Chapter 27: Personal Property and Bailments

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Chapter 1: Legal EthicsCHAPTER 27: PERSONAL

PROPERTY AND BAILMENTS

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Learning Objectives1. What is real property? What is personal

property?2. What is the difference between a joint

tenancy and a tenancy in common?3. What are the three elements necessary

for an effective gift?4. What are the three elements of a

bailment?5. What are the basic rights and duties of a

bailee? Of a bailor?

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Introduction• Property consists of legally protected rights

and interests a person has in anything with an ascertainable value that is subject to ownership.

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Introduction Property is divided into real and

personal property. –Real property includes land everything

permanently attached to it. –Personal property is both tangible and

intangible.

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Property Ownership Introduction. 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.

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Property Ownership Fee Simple.–Owns the entire “bundle of rights”.–Gives the owner the maximum possible

estate or right of ownership of real property, continuing forever. –Chapter 28 will deal with realty estates.

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•Concurrent Ownership.–Tenancy in Common: A and B own an undivided interest in the property. Upon B’s death interest passes to B’s heir, “C”.

A B

C

Property Ownership

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•Concurrent Ownership.–Joint Tenancy: A and B own an undivided interest in property but, upon B’s death, B’s interest passes to A, the surviving joint tenant.

Property Ownership

A B

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Property Ownership• Concurrent Ownership.– Community Property (limited # of states)• Property acquired by couple during their marriage is

owned as an undivided ½ interest in property (real and personal).

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

Acquiring Ownership of Personal Property

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• Possession: – Capture of wild animals (wild animals belong to no

one).– Finding of abandoned property.– Adverse Possession.

Acquiring Ownership of Personal Property

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• Production: – Writers, inventors, manufacturers, and others who

produce personal property acquire title to it.

Acquiring Ownership of Personal Property

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• Gifts.– Voluntary transfer of property ownership from Donor

(owner) to Donee (recipient) for no consideration. Three elements:• Donative Intent: based on circumstances, or relationship

between the parties. • CASE 27.1 GOODMAN V. ATWOOD (2011). What factors

indicated capacity?

Acquiring Ownership of Personal Property

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• Gifts.– Three elements:• 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.–CASE 27.2 IN RE ESTATE OF PIPER

(1984). Why was the gift ineffective?

Acquiring Ownership of Personal Property

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• Gifts.– Three elements:• Acceptance.

– Gifts Intervivos and Gifts Causa Mortis.• Intervivos: while the donor is living. • Causa Mortis: while the donor is living but made

with an expectation of imminent death. Gift is revocable if the donor lives.

Acquiring Ownership of Personal Property

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Acquiring Ownership of Personal Property

Accession.–Some value added to another’s personal

property by use of either labor or materials.–With owner’s consent.–Without owner’s consent.

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Acquiring Ownership of Personal Property

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.

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Mislaid, Lost, and Abandoned Property

Mislaid Property: Voluntarily placed somewhere, then inadvertently forgotten. Finder is caretaker for true owner.

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Mislaid, Lost,and Abandoned Property

Lost Property: Involuntarily left. Property owner acquires title against whole world, except for true owner. –Conversion of Lost Property: finder may

be liable.–Estray Statutes.

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Mislaid, Lost, and Abandoned Property

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.

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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.

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Bailments Differs from sale or gift because

property is transferred without passage of title.

Elements of a Bailment: – (1) personal property, (2) delivery of

possession, and (3) agreement to return or dispose of property.

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Bailments Elements of a Bailment.–Personal Property. (Tangible or

Intangible--not persons or realty.)–Delivery of Possession.• Bailee given physical or constructive

possession, and knowingly accept.• Involuntary Bailments: bailee is responsible

to safeguard property for true owner.

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Bailments Elements of a Bailment.–Bailment Agreement.• Bailments for less than a year do not

require a writing under the Statute of Frauds.• Agreement can be express or implied.• Agreement provides for return of property

to bailor, a third party or disposal by bailee.

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Bailments Ordinary Bailments.–Bailment for the Sole Benefit of the Bailor

(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.

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• Mutual Benefit Bailment (most common): Each party owes the other a reasonable duty of care.

Bailments

Bailor’s Sole Benefit

Mutual Benefit Bailee’s Sole Benefit

Slight Care Reasonable Care Great Care

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Bailments Ordinary Bailments.–Rights of the Bailee. • Right of Possession.• Right to Use Bailed Property. • Right to Compensation: gratuitous

bailment, bailee’s lien.• Right to Limit Liability.

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Bailments Ordinary Bailments.–Duties of the Bailee. • Duty of Care. • Duty to Return Bailed Property. Bailee may

be liable for breach of contract, conversion and/or negligence. • CASE 27.3 LAPLACE V. BRIERE (2009). In

your view, was the bailee negligent?

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Bailments Ordinary Bailments.–Duties of the Bailor. • Bailor’s Duty to Reveal Defects.–Mutual Benefit Bailment: bailor must notify

bailee of all known defects and hidden defects the bailor knew about or could have discovered with reasonable inspection.

•Warranty Liability for Defective Goods.

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Bailments Special Types of Bailments.–Common Carriers. Publicly licensed to

provide transportation services to general public. • Common Carriers are strictly liable for

damages, unless damages caused by:–An act of God.–An act of a public enemy.–An order of a public authority.

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Bailments Special Types of Bailments.–Common Carriers.• Common Carriers are strictly liable unless

damages caused by:–An act of the shipper.–The inherent nature of the goods.

• Not permitted to contract away their liability, but can limit dollar liability.

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Bailments Special Types of Bailments.–Warehouse Companies. • Can issue documents of title. • Owe duty of reasonable care.• Can’t exculpate, can limit.

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Bailments Special Types of Bailments.–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.