Personal Property Outline Barbri

PERSONAL PROPERTY
PERSONAL PROPERTY i.
PERSONAL PROPERTY
TABLE OF CONTENTS
I. REAL AND PERSONAL PROPERTY DISTINCTIONS . . . . . . . . . . . . . . . . . . . . . 1

A. GENERAL DISTINCTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
B. LEASEHOLDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
C. CROPS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1. Fructus Naturales vs. Fructus Industriales . . . . . . . . . . . . . . . . . . . 1
2. Conveyance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
3. Mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
4. Doctrine of Emblements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
D. FIXTURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
II. ACQUISITION AND LOSS OF RIGHT OR TITLE TO PERSONAL PROPERTY . . . . . . 2
A. PRINCIPAL MODES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
B. OWNERSHIP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1. Wild Animals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
a. Acquisition of Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1) Possession . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2) Constructive Possession . . . . . . . . . . . . . . . . . . . . . . . . 2
3) Mere Pursuit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4) Trespass . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
5) Violation of Statute . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
b. Loss of Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1) Escape . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2) Habit of Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3) Marked Animals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2. Literary Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
a. Requirements for Protection . . . . . . . . . . . . . . . . . . . . . . . . 3
1) Concrete Form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2) Work Must Be New . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3) Must Be “Fixed” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
b. Extent of Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
c. Copyright Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
d. Limitation on Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
e. Letters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
f. Rights in an Idea . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ii. PERSONAL PROPERTY
3. Persona . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4. Human Tissue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5. Tortious Conversion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
a. Money and Negotiable Instruments . . . . . . . . . . . . . . . . . . . . 5
b. Owner Intended to Transfer Title . . . . . . . . . . . . . . . . . . . . . . 5
c. Owner Represented that Possessor Has Authority to Sell . . . . . . 5
6. Burden of Showing Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
C. LOST, MISLAID, AND ABANDONED PROPERTY . . . . . . . . . . . . . . . . . . . 6
1. Concept . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
a. Lost Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
b. Mislaid Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
c. Abandoned Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1) Distinguish from Lost . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2) Acquisition of Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3) Escheat . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2. General Rules for Lost or Mislaid Property . . . . . . . . . . . . . . . . . . . 7
a. Finder of Lost Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1) General Rule—Finder Entitled to Possession Except Against
True Owner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2) Exceptions to General Rule . . . . . . . . . . . . . . . . . . . . . . . 8
a) Trespasser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
b) Highly Private Locus . . . . . . . . . . . . . . . . . . . . . . . . 8
(1) Private Place . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(2) Public Place . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
c) Employer-Employee . . . . . . . . . . . . . . . . . . . . . . . . 8
d) Buried Articles . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
b. Finder of Mislaid Property . . . . . . . . . . . . . . . . . . . . . . . . . . 9
c. Rights and Duties of Possessor . . . . . . . . . . . . . . . . . . . . . . . 9
1) Possessor as Quasi-Bailee . . . . . . . . . . . . . . . . . . . . . . . 9
2) Duty to Find Owner . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3) Duty of Due Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4) Extent of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5) Acquiring Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
d. Treasure Trove . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1) Right of Finder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2) Modern View . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3. Uniform Unclaimed Property Act . . . . . . . . . . . . . . . . . . . . . . . . 11
D. ACCESSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1. Accession by Innocent Trespasser . . . . . . . . . . . . . . . . . . . . . . . . 11
PERSONAL PROPERTY iii.
a. General Rule—Trespasser Cannot Recover . . . . . . . . . . . . . . . . 11

b. Original Owner’s Remedies . . . . . . . . . . . . . . . . . . . . . . . . . 11
1) Damages for Conversion . . . . . . . . . . . . . . . . . . . . . . . . 11
2) Replevin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
c. When Original Owner Is Limited to Damages . . . . . . . . . . . . . . 11
1) Complete Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2) Great Increase in Value . . . . . . . . . . . . . . . . . . . . . . . . . 12
2. Accession by Willful Trespasser . . . . . . . . . . . . . . . . . . . . . . . . . 12
a. Complete Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
b. Original Owner’s Remedy . . . . . . . . . . . . . . . . . . . . . . . . . . 12
E. CONFUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1. Known Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2. Unknown Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
a. Innocent Confusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
b. Wrongful Confusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
c. Negligent Confusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
F. ADVERSE POSSESSION—STATUTE OF LIMITATIONS . . . . . . . . . . . . . . . 13
1. Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
a. Actual . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
b. Open and Notorious . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
c. Hostile and Adverse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
d. Exclusive and Continuous . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2. Statute of Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
a. Accruing of Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
b. Tacking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
c. Tolling the Statute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
1) Disability of Plaintiff . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2) Defendant Out of Jurisdiction . . . . . . . . . . . . . . . . . . . . 14
3) Fraudulent Concealment . . . . . . . . . . . . . . . . . . . . . . . . 14
3. Bona Fide Purchaser of Stolen Goods . . . . . . . . . . . . . . . . . . . . . 14
G. TITLE BY JUDGMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
1. Election of Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
a. Replevin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
b. Trespass . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
c. Trover . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2. Conversion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
a. Effect of Suing in Trover . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
1) Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
iv. PERSONAL PROPERTY
2) Relation Back . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
b. Who Can Sue? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
c. Who Can Be Sued? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
H. GIFT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
1. Gifts Inter Vivos . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
a. Donative Intent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
1) Intent to Make a Present Gift . . . . . . . . . . . . . . . . . . . . . 16
2) Promise to Make a Gift in the Future . . . . . . . . . . . . . . . . 17
3) Donative Intent Applies to Title . . . . . . . . . . . . . . . . . . . . 17
b. Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
1) Types of Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
a) Actual Physical Delivery . . . . . . . . . . . . . . . . . . . . . . 17
b) Constructive Delivery . . . . . . . . . . . . . . . . . . . . . . . 18
c) Delivery by Written Instrument . . . . . . . . . . . . . . . . . 18
(1) Requirements . . . . . . . . . . . . . . . . . . . . . . . . . 18
(2) Physical Delivery Possible . . . . . . . . . . . . . . . . . . 18
d) Symbolic Delivery . . . . . . . . . . . . . . . . . . . . . . . . . 19
2) Donee Already in Possession . . . . . . . . . . . . . . . . . . . . . 19
3) Gift Through Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
a) If Agent of Donee . . . . . . . . . . . . . . . . . . . . . . . . . . 19
b) If Agent of Donor . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4) Special Problems in Delivery . . . . . . . . . . . . . . . . . . . . . 19
a) Checks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(1) Check of Donor . . . . . . . . . . . . . . . . . . . . . . . . 19
(2) Check of Another . . . . . . . . . . . . . . . . . . . . . . . 19
b) Promissory Notes . . . . . . . . . . . . . . . . . . . . . . . . . . 20
c) Stock Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . 20
d) Life Insurance Policy . . . . . . . . . . . . . . . . . . . . . . . . 20
e) Bank Savings Deposits . . . . . . . . . . . . . . . . . . . . . . 20
f) Joint Checking Account . . . . . . . . . . . . . . . . . . . . . . 20
(1) Rebuttable Presumption of No Gift . . . . . . . . . . . 20
(2) Survivor Becomes Owner . . . . . . . . . . . . . . . . . . 20
c. Acceptance of Donee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
d. Gifts in Contemplation of Marriage . . . . . . . . . . . . . . . . . . . . 21
2. Gifts Causa Mortis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
a. Concept and Essential Elements . . . . . . . . . . . . . . . . . . . . . . 21
1) Present Mental Capacity . . . . . . . . . . . . . . . . . . . . . . . . 21
2) Gift Must Be Personal Property . . . . . . . . . . . . . . . . . . . . 21
3) Delivery and Acceptance . . . . . . . . . . . . . . . . . . . . . . . . 21
a) Identical Test . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
b) Exception—Delivery by Deed of Gift (Symbolic
Delivery) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
PERSONAL PROPERTY v.
4) Anticipation of Death . . . . . . . . . . . . . . . . . . . . . . . . . . 22
a) Imminence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
b) Death as Anticipated . . . . . . . . . . . . . . . . . . . . . . . 22
c) Recovery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(1) Gift Is Revoked by Operation of Law . . . . . . . . . . . 22
(2) Compare—Deed to Real Property Not Revoked . . . . 23
5) Absence of Revocation . . . . . . . . . . . . . . . . . . . . . . . . . 23
a) Affirmatively by Donor . . . . . . . . . . . . . . . . . . . . . . 23
b) Failure of Donee to Survive . . . . . . . . . . . . . . . . . . . . 23
b. Creditor Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
I. UNIFORM TRANSFERS TO MINORS ACT . . . . . . . . . . . . . . . . . . . . . . . 23
1. Purpose of Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2. Subject Matter of Gift . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3. Types of Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4. Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5. Possession of Gift . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6. Creation of Custodial Property . . . . . . . . . . . . . . . . . . . . . . . . . 24
7. One Minor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
8. Custodian . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
a. Who Is Custodian? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
b. Duties of Custodian . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
1) Preservation of Property . . . . . . . . . . . . . . . . . . . . . . . . 25
2) Payment to Minor . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
c. Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
d. Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
e. Removal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
9. Final Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
III. LIENS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
A. IN GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
1. Concept . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
a. Conditions for Lienor’s Right to Possess . . . . . . . . . . . . . . . . . 25
b. Pawn Distinguished . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
c. Mortgage Distinguished . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
2. Classes of Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
a. General Lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
b. Special Lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
1) Lienor Has Possession . . . . . . . . . . . . . . . . . . . . . . . . . . 26
vi. PERSONAL PROPERTY
2) Lienor Must Add Value . . . . . . . . . . . . . . . . . . . . . . . . . 26

a) Exception—Special Lienors . . . . . . . . . . . . . . . . . . . . 27
c. Consequence of Classification . . . . . . . . . . . . . . . . . . . . . . . 27
1) General Lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2) Special Lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
3) Ambiguous—Construe as Special . . . . . . . . . . . . . . . . . . 27
B. RIGHTS OF DIFFERENT LIENORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
1. Lienors Under the General Rule . . . . . . . . . . . . . . . . . . . . . . . . . 27
a. Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
b. Cleaner and Launderer . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
c. Mechanic or Artisan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
d. Motor Vehicles, Including Trailers . . . . . . . . . . . . . . . . . . . . . 28
e. Warehouser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
f. Landlord . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
g. Common Carrier . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2. Exceptions to Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
a. Innkeepers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
b. Other Bailees for Hire . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
C. WAIVER OF LIEN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
1. By Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2. By Acceptance of Other Security . . . . . . . . . . . . . . . . . . . . . . . . 29
3. Demand for Excess Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
4. Reservation of Lien or Temporary Use by Bailor . . . . . . . . . . . . . . . 29
D. MECHANIC’S LIEN VS. PERFECTED SECURITY INTEREST . . . . . . . . . . . . . 29
E. ENFORCEMENT OF LIEN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
IV. BAILMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
A. DEFINITION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
1. No Transfer of Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
2. Contract Aspect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
B. ELEMENTS OF BAILMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
1. Possession of the Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
2. Bailee’s Consent Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
3. Knowledge of Presence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
4. Property Concealed in Bailed Property . . . . . . . . . . . . . . . . . . . . 31
5. Constructive Bailment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
PERSONAL PROPERTY vii.
C. BAILMENT DISTINGUISHED FROM OTHER TRANSACTIONS . . . . . . . . . . . 32

