05-04-11 ONE STEP UP LTD, VS. SAM LOGISTIC, INC., ET AL. A-2494-09T3
The primary issue in this case is whether a bailee can escape liability for conversion under the UCC's good faith exception, N.J.S.A. 12A:7-404. We hold that a bailee faced with adverse claims cannot avail itself of this exception where it failed to follow the procedure set forth in Capezzaro v. Winfrey, 153 N.J. Super. 267, 273 (App. Div. 1977). Specifically, in order to establish that the property was released in "good faith," the bailee must show that it either (1) investigated the competing claims and confirmed the validity of the claim underlying the release, or (2) filed an action for interpleader.
