978-1285770178 Lecture Note BL ComLaw 1e IM-Ch28 Part 2

CHAPTER 28: PERSONAL PROPERTY AND BAILMENTS 11

whole or in part.

costs before obtaining possession.

fine of $10 and a payment of double the value of the property to the owner.

12 INSTRUCTOR’S MANUAL FOR BUSINESS LAW: COMMERCIAL LAW FOR ACCOUNTANTS

worth less than $50, and the owner is not found or does not claim the property within ninety days, the finder

gets it.g If the property is worth more than $50, after ninety days the police must place a notice of the find at

least once in a newspaper of general circulation. If, after seven days following the first publication of the

notice, no owner appears, the finder gets the property (after paying costs).h Local governments can vary these

requirements, but any ordinance must require that the police or sheriff’s department hold onto the property for

at least three months, and if it is to be sold, notice must be published at least five days before the sale.

a. The “police station or police headquarters of the city where the finding occurred or possession was acquired, but if the finding occurred

or possession was acquired in buildings or on grounds or premises under the control and supervision of the commissioner of general

services . . . , then the property may also be deposited in a station of the capital buildings police. If the finding occurred or possession was

acquired outside a city, then such property shall be deposited in a station or substation of the state police or in a police station or police

headquarters, including a sheriff’s office, of the county, town, or village where the finding occurred or possession was acquired. If the

finding occurred or possession was acquired in buildings or on grounds or premises constituting a state park, parkway, recreational

facility or historic site under the jurisdiction of the commissioner of parks, recreation and historic preservation, then such property may

also be deposited in a station of the regional state park police. If the finding occurred or possession was acquired in buildings or on the

grounds or premises of the state-operated institutions in the state university of New York, then such property may also be deposited with

a security officer or peace officer appointed by the state university.”

b. Generally, the police hold onto the property and notify the occupant, or the person in charge, of the premises on which the property

was found. The police must also notify any other person whom they have reason to believe has an interest in the property. Perishable

goods can be sold. Any other property can be sold when the expenses of holding onto it exceed half its expected value.

c. “Property having a value of less than one hundred dollars or proceeds of property having such value, three months; property having a

value of one hundred dollars or more but less than five hundred dollars or proceeds of property having such value, six months; property

having a value of five hundred dollars or more but less than five thousand dollars or proceeds of property having such value, one year;

property having a value of five thousand dollars or more or proceeds of property having such value, three years.”

d. As usual, there are exceptions. An employer has rights to property found by an employee under a duty to give the property to the

employer (for example, property found by a public employee is subject to the rights of the agency for which the employee works).

Property found in the safe deposit area of a bank or safe deposit company is subject to different rules.

e. There are exceptions for perishable goods, which the court may order to be sold immediately, and watercraft worth less than $15. The

finder gets title to the watercraft after three months.

f. Outside a California city, “police authorities” would be a sheriff’s department.

g. Some property, such as perishable goods, may be sold at public auction immediately. The finder then gets the proceeds after the

required period. Animals are subject to an entirely different set of statutes.

h. “[U]nless the property was found in the course of employment by an employee of any public agency in which case the property shall be

sold at public auction.”

whole or in part.

CHAPTER 28: PERSONAL PROPERTY AND BAILMENTS 15

CASE SYNOPSIS—

Case 28.3: Bridge Tower Dental, P.A. v. Meridian Computer Center, Inc.

Bridge Tower Dental, P.A., contracted with Meridian Computer Center, Inc., to develop a computer

system for its dental practice. When one of the server’s two hard drives stopped working—data was backing

up on only one drive—Meridian agreed to replace it. But Meridian accidentally erased all of the backed–up

data. Bridge lost all of its patients’ records and contact information. Bridge filed a suit against Meridian for

negligence. From a judgment in Meridian’s favor, Bridge appealed.

The Idaho Supreme Court reversed. A bailment existed between Bridge and Meridian. The bailment

included the data that was lost. Meridian was presumably negligent because the data was erased while in the

bailee’s possession. Meridian owed “a duty to protect and safeguard bailed property in order to return it in the

same condition as it was delivered.”

………………….………….….………………………………………….……………………………………..…………..

Notes and Questions

How could Meridian have avoided or at least reduced the cost of its liability? To avoid or reduce the

cost of liability for the lost data, Meridian might have exceeded “the industry standard” by backing up the data

on the mirrored hard drive before doing anything else. Or the company might have obtained an insurance

policy to cover such contingencies such as a loss of data in these circumstances. The firm might also have

included a notice in its agreement with Bridge limiting its liability by type of risk or monetary amount.

ANSWER TO “THE SOCIAL DIMENSION”

QUESTION IN CASE 28.3

What kind of bailment existed in this case? Explain your answer. The parties had a mutual-benefit

bailment because Meridian Computer was performing service work. Bridge Dental did not compensate

Meridian Computer for the work, but only because the server was still under warranty. The court also

assumed that the parties had a mutual-benefit bailment by imposing a reasonable standard of care.

ANSWER TO “THE LEGAL ENVIRONMENT DIMENSION”

QUESTION IN CASE 28.3

Could Meridian have effectively limited its bailment liability? Explain. Possibly. Bailees can limit their

bailment liability by type of risk, by monetary amount, or both, so long as these limits are called to the

attention of the bailor and the limitations are not against public policy. Whether notice is effective will depend

on the obviousness of the notice and any other circumstances that might affect its effectiveness. Limits may

not be enforceable if they are considered to be against public policy. An exculpatory clause that limits a

whole or in part.