ch46

Chapter 46Personal Property

and Bailments

Chapter 46Personal 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.

Acquiring Ownership of Personal Property.Laws Governing Mislaid, Lost, or Abandoned Property.

§1: Property Classification§1: Property ClassificationProperty is divided into real and personal property. Real property (see Chapter 47) includes land everything permanently attached to it. Personal property is both tangible and intangible (stocks, copyrights).

§ 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.

Fixtures [2]

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 SimpleFee 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 47 will deal with realty estates.

Concurrent OwnershipConcurrent Ownership

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”.

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.

Concurrent Ownership [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

§ 4: Acquiring Ownership of Personal Property

Personal property can be acquired through:Possession.Production.Gift.Will or Inheritance.Accession.Confusion.

PossessionPossession

Capture of wild animals (wild animals belong to no one).

Finding of abandoned property.

Adverse Possession.

ProductionProduction

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

GiftsGifts

Voluntary transfer of property ownership from Donor (owner) to Donee (recipient) for no consideration.

Three typesIntervivos—while onor is living.Causa Mortis: -- made by donor in

contemplation of imminent death.Testamentary – after death, by will/inheritance.

Gifts [2]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 donorAcceptance by the Donee.

AccessionAccession

“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.

ConfusionConfusion

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

§ 5: Mislaid, Lost or Abandoned Property

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 should 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.

§6: Bailments§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 BailmentElements of a BailmentPersonal 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§7: Ordinary BailmentsBailment 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.

Rights and Duties of the BaileeRights 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.

Duty to Return bailed property in same condition to Bailor. Bailee may liable for conversion and/or negligence.

Rights and Duties of the BailorRights 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 BailmentsTermination 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§ 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 CarriersCommon CarriersPublicly 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 InnkeepersWarehouses and Innkeepers

Warehouses: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.

Case 46.1: In Re Sand & Sage Farm(Fixtures)


FACTS:Ardery bought an eighty-acre tract of land

(Sand and Sage Farm) that contained an eight-tower center-pivot irrigation system, consisting of an underground well and pump connected to a pipe that ran to the pivot where the water line was attached to a further system of pipes and sprinklers suspended from the towers, extending over the land in a circular fashion.

The system’s engine and gear head were bolted to a concrete slab above the pump and well, and attached to the pipe.

FACTS (cont’d)The Arderys granted to Farmers State Bank a mortgage

that covered “all buildings, improvements, and fixtures.”

Sand & Sage Farm granted Ag Svcs. a security interest in the farm’s “equipment.” Nothing in the security agreement or financing statement referred to fixtures.

When the Arderys and Sand & Sage filed for bankruptcy and asked for permission to sell the land, with the irrigation system, to Bohn Enterprises, Ag Services claimed that it had priority to the proceeds covering the value of the irrigation system. The bank responded that it had priority because the system was a “fixture.”



HELD: FOR BANK. IRRIGATION SYSTEM WAS A FIXTURE.Factors to consider to determine whether

personal property attached to land is a fixture depends on “(i) how firmly the goods are attached or the ease of their removal (annexation); (ii) the relationship of the parties involved (intent); and (iii) how operation of the goods is related to the use of the land (adaptation).

Intent is the controlling factor.



Case 46.2: In Re Estate of Piper(Gifts)


FACTS:For eight years preceding Piper’s death,

Kauffman took Piper to the doctor, beauty shop, and grocery store; wrote her checks to pay her bills; and helped care for her home.

Gladys died intestate. Among her other property were two diamond rings. Clara filed a claim in a Missouri state court against the estate, maintaining that Gladys had promised the rings as a gift to her. The trial court awarded her the rings. Gladys’s heirs and the administrator of her estate appealed.

HELD: FOR CHILDREN. NO GIFT.The appellate court reversed, ruling that no

effective gift of the rings had been made because Gladys had never delivered them to Clara.

The expression of a desire to give does not constitute a gift unless the intention is executed by a complete and unconditional delivery of the subject matter or delivery of a proper written instrument evidencing a gift.



Case 46.3: Sea Hunt v. Unidentified Shipwrecked Vessel

(Mislaid, Lost or Abandoned Property)



FACTS:In 1750, La Galga sank in a hurricane off the

coast of the Virginia. In 1802, Juno sank in a storm off the Virginia coast.

The Virginia Marine Resources Commission granted Sea Hunt, Inc., a maritime salvage company, permits to explore for shipwrecks off the Virginia coast and conduct salvage operations.

Sea Hunt found the remains of La Galga and Juno. Virginia sued for ownership under the Abandoned Shipwreck Act of 1987 (ASA).

HELD: AGAINST SEAHUNT. THE WRECKS WERE NOT ABANDONED.The Fourth Circuit ruled that the ships were not

abandoned and therefore did not belong to Virginia. The court explained that “for Virginia to acquire title

to the shipwrecks and to issue salvage permits to Sea Hunt, these vessels must have been abandoned by Spain.

The court concluded, however, that “[a]n owner who comes forward has definitely indicated his claim of possession, and in such a case abandonment cannot be implied.”





Case 46.4: Lembaga v. Cace Trucking(Duties of a Bailee)


FACTS:Cace picked up shipment containers for

Lembaga, stored them in its warehouse, and delivered them.

One afternoon, Cace picked up two containers of perfume. While the first container was brought into the warehouse and unloaded, the second container disappeared. Part of a broken lock was found where the container had been.

Lembaga sued Cace, alleging negligence and conversion.

HELD: FOR LEMBAGA.Proof of damage to or loss of goods while

in the custody of a bailee gives rise to a presumption of conversion by the bailee.

The bailee may rebut the presumption by proof that the bailee did not intentionally or negligently convert the goods and that it was not negligent in preventing third parties from causing the loss or damage.”

