August 9, 2017

How To Criminally Convert Cash; Clark-Silberman v. Silberman

Category: Indiana Law Review | Author: | Share:

For those who want to know how to convert cash, this case provides an excellent example: obtain a power-of-attorney from a sick man, and then use that document to take cash out of a safe deposit box. The prize is treble damages.

Harold was a successful businessman. And when Harold and Cynthia married in 1991, Harold had two adult children, Richard and Susan.

When Harold died in 2013, he had a complicated estate plan. Cynthia, Richard, and Susan had all been named co-financial attorneys-in-fact in 1996, with Harold’s business partner, Geoff, being the final arbiter of disputes. Harold also had a trust and a will prepared, on which Cynthia, Richard, and Susan were all named as cotrustees and co-personal representatives, respectively.

Before Harold died, Cynthia saw his estate planning documents, and was unhappy to find out that she was only getting a third of Harold’s assets, with Richard and Susan getting the rest. She was also unhappy with the co-trustee/co-personal representative arrangements.

Harold was hospitalized in January 2013, and Cynthia went to the bank where Harold had a safe-deposit box (titled in the names of Harold, Richard, and Susan) shortly thereafter. The bank would not let Cynthia access the box without a power-of-attorney. Cynthia had that document prepared and had Harold sign the document in the hospital. Cynthia returned to the bank the next day, opened the box, and removed $46,182 in cash and a gold watch. Cynthia did not tell Richard or Susan that she opened the box.

After Harold died, Richard and Susan brought an action against Cynthia alleging, among other things, that she converted the funds she took from the safe deposit box. The matter was tried, after which the trial court found Cynthia committed criminal conversion when she took those funds, and awarded treble damages to Richard and Susan. Cynthia appealed.

On appeal, Cynthia only took issue with the finding that she criminally converted the cash in the safe deposit box. In other words, she did not believe that she knowingly or intentionally exerted unauthorized control over the money. In order for money to be converted it must be a “special chattel,” which is “a determinate sum with which the defendant was entrusted to apply to a certain purpose.”

Money which is kept as part of a contractual dispute or a claim for the repayment of a debt cannot be the subject of a conversion action. But the Court distinguished those situations from this one.

The present case, however, is neither a contract dispute nor a claim for repayment of a debt. Nor was the $46,182 put into some other pool of money where it was co-mingled. Rather, we find that it is more akin to a situation where determinate sums were placed with a third party for safekeeping, or held in a separate fund or account, which are circumstances that we have held may support a claim for criminal conversion. … [H]ere, Harold delivered the $46,182 to PNC and placed it in an envelope in a safe deposit box. The safe deposit box was titled in his name together with his children’s names. We believe this is the type of “deliver[ing] to a third party for safekeeping” and conduct that “indicates intention to retain ownership” that Kopis found was lacking in that case.

Cynthia argued that she could not have converted the funds because they were not entrusted to her for a particular purpose. But the Court said that Cynthia’s argument showed that she misunderstood what this means.

The record before us is that Harold’s course of conduct indicates that he intended to retain ownership and possessory interest in that specific $46,182 and that he entrusted the money to PNC, to be separately held and accounted for, accessible only by a valid power of attorney and, if removed, to be retained by that person (here, Cynthia) in accordance with the document’s terms and for Harold’s benefit. Only through falsely representing to PNC that she was Harold’s sole attorney-in-fact, did Cynthia successfully access and remove the funds and place them in her Key Bank safe deposit box. Furthermore, there is no evidence that, after she took the funds, she told Harold, Richard, or Susan that she had done so. Thus, even if Cynthia’s access to the box was gained through a valid power of attorney (and neither we nor the trial court find that the Financial POA was valid), her actions after taking the money do not reflect that she was acting for Harold’s benefit.

Thus, the judgment against Cynthia was affirmed.

Lessons:

  1. Money put into a safe deposit box is likely a special chattel which may be converted.
  2. A person who has been granted a power-of-attorney or made a trustee has been entrusted to use the assets so entrusted for the benefit of others, not themselves.