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Conversion: Michigan’s Statutory Remedy Becomes More “Use – Full”

June 24, 2015

James K. O’Brien

Conversion of another person’s property has been defined in Michigan as “any conduct inconsistent with the owner’s property rights.”

You could take someone else’s property and conceal it, sell it, destroy it, or simply refuse to give it back upon request; if you do, you may have committed common law conversion, and the true owner of the property may have the right to sue you.

If you convert property and put it to “… your own use,” you may also be responsible under a Michigan law (MCL 600.2919a) for three times the actual damage that the owner of the property suffers, and also be obliged to pay his attorney’s fees for suing you.

But what does it mean, exactly, to convert property “for your own use?” That was the million-dollar question – literally – considered and decided recently by the Michigan Supreme Court in Aroma Wines & Equipment, Inc. v Columbian Distribution Services, Inc., Michigan Case Number 148907–09, decided June 17, 2015.

In particular, the case involved wine stored by Aroma Wines and Equipment (Aroma) in a climate-controlled warehouse operated by Columbian Distribution Services (Columbian). After a payment dispute, Columbian refused to release the wine to Aroma, but instead moved the wine out of the climate-controlled portion of its warehouse, allegedly damaging it. Aroma claimed that by moving the wine, for its own business purposes, Columbian “converted the wine for its own use.” In doing so, Columbian violated not only the common law, but MCL 600.2919a, and Aroma asked for treble damages and attorney fees. The trial court took the claim under MCL 600.2919a away from the jury, ruling that in order to convert the wine to Colombian’s own use, the defendant would have had to “… drink [the wine] or perhaps sell it”, and since it did not, Aroma could not receive damages based on MCL 600.2919a.

The Michigan Supreme Court used a broader definition of converting property to one’s own use, one that included “…employ[ing] the converted property for some purpose personal to the defendant’s interests, even if that purpose is not the object’s ordinarily intended purpose.” Aroma claimed that its wine was moved from the climate controlled area of the warehouse, either in order to rent the space to a higher paying customer, or to give Columbian leverage in the billing dispute; in either case, if proven, moving the wine could constitute conversion to Colombian’s own use, making MCL 600.2919a applicable.

The lesson for property owners: a powerful tool may be more easily available under Michigan law to seek return of stolen property, or property wrongfully withheld from the owner. The message to landlords, warehousemen and service industries where property is turned over for storage or services to be performed: be especially careful before refusing an owner’s demand for return of his property – the gain in bargaining position may not be worth the additional risk.