Additional Case: Mitchell v. Bank of America National Association1
Facts: Donna and Timothy Mitchell rented a safe deposit box from a Dallas branch of the Bank of
America. The lease agreement stated that the bank “had no possession or custody of, nor control over, the
contents of the Box, and the Lessee [the couple] assumes all risks in connection with the depositing of
such content.” The lease also permitted the bank to remove the box’s contents if the rental fee went
unpaid.
Bank officers, believing the Mitchells were behind in their rental fees, drilled into the box and
removed the contents, which they inventoried and sent to a central vault elsewhere. The Mitchells
expressed their displeasure and, a week later, the bank returned the contents to the Dallas branch. The
couple placed the contents into a bag under the front seat of their car. Shortly after leaving the bank, the
Mitchells had a flat tire. A stranger offered assistance. While they were all changing the tire, the bag
disappeared.
The Mitchells sued the bank, claiming that its negligence enabled bank employees to learn of the
box’s contents, orchestrate the flat tire, and steal the bag.
The trial court gave summary judgment for the bank, finding that the contract language quoted above
meant that there was no bailment, and no possible negligence. The Mitchells appealed.
Issue: Was there a bailment?
Holding: Summary judgment for the Bank reversed. Common law negligence principles generally
govern liability in bailment relationships. Parties to a bailment can alter the law of bailment by agreeing
to contract terms that clearly vary the liability imposed by law. To the extent the lease agreement clearly
addressed the duties and liabilities of the Bank for the Mitchells’ property, the lease agreement controls.
To establish a bailment, there must be a delivery of personal property from one person to another for a
specific purpose. The lease clearly provides that so long as the contents of the box remained in the box,
there was no delivery of the property to the Bank. Accordingly, no bailment occurred due to the deposit
of the Mitchells’ property into the box.
However, the lease authorized the Bank to remove the contents of the box for non-payment of rent.
The lease thus contemplated a delivery of the property to the Bank under certain circumstances and did
not change the duties imposed by law once the Bank exercised its right to take control of the property.
The trial court thus erred in granting summary judgment for the Bank on the grounds the Mitchells’
common law cause of action for breach of bailment was superseded by the written contract.
Question: What law governed the Mitchells’ lease of the safe deposit box from the Bank?
Question: How did the box-rental agreement deal with the parties’ liability?
Question: Why do the Mitchells argue that there was a bailment?
Answer: Because if the box-rental agreement controlled, the Bank as a matter of law is entitled to
Question: Why?
Question: The box-rental agreement said the Bank had no possession, custody, or control over the
contents of the box. Since bailment requires that the bailee exercise control over the property, how
can there be a bailment?
1 2002 WL 31139375 Court of Appeals of Texas, 2002
Answer: The no-bailment terms controlled the relationship as long as the contents remained in the
Question: Viewed as a bailment relationship, which party is liable for the loss?
Additional Case: Sealey v. Meyers Parking System2
Facts: Sharon Sealey parked her Nissan Pulsar in Meyers’s parking garage. She locked the car and took
the keys with her. When she returned that evening, she found that vandals had stolen her radio and
severely damaged the car. She sued. Meyers argued that there was no bailment and hence no liability.
Issue: Did the parties create a bailment?
Holding: Judgment for Sealey. There was a bailment and Sealey is entitled to damages for the full cost
of repairs. This was a park and lock facility, but nonetheless the garage exercised control of Sealey’s car.
An attendant controlled egress at the gate; a driver was not free simply to drive away. The garage also
had a security guard.
Question: Why are the parties arguing about whether there was a bailment?
there is no basis for liability.
Question: What was the key factor in deciding whether the parties had created a bailment?
Question: The court ruled that the garage did have control. Why?
Answer: The court said two factors indicated control:
Question: Describe a garage in which there is no bailment.
Answer: A park and lock garage in which there is no security guard, the driver pays upon entering,
Rights of the Bailee
The bailee’s primary right is possession of the property. Anyone who interferes with the bailee’s rightful
possession is liable to her.
Even a bailor is liable if he wrongfully takes back property from a bailee.
The bailee is typically, though not always, permitted to use the property.
