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Part Ten: Property
CONTENTS
Chapter 47 Introduction to Property, Property Insurance, Bailments, and Documents of Title
Chapter 48 Interests in Real Property
Chapter 49 Transfer and Control of Real Property
Chapter 50 Trusts and Decedents’ Estates
ETHICS QUESTIONS RAISED IN THIS PART
1. Under what circumstances should an insurance company be able to deny coverage to a person seeking health
or life insurance? Some small businesses and others today claim they are arbitrarily classified as risks for
health insurance. In a few cases single men in certain professions or who reside in certain areas of the
country are classified as being at risk for AIDS even though they test negative for the AIDS antibody and can
pass a physical examination. What criteria should an insurance company be able to use in assessing the risks
of its insured or potentially insured clients.
2. What are the ethical responsibilities of a property owner when an insurance policy is in effect on the
property? Does a small deductible clause in a policy make the property owner more or less likely to take
precautions to prevent damage to the property?
3. What is the purpose of an implied warranty of habitability? Is there an ethical obligation to provide such a
warranty even if the state where the property is located does not require one? Why?
4. Some retirement communities and homeowner's associations have clauses in the association agreement
which prohibit the property owners from having children reside with them. Why would a homeowner's
ACTIVITIES AND RESEARCH PROBLEMS
1. Collect insurance policies of a particular kind from various insurance companies and compare the terms.
2. Have students interview one or more insurance agencies to determine how they handle applications for
medical or life insurance when the prospective client has a serious medical problem such as AIDS or
diabetes or cancer. Are there certain people who are uninsurable? If so, who and why? Then have students
discuss and compare their findings.
3. Have students collect forms for various types of real estate transactions and then discuss the terms and
conditions of each of these transactions.
4. Research the local zoning restrictions for the area in which you live and discuss the restrictions.
5. Have students attend a local planning commission meeting to hear current issues involving land use in your
area.
6. Have students do research to find examples or cases involving each of the various types of trusts discussed in
the chapter. You might refer them to form books or tax planning manuals.
7. Have students research the intestacy laws in your state. Then have them draft a proposed will of their own.
Chapter 47
INTRODUCTION TO PROPERTY, PROPERTY
INSURANCE, BAILMENTS, AND DOCUMENTS OF
TITLE
I. Introduction to Property and Personal Property
A. Kinds of Property
1. Tangible and Intangible
2. Real and Personal
3. Fixtures
B. Transfer of Title to Personal Property
1. By Sale
2. By Gift
a. Delivery
b. Intent
c. Acceptance
d. Classification
3. By Will or Descent
4. By Accession
5. By Confusion
6. By Possession
II. Property Insurance
5. Waiver and Estoppel
6. Termination
III. Bailments and Documents of Title
A. Bailments
1. Essential Elements of a Bailment
a. Delivery of Possession
b. Personal Property
c. Possession for a Determinable Time
d. Restoration of Possession to the Bailor
2. Rights and Duties of Bailor and Bailee
a. Bailee's Duty to Exercise Due Care
b. Bailee's Absolute Liability to Return Property
c. Bailee's Right to Limit Liability
d. Bailee's Right to Compensation
e. Bailor's Duties
3. Special Types of Bailments
a. Pledges
Cases in This Chapter
Freeman v. Barrs Mirvish v. Mott Hadfield v. Gilchrist
Chapter Outcomes
After reading and studying this chapter, the student should be able to:
Define (1) tangible and intangible property, (2) real and personal
property, and (3) a fixture.
Explain (1) the ways to transfer title to personal property; (2) the three
elements of a valid gift; and (3) the difference in the law’s treatment
of abandoned property, lost property, and mislaid property.
With respect to property insurance, explain (1) the different types of
fires, (2) insurance clauses, (3) other insurance clauses, (4) insurable
interest, (5) valued and open policies, and (6) the defenses of
misrepresentation, breach of warranty, concealment, waiver, and
estoppel.
TEACHING NOTES
I. INTRODUCTION TO PROPERTY &
PERSONAL PROPERTY
Property is an interest, or a group of interests, that is legally protected. The
right to possess property, use it, sell it, and to control to whom it shall pass
on the death of the owner are all included within the term “property.”
