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Chapter 20
PERSONAL PROPERTY AND BAILMENTS
RESTATEMENT
Personal property is property that is movable or intangible such as rights in inventions, trademarks, and writings.
Title to personal property can be acquired by gift. To constitute a valid gift, there must be the intent to make a gift
and either actual or constructive delivery. Gifts causa mortis are gifts in contemplation of death and are not final
unless the party dies.
Title to personal property can also be transferred through the finding of lost property with certain statutory
exceptions for holding periods before title passes to the finder. Title to abandoned personal property can also be
transferred if the owner relinquishes possession with the intent to abandon. Title to personal property can
escheat to the state if no one steps forward for unclaimed property.
Title to personal property can be held by more than one person with various interests and rights. The forms of
multiple ownership are tenancy in common, joint tenancy, tenancy by entirety and community property. There are
various requirements for creation of these interests.
A bailment is the temporary transfer of possession of personal property from one party to another. The bailor is
the party who owns the property or transfers possession and the bailee is the party who accepts possession.
A bailment exists when there is the intent to create a bailment, an agreement for the bailment and a transfer of
possession. The transfer occurs by delivery and acceptance of the personal property.
There are several forms of bailments. An extraordinary bailment is one in which the law imposes a higher duty
such as the strict liability of a common carrier. Ordinary bailments are those in which no special statutory duties
are imposed. A bailment can be for compensation or can be done gratuitously. Constructive bailments result
when property comes into possession of another without the owner ’s consent but is legitimate, as when lost
property is found.
The bailee has a duty of care with respect to the property which varies in certain circumstances. The bailee also
has a duty to return possession of the property. The bailor has a responsibility of responsible care for the
condition of the property and the right to demand the return of the property.
STUDENT LEARNING OUTCOMES
LO.1: Explain how title to personal property is acquired.
LO.2: List and explain the various types of gifts.
LO.3: Explain the legal theory whereby an owner can recover his or her property from the wrongful
exclusionary retention of another.
LO.4: Identify the elements necessary to create a bailment.
LO.5: Explain the standard of care a bailee is required to exercise over bailed property.
INSTRUCTOR’S INSIGHTS
Break the chapter down into two components – related Learning Outcomes are indicated in ( ):
1. What are the general principles of personal property ownership?
Discuss the nature of personal property
Explain the ownership issues for personal property (LO.1)
2. What are the general characteristics of bailments?
Define bailment
List the elements of a bailment (LO.4)
Describe the various types of bailments
CHAPTER OUTLINE
I. What are the General Principles of Personal Property Ownership?
A. Property is a bundle of rights
C. Personal property
1. Whole or fractional rights in things that are tangible and movable
D. Limitations on ownership
1. Absolute ownership is all possible rights
2. Can transfer rights in segments
E. Title to personal property
F. Acquisition by gift
1. Voluntary act of owner without receiving anything
a. Donor is the one who makes the gift
2. Inter vivos gifts (See Figure 20-1 in text)
b. Elements
i. Intent to transfer title at that time, not in the future; not something lent
3. Gifts causa mortis
a. In contemplation of imminent death
b. Taking effect if donor dies
4. Gifts and transfers to minors
a. Uniform acts allow property to be transferred to the custodian to hold for the benefit of the minor
CASE BRIEF: Heath v. Heath
493 N.E. 2d 97 (Ill. App. 1986)
FACTS: In 1980, Larry Heath received $10,000 from his father. With interest, these funds grew to
$13,381 by 1983, and in March he used this money to establish two custodian bank accounts
for his minor children under the Uniform Gifts to Minors Act. Larry was listed as custodian on
each account. In August 1984, Larry closed both accounts and returned the proceeds to his
mother, since his father was now in Europe. The children’s mother, Pamela, brought suit to
recover the funds on behalf of the children, contending that the deposits were irrevocable gifts.
