A bailee that in good faith has received goods and delivered or otherwise disposed of the goods according to the terms of a document of title or pursuant to Chapter 55, Article 7 NMSA 1978 is not liable for the goods even if:

(1) the person from which the bailee received the goods did not have authority to procure the document or to dispose of the goods; or

(2) the person to which the bailee delivered the goods did not have authority to receive the goods.

History: 1953 Comp., § 50A-7-404, enacted by Laws 1961, ch. 96, § 7-404; 2005, ch. 144, § 79.

OFFICIAL COMMENTS

UCC Official Comments by ALI & the NCCUSL. Reproduced with permission of the PEB for the UCC. All rights reserved.

Prior Uniform Statutory Provision. — Former Section 7-404 [55-7-404 NMSA 1978].

Changes. — Changes reflect the definition of good faith in Section 1-201 [55-1-201 NMSA 1978] and for style.

This section uses the test of good faith, as defined in Section 1-201 [55-1-201 NMSA 1978], to continue the policy of former Section 7-404 [55-7-404 NMSA 1978]. Good faith now means "honesty in fact and the observance of reasonable commercial standards of fair dealing." The section states explicitly that the common law rule of "innocent conversion" by unauthorized "intermeddling" with another's property is inapplicable to the operations of commercial carriers and warehousemen that in good faith perform obligations that they have assumed and that generally they are under a legal compulsion to assume. The section applies to delivery to a fraudulent holder of a valid document as well as to delivery to the holder of an invalid document. Of course, in appropriate circumstances, a bailee may use interpleader or other dispute resolution process. See Section 7-603 [55-7-603 NMSA 1978].

Cross References. — Section 7-603 [55-7-603 NMSA 1978].

"Bailee". Section 7-102 [55-7-102 NMSA 1978].

"Delivery". Section 1-201 [55-1-201 NMSA 1978].

"Document of title". Section 1-201.

"Good faith". Section 1-201.

"Goods". Section 7-102.

"Person". Section 1-201.

"Receipt of goods". Section 2-103 [55-2-103 NMSA 1978].

"Term". Section 1-201.

Repeals and reenactments. — Laws 2005, ch. 144, § 79, effective January 1, 2006, repealed former 55-7-404 NMSA 1978 as enacted by Laws 1961, ch. 96, § 7-404, and enacted a new section. Pursuant to 12-2A-14 NMSA 1978, the 2005 revision is considered an amendment rather than a new enactment.

Am. Jur. 2d, A.L.R. and C.J.S. references. — 13 Am. Jur. 2d Carriers § 474; 78 Am. Jur. 2d Warehouses §§ 201, 204.

Lack of endorsement or irregular endorsement of warehouse receipt or bill of lading as affecting privilege of goods, 18 A.L.R. 588.

Effectiveness, as pledge, of transfer of nonnegotiable instruments which represent obligations, 53 A.L.R.2d 1396.

93 C.J.S. Warehousemen and Safe Depositaries § 27.