In everyday life, people tend to think of property ownership in two ways:
1) as owning the physical thing itself (“I just bought a piece of property
in Oakland,” referring to a house and lot.); and
A. KINDS OF PROPERTY
*** Chapter Outcome***
Define (1) tangible and intangible property, (2) real and personal property, and (3) a
fixture.
Tangible and Intangible
Tangible property has a physical presence (land, books, etc.) while intangible
property does not. Examples of intangible property are a stock certificate, a
promissory note, and a deed; each stands for rights which cannot be reduced
to physical possessions but which have legal reality and will be judicially
protected.
The same item may be the object of both tangible and intangible property. If
Ann buys a book published by Brown & Sons, she owns that particular copy;
it is tangible property. However, Brown & Sons has the exclusive right to
Real and Personal
Real property is land and all interests in it. Personal property is every thing or
interest that is not real property. The transfer of real property during life can
be accomplished only through certain formalities, including execution and
delivery of a written instrument known as a deed. In contrast, personal
property may be transferred with relative simplicity and informality.
NOTE: See Figure 47-1: Kinds of Property.
Fixtures
Personal property that becomes so firmly attached to land so as to become
part of the realty. Unless otherwise provided by agreement, personal
property remains the property of the person who placed it on the real estate.
On the other hand, property that has been a=xed so as to become a fixture
(an actual part of the real estate) becomes the property of the real estate
owner.
When people have con>icting claims to ownership of personal property that
has become a fixture, the parties’ intention, as expressed in their
agreement, will control the settlement. When there is no express agreement,
the following factors are relevant in determining whether any particular item
is a fixture:
The most important test of whether an item is a fixture is whether it can be
removed without material injury to the land or building on the land; if not,
the item is generally held to have become part of the realty.
However, the test of purpose or use applies if the item can be removed
without damaging the property.
CASE 47-1
FREEMAN v. BARRS
Missouri Court of Appeals, Southern District, Division One, 2007
237 S.W.3d 285
http://caselaw.lp.findlaw.com/scripts/getcase.pl?court=mo&vol=/appeals/112007/&invol=5411107
Parrish, P. J.
Francis B. Freeman, Jr., (plaintiff) appeals a judgment for Mary Ann Barrs (defendant) in an
action plaintiff brought to replevy [recover] a cattle scale. * * *
In 2005, defendant purchased a tract of real estate consisting of approximately 4,000
acres from plaintiff for a price of $3,500,000. There were four residences on the property,
two barns, and a covered pole barn with open sides. The pole barn houses the cattle scale
that was the subject of plaintiff’s replevin action and an enclosed veterinarian office.
The contract between the parties was a form contract. Its paragraph 2 states:
Inclusions, Exclusions and Exceptions
The Property includes any and all rights, privileges and easements appurtenant
thereto, together with all existing buildings and improvements and all affixed
equipment now located thereon, if any, including all mechanical, HVAC, electrical
* * *
The Plaintiff purchased the present scale in June 2001 for Eleven thousand dollars
($11,000). The scale was sold as a portable model. Plaintiff placed the scale in a pole-type
barn on a concrete pad poured for the scale, then poured concrete ramps which would allow
cattle to enter and exit the scale. Plaintiff further welded iron fence into place to help funnel
the cattle through the scale area. * * *
* * *
Judgment was entered for defendant on plaintiff’s replevin claim. * * *
* * *
Paragraph 2 of the real estate contract between the parties unambiguously provides that
the sale included all affixed equipment located on the property. Courts do not rewrite
unambiguous contracts but construe them as written. [Citation.] Thus, as defendant suggests,
if the scale constitutes a fixture, the judgment will be affirmed.
A fixture is an article in the nature of personal property which has been so annexed to the
(2) the adaptation to the use to which the realty is devoted; and (3) the intent that the object
become a permanent accession to the land. [Citation.] These elements or tests all present
questions of fact and are not ordinarily resolvable by law. [Citation.] Whether or not an
article is a fixture depends upon the facts and circumstances of a particular case. [Citation.]