Larry contended that the money was his father’s and was never intended as a gift. Larry
testified that he was a mere factory worker and was ignorant of the legal effect of his signing
the signature cards for the custodian accounts.
ISSUE: Were the deposits irrevocable gifts?
REASONING: To find that an inter vivos gift has been made, there must be donative intent and delivery. The
UGMA expressly deals with “delivery” and provides that this element of a gift is satisfied by
documentary compliance with the procedures of the statute. The issue of “donative intent” is
not conclusively resolved by making a determination that there was documentary compliance
with the statute. However, documentary compliance with the procedures set forth by the UGMA
is highly probative on the issue of intent. Larry’s testimony that he was ignorant of the legal
effect of his signing the signature cards was unworthy of belief and insufficient to rebut the
strong documentary showing that he had created irrevocable gifts.
5. Conditional gifts
a. Have the students discuss how the following problem should be solved:
Dr. Bob, age 58, is an extremely wealthy, attractive, and physically fit local surgeon who has
never married. One day, while working out at a local health club, Dr. Bob meets Susie, who is
extremely attractive and extremely intelligent, having a doctorate degree from a prestigious
institution (undoubtedly your own). The two start dating, and Dr. Bob showers Susie with gifts
(fur coat, television, VCR, jewelry, works of art, etc.). After several months, they announce the
Have your students raise their hands to show how many of them would allow Dr. Bob to get all
of his gifts back and how many would allow Susie to keep all of the gifts. Tell the students that
Susie makes a living by doing this to Dr. Bobs all over the country. See if this changes any of
the votes or whether the students are still tied to the quoted portion of the text. Have the
students discuss the fairness of Susie’s keeping the gifts and what, if anything, Dr. Bob could
have done to prevent this. Have the students discuss California Civil Code § 1590, which states:
Where either party to a contemplated marriage in this state makes a gift of money or
property to the other on the basis or assumption that the marriage will take place, in
Have the students discuss how this statute changes the solution to the problem. Students
probably will engage in a lively discussion of which particular items Dr. Bob should get back,
b. Engagement rings as conditional gifts
CASE BRIEF: Meyer v. Mitnick
625 N.W. 2d 136 (Mich. App. 2001)
FACTS: Dr. Barry Meyer and Robyn Mitnick became engaged on August 9, 1996, at which time Barry
gave Robyn a custom-designed engagement ring that he purchased for $19,500. On November
8, 1996, Barry asked Robyn to sign a prenuptial agreement and Robyn refused. The
engagement was broken during that meeting, with both Barry and Robyn contending the other
party caused the breakup. Robyn did not return the ring and Barry sued for its return. Robyn
filed a counter complaint alleging that the ring was an unconditional gift, and that because Barry
broke the engagement, she was entitled to keep the ring. Trial court found for Meyer.
ISSUE: Is an engagement ring a conditional gift?
HOLDING: Yes. The court concluded an engagement ring by its very nature is a conditional gift given in
contemplation of marriage and only becomes a completed gift upon marriage. The court held
REASONING: The general principles of law concerning a donor's right to return of an engagement ring vary
according to jurisdictions. Some courts apply the older rules that when an engagement has
been unjustifiably broken by the donor, the donor shall not recover the ring. However, if the
engagement is broken by mutual agreement, or unjustifiably by the donee, the ring should be
returned to the donor. In such cases, the courts make a critical inquiry determining the fault for
the termination of the relationship. The holding of this court reflects a modern trend in which
fault, a matter of the heart, is not considered by the courts.
