Here we address whether summary judgment was appropriately entered on claims of conversion and constructive trust when a third party came into possession of funds, ownership of which was disputed between the primary contracting parties. We hold that the record forecasts genuine issues of material fact with respect to both claims, and we therefore reverse and remand for further proceedings.
Background
Variety Wholesalers (“Variety”) is a large retail corporation with stores in fourteen states. To support its stores, Variety maintains significant shipping аnd trucking operations. At times pertinent here Salem Logistics (“Salem”), now bankrupt, provided logistical services to businesses, including freight bill auditing services. Ark Royal Capital, LLC (“Ark”) is an investment company that provides, among other services, asset-based loan arrangements to businesses. Asset-based loans are described here as a means for undercapitalized companies that cannot obtain traditional loans to receive a loan in exchange for a security interest in their assets, often accounts receivable.
In March 2006 Salem entered intо an asset-based loan agreement with Ark. Under that agreement (hereafter “Finance Agreement”) Ark provided a revolving line of credit to Salem through which Salem could pay its operating expenses. In exchange, Salem gave Ark a security interest in all its assets. The Finance Agreement capped the line of credit at the lesser of $2.2 million or 80% of Salem’s “Eligible Accounts,” which it defined as “valid, legally enforceable obligation[s]” that were “not subject to any claim, dispute or other defense.” Under the Finance Agreement Ark required Salem to forward any funds it rеceived and to instruct its customers to send payments directly to a lockbox account maintained by Ark at Wachovia Bank (now Wells Fargo 1 ). Ark used the money that came into the lockbox account to pay itself the interest and principal on Salem’s revolving *522 line of credit, thereby making further credit available to Salem. Salem had multiple clients that paid into the lockbox account, and the funds from those multiple clients were not segregated. Ark’s Chief Operating Officer, Allison Hanslik, joined Salem’s Board of Directors under the loan arrangement. Hanslik and research analyst David Pearson reviewed Salem’s accounts on a weekly basis before issuing borrowing certificates.
In July 2007 Variety entered into a contract (hereafter “Freight Agreement”) with Salem under which Salem would provide freight bill payment and auditing services. 2 The Freight Agreement has two distinct parts. Schedule A, titled “Services Provided,” describes the services that Salem would provide to Variety under that Agreement. Salem agreed to receive all of Variety’s freight bills from the carriers, audit the bills, prepare a master invoice for the bills, and send the invoice to Variety weekly. Variety would then send Salem the full amount shown on the master invoice. Salem would then pay the carriers. Schedule B of the Freight Agreement, titled “Contractor Rates and Charges,” describes the amounts Variety would pay to Salem for its services: $0.68 for each paper freight bill, $0.38 for each electronic freight bill, and $0.18 per small package. By letter Salem requested that Variety send the amounts on the master invoices directly to the Wachovia account, but did not inform Variety that the account was actually controlled by Ark.
Throughout the time Variety operated under the Freight Agreement, the company fielded complaints from its carriers that their payments were arriving late or not at all. Variety worked with Salem in an effort to alleviate the problem. Salem promised to do so but problems continued. Variety terminated the Freight Agreement in December 2008 and filed suit in January 2009 for recovery of approximately $888,000 it had forwarded to Salem which had not been paid to carriers. In the process Variety sought and received an order of attachment on the Wachovia account it believed bеlonged to Salem. In so doing Variety discovered that the account actually belonged to Ark. Variety demanded the missing funds be returned by Ark but Ark refused. Variety then amended its complaint to add Ark as a defendant.
The trial court conducted a period of discovery and depositions and received filings in support of and opposition to the parties’ motions for summary judgment. After a hearing, the trial court *523 entered summary judgment for Variety on its claim of conversion against Ark, and for Ark on Variety’s claim of constructive trust. The trial court ordered Ark to pay Variety $887,889.37, plus interest. Thе Court of Appeals reversed, and entered summary judgment for Ark on both issues. We now reverse and remand on both issues.
Summary Judgment
The standard of review for an order of summary judgment is firmly established in this state. We review a trial court’s order granting or denying summary judgment de novo.
