Suppose that Demery had gone to work for a company not owned or managed by a family member and had stolen funds from it to pay Georg. Would Georg then be the more innocent party? Why or why not?

Clinton Georg employed Cassandra Demery as a bookkeeper at his business, Freestyle until he discovered that she had embezzled more than $200,000 and had failed to pay $240,000 in state and federal taxes owed by Freestyle. Georg fired Demery and said that if she did not repay the embezzled funds, he would notify the authorities. Demery went to work as a bookkeeper for Metro Fixtures Contractors, Inc., a company owned by her parents. She wrote a check to Freestyle for $189,000 out of Metro’s account and deposited it into Freestyle’s checking account. She told Georg that the check was a loan from her family to enable her to repay him. Georg used the funds to pay his back taxes. Two years later, Metro discovered Demery’s theft and sued Georg and Freestyle for conversion (see Chapter 4), as Demery had no authority to take the funds. The trial court held that Freestyle was a holder in due course (HDC) and granted summary judgment. Metro appealed. The appeals court reversed, holding that because Demery deposited the check directly into Freestyle’s account, Freestyle could not have been an HDC as it never had actual possession of the check. Georg and Freestyle appealed.