978-1285770178 Lecture Note BL ComLaw 1e IM-Ch28 Part 3

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

whole or in part.

weepers,” ask students to consider the accuracy of these statements in light of the principles set out in this

whole or in part.

CHAPTER 28: PERSONAL PROPERTY AND BAILMENTS 21

whole or in part.

procedures for claiming an interest in lost property. Even if they had, however, “[f]ederal statutory law grants the

United States Government an ownership interest in the cash * * * . The law provides that * * * illicit cash is forfeited to

the Government and the Complaint clarifies that the money in this case is the other side of an illegal drug deal and as

such, is illicit. * * * The Claimants can no more claim ownership in the proceeds of an illegal drug deal than they could

claim rightful ownership in illegal drugs themselves * * * . Simply because they found the money on the side of the

railroad tracks does not legitimize the cash or their claim to it.”

There was a third party involved in this case, Shortly after the USBP agents confiscated the bag of cash, a

States. It is a logical inference from the Complaint that the owner of the $165,580.00 is Allen Gagnon. It would be

passing strange for someone with no connection to the money in the duffel bag not only to know the exact amount of

money in the bag, but also how it was wrapped and where it was lost. Mr. Gagnon’s decision not to file a claim in the

unusual circumstances of this case does not mean that he is not the owner; it only means that—likely for good and

sufficient reason—he has decided not to claim the cash.”

A federal statute provides an “innocent owner” defense, under which: “[a]n innocent owner’s interest in

property shall not be forfeited.” An “owner” is defined as someone with an ownership interest, not someone “with only

a general unsecured interest, or claim against, the property or estate of another.” Could Madore and LaPointe

successfully claim ownership of the cash under this statute? No. The court explained that “[a]t best, even if

is not enough to establish standing to challenge the government’s forfeiture claim. “[T]he Claimants merely came

upon the money as the result of a fortuitous incident. While they might have briefly possessed the currency, mere

naked possession does not rise to the level of an ownership interest.” The court cited as similar a case in which a

cabdriver was held not to have an interest in a suitcase full of cash found by the police’s drug-sniffing dogs in the

trunk of his taxi.

defense to the forfeiture,” which they could not do.

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

whole or in part.

Footnote 13: Michael Straub of Treiber & Straub, Inc., in Wisconsin chose to return a diamond ring to

Norman Silverman Co. in California via United Parcel Service, Inc. (UPS), and, through www.ups.com, arranged the

shipment. On the Web site, a customer has to click on two on-screen boxes to agree to “My UPS Terms and

Conditions.” Among these terms, UPS and its insurer, UPS Capital Insurance Agency, Inc., limit their liability and the

amount of insurance coverage on packages to $50,000. UPS refuses to ship items of “unusual value”—those worth

more than $50,000—for which the carrier and its insurer disclaim liability entirely. The ring was worth $105.000.

Straub opted for the maximum coverage and indicated on the air bill that the value was “$50,000 or less.” UPS lost

the ring. Treiber reimbursed the wholesaler for the full loss and filed a suit in a federal district court against UPS and

its insurer to recover $50,000 under the insurance policy. The court issued a summary judgment in the defendants’

actual value” of the ring, “Treiber effectively breached the shipping contract.”

If Straub had arranged for the shipment of the ring in a face-to-face transaction and UPS had not

provided a copy of its shipping terms and conditions, would the court have ruled differently? Probably. The

court indicated that this might have produced a different outcome. “While Treiber may not be a regular user of the

court in the Treiber case, which noted that “FedEx permits shippers to send packages worth up to $50,000, but it

limits liability for items of extraordinary value to $500.”

If Straub had claimed that he had not read the terms, would the result in this case have been

different? Why or why not? No. The court said, “Failure of the plaintiff to read the matter plainly placed before it

conspicuous). What this indicates about the use of the Internet to conduct business is its general acceptance as a

legitimate means.

REVIEWING—

 PERSONAL PROPERTY AND BAILMENTS 

Vanessa Denai purchased forty acres of land in rural Louisiana with a 1,600-square-foot house on it and

a metal barn near the house. Seven months later, Denai met Lance Finney, who had been seeking a small

CHAPTER 28: PERSONAL PROPERTY AND BAILMENTS 23

plot of rural property to rent. After several meetings, Denai invited Finney to live on a corner of her property in

exchange for Finney’s assistance in cutting wood and tending her property. Denai agreed to store Finney’s

sailboat in her barn. With Denai’s consent, Finney constructed a concrete and oak foundation on Denai’s

property. Finney then purchased a 190-square-foot dome from Dome Baja for $3,395. The dome was shipped

by Doty Express, a transportation company licensed to serve the public. When he received it, Finney installed

the dome frame and fabric exterior so that the dome was detachable from the foundation. A year after Finney

installed the dome, Denai wrote Finney a note stating, “I’ve decided to give you four acres of land surrounding

your dome as drawn on this map.” This gift violated no local land-use restrictions. Ask your students to

answer the following questions, using the information presented in the chapter.

1. Is the dome real property or personal property? Explain. The dome is personal property. A key

distinction between personal and real property is that real property is not movable. Here, the dome was

movable because it was detachable from its foundation, which indicates an intent that it not be a fixture.

2. Is Denai’s gift of land to Finney a testamentary gift, a gift causa mortis, or a gift inter vivos?

Denai’s gift of the land was a gift inter vivos—a gift made during one’s lifetime and not in contemplation of

imminent death.

3. What type of bailment relationship was created when Denai agreed to store Finney’s boat? What

degree of care was Denai required to exercise in storing the boat? Finney was the bailor and Denai was

the bailee in an ordinary, voluntary, gratuitous bailment for the sole benefit of the bailor. It is ordinary because

it is not special—Denai is not a common carrier, a warehouse company, or an innkeeper. It is voluntary

because the property was voluntarily delivered with the knowledge of both parties. It is gratuitous because the

facts do not indicate consideration. It is for the sole benefit f the bailor because it exists for his convenience

and benefit alone. The duty of care required of Denai (the bailee) is to exercise reasonable care to preserve

the sailboat (the bailed property) but the degree of that care is slight, because the bailment is for the sole

benefit of the bailor.

4. What standard of care applied to the shipment of the dome by Doty Express? Doty was a c

common carrier (a publicly licensed transportation service, such as a trucking company). A common carrier is

held to a standard of care based on strict liability, rather than reasonable care, in relation to bailed personal

property. The carrier is thus liable, regardless of care, for all loss or damage to goods, except damage caused

by: (1) an act of God, (2) an act of a public enemy, (3) an order of a public authority, (4) an act of the shipper,

or (5) the inherent nature of the goods. Common carriers cannot contract away this liability but they can limit

their dollar liability to an amount stated on the shipment contract.

 DEBATE THIS 

Common carriers should not be able to limit their liability. Those who use common carriers for

shipping should not have to worry about what happens if a parcel is lost or damaged. After all, customers of

common carriers do not control in what manner their parcels are handled during shipping. Liability should be

shouldered uniquely by the carrier.

If common carriers had unlimited liability, they would have to purchase much more expensive insurance

to cover their increased liability. Consequently, common carriers would have to raise their rates, thereby

hurting all customers. Customers should simply buy more insurance themselves for their shipments.