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1
whole or in part.
Personal Property and Bailments
ownership rights may be acquired, and the laws governing rights in mislaid, lost, or abandoned property.
This chapter also examines the law relating to bailments. Most bailments are created by agreement, although
in many bailments not all of the elements of a contract (such as mutual assent or consideration) are present. A
bailment may also be distinguished from a sale or a gift in that possession is transferred without passage of title or
Personal property is moveable. (Real property is immoveable.) When two or more persons own property,
concurrent ownership exists.
2 INSTRUCTOR’S MANUAL FOR BUSINESS LAW: COMMERCIAL LAW FOR ACCOUNTANTS
whole or in part.
A. WHY IS THE DISTINCTION IMPORTANT?
1. Taxation
Taxation of types of property differs—businesses may be taxed on personal property (when non-
business owners often are not).
2. Acquisition
C. FIXTURES
Fixtures—items affixed or attached to real property in a permanent way—are included in a sale of land if
the contract does not provide otherwise.
1. Typical Fixtures
The key to determining whether something is a fixture is the intent of its owner.
CASE SYNOPSIS—
Case 28.1: APL Limited v. Washington State Department of Revenue
APL Limited, American President Lines, LTD, and Eagle Marine Services, LTD (collectively, APL) leased
Terminal 5 from the Port of Seattle to load and unload ships. The terminal was outfitted with 800-ton cranes
that ran on steel rails embedded in concrete and supported by specially engineered piers. The cranes were
wired to the terminal’s electrical system, which included a substation built to power them. APL paid sales tax
on the rent for the cranes for more than twenty years. Arguing that the cranes were fixtures—and thus not
taxable personal, property—APL filed a suit in a Washington state court against the state to obtain a refund.
The court issued a judgment in the state’s favor. APL appealed.
A state intermediate appellate court reversed. The lower court had not determined the parties’ intent with
respect to the cranes. Whether personal property becomes a fixture turns on the question of intent.” “The
determinative factor for whether a chattel annexed to real property becomes part of the real property or
retains its character as personal property is . . . the intent with which the chattel was annexed to the land.”
..................................................................................................................................................
Notes and Questions
What is a fixture, and how does it relate to real property rights? A fixture is a thing associated with
realty (attached into or; permanently situated on the property by means of cement, plaster, bolts, nails, roots,
CHAPTER 28: PERSONAL PROPERTY AND BAILMENTS 3
whole or in part.
or screws; attached to another fixture; or simply intended by the owner to be a fixture). Fixtures are included
in the sale of land unless the contract provides otherwise.
It has been proposed that fixture should be given a more concrete definition so that it would be clearer
what property is included in, for example, a sale. One suggestion is that an item would not be a fixture if one
person could remove it in an hour, using a few basic tools (for instance, a hammer, a screwdriver, and a
wrench). What’s wrong with this sort of definition? One problem is that it seems no less arbitrary than the
three factors cited by the court. Some people are more skilled than others, some can move faster, some are
stronger. If an item could be removed by a skilled craftsman in forty-five minutes, but by someone with less
skill in no less than sixty-five minutes, would it mean the item was a fixture?
ANSWERS TO THE LEGAL REASONING
QUESTIONS AT THE END OF CASE 28.1
1. Why did it matter to the parties in this lawsuit whether the cranes were fixtures or not? The “stake”
in this lawsuit were the sales taxes that APL Limited was paying on the rents received for the cranes, based
on the assumption that the cranes were personal property. If the court held that the cranes were fixtures, and
thus realty, APL would avoid having to pay future sales taxes on the cranes (and might even receive a refund
of previously paid sales taxes on the cranes). For the state department of revenue, the outcome of the case
would determine whether it could collect sales taxes from APL.
2. Did the fact that the appellate court reversed the judgment of the trial court mean that the cranes
were fixtures? Explain. No. The court reversed the summary judgment granted by the court in the state’s
favor because the trial court had not examined the issue of intent. According to the court, of the three factors
determining whether property was a fixture, the “intention of the party making the annexation to make a
permanent accession to the freehold” was the most significant. Because the trial court had not given this
factor sufficient scrutiny, summary judgment was inappropriate. The case was sent back to the trial court for a
closer examination of this factor to determine whether the cranes should be classified as fixtures.
