsH ON
EQuiTY 307, n. 26 (1930), the author intimates that the advantage of replevin
over trover and conversion seems to have been defeated by the privilege of
rebonding now given to defendants.
62
63
1951]
FREEDOM OF SPEECH
v.
nice in balancing" the remedies when the wrongful acquirer retains the chattel.
Nevertheless, the courts have done so.
1 Cantwell v. Connecticut, 310 U. S. 296, 310 (1940).