6. Anatomical gifts
a. Many students are particularly interested in how to go about making anatomical gifts. Discuss
this topic in detail, using the applicable laws in your state.
b. The Uniform Anatomical Gift Act
G. Acquisition by finding of lost property
1. The owner does not know where it is, but intends to retain title
H. Transfer of title by nonowner
1. No title is transferred by a thief
I. Occupation of personal property
1. Wild animals
a. Not owned by anyone until dominion or control
2. Abandoned personal property
a. Question of intent to give up title
CASE BRIEF: Ritz v. Selma United Methodist Church
467 N.W. 2d 266 (Iowa 1991)
FACTS: Charles and Rosa Nelson owned a home in Selma, Iowa, for over a half century. After their
deaths, the property was abandoned because of the substantial unpaid real estate taxes. The
Selma United Methodist Church purchased the property at a tax sale. When the church razed
the dwelling, they found $24,547 in cash and coins that had been buried in the ground in glass
jars by Charles many years before. The heirs of the Nelson family claimed the money. The
church claimed that since the real estate was abandoned by the estate, the church was now the
true owner of the money.
ISSUE: Had the real estate, and hence, cash, been abandoned?
REASONING: Although the real estate was abandoned, the money found by the church had not been
abandoned by its owner, Charles Nelson. The fact that it was buried in glass jars indicates that
the owner was trying to preserve it. Therefore, the money had not been abandoned and was
owned by Nelson’s heirs.
c. Conversion
i. Property that is lost is sought by true owner and finder refuses to return
ii. Remedy is limited to property that can be possessed, not real property
CASE BRIEF: Williams v. Smith Avenue Moving Co.
582 F. Supp. 2d 316 (N.D. N.Y. 2008)
FACTS: The Williams moved their personal property to Smith Storage, which was operated by the
Faeber family. After the death of a Faeber parent, however, the family decided to close Smith
Storage and notified their customers. At this time, two of the Faeber sons removed some
property from the storage facility and consigned it to North Star Auction Galleries, Inc.
When the Williams found out that some of their property was listed on North Star’s website, they
sued the Faebers for conversion. The Faebers claimed that they genuinely thought the property
belonged to their mother, and that the Williams did not provide sufficient proof that the stored
property belonged to them.
ISSUE: Is this conversion even if, as the Faebers contend, it was done in good faith?
REASONING: Good faith is not a defense to conversion, and the Faebers’ claim that the Williams did not
provide sufficient proof of ownership is irrelevant. A bailee cannot deny a bailor’s title as an
excuse for refusing to redeliver the property.
J. Escheat
1. Unclaimed property can be transferred to the state
CASE BRIEF: Presley v. City of Memphis
769 S.W. 2d 221 (Tenn. App. 1988)
FACTS: Elvis Presley contracted with Mid-South Coliseum Board (City of Memphis) for the rental of the
Coliseum and for personnel to sell tickets for concerts on August 27 and 28, 1977; $325,000
worth of tickets were sold. On August 16, 1977, Elvis Presley died. Refunds were given to
those who returned their tickets to the Coliseum Board. Ten years after his death, however,
$152,279 worth of ticket proceeds remained unclaimed in the custody of the Board. This fund
had earned $223,760 in interest. Priscilla Presley and the co-executors of the estate of Elvis
Presley brought an action, claiming the unrefunded ticket proceeds for the canceled concerts.
The state of Tennessee claimed that it was entitled to the proceeds under the Uniform
Disposition of Unclaimed Property Act. From a judgment for the co-executors, the state
appealed.
ISSUE: Is the estate of a famous entertainer entitled to unrefunded ticket proceeds because the ticket
holders have abandoned their claims to the fund?
HOLDING: No. A Tennessee statute provides that “all property, ...including any income or increment
thereon...that is held or owing in the state in the ordinary course of the holder ’s business that
has remained unclaimed by the owner for more than seven years after it became payable or
distributable is presumed abandoned.” The refunds remained unclaimed for more than seven
years and were held in the ordinary course of the coliseum ’s business. The presumption of
abandonment as to the unclaimed ticket proceeds matured on August 16, 1984. The plaintiffs
have no claim under the statute because the plaintiffs have no legal right to the funds. It is the
intent of the legislation that windfalls benefit the public rather than individuals – the Presley
estate or the coliseum, in this case. Reversed and remanded.