3. What is the key factor in determining whether property is a fixture, and how did that factor
determine the outcome in this case? The key factor in determining whether an item of personal property is
a fixture is the intent of its owner—as the court in the APL case stated, “the intent with which the chattel was
annexed to the land.” The court explained that, “intent can be determined from the nature of the chattel
attached and its relation or necessity to the activity conducted on the land and the manner in which it is
annexed. When the owner and the person that annexes the chattel are one and the same, a rebuttable
presumption arises that the owner's intention was for the chattel to become part of the realty.” In other words,
“annexation is so intertwined with the intent to annex, one cannot be examined without the other.”
In this case, because the lower court had not examined the facts regarding the Port's intent to annex the
cranes, the state intermediate appellate court reversed the lower court’s decision. “The factual inferences that
can be drawn from the evidence presented should be permitted to be argued to the trial court. Because the
trial court did not consider these inferences, summary judgment was inappropriate.”
4. What might the court conclude if the Port of Seattle had rebuilt the terminal to accommodate the
cranes with the intent that they be removed after the end of APL’s lease term? The court explained that,
“intent can be determined from the nature of the chattel attached and its relation or necessity to the activity
4 INSTRUCTOR’S MANUAL FOR BUSINESS LAW: COMMERCIAL LAW FOR ACCOUNTANTS
conducted on the land and the manner in which it is annexed. When the owner and the person that annexes
the chattel are one and the same, a rebuttable presumption arises that the owner's intention was for the
chattel to become part of the realty.” But the common law requires “the intention of the party making the
annexation to make a permanent accession to the freehold.” If the owner had not intended the cranes to be a
permanent addition to the terminal, the court could conclude that they were in fact personal property.
D. TRADE FIXTURES ARE PERSONAL PROPERTY
Unlike other fixtures, trade fixtures generally remain the tenant’s property.
B. PRODUCTION
Writers, inventors, and manufacturers produce personal property and thereby acquire title.
ENHANCING YOUR LECTURE—
ARE CLAMS “WILD ANIMALS”?
Timothy Longshore was arrested and convicted for stealing clams from a private beach near Puget
Sound, Washington. On appeal to the Supreme Court of Washington, Longshore argued that he had not
committed theft because the landowner did not own the clams. He asserted that because clams are wild
animals, or ferae naturae, they are not owned by anyone until someone takes possession of them. The court,
however, viewed the matter differently. The court emphasized that clams “ordinarily live in the soil under the
waters” and belong with the land. “When taken, they must be wrenched from their beds, made well down in
the soil itself.” Therefore, said the court, it must follow that a private landowner “has the right to exercise
dominion [control] and ownership over what is upon the land, and especially over things so closely related to
the soil as clams.” The court also had the letter of Washington law on its side: the Washington legislature had
enacted a statute that, among other things, stated that the term wildlife “does not include . . . fish, shellfish,
and marine invertebrates classified as food fish or shellfish.”a
THE BOTTOM LINE
In the state of Washington, an individual who privately owns tidelands also owns any naturally occurring
clams embedded in the soil.
a. State v. Longshore, 141 Wash.2d 414, 5 P.3d 1256 (2000).
C. GIFT
whole or in part.
A gift is a voluntary transfer of property ownership not supported by consideration. The three
1. Donative Intent
Donative intent is determined from the language of the donor and the surrounding circumstances
(the text provides the example of a court challenge on the basis of fraud, of duress).
2. Delivery
b. Relinquishing Dominion and Control
Effective delivery requires giving up complete dominion and control.
CASE SYNOPSIS—
Case 28.2: In re Estate of Piper
For eight years preceding Gladys Piper’s death, Clara Kauffman took Piper to the doctor, beauty shop,
and grocery store; wrote her checks to pay her bills; and helped care for her home. Piper died intestate.
Among her property were two diamond rings. Kauffman filed a claim in a Missouri state court against the
estate, maintaining that Piper had promised the rings as a gift to her. The trial court awarded her the rings.
Piper’s heirs and the administrator of her estate appealed.
A state intermediate appellate court reversed, ruling that no effective gift of the rings had been made
because Piper had never delivered them to Kauffman. The expression of a desire to give does not constitute
a gift unless the intention is executed by a complete and unconditional delivery of the subject matter or deliv-
ery of a proper written instrument evidencing a gift.
..................................................................................................................................................
