this court is a conversion action the defendant of dominic was unquestionably the lone architect and beneficiary of this conversion the facts are obvious and the district court committed reversible error in entering summary judgment in its favor very very simply the facts are on its final days and business hunch tractor completed its largest sale ever eight hundred twenty five thousand dollars instead of remitting those proceeds to its floor plan lender c n a age mr brown has seized the opportunity to use those proceeds to pay loans to their bank loans which not coincidentally were the only loans that mr guaranteed and were the only loans which mr parker on had pledged one point five million in personal liquid assets to secure mr pitt gano committed this conversion for his own benefit there are three independent grounds for conversion liability here all of which are well grounded in law first mr director the conversion second of all he effectively received the proceeds due to see an age to repayment of his debts and third he received the traceable proceeds of the conversion by obtaining return of his pledged stock in order first mr berg and it was liable for his own actions he is liable for the conversion he directed the district court concluded that mr began had directed the conversion and benefited from the conversion but he was insulated from liability because he directed the conversion on behalf of the corporation tractor that statement is an error of law the law in kentucky is very clear that if a shareholder of a corporation converts proceeds even off on behalf of his corporation the individual is still liable that we doesn't there have to be some wrongful there in if you had a major shareholder of a of a company and he caused the company to engage with him mean that that might be exercising control but if the company had the power to do that it's within their rights to do it it wouldn't be a conversion when there is an element of intent contained in conversion however an officer can unwittingly commit conversion if you take possession or control of collateral due to another and directed to another the if your acts are knowing then the liability follows the  collateral for that was on the floor of the tractor it was a case dealership see n h capital provided the floor plan the whole cell phone answering for the dealership when anything was sold any collateral was sold such as the twelve backhoes that are alternately at issue in this case the funds received by the dealership were immediately due to see and each capital towards application to the floorplan line of credit instead of remitting those proceeds to see and each committed conversion of something that's just oda somebody else see n h had the right to possession of the collateral so it's not a conversion is not necessarily premised only on ownership so if someone were to steal a least car for instance the lessee of the vehicle could still sue for conversion because they have a right to possession and for whatever reason what is the evidence that shows that mr gado actually directed the money be paid to the bank as opposed to see in age he left an e mail paper trail directing commonwealth bank on the day that the money was received mr pitt gano started immediately contacted commonwealth bank directing that the funds be used to pay off the line of credit and the term loan due in twenty eighteen and to close it understand contractor had never received this large of a payment in its life mr program knew that it came in and immediately contacted the bank telling them to use all of the money to pay off the loans as i recall he claims that he was unaware that some of these payments were being made and that the hut tractor he  receiving some receivables and money was somehow getting paid so i guess what you're arguing is that there is a genuine dispute as to facts in terms of his involvement in the directing the payment of that at best there is a fact question for mr program but there can be no question that in addition to directing the conversion he received the benefits of that conversion the proceeds were paid to commonwealth bank but they were effectively transferred to put mr pergamos own use and benefit that is a second grounds for imposing conversion liability here we cite to a an eastern district of virginia case federal insurance company vs smith where  a husband used insurance proceeds due to a lender in order to pay off the mortgage of he and his wife the court imposed conversion liability on the wife notwithstanding the fact that she never touched the money the court stated that if the money was used to satisfy her joint obligations than she received the benefit of that in his liable for conversion it said they were effectively transferred to the defendant's possession through the agency by which defendant chose to receive the funds here mr directed that the funds be sent to commonwealth bank for his own use and benefit that also supports conversion liability but tell me how this squares with your fraudulent conveyance claim because as i recall the district court case failed to name a necessary party commonwealth and i suppose there's a question as to whether there is a third party liability under kentucky law the we believe the facts support both conversion and fraudulent conveyance independently s to convert s to fraudulent conveyance a district court held that only commonwealth could be a defendant to this action intent to defraud a creditor the court focused exclusively on the term transfer transfer who received the money and while commonwealth was the payee there is no doubt that mr pratt got no received a gift which is absolutely precluded by the statute so the kentucky fraudulent conveyance act voids gifts made with the intent to avoid a creditor here mr absolutely received a gift the sum total of this transaction was funds were received by one tractor they were then paid to commonwealth so that mr pic gano could have tain the release