In which of the following situations has conversion NOT occurred?
A) When an instrument is paid on a forged indorsement.
B) When a drawee to whom a draft is delivered for acceptance properly returns it upon request.
C) When any person to whom an instrument is delivered for payment refuses on demand to pay or to return it.
D) When a bank pays an instrument containing only one of two required indorsements.

Question

Quizplus · Accepted Answer

Conversion occurs when there is an unauthorized assumption and exercise of the right of ownership over goods belonging to another, to the exclusion of the owner's rights. In option B, the drawee properly returning a draft upon request does not constitute an unauthorized exercise of ownership, but rather a compliance with a request, hence no conversion has occurred.

In Which of the Following Situations Has Conversion NOT Occurred