REASONING: In the Presley case, it is really hard to reconcile the concept of escheat with our contemporary
notions of celebrity. After all, upon the death of the King, the ticket holders were holding items of
great value even though their original contract with Presley was broken. Arguably, in waiving
their right to refund, they have accepted compensation for this waiver and the estate should
thus benefit. However, this ostensibly contractual argument fails because no offer was made
and the “consideration” was the death of Elvis (an unconscionable arrangement). In the
absence of the Tennessee statute, it is very likely that the Presley estate would have received
the unclaimed ticket proceeds under equitable principals that may have taken into account the
unique way in which the fund was created. What did happen was that a statute, designed to
deal with unclaimed (and obviously forgotten) items in warehouses, safe deposit boxes, etc.,
reverted the fund to the state, should some ticket holder someday wish to reclaim the price paid
in 1977 to see Elvis one last time. Arguably, while seeking to prevent a windfall to either the
Coliseum or Presley’s estate, the state of Tennessee has instead benefited from a windfall. But
then this windfall does benefit the public at large, an admirable end for these funds.
K. Multiple ownership of personal property
1. Tenancy in Common
a. Co-owners of property
2. Joint tenancy
a. Four unities of ownership
i. Time – acquire interests at the same time
ii. Title – acquire the same title
b. It may be transferred, but this severs joint tenancy, e.g., A, B and C are joint tenants. C
c. “With right of survivorship” shows intent
CASE BRIEF: Auffert v. Auffert
829 S.W. 2d 95 (Mo. App. 1992)
FACTS: Rachel Auffert purchased a $10,000 certificate of deposit on January 7, 1981, creating a joint
tenancy in this bank deposit payable to herself or either of her two children, Mary Ellen or Leo,
“either or the survivor.” When Rachel died, a note dated January 7, 1981, written in Rachel ’s
handwriting and signed by her was found with the certificate of deposit. The note stated:
Leo:
If I die this goes to Sr. Mary Ellen,
Wanted another name on it.
s/ Rachel Auffert
Jan 7 1981
Mary Ellen cashed the certificate of deposit and retained the proceeds. Leo sued to recover
one-half the value of the certificate. From a judgment for Mary Ellen, Leo appealed.
ISSUE: When a joint bank account is established, can subsequent instructions regarding the fund ’s
distribution to survivors be given any effect?
HOLDING: No. Missouri statute § 362.470.1 presumes that when a joint tenancy account is created, in
survivorship, the funds are to be divided equally among the remaining joint tenants. Facts
established show that Rachel Auffert opened a certificate of deposit account in the names of
REASONING: Statutory rules such as § 362.470 are created in response to problems that the legislature wants
to see resolved in a certain way, usually after the judiciary has decided the problem in an
opposite manner. In Auffert, the genuine wishes of Rachel were disregarded by the force of
statute. The creation of a statute to handle such circumstances probably arose from the
concern that an unscrupulous joint tenant could change the division of the proceeds without
notice to the other joint owners. Rather than burying the courts in controversies involving the
intentions of a dead person, the statute takes the position that if the owner had wanted the
proceeds to be divided up in a certain way – he should have done so while alive. This
presumption is rebuttable, but as Auffert points out, even a genuine writing does not defeat this
presumption.
There is the possibility that the lower trial court gave an inordinate amount of weight to Sister
Mary Ellen Auffert’s status as a nun in its decision. Whether one party was more worthy to the
funds than another is a question that the statute seeks to eliminate.
3. Tenancy by entirety
a. Same four unities plus additional unity of person
4. Community property
a. Husband and wife only
II. What are the General Characteristics of Bailments?
A. Definition
CASE BRIEF: Johnson v. North Carolina Department of Cultural Resources
735 S.E. 2d 595 (N.C. App. 2012).
FACTS: In 1910, Colonel Charles Johnson loaned a collection of original historic documents to the
North Carolina Historical Commission. In a letter to the Secretary of the Historical Commission,
dated 21 December 1910, Johnson stated: “You will remember that my position in this is that I
have loaned [the Collection] to the State with the right of recall and repossession at any time if I
see fit.” In a letter dated 23 December 1910, Connor replied to Johnson and stated that “[i]t is
thoroughly understood by the North Carolina Historical Commission that the ‘Charles E.