Builders Mut. Ins. Co. v. N. Main Constr., Ltd.,
Conversion
Variety’s first claim against Ark alleges conversion. This Court has stated that “[t]he tort of conversion is well defined as ‘an unauthorized assumption and exercise of the right of ownership over goods or personal chattels belonging to another, to the alteration of their condition or the exclusion of an owner’s rights.’ ”
Peed v. Burleson’s, Inc.,
Before both the Court of Appeals and this Court, Variety offered a theory of bailment to show that it retained ownership of the funds *524 at issue, but we conclude it is unnecessary to address the bailment argument. The question is one simply of contractual intent: whether the agreement between Variety and Salem contemplated that the funds sent by Variety under Schedule A would become Salem’s property or would merely pass through Salem on their way from Variety to Variety’s carriers.
Variety argues that the contract’s terms specifically describe a several step process in which thе funds Variety sent to Salem under Schedule A would be used exclusively and immediately to pay Variety’s carriers. The pertinent steps of this process as shown in Schedule A (“Services Provided”) of the Freight Agreement are: “7. A master invoice id [sic] prepared once a week and submitted to Client in electronic or hard copy format (or both)[.] 8. Payment is received from client. 9. Monies are immediately distributed to carriers[.]”
The Court of Appeals interpreted the provisions of the contract to contemplate that in Step 8, Variety would pay Salem the amоunt on the master invoice in compensation for Salem’s services, and that in Step 9, Salem would pay, out of its general funds, the bills to the carriers.
Variety Wholesalers, Inc. v. Salem Logistics Traffic Servs., LLC,
_ N.C. App. _, _,
Black’s Law Dictionary defines payment as “[t]he money or other valuable thing so delivered in satisfaction of an obligation.”
The use of the term “payment” is clear, so we may infer that Variety and Salem intended that the money transferred was for the satisfaction of an obligation in the form of Salem’s services.
The use of the term “payment” does not support an interpretation that Variety retained ownership in the funds upon transfer.
Id.
at _,
Instead, we see more than one possible meaning, depending on the resolution of certain disputed facts, such as those determining intent. Intent is a question of fact. Here there is conflicting еvidence on the factual matters bearing on contractual intent, which is the
*525
central inquiry in determining whether Variety retained ownership of the funds. As such, the question of contractual intent poses a genuine issue of fact material to Variety’s conversion claim. As this Court has previously stated, “[w]hen an agreement is ambiguous and the intention of the parties is unclear, however, interpretation of the contract is for the jury. ‘An ambiguity exists in a contract when either the meaning of words or the effect of provisions is uncertain or capable of several reasonable interpretations.’ ”
Schenkel & Shultz, Inc. v. Hermon F. Fox & Assocs.,
Moreover, we have stated that contracts are to be construed “ ‘consistently with reason and common sense.’ ”
Stephens Co. v. Lisk
,
The materials in the record provide evidence to support both of these interpretations. George Blackburn, Variety’s general counsel, testified at deposition that “[o]ur understanding was . . . the funds actually belonged to either Variety or the carrier,” and “the contract contemplated that all that ever happened was [the money] passed through Salem’s hands.” Tim Hedgepeth, Variety’s transportation manager for the second half of the Salem contract, also testified that “money was funded to Salem” and the money sent “was to pay those invoices.” On the other hand, Salem’s Chief Financial Officer, Kerry Yow, testified that Salem treated the funds Variety sent as “revenue” and the payments to carriers as “costs of goods sold.” When Ark had Salem conduct an audit of receivables in October 2008, Variety confirmed by letter that the amounts owed on their accounts were receivables. While this is only a small sampling of the available evidence and testimony, it reveals a conflict over the meaning of these contractual terms. Therefore, we conclude that this genuine issue of the material fact of contractual intent precludes summary judgment on the conversion claim.
*526 In lieu of simply remanding at this point, though, we conclude that some further discussion of secondary issues is warranted. By granting summary judgment in Variety’s favor on the conversion claim, the trial court implicitly addressed and rejected Ark’s defenses of bona fide purchaser without notice, commingling, and lack of possession of the funds.
