PERSONAL PROPERTY AND BAILMENT CHAPTER 47 PERSONAL PROPERTY AND BAILMENT © 2010 Pearson Education, Inc., publishing as Prentice-Hall

Property Real property – land and property permanently attached to it. E.g., buildings, fixtures, trees, soil, minerals, timber, and plants. Personal property – property that is not real property. E.g., book, car, stock certificate.

Personal Property Tangible Property – All real property and physically defined personal property. E.g., buildings, goods, animals, and minerals. Intangible Property – Rights that cannot be reduced to physical form. E.g., stock certificates, certificates of deposit, bonds, and copyrights.

Acquiring Ownership of Personal Property Possession or capture Purchase Production Gift Will or inheritance Accession Confusion Divorce

Ownership Acquired By Possession or Capture Acquiring ownership of unowned property in its natural state. Important when country was being developed. Rare in today’s society.

Acquiring Ownership by Purchase or Production Purchasing the property from its rightful owner. Producing a finished product from raw materials and supplies.

Acquiring Ownership by Gift Voluntary transfer of title to property without payment of consideration by the donee. Three elements for valid gift: 1. Donative Intent 2. Delivery (physical or constructive) 3. Acceptance

Gifts Gifts inter vivos are made during donor’s lifetime. Irrevocable present transfers of ownership. Gifts causa mortis are made in anticipation of death. Can be revoked up until time of death. Takes precedence over prior will.

Uniform Gifts to Minors Act Uniform Transfers to Minors Act Establish procedures to make irrevocable gifts to minors. Gifts of money deposited in financial institution. Gifts of securities registered in name of trustee as custodian. Donor or trustee acts as custodian of funds.

Ownership Acquired by Will or Inheritance Property distributed to beneficiaries named in a will. Property distributed to heirs stipulated in an inheritance statute.

Ownership Acquired by Accession When value of personal property increases because it is added to or improved by natural or manufactured means, accession belongs to the owner. E.g., when horse gives birth to a colt.

Ownership Acquired by Accession (continued) If improvement is made wrongfully, owner acquires value of improved property. E.g., when thief steals car and puts new engine in it. If improvement is made mistakenly and improvement cannot be removed, owner acquires value of improved property. E.g., when addition to house is made larger than planned.

Ownership Acquired by Confusion Occurs when fungible goods are commingled. E.g., oil, grain, cattle. Owners share title to the commingled goods in proportion to the amount of goods contributed.

Ownership Acquired by Divorce When a marriage is dissolved by a divorce, the parties obtain certain rights in the property of the marital estate.

Mislaid Property Owner voluntarily places property somewhere and then inadvertently forgets it. Owner of the premises where the personal property is mislaid entitled to take possession of the property against all except the rightful owner. Claim is superior to rights of finder. Must take reasonable care of property until it is reclaimed by owner.

Lost Property Owner leaves property somewhere because of negligence, carelessness, or inadvertence. Finder obtains title to the found property against everyone except the true owner.

Estray Statutes Finder of mislaid or lost property obtains clear title to the property if: Finder reports find to an appropriate government agency. Finder or government advertises the lost property Owner does not claim the property within a stated time period (e.g., one year).

Abandoned Property Property is abandoned if: An owner discards the property with the intent to relinquish his or her rights in it, or An owner of mislaid property gives up any further attempts to locate it. Finder of abandoned property acquires title.

Bailment Owner of personal property (bailor) transfers the property to another (bailee) to be held, stored, delivered, or for some other purpose. E.g., warehouse or trucking company holds property. Title to property not transferred. Bailee must follow bailor’s directions concerning the property.

Goods transferred for safekeeping, storage, or transportation Parties to a Bailment Bailor Bailee Goods transferred for safekeeping, storage, or transportation

Elements to Create a Bailment Personal Property Only personal property can be bailed. Delivery of Possession The bailee has exclusive control over the personal property. The bailee must knowingly accept the personal property.

Elements to Create a Bailment (continued) Bailment Agreement A bailment may be either express or implied. Express bailments can be either written or oral. Under the Statute of Frauds, a bailment must be in writing if it is for more than one year. A bailment may be implied from the circumstances.

Ordinary Bailments Bailments for the sole benefit of the bailor. Bailee cares for property as a favor. Bailments for the sole benefit of the bailee. Bailee asks to use bailor’s property for personal reasons. Bailments for the mutual benefit of the bailor and bailee.

Ordinary Bailee’s Duty of Care Type of Bailment Duty of Care Owed by Bailee Bailee Liable to Bailor for For the sole benefit of the bailor Slight Gross negligence For the sole benefit of the bailee Great Slight negligence For the mutual benefit of the bailor and bailee Ordinary Ordinary negligence

Duration and Termination of Bailments Bailment for fixed term – A bailment that terminates at the end of the term or sooner by mutual consent of the parties. Bailment at will – A bailment without a fixer term; can be terminated at any time by either party.

Special Bailments Common Carriers Warehouse Companies Innkeepers

Warehouse Company Bailee engaged in storing property for compensation. Ordinary bailee. Owes duty of reasonable care. Liable only for loss from own negligence. Can limit liability by offering bailor opportunity to increase limit for an additional charge. Warehouse receipt indicates lien on stored items for expenses of storage.

Common Carrier Offers transportation services to public. E.g., airlines, railroads, trucking companies. Mutual benefit bailment. If goods are lost or damaged, carrier is liable. Act of God and other exceptions. Can limit liability by offering bailor an opportunity to purchase higher limit. Bill of lading issued by carrier-bailee when goods are received.

Common Carrier (continued)

Innkeeper’s Statute Under common law, innkeeper held to strict liability standard for loss of personal property. Most states have enacted Innkeepers’ Statutes to limit liability of innkeepers if safe is provided and guests are aware of safe. May also limit dollar amount of liability.