* * *
* * * The * * * two elements, adaptation and intent, are more important in determining
whether a chattel became a fixture than the method by which the chattel is affixed to a
freehold. [Citation.] Annexation that may be slight and easily displaced does not prevent an
article from becoming a fixture when the other elements are found. [Citation.]
Annexation
Plaintiff purchased the scale and printer in 2001. The scale was purchased by plaintiff to
“start selling cattle from the ranch and not sending them to the sale barn to keep the price up
a little.” It was placed in a roofed structure that housed cattle-working pens and a small
veterinary office. The scale weighs approximately 6,500 pounds. A fence and gates within
the structure had to be cut off in order to install the scale. A concrete slab was poured in the
Adaptation
Ray Stone had been ranch manager for plaintiff. At the time of trial he had an agreement
with defendant that permitted him to run cattle on the property. He was running 200 head of
cows and 90 calves on the property. He “just kind of [saw] after the place” for her. He told
the court that the scale was integral to a cattle-working facility. The scale was used to weigh
cattle for sale and to determine required dosages of medicine administered to cattle.
Intent
The scale was described as portable by its manufacturer. The manufacturer sold peripheral
items that permitted the scale to be moved. This included a trailer and an inverter. Plaintiff
did not buy that equipment. Ray Stone told the court that the scale was purchased “to be
stationary whether it was portable or not.”
This court concludes that the scale was a fixture; that, therefore, the sale of the real
estate on which it was situate included the sale of the scale. A 6,500-pound scale placed on a
to facilitate the cattle operation on the premises. It had been used for that purpose since its
purchase. Its adaptation for that purpose enhanced the operation of the cattle ranch.
Mindful that “[i]n determining the intention of the person making the annexation the
court … is not bound by [that person’s] testimony on this point, nor by his secret or
*** Chapter Outcome***
Explain (1) the ways to transfer title to personal property, (2) the three elements of a
valid gift, and (3) the difference in the law’s treatment of abandoned property, lost
property, and mislaid property.
B. TRANSFER OF TITLE TO PERSONAL PROPERTY
Real property can only be transferred with certain formalities. Personal
property may be transferred with relative simplicity and informality. The law
concerning personal property has been largely codified. The Uniform
Commercial Code (UCC or the Code) includes the law of sales of goods
(Article 2), as well as the law governing the transfer and negotiation of
negotiable instruments (Article 3) and of investment securities (Article 8).
By Sale
A sale of tangible personal property (goods) is a transfer of title to specified
existing goods for a consideration known as the price.
Title passes when the parties intend it to pass; transfer of possession is not
required for transfer of title.
By Gift
A gift is a transfer of property from one person to another without
consideration. Lack of consideration is the basic distinction between a gift
and a sale. For a gift to be complete there are three requirements: a)
delivery, b) intent, and c) acceptance.
Delivery — A gift must be completed by irrevocable delivery of the gift
property to be effective. A gratuitous promise to make a gift is not binding.
The term "delivery" includes but is not limited to manual transfer of the item
to the donee. Constructive delivery is the delivery of something symbolic of
control over the item.
CASE 47-2
MIRVISH v. MOTT
Court of Appeals of New York, 2012
18 N.Y.3D 510, 965 N.E.2D 906
http://scholar.google.com/scholar_case?case=7402616197320321465&hl=en&as_sdt=2&as_vis=1&oi=scholarr
Read, J.
Jacques Lipchitz, the Russian-born cubist sculptor, died in 1973 at the age of 81. He was
survived by his wife, Yulla H. Lipchitz, who inherited many valuable works of art from her
husband, including “The Cry,” a 1,100–pound bronze sculpture, cast three of seven,
1928–1929. After she was widowed, Yulla began a relationship with Biond Fury as early as
1980; the two of them lived together for 17 years prior to her death on July 20, 2003 at the
age of 92.
