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Tracing Through Exchanges

Tracing Through Exchanges

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Tracing Through Exchanges

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  1. Tracing Through Exchanges • Direct Exchange - P can trace through direct exchanges as in Problem 8-1 – direct exchange of stock-cash-stock. • Exchanges & Commingling • If D commingles P’s stolen cash with his own, P must use the tracing fictions/presumptions: • D spends his own $ first • New $ lawfully acquired is Ds unless D manifests an intent to replenish P’s $ • D invests P’s $ first 1 & 3 can be used at P’s election to maximize P’s recovery although can only use in “real time.” 2 must be used as it is stated. • Use of these presumptions with the ledger system will illustrate the lowest intermediate balance rule (without consciously applying it) • LIB – If total balance of account falls below the value of the stolen item deposited in the account, the lowest balance prior to the next deposit of P’s $ (or adjudication) limits what P can get for that particular property

  2. Tracing into Swelled Assets • If D is bankrupt & P can trace into assets that are now worth more that what P lost, court will limit P to amount that she actually lost • Equitable lien – device that secures a monetary judgment in the amount of loss by creating a security interest in specific property. Gives holder of the lien the right to force a sale and have the proceeds of the sale applied to pay of the security interest. • P can force sale, get amount of her losses and then the remainder goes back into the bankruptcy estate for unsecured creditors. • If D is NOT bankrupt P can trace into assets and keep the entire amount.

  3. Facts Common to all Tracing problems • Scum manages a trust fund for his mother which contains the following: • 100 shares Microsoft at $30/share • 100 shares of Exxon at $50/share • 100 shares of Walmart at $60/share • Scum maintains his own checking account which, at the beginning of each problem, has $10,000 in it. • Due to financial difficulties, after the actions identified in each problem, Scum eventually goes bankrupt making a damage judgment essentially not worth it. • Each transaction in each problem occurs in chronological order on a different day with the balance immediately being recorded.

  4. On an exam • It is fine to use a ledger to illustrate your work on an essay question (assuming a bank account is involved). • You don’t need to use columns with lines (you can simply create rows of numbers with tabs if you are working on computer). Alternatively, computer users can just use a bluebook for this problem if it makes them more comfortable. • Show your work out to the side of the ledger – i.e., indicate the purpose of the deposits/withdrawals and the presumptions you use. • Don’t just write “presumption #1” without telling me what that means somewhere in the answer. That doesn’t let me know that you understand what is going on. • On a multiple choice question, you simply have to do the work and see which answer it matches with

  5. What is contempt? • A court’s power to protect itself and its orders • Generally arises in two situations: • A party or witness (contemnor) acts disrespectfully toward a judicial body (i.e., disruption in the courtroom, etc.) • A party violates a court order that applies to that party (e.g., an injunction)

  6. Kinds of contempt – civil compensatory contempt • Compensates non-contemnor for its losses/contemnor’s gains due to contemnor’s violation of court order • Responsibility for proof of harm lies w/ non-contemnor • Can be imposed whether violation is willful or merely inadvertent • Initiated by motion of aggrieved party – civil procedures apply • Movant must show violation of order by clear and convincing evidence

  7. Kinds of contempt – Coercive civil contempt • Order designed to coerce contemnor to comply with court order in the future. • Typical methods of coercion - Court jails contemnor until compliance OR fines for every day of non-compliance (fine is usually payable to the gov’t) • Coercive civil contempt is viewed as remedial rather than as punishment • Contemnor “holds the keys to the jailhouse door” • Civil procedures typically apply (But see Bagwell) • Aggrieved party typically initiates by motion UNLESS it is a summary contempt (e.g., in-court refusal to testify) where court is vindicating own rights

  8. Kinds of contempt – criminal contempt • Designed to punish past conduct – vindicate court’s authority • Characterized by the imposition of a determinate fine or jail sentence as a result of past behavior – all fines payable to the state • “Intent” requirement – contempt imposed only for willful violations • Willful – purpose or knowledge • Most (but not all) of the procedural protections applicable in criminal proceedings apply • PBRD, jury trial for certain $ amounts, double jeopardy . . .