Duties of the Bailee
The bailee is strictly liable to redeliver the goods on time to the bailor or to whomever the bailor
designates. Strict liability means there are virtually no exceptions. The bailee is obligated to exercise due
care. The level of care required depends upon who receives the benefit of the bailment.
Burden of Proof
Once the bailor has proven the existence of a bailment and loss or harm to the goods, a presumption of
negligence arises and the burden shifts to the bailee to prove adequate care.
Long before his time as President, Abraham Lincoln was a lawyer who argued more than 150 cases
before the Supreme Court of Illinois. The case for Weedman is modeled after the arguments that a
young Lincoln actually made.
2 147 Misc.2d 217, 555 N.Y.S.2d 574, 1990 N.Y. Misc. LEXIS 219 Civil Court of New York, 1990
Exculpatory Clauses
An exculpatory clause is generally unenforceable if it attempts to exclude an intentional tort or reckless
behavior.
Case: Tannenbaum v. New York Dry Cleaning, Inc.3
Facts: When Rob Tannenbaum picked up his $160 shirt at the dry cleaners, he found it too badly torn to
wear. He sued, claiming negligence. New York Cleaners denied causing the tear. In addition, the
Cleaners claimed that even if the company damaged the shirt, an exculpatory clause on the back of the
ticket limited its liability to $20.
Issues: Was the cleaner negligent? If so, did the exculpatory clause limit the company’s liability?
Excerpts from Judge Samuels’ Decision: To the customer, it doesn’t seem reasonable that he should be
able to recover only $20 for the destruction of the $160 shirt he took to the dry cleaner to be laundered.
The Limitation Clause reads as follows:
In laundering, we cannot guarantee against color loss, and shrinkage; or against damage to weak and
tender fabrics. The company’s liability with respect to any lost article shall not exceed 10 times our
charge for processing it.
The foregoing is printed in gray type, against a light yellow background, and is significantly more
difficult for a person with good eyesight to read than the text on the front of the claim ticket.
This case is clearly one of bailment for hire. When a bailee is unable to return the bailed item, or (as
here) returns it in damaged condition, a rebuttable presumption arises that the loss of, or damage to, the
item is attributable to the bailee’s negligence.
At trial, Defendant denied that the shirt had been damaged while in its care, but did not offer, in the
alternative, any explanation negating the presumption of negligence. Accordingly, Defendant is liable for
negligence, unless its disclaimer is effective.
New York law has long disfavored exculpatory clauses that relieve a party to a contract from liability
for the consequences of its own negligence. The law’s disfavor has been expressed in strict requirements
that the disclaimer of liability for negligence be made explicit and be communicated in such a way as to
ensure that the party who is to be bound by the disclaimer has knowingly accepted such disclaimer.
It appears that Defendant sought to enjoy the protections of a disclaimer without alarming its
customers by causing them actually to contemplate the Limitation Clause. Defendant offered no evidence
that it had taken any steps to call Claimant’s attention to its terms beyond giving him the Claim Ticket.
[T]he Court finds that Claimant was not aware of, and did not assent to be bound by, the Limitation
Clause.
Claimant is awarded judgment in the amount of $160, plus interest and costs.
Question: What did the court say about the visibility of the clause?
3 2001 N.Y. Slip Op. 40076 (U), 2001 WL 913272 Civil Court of the City of New York, 2001
Innkeepers
Hotels, motels, and inns frequently act as bailees of their guests’ property. Most states have special
innkeeper statutes that regulate liability (for example, see http://www.leg.state.fl.us/Statutes/index.cfm?
App_mode=Display_Statute&Search_String=&URL=0500-0599/0509/0509PARTIContentsIndex.ht
ml for Florida’s innkeeper statute).
Case: GNOC Corp. v. Powers4
Facts: David Powers and a friend arrived at the Hilton Casino in Atlantic City for a two-day
stay, Powers’ fourth visit to the hotel. They checked in at the front desk and received electronic room
keys. Clearly visible signs, posted there and in each room, notified guests that the hotel was not
responsible “for valuables or other property left in room,” and that the hotel had a safe for valuables.