of his stock that is a gift it's no different than someone going to a jewelry store and buying a ring for his wife  the jewelry store is the payee but the wife gets the gift the kentucky fraudulent conveyance act absolutely void gets you a question about the scope of relief under any of your theories you wouldn't be getting more than value of the payment by the state is that correct the the payment by the state was eight hundred twenty five thousand dollars not asking for more than eight hundred twenty five we're asking for eight hundred seventy seven thousand and the reason for that is that there were there was additional collateral sold by contractor in that same way you're not trying to make make the ghana liable for all the debts of the author ego claim would arguably impose damages on you asking all of that or the full we have asked for that yet when that doesn't doesn't the fact that you're asking for that sort of undermine the theory because it's hard to see how you have a claim for that for for all the debts of hunt tractor beyond this conversion or conveyance or taking the money that came from the state or whatever the conversion and the fraudulent conveyance action seek only imposition of liability for the amount transferred in satisfaction eight hundred seventy seven may i very quickly mr ok the conversion of fraudulent transfer action sequel me imposition of damages of roughly eight hundred seventy seven would be more than twice that much it could be yes if he is the alter much much more much more a wide ranging liability that you're seeking under this under this  we ask ourselves when this lawsuit was filed why would a simple transfer case it become so complicated why would you have all these alternative theories of damages and why would you not sue the transfer and the answer has become apparent because the transfer e the bank had as much right to this money and more than  reported on mat ad nauseum that's out after they get the money though right they have to get the money the money this transaction up until the loans were repaid was no different from any other transaction in ninety five years saying if a bank is owed money by somebody that that that person can pay the bank what he owes somebody else well he owes to him asking a hypothetical hypothetical be enforced because the transferee is not a party and you've got to transfer the fraudulent transfer simply unwinding the deal that's what that's that's the remedy put everybody back to where they were and you can't put them back to where they were unless you have a transfer read and i think i'm not sure but that answers your question justice roger but i think that once you deposit the money into the bank then the bank has as much right to it as c n n age or more and it's a business decision what bills are going to be terry bank and it's because of the priority we give to the bank had a security interest ace recorded security interest in the funds in the bank as well as the inventory anything they had a superior interest in the inventory and they had an interest in the proceeds but when the money went to the bank the bank had an interest in the money and the bank's interest in the money was superior to that of c n h that's black letter law that's that in kentucky and that is why they realize and the courts gave them months to bring in additional parti and we kept holding our breath thinking they're going to bring in the banks are going to bring in the bank but they never did but they were smarter than we were the reason they didn't bring in the bank is that they knew the bank had a sapir interest in the money so they couldn't unwind it they couldn't force the bank to give the money back and then the bank then they would get the money and and then the bank would go after the gato they knew that that wasn't going to work they were they just off smart of us but they didn't have a remedy because you have a company that has more debt than it has assets and so it paid off a debt and because the gano got a benefit for their thinking he is the transferee he owes some kind of a duty to see in a he has he's done something horribly wrong and all that happened here was the bank got paid what if there was a priority do you challenge that there was a priority body language expert on the bench that is scary but the question is do i not go i question the priority amount their answer is yes you see see seventy two question the priority yes what if you didn't question the priority in what is there i put that hypothetically speaking what if there is a priority what is so hard and you circumvent that just by putting the money in a bank no no i think if there was no prodding then you have to say you unbind but if improperly and i drive him around town here to the bar is there is he get to say to the is the owner of the rightful owner get to sue him and get money from him because he took a ride my car if you pay off the debts of somebody and that somebody is closely related to you like your spouse or an alter ego of yourself or your or your kids you pay off that debt with money that you owe somebody else that's a that's not the case you have to understand then you have to sue the person you pay off as the person who gets privately conveyed or has fraud you have posed on them has to sue that person who who who received the payoff on the debt is that the argument you have to sue the transfer or and the transfer so you're saying yes you have to sue guess you have to sue the diamond dealer in his example is he the transfer or did he if he had something to do with it on the transfer are you on your the diamond or who has the proceeds whatever it is well is the legislature to be sued what is the logic of saying that this injury he could have had to go through twelve steps and it ends up right here you have to sue all those people that's what the law says  put people back in the position they started with all those people in the middle a have it doesn't matter whether