978-0134004006 Chapter 47 Lecture Note

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385

Jeremy Bentham

I. Teacher to Teacher Dialogue

key area.

In addition to the substantive areas of the law of personal property, you might want to

introduce these materials as part of a body of law (the others being real property, insurance, wills,

and trusts) that is very much interconnected with their personal planning strategies.

Insurance is defined as a contractual arrangement whereby one undertakes to indemnify

insurance is more vital than ever.

The study of personal property revolves around being able to answer three key questions:

1. How it this property classified?

2. How is this property acquired or transferred?

3. What are the legal consequences of the answers to questions 1 and 2?

All personal property falls into one classification or another. The type of classification used will

have important consequences on how property will be treated in the eyes of the law. For example,

consider the basic distinction between real and personal property. Sales of real property

In addition to classification, the acquisition and transfer of rights and duties to property are of

key personal and business importance. Most property is transferred by way of contract with some

sort of reciprocal exchange of consideration. You work, get paid, and that money is exchanged

PERSONAL PROPERTY AND

BAILMENT

Chapter 47

II. Chapter Objectives

1. Define personal property.

2. Describe the methods for acquiring and transferring ownership in personal property.

property.

4. List and describe the elements for creating a bailment.

5. Explain the liability of bailees for lost, damaged, or destroyed goods.

III. Key Question Checklist

 What is the difference between real and personal property?

 How can property be acquired or transferred legally?

 Explain the differences among mislaid, lost, and abandoned property.

IV. Text Materials

Introduction to Personal Property and Bailment

Sometimes personal property is delivered to another party for transfer, safekeeping, or some other

purpose. This is called a bailment.

Personal Property

Personal property consists of everything that is not real property. Real property is tangible

property like autos, furniture, jewelry, and intangible property such as securities, patents, and

Ownership of Personal Property

Personal property may be acquired or transferred with a minimum of formality.

Personal Property and Bailment

Possession or Capture – Taking possession of unowned personal property or capturing it, will

Purchase – The most common form of acquisition is by purchase from the owner.

Production – Another common form of acquisition is when a manufacturer produces a finished

product from raw materials.

Gift – A voluntary transfer of property without consideration from a donor to a donee is called a

Uniform Gift to Minors Act and Uniform Transfers to Minors Act – These acts were

drafted by the National Conference of Commissioners on Uniform State Laws and do not become

Accession – When the value of personal property increases because it is added to or improved by

natural or manufactured means, it is called accession. If it is improved wrongfully, the owner

acquires title and does not have to pay for the improvements. If the improvements are made

Confusion – Confusion occurs when two or more persons commingle fungible goods, because it

Will, Living Trust, or Inheritance – If a person dies with a will, property will pass to

Divorce or Annulment – Divorce generally serves to eliminate ownership rights of jointly held

property within a marital estate.

Mislaid, Lost, and Abandoned Personal Property

Ownership rights to property will vary depending on whether the property is mislaid, lost, or

abandoned.

becomes an involuntary bailee.

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Abandoned Property – Property is considered abandoned if the owner has discarded it with the

intent to relinquish his/her rights to it or the owner of mislaid or lost property gives up all further

attempts to locate it. The finder of the property acquires title to it.

as a finder. The daughters claimed the money was mislaid property that belonged to them. The

current owners of the house contended it was theirs. The court was faced with the question of

whose money was it.

Issue: Was the property at issue mislaid or abandoned property?

property which belong to the estate.

Ethics Questions: The daughters did not know about the money otherwise they would not have

Ethics: Estray Statutes Promote Honesty in Finders

Bailment

A bailment is a transaction in which the owner (the bailor) transfers his personal property to be

held, stored, delivered, or for some other purpose to a bailee, without transferring ownership.

property.

Case 47.2 Bailment: Ziva Jewelry, Inc. v. Car Wash Headquarters, Inc.

897 So.2d 1011, 2004 Ala. Lexis 238 (2004), Supreme Court of Alabama

Facts: Stewart Smith was employed by Ziva Jewelry as a traveling sales representative. In

Personal Property and Bailment

shows. Smith testified that he knew that thieves are aware of jewelry trade shows and sometimes

Tunnel Car Wash, owned by Car Wash Headquarters, Inc. (CWH). At Rain Tunnel, the driver

leaves his or her vehicle with employees of the car wash, and the vehicle is sent through a wash

“tunnel.” Upon completion of the car wash cycle, an employee drives the vehicle to another area

of the car-wash premises to be hand dried. Once the vehicle is dried, the driver is signaled to

retrieve the vehicle.

about 15 minutes later by the police, the jewelry was gone.

Ziva Jewelry sued CWH to recover the value of the jewelry, alleging that a bailment had

been created between Ziva and CWH and that CWH, as the bailee, was negligent in not

protecting the bailed goods. CWH defended, arguing that no bailment was created and therefore it

responsibility for the jewelry hidden inside Smith’s trunk. Ziva Jewelry acknowledges that the

jewelry was not plainly visible; that its presence was not made known to the car-wash employees;

and that there was no reason that the employees should have expected expensive jewelry to be in

the trunk of Smith’s vehicle. Ziva Jewelry cannot claim that CWH knew or that it should have

bailment, the owner of the property is the bailor. The law of bailment establishes the rights,

duties, and liabilities of parties to a bailment. A bailment is different from a sale or a gift because

title to the goods does not transfer to the bailee. For a bailment to be created, it is important that

the bailee has exclusive control over the personal property and that the bailee knowingly accepts

not negligent.

