What is the liability status of A who intends to steal B's hat but returns it upon seeing a policeman?

The correct answer is that this is not considered conversion. To determine liability for conversion, one must consider the key aspect of possession and the intent to deprive the owner of their property. Conversion involves an intentional exercise of dominion or control over someone else's property that interferes with the owner's rights.

In this scenario, A intended to steal B's hat but ultimately returned it upon seeing a policeman. The act of intending to steal does not suffice for conversion; rather, the actual exercise of control or dominion over the hat without returning it would constitute conversion. Since A returned the hat and did not permanently deprive B of its use or possession, conversion is not applicable.

The notion of attempted theft may come into play if there is consideration of criminal liability, but for tort law specifically related to conversion, A's act of returning the hat indicates that there was no full exercise of control, which distinguishes it from conversion. Therefore, the act does not meet the criteria for conversion as defined in tort law.