Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
Suggested Additional Assignments
Research: Gifts
Students should find the website of a nonprofit organization that solicits gifts, such as the World Wildlife
Foundation at http://worldwildlife.org/how_to_help. In a one-page paper, students should summarize the
many different ways to donate to the organization, and should clarify which are true gifts and which are
testamentary disposals.
Writing: Found Property
Students should write a two-page story describing at least two instances of found property that fall into
two different categories, whether abandoned, lost, mislaid or treasure trove. The goal is to make the issue
of lawful ownership as close a call as possible, but students must be able to identify who wins, and why.
Research: Bailment Dispute
On the Internet, students should find an article discussing a current bailment dispute. They should submit
brief written answers to these questions:
How was the bailment created–by contract, informal agreement, or constructively?
Did the bailee assume physical control of the property?
Who received the benefit of this bailment (bailee, bailor, or both parties)?
What level of care does the law impose in such a bailment?
What is the dispute about?
Who has the burden of proof?
Were any exculpatory clauses involved? If so, were they enforceable?
Did any statutes govern this type of bailment, such as an innkeeper or common carrier
law?
Action Learning: Itemized Bailments
Ask students to make a list of bailments in which they have been involved during the last year, as either
bailor or bailee. For example, borrowing a parent’s car, lending a book to a friend, checking a coat in a
restaurant, etc. Offer a prize for the most unusual bailment.
Chapter Overview
Chapter Theme
A generous gift, a found parcel, a complex bailment: personal property is always with us . . . unless we
misplace it.
Quote of the Day
“The manner of giving is worth more than the gift.” –Pierre Corneille (1606-1684), French playwright,
Le Menteur, act I, scene 1.
Gifts
A gift is a voluntary transfer of property from one person to another without any consideration. A gift has
three elements:
The donor intends to transfer ownership of the property to the donee immediately,
The donor delivers the property to the donee, and
The donee accepts the property.
Inter Vivos Gifts and Gifts Causa Mortis
An inter vivos gift means a gift made “during life,” when the donor is not under any fear of impending
death.
An inter vivos gift becomes final upon delivery.
The donor may not revoke an inter vivos gift after it becomes final.
A gift causa mortis is one made in contemplation of approaching death.
A gift causa mortis is valid if the donor dies as expected, but is revoked if he recovers.
The donor can revoke the gift at any time before he dies.
You Be The Judge: Albinger v. Harris1
Facts: Michelle Harris and Michael Albinger lived together in a stormy relationship, marred by alcohol
abuse and violence, on and off for three years. When they announced their engagement, Albinger gave
Harris a $29,000 diamond ring, but the couple broke off their wedding plans because of emotional and
physical turmoil. Harris returned the ring. Later, they reconciled and resumed their marriage plans, and
Albinger gave his fiancée the ring again. This cycle repeated several times over the three years.
Eventually they ended their affair, and Harris moved to Kentucky, with the ring.
Albinger sued for the value of the ring. The trial court found that the ring was a conditional gift,
made in contemplation of marriage, and ordered Harris to pay its full value. She appealed. The Montana
Supreme Court had to decide, in a case of first impression, whether an engagement ring was given in
contemplation of marriage. (In Montana, and many states, neither party to a broken engagement may sue
for breach of contract, because it is impossible to determine who is responsible for ending the
relationship.)
You Be The Judge: Who owns the ring?
Holding: Michelle Harris gets to keep the ring. The court was unwilling to create a new type of
conditional gift. The court discussed the history of anti-heart balm statutes, the history of ring giving, and
other issues. Some excerpts of the decision follow.
Abolition of Breach of Promise Actions
By the mid-1930’s, several state legislatures questioned the efficacy of court “interference with
domestic relations” and passed statutes barring actions for breach of promise to marry, alienation
of affections, criminal conversation and other inappropriate conduct of the “private realm.”