Ordinary Bailments

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to protect the bailed property.

Bailment for the Sole Benefit of the Bailee – Bailments for the sole benefit of the bailee are also

gratuitous bailments, but here the bailee owes a duty of utmost care or duty of great care.

Duration and Termination of Bailments – Bailments generally expire at the time specified

(bailment for a fixed term), or sooner by mutual consent. A party who terminates a bailment in

Special Bailments

Warehouse Company – Warehousers are bailees that are engaged in the business of storing

property for compensation, and are subject to the rights and liabilities of ordinary bailees, owing a

bailor can purchase additional protection.

Warehouse Receipt – This is a document of title issued to a bailor by a company engaged in the

business of storing goods for hire. The warehouse company has a lien on the goods in their

possession against payment of the incurred expenses.

amount.

Case 47.3 Common Carrier Shipment: Rykard v. FedEx Ground Package System, Inc.

2010 U.S. Dist. Lexis 11097 (2010), United States District Court for the Middle District of

Georgia

or coins.

Issue: Is FedEx liable?

Decision: Rykard cannot recover from FedEx.

Ethics Questions: Rykard really cannot reasonably expect FedEx to cover this loss. So long as

FedEx informs customers of its policies and those policies are both reasonable and legal, it does

Personal Property and Bailment

Bill of Lading – These documents of title are issued by a carrier-bailee when goods are received

for transportation, creating a lien on the goods until payment for expenses is received.

V. Key Terms and Concepts

attempts to locate.

 Acceptance—For a gift to be created, it is essential that the gift is accepted by the donee.

 Accession—Occurs when the value of personal property increases because it is added to

or improved by natural or manufactured means.

 Annulment—The termination of a marriage.

compensation for work done or services provided.

 Bailee—A holder of goods who is not a seller or a buyer (e.g., a warehouse or common

carrier).

year.

 Bailment at will—A bailment without a fixed term; can be terminated at any time by

either party.

 Bailment for a fixed term—A bailment that terminates at the end of the term or sooner by

mutual consent of the parties.

 Bill of lading—A document of title that is issued by a carrier when goods are received for

transportation.

 Capture— A person can acquire ownership in unowned personal property by capturing it.

 Common carrier—A firm that offers transportation services to the general public. The

acquired by confusion.

 Consignee—The person receiving the goods. The bailee.

 Consignor—The person shipping the goods. The bailor.

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 Constructive delivery—Symbolic delivery.

 Delivery— Delivery must occur for there to be a valid gift.

 Delivery of possession—Delivery of possession involves two elements: (1) The bailee

must have exclusive control over the personal property, and (2) the bailee must

knowingly accept the personal property.

bailed goods.

 Duty of reasonable care—The duty that a reasonable bailee in like circumstances would

owe to protect the bailed property.

 Duty of slight care—A duty not to be grossly negligent in caring for something in one’s

responsibility.

 Estray statute—Most states have enacted estray statutes that permit a finder of mislaid or

lost property to clear title to the property on fulfillment of certain conditions.

 Express bailment—Most express bailments can be either written or oral.

 Elements of a bailment—The following three elements are necessary to create a bailment:

and (3) acceptance.

 Gift causa mortis—A gift that is made in contemplation of death.

 Gift inter vivos—A gift made during a person’s lifetime that is an irrevocable present

transfer of ownership.

 Inheritance—If a person dies, property may be distributed to heirs through inheritances.

(e.g., hotel, motel).

 Implied bailment—Finding and safeguarding of lost property is an example of implied

bailment.

 Innkeeper—The owner of a facility that provides lodging to the public for compensation.

 Innkeeper’s statutes—State statutes that limit an innkeeper’s common law liability. An

fact.

 Intangible property—Rights that cannot be reduced to physical form such as stock

Personal Property and Bailment

negligence, carelessness, or inadvertence.

 Mislaid property—When an owner voluntarily places property somewhere and then

inadvertently forgets it.

 Mutual benefit bailment—A bailment for the mutual benefit of the bailor and bailee. The

bailee owes a duty of ordinary care to protect the bailed property.

property.

 Possessory lien—Lien obtained by a bailee on bailed property for the compensation

owned by the bailor to the bailee.

 Real property—The land itself as well as buildings, trees, soil, minerals, timber, plants,

and other things permanently affixed to the land.

 Special bailments—Special bailments involve warehouse companies, common carriers,

and innkeepers.

buildings, goods, animals, and minerals.

 Through bill of lading—A bill of lading that provides that connecting carriers may be

used to transport the goods to their destination.

 Uniform Gift to Minors Act and Revised Uniform Gift to Minors Act—Acts that

establish procedures for adults to make gifts of money and securities to minors.

business of storing goods for hire.

 Will or inheritance—A way to acquire title to property that is a result of another’s death.