Chapter 20: Personal Property and Bailments Flashcards
Property
A piece of land, or a thing, or an object
Also the rights and individual may possess in the piece of land/thing/object (to possess, use, dispose of)
Real property
Land and the things embedded in the land. (Also things attached to the earth and rights in those things)
Personal property
Property that is movable or intangible or rights in such things
Types of personal property
- whole or fractional rights in things that are tangible and movable
- claims and debts (choses in action)
- intangible property rights
Chose in action
Intangible personal property in the nature of claims against another
Ways to acquire title to personal property
- purchase (law or sales)
- gift
- finding lost property
- occupation
- escheat
Transfer via theft
Transfers posession only. Not title
Gift
Title to an owner’s personal property voluntarily transferred by a party not receiving anything in exchange
No consideration received (though may be in response to something)
Donor
Person making a gift
Donee
Recipient of a gift
Inter vivos gifts
Any transaction that takes place between living persons and creates rights prior to the death of any of them
Takes effect when donor:
1) expresses intent to transfer title at that time
(Not intent to confer benefit in future)
2) makes delivery of the property
(Requires intent to make it a gift)
- may be symbolic or constructive delivery
- subject to the right of donee to disclaim the gift in a reasonable time after transfer
- donee cannot sue for breach since there is no consideration and thus no contract
Symbolic delivery
Also called constructive delivery
Delivery of goods by delivery of the means of control, such as a key or a relevant document of title
Inter vivos gifts and donor death
If the donor dies before doing what is needed to make an effective gift then the gift fails. An agent or executor cannot perform the missing steps on behalf of the donor
Gifts causa mortis
Gift made by the donor in the belief that death was immediate and impending, that is revoked or is revocable under certain circumstances
A conditional gift. Donor can take property back if
- donor dies not die
- donor revokes gift before dying
- donee dies before donor
Gifts and transfers to minors
Provisions under uniform acts:
- transferring property to a custodian to hold for the benefit of a minor (custodian has discretionary power to use property ONLY for the benefit of the minor, not for self.)
- gift is final and irrevocable
- custodianships terminate and property is distributed when minor reached 21
Heath v. Heath
- father Larry received money from his father and put into custodian bank accounts for his minor children (under uniform gifts to minors act)
- he later closed those accounts and returned the money to his mother
- children’s mother sued on behalf of the children contending that money was irrevocable gift
- judgement for mother/children. Gift made under UMGA. Not believable that Larry didn’t understand that he had made an irrevocable gift
Conditional gifts
Gift made subject to a condition
- condition precedent (must happen before gift is transferred)
- condition subsequent (if happens will terminate gift)
Engagement ring mostly considered conditional gift (may or may not require return - mostly do on the premise that fault cannot be determined)
Meyer v. Mitnick
- Meyer gave Mitnick an engagement ring
- engagement was broken off during prenup agreement discussion
- Mitnick did not return the ring so Meyer sued for it’s return
- Mitnick claimed unconditional gift/that because Meyer broke engagement she was entitled to keep ring
- judgement for Meyer
- engagement ring is a conditional gift
- because fault is impossible to definitely determine the ring returns to the donor as condition is incomplete. Fault doesn’t matter
Anatomical gifts
Governed by the Uniform Anatomical Gift Act
- gift takes effect on death of the donor
- may be made by persons over 18 of their own bodies, or (with some restrictions) next of kin
- hospital can be sued for intentional infliction of emotional distress if misleads family members into consenting to donations
Finding lost property
- finder acquires possession, not title. Is required to surrender property when true owner establishes ownership
- not entitled to a reward without a contract
- if found in public place where it had intentionally been placed (likely owner will recall where it was left) finder must turn possession over to proprietor/manager of public place (does not apply if not seemingly intentionally placed)
- some states allow finder to sell or keep property if owner doesn’t appear in stated time period. Required to make good faith effort to find owner
State v. Preston
- Preston found diamond ring on floor of Walmart
- testified that took it to pawn shop for safekeeping/ because would need the money to find the owner
- convicted of theft (“appropriating another’s property where the actor knows the property was lost, not abandoned”)
- appealed and conviction affirmed
- definition of “lost” vs “abandoned”
- if lost person who loses item retains ownership
Lost vs abandoned
Lost: when the owner has parted with possession unwittingly and no longer knows the location (owner retains ownership)
Abandoned: when the owner intentionally relinquishes possession and rights to the property (owner loses ownership interest)
Occupation of personal property