Notes and Questions
Might the court have found evidence of all three elements of a valid gift in the quoted testimony of
the two witnesses, if it had been so inclined? Explain. Perhaps. The estate did not offer any evidence to
rebut the testimony of either witness. Piper had said of the rings to one of the witnesses, “these are Clara’s.”
From this a court might have inferred (and the trial court appears to have actually inferred) that Piper had
delivered the rings, Kauffman had accepted them, and Kauffman had allowed to Piper to wear them until she
was “done with them.”
The total value of Piper’s estate, not including jewelry, was about $5,400. The appraised value of the
jewelry was $2,500. Was the court’s decision affected by the fact that the jewelry was of significant
whole or in part.
value relative to the value of the entire estate? Why or why not? Probably not. When a person gives
away a large portion of his or her assets, the court will scrutinize the transaction to determine whether the gift
was valid. This scenario, however, more often applies when the value of the estate and the gift at issue are of
much greater value than those in this case. The court also held that there was no gift for other reasons apart
from any mental incompetence or fraud.
ANSWER TO “WHAT IF THE FACTS WERE DIFFERENT?”
QUESTION IN CASE 28.2
Suppose that Piper had told Kauffman that she was giving the rings to Kauffman but wished to
keep them in her possession for a few more days. Would this have affected the court’s decision in
this case? Explain. Whether a gift would exist would depend on whether Kauffman had acquired the
unconditional right to remove the rings whenever she chose. In other words, the court would ask whether
Piper had given up complete control of the rings before it would rule that Kauffman was entitled to claim them
as gifts. In such a situation, however, the fact that the rings remained in Piper’s possession would suggest
that there was no effective delivery even though Kauffman might argue that she was given the power to
remove the rings whenever she chose.
ADDITIONAL CASES ADDRESSING THIS ISSUE —
Other cases addressing the delivery element of a gift include the following:
• Fontaine v. Colt’s Manufacturing Co., 74 Conn.App. 730, 814 A.2d 433 (2003) (an employer’s public
presentation of a revolver to a departing employee at a retirement dinner, and the immediate repossession of
the revolver for the purpose of making improvements that the employer intended to be a part of the gift,
constituted a constructive form of delivery sufficient to consummate the gift of the improved revolver).
• Huskins v. Huskins, 134 N.C.App. 101, 517 S.E.2d 146 (1999) (a donor did not “deliver” the cash in a
safe to the donee, and thus there was no completed “gift” of the cash, even though the donor mailed his son a
letter with the safe’s combination and a note stating that the contents of the safe belonged to the donee in
light of other interpretations of these actions and other steps the donor might have taken to complete a gift of
the cash).
• In re Estate of Estes, 1999 OK 59, 983 P.2d 438 (1999) (delivery to one acting in the capacity of the al-
leged donor’s agent is in effect no delivery at all and insufficient to effectuate a delivery for purposes of an
inter vivos gift).
ENHANCING YOUR LECTURE—
whole or in part.
8 INSTRUCTOR’S MANUAL FOR BUSINESS LAW: COMMERCIAL LAW FOR ACCOUNTANTS
AN ENGAGEMENT RING IS FOREVER
Other courts, when deciding engagement-ring cases, avoid the fault/no-fault issue by applying the law
governing gifts. In these jurisdictions, an engagement ring, once delivered to and accepted by the donee, is
an effective gift belonging to the donee. For example, in one case Michael Albinger had given Michelle Harris
a $29,000 diamond engagement ring in contemplation of their marriage. When the couple decided not to go
through with the marriage, Michelle claimed that the ring was hers to keep. Michael wanted it back. Ultimately,
the Montana Supreme Court held for Michelle. The court stated that Montana law defined a gift as a “transfer
of personal property made voluntarily and without consideration.” The court was reluctant to carve out an
exception in the state’s gift law for engagement rings. Among other things, stated the court, to do so would
reflect a gender bias favoring men.
A dissenting judge was astonished by the majority’s decision. The judge noted that women are more
likely to be the subject of these actions simply because they are more likely to receive the rings. Does that
mean, queried the judge, that “we [should] just prohibit gifts in anticipation of marriage altogether because
men are more likely to have to pay for them?”d
FOR CRITICAL ANALYSIS
As noted, some courts hold that an engagement ring is a conditional gift that becomes an absolute
(effective) gift only on marriage. Other courts conclude that when an engagement ring is given to the donee,
the donee should have full ownership rights in the property. Where do your students stand on this issue?
