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

Question

Quizplus · Accepted Answer

Conversion, in the context of negotiable instruments, refers to the wrongful possession or control of another's property that interferes with their rights. Options A, B, and D describe situations where there's an interference with the rightful owner's possession or control of the instrument, constituting conversion. Option C describes a proper action by the drawee, returning the draft upon request, which does not interfere with the owner's rights and thus does not constitute conversion.

In Which of the Following Situations Has Conversion NOT Occurred