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ANSWERS TO PROBLEMS
1. In January, Roger Burke loaned his favorite nephew, Jimmy White, his valuable Picasso
painting. Knowing that Jimmy would celebrate his twenty-first birthday on May 15,
Burke sent a letter to Jimmy on April 14 stating:
Dear Jimmy,
Tomorrow I leave on my annual trip to Europe, and I want to make you a fitting birthday
gift, which I do by sending you my enclosed promissory note. Also I want you to keep the
Picasso, which I loaned you last January, and you may now consider it yours. Happy
birthday!
Affectionately,
/s/ Uncle Roger
The negotiable promissory note for $5,000 sent with the letter was signed by Roger
Burke, payable to Jimmy White or bearer, and dated May 15. On May 21, Burke was
killed in an automobile accident while motoring in France.
First Bank was appointed administrator of Burke's estate. Jimmy presented the note to
the administrator and demanded payment, which was refused. Jimmy brought an action
against First Bank as administrator, seeking recovery on the note. The administrator in
turn brought an action against Jimmy, seeking the return of the Picasso.
(a) What decision in the action on the note?
(b) What decision in the action to recover the painting?
Answer: Transfer of Title: By Gift.
(a)Jimmy should not prevail in his action on the note. Professor Graves, "Summary of Title
to Personal Property," page 25, says:
2. Several years ago, Pierce purchased a tract of land on which stood an old, vacant
house. Recently, Pierce employed Fried, a carpenter, to repair and remodel the house.
While Fried was tearing out a partition to enlarge one of the rooms, he found a metal
box hidden in the wall. After breaking open the box and discovering that it contained
$2,000 in gold and silver coins and old-style bills, Fried took the box and its contents to
Pierce and told her where he had found it. When Fried handed the box and the money
over to Pierce, he said, “If you do not find the owner, I claim the money.” Pierce placed
the money in an envelope and deposited it in her safe deposit box, where it presently
remains. No one has ever claimed the money, but Pierce refuses to give it to Fried.
Will Fried be able to recover the money from Pierce? Why?
Answer: Transfer of Title: By Possession. Judgment will vary from jurisdiction to
jurisdiction between Fried and Pierce. There are three persons involved in the problem,
the owner of the money, Fried the finder, and Pierce the landowner, all of whom have
possible claims to the money. The owner, who has the first claim, has not been located
3. Gable, the owner of a lumber company, was cutting trees over the boundary line
between his property and property owned by Lane. Although he realized he had crossed
onto Lane’s property, Gable continued to cut trees of the same kind as those he had cut
on his own land. While on Lane’s property, he found a diamond ring on the ground,
which he took home. All of the timber Gable cut that day was commingled.
What are Lane's rights, if any, (a) in the timber and (b) in the ring?
Answer: Transfer of Title/Confusion.
4. Decide each of the following problems.
(a) A chimney sweep found a jewel and took it to a goldsmith, whose apprentice removed
the stone and refused to return it. The chimney sweep sues the goldsmith.
(b) One of several boys walking along a railroad track found an old stocking. All started
playing with it until it burst in the hands of its discoverer, revealing several hundred
dollars. The original discoverer claims all of the money; the other boys claim it should be
divided equally.
(c) A traveling salesperson leaving a store notices a parcel of bank notes on the floor. He
picks them up and gives them to the owner of the store to keep for the true owner. After
three years, they have not been reclaimed, and the salesperson sues the storekeeper.
(d) Frank is hired to clean the swimming pool at the country club. He finds a diamond
ring on the bottom of the pool. The true owner cannot be found. The country club sues
Frank for possession of the ring.
(e) A customer found a pocketbook lying on a barber's table. He gave it to the barber to
hold for the true owner, who failed to appear. The customer sues the barber.
Answer: Transfer of Title.
(a)For the chimney sweep. Although he was not the owner, he has title against all but the
true owner.
5. Jones had 50 crates of oranges equally divided between grades A, B, and C, grade A
being the highest quality and C being the lowest. Smith had 1,000 crates of oranges,
about 90 percent of which were grade A, but some of which were grades B and C, the
exact percentage of each being unknown. Smith willfully mixed Jones’s crates with his
own so that it was impossible to identify any particular crate. Jones seized the whole lot.
Smith demanded 900 crates of grade A and 50 crates each of grades B and C. Jones
refused to give them up unless Smith could identify particular crates. This Smith could
not do. Smith brought an action against Jones to recover what he demanded or its value.
Judgment for whom, and why?