Why?
a. Meyer v. Mitnick, 244 Mich.App. 697, 625 N.W.2d 136 (2001).
b. Lindh v. Surman, 560 Pa. 1, 742 A.2d 643 (1999).
c. Heiman v. Parrish, 262 Kan. 926, 942 P.2d 631 (1997).
d. Albinger v. Harris, 310 Mont. 27, 48 P.3d 711 (2002).
3. Acceptance
Courts generally assume acceptance unless shown otherwise.
4. Gifts Inter Vivos and Gifts Causa Mortis
Gifts causa mortis must meet the requirements for other types of gifts and, additionally, do not
become absolute until the donor dies from the contemplated illness or disease.
D. ACCESSION
Accession occurs when someone adds value to a piece of personal property by use of labor or ma-
When confusion occurs by agreement, honest mistake, or the act of some third party, the owners all
share ownership in proportion to the amount each contributed. If a person wrongfully and willfully mixes
his or her goods with those of another to render them indistinguishable, thereby causing confusion, the
innocent party acquires title to the total.
CHAPTER 28: PERSONAL PROPERTY AND BAILMENTS 9
The rules governing the ownership of found property differ with when the property is categorized as mislaid,
lost, or found.
A. MISLAID PROPERTY
If property has been mislaid, the owner—not the finder—has first claim to it, although the owner of the
1. Conversion of Lost Property
Failing to return property to its true owner is conversion. Many states require a finder to attempt to
locate the owner.
2. Estray Statutes
10 INSTRUCTOR’S MANUAL FOR BUSINESS LAW: COMMERCIAL LAW FOR ACCOUNTANTS
whole or in part.
Gouldberg,b the court said yes.
In the Anderson case, the plaintiffs had trespassed on another’s land and wrongfully cut timber. The
defendants later took the logs from the mill site, allegedly in the name of the owner of the property on which
the timber had been cut. The evidence at trial indicated that both parties had illegally acquired the property.
The court instructed the jury that even if the plaintiffs were trespassers when they cut the logs, they were
entitled to recover them from later possessors—except the true owner or an agent of the true owner. The jury
found for the plaintiffs, a decision affirmed later by the Minnesota Supreme Court. The latter court held that
the plaintiffs’ possession, “though wrongfully obtained,” justified an action to repossess the property from
another who took it from them.
2 INSTRUCTOR’S MANUAL FOR BUSINESS LAW: COMMERCIAL LAW FOR ACCOUNTANTS
whole or in part.
A. WHY IS THE DISTINCTION IMPORTANT?
1. Taxation
Taxation of types of property differs—businesses may be taxed on personal property (when non-
business owners often are not).
2. Acquisition
C. FIXTURES
Fixtures—items affixed or attached to real property in a permanent way—are included in a sale of land if
the contract does not provide otherwise.
1. Typical Fixtures
The key to determining whether something is a fixture is the intent of its owner.
CASE SYNOPSIS—
Case 28.1: APL Limited v. Washington State Department of Revenue
APL Limited, American President Lines, LTD, and Eagle Marine Services, LTD (collectively, APL) leased
Terminal 5 from the Port of Seattle to load and unload ships. The terminal was outfitted with 800-ton cranes
that ran on steel rails embedded in concrete and supported by specially engineered piers. The cranes were
wired to the terminal’s electrical system, which included a substation built to power them. APL paid sales tax
on the rent for the cranes for more than twenty years. Arguing that the cranes were fixtures—and thus not
taxable personal, property—APL filed a suit in a Washington state court against the state to obtain a refund.
The court issued a judgment in the state’s favor. APL appealed.
A state intermediate appellate court reversed. The lower court had not determined the parties’ intent with
respect to the cranes. Whether personal property becomes a fixture turns on the question of intent.” “The
determinative factor for whether a chattel annexed to real property becomes part of the real property or
retains its character as personal property is . . . the intent with which the chattel was annexed to the land.”
..................................................................................................................................................
Notes and Questions
What is a fixture, and how does it relate to real property rights? A fixture is a thing associated with
realty (attached into or; permanently situated on the property by means of cement, plaster, bolts, nails, roots,
CHAPTER 28: PERSONAL PROPERTY AND BAILMENTS 3
whole or in part.
or screws; attached to another fixture; or simply intended by the owner to be a fixture). Fixtures are included
in the sale of land unless the contract provides otherwise.