1. Renting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
a. Parking Lots . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
1) Examine Surrender of Control Over Car . . . . . . . . . . . . . . 32
2) Where Lot Owner Is Deemed a Lessor . . . . . . . . . . . . . . . 32
b. Safe Deposit Boxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2. Employer and Employee Relationship . . . . . . . . . . . . . . . . . . . . . 33
a. Employee Cannot Be Bailee of Employer’s Goods . . . . . . . . . . . 33
b. Negligence of Bailee Not Imputed to Bailor . . . . . . . . . . . . . . . 33
3. Consignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
4. Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
a. In General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
1) Distinction Is Relevant as to Risk of Loss . . . . . . . . . . . . . . 33
2) Test for Bailment vs. Sale . . . . . . . . . . . . . . . . . . . . . . . . 34
b. Sale on Approval vs. Sale or Return . . . . . . . . . . . . . . . . . . . . 34
1) Sale on Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
2) Sale or Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5. Pledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6. Intra Hospitum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
D. BAILEE’S RIGHTS IN BAILED CHATTEL . . . . . . . . . . . . . . . . . . . . . . . . . 35
1. Possession . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
a. Rights of Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
b. Attachment by Bailor’s Creditor . . . . . . . . . . . . . . . . . . . . . . 35
2. Use of Bailed Goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
a. Agreed Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
b. Incidental Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
E. BAILOR’S RIGHTS IN BAILED CHATTEL . . . . . . . . . . . . . . . . . . . . . . . . 36
1. Actions Against Bailee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
a. Action for Damages for Breach of Contract . . . . . . . . . . . . . . . 36
b. Tort Action for Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
c. Conversion Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
d. Replevin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
2. Actions Against Third Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
a. Bailment of Definite Duration . . . . . . . . . . . . . . . . . . . . . . . 37
b. Terminable Bailment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
c. Actions for Damage to Future Right of Possession . . . . . . . . . . 37
F. BAILEE’S DUTY WITH RESPECT TO BAILED GOODS . . . . . . . . . . . . . . . . 38
viii. PERSONAL PROPERTY
1. Bailee’s Duty of Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

a. Bailee Is Not Insurer of Goods . . . . . . . . . . . . . . . . . . . . . . . . 38
b. Type of Bailment May Determine Degree of Care . . . . . . . . . . . 38
2. Burden of Proof as to Bailee’s Negligence . . . . . . . . . . . . . . . . . . 38
3. Contractual Provisions on Bailee’s Duty of Care . . . . . . . . . . . . . . . 38
a. Waiver of Liability for Negligence . . . . . . . . . . . . . . . . . . . . . 38
b. Liability May Be Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
1) Posted Signs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
2) Claim Check . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
3) Hotels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
a) May Limit Liability . . . . . . . . . . . . . . . . . . . . . . . . . . 39
b) Compliance with Posted Notice Required . . . . . . . . . . 39
4) Warehouses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
4. Absolute Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
a. Departure from Terms of Bailment . . . . . . . . . . . . . . . . . . . . 40
b. Breach of Agreement to Insure . . . . . . . . . . . . . . . . . . . . . . . 40
5. Duty to Redeliver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
a. Absolute Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
b. Exception—Indispensable Instrument . . . . . . . . . . . . . . . . . . 41
c. Exception—Involuntary Bailee . . . . . . . . . . . . . . . . . . . . . . . 41
d. Adverse Claimants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
e. Excuses for Nondelivery . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
6. Estoppel of Bailee to Deny Bailor’s Title . . . . . . . . . . . . . . . . . . . . 42
7. Conversion by Bailee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8. Bailee’s Liability to Third Parties . . . . . . . . . . . . . . . . . . . . . . . . . 42
G. COMPENSATION AND REIMBURSEMENT . . . . . . . . . . . . . . . . . . . . . . . 42
1. Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
2. Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
3. Bailee’s Lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
H. BAILEE’S RIGHTS OF ACTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
1. Against Bailor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
2. Against Third Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
I. DEFECTS IN SUBJECT OF BAILMENT . . . . . . . . . . . . . . . . . . . . . . . . . . 43
1. Gratuitous Bailments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
2. Bailments for Hire . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
PERSONAL PROPERTY ix.
J. TERMINATION OF BAILMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
1. By Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
2. By Conduct of Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
V. COMMON CARRIERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
A. CONCEPT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
B. LIABILITY FOR LOSS OR DAMAGE OF GOODS SHIPPED . . . . . . . . . . . . . 44
1. Commencement of Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
2. Limitation of Liability at Common Law Allowed . . . . . . . . . . . . . . . 44
a. Cannot Limit Liability Due to Negligence . . . . . . . . . . . . . . . . 44
b. Effect of Posted Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
3. Limitation of Liability Constrained by Statute . . . . . . . . . . . . . . . . 45
C. PASSENGER BAGGAGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
1. Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
2. Nondelivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
PERSONAL PROPERTY 1.
PERSONAL PROPERTY
I. REAL AND PERSONAL PROPERTY DISTINCTIONS
A. GENERAL DISTINCTIONS
Real property is immovable property and consists of land, things fixed to land, and things
incidental or appurtenant to land. Personal property is movable property, which includes
every kind that is not real property. Real property may be converted into personalty by
severance and vice versa by an annexation intended to be permanent.
B. LEASEHOLDS
Leases of land are an exception to the general rule. Leases are considered personal, not
real, property.
C. CROPS
1. Fructus Naturales vs. Fructus Industriales
Fructus naturales are crops that grow spontaneously on the land (e.g., trees, bushes,
grass), while fructus industriales are the result of cultivation (e.g., grain, vegetables).
Title to fructus naturales passes with the land, and such crops are real property.
Fructus industriales are personalty.
2. Conveyance
A conveyance of land includes annual crops, unless a reservation in the deed (or
provision in the operative will) is made to the contrary. This result is based upon the
presumed intention of the parties; however, a contrary intent may be shown.
3. Mortgage
In general, the prior mortgage of the land will prevail over the subsequent mortgage
of the crops. Similarly, the prior mortgage of the crops will prevail over the subse-
quent mortgage of the land. In other words, the first mortgage in time prevails.
4. Doctrine of Emblements
Emblements is the well-established right of a former tenant (or her personal repre-
sentative) to enter upon property to cultivate, harvest, and remove crops planted
by her prior to the termination of her estate. The right of emblements exists where
two requirements are fulfilled: (1) the tenancy was for an uncertain duration (i.e., life
estate or tenancy at will); and (2) the tenancy terminated without fault on the part of
the tenant.
D. FIXTURES
Under the concept of fixtures, a chattel that has been annexed to real property is
converted from personalty to realty. The former chattel becomes an accessory to the
2. PERSONAL PROPERTY
land (i.e., a fixture) and passes with ownership of the land. Section 9-334 of the Uniform
Commercial Code governs priorities of conflicting security interests in fixtures and real
estate. For a more detailed discussion of fixtures, see Real Property outline.
II. ACQUISITION AND LOSS OF RIGHT OR TITLE TO PERSONAL PROPERTY
A. PRINCIPAL MODES
Rights and title to personal property are acquired or lost by occupancy, adverse
possession, accession, confusion, judgment, gift, or when the chattel is lost, mislaid, or
abandoned. A person acquires title to personal property by voluntary act or by operation
of law (such as conduct creating an estoppel). The intent of the parties is controlling in
determining which goods pass and when title passes in a sale. In general, once a person
has become the owner of personal property, she cannot be divested of title without her
consent.
B. OWNERSHIP
A thing capable of ownership but not then owned belongs to the person who acquires
actual or constructive dominion and control over it and has the intent to assert owner-
ship over it.
1. Wild Animals
Wild animals (ferae naturae) in their natural state are unowned. They become private
property upon being reduced to possession.
a. Acquisition of Title
1) Possession
The first person to exercise dominion and control over such an animal
becomes, with possession, the owner of the animal.
2) Constructive Possession
Animals caught in a trap or net belong to the one who owns and has set
the trap or net. By setting such a trap, one is said to constructively possess
those animals snared.
3) Mere Pursuit
Mere pursuit does not constitute the exercise of dominion and control suffi-
cient to give the hunter a property right in the animal. However, where an
animal has been mortally wounded so that actual possession is practically
inevitable, a vested property right in the animal accrues that cannot be
divested by another’s act in intervening and killing the animal.
4) Trespass
While a landowner is not regarded as the owner of all wild animals found
on his property, a trespasser who kills game on another’s land forfeits her
title in favor of the landowner. This is to prevent the act of trespassing from
benefiting the trespasser.
5) Violation of Statute
One who violates a statute (e.g., failure to have a hunting license) forfeits
her title in animals caught pursuant thereto.
b. Loss of Title
1) Escape
If a wild animal, captured and held in private ownership, escapes and
resumes its natural liberty, the former owner loses his property right in
it. The animal once again is unowned, and the first person thereafter to
capture it becomes the new owner.
2) Habit of Return
If a wild animal escapes and, though wandering about without restraint,
periodically returns to its owner’s home, or if, though endeavoring to
escape, it is still pursued by the owner or is by other means liable to be
recaptured by the owner, title is not lost.
3) Marked Animals
When certain animals, such as furbearing animals, have been captured and
reduced to private ownership, it is common for the owner to mark or brand
them for purposes of identification. If the animal escapes and resumes its
natural liberty, the question becomes whether title is lost. Normally, modern
courts will allow title to be retained in the former possessor as long as the
animal is marked and the owner exercises all possible effort to recapture
the animal.
2. Literary Property
The author of a book or literary composition has, by copyright, the exclusive right to
continue to reproduce and sell her “original work of authorship” as expressed and
“fixed” in a tangible medium of expression. Protection of this right exists solely under
federal statute. [See 17 U.S.C. §301(a)]
a. Requirements for Protection

Certain requirements must be met before one is entitled to copyright protection.
1) Concrete Form
The work must have already taken on concrete form in order to be entitled
to protection, e.g., an abstract idea for a future work is not entitled to
protection.
2) Work Must Be New

The material involved must be new and original.
3) Must Be “Fixed”
The work must be “fixed” in a tangible medium of expression. A work is
“fixed” when its embodiment in a copy or phonorecord (terms of art broadly
defined) is sufficiently permanent to permit it to be perceived or repro-
duced, for a period of more than transitory duration, with or without the aid
of a machine or device. [See 17 U.S.C. §101]
b. Extent of Protection
This protection securing the author’s exclusive rights to reproduction, display,
etc., is limited to her lifetime plus 70 years, or if the author was anonymous or
working for hire (e.g., an employee of a corporation), 95 years from publication
or 120 years from creation, whichever expires first. [17 U.S.C. §302]
c. Copyright Enforcement
A claim of copyright ownership must be properly registered with the United
States Copyright Office in order to enforce the author’s rights, even though a
copyright is deemed to be present from the time a work is created. Until a work
is preregistered or registered, an author cannot bring a civil action for copyright
infringement. [17 U.S.C. §411(a)] Once a work is properly registered, an infringe-
ment action may be brought even for infringement occurring before registration.
Note that if an author does not register the copyright, his protection is limited
to any contractual or quasi-contractual theories available under state law (e.g.,
recovery in implied contract for misappropriation of sketched idea for a movie).
d. Limitation on Protection
The protection is not good as against any individual who independently creates
the identical or similar work product.
e. Letters
Letters are “literary works,” which are “works of authorship” under 17 U.S.C.
section 102(a)(1). The sender of a letter has the exclusive right to sell, publish,
or reproduce the contents of the letter. Ownership of the document itself lies in
the receiver of the letter.
f. Rights in an Idea
Although ideas receive no copyright protection, a person has a property right
in her own idea that is original, concrete, and useful and is disclosed in circum-
stances that, reasonably construed, clearly indicate that compensation is
contemplated if the idea is accepted and used. Damages may be recovered for
the use or appropriation of the idea by another.
3. Persona
A celebrity’s right of publicity (i.e., the right to control the commercial value of his
name, likeness, or personality) is tangible personal property. This protects people
from losing the benefit of their work in creating a recognizable persona or identity.
This right exists both at common law and by statute.
4. Human Tissue
While a person has a property right to his own tissue, that right evaporates once a
sample is voluntarily given to a third party. [See Moore v. Regents of the University
of California, 51 Cal. 3d 120 (1990)—patient did not have property right to spleen
following its removal by doctors who then used it to create a cell line of great
commercial value]
5. Tortious Conversion
Tortious conversion of personal property does not deprive the true owner of her
title. Moreover, one who does not have title to goods cannot pass title to even a
bona fide purchaser, except in the following circumstances:
a. Money and Negotiable Instruments

Transfers of money and of negotiable instruments will pass title to a bona fide
purchaser.
b. Owner Intended to Transfer Title

Where the owner of goods is induced by fraud or misrepresentation to sell
the goods and the vendee subsequently transfers the goods to a bona fide
purchaser, the latter retains the goods as against the original owner where the
original owner intended to transfer title to the goods to the defrauder.
c. Owner Represented that Possessor Has Authority to Sell

