## Facts

- Quinton F. Mattson and Cascade Logging Corp. contracted with West Coast Lumber Sales under an arrangement in which West Coast would cut Mattson’s logs and sell lumber on orders pre-sold by West Coast and approved by Mattson.
- In May 1980, West Coast removed about 285,000 board feet of lumber from plaintiffs’ site without approval, constituting a conversion.
- In September 1980, plaintiffs sued West Coast for conversion seeking only money damages; they did not seek replevin, an injunction to prevent sale, or a constructive trust on the lumber or proceeds.
- While that suit was pending, in February 1981, Commercial Credit Business Loans, Inc. extended a line of credit to West Coast secured by West Coast’s inventory and accounts; Commercial Credit knew of the pending litigation but was told plaintiffs were not claiming the loan collateral.
- Under the accounts-receivable financing arrangement, West Coast remitted collections to Commercial Credit, which made advances; over roughly 18 months, Commercial Credit advanced about $2,000,000 more than it received.
- In June 1982, plaintiffs obtained a $192,011.17 conversion judgment against West Coast; West Coast then entered bankruptcy.
- Plaintiffs brought a separate action against Commercial Credit seeking the proceeds of the converted lumber under theories of (1) money had and received and (2) unjust enrichment seeking a constructive trust.
- The trial court granted summary judgment for Commercial Credit; the Court of Appeals affirmed.

## Issues

1. Whether plaintiffs who obtained a money-damages judgment for conversion, without pursuing equitable relief directed at the property or proceeds, could later seek restitution from the converter’s secured lender via money had and received or unjust enrichment/constructive trust.
2. Whether a secured lender that received and applied collections from accounts, with notice of pending conversion litigation but a net lending loss, could be liable in restitution for proceeds traceable to converted goods.

## Decision

- The Oregon Supreme Court affirmed summary judgment for Commercial Credit.
- Plaintiffs could not recover from Commercial Credit on a money-had-and-received theory.
- Plaintiffs could not obtain restitution by imposing a constructive trust on proceeds in Commercial Credit’s hands.
- Notice of a pending conversion lawsuit, without a timely asserted proprietary or equitable claim to the collateral or proceeds, did not make Commercial Credit’s receipt of collections unjust.

## Legal Principles

- A plaintiff who elects a legal remedy for conversion (money damages) and obtains judgment, when equitable remedies aimed at the property or proceeds were available, is generally barred from later pursuing an inconsistent restitutionary claim to the same proceeds against a third party.
- Money had and received requires that the defendant possess money that, in equity and good conscience, belongs to the plaintiff; the claim fails where the defendant is not actually enriched.
- A constructive trust requires unjust enrichment; it is disfavored where the recipient is a secured lender that did not profit and instead advanced more than it recovered.
- Knowledge of related litigation does not, by itself, establish bad faith or unjust enrichment sufficient to impose restitutionary liability on a secured creditor.

## Conclusion

The court held that plaintiffs’ earlier choice to pursue only money damages for conversion, combined with the absence of net enrichment to the secured lender, foreclosed later restitutionary recovery from the lender for proceeds traceable to the converted lumber.


Mattson v. Com. Credit Bus. Loans, Inc., 301 Or. 407, 723 P.2d 996 (Or. 1986)