Chapter 43 Personal Property and Bailments

1. Chapter 43Personal Property and Bailments

2. Learning Objectives • What is real property? What is personal property? • What does it mean to own property in fee simple? 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 for an effective bailment? • What are the basic rights and duties of the bailee? The Bailor?

3. 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. 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. Fee 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 37 will deal with realty estates.

6. A B Fig.1 C Fig. 2 A B Concurrent 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.

7. Concurrent Ownership • 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).

8. 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.

9. Gifts • 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.

10. Gifts • 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 donor • Acceptance by the Donee.

11. Acquiring Ownership of Personal Property • Will or Inheritance. • 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.

12. 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 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.

13. 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.

14. 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 or constructive. • Bailee must knowingly accept (Bailee must intend to exercise control over chattel). • Bailment Agreement. • Express or Implied.

15. Ordinary Bailments • Bailment 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.

16. Rights 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.

17. 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. Rights and Duties of the Bailor

18. Common Carriers • Publicly licenses to provide transportation services to general public. • 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.

19. Warehouses 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.

20. Termination 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.