The owner of goods may be estopped from asserting title if she has expressly
or impliedly represented that the possessor of the goods is the owner or has
authority to sell them and a bona fide purchaser has relied in good faith upon
such representations.
EXAMPLES
1) Owner delivers the goods to a retailer of similar items.
2) Owner delivers indicia of title to a third party.
6. Burden of Showing Title

One attempting to divest another of personal property has the burden of showing
title and the right to do so. Any evidence is admissible, and ownership may be estab-
lished by proof of acts of ownership as well as by direct testimony. Possession plus a
claim of title is prima facie evidence of title and ownership.
C. LOST, MISLAID, AND ABANDONED PROPERTY

1. Concept
The fact that the owner has either lost or mislaid his property does not lead to the
divestiture of his title. Title to such property persists despite the fact that it has been
lost or mislaid. The owner relinquishes title when he abandons the property.
a. Lost Property
Property is “lost” when the owner has accidentally and involuntarily parted
with his possession and does not know where to find it. To determine whether
property is lost, the key factor is the place where it is found: judging from the
place where found, would a reasonable person conclude that the owner had
accidentally and involuntarily parted with possession of it and does not know
where to find it?
EXAMPLE
A wristwatch found on the floor in a public place will likely be regarded as lost
property. Judging from the place where found, it is reasonable to conclude that
one would not intentionally place a wristwatch on the floor.
b. Mislaid Property
Property is “mislaid” when, judging from the place where found, it can reasonably
be determined that it was intentionally placed there and thereafter forgotten.
EXAMPLE
A briefcase found on a desk, table, or counter will likely be regarded as mislaid
property. Judging from the place where found, it is reasonable to conclude that
the item was intentionally placed there and thereafter forgotten.
c. Abandoned Property
Abandoned property is property that the owner has voluntarily relinquished all
ownership of without reference to any particular person or purpose. It is neces-
sary to show an intent to give up both title and possession.
EXAMPLES
1) Allowing refrigerators to remain in a building that the owner of the refrigera-
tors knows will be destroyed is an act of abandonment.
2) A tenant’s act of leaving her apartment for one week and being in arrears for
one week’s rent is not enough to constitute abandonment of the property in the
apartment. A landlord's attempt to charge an extra fee to allow the tenant to
regain the property constitutes conversion.
1) Distinguish from Lost

A chattel is not abandoned merely because the owner has parted with its
possession. If the owner of a chattel involuntarily parts with possession of
goods, they should be categorized as either lost or mislaid. Lost or mislaid
goods are treated differently from abandoned chattels. To show that a
chattel has been abandoned, one must show that the former owner volun-
tarily gave up and relinquished his ownership in the chattel.
2) Acquisition of Title
If a chattel can be categorized as abandoned, it becomes, by virtue of the
abandonment, unowned. As with wild animals, ownership of an abandoned
chattel is acquired by reducing it to possession. Title to abandoned chattel
is acquired by: (1) actual or constructive dominion and control over the
thing, and (2) an intent to assert ownership over it.
3) Escheat
Where abandoned property is held by an intermediary with no property
interest in the property (e.g., unclaimed funds held by banks or other
depositories), the state may assume title to the property through a process
called escheat. Property may be escheated only by the state in which
the property is located. Intangible property is considered to be located at
the domicile of the property owner. [Delaware v. New York, 507 U.S. 490
(1993)—state of owner’s last known address is state with right to escheat
unclaimed securities funds]
2. General Rules for Lost or Mislaid Property

Once you have established that property is lost or mislaid, you must discuss who has
the right to possess the property as against the whole world—except the true owner.
a. Finder of Lost Property
1) General Rule—Finder Entitled to Possession Except Against True

Owner
If property is categorized as “lost,” the one who reduces it to possession
becomes its finder. Possession is physical control coupled with an inten-
tion to assume dominion over the object. The intent may be manifested by
an effort to keep others away, or may be implied, as in the case of an article
discovered on the land of an owner. Generally, the finder of lost property is
entitled to possession of it as against all except the true owner.
EXAMPLES
1) A boy who discovers a sock and throws it among his friends does not
have the requisite intent to assert control over the sock or the money found
in it.
2) The act of placing markers over the spot where a wrecked boat is locat-
ed is not a sufficient exercise of dominion and control to support a claim for
title to the abandoned property.
2) Exceptions to General Rule
a) Trespasser
To penalize one who trespasses onto private property, most courts
would hold that a trespasser-finder will not be allowed to secure
possessory rights in the lost property. The right of possession will
therefore fall to the owner of the place where the item of property is
found (locus in quo).
b) Highly Private Locus

Where a chattel is found in a highly private locus, the owner of the
locus in quo, and not the finder, will acquire the possessory rights.
Several explanations have been given for this rule. One is that the
owner of a highly private locus possesses, by definition, everything
within the locus, and therefore possesses the item that has been lost.
Another reason set forth is that the true owner, having lost property in
such a private locus, will more likely return to the place to recoup his
property.
(1) Private Place

For the finder to be deprived of his possessory right in the lost
article, the place of discovery must be highly private. The rule is
generally applicable only to locations wherein the public is not
invited, e.g., a home.
(2) Public Place

If the place of discovery is open to the public, then the finder
becomes entitled to the right of possession. The mere fact that
the place of discovery is privately owned is not sufficient to
render it a highly private locus.
c) Employer-Employee
There is some authority that holds that an employee who finds an
article in the course of his employment should surrender the right of
possession to his employer. Within the employer-employee relation-
ship, the basic concept is that the employer has the right to direct the
employee in his activities. On this basis, if the employee found the
article by virtue of an act specifically directed by the employer, the
employer should acquire the rights of possession in the article.
d) Buried Articles
On a theory of constructive possession, it can be held that the owner
of real property possesses all that which lies beneath the surface of his
land. On this basis, if one finds an article buried beneath the surface,
the right of possession ought to belong to the owner of the locus
rather than the finder.
b. Finder of Mislaid Property

The finder of mislaid property does not acquire the right to possession. The
owner of the locus in quo becomes entitled to possess the mislaid property
against all the world except the true owner. Rationale: Since, by definition,
mislaid property is that which has been intentionally placed where found and
thereafter forgotten, when the true owner realizes where he has mislaid his
property he will return to that location to retrieve his property. On this basis, in
an effort to return property to its owner, the right of possession is given to the
owner of the locus in quo and not the finder.
EXAMPLE
A maid found a valuable brooch in the slats of a hotel bed. The possessor of the
room at the time claimed the brooch as finder (the maid having put the brooch
on his dresser). Held: The brooch must have been placed in the slats on pur-
pose and not by inadvertence. Therefore, the brooch was mislaid property and
possession was awarded to the hotel as owner of the premises. [Flax v. Monti-
cello Realty Co., 185 Va. 474 (1946)]
c. Rights and Duties of Possessor

The foregoing rules, applicable under the common law, describe who acquires
the right of possession as against the whole world except the true owner. Under
these rules, however, neither the finder (as to lost goods) nor the owner of the
locus in quo (as to mislaid goods) becomes the title owner of the property; he
merely acquires the right of possession, and as possessor has the following
rights and duties.
1) Possessor as Quasi-Bailee
The possessor is a quasi-bailee. His title is good as against all the world
except the true owner, even to the point of suing for the return of the
property if wrongfully taken from him.
EXAMPLE
A lost ring belonging to O was found by X, who then lost it himself. It was
then found by Y. X may recover possession from Y or anyone else but O.
2) Duty to Find Owner

Should the finder know or have reasonable means of discovering the true
owner, he must do so, or he may be guilty of larceny, and he may be held
liable in tort for conversion.
EXAMPLE
X finds a wallet containing identification papers, including the telephone
number of its owner, Y. X does not attempt to contact Y, but holds the wal-
let (including contents) with intent to return it to Y should Y ever ask for it. X
has converted the wallet and its contents.
3) Duty of Due Care

The possessor must keep the goods with due care, considering that he is a
gratuitous bailee and considering the nature of the goods. Failure to adhere
to this standard will render him liable in negligence.
4) Extent of Obligations
These obligations persist until sufficient time has passed for the true owner
to be deemed to have abandoned her goods (which will depend upon the
character of the goods and circumstances of the case) or until the statute of
limitations has run.
5) Acquiring Title
As a general rule, after a sufficient time has run for the goods to be
deemed abandoned, or after the statute of limitations has run, the
possessor becomes the new owner of the goods.
d. Treasure Trove
Treasure trove is any gold or silver in coin, plate, or bullion found concealed
(e.g., in the earth, in a house, in a bureau, etc.), the owner of which is unknown.
Treasure trove has been held to include paper representatives of gold and
silver.
1) Right of Finder
Treasure trove, according to the common law, belonged to the finder as
against everyone in the world except the true owner. In addition, the fact
that the finder was a trespasser would not deprive him of his possessory
rights.
2) Modern View
Today, many states apply the usual rules applicable to lost property in
dealing with treasure trove. No exception is made for the handling of
treasure trove problems.
3. Uniform Unclaimed Property Act

Most states have adopted a version of the Uniform Unclaimed Property Act (the
“Act”), which provides for the disposition of intangible property (such as money,
checks, and stock) and property in safe deposit boxes. Under the Act, such property
is presumed abandoned if the owner does not claim it or otherwise demonstrate an
interest in it for the statutory period, generally five years. The Act provides a proce-
dure for turning the property over to a state administrator, who sells it if unable to
locate the owner. A holder who disposes of unclaimed property pursuant to the Act
is relieved of liability to the owner.
A minority of states use the older Uniform Disposition of Unclaimed Property Act,
which differs primarily in fixing the basic statutory period at seven years.
D. ACCESSION
Accession is the addition of value to property by the expenditure of labor or the addition
of new materials. If the addition can be detached from the principal chattel, this will be
ordered and each party will be put in status quo ante. If the addition cannot be detached
from the principal chattel, the issue is one of ownership: Who is the owner of the chattel
in its enhanced state? The answer depends upon whether the trespasser acted in good
faith or was a willful trespasser.
1. Accession by Innocent Trespasser
a. General Rule—Trespasser Cannot Recover

Where a trespasser adds value to the original owner’s chattel, the original owner
retains title, and the trespasser cannot sue for compensation for the value of his
labor or materials added to the chattel.
b. Original Owner’s Remedies
1) Damages for Conversion

The original owner may sue the trespasser and obtain conversion damages—
the value of the original materials plus any consequential damages.
2) Replevin
Alternatively, the original owner may seek replevin—return of the chattel.
c. When Original Owner Is Limited to Damages

In some cases the original owner is limited to a cause of action for damages;
she may not sue in replevin because the act of accession divested her of title.
1) Complete Change
When the species of property has been completely changed by the
addition of value to the property by the expenditure of labor or new
materials, the original owner may not recoup the chattel.
2) Great Increase in Value

A similar exception is made when the increase in value is so great that it
would be unfair to permit the original owner to reclaim her property.
EXAMPLES
1) The owner of clay used by another in making bricks has no title to the
bricks because the identity of the clay has been lost in the creation of a
new species.
2) Where trees originally worth $25 are converted by a person in good faith
into barrel hoops worth $700, the original owner cannot recover the hoops.
2. Accession by Willful Trespasser

A willful trespasser cannot gain any rights of ownership in the property he has
enhanced in value under the rules of accession. The original owner of the chattel is
entitled to the property in its improved state regardless of the degree of augmenta-
tion in value made by the trespasser.
a. Complete Change
The original owner’s title persists even though there has been a complete
change in the form of the chattel.
b. Original Owner’s Remedy

