## Facts

- Fur & Wool Trading Co., Ltd. alleged its goods were taken from its possession by force.
- George I. Fox, Inc. allegedly received the goods with knowledge of the taking and sold them at a profit.
- The sale price and profits were unknown to the owner, and the defendant refused a demand to account for amounts received.
- The owner brought an action in equity seeking disclosure of sale proceeds, repayment of those proceeds, and related equitable relief (including an accounting).
- The trial court dismissed the complaint on the theory that legal remedies were adequate; the Appellate Division affirmed.

## Issues

1. Whether an owner whose goods were wrongfully taken and then sold by a knowing recipient may sue in equity for an accounting and recovery of sale proceeds, despite the availability of legal actions such as conversion, replevin, or money had and received.
2. Whether a knowing wrongdoer who sells another’s goods may be treated as a trustee ex maleficio of the proceeds, supporting equitable jurisdiction.
3. Whether inability to trace specific proceeds defeats equitable jurisdiction, or merely limits remedies such as an equitable lien.

## Decision

- The Court of Appeals reversed the dismissal and allowed the action to proceed in equity.
- The court held the complaint stated a proper claim for an equitable accounting based on a constructive trust theory: the defendant could be treated as a trustee ex maleficio of the proceeds.
- The court rejected the action as a mere bill of discovery, but sustained it as a bill for accounting grounded in a trust-type relationship.
- The court held that failure to trace identifiable proceeds may defeat a lien or claim to specific property, but does not require dismissal once equity properly has jurisdiction; equity may still grant a personal judgment against the wrongdoer.

## Legal Principles

- Availability of legal remedies (e.g., conversion, replevin, money had and received) does not automatically bar equitable jurisdiction where the claim seeks traditional equitable relief tied to a trust-like obligation to account.
- A wrongdoer (including one who knowingly receives and sells wrongfully taken goods) may be treated as a constructive trustee (trustee ex maleficio) of the sale proceeds and identifiable substituted property.
- An equitable lien or recovery of specific property depends on identification/tracing of the proceeds or substituted property; absent identification, no lien attaches.
- Once equity properly takes jurisdiction on a constructive trust/accounting theory, commingling or later failure to locate the specific proceeds does not defeat jurisdiction; equity may award a personal judgment against the constructive trustee.

## Conclusion

The court held that a knowing seller of wrongfully taken goods may be sued in equity as a trustee ex maleficio for an accounting and recovery of proceeds, and that even if tracing fails and no lien is available, equity may retain jurisdiction and grant a personal judgment rather than dismissing the action as limited to legal remedies.


Fur & Wool Trading Co. v. George I. Fox, Inc., 245 N.Y. 215 (N.Y. 1927)