Kevin G. Faley and Andrea M. Alonso
*Originally published in the
New York Law Journal
January 21, 2014

The American legal system has struggled in applying obsolete concepts to modern legal dilemmas. An example of this is conversion,1 a theory of recovery which, until recently, substantiated our society's reluctance to either adapt antiquated claims to the 21st century or discard these archaic concepts to the ash heap of history.2

While recently some jurisdictions have recognized conversion's applicability to intangible property, others have been hesitant to adopt that approach.3 This article will explore the history of conversion, from its origin dating back to 11th century England and through its many transformations to its current form, with the groundbreaking New York case of Shmueli v. Corcoran Group and its effects on conversion in the digital age.

A History of Conversion

Dating back to the Norman Conquest of England in the eleventh century, proceedings against wrongdoers took the form of private appeals of larceny or robbery pursued only by the aggrieved party, not the state. The private parties sought to recover their stolen chattel and punish the thief. If the accused was caught in fresh pursuit he was taken to an impromptu court whereupon by a sworn oath taken by the appellor he was put to death.4

Litigants also sought to retrieve their property by claiming trespass de bonus asportatis. Whereas in the past the remedy had been to return the stolen property, under trespass de bonus asportatis the remedy was the damages for the wrongful taking of property. Judgment was satisfied by levy of execution and sale of the defendant's property.5 Possession of the tangible property remained the focus of trespass despite the change in remedy. An action in trespass could not be maintained unless the plaintiff had possession of the property.6

Action in trover arose and by the 15th century absorbed replevin and detinue. Replevin was an action to immediately recover the specific chattel and required a showing of trespass as well as wrongful detention.7 Detinue, however, was an action by which plaintiff could recover either the chattel or damages. Plaintiff had to prove wrongful detention, which required plaintiff to specifically identify the goods to be returned. Then, defendant could either give back the chattel or pay damages.8

In an action for trover, plaintiff could recover the full value of the chattel despite a lack of possession, curing the procedural possessory problems of trespass. Importantly, trover, was created "as a remedy against the finder of lost goods who refused to return them."9

Trover's relabeling to conversion comes from the old pleading form for an action in trover. The form alleged that the defendant had "converted [a chattel] to his own use." "[Conversion] was created to address 'some interferences with chattels for which the action of trover would not lie,' such as a claim dealing with a right for future possession."10

Tangibility Requirement

Under Section 222A[1] of the Restatement [Second] of Torts, conversion is defined as: "[D]ominion or control over a chattel which so seriously interferes with the right of another to control it that the actor may justly be required to pay the other the full value of the chattel."11 New York authority, however, defines conversion as: "[w]hen one who owns and has the right to possession of personal property proves that the property is in the unauthorized possession of another who has acted to exclude the rights of the owner."12

In the traditional common-law context, a person could sue for conversion when denied complete use of his or her tangible property. But this rationale has not been expanded to cover new fact patterns. Some jurisdictions have not expanded conversion's definition to include intangible property. The most common reasoning is a reliance on the origin of conversion in appeal and later as detinue sur trover, as a tort to recover lost tangible property.13

In the traditional sense, intangible property was not considered capable of being lost and found. It would remain this way until conversion came to include intangible things represented in tangible form, such as promissory notes, stock certificates, insurance policies and bank books. This was known as the merger doctrine.14

The truth is that, when the allegation of lost property became a fiction by the extension of the action to cases not originally embraced within it, the courts carried the original characteristics of the action along with it into its new relations, without stopping to inquire whether all of them were still important.15

Intangible Property

Prior to Shmueli v. Corcoran Group, there had never been a New York decision to rule that intangible property could be converted. The Court of Appeals in Sporn v. MCA Records discussed the topic but failed to expressly rule on the subject.16 In that case, Kae Williams, who discovered the rock and roll band "The Silhouettes," arranged for the band to record the song "Get a Job" in late 1957. That year Williams leased Ember Records the rights to "Get a Job," but maintained a reversionary interest in case the company was ever liquidated. When the company was liquidated in 1965, Williams claimed he reacquired all rights associated with "Get a Job." Over his objection, Ember sold the rights to Bell Records which continued to use the song.

