Commercial Law (Mgmt 348)

1. Commercial Law(Mgmt 348) Personal Property and Bailments (Chapter 47) Professor Charles H. Smith Spring 2011

2. Personal Property or Real Property? • Real property – as known as real estate • Land and everything permanently attached to it (structures and anything permanently attached to the structures); not movable. • Personal property – also known as chattels • Anything other than real property; movable. • Can be tangible (e.g., your cell phone) or intangible (e.g., patent on type of cell phone you own). • Distinction important for tax reasons and difficulty in transfer/acquisition. • Converting from one type to the other • Real → personal by removal from land (e.g., uprooting tree). • Personal → real by attachment to land (e.g., affixing fence to land).

3. Fixtures • Fixture – generally, something permanently attached to land; e.g., house attached by foundation to land, tree attached by roots to land, fence attached by driving posts into land. • However, permanent attachment to land not required, such as statue. • Fixtures are included when land sold. • Look to intent of party who put the fixture at the real property.

4. Fixtures cont. • If intent cannot be ascertained (e.g., person who put property on land unavailable), then consider whether attached property • Cannot be removed without causing substantial damage to remaining real property. • Is so adapted to the rest of the real property so as to become part of it. • If either is true, then property is a fixture – examples? • Note that “trade” fixtures (personal property installed for commercial purpose) remains property of and may be removed by owner of the trade fixture.

5. How to Acquire Personal Property • Possession – ownership gained by mere possession of property; e.g., foul ball caught at baseball game. • Production – person who produces something now owns it; e.g., intellectual property (but what if IP produced as part of job?).

6. How to Acquire Personal Property cont. • Elements of a gift are • Donor must intend to make gift (donative intent). • Property must be delivered to donee • Constructive delivery; e.g., key to car or safe deposit box instead of car itself or contents of box. • Donor’s complete relinquishment of dominion and control. • Donee must accept property. • Gift causa mortis – gift made contemplating imminent death; if no death due to anticipated cause, then no gift even if death occurs soon after due to another cause. • Case study – In re Estate of Piper (pages 963-64) – delivery element.

7. How to Acquire Personal Property cont. • Assession (“something added”) • Person who adds value to personal property may acquire it. • No acquisition if value added without owner’s consent (may not even be any payment obligation for added value). • Confusion • Multiple owners’ personal property is mixed. • Fungible property. • If agreement or good faith mistake, owner entitled to share of total. • If wrongful confusion, then innocent party entitled to the whole.

8. Mislaid, Lost or Abandoned Property • See Concept Summary 47.2 for general statement of rights and responsibilities under common law (page 968). • See Civil Code § 2080 et seq. for more specific statement of rights and responsibilities under California law.

9. Mislaid, Lost or Abandoned Property cont. • Case studies • United States v. $165,580 (pages 967-68) – any entitlement to “found” money suspected of being part of drug deal? • Bonner v. City of Santa Ana, 45 Cal.App.4th 1465 (1996) – damages claims under California Constitution based on city employees’ taking plaintiffs’ personal property hidden on public property.

10. Bailments • Bailment – owner (“bailor”) allows another (“bailee”) to take temporary possession of owner’s personal property; bailment comprised of • Personal property – previously discussed as to personal property or real property. • Delivery of possession (but not title) • Physical vs. constructive delivery – previously discussed as to gifts. • Involuntary bailment – applies if lost or mislaid property. • Agreement that property will be returned to bailor or otherwise disposed of according to bailor’s directions – usually written contract but not required unless property to be held by bailee for more than one year.

11. Ordinary Bailments • Bailment for sole benefit of bailor – bailee takes possession of and cares for bailor’s property as a favor (no compensation); bailee has slight duty of care and will be liable for damage to property only if gross negligence. • Bailment for sole benefit of bailee – bailor does bailee a favor by loaning property to bailee for no compensation; bailee has utmost duty of care and will be liable for damage to property even if only slight negligence. • Mutual benefit bailment (or bailment for hire) – bailee takes possession of and cares for bailor’s property in exchange for compensation; bailee has ordinary duty of care and will be liable for damage to property if fails to exercise reasonable care. • See Concept Summary 47.3 – Rights and Duties of the Bailee and the Bailor (page 976).

12. Special Types of Bailments • Common carriers • Licensed to transport personal property and not required to provide transportation services. • Held to higher standard of strict liability for damaged/lost property (instead of negligence). • Case study – Treiber & Straub, Inc. v. UPS (pages 974-75). • Warehouses – same as common carrier except ordinary negligence liability. • Innkeepers • If provide lodging to “guests” (not “lodgers”) for compensation as regular business, then strict liability. • Different rules if hotel provides safe for valuables; what about provision of parking lot/services as to cars?

13. Miscelleous Case Studies • Reviewing Personal Property and Bailments (page 977). • Case Problems 47-1, 47-3, 47-4, 47-5, 47-6 and 47-9 (pages 977-79).