Engagement Ring Symbology
The custom of giving expensive engagement rings is largely a mid- to late 20th Century
phenomenon. The six-prong gold or platinum setting holding a raised, brilliant-cut diamond,
which has become the classic engagement ring style, was created by Tiffany’s in the 1870s.
DeBeers’ launched its national advertising campaign in 1939 that promised: “A diamond is
forever.” To cultivate a no-return custom in America, the cartel threatened to cut off supply to
dealers who bought diamonds back from purchasers. An interesting correlation exists between
the mid-20th Century increase in demand for costly diamond engagement rings and the statutory
changes by state legislatures to abolish the breach of promise action. After the Second World
War, expensive rings became not just symbols of love, but tangible economic commitments in
themselves, and appear to have gained significance as other economic incidents of marriage were
in flux.
Conditional Gift Theory
According to Montana law, “a gift is a transfer of personal property made voluntarily and without
consideration.” The essential elements of an inter vivos gift are donative intent, voluntary
delivery, and acceptance by the recipient.
Another essential element of a gift is that it is given without consideration. A purported “gift”
that is part of the inducement for “an agreement to do or not to do a certain thing,” becomes the
consideration essential to contract formation. An exchange of promises creates a contract to
1 2002 MT 118, 2002 WL 1226858 Supreme Court of Montana, 2002
marry, albeit an unenforceable one. When an engagement ring is given as consideration for the
promise to marry, a contract is formed and legal action to recover the ring is barred by the
abolition of the breach of promise actions.
Albinger maintains he held a reversionary interest in the gift of the engagement ring
grounded in an implied condition subsequent. Since actions stemming from breach of the
contract to marry are barred by our “anti-heart balm” statute, Albinger urges the Court to adopt a
conditional gift theory patterned on the law relevant to a gift in view of death. Under Montana
law, no gift is revocable after acceptance except a gift in view of death. While some may find
marriage to be the end of life as one knows it, we are reluctant to analogize gifts in contemplation
of marriage with a gift in contemplation of death. This Court declines the invitation to create a
new category of gifting by judicial fiat.
Gender Bias
Article II, Section 4 of the Montana Constitution recognizes and guarantees the individual dignity
of each human being without regard to gender. This Court and the Montana State Bar have
recognized the harm caused by gender bias and sexual stereotyping in the jurisprudence and
courtroom of this state.
Conditional gift theory applied exclusively to engagement ring cases, carves an exception in the
state’s gift law for the benefit of predominately male plaintiffs.
Engagement Ring Disposition
To preserve the integrity of our gift law and to avoid additional gender bias, we decline to adopt
the theory that an engagement ring is a gift subject to an implied condition of marriage.
Question: If you think that Michelle Harris should win, please answer these questions:
Intent is an element of a gift. Wasn’t Albinger’s intent to give Harris the ring only if the
couple married?
If you took a poll of 10,000 Americans, wouldn’t most agree that the former fiancée
should return an engagement ring if the relationship ends?
Harris gave back the ring each time they ended their unhappy affair. Doesn’t that
indicate she knew it was only conditionally hers?
Although Montana has no law declaring these rings as conditional gifts, isn’t that because
there has been no need of such a law – because everyone understood that the ring had to be
returned?
Question: If you think that Michael Albinger should win, please answer these questions:
Why should a court help someone who beat up his girlfriend?
If Albinger did not want Harris to keep the ring, why did he keep giving it to her?
Doesn’t Harris’s returning of the ring indicate simply that she voluntarily decided to give
it to Albinger – not that she thought she owed it to him?
There is no such thing as a conditional gift – why should this court create one?
Typically, the man gives the ring to the woman, and typically, the woman’s family bears
the expense of preparing for and hosting the wedding. Wouldn’t the proposed “conditional gift”
mean that the man gets back his money but the woman’s family does not?
Found Property
These policies govern the law of found property:
Return the found property to its proper owner, if possible, and
Reward the finder if no owner can be located.
There are four kinds of found property:
Abandoned property is something that the owner has knowingly discarded because she no
longer wants it.