The owner of the chattel subject to willful trespass may elect to sue the
trespasser for damages for conversion (i.e., the full present value of the
property in its improved state) or for replevin (i.e., the return of the chattel as
now changed or improved).
E. CONFUSION
Confusion is an intermixture of goods owned by different persons such that the property
of each can no longer be distinguished, i.e., fungible goods. If the property can be identi-
fied and returned, there is no confusion.
1. Known Contributions
Where goods are of the same kind and quality, the parties are tenants in common of
the mass in proportion to their respective interests, regardless of how the confusion
took place, and even regardless of whether the confusion was fraudulent or willful.
EXAMPLE
Where wheat of the same grade belonging to different persons is wrongfully and
fraudulently mingled by one of them and ground into flour, the wrongdoer is entitled
to his proportionate share of the mass.
2. Unknown Contributions
a. Innocent Confusion
If the confusion was innocent (e.g., by an act of God, act of a third party, or
consent), the owners are tenants in common of the mass. If the amount of
contribution is unknown, the parties share equally.
b. Wrongful Confusion
If the confusion was caused wrongfully by one of the owners, her agent, bailee,
or trustee, the burden is on such owner to identify her portion. If she cannot do
so, the entire mass belongs to the innocent owner.
EXAMPLE
Where the owner of bales of cotton fraudulently mingles them with bales be-
longing to another so that they become indistinguishable, the wrongdoer is
entitled to no part of the goods unless she can identify her property.
c. Negligent Confusion
In most states, negligent confusion is treated as wrongful confusion, but some
states follow the innocent confusion rules when negligence is involved.
F. ADVERSE POSSESSION—STATUTE OF LIMITATIONS

Title to personal property by adverse possession results from the running of a statute of
limitations, which requires that the cause of action for recovery of the property be brought
within a specified period after it accrues. When the period specified has run, the presump-
tion that the person in possession has the right to possession cannot be overcome by the
former owner; the party in possession thereafter has an enforceable right to possession
superior to everyone and thus becomes the true owner. In an action for recovery of the
property, the defendant must plead the statute of limitations as an affirmative defense.
1. Requirements
As with real estate, the cause of action does not accrue and, therefore, the statute
of limitations does not run unless the possession relied on is: (1) actual; (2) open
and notorious; (3) hostile and adverse, under a claim of right; and (4) exclusive and
continuous.
a. Actual
Physical possession is usually required.
b. Open and Notorious

There must be some visible act of dominion or use on the part of the possessor
that is inconsistent with the absolute right of property in the owner, so as to
give reasonable notice to the owner. In the case of thieves, a secret holding is
presumed. A finder of lost or mislaid property is presumed to hold openly.
c. Hostile and Adverse

Possession must not be by consent and not in subordination to the rights of the
true owner.
d. Exclusive and Continuous

Possession must be exclusive to the adverse possessor (except for tacking—see
below). Since the possession must be continuous for the statutory period, inter-
rupted periods that together total the required time are insufficient.
2. Statute of Limitations
Title passes when the statutory limitation period has run.
a. Accruing of Claim
The accruing of the claim or cause of action is often a crucial question. Demand
and refusal may be required, e.g., when possession passed originally as a gratu-
itous bailment.
b. Tacking
Successive possessors of the property may “tack” or combine their respective
periods of possession as long as they are in privity, e.g., the property is sold,
given, or bequeathed to the subsequent possessor.
c. Tolling the Statute

Tolling the statute means that the time during which the following conditions are
met is not counted in the time period, or that the period, which has otherwise
expired, is extended beyond a certain event.
1) Disability of Plaintiff
When a person entitled to maintain an action is a minor, mentally incom-
petent, or imprisoned on the date the action accrues, she may bring the
action after removal of the disability within a period permitted by statute.
2) Defendant Out of Jurisdiction

When the possessor, who is a resident of this jurisdiction, is outside the
jurisdiction, the statute is tolled until the possessor returns.
3) Fraudulent Concealment
When a potential defendant fraudulently conceals himself after the action
accrues, so as to avoid service, the statute is tolled until the concealment
has ended.
3. Bona Fide Purchaser of Stolen Goods

A bona fide purchaser of stolen goods is not protected against the claim of the
owner unless the statute of limitations has run on the owner. Since a secret (rather
than open and notorious) holding is presumed in the case of stolen goods, the
running of the statute is unlikely. The risk is on the purchaser.
G. TITLE BY JUDGMENT
1. Election of Remedies
One who destroys, misuses, misdelivers, or otherwise wrongfully deprives the
owner of a chattel of her possessory rights may be liable to the owner under various
theories of recovery.
a. Replevin
Replevin is an action to recover the chattel itself.
EXAMPLE
A bailed her automobile to B. Upon A’s making proper demand for its return, B
refused to redeliver possession of the car. A may sue B in replevin to have the
subject matter of the bailment returned to her.
b. Trespass
The action in trespass is to recover money damages incurred by reason of the
dispossession.
c. Trover
The action in trover is to recover the value of the chattel along with damages
for dispossession.
2. Conversion
An owner may allege conversion and sue the wrongdoer in trover. The substance of
the action is that from and after the time the property was converted (i.e., wrongfully
dealt with, misdelivered, or damaged), the wrongdoer by her action “purchased the
chattel.” By proceeding on the theory of conversion, the court in substance forces a
sale of the chattel for the value as of the date of conversion.
a. Effect of Suing in Trover

Should the owner proceed under a trover theory, title to the chattel, by virtue of
the forced sale, becomes vested in the converter by operation of law.
1) Merger
If the remedy elected is trover, the right to possession, which is the basis of
the cause of action and which is necessarily proved if the plaintiff prevails,
is merged in the judgment awarding damages. It is not extinguished,
however, until the judgment is satisfied, and the plaintiff may elect to sue in
replevin until that time.
2) Relation Back
When the judgment is satisfied by the tortfeasor, title to the converted
property passes to him but relates back to the date of conversion. Thus,
if the property is destroyed after conversion but before satisfaction of the
judgment, the loss falls on the converter. Likewise, if the property fluctuates
in value, the tortfeasor recoups the benefits or the burdens of the fluctua-
tion in value.
b. Who Can Sue?

Anyone who is in actual possession of the chattel in question or who is entitled
to immediate possession of the chattel can maintain an action for trover. On
this basis, a bailee who has the right of possession or who is entitled to the
right of possession may elect trover as the action when faced with the wrongful
conduct of another.
c. Who Can Be Sued?

Obviously, the tortfeasor-converter can be sued in trover. However, a situa-
tion frequently arises in which the converter sells the subject matter of the tort
before the action is brought. In such cases, the purchaser (even a bona fide
purchaser) is liable as a converter.
H. GIFT
A gift is a voluntary transfer of property by one to another without any consideration
or compensation. To be valid, a gift must be executed or actually made. A gratuitous
promise to make a gift in the future is not binding.
1. Gifts Inter Vivos

An inter vivos gift, once made, is irrevocable. There are three requirements for an
inter vivos gift: (1) donative intent, (2) delivery, and (3) acceptance of the gift.
a. Donative Intent
1) Intent to Make a Present Gift

The donor must have a present mental capacity and must intend to make
an effective gift of her property.
EXAMPLE
Where the donor intended to retain use of so much of her bank account as
she desired during her life and to give the balance remaining at her death
to the donee, there was no valid gift, even though the bank book had
been delivered to the donee. There being no intent to make an immedi-
ate gift, and the transfer not being effective until the donor’s death, the
transaction was testamentary.
2) Promise to Make a Gift in the Future

If, by the act of the donor, it can be determined that the donor manifested
her intention to have title pass to the donee at some future date, the requi-
site mental state is not present and no gift follows.
EXAMPLE
A mother tells her daughter, “I shall make a gift of this wristwatch to you to-
morrow.” The requisite mental state is not present. The mother, the would-
be donor, has not indicated that she wishes to vest title in the daughter at
that moment. The mother has made a mere gratuitous promise to make a
gift in the future.
3) Donative Intent Applies to Title

The requirement of donative intent should not be construed to require
that the donor intends the donee to obtain full and complete rights of use
and enjoyment in the subject matter of the gift. The donor may intend to
immediately vest title in the donee, and yet reserve a right of possession
until some future date. Notwithstanding this intention, a gift may be effec-
tive.
EXAMPLE
A father tells his son, “This wristwatch is now yours; however, I wish to use
it until my new one arrives.” As long as all other requirements for the valid
execution of the gift are complied with, the gift is effective even though the
donor has retained possessory rights in the subject matter of the gift.
b. Delivery
In addition to the requirement that the donor possess the requisite donative
intent, delivery in one form or another must be made in order to effect a valid
gift inter vivos.
1) Types of Delivery
The basic ways of accomplishing the delivery requirement are: (1) actual
physical delivery, (2) constructive delivery, (3) delivery by written instru-
ment, and (4) symbolic delivery.
a) Actual Physical Delivery

If the donor physically vests the donee with possession of the subject
matter of the gift, the delivery requirement is satisfied. To show that
delivery has been accomplished in this manner, there must be a
showing that the donee has received dominion and control over the
subject matter of the gift.
EXAMPLE
A husband places certain securities in an envelope. The envelope
bears the following inscription: “The enclosed are for my wife, Mary.”
The envelope is then placed with its contents into the husband’s safe
deposit box. There would be no valid gift. The delivery requirement is
not satisfied because the husband has not physically transferred the
securities to his wife, and has retained dominion and control over his
own safe deposit box.
b) Constructive Delivery
When an item, because of its size or location, would be impossible or
impracticable to manually deliver, substitute delivery may be sufficient.
In such cases, the delivery requirement will be satisfied if the donor
surrenders as much control over the subject matter of the gift as he
presently possesses.
EXAMPLES
1) If A declares that he gives an antique desk and all its contents to B
and hands B the key to the desk, the delivery requirement may have
been satisfied because A has given B control over the desk.
2) Since a passbook to a savings account is evidence of control of that
account, delivery of the passbook with the requisite donative intent is
sufficient delivery.
c) Delivery by Written Instrument

Since delivery has been established as a fraud-prevention device,
most courts will accept a written document evidencing the gift. The
execution and subsequent delivery of this written “deed of gift” should
be sufficient to accomplish the gift.
(1) Requirements
To be sufficient, the writing should manifest the donative intent,
describe the subject matter of the gift, be signed by the donor,
and be delivered.
(2) Physical Delivery Possible

One may accomplish delivery by written instrument even though
the subject matter of the gift was capable of being manually trans-
ferred. Note that some courts that do not recognize the validity of
delivery by written instrument may still treat the writing as a form
of symbolic delivery (see below) if manual delivery is impossible
or impracticable.
d) Symbolic Delivery
When manual delivery is impossible or impracticable, symbolic
delivery is permitted. Symbolic delivery occurs when the donor hands
over some object, other than the item given, that is symbolic of the
item. Symbolic delivery is most commonly effectuated by delivering a
written instrument, as described above.
2) Donee Already in Possession

If the donee is already in possession of the article, the donor need not
repossess the article and then return it to the donee, because the law will
not require a useless act. But the donor must do something to make his
intent objectively clear.
3) Gift Through Agent
a) If Agent of Donee
If a gift is given through an agent of the donee, the gift is effective
when the donor delivers to the agent.
b) If Agent of Donor
If a gift is given through the agent of the donor, the gift is effective
when the agent delivers to the donee, unless the agent has assented
to hold the property for the donee. Thus, where such assent is missing
and the donor delivers the item to his agent for delivery to the donee,
if the donor dies before delivery is made, there is no gift. The agent’s
authority to deliver terminated upon the donor’s death, and no delivery
was made.
4) Special Problems in Delivery
a) Checks
(1) Check of Donor

The mere manual delivery of a check made by the donor does not
fulfill the delivery requirement. Since the check simply orders the
bank to perform the delivery of the real subject matter (i.e., the
money), there is no delivery until such time as the bank makes
payment.
(2) Check of Another

Since the check of another is not the directive of the donor to
have complete delivery made by his agent, but rather a contract
right given by another, its transfer fulfills the delivery require-
ment. It is important to note that even where a check must be
indorsed by the donor for proper negotiation, the manual delivery

of the unindorsed check (coupled with the requisite donative
intent) completes the gift.
b) Promissory Notes
Because a promissory note, drawn by the donor, is merely a promise
to deliver money in the future, the execution and manual delivery of a
promissory note is not a valid gift. However, if a promissory note has
been drawn in favor of the donor, and thereafter the donor transfers it
to a third person (i.e., the donee), the gift is valid.
c) Stock Certificates
Delivery of shares of stock with the requisite donative intent consti-
tutes a valid gift. This may be true though the donor continues to
receive the dividends thereon up to the time of his death. In addition,
indorsement of the stock certificate is not a prerequisite to valid and
complete delivery. Also, it is not necessary that the donee’s name be
entered on the corporate books in order to complete delivery.
d) Life Insurance Policy