Johnson Collection’ of manuscripts deposited by you with the Commission, was deposited
merely as a loan, subject to your recall at any time you may see fit.” In 2008, Harvey Johnson a
descendent of Col. Johnson, discovered the 1910 correspondence and brought action for the
return of the collection under the law of bailment asserting that he and other descendants were
owners of the collection. The state contends that the claim is barred by the statute of limitations
or the doctrine of laches.
ISSUE: Is Harvey Johnson entitled to the return of the collection under the law of bailments?
REASONING: Col. Johnson’s transfer of the Collection to the Historical Commission created a bailment, which
continued after his death. Ownership of the Collection, including the right to recall the
Collection, properly passed to Johnson’s descendants through his will. Plaintiffs had no viable
claim against the State until after the State refused to return the Collection upon demand in
2008. Plaintiffs timely pursued this claim, and thus, the claim was not barred by either the
statute of limitations or the doctrine of laches.
B. Elements of bailment (See Figure 20-2)
1. Agreement
a. Can be expressed or implied
2. Delivery and acceptance
a. Actual – bailor hands it to bailee
C. Nature of the parties’ interests
1. Bailor’s interest
2. Bailee’s interest
D. Classification of bailments
1. Ordinary – most bailments; those other than extraordinary
2. Extraordinary (or special)
3. Contract or bailments for hire
4. Gratuitous (no compensation, but duties are the same)
E. Constructive bailments
1. Possession not transferred knowingly
F. Renting of space distinguished
1. No delivery to owner of space, no bailment
G. Bailment of contents of container
1. Is checking a coat a bailment of what’s in the pockets?
H. Duties and rights of the bailee
1. Performance as called for in the contract
2. Liability for defects and care of property
a. Sole benefit of the bailee – highest care; bailee liable for slightest negligence
b. Sole benefit of the bailor – least care; bailee required to exercise only slight care
c. Mutual benefit – ordinary care; bailee liable for ordinary negligence (Your examples should
bailor
CASE BRIEF: Hadfield v. Gilchrist
538 S.E. 2d 268 (S.C. App. 2000)
FACTS: Hadfield went to retrieve his car from a parking space on a private property, where his wife had
parked the car earlier that day without permission. The property owner called Gilchrist Towing
Co. and had the car removed. When Hatfield discovered the car was towed, he telephoned the
towing company and was told he would have to wait until the morning to retrieve the car after
paying towing and storage fees. The next morning after paying the charges, Hadfield went to
the storage lot and found that his car had been extensively vandalized. Gilchrist refused to pay
the estimated cost of repairs, $4,021.43. Hadfield brought suit contending that constructive
bailment for the mutual benefit of Hadfield and Gilchrist had been created, and the Gilchrist had
breached his duty of care to Hadfield. Gilchrist contended that he towed the vehicle pursuant to
Charleston Municipal Ordinances, which are for the sole benefit of the vehicle owners, intended
to preserve their property. As such the relationship created was a gratuitous bailment, which
limited his duty of care. Trial court found for plaintiff.
ISSUE: Did bailee use ordinary care in the storage and safekeeping of plaintiff's property?
HOLDING: No. The court held that where a city ordinance is utilized as a legal justification for taking
possession of a vehicle on private property the person or entity lawfully acquiring possession of
REASONING: The burden of proof first rests upon the bailor, to prove a prima facie case. He must show: (1)
the goods were delivered to the bailee in good condition; and (2) they were lost or returned in
damaged condition. When the bailor has so proven, the burden is shifted to the bailee to show
that he used ordinary care in the good's storage and safekeeping.
