rate prevailing on the date of the wrong; in other cases the
exchange rate at the time of judgment is appropriate. Here
plaintiff contends that the "judgment date" rule best restores
Cronel to the position it would have occupied had the tortious
conduct not occurred.
This is a diversity case. The claim against Bernard is one for
conversion in Illinois. Bernard is not a party to the contract to
pay in Swiss francs, and the mere existence of such an agreement
does not govern the proper determination of damages.*fn2 Cf.
First National Bank of Mount Prospect v. York, 27 Ill. App.3d 614,
327 N.E.2d 400, 402 (1st Dist. 1975). Rather, relief should be
determined in accordance with the general rule applied in
Illinois for trover and conversion actions. The measure of
damages is the market value of the property at the time and place
of conversion, plus legal interest. Jensen v. Chicago & Western
Indiana R. Co., 94 Ill. App.3d 915, 50 Ill.Dec. 470, 485,
419 N.E.2d 578, 593 (1st Dist. 1981); Henkel v. Pontiac Farmers Grain
Co., 55 Ill. App.3d 898, 13 Ill.Dec. 635, 371 N.E.2d 352 (4th
Dist. 1977). The mere fact that plaintiffs are Swiss citizens,
and that they hoped for a set payment in Swiss francs, does not
justify deviating from this general rule. Cf. Charles Selon &
Assoc. v. Aisenberg, 103 Ill. App.3d 797, 59 Ill.Dec. 457,
431 N.E.2d 1214, 1217 (1st Dist. 1981) (the fact that the property
converted was gold, whose value fluctuates significantly over
time, does not render inapplicable the rule in Illinois that
damages are determined as of the date of conversion).
Assuming arguendo that the contract price in Swiss francs was
conclusive as to damages, moreover, the result would not be
significantly changed. Determination of the judgment in terms of
United States currency would require using the exchange rate in
existence on the date of the alleged conversion.
Although the issue most often arises in the context of a breach
of contract, the principles governing recovery for tortious
conduct are analogous. See Shaw, Savill, Albion & Co., Ltd. v.
The Fredericksburg, 189 F.2d 952, 955 (2d Cir. 1951). When faced
with this question, the courts have responded in a virtually
unanimous fashion. Where a tort occurs in the forum state,*fn3
but damages must be assessed in terms of foreign money, the rate
of exchange existing on the date the cause of action arose should
prevail. 40 Harv.L.Rev. 619, 625 (1927), and cases cited therein.
See The Verdi, 268 F. 908 (S.D.N.Y. 1920). Cf. Hicks v. Guinness,
269 U.S. 71, 46 S.Ct. 46, 70 L.Ed. 168 (1925); Compania Engraw
Commercial E. Industrial S.A. v. Schenley Distillers, Corp.,
181 F.2d 876 (9th Cir. 1950); Simonoff v. Bank, 279 Ill. 248,
116 N.E. 636 (1917).
Cronell responds that it is merely "fortuitous" that courts
chose a breach-day rule, and that judges simply selected the date
which would ensure the injured party the higher dollar amount.
This contention is not supported by the decisions they cite.
While, in the past, the rate of exchange prevailing at the date
of breach did predominantly favor the plaintiff, this fact does
not appear to be a significant reason for the court's choice of
a breach-date rule. For example, in one case relied upon by
Cronel, the court held that the judgment in American dollars was
computable at the rate of exchange in existence on the date of
breach not because this would benefit the
plaintiff, but rather because it was the majority rule:
The most of jurisdictions, in some tort and most
contract cases, follow the English and New York rule
and apply the rate of exchange prevailing at the date
of breach. . . . [W]e are of the view that the
California courts today would, in the domain of
contract law, follow the so-called New York doctrine.
Compania Engraw Commercial & Industrial S.A. v. Schenley
Distillers Corp., 181 F.2d at 879. Similarly, the Supreme Court
in Hicks v. Guinness, 269 U.S. 71, 46 S.Ct. 46, 70 L.Ed. 168
(1925), adopted the "breach date" because "[t]he loss for which
the plaintiff is entitled to be indemnified is the loss of what
the contractor would have had if the contract had been
performed; `. . . it happens at the moment when the contract is
broken, just as it does when a tort is committed, and the
plaintiff's claim is for the amount of that loss valued in money
at that time." Id. at 80, 46 S.Ct. at 47.
It is true that in Gylfe v. Trujillo, 209 F.2d 386 (2d Cir.