The rules for delivery of life insurance policies are similar to those for
delivery of stock certificates.
e) Bank Savings Deposits

Delivering a bank book to the donee with intent to make a gift is a
sufficient symbolic delivery when the savings bank book represents
dominion over the amount on deposit.
f) Joint Checking Account
(1) Rebuttable Presumption of No Gift

In some jurisdictions, where a joint checking account is opened
and one party puts in all or most of the money, there is a presump-
tion that this is done for the convenience of that party and not
as a gift, particularly where the person whose money is involved
is an invalid or is otherwise unable to get to the bank easily. The
presumption may be rebutted by clear proof of donative intent. It
may also be rebutted by showing that convenience was not the
reason; i.e., the person whose money was involved had ready
access to the joint account.
(2) Survivor Becomes Owner

Other jurisdictions do not allow such a rebuttable presumption
to be raised in the case of a joint checking account. If statutory
formalities are complied with, the survivor of a joint account

will automatically become the owner of the account (absent
fraud, undue influence, mental incapacity, or mistake). [See In re
LaGarce’s Estate, 487 S.W.2d 493 (Mo. 1972)]
c. Acceptance of Donee
When the gift is beneficial to the donee, acceptance by her is presumed.
However, the donee may refuse to accept a gift by an affirmative act.
d. Gifts in Contemplation of Marriage

Most jurisdictions hold that engagement gifts are made in contemplation of
marriage and are conditioned on the subsequent ceremonial marriage taking
place. If the marriage does not occur, engagement gifts must be returned. While
an engagement ring by definition is given in contemplation of marriage, this may
not be the case with other gifts given during the engagement period. Courts
consider factors such as the type of property given, fraud, conditions attached
to the gift, and the intent of the donor to determine whether the gift will be
deemed to be given in contemplation of marriage (and thus recoverable by the
donor if the marriage does not occur).
2. Gifts Causa Mortis
a. Concept and Essential Elements

A gift causa mortis is one given in contemplation of death. For the gift to be
valid, the following elements must exist:
1) Present Mental Capacity

The donor must have the same present mental capacity to make the gift as
is required for a gift inter vivos.
2) Gift Must Be Personal Property

Real property cannot be conveyed as a gift causa mortis.
3) Delivery and Acceptance

The delivery and acceptance requirements that are essential to the validity
of a gift inter vivos are also required for gifts causa mortis.
a) Identical Test
To accomplish a gift causa mortis, the requisite donative intent, in
addition to delivery and acceptance of the subject matter of the gift, is
required. The rules relating to delivery and acceptance are identical for
both gifts inter vivos and gifts causa mortis, with one exception.
b) Exception—Delivery by Deed of Gift (Symbolic Delivery)

There are a significant number of states that hold that the donor may
not accomplish a gift causa mortis by virtue of symbolic delivery. The

rationale given is that execution of a written document that acts as a
testamentary device should be sufficient to vest title in a donee only
if drawn in compliance with the Statute of Wills. All other forms of
delivery previously indicated as being acceptable for the valid accom-
plishment of a gift inter vivos will be sufficient and acceptable for the
valid accomplishment of a gift causa mortis.
4) Anticipation of Death
The definition of a gift causa mortis includes the requisite that the donor
be in contemplation of imminent death. As originally envisioned, the donor
must have been suffering from an illness that realistically confronted her
with a fear of death.
a) Imminence
There is recognition of a valid gift causa mortis as long as the donor
was suffering from an actual illness that threatened her life. The mere
abstract fear of death from a future cause (e.g., fear of flying, fear of
death in war, etc.) is not sufficient.
b) Death as Anticipated
To validate a gift causa mortis, older cases held that the donor
had to die as anticipated. If she died from some other cause, some
early decisions indicated that the gift was revoked. There has been,
however, considerable liberality given to this concept in more recent
decisions.
EXAMPLE
A victim of an automobile accident is placed in an ambulance. In fear
of death from the injuries sustained in the accident, she attempts to
make a gift causa mortis. En route to the hospital the ambulance is
struck by a train and the donor is killed. Can it be said that the donor
died “as anticipated”? The more modern authorities would say yes.
c) Recovery
(1) Gift Is Revoked by Operation of Law

An important ingredient in determining the validity of the gift
causa mortis is the failure of the donor to recover from the illness
that placed her in contemplation of death. Once it can be said that
the donor “recovered,” the gift is revoked by operation of law. As
long as the donor has failed to recover, the gift is not revoked. The
concept of “recovery” predominates in most modern cases. As
in the example given above, the donor did not recover from the
illness that prompted the attempted gift causa mortis. Therefore,
one who attempts a gift causa mortis in contemplation of death
will have made a valid gift as long as she fails to recover, though
the precise cause of death is different.
(2) Compare—Deed to Real Property Not Revoked

Because the property given must be personal property, a deed to
real property executed and delivered in contemplation of death is
not revoked as a gift causa mortis when the donor recovers.
5) Absence of Revocation
In addition to the failure of the donor to recover, a requirement of a valid
gift causa mortis is that it not be revoked.
a) Affirmatively by Donor
The definition of the gift causa mortis contemplates that the donor has
passed title to the donee. However, it is a revocable transaction. The
donor reserves the right, as a condition subsequent, to revest owner-
ship in herself by any affirmative act manifesting such intention.
b) Failure of Donee to Survive

The gift causa mortis is given on the essential condition that the donee
survive the donor. Should the donee fail to survive the donor, the gift is
revoked by operation of law.
b. Creditor Claims
A gift causa mortis is always subject to the claims of creditors of the donor’s
estate.
I. UNIFORM TRANSFERS TO MINORS ACT

1. Purpose of Act
While at common law a minor may legally receive a gift, a gift to a minor may be
troublesome because of uncertainty over who will manage or care for the property
until the donee reaches majority. There may also be questions about the donor’s
eligibility for the annual gift tax exclusion provided by the Internal Revenue Code. A
donor who gives property in a manner prescribed by the Uniform Transfers to Minors
Act (“UTMA”) makes a completed gift to the minor donee and qualifies for the gift tax
exclusion.
2. Subject Matter of Gift

The UTMA applies to all kinds of property whether real or personal, tangible or
intangible.
3. Types of Transfers
The UTMA applies to all types of transfers, not just lifetime outright gifts. It includes
transfers from trusts, estates, guardianships, and the minor’s debtors.
4. Title
The gift is irrevocable. The custodial property is indefeasibly vested in the minor,
subject to the rights, powers, duties, and authority of the custodian.
5. Possession of Gift
The donor must place the custodian in control of the property as soon as practi-
cable. However, the donor’s failure to comply with this requirement, his designation
of an ineligible person as custodian, or the death or incapacity of the person desig-
nated as custodian does not affect a consummation of the gift.
6. Creation of Custodial Property

Custodial property is created when:
(i) A security is registered in the name of the donor, other adult, or trust company
as custodian for a minor, or delivered with endorsements to someone other than
the donor.
(ii) Money is paid or delivered to a broker or financial institution for credit to

account in the custodian’s name, as custodian for the minor.
(iii) A life insurance policy or annuity is registered or assigned and delivered.
(iv) An interest in real property is recorded.
(v) Other property interests are transferred to a trust company or adult other than
the donor, and the custodian signs the receipt.
(vi) A certificate of title is issued by state or federal government (e.g., for aircraft,
boats, automobiles).
[UTMA §9]
7. One Minor
Each gift may be to only one minor.
8. Custodian
a. Who Is Custodian?
Only one person may be the custodian. The custodian may be the donor,
another adult, an adult member of the minor’s family, the guardian of a minor, or
a trust company.
b. Duties of Custodian
1) Preservation of Property
The custodian must take control of custodial property, register or record
title if appropriate, and collect, hold, manage, invest, and reinvest it as
would a prudent person dealing with the property of another.
2) Payment to Minor
The custodian pays to the minor for expenditure by him, or expends for the
minor’s benefit, so much of the custodial property as the custodian deems
advisable.
c. Compensation
The custodian is entitled to reasonable compensation and reasonable
expenses, but may act without compensation.
d. Successors
The custodian, should he resign, designates a successor custodian, or a
successor may be appointed by the court upon petition.
e. Removal
The custodian may be removed by the court upon petition of the minor (if age
14 or older), the donor, an adult member of the minor’s family, or the guardian of
the minor.
9. Final Distribution
Final distribution to the minor should be made when the minor reaches the age of
majority. If the minor dies before reaching majority, distribution should be made to
the minor’s estate.
III. LIENS
A. IN GENERAL
1. Concept
A lien is the right of one (the lienor) to possess and retain personal property that
she has improved or enhanced in value, or otherwise serviced, as security for the
payment by the person claiming the property (the lienee) of all charges for the
improvement or service.
a. Conditions for Lienor’s Right to Possess

The lienor has a right to possess for a period of time only if the following condi-
tions are present:
1) A debt arises from services performed on the thing;
2) Title to the thing is in the debtor (lienee); and
3) Possession of the thing is with the creditor (lienor).
b. Pawn Distinguished
The pawn is held to secure the performance of a promise or other obligation.
There may or may not be improvements to or services upon the pawned article.
c. Mortgage Distinguished
In a common law mortgage there is a transfer of legal title to the mortgagee as
security for the performance of the mortgagor’s obligations. Upon the failure of
the mortgagor to perform, the mortgagee’s title becomes absolute, subject to
the equity of redemption.
2. Classes of Liens
a. General Lien
A general lien is the right to retain all of the property of another as security
for a general balance due from that person. It exists only when (1) separately
contracted for, (2) conferred by statute, or (3) (most commonly) according to
the usage or custom of a particular trade, a general lien is so well established
that the parties to a particular transaction must be taken to have made their
contracts in relation to the usage or custom. This custom is well established for
certain professions, e.g., attorney, banker, universal agent, and innkeeper.
b. Special Lien
A special lien is the right to retain specific property as security for payment of
charges for work done on or services rendered concerning that specific piece of
property.
1) Lienor Has Possession

For the special lien, the article must be in possession of the lienor. Thus, if
work is done on the owner’s premises, no lien will attach unless the parties
intended that the lienor should possess the chattels, e.g., materials used in
a building on the owner’s land.
2) Lienor Must Add Value

For the special lien, the lienor generally must add value to the chattel. It is
not enough that the chattel be used to produce a valuable result.
EXAMPLES
1) The local gas station washes Smith’s car. Value is added, no matter how
infinitesimal. (A clean car is worth more than a dirty car.) There is a lien.
2) Owner sent type to a printer, who used the type to produce a printed
work for Owner. There is no lien in the type, for no value was added to it.
a) Exception—Special Lienors
The special lien may exist for a common or private carrier, a
warehouser, an ordinary bailee, a trustee, an arbitrator, a general
agent, or a special agent (see B.1., below). They are entitled to a lien
without having added value to the chattel. Furthermore, if a person
performs labor on the chattel which does not increase the value of the
chattel, she should have a special lien for the reasonable value of the
services performed.
c. Consequence of Classification
The classification of liens is important only when the lienor releases a portion of
the chattels held as security.
1) General Lien
If the lienor has a general lien and releases some of the chattels, the
chattels released are freed from the lien, but the lienor may hold the
unreleased portion until the entire lien charge is paid.
2) Special Lien
If the lienor has a special lien and releases some of the chattels held, he
thereby waives his lien to the extent of the chattels released.
3) Ambiguous—Construe as Special
In case of doubt, a lien is construed as special rather than general,
because the law does not favor general liens.
B. RIGHTS OF DIFFERENT LIENORS

As a rule, the lien is given by the owner of the property. In exceptional circumstances, a
lien may be given by one who is not the owner of the chattel.
1. Lienors Under the General Rule
a. Attorney
Attorneys have a lien on all papers, securities, money, and documents in their
possession for the general balance of accounts with their clients.
b. Cleaner and Launderer

Cleaners, launderers, dyers, and pressers have a lien on clothing for the value
of the services performed.
c. Mechanic or Artisan
A mechanic or artisan who makes, alters, or repairs any article of personal
property at the request of the owner has a statutory lien on that property for her
just and reasonable charges for work done and materials furnished.
d. Motor Vehicles, Including Trailers