In some cases title to personal property may be acquired by “occupation” - taking and retaining possession
Ex:
- wild animal. If obtains control becomes owner (but if killed/ captured on another’s land without permission it is property of landowner)
Abandoned personal property
Title to abandoned personal property may be acquired by the first person who obtains possession and control of it
Property only abandoned if abandoned totally voluntarily
Ritz v. Selma United Methodist Church
- home owned by Nelson’s was abandoned after their deaths due to unpaid real estate taxes
- Selma United purchase property at a tax sale
- upon raising the dwelling found $24k in cash buried in glass jars
- nelson heirs claimed the money
- church claimed it was theirs as part of the abandoned real estate
- judgment for heirs. Burial of the jars speaks to intent to preserve, not abandoned
Conversion
The act of taking personal property by a person not entitled to it and keeping it from it’s true owner or prior possessor without consent
The wrongful exclusionary retention of an owner’s physical property (applies also to tangible documents representing intangible rights)
Williams v. Smith avenue moving co
- Williams placed personal property from a gallery into Smith storage (operated by Faber family)
- when Faber parent died the smith storage business was discontinued. Customers notified
- sons not active in business removed property from storage and consigned it to auction
- Williams sued for conversion
- sons claimed had believed in good faith that property belonged to mother and that Williams lacked sufficient proof of ownership
- judgment for Williams
- proof of ownership sufficient
- no proof of ownership by mother
- good faith not a defense to conversion
“Bailee cannot deny a bailor’s title as an excuse for refusing to redeliver property”
Bailee
Person who accepts possession of a property
Bailor
Person who turns over the possession of property
Escheat
Transfer to the state of the title to a decedent’s property when the owner of the property dies intestate and is not survived by anyone capable of taking the property as heir
May be governed by uniform unclaimed property act
Intestate
Condition of dying without a will as to any property
Presley v. City of Memphis
- Elvis (Presley) contracted with city of Memphis for coliseum ticket sales for concert
- he died before concert
- ticket presented for refund were refunded
- widow sued for remaining unclaimed ticket sales (and interest)
- judgement for state
- under uniform disposition of unclaimed property act
- ticket price was property of ticket holders not Elvis estate
- windfalls go to state to benefit public, not individuals
Severalty
Ownership of property by one person (person holds all rights to particular property)
Cotenancy
When two or more persons hold concurrent rights and interests in same property
Forms include:
- tenancy in common
- joint tenancy
- tenancy by entirety
- community property
Tenancy in common
Relationship that exists when two or more persons own undivided interests in property
Interest if tenant in common can be transferred or inherited
Joint tenancy
Estate held jointly by two or more with the right of survivorship as between them unless modified by statute
(On death of joint tenant, remaining tenant takes property as holder in severalty)
No interest transferred to heirs. If transfered destroys joint tenancy and remaining joint tenant becomes tenant in common with person interest transferred to.
Some states require right of survivorship to be formally recognized in text of estate (if lacking ownership construed as tenancy in common)
Lewis v. Rosebrook
- rosebrook and lewis as couple had three joint accounts with right of survivorship at various banks
- when relationship ended rosebrook transfered money from those accounts to accounts in her own name
- Lewis’ daughter sued on his behalf: breach of oral trust and conversion of funds
- judgement for Lewis. “Realities of ownership” = parties intended to be equal owners of account, rosebrook didn’t have the right to appropriate a the funds (had to return everything over her 50% share)
Tenancy by entirety
(or tenancy by the entireties)
Transfer of property to both husband and wife
Right of survivorship cannot be extinguished and one spouse’s internet cannot be transferred to a third person
(In some jurisdiction rights to share the possession and profits may be transferred)
Creditors if only one spouse cannot reach the property while both are living
In many states granting an absolute divorce converts tenancy by the entireties to tenancy in common
Community property
Cotenancy held by husband and wife in property acquired during their marriage under law of some states, principally in the southwestern US
Some statutes provide for right of survivorship
Others say half property of the deceased goes to heirs / disposed of by will
Property acquired during marriage is “prima facie” community property even if in a individual’s name unless it can be shown it was obtained with property possessed by individual prior to marriage
Prima facie
Evidence that, if believed, is sufficient by itself to lead to a particular conclusion
Bailment
Relationship that exists when personal property is delivered into the possession of another under an agreement, express or implied, that the identical property will be returned or will be delivered or disposed of in accordance with the bailment.