Powers won $76,000, which he converted into $25,000 cash, ten grey chips worth $5,000 each, and
one white $1,000 chip. He and his friend retired to their rooms. During the night, both Powers and his
friend had various room service deliveries. Sometime before he went to bed, Powers placed his cash,
chips and a money clip on the dresser. At 4:19 a.m. the front desk issued a second key to Powers’ room to
an unknown person. Powers awoke to discover that his cash, chips and clip were gone.
Powers ended up $25,000 in debt to the casino, and when he refused to pay, the hotel sued. Powers
claimed that the Hilton owed him $76,000 for the stolen merchandise. The trial judge ruled in favor of
the Hilton, based on New Jersey’s innkeeper statute, which states:
If the proprietor of any hotel shall provide a safe or other depository in the hotel’s office or in another
convenient place, for the safekeeping of any valuables belonging to guests of the hotel, and shall place,
in a conspicuous position in the room or rooms occupied by each guest, a notice stating the fact that a
safe is provided in which valuables may be deposited, and any guest shall neglect to deliver valuables to
the person in charge of the safe, the proprietor shall not be liable in any sum for the loss of valuables
sustained by that guest, by theft or otherwise…. “Valuables” includes money, bank notes, bonds,
precious stones, jewelry, ornaments [etc] and any other articles of similar value.
Powers appealed.
Issues: Did the innkeeper statute protect the hotel?
Holding: Excerpts from the Per Curiam decision:
It is defendant’s contentions that because casino chips are not specifically enumerated in [the innkeeper
statute] and are not items of value as they are merely an accounting mechanism to evidence a debt owed
by the casino, [the statute] does not apply to them. Further, he asserts that the chips do not “belong to
guests,” pointing to [a related statute] which provides:
Each gaming chip and plaque is solely evidence of a debt that the issuing casino licensee owes to the
person legally in possession of the gaming chip or plaque, and shall remain in the property of the
issuing casino licensee.
To be sure, casino chips are not specifically listed as one of the enumerated items in the definition of
“valuables.” But the list is not exhaustive, as it is preceded by the word “includes” and followed by the
words “any other articles of similar value.” Included under the statutory definition of valuables are
“money, bank notes, bonds, securities, checks, business papers, documents.” As the motion judge
observed: “While the statute may not say casino chips, it does have in there the things that have, like
chips, no intrinsic value of their own [but] are evidence of either value or debt.” And too, although the
hotel owns the chips, while they are in the possession of the guest they belong to that guest until
redeemed for cash.
So too, defendant’s reliance upon [an earlier case called Heinz] is misplaced. Heinz concerned strict
compliance with the statutorily required notice. Here, defendant concedes that the Hilton complied with
the statutory notice requirements. Where, as here, a hotel is in strict compliance with the notice
requirements, the Act operates as a bar to plaintiff’s recovery.
4 2006 WL 560687, N.J. Superior Court, Appellate Division, 2006.
Affirmed.
Question: When goods are stolen, hotels rely on innkeeper statutes. What do the statutes generally
hold?
Question: Why is this statute necessary?
Answer: Although hotels and inns are in the business of providing accommodations to numerous
people, they cannot insure that every guest acts as prudently as they should with regard to their
Question: Didn’t the hotel act improperly by issuing a second key to Powers’ room to an unknown
person?
Answer: It is unclear from the case what exactly happened regarding the second key. Regardless, the
Question: Why?
Answer: Perhaps because even if the second key were erroneously issued (and that fact is not clear)
Multiple Choice Questions
1. Which of the following requirements must be met to create a bailment?
I. Delivery of personal property to the intended bailee
II. Possession by the intended bailee
(a) I only
(b) II only
(c) Both I and II
(d) None of the above
2. Consider the following:
I. A house (value: $150,000)
II. A giant HD television in the house (value: $4,999)
III. The land that the house sits upon (value: $30,000)
IV. An old car in the house’s garage (value: $5,001)
How many of these items are personal property?
(a) All 4 of them
(b) 3 of them
(c) 2 of them
(d) 1 of them
(e) None of them
3. Holding out an envelope, Alan says, “Ben, I’m giving you these opera tickets.” Without taking
the envelope, Ben replies, “Why would I want opera tickets? Loser.” Alan leaves, crestfallen.