Answer: Transfer of Title: By Confusion. Judgment for Smith. While the goods have been
6. Barnes, the owner and operator of Blackacre, decided to cease farming operations and
liquidate his holdings. Barnes sold fifty head of yearling Merino sheep to Billing and
then sold Blackacre to Clifton. He executed and delivered to Billing a bill of sale for the
sheep and was paid for them. It was understood that Billing would send a truck for the
sheep within a few days. At the same time, Barnes executed a warranty deed conveying
Blackacre to Clifton. Clifton took possession of the farm and brought along one hundred
head of his yearling Merino sheep and turned them into the pasture, not knowing the
sheep Barnes sold Billing were still in the pasture. After the sheep were mixed, it was
impossible to identify the fifty head belonging to Billing. Explain whether Billing will
recover the fifty head of sheep from Clifton.
Answer: Transfer of Title: By Confusion. Yes. The sheep were commingled through no
7. Susan permitted Kevin to take her very old grandfather clock on the basis of Kevin’s
representations that he was skilled at repairing such clocks and restoring them to their
original condition and could do the job for $60. The clock had been badly damaged for
years. Kevin immediately sold the clock to Fixit Shop for $30. Fixit Shop was in the
business of repairing a large variety of items and also sold used articles. Three months
later, Susan was in the Fixit Shop and clearly identified a grandfather clock Fixit Shop
had for sale as the one she had given Kevin to repair. Fixit Shop had replaced more than
half of the moving parts by having exact duplicates custom-made; the clock’s exterior
had been restored by a skilled cabinetmaker; and the clock’s face had been replaced by a
duplicate. All materials belonged to Fixit Shop, and its employees accomplished the
work. Fixit Shop asserts it bought the clock in the normal course of business from Kevin,
who represented that it belonged to him. The fair market value of the clock in its
damaged condition was $30, and the value of repairs made is $220.
Susan sued Fixit Shop for return of the clock. Fixit Shop defended that it then had title to
the clock and, in the alternative, that Susan must pay the value of the repairs if she is
entitled to regain possession. Who will prevail? Why?
8. Under an oral agreement, Hyer rented from Bateman a vacant lot for a filling station.
Hyer placed on the lot a lightly constructed building bolted to a concrete slab and
several storage tanks laid on the ground in a shallow excavation. Later, Hyer prepared a
lease which contained a provision allowing him to remove the equipment at the
termination of the lease. This lease was not executed, having been rejected by Bateman
due to a renewal clause it contained. Several years later, another lease was prepared,
which both Hyer and Bateman did sign. This lease did not mention removal of the
equipment. At the termination of this lease, Hyer removed the equipment, and Bateman
brought an action to recover possession of the equipment. What judgment?
9. Elvers sold a parcel of real estate, describing it by its legal description and making no
mention of any improvements or fixtures on it. The land had upon it a residence, a barn,
a rail fence, a stack of hay, some growing corn, and a windmill. The residence had a
mirror built into the west wall of the living room and a heating system consisting of a
furnace, steam pipes, and coils. In the house were chairs, beds, tables, and other
furniture. On the house was a lightning rod. In the basement were screens for the
windows. Which of these things passed by the deed and which did not?
10. John Swan rented a safe deposit box at the Tenth Citizens Bank of Emanon, State of
X. On December 17, 2011, Swan went to the bank with stock certificates to place in the
safe deposit box. After he was admitted to the vault and had placed the stock certificates
in the box, Swan found lying on a chair in the privacy booth of the vault a $5,000
negotiable bearer bond issued by the State of Wisconsin with coupons attached, due June
30, 2018. Swan picked up the bond and, observing that it did not carry the name of the
owner, left the vault and went to the office of the president of the bank. He told the
president what had occurred and delivered the bond to the president only after obtaining
his promise that, should the owner not call for the bond or become known to the bank by
June 30, 2012, the bank would redeliver the bond to Swan. On July 1, 2012, Swan
learned that the owner of the bond had not called for it, nor was his identity known to the
bank. Swan then asked that the bond be returned to him. The bank refused, stating that it
would continue to hold the bond until the owner claimed it. Explain whether Swan will
prevail in his action to recover possession of the bond.
11.Lile, an insurance broker who handled all insurance for Tempo Co., purchased a fire
policy from Insurance Company insuring Tempo Co.’s factory against fire in the amount
of $1.5 million. Before the policy was delivered to Tempo and while it was still in Lile’s
hands, Tempo advised Lile to cancel the policy. Prior to cancellation, however, Tempo
suffered a loss. Tempo now makes a claim against Insurance Company on the policy. The
premium had been billed to Lile but was unpaid at the time of loss. In an action by Tempo
Co. against Insurance Company, what judgment?
12. On July 15, Adler purchased in Chicago a Buick sedan, intending to drive it that day
to St. Louis, Missouri. He telephoned a friend, Maruchek, who was in the insurance
business, and told him that he wanted liability insurance on the automobile, limited in
amount to $50,000 for injuries to one person and to $100,000 for any one accident.
