Conversion, Bailment, and Money Had and Received

Often in Real Estate transactions, issues of conversion, bailment, and money had and received arise between parties. Conversion in the legal sense is when one person takes control or possession of property belonging to another. Bailment is when one person transfers property from one person to another who then takes possession for the purpose of safekeeping of the property. Money had and received is the process of returning money to one party when the party in possession received it in error. The Dallas Court of Appeals recently addressed these issues in Lawyers Title Co. v. J.G. Cooper Development, Inc.

Cooper and Lawyers Title Co. entered into an agreement to purchase some real estate in Fort Worth. Cooper deposited 1.8 million dollars in a fund controlled by Lawyers Title Co for the express purpose of purchasing the Fort Worth property. Instead, Lawyers Title Co. used the 1.8 million dollars to purchase property located in Dallas. Cooper sued Lawyers Title Co. for conversion, bailment, and money had and received.

Cooper claimed that Lawyers Title Co. converted the 1.8 million dollars because Lawyers Title Co. used the money for a purpose that was not agreed upon between the two parties. To prove conversion, a party must prove that it owned or had possession of the property; the other party exercised control of the property in a way inconsistent with the agreement between the parties; the owner demanded the property be returned; and the other party did in fact refuse to return the property. The court found that there was a question about whether or not Lawyers Title Co. exercised any control over Cooper’s money.

Cooper also claimed that the transfer of the 1.8 million dollars created a bailee/bailor agreement. Basically, Cooper claims he entrusted Lawyers Title Co. with the 1.8 million dollars for safekeeping during the purchase process and that Lawyers Title Co. breached that safekeeping agreement. The four factor needed to create a bailee/bailor relationship are: 1) one party must deliver the property to the other party for safekeeping; 2) the other party must accept the delivered property; 3) an implied or an express contract must exist; the parties must agree that the property will be dealt with in the manner that they agreed upon and in no other way. In this case, the court found that the evidence was insufficient to show that Lawyers Title Co. ever came into possession of the 1.8 million dollars in a bailee/bailor type situation.

Finally, Cooper claimed that Lawyer’s Title Co. had and received money from him in error. To prove a claim for money had and received, a party must show that the other party was in possession of money that “in equity and good conscience” belongs to the first party. Basically, does the defendant have money that belongs to the plaintiff without having earned the money. The court found that the facts did not prove nor disprove which party had ownership of the 1.8 million dollars, therefore summary judgment was not a proper solution.

At Guest and Gray Law Firm, we have fighting and winning business lawsuits and disputes for decades. You may have a problem with a supplier, or with a breach of contract claim. You may have a non-compete agreement that has to be enforced. Maybe the city or state government is suing you over a code violation. These are all areas in which the Guest and Gray Law Firm business law team has gotten results for our clients. We also offer legal services in the following areas:

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