Later that day, a girl whom Ben has liked for some time says, “I sure wish I were going to the
opera tonight.” Ben scrambles, calls Alan, and says, “Alan, old buddy, I accept your gift of the
opera tickets. I’m on my way over to pick them up.” Does Ben have a legal right to the tickets?
(a) Yes, because Alan intended to transfer ownership.
(b) Yes, because offers to give gifts cannot be revoked.
(c) No, because no consideration was given.
(d) No, because Ben did not accept the gift when offered.
4. Gina has season tickets to Cardinals games. One Monday, she promises to give her tickets to
Friday’s game to Ed, a friend who works across town. On Tuesday, Gina hands the tickets to Al,
an administrative assistant. An hour later, when Al still has the tickets and has not given them to
Ed, Gina returns. “Sorry,” she says, “but my cousins are coming to town this weekend. I’ll need
those tickets back.” Gina is entitled to get the tickets back if Al works for…
(a) Gina
(b) Ed
(c) Both A and B
(d) None of the above
5. Craig finds a rare 1955 double-date penny, worth $4,000, on a city sidewalk outside a coin
collectors’ convention. The penny is ____ property. If the true owner cannot be found, then the
penny will belong to ____.
(a) lost; Craig
(b) lost; the city
(c) abandoned; Craig
(d) abandoned; the city
(e) mislaid; Craig
Case Questions
1. During her second year at the Juilliard School of Music in New York City, Ann Rylands had a
chance to borrow for one month a rare Guadagnini violin, made in 1768. She returned the violin
to the owner in Philadelphia, but telephoned her father to ask if he would buy it for her. He
borrowed money from his pension fund and paid the owner. Ann traveled to Philadelphia to pick
up the violin. She had exclusive possession of the violin for the next 20 years, using it in her
professional career. Unfortunately, she became an alcoholic, and during one period when she was
in a treatment center, she entrusted the violin to her mother for safekeeping. At about that time,
her father died. When Ann was released from the center, she requested return of the violin, but her
mother refused. Who owns the violin?
Answer: Ann does. Ann’s father made a valid inter vivos gift of the violin while Ann was still a
2. Ronald Armstead worked for First American Bank as a courier. His duties included making
deliveries between the bank’s branches in Washington, DC Armstead parked the bank’s station
wagon near the entrance of one branch in violation of a sign saying: “No Parking Rush Hour
Zone.” In the rear luggage section of the station wagon were four locked bank dispatch bags,
containing checks and other valuable documents. Armstead had received tickets for illegal
parking at this spot on five occasions. Shortly after Armstead entered the bank, a tow truck
arrived and its operator prepared to tow the station wagon. Transportation Management, Inc.,
operated the towing service on behalf of the District of Columbia. Armstead ran out to the vehicle
and told the tow truck operator that he was prepared to drive the vehicle away immediately. But
the operator drove away with the station wagon in tow. One and one-half hours later, a bank
employee paid for the car’s release, but one dispatch bag, containing documents worth $107,000,
was missing. First American sued Transportation Management and the District of Columbia. The
defendants sought summary judgment, claiming they could not be liable. Were they correct?
Answer: The trial court held that this was a gratuitous bailment and that therefore the defendants
were liable only for gross negligence. Because there was no gross negligence, the court found for
3. During the Great Depression of the 1930s, the federal government’s Works Progress
Administration hired artists to create public works of art. The goal was to provide employment
and beautify the nation. The artist James Daugherty painted six murals on the walls of the public
high school in Stamford, Connecticut. During the 1970s, the city began to restore its high school.
The architect and school officials agreed that the Daugherty murals should be preserved. They
arranged for the construction workers to remove the murals to prevent harm. By accident, the
workers rolled them up and placed them near the trash dumpsters for disposal. A student found
the murals and took them home, and later notified the federal government’s General Services
Administration (GSA) of his find. The GSA arranged to transport the murals to an art restorer,
named Hiram Hoelzer, for storage and eventual restoration, when funds could be arranged. Over
19 years went by before anyone notified the Stamford School system where the murals were. In
the meantime, neither the GSA nor anyone else paid Hoelzer for the storage or restoration. By
1989 the murals were valued at $1.25 million by Sotheby’s, an art auction house. Hoelzer filed
suit, seeking a declaration that the murals had been abandoned. Were they abandoned? What
difference does it make?