In its First Affirmative Defense, Ark claimed that Variety’s payments “were commingled with other funds and re-advanced to Salem and Ark Royal is no longer in possession of those funds.” In its Fourth Affirmative Defense, Ark claimed that it “gave value for the Variety accounts receivable and the payments on these accounts without knowledge that these accounts receivable or the funds in payment thereof were anything other than what the Salem Logistics Defendants represented them to be.” Further, in its Motion for Summary Judgment, Ark argued that summary judgment in its favor was appropriate because Variety’s money “was immediately commingled with other monies and was not thereafter segregated or specifically identifiable and a conversion claim cannot lie under such circumstances” and because Ark “received funds in good faith without notice of any adverse claim to such funds and gave value therefor.” Thus, Ark clearly raised these defenses at the trial level, and the trial court by necessity resolved all of these defenses against Ark. For the sake of clarity, at least as to which issues remain for trial among those properly presented to this Court, we conclude the better approach is to address these secondary aspects of the conversion claim.
Bona Fide Purchaser Defense
If a jury were to decide the question of contractual intent — and thus ownership of the funds — against Variety, the conversion claim would end there. Oh the other hand, if the Freight Agreement is interpreted to designate Salem as a mere conduit such that the funds remained Variety’s property until paid to the carriers, Variety and the trial court must then contend with Ark’s defense that Ark “gave value for the Variety accounts receivable.” In essence this argument, pleaded as Ark’s fourth affirmative defense, is that Ark was a bona fide purchaser for value without notice that Salem may have been simply a conduit. A party who comes into possession of stolen or converted funds “ ‘will not be permitted thus to use [the] funds when he is fully aware of their nature, or there are circumstances to awaken suspicion and put him on inquiry,’ ”
Lavecchia v. N.C. Joint Stock Land Bank of Durham,
Based on thе record we have, evidence of actual notice is scant at best. Variety may have to pursue a constructive notice theory. While articulations of the definition of constructive notice vary in North Carolina case law, this Court has discussed the underlying concept as follows:
Knowledge of facts which the [party] has or should have had constitutes notice of whatever an inquiry into such facts would have disclosed and is binding on the [party]. Whatever puts a person *528 on inquiry amounts in law to ‘notice’ of such facts as an inquiry pursued with reasonable diligence and understanding would have disclosed.
N. Nat’l Life Ins. Co. v. Lacy J. Miller Mach. Co.,
Commingling of Funds
There is one final issue that we must address before concluding our discussion of conversion. Even if the contractual issue and the notice issue are decided in Variety’s favor, Ark argues that, as a matter of law, Variety cannot maintain a claim for conversion of money unless the funds in question can be specifically traced and identified. Although this Court has not explicitly so stated, the general rule is that “money may be the subject of an action for conversion only when it is capable of being identified and described.”
Alderman v. Inmar Enters., Inc.,
“The requirement thаt there be earmarked money or specific money capable of identification before there can be a conversion has been complicated as a result of the evolution of our economic system.”
Campbell v. Naman’s Catering, Inc.,
In the context of this conversion claim, we conclude that funds transferred electronically may be sufficiently identified through evidence of the specific source, spеcific amount, and specific destination of the funds in question. Other courts confronting this challenge have held similarly. 4 Here Variety has provided evidence of multiple wire transfers of specific sums totaling $887,889.37 from its account to the Wachovia lockbox account. This documentation may be sufficient to meet the identifiable funds requirement and sustain a conversion claim but again, this issue is for the trier of fact to resolve.
Finally, Ark maintains that it no longer has possession of the money in question, having loaned it back to Salem and lost it when Salem went bankrupt. Ark argues that Variety cannot prove that Ark still has the money in question and therefore, cannot recover. If this
*530
were the rule, Ark would be completely immunized from liability even for clear and deliberate conversion of funds, simply by the nature of the revolving line of credit. We decline to so hold. Rather, the rule cited numerous times by our Court of Appeals seems appropriate here: “ ‘ “The essence of conversion is not the acquisition of property by the wrongdoer, but a wrongful deprivation of it to the owner ... and in consequence it is of no importance what subsequent application was made of the converted property, or that defendant derived no benefit from the act.” ’ ”
Mace v. Pyatt,
Constructive Trust
Variety’s second issue here stems from its claim seeking to have the trial court impose a constructive trust on Ark. We hold that summary judgment was inappropriate on this issue as well. As we did in the discussion of conversion, here we conclude that additional discussion of constructive trust and its secondary issues is warranted, because both the Court of Appeals and the trial court relied on the erroneous assumption that there can be no constructivе trust in the absence of a fiduciary relationship. Resolution of this claim on remand will require examination of the issues of notice and possible unconscientious acquisition of the funds, as well as Ark’s defense of commingling raised below. We conclude that clarity is best served if we reverse summary judgment and also address what could have been an alternative basis for the summary judgment order.