It has been proposed that fixture should be given a more concrete definition so that it would be clearer
what property is included in, for example, a sale. One suggestion is that an item would not be a fixture if one
person could remove it in an hour, using a few basic tools (for instance, a hammer, a screwdriver, and a
wrench). What’s wrong with this sort of definition? One problem is that it seems no less arbitrary than the
three factors cited by the court. Some people are more skilled than others, some can move faster, some are
stronger. If an item could be removed by a skilled craftsman in forty-five minutes, but by someone with less
skill in no less than sixty-five minutes, would it mean the item was a fixture?
ANSWERS TO THE LEGAL REASONING
QUESTIONS AT THE END OF CASE 28.1
1. Why did it matter to the parties in this lawsuit whether the cranes were fixtures or not? The “stake”
in this lawsuit were the sales taxes that APL Limited was paying on the rents received for the cranes, based
on the assumption that the cranes were personal property. If the court held that the cranes were fixtures, and
thus realty, APL would avoid having to pay future sales taxes on the cranes (and might even receive a refund
of previously paid sales taxes on the cranes). For the state department of revenue, the outcome of the case
would determine whether it could collect sales taxes from APL.
2. Did the fact that the appellate court reversed the judgment of the trial court mean that the cranes
were fixtures? Explain. No. The court reversed the summary judgment granted by the court in the state’s
favor because the trial court had not examined the issue of intent. According to the court, of the three factors
determining whether property was a fixture, the “intention of the party making the annexation to make a
permanent accession to the freehold” was the most significant. Because the trial court had not given this
factor sufficient scrutiny, summary judgment was inappropriate. The case was sent back to the trial court for a
closer examination of this factor to determine whether the cranes should be classified as fixtures.
3. What is the key factor in determining whether property is a fixture, and how did that factor
determine the outcome in this case? The key factor in determining whether an item of personal property is
a fixture is the intent of its owner—as the court in the APL case stated, “the intent with which the chattel was
annexed to the land.” The court explained that, “intent can be determined from the nature of the chattel
attached and its relation or necessity to the activity conducted on the land and the manner in which it is
annexed. When the owner and the person that annexes the chattel are one and the same, a rebuttable
presumption arises that the owner's intention was for the chattel to become part of the realty.” In other words,
“annexation is so intertwined with the intent to annex, one cannot be examined without the other.”
In this case, because the lower court had not examined the facts regarding the Port's intent to annex the
cranes, the state intermediate appellate court reversed the lower court’s decision. “The factual inferences that
can be drawn from the evidence presented should be permitted to be argued to the trial court. Because the
trial court did not consider these inferences, summary judgment was inappropriate.”
4. What might the court conclude if the Port of Seattle had rebuilt the terminal to accommodate the
cranes with the intent that they be removed after the end of APL’s lease term? The court explained that,
“intent can be determined from the nature of the chattel attached and its relation or necessity to the activity
4 INSTRUCTOR’S MANUAL FOR BUSINESS LAW: COMMERCIAL LAW FOR ACCOUNTANTS
conducted on the land and the manner in which it is annexed. When the owner and the person that annexes
the chattel are one and the same, a rebuttable presumption arises that the owner's intention was for the
chattel to become part of the realty.” But the common law requires “the intention of the party making the
annexation to make a permanent accession to the freehold.” If the owner had not intended the cranes to be a
permanent addition to the terminal, the court could conclude that they were in fact personal property.
D. TRADE FIXTURES ARE PERSONAL PROPERTY
Unlike other fixtures, trade fixtures generally remain the tenant’s property.
B. PRODUCTION
Writers, inventors, and manufacturers produce personal property and thereby acquire title.
ENHANCING YOUR LECTURE—
ARE CLAMS “WILD ANIMALS”?