Answer: Abandonment is a vital issue because if Stamford abandoned the murals, Hoelzer
probably owns them. An owner abandons property only by deliberately relinquishing all right in
4. Marjan International Corp. sells handmade oriental rugs. V. K. Putman, Inc., is a Montana
trucking company. Marjan delivered valuable rugs to Putman for shipment from New York City
to Tacoma, Washington. Unfortunately, there were several delays in transit. The truck driver
encountered snow storms and closed roads. His truck also overheated and required repairs in a
garage. Before the driver resumed the trip, he stopped to pick up and load other goods. When the
truck finally arrived in Tacoma, two bales of rugs were missing. Marjan sued, on the grounds that
Putman was a common carrier, but Putman claimed it was a contract carrier. What difference does
it make whether Putman was a common carrier or a contract carrier, and how is that determined?
Answer: A common carrier is one that makes its services available on a regular basis to the
general public. A common carrier is strictly liable for any loss to the goods, unless the carrier can
demonstrate that the harm was caused by an act of God, an enemy of the state, a public authority,
5. You Be the Judge: WRITING PROBLEM Eileen Murphy often cared for her
elderly neighbor, Thomas Kenney. He paid her $25 per day for her help and once gave her a bank
certificate of deposit worth $25,000. She spent the money. Murphy alleged that shortly before
his death, Kenney gave her a large block of shares in three corporations. He called his broker,
intending to instruct him to transfer the shares to Murphy’s name, but the broker was ill and
unavailable. So Kenney told Murphy to write her name on the shares and keep them, which she
did. Two weeks later Kenney died. When Murphy presented the shares to Kenney’s broker to
transfer ownership to her, the broker refused because Kenney had never endorsed the shares as
the law requires, that is, signed them over to Murphy. Was Murphy entitled to the $25,000? To
the shares? Argument for Murphy: The purpose of the law is to do what a donor intended, and
it is obvious that Kenney intended Murphy to have the $25,000 and the shares. Why else would
he have given them to her? A greedy estate should not be allowed to interfere with the deceased’s
intention. Argument for the Estate: Murphy is not entitled to the $25,000 because we have no
way of knowing what Kenney’s intentions were when he gave her the money. She is not entitled
to the shares of stock because Kenney’s failure to endorse them over to her meant he never
delivered them, and that is an essential element of a gift.
Answer: Murphy gets the $25,000. There was delivery, acceptance, and adequate evidence that
Kenney intended the items as gifts. Murphy is not entitled to the shares, though, because without
Discussion Questions
1. “Finders keepers, losers weepers” is a common children’s rhyme. Does the law mirror its
sentiment?
2. Is it sensible to distinguish between inter vivos gifts and gifts causa mortis? Should someone “on
his deathbed” be able to change his mind so easily?
3. ETHICS Famous artists Georgia O’Keefe and Alfred Stieglitz donated 101 artworks to
Fisk University in the 1940s. But the gift had two conditions: The pieces could not be
sold and they had to be displayed as one collection. Over 50 years later, Fisk could not
pay to maintain the collection and decided to sell two of the pieces. Proceeds of the sale
would go to restore its endowment and build a new science building. The Georgia
O’Keefe Foundation sued to stop the sale, arguing that the artists would have opposed it.
Should the law permit this sale? Do you agree with Fisk’s actions? What duties do gift
recipients have to donors? What would Kant and Mill say?
4. Common carriers are not usually liable when property is damaged, but they are not liable for
“acts of God” – floods, hurricanes, and the like. Is this fair? If you send a friend an important
item via UPS, and the UPS truck is hit by a tornado, who should pay for the lost item? Isn’t UPS
in a better financial position to pay for the loss? (In the end, they might well offer to pay for the
loss, but they would not be legally required to do so.)
5. Dan checks into a nice beachfront hotel. He does not want to expose his $10,000 Patek Philipe
wristwatch to saltwater, and so he leaves it in the dresser in the room. When he returns from the
beach, the watch is gone. He is shocked to learn that the hotel is not legally responsible for the
value of his watch. Is the law reasonable in such cases? Should the hotel be liable? Why or why
not?
Answer: Answers will vary. Provided the hotel obeys the statute’s details, it typically has no