3. Contract modification of liability
a. Bailee may limit liability
b. Some statutory limitations on certain types of bailees (such as parking garages)
ANSWERS TO QUESTIONS AND CASE PROBLEMS
1. Elements of a gift: intent and delivery. Giving the handgun at the retirement dinner in front of all associates
present evidences an intent to make a gift. The public presentation of the revolver constituted a constructive
2. Abandoned property. Marlene has no rights for Joe merely took property that had been abandoned.
3. Transfer by gift. The issues were whether the $5,000 was a gift or a contract that required Carl to repay what
was due. The elements for a gift include intent and delivery. The money was delivered initially as a loan
4. Multiple ownership. Ruth and Stella – joint tenants with Roy and Stella. Roy and Stella – tenants in common.
5. Duties and liabilities of bailees. The delivery of the photographs by the bailor, Grace, to the bailee, Sygma,
and the acceptance by Sygma, constituted a transaction called a bailment, under which the bailee was
6. Uniform Gifts to Minors Act. Judgment was for Joan on behalf of Eden and Alexander. In order to find that an
inter vivos gift has been made, there must be donative intent and delivery. The UGMA expressly deals with
delivery and provides that this element of a gift is satisfied by documentary compliance with the procedures
7. Multiple ownership – joint tenancy. The signature card providing “Joint Account – Payable to Either or
Survivor” created prima facie presumption that a joint tenancy was created even though the words “Payable
8. Classification of bailment; duties of bailor. The case described is a gratuitous bailment. The father loaned the
weapon to his son without charge. The duty of care owed by the father to the son in this case, which is a
9. Duties of bailee. Judgment was for Welge on the counterclaim. When Baena Brothers made a contract with
respect to the furniture, it was required to perform that contract according to the ordinary principles of
contract law. The concept of due care, which would protect Baena Brothers if the goods were damaged by a
10. Duties of bailee, contract modification of liability. Judgment for Schroeder. When a bailee attempts to limit
liability by printing such a limitation on a claim check, the limitation must be called to the attention of the
bailor before it may become part of the bailment contract. The limitation on the claim check was not called to
11. Necessity of delivery of property to give rise to bailment; return of bailed property . John gave possession of
his raincoat to the restaurant at the restaurant ’s coatroom, and the restaurant, through its attendant,
accepted possession of the coat. In accepting responsibility, the restaurant did not seek to limit the
responsibility it assumed when it accepted the coat by communicating to John any limitation on its liability. All
of the elements of a bailment were present. There was delivery of possession of the bailed item, the
Because the restaurant did not take possession of Lynn’s raincoat, no bailment was ever created, and Lynn
would not be successful in her suit against the restaurant.
Authors’ Comment: The question may be asked whether the restaurant could disclaim responsibility for loss
of articles of clothing by posting a large sign at the door of the coatroom stating that the restaurant is not
responsible for lost or stolen articles of clothing. What if the disclaimer appeared only on the back of a claim
12. Elements of a bailment; renting of space. No. By parking the car himself, locking it, and keeping the keys,
Rhodes retained control of the car. And with no attendant on duty and no ticket verification system in effect,
the parking lot did not exercise realistic control over the car. Therefore, the car was not in the possession of
13. Elements of a bailment. Judgment for PTAR Inc. There was no delivery of the jewelry to the exclusive
possession or control of PTAR Inc. and no acceptance of the jewelry by PTAR Inc. The jewelry was placed on
14. Conditional Gifts. If the ring was a holiday gift, it was completed upon delivery. If it was an engagement ring it
is considered a conditional gift. The court found that the more credible evidence supports Charles’ claim that
15. Bailee’s duties; duty of care. The Mississippi court held the clothing manufacturer liable as a matter of law for
damage to its customer’s fabric caused by a leak at the manufacturer ’s facility and the lease held the
LAWFLIX
The Goonies (1985) (PG)
This story is about children finding a lost treasure they wish to claim as theirs and use for purposes of stopping
management system for classroom use.