Timothy Longshore was arrested and convicted for stealing clams from a private beach near Puget
Sound, Washington. On appeal to the Supreme Court of Washington, Longshore argued that he had not
committed theft because the landowner did not own the clams. He asserted that because clams are wild
animals, or ferae naturae, they are not owned by anyone until someone takes possession of them. The court,
however, viewed the matter differently. The court emphasized that clams “ordinarily live in the soil under the
waters” and belong with the land. “When taken, they must be wrenched from their beds, made well down in
the soil itself.” Therefore, said the court, it must follow that a private landowner “has the right to exercise
dominion [control] and ownership over what is upon the land, and especially over things so closely related to
the soil as clams.” The court also had the letter of Washington law on its side: the Washington legislature had
enacted a statute that, among other things, stated that the term wildlife “does not include . . . fish, shellfish,
and marine invertebrates classified as food fish or shellfish.”a
THE BOTTOM LINE
In the state of Washington, an individual who privately owns tidelands also owns any naturally occurring
clams embedded in the soil.
a. State v. Longshore, 141 Wash.2d 414, 5 P.3d 1256 (2000).
C. GIFT
whole or in part.
A gift is a voluntary transfer of property ownership not supported by consideration. The three
1. Donative Intent
Donative intent is determined from the language of the donor and the surrounding circumstances
(the text provides the example of a court challenge on the basis of fraud, of duress).
2. Delivery
b. Relinquishing Dominion and Control
Effective delivery requires giving up complete dominion and control.
CASE SYNOPSIS—
Case 28.2: In re Estate of Piper
For eight years preceding Gladys Piper’s death, Clara Kauffman took Piper to the doctor, beauty shop,
and grocery store; wrote her checks to pay her bills; and helped care for her home. Piper died intestate.
Among her property were two diamond rings. Kauffman filed a claim in a Missouri state court against the
estate, maintaining that Piper had promised the rings as a gift to her. The trial court awarded her the rings.
Piper’s heirs and the administrator of her estate appealed.
A state intermediate appellate court reversed, ruling that no effective gift of the rings had been made
because Piper had never delivered them to Kauffman. The expression of a desire to give does not constitute
a gift unless the intention is executed by a complete and unconditional delivery of the subject matter or deliv-
ery of a proper written instrument evidencing a gift.
..................................................................................................................................................
Notes and Questions
Might the court have found evidence of all three elements of a valid gift in the quoted testimony of
the two witnesses, if it had been so inclined? Explain. Perhaps. The estate did not offer any evidence to
rebut the testimony of either witness. Piper had said of the rings to one of the witnesses, “these are Clara’s.”
From this a court might have inferred (and the trial court appears to have actually inferred) that Piper had
delivered the rings, Kauffman had accepted them, and Kauffman had allowed to Piper to wear them until she
was “done with them.”
The total value of Piper’s estate, not including jewelry, was about $5,400. The appraised value of the
jewelry was $2,500. Was the court’s decision affected by the fact that the jewelry was of significant
whole or in part.
value relative to the value of the entire estate? Why or why not? Probably not. When a person gives
away a large portion of his or her assets, the court will scrutinize the transaction to determine whether the gift
was valid. This scenario, however, more often applies when the value of the estate and the gift at issue are of
much greater value than those in this case. The court also held that there was no gift for other reasons apart
from any mental incompetence or fraud.
ANSWER TO “WHAT IF THE FACTS WERE DIFFERENT?”
QUESTION IN CASE 28.2
Suppose that Piper had told Kauffman that she was giving the rings to Kauffman but wished to
keep them in her possession for a few more days. Would this have affected the court’s decision in
this case? Explain. Whether a gift would exist would depend on whether Kauffman had acquired the
unconditional right to remove the rings whenever she chose. In other words, the court would ask whether
Piper had given up complete control of the rings before it would rule that Kauffman was entitled to claim them
as gifts. In such a situation, however, the fact that the rings remained in Piper’s possession would suggest
that there was no effective delivery even though Kauffman might argue that she was given the power to
remove the rings whenever she chose.
ADDITIONAL CASES ADDRESSING THIS ISSUE —
Other cases addressing the delivery element of a gift include the following:
• Fontaine v. Colt’s Manufacturing Co., 74 Conn.App. 730, 814 A.2d 433 (2003) (an employer’s public
presentation of a revolver to a departing employee at a retirement dinner, and the immediate repossession of
the revolver for the purpose of making improvements that the employer intended to be a part of the gift,
constituted a constructive form of delivery sufficient to consummate the gift of the improved revolver).
• Huskins v. Huskins, 134 N.C.App. 101, 517 S.E.2d 146 (1999) (a donor did not “deliver” the cash in a
safe to the donee, and thus there was no completed “gift” of the cash, even though the donor mailed his son a
letter with the safe’s combination and a note stating that the contents of the safe belonged to the donee in
light of other interpretations of these actions and other steps the donor might have taken to complete a gift of
the cash).
