1. PERSONAL PROPERTY AND BAILMENT
CHAPTER 47
PERSONAL PROPERTY AND BAILMENT
© 2010 Pearson Education, Inc., publishing as Prentice-Hall

2. Property Real property – land and property permanently attached to it.
E.g., buildings, fixtures, trees, soil, minerals, timber, and plants.
Personal property – property that is not real property.
E.g., book, car, stock certificate.

3. Personal Property
Tangible Property – All real property and physically defined personal property.
E.g., buildings, goods, animals, and minerals.
Intangible Property – Rights that cannot be reduced to physical form.
E.g., stock certificates, certificates of deposit, bonds, and copyrights.

4. Acquiring Ownership of Personal Property
Possession or capture
Purchase
Production
Gift
Will or inheritance
Accession
Confusion
Divorce

5. Ownership Acquired By Possession or Capture
Acquiring ownership of unowned property in its natural state.
Important when country was being developed.
Rare in today’s society.

6. Acquiring Ownership by Purchase or Production
Purchasing the property from its rightful owner.
Producing a finished product from raw materials and supplies.

7. Acquiring Ownership by Gift
Voluntary transfer of title to property without payment of consideration by the donee.
Three elements for valid gift:
1. Donative Intent
2. Delivery (physical or constructive)
3. Acceptance

8. Gifts Gifts inter vivos are made during donor’s lifetime.
Irrevocable present transfers of ownership.
Gifts causa mortis are made in anticipation of death.
Can be revoked up until time of death.
Takes precedence over prior will.

9. Uniform Gifts to Minors Act Uniform Transfers to Minors Act
Establish procedures to make irrevocable gifts to minors.
Gifts of money deposited in financial institution.
Gifts of securities registered in name of trustee as custodian.
Donor or trustee acts as custodian of funds.

10. Ownership Acquired by Will or Inheritance
Property distributed to beneficiaries named in a will.
Property distributed to heirs stipulated in an inheritance statute.

11. Ownership Acquired by Accession
When value of personal property increases because it is added to or improved by natural or manufactured means, accession belongs to the owner.
E.g., when horse gives birth to a colt.

12. Ownership Acquired by Accession (continued)
If improvement is made wrongfully, owner acquires value of improved property.
E.g., when thief steals car and puts new engine in it.
If improvement is made mistakenly and improvement cannot be removed, owner acquires value of improved property.
E.g., when addition to house is made larger than planned.

13. Ownership Acquired by Confusion
Occurs when fungible goods are commingled.
E.g., oil, grain, cattle.
Owners share title to the commingled goods in proportion to the amount of goods contributed.

14. Ownership Acquired by Divorce
When a marriage is dissolved by a divorce, the parties obtain certain rights in the property of the marital estate.

15. Mislaid Property
Owner voluntarily places property somewhere and then inadvertently forgets it.
Owner of the premises where the personal property is mislaid entitled to take possession of the property against all except the rightful owner.
Claim is superior to rights of finder.
Must take reasonable care of property until it is reclaimed by owner.

16. Lost Property
Owner leaves property somewhere because of negligence, carelessness, or inadvertence.
Finder obtains title to the found property against everyone except the true owner.

17. Estray Statutes
Finder of mislaid or lost property obtains clear title to the property if:
Finder reports find to an appropriate government agency.
Finder or government advertises the lost property
Owner does not claim the property within a stated time period (e.g., one year).

18. Abandoned Property Property is abandoned if:
An owner discards the property with the intent to relinquish his or her rights in it, or
An owner of mislaid property gives up any further attempts to locate it.
Finder of abandoned property acquires title.

19. Bailment
Owner of personal property (bailor) transfers the property to another (bailee) to be held, stored, delivered, or for some other purpose.
E.g., warehouse or trucking company holds property.
Title to property not transferred.
Bailee must follow bailor’s directions concerning the property.

20. Goods transferred for safekeeping, storage, or transportation
Parties to a Bailment
Bailor
Bailee
Goods transferred for safekeeping, storage, or transportation

21. Elements to Create a Bailment
Personal Property
Only personal property can be bailed.
Delivery of Possession
The bailee has exclusive control over the personal property.
The bailee must knowingly accept the personal property.

22. Elements to Create a Bailment (continued)
Bailment Agreement
A bailment may be either express or implied.
Express bailments can be either written or oral.
Under the Statute of Frauds, a bailment must be in writing if it is for more than one year.
A bailment may be implied from the circumstances.

23. Ordinary Bailments Bailments for the sole benefit of the bailor.
Bailee cares for property as a favor.
Bailments for the sole benefit of the bailee.
Bailee asks to use bailor’s property for personal reasons.
Bailments for the mutual benefit of the bailor and bailee.

24. Ordinary Bailee’s Duty of Care
Type of Bailment
Duty of Care Owed by Bailee
Bailee Liable to Bailor for
For the sole benefit of the bailor
Slight
Gross negligence
For the sole benefit of the bailee
Great
Slight negligence
For the mutual benefit of the bailor and bailee
Ordinary
Ordinary negligence

25. Duration and Termination of Bailments
Bailment for fixed term – A bailment that terminates at the end of the term or sooner by mutual consent of the parties.
Bailment at will – A bailment without a fixer term; can be terminated at any time by either party.

26. Special Bailments
Common Carriers
Warehouse Companies
Innkeepers

27. Warehouse Company Bailee engaged in storing property for compensation.
Ordinary bailee.
Owes duty of reasonable care.
Liable only for loss from own negligence.
Can limit liability by offering bailor opportunity to increase limit for an additional charge.
Warehouse receipt indicates lien on stored items for expenses of storage.

28. Common Carrier Offers transportation services to public.
E.g., airlines, railroads, trucking companies.
Mutual benefit bailment.
If goods are lost or damaged, carrier is liable.
Act of God and other exceptions.
Can limit liability by offering bailor an opportunity to purchase higher limit.
Bill of lading issued by carrier-bailee when goods are received.

29. Common Carrier (continued)

30. Innkeeper’s Statute
Under common law, innkeeper held to strict liability standard for loss of personal property.
Most states have enacted Innkeepers’ Statutes to limit liability of innkeepers if safe is provided and guests are aware of safe.
May also limit dollar amount of liability.