Any person who stores, repairs, or furnishes supplies of or concerning motor
vehicles has a lien for the agreed or reasonable charges when the charges are
incurred by the owner, the conditional vendee, or the chattel mortgagor.
e. Warehouser
A warehouser has a lien to secure him for the time and labor expended upon
the chattel and for his storage charge.
f. Landlord
A landlord has a lien for rent upon the tenant’s personal chattels on the
premises, from the time of execution of the lease and the bringing of a chattel
onto the premises.
g. Common Carrier
A common carrier has a lien for charges on the theory that the common carrier
is compelled by law to accept all persons who present themselves. However,
it has no lien on the goods that it receives from persons other than the owner,
such as goods stolen by the shipper. The reason for this rule is that the carrier
may demand transportation charges in advance, or in the alternative, proof from
the shipper that she is acting with authority from the owner. This bailee for hire
should be particularly distinguished from the innkeeper (see below).
2. Exceptions to Rule
a. Innkeepers
The lien of an innkeeper is peculiar in that it attaches to any property brought
into the inn by the guest. It is not essential in all cases that the guest is the
owner of the property. The property may be that of a third person, or even
stolen. As long as the innkeeper has no knowledge that the property is not
rightfully in the possession of the guest, his lien will attach generally to all the
property to the extent of a reasonable charge for the services rendered.
EXAMPLE
The samples of a traveling salesman are subject to a lien for an innkeeper’s
charges and may be sold, after proper notice, to satisfy the charges, even though
the innkeeper has full knowledge that they are owned by the guest’s employer.
b. Other Bailees for Hire

Other bailees for hire acquire no lien on goods received from someone not the
owner, for there is no similar duty to accept all goods offered. Therefore, the
situation is governed by the general rule that “a lien is a proprietary interest,”

a qualified ownership, and, in general, can be created only by the owner or by
some person authorized by her.
EXAMPLE
A person in possession of a truck with the owner’s permission cannot create a
lien for repairs. That the repairs are of benefit to the owner is immaterial.
C. WAIVER OF LIEN
1. By Contract
Although a lien is conferred by law, it may be waived by any contract inconsistent
with the existence of the lien. Such contracts usually occur when the artisan agrees
to deliver the goods before payment for his services is to be made.
EXAMPLE
If a person delivers cloth to a tailor to be made into a garment, under agreement by
which the tailor is to be paid for his services 30 days after the completion and deliv-
ery of the garment, the tailor has no lien on the goods.
2. By Acceptance of Other Security

So too, where a lienor accepts security for payment, the security eliminates the
common law lien. The acceptance of the security indicates an intention to regard it
as a substitute for the lien.
3. Demand for Excess Charges

A lienor who in good faith demands charges in excess of the original amount of the
lien does not waive the lien. However, if the lienee tendered the original amount
due under the lien before the lienor demanded the excess amount, the lienor must
discharge the lien. If the lienor does not discharge the lien, he may be subject to
statutory penalties or liable in an action for replevin or trover.
4. Reservation of Lien or Temporary Use by Bailor

The lien is not lost if the lienor surrenders the goods to the bailor, specially
reserving his lien, or if the bailor is permitted to make temporary use of the property.
Therefore, a garage proprietor does not lose his lien on automobiles stored in his
garage where the owners are permitted to use their cars daily. In the case of the
surrender of temporary possession, the lien enjoys priority over the claims of the
bailor’s subsequent creditors.
D. MECHANIC’S LIEN VS. PERFECTED SECURITY INTEREST

In many states, the mechanic who performs labor at the request of the mortgagor has
priority as against the holder of a perfected security interest. This is true even though the
mechanic performs her work at a time when the security interest exists. The rationale is
that the mechanic has enhanced the value of the article.
E. ENFORCEMENT OF LIEN
A common law possessory lien is merely a right to hold possession until the debt is paid.
The lienor has no right to sell the goods to reimburse himself unless this right is conferred
by statute or special agreement. Statutes in practically all states give the lienor the power
to enforce the lien by sale, either by notice or by judicial foreclosure.
IV. BAILMENTS
A. DEFINITION
A bailment is the relationship created by the transfer of possession of an item of personal
property by one called the bailor to another called the bailee for the accomplishment of a
certain purpose.
EXAMPLE
If a coat is delivered to a tailor to be repaired, she acquires a right to its possession as
against all the world except for the owner, who, as bailor, retains an unconditional title to
the coat with the right to its return.
1. No Transfer of Title
The bailment relationship involves the transfer of possession of an item of personal
property to the bailee without a transfer of title. The bailee acquires the right to
possess the property in accordance with the terms of the bailment. A bailment
obligates the bailee to return the item of personal property to the bailor or otherwise
dispose of it according to the terms of the bailment.
2. Contract Aspect
The bailment arises where one possesses the property of another. This relationship
may be part of an express contractual arrangement between the parties; however,
an express contract is not necessary.
EXAMPLE
If one finds a lost article and takes it into her possession, she is a bailee for the un-
known owner, although she made no contract with that owner.
B. ELEMENTS OF BAILMENT
1. Possession of the Property
There is no bailment unless the bailee obtains physical custody over the property
coupled with intent to exercise control.
EXAMPLE
Plaintiff’s overcoat disappeared after he hung it on a hook on the wall immediately
behind, and within two feet of, the table at which plaintiff sat in defendant’s restau-
rant. Plaintiff did not notice a placard stating: “Not responsible for hats, overcoats,
umbrellas, etc.” Neither defendant nor any of her employees ever saw the coat. It
was held that there was no bailment for the overcoat since the facts are inconsistent
with the hypothesis that plaintiff intended to transfer to defendant or her employees
such possession of the coat as would exclude plaintiff’s possession.
2. Bailee’s Consent Required

Possession cannot be thrust upon the bailee without her consent. Therefore, a
delivery without acceptance by the bailee will not create a bailment, and the mere
custody of a chattel is not sufficient in law to constitute possession.
EXAMPLE
B, who has bought goods from S, claims that they are defective. He takes them back
to S’s shop. S asserts that they are perfect and refuses to accept a return of them.
Thereupon B walks out of the shop, leaving the goods there. S is not a bailee, al-
though she is now in possession of goods belonging to another. S cannot be made a
bailee except with her consent. Therefore, S is under no duty to exercise care of the
goods. She may even remove them from her shop.
3. Knowledge of Presence
It cannot be said that a person is in possession of an article as a bailee unless she
has knowledge or can be charged with knowledge of the presence of the article.
EXAMPLE
Where a customer, while trying on garments, lays her coat on the counter in the
presence of a clerk, the store is liable for the loss of the coat. In such a situation, the
clerk (and the store) impliedly invite customers to remove their coats and lay them
aside. Therefore, the removal of the coat in the presence of a clerk who has an op-
portunity to watch it constitutes a transfer of possession to the store with the con-
sequent duty of caring for it as a bailee. A contrary conclusion may be appropriate
where neither the store nor its employee is aware of the fact that a customer placed
her coat on a counter.
4. Property Concealed in Bailed Property

If a bailment exists with respect to an article, it does not follow that a bailment exists
with respect to something that is concealed within that article.
EXAMPLES
1) Where a coat with a fur piece concealed in it is deposited in a coat check room,
and the fur piece is not returned, the owner of the coat check room is not liable,
because she was not a bailee for the fur piece. Although she had custody of the fur,
she could not have intended to assume control over it, because it was concealed
and she did not know of its existence.
2) The articles in a car stored in a garage, parking lot, etc., are considered the sub-
ject of a bailment only if the bailee has actual or imputed knowledge of them. For
example, there would not be a bailment with respect to musical instruments left in
the trunk of a car without notice to the garage.
5. Constructive Bailment
Although the normal bailment is consensual, a constructive or involuntary bailment
arises by operation of law in a few situations where the agreement of the parties is
implied. For example, a constructive bailment arises when someone finds lost goods
and retains physical custody of the goods or when a landlord repossesses premises.
C. BAILMENT DISTINGUISHED FROM OTHER TRANSACTIONS

1. Renting
a. Parking Lots
1) Examine Surrender of Control Over Car

Parking a car in a parking lot may constitute a renting of parking space
or it may constitute a bailment. Whether a particular transaction amounts
to a bailment or to a mere renting of parking space depends on whether
the owner surrenders control over the car to the operator of the lot. Thus,
the turning over of the keys by the owner to the operator or use by the
operator of a checking system would indicate a bailment. Where the owner
parks her own car, selecting her own space, locking the car, and taking the
keys, she leases the space, and the operator of the parking lot or garage is
not a bailee.
2) Where Lot Owner Is Deemed a Lessor

Where the parking lot owner is held to be a lessor, the lessor must still
exercise ordinary care. The lessor is therefore liable to a car owner for
damage done to the car where the attendant was on actual notice of
tampering.
b. Safe Deposit Boxes

The relationship existing between a bank and the one who rents a safe deposit
box in the bank is that of bailor and bailee. Usually, the bank and the “renter”
of the box have duplicate keys, but the renter cannot have access to the box
except with consent and use of the bank’s key. This type of almost absolute
control by the bank of the box and its contents makes the bank a bailee.
2. Employer and Employee Relationship
a. Employee Cannot Be Bailee of Employer’s Goods

The ordinary possession by an employee of his employer’s goods does
not constitute a bailment. The employee merely has custody of the goods.
Possession and control of the goods remain with the employer. In a bailment,
the bailee has the right of possession and control of the goods, for the term
of bailment, against all the world including the bailor. Because an employee is
at all times subject to the orders and control of his employer, he cannot, as an
employee, be a bailee of his employer’s goods.
EXAMPLE
A truck driver, while using his employer’s truck in the course of his employment,
is not a bailee of the truck. If, however, the employer permits the truck driver
to use the truck over the weekend for his pleasure or convenience, a bailment
results.
b. Negligence of Bailee Not Imputed to Bailor

As to liability, the negligence of the employee is imputed to the employer if the
tort is committed in the course and scope of the employment. In contrast, the
negligence of a bailee is not usually imputed to the bailor because the posses-
sion and control is in the bailee and the act of the bailee is usually in her own
interest.
3. Consignment
A consignee differs from an ordinary bailee in that she is authorized to sell the
goods in the ordinary course of trade. Hence, a consignment may be described
as a special bailment for the purpose of sale. In a true consignment for sale, the
consignee is not only a bailee, but also an agent of the consignor to sell the goods.
In such cases the consignor’s right to the goods will be sustained as against: (1) the
consignee’s creditors, and (2) the trustee in bankruptcy of the consignee.
4. Sale
a. In General
1) Distinction Is Relevant as to Risk of Loss

A sale involves a transfer of title to the vendee. A bailment involves merely
a transfer of possession to the bailee, the title to the goods remaining in the
bailor. The importance of this distinction appears whenever it is necessary
to determine which party undertook the risk of loss. In a sale, the loss of
goods is sustained by the vendee because she is the owner. In a bailment,
the loss of goods falls upon the bailor because he has title.
2) Test for Bailment vs. Sale

A fairly workable rule to determine the nature of the transaction, whether
bailment or sale, is the following: When the identical thing delivered is to
be restored in the same or an altered form, the contract is one of bailment,
and the title to the property is not changed; but when there is no obliga-
tion to restore the specific article, and the receiver is at liberty to return
another thing of equal value or the money value, the title to the property is
changed—it is a sale.
EXAMPLES
1) When the article, however altered in form (e.g., wheat into flour, grapes
into wine, or milk into butter), is to be returned, the transaction is a bailment
and the title remains in the bailor.
2) But if a farm and cattle are leased with a stipulation that the lessee is to
return an equal number of cattle of the same quality at the expiration of the
tenancy, the transaction is a sale because it does not call for the redelivery
of the same property.
b. Sale on Approval vs. Sale or Return
1) Sale on Approval
Where goods are delivered on “approval” or “on trial,” the transaction
constitutes a bailment, the bailee having an option to purchase. Title to the
goods does not pass until the option is exercised by an indicated approval
or until the expiration of a reasonable time, when a time for approval is not
otherwise fixed. This should be distinguished from a “sale or return.”
2) Sale or Return
A “sale or return” transaction is a sale with the privilege on the part of
the vendee to reinvest title in the vendor upon notice to him. Thus, where
goods are shipped to a vendee on a “sale or return” and the vendee gives
notice of her election to reinvest title in the vendor, the vendee becomes a
bailee while the goods remain in her possession. Thus, in a “sale or return,”
the transaction may end as a bailment, although it begins as a sale.
5. Pledge
A pledge is a particular type of bailment by which the bailor delivers property to the
bailee to secure an obligation owed by the bailor to the bailee.
6. Intra Hospitum
A hotel or innkeeper is an insurer of the goods of a guest taken into custody and
control of the establishment. It is therefore liable for any loss or damage, except
where it can be shown that it was caused by an act of God, a public enemy, or the
fault of the guest.
EXAMPLES
1) Guest gives his car to a doorman for parking in the garage of a hotel. The hotel is
an insurer of the car and all of its contents (regardless of notice) unless it can show
the loss or damage is due to an act of God, a public enemy, or the fault of the guest.
2) Guest leaves his car with the doorman for parking in a nearby garage, knowing
that it is an independent establishment. The garage is liable only as a bailee.
D. BAILEE’S RIGHTS IN BAILED CHATTEL