Williams had put off suing Bell Records because of the cost associated with litigation, but then assigned his rights to Murray Sporn. In 1976, 11 years after the liquidation of Ember Records, Sporn brought suit. Ultimately the suit was barred by the expiration of the statute of limitations. Also, the rights to the song were deemed tangible because of the physical property of the master recording. Nevertheless, in dicta, the Court of Appeals remarked that an action in conversion would not normally lie when it involves intangible property.17

As society progressed into the digital age, common-law conversion was left behind. Statutes were created in some jurisdictions to protect intellectual property,18 but conversion maintained the traits it had carried since its origin. The tangibility requirement barred recovery for plaintiffs whose electronic files were taken. It would remain this way until the case of Shmueli v. Corcoran Group.19

Effect of 'Shmueli'

Sarit Shmueli was a real estate broker working at The Corcoran Real Estate Group. Over her five-year tenure at Corcoran, Shmueli maintained computer records of all the real estate deals she had participated in, prior to and independent of her association with Corcoran. When she was fired on March 18, 2002, her computer access codes were taken; she was denied access to all of her computer records, client lists and curriculum vitae. Shmueli sued, inter alia, for the conversion of these computer records.20

Shmueli is significant for being the first New York State court case to allow a cause of action sounding in conversion for the loss of intangible property. While, as the court noted, intangible property could be converted if it were represented in a tangible form, the law had not expanded conversion to cover property without such representation. The court refused to draw the traditional distinction between documents in digital format and those written on paper. The Shmueli court held that conversion applies to an electronic record as much as it applies to a paper record because of the expedience by which the latter can become the former.21 The court's reasoning is prophetic, yet remains the furthest New York has extended conversion to intangible property.

Three years after Shmueli, the New York Court of Appeals in Thyroff v. Nationwide Mutual Insurance Company ruled that electronic records that were indistinguishable from printed documents were subject to the claim of conversion.22 In that case, an insurance agent who was terminated at will was thereafter unable to retrieve his personal information stored on the company's computers. Those records included customer contacts and related data.

Rather than declare that intangible property was convertible, the Court of Appeals' decision reshaped the tort of conversion to encompass intangible records or documents which could otherwise be expressed in tangible form. Notably, the court did not rule that ideas could not be converted, as it had held in Astroworks v. Astroexhibit.23 The court expressly stated that its ruling did not consider any of the "myriad" other forms of virtual information.24

Traditional Elements

With Thyroff following Shmueli's holding, New York's common-law tort of conversion now encompasses digital, electronic and virtual information. Despite this expansion, lower courts have remained hesitant to stray from the new law and continue to require traditional elements associated with conversion's dominion requirement to use the property at all times and in all places.25

In one such case, the plaintiff alleged that "defendants wrongfully copied and displayed material, including images of handbags, from her website and improperly displayed said material on other locations o[f] the web, without her permission...."26 Plaintiff sued, inter alia, for conversion. The Supreme Court of New York County did not expand the tort to include the taking of pictures from one's website.

Similarly, in MP Innovations v. Atlantic Horizon Intl, plaintiff alleged defendant converted a product, system and formula of which plaintiff was the rightful owner.27 This product included an array of methodologies, strategies and information by which a detox patch could be sold on a mass media market scale. Again, the Supreme Court of New York County held that the scope of conversion had not been expanded to include information which had never been fixed in a digital or virtual form. Plaintiff's argument to read Thyroff broadly failed.

The Court of Appeals has yet to expand the ruling to other forms of information not fixed in digital or virtual form. Shmueli and Thyroff remain the farthest the New York courts have gone in expanding conversion to digital or intangible property.

Today, some traditional rules and elements of conversion remain intact even though neither Shmueli nor Thyroff addressed them. For example, plaintiffs must be denied "any and all" use of their property in order to recover under conversion; being denied exclusive use will not suffice.28 This rule has its history in the definition of dominion. When a plaintiff is denied dominion over the thing in question, the item is altered or the plaintiff's rights are excluded.29

As it stands, in order to maintain a successful cause of action for the conversion of an intangible item in New York four elements must be met: (1) the plaintiff must have ownership of the converted item; (2) the intangible item must be recorded in digital or virtual format and must be indistinguishable from its printed or physical form; (3) the plaintiff must be unlawfully denied dominion or control of the thing; and (4) there must be resulting damages.


Originating as an appeal in 11th century England, conversion has done away with many of its traditional elements. While some remain, Shmueli and Thyroff have extended conversion's protection to intangible property. Though subsequent cases have limited the holdings in Shmueli and Thyroff, plaintiffs can now recover the full value of their converted item at the time of the tort.