• In re Estate of Estes, 1999 OK 59, 983 P.2d 438 (1999) (delivery to one acting in the capacity of the al-
leged donor’s agent is in effect no delivery at all and insufficient to effectuate a delivery for purposes of an
inter vivos gift).
ENHANCING YOUR LECTURE—
whole or in part.
8 INSTRUCTOR’S MANUAL FOR BUSINESS LAW: COMMERCIAL LAW FOR ACCOUNTANTS
AN ENGAGEMENT RING IS FOREVER
Other courts, when deciding engagement-ring cases, avoid the fault/no-fault issue by applying the law
governing gifts. In these jurisdictions, an engagement ring, once delivered to and accepted by the donee, is
an effective gift belonging to the donee. For example, in one case Michael Albinger had given Michelle Harris
a $29,000 diamond engagement ring in contemplation of their marriage. When the couple decided not to go
through with the marriage, Michelle claimed that the ring was hers to keep. Michael wanted it back. Ultimately,
the Montana Supreme Court held for Michelle. The court stated that Montana law defined a gift as a “transfer
of personal property made voluntarily and without consideration.” The court was reluctant to carve out an
exception in the state’s gift law for engagement rings. Among other things, stated the court, to do so would
reflect a gender bias favoring men.
A dissenting judge was astonished by the majority’s decision. The judge noted that women are more
likely to be the subject of these actions simply because they are more likely to receive the rings. Does that
mean, queried the judge, that “we [should] just prohibit gifts in anticipation of marriage altogether because
men are more likely to have to pay for them?”d
FOR CRITICAL ANALYSIS
As noted, some courts hold that an engagement ring is a conditional gift that becomes an absolute
(effective) gift only on marriage. Other courts conclude that when an engagement ring is given to the donee,
the donee should have full ownership rights in the property. Where do your students stand on this issue?
Why?
a. Meyer v. Mitnick, 244 Mich.App. 697, 625 N.W.2d 136 (2001).
b. Lindh v. Surman, 560 Pa. 1, 742 A.2d 643 (1999).
c. Heiman v. Parrish, 262 Kan. 926, 942 P.2d 631 (1997).
d. Albinger v. Harris, 310 Mont. 27, 48 P.3d 711 (2002).
3. Acceptance
Courts generally assume acceptance unless shown otherwise.
4. Gifts Inter Vivos and Gifts Causa Mortis
Gifts causa mortis must meet the requirements for other types of gifts and, additionally, do not
become absolute until the donor dies from the contemplated illness or disease.
D. ACCESSION
Accession occurs when someone adds value to a piece of personal property by use of labor or ma-
When confusion occurs by agreement, honest mistake, or the act of some third party, the owners all
share ownership in proportion to the amount each contributed. If a person wrongfully and willfully mixes
his or her goods with those of another to render them indistinguishable, thereby causing confusion, the
innocent party acquires title to the total.
CHAPTER 28: PERSONAL PROPERTY AND BAILMENTS 9
The rules governing the ownership of found property differ with when the property is categorized as mislaid,
lost, or found.
A. MISLAID PROPERTY
If property has been mislaid, the owner—not the finder—has first claim to it, although the owner of the
1. Conversion of Lost Property
Failing to return property to its true owner is conversion. Many states require a finder to attempt to
locate the owner.
2. Estray Statutes
10 INSTRUCTOR’S MANUAL FOR BUSINESS LAW: COMMERCIAL LAW FOR ACCOUNTANTS
whole or in part.
Gouldberg,b the court said yes.
In the Anderson case, the plaintiffs had trespassed on another’s land and wrongfully cut timber. The
defendants later took the logs from the mill site, allegedly in the name of the owner of the property on which
the timber had been cut. The evidence at trial indicated that both parties had illegally acquired the property.
The court instructed the jury that even if the plaintiffs were trespassers when they cut the logs, they were
entitled to recover them from later possessors—except the true owner or an agent of the true owner. The jury
found for the plaintiffs, a decision affirmed later by the Minnesota Supreme Court. The latter court held that
the plaintiffs’ possession, “though wrongfully obtained,” justified an action to repossess the property from
another who took it from them.
