NCJ Number
12932
Journal
FEDERAL BAR JOURNAL Volume: 32 Issue: 2 & 3 Dated: (SPRING 1973) Pages: 117-128
Date Published
1973
Length
12 pages
Annotation
RATIONALE AND TEXT OF A SUGGESTED FEDERAL STATUTE AUTHORIZING THE U.S. TO DEMAND THAT MONEY ACQUIRED WRONGFULLY BE HELD FOR THE BENEFIT OF THE PUBLIC AS THE WRONGED PARTY IN A CONSTRUCTIVE TRUST.
Abstract
IN ORDER TO PREVENT THE ACCUMULATION OF WEALTH BY ORGANIZED CRIME, ITS SUBSEQUENT INVESTMENT IN LEGITIMATE BUSINESSES, AND A RESULTING CRIMINAL INFLUENCE IN ORDINARY BUSINESS AFFAIRS, THE REMEDY OF CONSTRUCTIVE TRUST IS SUGGESTED. A RATIONAL BASIS FOR PUBLIC SEIZURE, IN THE EXAMPLES GIVEN, MAY BE GROUNDED UPON THE PRINCIPLE OF THE CONSTRUCTIVE TRUST, SOMETIMES CALLED A TRUST EX MALEFICIO OR TRUST EX DELICTO. SUCH A TRUST IS NOT DEPENDENT FOR ITS EXISTENCE UPON THE WILL OR INTENTION OF THE PARTIES. ON THE CONTRARY, THE LAW CREATES THE RELATIONSHIP, IMPOSING A TRUST UPON PROPERTY, INCLUDING MONEY, WHICH HAS BEEN ACQUIRED BY WRONGFUL CONDUCT AND WHICH MUST, AFTER THE IMPRESSION OF THE TRUST, BE HELD FOR THE BENEFIT OF THE WRONGED PARTY. THE MOST USUAL CIRCUMSTANCES IN WHICH SUCH A RELATIONSHIP IS CREATED IS WHERE PROPERTY HAS BEEN ACQUIRED BY FRAUD, ACTUAL OR CONSTRUCTIVE, LEADING MANY COURTS TO IDENTIFY THE DOCTRINE SOLELY WITH FRAUD. HOWEVER, SUCH LIMITATION IS INCORRECT. THE REMEDY IS QUITE ELASTIC AND MAY BE APPLIED IN A VARIETY OF SITUATIONS. COMMISSION OF A CRIME MAY BE THE BASIS FOR IMPOSING SUCH A TRUST. THE SUGGESTED STATUTE EMBODIES UNDERLYING PRINCIPLE OF THE CONSTRUCTIVE TRUST THAT NO MAN IS ENTITLED TO PROFIT FROM HIS OWN WRONG. IT INCLUDES THE PRINCIPLE THAT MERE CHANGE IN FORM OF THE PROCEEDS OF WRONGFUL CONDUCT DOES NOT PREVENT RECOVERY, IF THEY CAN BE TRACED AND IF THEY HAVE NOT COME INTO THE HANDS OF AN INNOCENT PURCHASER FOR VALUE. IT ALSO EMBODIES THE EQUITABLE PRINCIPLE THAT THE CHANCELLOR WILL NOT GRANT RELIEF EXCEPT UPON CLEAR AND CONVINCING EVIDENCE.