Newton v. Porter - 69 N.Y. 133 (1877)

Rule:

The owner of negotiable securities stolen and afterwards sold by the thief may pursue the proceeds of the sale in the hands of the felonious taker or his assignee with notice, through whatever changes the proceeds may have gone, so long as the proceeds or the substitute therefor can be distinguished and identified, and have the proceeds or the property in which they were invested subjected, by the aid of a court of equity, to a lien and trust in his favor for the purposes of recompense and restitution, is founded upon the plainest principles of justice and morality, and is consistent with the rule in analogous cases acted upon in courts of law and equity.

Facts:

Thieves used proceeds of the sale of stolen bearer bonds to hire defendant attorneys to represent them in the criminal proceedings. Plaintiff, owner of the bonds, brought the present action to establish her right to the proceeds of the stolen bonds and to compel the defendants to account therefor. The lower courts ruled in favor of the plaintiff. Defendants challenged the decision.

Issue:

Under the circumstances, could the plaintiff recover the proceeds of the sale of the stolen bonds from the defendant attorneys?

Answer:

Yes.

Conclusion:

The Court affirmed the trial court judgment in favor of plaintiff. According to the court, the plaintiff could recover the proceeds of the sale of the stolen bonds from the attorneys. The Court found that it did not matter that the proceeds were no longer in the hands of the thieves, because the plaintiff could recover from an assignee with notice. The court noted that the circumstances under which the attorneys received the proceeds were unusual, and the record supported the trial court's finding of fact that the attorneys had notice.