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CHAPTER 28: PERSONAL PROPERTY AND BAILMENTS 11
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.
whole or in part.
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.
whole or in part.
