Madison Capital Company, LLC v. S & S Salvage, LLC

765 F.Supp.2d 923 (2011)

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Madison Capital Company, LLC v. S & S Salvage, LLC

United States District Court for the Western District of Kentucky
765 F.Supp.2d 923 (2011)

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Facts

Timothy Smith owned three companies that were in the business of mining. Smith borrowed funds from Community Trust Bank (CTB) in February of 2005 to fund these companies through a $1,500,000 term loan and a $350,000 revolving loan. These loans were secured by the equipment of the mining companies, which included 85 Hemscheidt Shields (Shields). The Shields were metal roof supports that weighed about 15 tons each. In December 2005, Smith sold the Shields as scrap metal. Smith contends that he sold the Shields to S & S Salvage, LLC (S & S) (defendant), who then sold the Shields to River Metals Recycling, LLC (River Metals) (defendant). S & S claims that it was acting as an agent for Smith and only transported the Shields and used S & S’s account for the sale to River Metals on Smith’s behalf. River Metals purchased the Shields without any knowledge of Smith or his mining companies. Madison Capital Company, LLC (Madison) (plaintiff) also loaned Smith and his company funds and eventually purchased CTB’s security interest from February 2005 through an assignment. Madison sued S & S and River Metals for conversion. Each of the parties moved for summary judgment.

Rule of Law

Issue

Holding and Reasoning (McKinley, J.)

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