Bailor
Person who turns over the possession of a property
Bailee
Person who accepts possession of a property
Duty to use reasonable care while in position of the bailed property
Johnson v. North Carolina department of cultural resources
- Johnson in possession of collection of historic documents
- loaned to North Carolina historical commission with specific provision for return as “he saw fit”
- historical commission communicated understanding
- almost a century later Johnson’s descendants brought action for a declaratory judgement that they were they owners of the collection
- decision for the descendants
- original transfer created a bailment that continued after Johnson’s death and passed to his descendanta
Elements of a bailment
- Agreement
Express or implied
“A contract to bail” (so all the elements of a contract)
Must be for personal property (not real property)
Need not be in writing - delivery and acceptance
In the absence of a prior agreement to the contrary, a valid delivery and acceptance generally require that the bailee be aware the goods have been placed within the bailees exclusive possession or control
Bailor’s interest in property
Usually owner but not required to be. sufficient that bailor have physical possession
Bailee’s Interest in the bailed property
Has possession only. No legal title. Has duty to return property
If sells property transfers only possession and owner mat recover property from buyer
Classification of ordinary bailments
Bailment for:
- the sole benefit of the bailor
- the sole benefit of the bailee
- the mutual benefit of both
Bailments for mutual benefir
Bailment in which the bailor and bailee both derive a benefit from the bailment
(Care or custody in exchange for payment. Though payment need not be cash)
Gratuitous bailment
Bailment in which the bailee does not receive any compensation or advantage
Sole benefit of the bailor
Constructive bailment
Bailment imposed by law as opposed to one created by contract whereby the bailee must preserve the property and redeliver it to the owner
(Government is bailee for impounded cars. Duty to keep safe and redeliver)
Property placed in a rented space
Does not create a bailment. Goods not delivered to the owner of the storage space
(Safe deposit box is a bailment)
Duties and rights of bailee
- because bailment is a contract liable for ordinary contract damages for failure to perform
- under a duty to care for bailed property (differs according to classification of bailment based on benefit
- for benefit of the bailor liable only for gross negligence
- for benefit of the bailee liable for even slight negligence
- mutual benefit = duty of reasonable /ordinary care
Has a right to receive payment for charges due for storage or repairs and a right to keep posession of the bailed property till charges are paid
Bailee’s lien
Specific, possessory lien of the bailee upon the goods for work done to them. Commonly extended by statute to any bailee’s claim for compensation, eliminating the necessity of retention of possession
Right to keep posession of bailed property till charges are paid
Hadfield v. Gilchrist
- Hadfield’s car was towed by Gilchrist Towing based on a municipal ordinance
- when Hadfield retrieved the car it was extensively vandalized
- Hadfield claimed constructive bailment for mutual benefit and breach of duty of care
- Gilchrist claimed sole benefit of vehicle owner and limited duty of care
- judgement for Hadfield
- city ordinance creates a constructive bailment for mutual benefit
- if bailor can prove if was a constructive bailment then bailee must prove that ordinary care was taken
Bailment liability
Based on tort principles
Burden of proof
Bailor sues for damages: must prove the bailee was at fault and fault was proximate cause for loss
Once proven that bailor delivered property to bailee in good condition bailor has burden of proof to show damage was not caused by their failure to exercise appropriate care
Liability for defects in bailed property
Mutual benefit bailment: bailor just make reasonable investigation to uncover defects and just inform the bailee of known defects. (Bailor liable for harm resulting from defects)
For sole benefit of bailee: bailor must inform bailee of known defects
Bailments for hire: rental of vehicles/machinery/ equipment
Uniform commercial code
Implied warranty of merchantability and fitness for a particular purpose for the protection of bailee customers
Contract modification of liability
- ordinary bailee may limit liability (excluding willful misconduct) by agreement or contract
- limitation of liability for negligence must be expressly worded (in some states this may be prohibited by statute for certain situations)
- limitation must be called to the attention of the bailor if printed on claim check