Andrea M. Alonso and Kevin G. Faley are partners of Morris Duffy Alonso & Faley. Harris Peskin, a paralegal, assisted in the preparation of this article.

1. "Conversion is an intentional exercise of dominion or control over a chattel which so seriously interferes with the right of another to control it that the actor may justly be required to pay the other the full value of the chattel." RESTATEMENT (SECOND) OF UNFAIR COMPETITION § 222A (1977).
2. See Sporn v. MCA Records, 58 N.Y.2d 482, 489 (1983).
3. Texas is one jurisdiction that has yet to depart from the traditional distinction. See Express One Int'l v. Steinbeck, 53 S.W.3d 895, 901 (2001).
4. See J.B Ames, "The History of Trover," 11 HARV. L. REV. 277, 278 (1897).
5. See id. at 278, 283; Lawrence H. Hill, "A New Found Haliday: The Conversion of Intangible Property-Re-Examination of the Action of Trover and Tort of Conversion," 1972 UTAH L. REV. 511, 514-16 (1972) (discussing the differences between trespass and appeal).
6. Hill, supra note 5, at 283; See Val D. Ricks, "The Conversion of Intangible Property: Bursting The Ancient Trover Bottle With New Wine," 1991 BYU L. REV. 1681, 1710 (1991).
7. Hill, supra note 5, at 518. Wrongful detention could be cured by returning the property before the action. Id.
8. Id. at 517-18. Plaintiffs often had difficulty proving detinue because they were unable to identify subtle nuances of the stolen item. Moreover, plaintiff had to prove wrongful detention to recover damages under detinue. If defendant returned the item, in any condition, to the plaintiff, then plaintiff could not recover. Id.
9. RESTATEMENT (SECOND) OF TORTS §242 cmt. d (1965).
10. RESTATEMENT (SECOND) OF TORTS §242 cmt. D (1965). Thyroff v. Nationwide Mut. Ins., 8 N.Y.3d 283, 288 (2007) (quoting RESTATEMENT (SECOND) OF TORTS §222A cmt. b (1965)).
12. Republic of Haiti v. Duvalier, 211 A.D.2d 379, 384 (1st Dept. 1995).
13. Express One Int'l., 53 S.W.3d 895, 901; see also Ames, supra note 4, at 278.
14. See Agar v. Orda, 264 N.Y. 248, 251 (1934) ("Indeed, this court has held that the shares of stock are so completely merged in the certificate that conversion of the certificate may be treated as a conversion...")
15. Ricks, supra note 6, at 1686 (citing Ayers v. French, 41 Conn. 142, 151 (Sup. Ct. of Errors, 1874)).
16. Sporn v. MCA Records, 58 N.Y.2d 482, 489 (1983).
17. "While it is true that an action for conversion will not normally lie, when it involves intangible property, an action involving infringement of property rights by virtue of misappropriating tangible property-in this case the master recording-should properly be considered an action to recover for conversion of that property." Id.
18. See generally 18 U.S.C. §1832 (2012) (outlining the criminal repercussions of conversion); Cal. Civ. Code §3336 (West).
19. Shmueli v. Corcoran Grp., 9 Misc.3d 589, (N.Y. Sup. Ct. N.Y. Cnty. 2005).
20. Id. at 590.
21. Id. at 590, 592.
22. Thyroff v. Nationwide Mut. Ins., 8 N.Y.3d 283, 292-93 (2007).
23. The 2003 S.D.N.Y. case held that ideas could not be converted but similar to the Thyroff holding, the tangible expression or implementation of that idea could be. Astroworks v. Astroexhibit, 257 F.Supp.2d 609, 618 (S.D.N.Y. 2003).
24. Thyrofff, at 293.
25. The notion of dominion stems from the case of Fouldes v. Willoughby which held dominion is the right to "use of [the chattel] at all times and in all places." Ricks, supra note 5, at 1690-91 (citing Fouldes v. Willoughby, 151 Eng.Rep. 1153 (Ex.1841)).
26. Leser v., 18 Misc. 3d 1119(A), (N.Y. Sup. Ct. N.Y. Cnty. 2008).
27. MP Innovations v. Atlantic Horizon Intern., No. 604133/2007, 2008 WL 7729118 (N.Y. Sup. Ct. N.Y. Cnty. 2008).
28. State v. Seventh Regiment Fund, 98 N.Y.2d 249, 259-60 (2002).
29. Independence Disc. v. Bressner, 47 A.D.2d 756, 757 (1st Dept. 1975).