1. Possession
The bailee has the exclusive right to possession of the property during the bailment,
provided she is exercising this right according to the terms and conditions of the
bailment. This right is operative not only against third persons, but also against the
owner of the property.
a. Rights of Action
The bailee may maintain a trover, trespass, or replevin action against third
parties interfering with her possession, or even against the bailor. Unless she is
a gratuitous bailee, she may replevy even as against the bailor to recover her
possession if, for example, the bailor takes the object bailed before the termina-
tion of the term.
b. Attachment by Bailor’s Creditor

A creditor of the bailor has no greater rights than the bailor himself and no right
to take the bailed goods by attachment.
2. Use of Bailed Goods

Ordinarily, the bailee has no right to use the subject matter of the bailment. However,
she may acquire this right by express contract with the bailor. But, even where there
is no such contract, the circumstances may indicate a presumed intention that the
bailee make some use of the property.
EXAMPLE
A stablekeeper has presumed authority to exercise a horse and milk a cow in order
to preserve the health of the animals.
a. Agreed Use
In bailments for the hired use of personal property, as where A rents his horse,
car, or launch to B for B’s use, the bailee (B) obviously has the right to make the
agreed use of the property bailed. The same is true of the gratuitous loan of
an article for use. In such cases, however, the bailee’s use of the bailed article
is limited by the terms of the agreement. Any intentional, unauthorized use of
the goods that results in loss or damage renders the bailee absolutely liable to
the bailor, irrespective of the question of care or negligence. (See F.4., below.)
However, if the departure from the terms of the contract is unintentional, no
liability ensues unless the bailee has been negligent.
b. Incidental Use
In bailments for storage, repair, or transportation, the bailee is under a duty not
to make any use of the goods except such use as is incidental to the perfor-
mance of her services.
EXAMPLE
A stores his car in B’s garage. B, without A’s knowledge or consent, uses A’s car
on the highway. While the car is being so used, and without any negligence on
B’s part, it is damaged or wrecked. B is absolutely liable to A for the damage or
loss.
E. BAILOR’S RIGHTS IN BAILED CHATTEL

1. Actions Against Bailee
Where, due to the wrongful act of the bailee, the goods bailed have been lost or
damaged, the bailor can maintain an action against the bailee.
a. Action for Damages for Breach of Contract

For example, a bailor can maintain an action against a bailee for money paid to
the bailee for work improperly done on the bailed goods.
b. Tort Action for Damages

A bailor can maintain an action for damages against a bailee who by her
wrongful act has destroyed or injured the goods bailed.
c. Conversion Action
Where the bailee’s wrongful conduct constitutes or amounts to a conversion of
the bailed goods, the bailor can maintain trover (conversion) against the bailee.
d. Replevin
A bailor entitled to immediate possession can maintain replevin against the
bailee to recover the bailed goods.
2. Actions Against Third Parties
a. Bailment of Definite Duration

Where the bailment is for a definite time, a bailor cannot maintain trover or
replevin during the life of the bailment against a person who converts the bailed
property from the bailee because, although he has the general property right
in the thing, he has neither the possession nor the right to possession. Trover
and replevin are predicated upon the immediate right to possession. However,
he may bring an action for damages that he has suffered on the theory of the
common law action of trespass on the case. (See 2.c., below.)
EXAMPLE
X rents a book to Y for one year and Z wrongfully takes the book from Y on the
second day. X may not bring, until the year has passed, replevin against Z for
recovery of the book, nor may he bring an action in trover for its value when
taken, for he is not entitled to possession during the term of the bailment. He
may bring replevin after the term of the bailment has expired.
b. Terminable Bailment
Where the bailor may treat the bailment as ended by reason of a gratuitous
bailment, a bailment terminable at will, or the bailee’s unauthorized act, he may
maintain the actions of conversion or replevin against a third party.
EXAMPLE
Where a bailee of a sewing machine sells it to a third party, the bailor may
replevy it from him, as the bailee’s conversion terminates the bailment contract
and gives the bailor an immediate right to possession.
c. Actions for Damage to Future Right of Possession

A bailor may sue a third party who injures the bailed property for damages
for injury to his reversionary interest, even though he may not maintain trover
or replevin for lack of the immediate right to possession. In such an action it
is immaterial that the bailee may have been contributorily negligent, as the
negligence of a bailee is not imputed to her bailor. The sole issue in the case
is whether or not the third party was negligent. The reason for this rule is that
the use and care of the chattel is in the control of the bailee and subject to her
exclusive control. The bailor has relinquished all control.
EXAMPLE
A husband who gratuitously lends his automobile to his wife, a physician, to en-
able her to make professional calls, is permitted to recover from a third party for
injury to his car caused by the concurring negligence of his wife and the third
party, since the bailee’s negligence is not imputed to the bailor.
F. BAILEE’S DUTY WITH RESPECT TO BAILED GOODS

1. Bailee’s Duty of Care
a. Bailee Is Not Insurer of Goods

A bailee must exercise due care with respect to the bailed goods; she is not an
insurer of their safety. If the goods are damaged or lost through no fault of the
bailee (e.g., theft, earthquake), the loss falls on the bailor.
b. Type of Bailment May Determine Degree of Care

The specific degree of negligence upon which liability will rest is said to vary
with the type of bailment. Generally, where the bailment is for the sole benefit
of the bailor (the bailee is uncompensated), only slight diligence is required
and liability is said to rest on gross negligence. Where the bailment is for the
sole benefit of the bailee (e.g., where the bailor gratuitously loans his property),
great diligence is required and liability will result from slight negligence.
Bailments for hire and pledges are for the mutual benefit of bailor and bailee
and ordinary due care is required. Today, the trend is away from such classifica-
tions and toward a rule that considers whether the bailee exercises ordinary
care under all circumstances. These circumstances include the value of the
goods, the type of bailment, any custom of a trade, etc.
2. Burden of Proof as to Bailee’s Negligence

Where goods have been lost, destroyed, or damaged during the bailment, the
burden is on the bailee to prove that the loss, etc., was caused despite her due care.
Consequently, when the bailor has shown a delivery of the goods to the bailee and
that the latter has failed on proper demand to return the goods, or has returned
them in a damaged state, he has made out a prima facie case for recovery. The
burden is then on the bailee to explain why the goods were not returned or why they
were returned in a damaged condition. The reason for this rule is that the bailee has
in her possession the means of ascertaining the exact cause of the damage or the
nonreturn of the goods.
3. Contractual Provisions on Bailee’s Duty of Care

The parties may prescribe the extent of the bailee’s liability by contract and may
impose either a lesser or a greater obligation than the law ordinarily requires.
a. Waiver of Liability for Negligence

Such contracts are not generally favored and are therefore strictly construed.
Thus, a general exculpatory clause (e.g., “bailee assumes no responsibility
for loss or damage to bailed chattel”) does not exempt a bailee from liability
created by her own negligence.
b. Liability May Be Limited

An ordinary bailee (e.g., a neighbor who borrows an item) may exempt herself
from liability for her own negligence. On the other hand, public policy prevents a
professional bailee from exempting herself from liability for her own negligence,
although she may, under proper circumstances, limit her liability. However, a
professional bailee’s limitation is not valid unless the bailor knows or should
know of the limitation and assents to it.
1) Posted Signs
It is the customary practice of check room proprietors, warehousers, and
garage-keepers to post public notices limiting their liability. It is held,
however, that such a limitation is not binding on the bailor in the absence
of proof that the bailor read the notice or, considering its size and location,
should have read the sign.
2) Claim Check
It is also a customary practice for check room proprietors, garages, and
warehousers to place a limitation of liability on the claim check. Most courts
hold that a claim check does not evidence a contract between the parties.
A claim check is generally issued for purposes of identification, and the
mere fact that a would-be contract provision is contained on the claim
check is not sufficient proof that the bailor actually knew, or should have
known, of this term.
3) Hotels
a) May Limit Liability

By statute, hotels may limit their liability for articles placed in their care
by providing notice thereof. The hotel is limited to a certain sum in
liability for items placed in a safe provided for that purpose, unless it
specifically contracted for higher liability. Also, by providing a safe and
such notice, the hotel’s liability for loss of goods from the hotel room is
limited to such amount of money and jewelry or other articles of value
as it is usually common or prudent for guests to retain in their rooms.
b) Compliance with Posted Notice Required

If a hotel posts a notice requiring guests to bolt the door and deposit
their key with the desk when leaving, the hotel is not liable for lost
luggage or other articles should it appear that the door was not
locked or bolted or that the key was not deposited, unless the loss is
directly or indirectly caused by, or attributable to, the proprietor or his
employees.
4) Warehouses
A warehouser may limit the amount of his liability in case of loss or damage
to stored goods by including a limitation provision in the warehouse receipt
or storage agreement. On the other hand, at the time of signing the storage
agreement or within a reasonable time after receiving the warehouse
receipt, the bailor may request in writing that the warehouser increase the
amount of his liability. In this event, the warehouser may charge increased
rates based on the increased valuation of the goods. A limitation with
respect to the warehouser’s liability for conversion to his own use is not
effective.
4. Absolute Liability
The bailee is absolutely liable for loss or damage without regard to her care under
the following circumstances.
a. Departure from Terms of Bailment

The bailee is rendered absolutely liable as a converter when she departs from
the terms of the bailment, as by using the goods for a different purpose than the
one agreed upon. In addition, absolute liability attaches if the bailee removes
the goods from an agreed place of storage to another without the bailor’s
knowledge or consent.
EXAMPLES
1) B rents a car and agrees to use it only within City M. On impulse, she drives
the car to City P, and while it is legally parked on the street, a car driven by X
totally demolishes it. B is liable for the damage because the use was unauthor-
ized and outside the scope of the bailment.
2) A stores his car in B’s garage. B, without A’s knowledge or consent, uses A’s
car on the highway. While the car is being so used, and without any negligence
on B’s part, it is damaged or wrecked. B is absolutely liable to A for the damage
or loss.
b. Breach of Agreement to Insure

When the bailee expressly agrees, or by custom or previous course of dealing
impliedly agrees, to insure the goods against hazards, but fails to do so and
the goods are damaged or destroyed by such hazard, the bailee is rendered
absolutely liable.
5. Duty to Redeliver
Upon the termination of the bailment, the bailee owes a duty to redeliver or account
for the thing bailed in its original or agreed-upon, altered form. Delivery must be
made to the bailor or someone claiming under him.
a. Absolute Liability
Although a bailee is held only to a standard of reasonable care with respect
to protection and preservation of the bailed chattel, she is absolutely liable for
improperly delivering the bailed chattel to someone other than the bailor. Such
misdelivery is a breach of the bailment and a conversion of the bailed chattel.
Therefore, the liability is absolute and not based upon negligence.
EXAMPLE
A bailee who in good faith delivers the bailed chattel to the wrong person under
an expertly forged order is held liable to the bailor for the value of the goods.
b. Exception—Indispensable Instrument
An exception to the rule of absolute liability for misdelivery has been made by
some courts when the bailee delivers the chattel to one holding an indispens-
able instrument (e.g., claim check) as long as the bailee had no notice or knowl-
edge that the one presenting the instrument was not the original bailor.
EXAMPLE
A bails his car to a parking garage and receives a numbered claim check, which
he then loses. B finds the claim check and presents it to the bailee garage. The
garage delivers the car to B in reliance upon the indispensable instrument (i.e.,
the claim check). As long as the garage had no knowledge or notice that B was
not the original bailor, it will not be held to a standard of strict liability for deliver-
ing the car to B.
c. Exception—Involuntary Bailee
An involuntary bailee is liable only if the bailee was negligent in delivering the
goods to the wrong person. Courts impose strict liability on an ordinary bailee
because he is in breach of contract when he misdelivers. An involuntary bailee
has no contract.
EXAMPLE
A hotel guest leaves her purse in the hotel restaurant. The hotel is liable for de-
livering the purse to the wrong person only if it was negligent in doing so.
d. Adverse Claimants
When a bailee has notice of, or reason to know of, an adverse claim to the
bailed property, the bailee will be absolutely liable for delivery to the original
bailor if the original bailor is not the true owner. The appropriate action to be
taken by the bailee is to interplead all claimants of the property.
e. Excuses for Nondelivery