Generally, the finder is permitted to keep abandoned property.
A court never presumes abandonment. The finder must prove that the owner intended to
relinquish all rights.
Lost property is something accidentally given up.
Generally, the finder of lost property has rights superior to the entire world except the
true owner.
If the true owner comes forward, she gets her property back. If not, the finder may keep
it.
If the finder has discovered the item on land belonging to another, the landowner is
probably entitled to keep it.
Mislaid property is something the owner has intentionally placed somewhere and then
forgotten.
Generally, the finder gets no rights in property that has simply been mislaid.
If the true owner cannot be located, the mislaid item belongs to the owner of the premises
where the item was found.
Treasure trove is coins or currency concealed by an owner so long ago that it is likely the
owner has died.
The finder can generally keep treasure trove.
Landmark Case: Armorie v. Delamirie2
Facts: Before Parliament banned the practice in 1840, many English chimney sweeps forced young
children to climb the narrow flues and do the cleaning. Armorie was one such boy. But fortune smiled on
him, and he found a jeweled ring. To discover its value, he carried the ring to a local goldsmith.
Armorie handed the ring to the goldsmith’s apprentice, who removed the jewels from the ring and
pretended to weigh it. He called out to the goldsmith that the ring was worth three halfpence. The
goldsmith then offered that amount to Armorie.
Not being a fool, Armorie refused the offer and demanded that the ring be returned. The apprentice
gave him the ring, but without the jewels.
Issue: Did the chimney sweep boy have a legal right to retain possession of the found jewels?
Excerpts from Justice Pratt’s Decision: The finder of a jewel, though he does not by such finding
acquire an absolute property or ownership, has such a property as will enable him to keep it against all but
the rightful owner. As to the value of the jewel the Chief Justice directed the jury, that unless the
defendant did produce the jewel, and shew it not to be of the finest water, they should presume the
strongest against him, and make the value of the best jewels the measure of their damages: which they
accordingly did.
Question: What kind of found property did the court classify the ring under?
Additional Case: Franks v. Pritchett3
Facts: Alex Franks spent two nights at a Comfort Inn in Searcy, Arkansas. As he prepared to leave,
clearing out the left drawer of the dresser, he discovered two bundles of cash, each wrapped with masking
tape. He notified the hotel manager, who gave the money to the police. The bundles contained 46
2 93 ER 664, Middlesex, 1722
3 2004 WL 2453930 Court of Appeals of Arkansas, 2004
one-hundred-dollar bills and 480 twenty-dollar bills, for a total value of $14,200. The city of Searcy held
the money until a court could determine its owner.
The trial court acknowledged that narcotics traffickers often used the hotel. However, the judge
rejected Franks’ assertion that the currency was abandoned drug-money, ruling instead that it was mislaid
property. He awarded the money to the hotel’s owners, Perri and Seddika Kazi, to hold in trust until the
rightful owner claimed it. Franks appealed.
Issue: Was the money mislaid, lost, or abandoned property?
Holding: Judgment for hotel’s owners affirmed. Excerpts from the court’s opinion: Franks argues that
there is no reason to believe that the true owner left the money in the drawer of a public motel room for
security purposes with the expectation of returning to claim it. The Kazis argue that the circuit court
properly inferred that the money was placed into the drawer intentionally. They point to the fact that the
money was intentionally and meticulously wrapped. They also argue that common sense and logic defy
that the owner intended to part with such a large amount of money.
The [trial] court noted that if the money had been found on the floor instead of in a drawer, it could
have been said to have been lost. [Its location in a drawer shows it was placed there.] The trial court
concluded that, because the money was intentionally placed in the drawer, it had not been abandoned
(voluntarily forsaken by the owner) or lost (through neglect, carelessness, or inadvertence) and was
therefore mislaid property.
Question: What is abandoned property?
Question: Who keeps abandoned property?
Question: What is lost property?
Question: Who is entitled to lost property?