From time to time, Yulla would make gifts to Fury, including art created by her late
husband. She memorialized these gifts by giving Fury a picture of the artwork with a writing
describing the piece and declaring that it was a gift. After Yulla's death, Fury produced a
About a year later, the French minister of culture and communication approached Pierre
Levai, Marlborough's president, to ask about the possibility of placing “The Cry” on exhibit
in Paris for a period of five years, “with a view to its ultimately being purchased.” The
minister proposed to include “The Cry” in a group of modern and contemporary works to be
installed in the Tuileries Gardens near the Louvre Museum. On November 11, 1998, Levai
wrote the minister that he had discussed the French government's request “with the Lipchitz
family,” who agreed to loan the sculpture for three years, unless Yulla died earlier. At the
conclusion of the loan, Levai continued, the family was “prepared to negotiate a sale of the
mother's estate. He is an attorney, and he handled Yulla's financial affairs and held power of
attorney from her for many years prior to her death. Mott also performed legal work for
Marlborough, beginning as early as 1980.
According to Mott, he talked to his mother about the loan and, on her behalf, “consented
that [‘The Cry’] should be put on display in the [Tuileries Gardens] in Paris and it was and it
had [Yulla's] name on the loan.” The French government at some point also inquired if, once
[On March 9, 2004, Fury's attorney sent a letter and a copy of the deed of gift to Mott's
attorney, demanding immediate delivery of “The Cry” to Fury. Mott claims to have sold
“The Cry” and three other sculptures in a package deal in July 2004 to Marlborough
International Fine Art Establishment (Marlborough International) for $1 million. But in a
letter to the French minister dated January 10, 2005, six months after the purported sale of
“The Cry” to Marlborough International, Mott informed the minister that Yulla had passed
away in 2003; noted that “the agreement for the loan also provided that at its conclusion the
Lipchitz family would be prepared to negotiate a sale of the Sculpture”; and inquired “[o]n
Both Mott, as executor of Yulla's estate, and Mirvish filed petitions with the Surrogate's
Court seeking resolution of their conflicting claims of ownership of "The Cry." The
Surrogate's Court ruled in favor of Mirvish, concluding that Yulla had made a valid inter
vivos gift of “The Cry” to Fury because the wording of the deed of gift was “in the past
tense, i.e., ‘I gave this sculpture “The Cry” to my good friend Biond Fury,’” which was not
only “indicative of an antecedent transfer,” but also “clearly identifie[d] the intended object
and [was] consistent with [Yulla's] long pattern of making gifts of similar items to her
companion.” The Appellate Division reversed the Surrogate Court’s decree.]
* * *
The principles of law that control the outcome of this appeal are a good deal less
complicated than the history of the dispute, as is the application of those principles to the
facts. In [citation] we held that
[f]irst, to make a valid inter vivos gift there must exist the intent on the part of the donor
to make a present transfer; delivery of the gift, either actual or constructive to the donee;
and acceptance by the donee. Second, the proponent of a gift has the burden of proving
each of these elements by clear and convincing evidence [citations].
Intent — There must be intent on the part of the maker (donor) of the gift to
make a present transfer, and there must be acceptance by the recipient
(donee) of the gift.
Acceptance — A voluntary, uncompensated delivery with intent to give the
recipient title constitutes a gift when the donee accepts it. The law usually
presumes that the donee has accepted, but the law will not require the
recipient to accept an unwanted gift.
classification — An inter vivos gift is a gift made by a donor during her
lifetime. A gift causa mortis is a conditional gift made in contemplation of
the donor's imminent death.
By Will or Descent
Title to personal property may be inherited through testate (by will) or
intestate succession (without will).
By Accession
An addition to one's property by increase of the original property (cow gives
birth to calf) or by production from such property (A innocently converts the
wheat of B into bread).
By Confusion
By Possession
In some instances, a person may acquire title to movable personal property
by taking possession of it.
• If the property has been intentionally abandoned or disposed of by the
owner, a finder is entitled to the property.
• A finder is generally entitled to lost property (property unintentionally
left) against everyone but the true owner. (Exception: When the lost
property is in the ground, the landowner has a claim superior to that
of the finder.)
• Mislaid property is intentionally placed somewhere by the owner, who
then unintentionally leaves it. Most courts hold that if property has
been mislaid, not lost, then the owner of the premises, not the finder,
