Chapter 47 Personal Property and Bailments

Introduction Definition: Property consists of legally protected rights and interests a person has in anything with an ascertainable value that is subject to ownership. Difference Between Real and Personal Property. Ownership rights in each.

§1: Property Classification Property is divided into real and personal property. Real property (see Chapter 48) includes land everything permanently attached to it. Personal property is both tangible and intangible (stocks, copyrights). Real Tangible Intangible Personal Property

§ 2: Fixtures A fixture is personal property that becomes permanently affixed to real property. Intent that it become a fixture is necessary. Intent is determined by: The fact that the property cannot be removed without causing damage to the realty. The fact that the property is so adapted to the realty that it has become part of the realty. Case 47.1: In Re Sand & Sage Farm & Ranch (2001).

Trade Fixtures Trade fixtures: installed for commercial purposes by a tenant. They remain the property of the tenant and can be removed when tenant leaves, repairing any damage caused by removal.

§ 3: Property Ownership Property ownership is viewed as a “bundle of rights”, including the: Right to possess. Right to sell. Right to give. Right to lease. Right to destroy.

Fee Simple Person who owns the entire “bundle of rights” is said to be the owner in fee simple. Fee simple gives the owner the maximum possible estate or right of ownership of real property, continuing forever. Chapter 48 will deal with realty estates.

Concurrent Ownership A B C A B Tenancy in common (Fig.1). A and B own an undivided interest in the property. Upon B’s death interest passes to B’s heir, “C”. A B C Fig.1 Joint Tenancy (Fig. 2). A and B own an undivided interest in property but, upon B’s death, B’s interest passes to A, the surviving joint tenant. A B Fig. 2

Concurrent Ownership [2] Tenancy by the Entirety (not common) Usually between husband and wife. Community Property (limited # of states) Property acquired by couple during their marriage is owned as an undivided ½ interest in property (real and personal).

§ 4: Acquiring Ownership of Personal Property Personal property can be acquired through: Possession. Production. Gift. Will or Inheritance. Accession. Confusion.

Possession Capture of wild animals (wild animals belong to no one). Finding of abandoned property. Adverse Possession.

Production Writers, inventors, manufacturers, and others who produce personal property acquire title to it.

Gifts Voluntary transfer of property ownership from Donor (owner) to Donee (recipient) for no consideration. Three types Intervivos—while onor is living. Causa Mortis: -- made by donor in contemplation of imminent death. Testamentary – after death, by will/inheritance.

Gifts [2] Three requirements for valid gift: Delivery—actual or “constructive” (symbolic, such as keys to car). Donor must give up complete control or dominion. Delivery by a 3rd party is OK. Donative intent on the part of the donor Case 47.2: In Re Estate of Piper (1984). Acceptance by the Donee.

Accession “Something added.” Someone adds value to a piece of personal property by use of either labor or materials. With owner’s consent. Without owner’s consent.

Confusion Commingling so that a person’s personal property cannot be distinguished from another’s. Fungible goods consists of identical particles such as oil or grain. Commingled in bad faith. Commingled in good faith.

§ 5: Mislaid, Lost or Abandoned Property Mislaid Property: Voluntary placed somewhere, then inadvertently forgotten. Finder is caretaker for true owner. Lost Property: Involuntarily left. Property owner acquires title against whole world, except for true owner. Finder may be liable for: Conversion. Involuntary Bailment.

Mislaid, Lost or Abandoned Property [2] Abandoned Property: Discarded by true owner with no intention of recovering. Acquires title against all the world, including the original owner. Trespassers: no title. Treasure Trove: Title against all world except true owner.

§6: Bailments A bailment is formed by the delivery of personal property, without transfer of title, by one person (Bailor) to another (Bailee), usually under an agreement for a particular purpose. The property must be returned by the Bailee to the Bailor, or a third party as directed by the Bailor, in the same or better condition.

Elements of a Bailment Personal Property. (Tangible or Intangible--but not persons or realty.) Delivery of Possession. Bailee given exclusive control or possession. May be actual or constructive. Bailee must knowingly accept (Bailee must intend to exercise control over chattel). Bailment Agreement. Express or Implied.

§7: Ordinary Bailments Bailment for the sole benefit of the Bailor: A gratuitous Bailment; Bailee owes Bailor a low duty of care, liable only for gross negligence. Bailment for the sole benefit of the Bailee: Bailee owes Bailor a high duty of care and is liable for even slight negligence. Mutual Benefit Bailment: most common. Each party owes the other a reasonable duty of care.

Degree of Care Bailor’s Sole Benefit Mutual Benefit Bailee’s Sole Benefit Slight Reasonable Great

Rights and Duties of the Bailee Right To Possess. Bailee may acquire or use property temporarily. Title does not pass. Right to Use Bailed Property. Rights of Compensation. Reimbursed for costs or services as provided in the agreement. Right to Limit Liability.

Rights and Duties of Bailee [2] Duty to Return bailed property in same condition to Bailor. Bailee may liable for conversion and/or negligence. Case 47.3: Sunbelt Cranes Construction and Hauling, Inc. v. Gulf Coast Erectors, Inc. (2002). Case 47.4: Lembaga v. Cace Trucking (1999).

Rights and Duties of the Bailor Right to have property protected and used as agreed. Right to have property back at end of bailment with service or repair done properly. Right to have the Bailee not convert. Right to not be bound to limitation of liability unless Bailor knows. Duty to Provide safe goods: Mutual Benefit Bailment: free from known or hidden defects; Sole Benefit of Bailee: notify if any known defect.

Termination of Bailments Mutual agreement of both parties. Demand by either party. Completion of the purpose of the bailment. Act by the bailee that is inconsistent with the terms of the bailment. Operation of law.

§ 8: Special Types of Bailments Documents of Title and Article 7. Negotiability of Documents of Title. Possessor of document is entitled to receive, hold, and dispose of the document and the goods it covers. A good faith purchaser of the document may acquire a greater right to the document and goods it covers than the transferor had.

Common Carriers Publicly licenses to provide transportation services to general public. Common Carriers are strictly liable for damages except if the damages caused by: An act of God. An act of the public enemy. An order of the public authority. An act of the shipper. The inherent nature of the goods. Shipper’s loss. Connecting Carriers.

Warehouses and Innkeepers Owe duty of reasonable care. Can’t exculpate, can limit. Innkeepers: Owe duty of strict liability, modified by state statutes; if innkeeper provides safe and notifies guests. If parking area provided and innkeeper accepts bailment, then may be liable.

Law on the Web Bailments at ‘LectLaw.com Legal Research Exercises on the Web.