Question: What is mislaid property?
Question: Who may keep mislaid property?
Question: Which type of property was this cash?
Answer: The cash was mislaid property, because someone presumably placed it in the hotel room’s
Question: What is the primary goal of most statutes and common law rules concerning found
property?
Additional Case: Morgan v. Wiser4
This case illustrates the difficulty that courts have had deciding cases of found property and highlights
one of the policies behind judicial thinking. Wiser found gold coins over 100 years old. The Morgans
sued, claiming that Wiser found the coins on their property, and that the money therefore belonged to
4 711 So. 2d 220 Court of Appeals of Tennessee, 1985
them. Wiser denied having found the coins on the Morgans’ property but argued that, even if he had
discovered them there, he was entitled to them.
The coins were all dated 1861 or earlier. They were buried 8 to 20 inches below the surface, in a
place that showed no recent digging. The coins were covered with rust and appeared to have been buried
in a container that had decomposed.
Question: What kind of found property are the coins?
Question: What is treasure trove?
Question: What is the common law rule concerning who may keep treasure trove?
Answer: The common law rule is that the finder of treasure trove has superior rights against
Question: Compare this common law rule with the rule for mislaid property.
Answer:
Mislaid property is also something deliberately placed where it is found, by the owner,
Though the types of property are similar, the common law reached opposite outcomes
Question: Provide a concise, compelling syllogism that explains the opposite outcomes.
Answer: A blue ribbon for anyone who can do it. There seems to be little logic distinguishing these
Question: Who should win, the Morgans or Wiser?
Answer: The court agreed that under the common law rule, Wiser should win, as the finder of
treasure trove. However, the court declared that the common law rule was outdated:
We find the rule with respect to treasure trove to be out of harmony with modern notions of fair
Accession
Accession occurs when one person uses labor, materials, or both to add value to personal property
belonging to another. This generally occurs by agreement.
Wrongful Accessions: If the improver knows he is making accessions without authority, the owner may
generally take the improved property without paying for the work done.
Mistaken Accessions: If the improver mistakenly believes he is entitled to add accessions, the owner
probably has to pay for the increased value.
Bailment
A bailment is the rightful possession of goods by one who is not the owner.
Bailor: the person who delivers the goods
Bailee: the person in possession of the goods.
Example: Negative Wedding
Shana and Meng-Lu hired Billy to photograph their wedding, agreeing to pay $1,500 when Billy
delivered the proofs, negatives, and contact sheets, and extra sums for any prints they ordered. The
wedding went off beautifully and Billy snapped away feverishly. The photographer developed hundreds
of color proofs and many black and white contact sheets, and the pictures looked great. Later that week,
as Billy was driving his girlfriend to her business law class, the two had a bitter fight over the definition
of “bailment.” In a moment of forensic rage, Billy hurled into the river what he believed was his
girlfriend’s backpack of business law books, only to realize moments later that it was his own backpack,
containing all of Shana and Meng-Lu’s pictures, that was racing downstream and out to sea. Shana and
Meng-Lu sued, claiming breach of a bailment agreement and breach of contract. Billy has moved to
dismiss both the bailment and contract claims.
Question: On the bailment claim, argue for Shana and Meng-Lu.
Answer:
The parties created this bailment by agreement–namely, the contract to take pictures.
Shana and Meng-Lu were the rightful owners of all the proofs, negatives, and contact
Question: On the bailment claim, argue for Billy.
Answer: There is no bailment.
A bailment is the rightful, temporary possession of property by one who is not the owner.
The owner gives the property to the bailee. Here, Shana and Meng-Lu were not the owners of the
Question: Please rule on the bailment claim.
Question: Please comment on the contract claim.
Answer: Billy has clearly breached. The big question is, what are the damages? Shana and
Meng-Lu have not paid anything, so they are not out of pocket any money. Their losses are
expectation damages. The court will have to put a price tag on their expectation, no easy feat. A
Control
To create a bailment, the bailee must assume physical control of the bailor’s property with intent to
possess.
