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36. If the customer brings an action against the bank based on conversion, how much, if anything, should the customer recover?
At the time the customer pledged the certificate, the shares were worth $10,000; at the time the customer repaid the loan, the shares were worth $20,000; and at the time the bank offered to return the certificate, the shares were worth $5,000.
A customer pledged a stock certificate to a bank as security for a loan. A year later, when the customer fully repaid the loan, the bank refused the customer's demand to return the stock certificate because the officer dealing with the loan had the mistaken belief that there was still a balance due. No one at the bank reviewed the records until two months later, at which time the error was discovered. The bank then offered to return the stock certificate. However, the customer refused to accept it.
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A is incorrect. Someone who refuses to surrender a chattel to another person who is entitled to its immediate possession is liable for conversion even if the one holding the chattel originally came into possession lawfully.
B is incorrect. Damages for conversion are determined by the value of the chattel at the time of the conversion itself, which was when the customer demanded the return of the certificate, not when the bank subsequently attempted to remedy the conversion.
C is incorrect. As explained above, conversion damages are based on the value at the time of conversion, not when the defendant first came into possession of the chattel.