1959), the court stated that it is fairer to put the risk of
fluctuation of foreign exchange on the tort-feasor than on the
innocent party. At the same time, the court recognized that
controlling case authority supports the breach-day rule when the
tort occurs in the United States.*fn4 Further, what is fairer is
open to question. Bernard is sued as a forum resident for conduct
in the forum state. To the extent that the decline of the value
of the dollar reflected in the exchange rate is due to domestic
inflation, a recognition of that decline would place plaintiff in
a position more favorable than that of Bernard's neighbor, should
Bernard have converted his neighbor's goods. While there is an
unfairness in not recognizing the effects of inflation, that is
an unfairness which should be addressed by interest awards in
which interest rates reflect inflationary trends, not in singling
out a class of plaintiffs for special consideration (but see
below). Other factors affecting the exchange rate may bear little
relevance to the actual domestic purchasing power of the foreign
In accordance with the virtually unanimous case law, this court
would apply the exchange rate existing on the date the tortious
II. Prejudgment Interest
At the outset it should be noted that in "Illinois the right to
prejudgment interest in a conversion action arises only where
authorized by statute." Charles Selon & Associates, Inc. v.
Estate of Aisenberg, supra. That statute does not . . . recognize
the impact of inflation either by its rate or by general
applicability to losses which can be determined to reasonable
Cronel premises its request for prejudgment interest on that
part of the Illinois statute providing for an allowance of a 5
per cent interest rate on "all monies after they become due on
any bond, bill, promissory note, or other instrument of writing."
Ill.Rev.Stat. ch. 74, § 2 (1973) (emphasis supplied).
Alternatively, plaintiffs maintain that even if an award of
interest was not appropriate under the statute, interest may be
granted on the basis of equitable considerations.
Bernard argues that in order to recover prejudgment interest
Cronel, in addition to meeting the statutory requirements for
`money due on an instrument of writing,' must show that Bernard
unreasonably and vexatiously delayed payment. While there is some
case authority for Bernard's position that interest cannot be
awarded absent a showing of bad faith, see Grandview Development
Co. v. Finley Enter. Inc., 46 Ill. App.3d 348, 5 Ill.Dec. 166,
361 N.E.2d 305 (3d Dist. 1977); St. Joseph Hospital v. Corbetta
Construction Co., Inc., 21 Ill. App.3d 925, 316 N.E.2d 51 (1st
Dist. 1974), this court has previously held that "the better
reasoned view [is] that `the right to recover
interest on a written instrument is separate from and independent
of the right to recover interest on money withheld by an
unreasonable and vexatious delay of payment.'" Zinn v. Parrish,
No. 75 C 4235 (N.D.Ill. December 10, 1981), slip op. at 3,
quoting John Kubinski & Sons, Inc. v. Dockside Develop. Corp.,
33 Ill. App.3d 1015, 1023, 339 N.E.2d 529, 536 (1st Dist. 1975). See
also E.M. Melahn Construction Co. v. Village of Carpentersville,
100 Ill. App.3d 544, 56 Ill. Dec. 101, 427 N.E.2d 181, 186 (2d
Dist. 1981); Montgomery Ward & Co., Inc. v. Wetzel, 98 Ill. App.3d 243,
53 Ill.Dec. 366, 372, 423 N.E.2d 1170, 1176 (1st Dist.
1981); Haas v. Cravatta, 71 Ill. App.3d 325, 331, 27 Ill.Dec. 414,
418-19, 389 N.E.2d 226, 230-31 (2d Dist. 1979), Central National
Chicago v. Lumbermen's Mutual Casualty, 45 Ill. App.3d 401, 409,
3 Ill.Dec. 938, 943, 359 N.E.2d 797, 802 (1st Dist. 1977); Kansas
Quality Construction, Inc. v. Chiasson, 111 Ill. App.2d 277,
287-88, 250 N.E.2d 785, 789-90 (4th Dist. 1969). This conclusion
is supported by the policy considerations underlying an award of
prejudgment interest based on an "instrument of writing":
Statutory interest based on a written instrument is
not meant to be punitive but merely compensatory. A
refusal to pay a debt when due, even when based on a
good faith dispute, means that the debtor has the use
of the disputed funds until a court rules against
him. If a creditor is denied payment of a sum
rightfully his, he loses not only that sum but the
right to use it. In our society the use of money is
Haas v. Cravatta, 71 Ill.App.3d at 331-32, 27 Ill.Dec. at 419,
389 N.E.2d at 231.