Maruchek took the order and told Adler over the telephone that he was covered and that
his policy would be written by the Young Insurance Company. Later that same day and
before Maruchek had informed the Young Insurance Company of Adler’s application,
Adler negligently operated the automobile and seriously injured Brown, who brings suit
against Adler. Is Adler covered by liability insurance?
Answer: Nature of Insurance Contracts: Offer and Acceptance. Yes. Adler is protected
13. Graham owns a building having a fair market value of $120,000. She takes out a fire
insurance policy from the Bentley Insurance Company for $72,000; the policy contains
an 80 percent co-insurance clause. The building is damaged by fire to the extent of
$48,000. How much insurance is Graham entitled to collect?
14. Phil was the owner of a herd of twenty highly bred dairy cows. He was a prosperous
farmer, but his health was very poor. On the advice of his doctor, Phil decided to winter
in Arizona. Before he left, he made an agreement with Freya under which Freya was to
keep the cows on Freya’s farm through the winter, be paid the sum of $800 by Phil, and
return to Phil the twenty cows at the close of the winter. For reasons that Freya thought
made good farming sense, Freya sold six of the cows and replaced them with six other
cows. After winter was over, Phil returned from Arizona. Is Freya liable for conversion of
the original six cows? Why?
Answer: Restoration of Possession to the Bailor. Yes, the transaction was a bailment, with
a duty resting upon Freya to return Phil's 20 cows to him at the close of the winter. Freya
15. Hines stored her furniture, including a grand piano, in Arnett’s warehouse. Needing
more space, Arnett stored Hines’s piano in Butler’s warehouse next door. As a result of a
fire, which occurred without any fault of Arnett or Butler, both warehouses and their
contents were destroyed. Is Arnett liable to Hines for the value of her piano and
furniture? Explain.
Answer: Bailee's Duty to Exercise Due Care. Decision for Hines for the value of her
piano. Decision in favor of Arnett on Hines' claim for the value of her furniture.
Arnett, a warehouseman, is an ordinary bailee, with the duty to exercise reasonable care
as to the safety of the goods stored with him, and he is liable for loss or injury to the
16. Curtis rented a safe deposit box from Reliable Safe Deposit Company, in which he
deposited valuable securities and $4,000 in cash. Later, after opening the box and
discovering $1,000 missing, Curtis brought an action against Reliable. At the trial, the
company showed that its customary procedure was as follows: that there were two keys
for each box furnished to each renter; that if a key was lost, the lock was changed; that
new keys were provided for each lock each time a box was rented; that there were two
clerks in charge of the vault; and that one of the clerks was always present to open the
box. Reliable Safe Deposit Company also proved that two keys were given to Curtis at
the time he rented his box; that his box could not be opened without the use of one of the
keys in his possession; and that the company had issued no other keys to Curtis’s box.
Explain whether Reliable is obligated to pay Curtis for the missing $1,000.
Answer: Essential Elements of a Bailment. Decision in favor of Reliable Safe Deposit
17. A, B, and C each stored 5,000 bushels of yellow corn in the same bin in X’s
warehouse. X wrongfully sold 10,000 bushels of this corn to Y. A contends that inasmuch
as his 5,000 bushels of corn were placed in the bin first, the remaining 5,000 bushels
belong to him. What are the rights of the parties?
18. (a) On April 1, Mary Rich, at the solicitation of Super Fur Company, delivered a
$13,000 mink coat to the company at its place of business for storage in its vaults until
November 1. On the same day, she paid the company its customary charge of $50 for
such storage. After Mary left the store, the general manager of the company, on finding
that its storage vaults were already filled to capacity, delivered Mary’s coat to Swift
Trucking Company for shipment to Fur Storage Company. En route, the truck in which
Mary’s coat was being transported was badly damaged by fire caused by the driver’s
negligence, and Mary’s coat was totally destroyed. Is Super Fur Company liable to Mary
for the value of her coat? Why?
(b) Would your answer be the same if Mary’s coat had been safely delivered to Fur
Storage Company and had been stolen from the company’s storage vaults without
negligence on its part? Why?
19. Rich, a club member, left his golf clubs with Bogan, the pro at the Happy Hours
Country Club, to be refinished at Bogan’s pro shop. The refinisher employed by Bogan
suddenly left town, taking Rich’s clubs with him. The refinisher had previously been
above suspicion, although Bogan had never checked on the man’s character references. A
valuable sand wedge that Bogan had borrowed from another member, Smith, for his own
use in an important tournament was also stolen by the refinisher, as well as several pairs
of golf shoes that Bogan had checked for members without charge as an accommodation.
The club members concerned each made claims against Bogan for their losses. Can (a)
Rich, (b) Smith, and (c) the other members compel Bogan to make good their respective
losses?
