© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 1 Chapter 35: Personal Property and Bailments

2 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Learning Objectives What is real property? What is personal property? What is the difference between joint tenancy and tenancy in common? What are the three elements necessary for an effective gift? What are the three elements of a bailment? What are the rights and duties of a bailee? What are the rights and duties of a bailor?

3 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 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. Acquiring Ownership of Personal Property. Laws Governing Mislaid, Lost, or Abandoned Property.

4 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 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.

5 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Fee Simple Owner owns the entire “bundle of rights”. Fee simple gives the owner the maximum possible estate or right of ownership of real property, continuing forever. Chapter 36 will deal with realty estates.

6 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. A and B own an undivided interest in the property. Upon B’s death interest passes to B’s heir, “C”. The new owners of the property are A and C. AB C Tenancy in Common X

7 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Joint Tenancy A and B own a Joint Tenant interest in property. Upon B’s death, B’s interest automatically passes to A, the surviving joint tenant. AB X

8 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Community Property Community Property (limited number of states) –Property acquired by couple during their marriage is owned as an undivided ½ interest in property (real and personal).

9 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Real Property Ownership

10 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Acquiring Ownership of Personal Property 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.

11 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Voluntary transfer of property ownership from Donor (owner) to Donee (recipient) for no consideration. Three types –Intervivos—while donor is living. –Causa Mortis: -- made by donor in contemplation of imminent death. –Testamentary – after death, by will/inheritance. Gifts

12 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Three Requirements for a Valid Gift Donative Intent. Delivery—actual or “constructive” (symbolic, such as keys to car). –Relinquishing Dominion and Control: Donor must give up complete control or dominion. Acceptance by donee. Case 35.1 In re Estate of Piper. There was no evidence of actual delivery of the rings to plaintiff Kaufmann. Thus the rings remained in the estate of Piper.

13 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Acquiring Ownership of Personal Property Accession. –Someone adds value to a piece of personal property by use of either labor or materials. 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.

14 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Mislaid Property: Voluntary placed somewhere, then inadvertently forgotten. Finder is steward for true owner. Lost Property: Involuntarily left. Property owner acquires title against whole world, except for true owner. Finder must return to true owner or be liable for conversion. Abandoned Property: Discarded by true owner with no intention of recovering. Acquires title against all the world, including the original owner. Mislaid, Lost, and Abandoned Property

15 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 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. Bailments

16 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 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 (physical) or constructive. –Bailee must knowingly accept (Bailee must intend to exercise control over chattel). –“Involuntary” Bailments. Bailment Agreement. –Express or Implied.

17 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Ordinary Bailments: Duty of Care Bailment for the sole benefit of Bailor: –A gratuitous Bailment; Bailee owes Bailor a low duty of care, liable only for gross negligence. Bailment for the sole benefit of 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.

18 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Bailments: Bailee Duty of Care Bailment for Benefit of Bailor Bailment for Benefit of Bailee Low Duty of Care High Duty of Care Reasonable Care Mutual Benefit

19 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 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 of the Bailee

20 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Duties of Bailee Duty to return bailed property in same condition to bailor, or bailee may liable for conversion and/or negligence. Case 35.2 LaPlace v. Briere. Presumption of negligence occurs when bailed property is damaged under the bailee’s control; can be rebutted by proof of bailee using reasonable and ordinary care.

21 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Rights and Duties of 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.

22 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 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. Special Types of Bailments: Common Carriers Case 35.3 Treiber & Straub, Inc. v. United Parcel Service, Inc.. Carrier’s disclaimer limiting liability was enforceable and was prominent enough on the web site and repeated several times when the shipper “clicked” in agreement.

23 © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Special Bailments: Warehouses and Innkeepers Warehouses: –Issue documents of title (warehouse receipts) subject to contractual negotiations. Owes 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.