A constructive trust is a duty, or relationship, imposed by courts of equity to prevent the unjust enrichment of the holder of title to, or of an interest in, property which such holder acquired through fraud, breach of duty or some other circumstance making it inequitable for him to retain it against the claim of the beneficiary of the constructive trust.
Wilson v. Crab Orchard Dev. Co.,
It appears unlikely that Ark owed an explicit fiduciary duty to Variety. Lenders do not ordinarily owe fiduciary duties to their borrowers’ customers.
See Lassiter v. Bank of
N.C.,
Despite the probable lack of fiduciary duty, if Ark had actual or constructive notice that Salem did not have ownership of the funds deposited in the Wachovia account, Ark’s continued acceptance of those funds could be considered unconscientious or inequitable and could thus permit the imposition of a constructive trust. As described earlier, the question of actual or constructive notice here is a gеnuine issue of material fact. If Ark had notice, actual or constructive, the ultimate decision whether to impose a constructive trust as an equitable remedy would rest in the discretion of the trial court.
See Kinlaw v. Harris,
Commingling of Funds
The constructive trust issue involves a similar tracing and identification analysis as is presented in the conversion claim. Ark cites to case law involving constructive trusts and “trust pursuit” doctrine that rеquires tracing and identification of funds.
See, e.g., Edgecombe Bank & Trust Co. v. Barrett,
“[w]here a trustee so mingles the trust fund or property with his own or so invests it in property together with his own that the trust fund or property cannot be separated or the amount of each ascertained, the whole mixed fund or property becomes subject to the trust except so far as the trustee may be able to distinguish or separate his own, and the burden of making the separation or distinction is on the trustee or his representative, and the rule applies as long as any portion of the fund or property with which the trust fund or property can be traced remains.”
People’s Nat’l Bank v. Waggoner,
Conclusion
Because there are genuine issues of material fact to be resolved here, we hold that summary judgment was improper. Accordingly, the trial court also erred in its award of damages to Variety. We reverse the decision of the Court of Appeals and remand this case to that court for remand to the trial court for further proceedings not inconsistent with this opinion.
REVERSED AND REMANDED.
Notes
. In December 2008 Wells Fargo acquired Wachovia; by October 2011 the names of all ongoing Wachovia entities had been changed to Wells Fargo.
. Variety and Salem also discussed and negotiated a proposal for Salem to provide some shipping services in addition to the bill auditing services; however, a draft agreement on this subject was never signed.
. Arlc’s brief to this Court mentioned in passing the Uniform Commercial Code as another potential defense. Variety argues, and we agrеe, that the trial court did not address this issue and we need not reach it. However, amicus curiae argues at some length that the UCC precludes the conversion claim here because Ark was a holder in due course. We note in response that all “holder in due course” defenses require that the holder have received the property in good faith, for value, and
without notice. See, e.g.,
N.C.G.S. § 25-3-302(a)(2) (2011). Thus, the analysis would be no different under the UCC — if Ark had no notice, it is immune from liability, but if it did have notice, it is not. Amicus also claims that the UCC preempts the conversion claim entirely as inconsistent with the rights and liabilities created by Article 4A, governing “Funds Transfers.”
See id.
§ 25-4A-102 cmt. para. 4 (2011). Though North Carolina courts have not addressed this particular issue before, on this argument, we find the Eleventh Circuit’s analysis persuasive: “Article 4A is silent with regard to claims based on the theory that the beneficiary bank accepted funds when it knew or should have known that the funds were fraudulently obtained. Therefore, a provision of state law that requires a receiving or beneficiary bank to disgorge funds that it knew or should have known were obtained illegally when it accepted a wire transfer is not inconsistent with the goals or рrovisions of Article 4A____Interpreting Article 4A in a manner that would allow a beneficiary bank to accept funds when it knows or should know that they were fraudulently obtained, would allow banks to use Article 4A as a shield for fraudulent activity. It could hardly have been the intent of the drafters to enable a party to succeed in engaging in fraudulent activity, so long as it complied with the provisions of Article 4A.”
Regions Bank v. Provident Bank,
.
See, e.g., ADP Investor Commc’n Servs., Inc. v. In House Att’y Servs., Inc.,