Cengage Advantage Books: Fundamentals of Business Law Today 10th Edition by Roger LeRoy Miller

تمرين 24

Welco Electronics, Inc. v. Mora
Court of Appeal of California, Second District, 223 Cal.App.4th 202, 166 Cal.Rptr.3d 877 (2014).
FACTS Darrel Derouis, the president of Welco Electronics, Inc., hired a certified bookkeeper to help him "find where his money went." During the investigation, discrepancies in Welco's credit-card statements were discovered. Statements from the credit-card company contained charges to AQM Supplies-a company established by Nicholas Mora, who worked for Welco as a quality assurance manager. The credit-card charges to AQM, which totaled more than $375,000, did not appear on Welco's copies of the statements. At the time of the transactions, AQM had leased a portable credit-card terminal, and funds paid through the terminal were electronically deposited into Mora's bank account.
Welco filed a suit in a California state court against Mora, alleging conversion. Welco sought the value of the funds allegedly converted, as well as interest, expenses, punitive damages, and other costs. The court ruled in Welco's favor, and Mora appealed.
ISSUE Can the use of a company's credit card by an employee to obtain funds from the company constitute conversion?
DECISION Yes. A state intermediate appellate court affirmed the lower court's judgment.
REASON The court noted that, "The tort of conversion has been adapted to new property rights and modern means of commercial transactions." The court acknowledged that, "historically, the tort of conversion was limited to tangible property and did not apply to intangible property," but added that "modern courts … have permitted conversion claims against intangible interests."
The owner of a checking account, for instance, has an intangible property interest in his or her checks. Other examples of instruments representing intangible property rights include a savings account, an insurance policy, a company's customer list, and a stock certificate. Credit card, debit card, and PayPal information may also be subject to conversion. The card or account information is similar to the intangible property interest in a check.
The court reasoned that when Mora misappropriated Welco's credit card and used it, he took part of Welco's credit balance with the credit-card company. The result was an unauthorized transfer to Mora of Welco's property rights.
FOR CRITICAL ANALYS IS-E-Commerce Consideration Can the appropriation of an Internet domain name constitute conversion? Explain.