Case: David L. de Csepel v. Republic of Hungary5
Facts: Baron Mór Lipót Herzog was a passionate Hungarian-Jewish art collector who, in the first
half of the twentieth century, assembled more than two thousand paintings, sculptures, and other
artworks. Known as the “Herzog Collection,” this body of artwork was one of Europe’s great
private collections, and included paintings by renowned artists such as El Greco, Velázquez,
Renoir, and Monet.
Then, during World War II, Adolf Hitler sent German troops into Hungary. The country enacted
anti-Semitic laws and deported Hungarian Jews to concentration camps. The government
required all Hungarian Jews to register their artwork and valuables. It then confiscated the most
prized pieces.
The Herzogs attempted to save the collection by hiding it in the cellar of one of the family’s
factories. But the Hungarian government and its Nazi collaborators discovered the hiding place.
They took the artwork directly to SS Commander Adolf Eichmann, who personally selected the
best pieces for transfer to Germany. The remainder was handed over to Hungarian museums for
safekeeping. The Herzog family was forced to flee Hungary or face extermination.
At the end of World War II, the Herzog heirs were dispersed all over the world—from the United
States to Argentina. They claim that, at the time, they arranged for the Hungarian government to
retain possession of most of the collection so that the works could continue to be displayed in
Hungary. But when the Herzogs requested the collection’s return, Hungary refused and thus
began a seven-decade struggle over the artwork.
Finally, in 2010, the Herzog family sued the Republic of Hungary over the art, asserting a claim
for bailment. They alleged that the family’s postwar arrangement with Hungary formed a
bailment agreement, whereby Hungary assumed a duty of care to protect the property and to
return it to the family on demand. Hungary moved to dismiss, arguing that no such bailment was
created. The district court denied the motion and Hungary appealed.
Issue: Did the parties create a valid bailment agreement?
Excerpts from Judge Tatel’s Decision:
The Herzog family seeks to recover not for the original expropriation of the Collection, but
rather for the subsequent breaches of bailment agreements they say they entered into with
Hungary. Specifically, the complaint alleges that Hungary’s possession or re-possession of any
portion of the Herzog Collection following World War II constituted an express or
implied-in-fact bailment contract under which Hungary assumed a duty of care to protect the
property and to return it to the Herzog family, and which Hungary breached by refusing to return
the Collection. The family’s claims, they reiterate, are nothing more than straightforward
bailment claims.
Hungary argues that the complaint fails to state a claim for bailment because it nowhere
alleges the necessary element of “mutual consent of the parties.” But the complaint contains
5 714F.3d 591 United States District Court for the District of Columbia, 2013
allegations that the parties directly agreed to a bailment relationship, with Hungary arranging
with representatives of the Herzog Heirs to retain possession of most of the Herzog Collection
and the Herzog family agreeing to allow the artworks to be ‘returned’ to the Museums or the
University for safekeeping.
According to Hungary, however, any showing of consent is negated by the allegations that the
Herzog family had no choice but to agree to allow most of the works belonging to the Herzog
Collection to remain in Hungary’s physical possession because they were harassed and
threatened by Hungarian government officials. We disagree. Even if the family’s consent was
induced by duress—a conclusion we would be reluctant to draw at the motion to dismiss stage—
that would mean only that the family could disclaim the agreement, not that the agreement was
invalid.6 Thus, for purposes of a motion to dismiss, the family has adequately pleaded the
element of consent.
Question: Why did Hungary’s argument, that the Herzogs’ consent was induced by duress, fail?
Question: Why was the Judge reluctant to conclude that the Herzog family’s consent was induced by
duress?
Question: Given the facts of this case, what level of due care is owed?
Answer: This depends upon who receives the benefit of the bailment. The facts do not appear to give rise
6In other words, if the Herzogs entered into the contract under duress, it was voidable by them, but not by
Hungary.
