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The general measure of damages for wrongful conversion of property is the market value of the property at the time of conversion. However, when converted goods have a fluctuating value, such as stock, courts have supplemented the general rule to provide a more equitable remedy to the injured party. The measure of damages for wrongful conversion is either its value at the time of conversion or its highest intermediate value between notice of the conversion and a reasonable time thereafter during which the stock could have been replaced had that been desired, whichever is higher.
Appellant Robert Heimbach and respondent John Fawcett agreed to jointly buy shares of stock and agreed that sale of the stock could only occur if both agreed. Appellant sold stock without informing respondent and deposited the remaining stock into a margin account bearing his name only. Respondent brought a conversion action. The trial court entered judgment for respondent, determined a damage award, and granted attorneys' fees to respondent under Minn. Stat. § 80A.23(2). Appellant challenged the decision, contending that the trial court erred in fixing damages for the conversion of the securities at the time the conversion occurred rather than within a reasonable time after respondent discovered the conversion of the securities and erred in awarding attorney fees under the Minnesota Securities Act, Minn. Stat. ch. 80A (1998).
On appeal, the court affirmed the judgment but reversed the award of fees. The trial court did not err in calculating damages based upon the worth of the stock at the time of conversion because awarding respondent damages based upon the stock's eventually deflated value would have been inequitable. The trial court did err, however, in awarding attorney fees because appellant's fraudulent acts did not occur prior to respondent's decision to buy the stock. Under Minn. Stat. §§ 80A.01 and 80A.23, subd. 2 (1998), of the Minnesota Securities Act, an award of attorney fees was not appropriate where the purchaser of stock failed to show that the co-purchaser's misrepresentations were prior to or contemporaneous with the purchaser's decision to buy the stock.