A collector agreed to sell his collection of authentic extras' costumes to a costume store for $10,000, payable one month after delivery via a third-party carrier. The costumes suffered minor water damage in transit and the store rejected the collection. The collector found another buyer willing to pay the original price. Before the collector retrieved the collection, the store sold and delivered the costumes to a theater company who knowingly accepted them. What is the measure of damages for conversion?

• A. $3,000
• B. $10,000
• C. $7,000
• D. $15,000

Answer: (D)

Damages for conversion are measured by the value of the property at the time of conversion, or the price the wrongdoer obtained on its sale to a third party, whichever is greater. Here, the store’s act of selling the costumes to a theater company is a conversion. Although transit damage reduced value, the store ultimately disposed of the property for a certain amount. The measure of damages would be the greater of the value at the time of conversion or the sale proceeds; in this scenario, the sale price obtained was 15,000, so that amount is used. The contract price of 10,000 isn’t the limit here, and the smaller figures (3,000 or 7,000) don’t reflect the correct measure under conversion, which tracks either FMV at conversion or the defendant’s sale proceeds.