their position is changed right so and so gives it to someone so gives it to so and so gives it to you or gives it to your spouse or your kid seems like you thought they ought to be able to take it away from the spouse of the kid without making every one of those interim transactions undone right but you say that makes sense to do it that way what's the sense of the why kentucky law would be that way if it is well with kentucky legislature have this is a legislative scheme in kentucky and this is all we operate under there are a lot of laws in kentucky i think are silly but i try to obey and plea you have no logical explanation for the laws just something that might well i do if you're trying to you said it makes perfect sense i think it does what's the sense that's like well the sense is if if if the intent of the law is to put people back into the position that they were in before the fraudulent transaction then the parties to the transaction have to be parties to the lawsuit because they can't order the bank to give them money the bank is transferring they've got the money you can order the bank to give the money back to one tractor and hand to see an age if the the bank's not a part to the lawsuit that's what makes sense and this and i can it i can give you a hypothetical where it would make sense perhaps but this is not one of  how come you didn't ask the court to join the bank as an indispensable part well we were we were hoping they wouldn't be because then then they couldn't even  have now when i don't i don't see how it would never dawned on me to ask the bank to do ask the court to ask mr carter to sue the bank so that the statute requirements would be fulfilled i wasn't anxious for him to do it right and that's candid and very  or if i may first address the issue of the commonwealth bank lien in the deposit account proceeds a depository institution absolutely has a lien on funds deposited by its customers to secure any loans that the bank may have outstanding of those customers it does not however give a bank and enforceable lien against the collateral proceeds many many customers of banks have loans outstanding with the banks they deposit money into its account and they have unfettered use of that money to pay it as required two parties such as c and each capital who was due proceeds the only time that a depository institution has a right to enforce its lien and demand use of the funds in the deposit account is if there is a default in the loans by the customer to the bank or a bank can if there is a default or if there is some right of set off of the deposit institution then absolutely commonwealth bank in this instance could take the cash however the commonwealth bank did not take the money that was the defense all along that was their initial response to see n h was that we're sorry commonwealth bank came and took the money they had a superior write in it due to their depository institution lien and therefore you have no right that's not true commonwealth bank unequivocal under the evidence here did not declare  default did not set off any funds hunt tractor through mr pickard of voluntarily remitted the money to commonwealth but what about his other argument that you have to sue the bank because they're the transfer or rejecting ring example as being regardless of how attractive it is just not what the kentucky legislature has come up i understand but the kentucky fraudulent conveyance actors pacifically section three seventy eight twenty voids transfers or gives without consideration in this instance commonwealth bank gave consideration they received eight hundred and a commonwealth bank received eight hundred seventy seven thousand dollars it then extinguished the liability of one tractor in mr pre dawn oh and released a one point five million dollars in collateral so by the time c n a should own a ravelled this transaction commonwealth bank had given up everything that it once had it was a conduit a conduit only commonwealth bank was the paper i understand but on to it in my example a conduit you could have seven conduits that's the same the kentucky statute says you have to sue the condo it absolutely does not will can you cite something the owners  citations that he that it's nice to have a good crystal example absolutely the act itself states that any gift or transfer without consideration or with the attempt to avoid a creditor is void the bank and in turn released the lien on his wife's property the plaintiff sued the wife for a fraudulent transfer into the court don't have to sue the bank they're in their financial intermediary they are a conduit here commonwealth bank did not participate in the scheme it did not benefit in this scheme the only thing that it did was act as the conduit so that mr pedagog could be absolved of his liability and obtain release of his collateral and so the bank did not do anything wrong that the statute itself simply doesn't require that all of these parties be made a party to it now kentucky does have a preferential conveyance statute which is somewhat curious and it provides that if a centrally a preference is made to a creditor then the transfer or the transfer must be made parties to the action and this is three seventy eight zero six zero must be made parties so that the money can be returned basically in escrow to the quarter to the debtor for disbursement to all of the creditors much like the bankruptcy code that requires the transfer or in the transfer you to be parties this is not the action in which is before the court with this is a fraudulent conveyance action which has no such language in it whatsoever the the law in kentucky is that in addition to mcmurray we cited several other cases such as pierce vs j v pierce is trustee again or a debtors payment to satisfy the wife's liens on liens on a wife if i may finish wife's property is a fraudulent conveyance to the wife there is no need to impose liability or to require a suit against the