However, the bailee is excused from making delivery to the bailor in the
following cases:
1) Where, during the life of the bailment, the bailor has sold the property to
the bailee or to a third party with notice given to the bailee;
2) Where there is title paramount in a third party and such party claims the
article; or
3) Where the property is taken from the bailee by judicial process.
6. Estoppel of Bailee to Deny Bailor’s Title

Since the bailee acquires possession by means of the bailment contract, she is
thereafter estopped to deny or dispute the bailor’s title, because one of the provi-
sions of the contract is to return the article after the purpose of the bailment is
accomplished. Thus, the bailee of an article cannot excuse her failure to return it by
asserting a claim to it herself or on behalf of another.
7. Conversion by Bailee
A conversion is an unauthorized act over the property of another of such nature as
is inconsistent with the rights of the owner. If the bailee has authority to use a chattel
in a particular way, the use of it in another manner, or in the same manner but to a
greater extent than authorized, is a conversion for which the bailor may maintain
trover. Moreover, and very importantly, a conversion makes a bailee an insurer and
therefore liable without reference to the question of negligence. In the case of a
bailment, a demand and refusal is a condition precedent to an action in trover.
8. Bailee’s Liability to Third Parties

If the bailee’s use of the bailor’s chattel results in harm to a third person, the bailor is
not liable. The liability is the bailee’s alone, for she wields possession and control of
the article.
G. COMPENSATION AND REIMBURSEMENT

1. Compensation
In a bailment for the mutual benefit of the bailor and the bailee, the bailee is entitled
to receive the agreed compensation for her services or, in the absence of such
agreement, the reasonable value of such services. (For recovery of compensation,
follow the rules for enforcement of liens.) In a bailment for the sole benefit of the
bailor or for the sole benefit of the bailee, the bailee is entitled to no compensation.
2. Reimbursement
The general rule is that ordinary expenses must be borne by the bailee and
extraordinary expenses by the bailor. Consequently, if the bailee pays an extraor-

dinary expense, not incurred through her own fault, she is entitled to reimburse-
ment from the bailor for such expense. For example, in the rental of a car, the cost
of gasoline and oil and such minor repairs as fixing a flat tire would be ordinary
expenses. The cost of a new tire, necessitated by a blowout (there being no spare
tire), or the repair of a broken axle, would be extraordinary expenses.
3. Bailee’s Lien
A bailee’s lien is not a general lien; it extends only to the property bailed. The right
to a lien is waived by a previous agreement to give credit, i.e., by an agreement
made in advance to deliver or redeliver the goods without receiving contempo-
raneous compensation for services expended upon them. The lien is forfeited by
the lienor’s refusal to accept a proper tender of the charges due. The lien is lost by
voluntarily parting with possession of the property.
H. BAILEE’S RIGHTS OF ACTION

1. Against Bailor
Where the bailor wrongfully takes from the bailee’s possession and converts the
subject matter of the bailment, the bailee can maintain an action against the bailor
for such conversion.
2. Against Third Parties

The bailee may maintain an action against third persons for damage, destruction, or
interference with the bailed goods, and may replevy them from third persons who
have wrongfully taken them from her possession. Any recovery by the bailee beyond
her interest in the bailed goods is for the benefit of the bailor. Full recovery by either
the bailor or bailee against a third person bars the action of the other toward the
third party.
I. DEFECTS IN SUBJECT OF BAILMENT

A bailor must exercise care so that the bailee is not harmed through a defect existing in
the bailed chattel.
1. Gratuitous Bailments
Where the bailment is gratuitous, the bailor must inform the bailee of any defect that
he knows exists in the chattel that might cause injury to the bailee. There is no duty
to disclose unknown defects.
2. Bailments for Hire

Where the bailment is for hire, the bailor is bound to inform the bailee of defects
that are known to him, or of which he could have known by exercising reasonable
diligence.
J. TERMINATION OF BAILMENT
Generally, a bailment may be terminated by agreement or conduct of the parties.
1. By Agreement
Mere lapse of the specified time or accomplishment of the purpose terminates a
bailment.
2. By Conduct of Parties
Notice to the other party (where the bailment is for an indefinite period), resump-
tion of possession by the bailor, mutual agreement, destruction of the property, or
misconduct of the bailee (at the election of the bailor) will terminate a bailment.
V. COMMON CARRIERS
A. CONCEPT
A common carrier is one who undertakes for hire to transport persons or goods from
place to place. Three requirements must be met: (1) there must be a holding out to
perform service for all those who apply, (2) the carriage must be for hire, and (3) the
service must be one for carriage.
B. LIABILITY FOR LOSS OR DAMAGE OF GOODS SHIPPED

The common carrier is an insurer of the goods given to it by the shipper and is liable for
any loss or damage to the goods under any circumstances other than the following: (1) an
act of God; (2) an act of a public enemy; (3) an act of state—e.g., legal process; (4) an act
of a shipper—e.g., defective packaging of goods by the shipper; or (5) the inherent nature
of the goods—e.g., perishable fruit damaged due to natural causes.
1. Commencement of Liability
A carrier’s liability as a common carrier commences when the goods are expressly or
impliedly delivered to, and accepted by, the carrier for immediate transportation.
Where the goods are stored in a warehouse and immediate transportation is not
contemplated, the carrier is merely liable as a warehouser.
2. Limitation of Liability at Common Law Allowed
a. Cannot Limit Liability Due to Negligence

By contract with the shipper, the common carrier may limit its liability for loss of
the shipped goods. Such a contract is binding even though the shipper has not
read the contract. Since the shipper is entitled to demand that the carrier accept
and carry its goods at a reasonable rate and subject to full responsibility, the
carrier must offer some additional consideration for the shipper’s agreement to
a limitation of liability—e.g., a lower rate to the shipper. A contract that relieves
the carrier from all liability for damage to the shipper’s goods due to the negli-
gence of the carrier is void as against public policy.
b. Effect of Posted Notice

Posted notices limiting liability, even though brought to the attention of the
shipper, are not effective to relieve the carrier of liability.
3. Limitation of Liability Constrained by Statute

The Interstate Commerce Act, and more particularly the Carmack Amendment,
restricts the ability of carriers operating in interstate commerce to limit the liability
imposed on them by the Act. Under the Act, contractual limitations of liability are
void except regarding (1) passenger baggage, and (2) released rates (i.e., amount of
liability agreed to in writing by the shipper). [49 U.S.C. §§11706(c), 14706(c)]
C. PASSENGER BAGGAGE
Baggage is goods that a passenger carries with him on a trip for his personal use, conve-
nience, or enjoyment, that are suitable to his station in life.
1. Delivery
A common carrier is liable as an insurer for baggage delivered to it. A carrier is not
liable for goods that are not baggage unless the carrier, knowing the nature of the
goods, accepts them anyway.
2. Nondelivery
A carrier is not liable as an insurer for goods retained in the possession or control of
the passenger. However, the carrier may be liable in a negligence action for failure
to properly protect its passengers.
APPROACH TO PERSONAL PROPERTY 1.
APPROACH TO EXAMS
PERSONAL PROPERTY
IN A NUTSHELL: Personal property is movable property, which includes every kind of
property that is not real property. Laws involving personal property focus on the right or title
to property and liability for loss or damage of property.
I. RIGHT OR TITLE TO PERSONAL PROPERTY
A. Ownership
1. Dominion and control over the property and intent to assert ownership
2. Tortious conversion does not deprive true owner of title
B. Lost, Mislaid, and Abandoned Property

1. Lost
a. Owner accidentally and involuntarily parted with possession
b. Owner does not know where to find the property
c. Finder has physical control with an intention to assume dominion
d. Finder has right to possess as against whole world, except true owner
2. Mislaid
a. Intentionally placed but thereafter forgotten
b. Owner of locus in quo is entitled to possess as against whole world, except true
owner
3. Abandoned
a. Intent to give up both title and possession
b. Title acquired by dominion and control with an intent to assert ownership
C. Accession
The addition of value to property through labor or addition of new materials
D. Confusion
Intermixture of goods owned by different persons such that property of each can no
longer be distinguished
E. Adverse Possession
Title to personal property results from the running of a statute of limitations
1. Title passes when statutory limitation period has run
2. Tacking—successive possessors in privity may combine their possession periods
3. Tolling—statutory period tolled if disability such as minority, mental incompetence, or
imprisonment
4. Requirements:
2. APPROACH TO PERSONAL PROPERTY
a. Actual possession
b. Open and notorious
c. Hostile and adverse
d. Exclusive and continuous
F. Gift
1. Gift inter vivos—requirements:
a. Donative intent—must be present intent to make gift
b. Delivery—must be delivery:
1) Actual physical delivery
2) Constructive delivery
3) By written instrument
4) By symbolic delivery
c. Acceptance—generally presumed
2. Gift causa mortis—requirements:
a. Donative intent, delivery, and acceptance
b. Gift must be in contemplation of imminent death
c. If donor recovers, gift is revoked by operation of law
G. Uniform Transfers to Minors Act (“UTMA”)

1. Donor places a custodian in control of the property transferred to a minor
2. Custodian
a. Only one custodian
b. Custodian’s duties
1) Holds, manages, invests, and reinvests custodial property
2) Pays minor for his expenditure
3. Final distribution to minor when minor reaches majority
II. LIEN
A. Definition
Right of lienor to possess and retain personal property he improved or enhanced in value
as security for payment by lienee of all charges for the improvement or service
B. Conditions that Must Be Met

1. Debt arises from services performed on the property
2. Title is in the debtor (lienee)
3. Possession is with the creditor (lienor)
C. Classes of Liens
1. General lien—right to retain all property as security
2. Special lien—right to retain specific property as security
APPROACH TO PERSONAL PROPERTY 3.
III. BAILMENTS
A. Definition
Relationship created by transfer of possession of personal property by the bailor to the
bailee for accomplishment of a certain purpose
B. Elements
1. No transfer of title
2. Bailee must return the property to bailor
3. Bailee obtains physical custody with intent to exercise control
4. Bailee must consent (although in few situations there is constructive or involuntary
bailment where agreement of the parties is implied)
5. Bailee must have knowledge of presence of property
C. Bailee’s Rights in Bailed Chattel

1. Exclusive possession during bailment, even against owner of property
a. Rights of action:
1) Trover
2) Trespass
3) Replevin
2. No use of bailed goods without express contract with bailor or a presumed intention
D. Bailor’s Rights in Bailed Chattel

1. Actions against bailee where, due to bailee’s wrongful act, goods were lost or
damaged
a. Damages for breach of contract
b. Damages for destruction of or harm to the bailed goods
c. Conversion
d. Replevin to recover the bailed goods
E. Bailee’s Duty with Respect to Bailed Goods

1. Bailee’s duty of care
a. Bailee must exercise due care but is not an insurer of bailed goods
b. Type of bailment may determine degree of care:
1) Sole benefit of bailor—only slight diligence, liability results from gross negli-
gence
2) Sole benefit of bailee—great diligence, liability results from slight negli-
gence
3) Bailments for hire and pledges are for mutual benefit, and ordinary due
care is required
4) Trend is away from classifications and toward consideration of whether
bailee exercised ordinary care under all circumstances
2. Burden of proof is on bailee to prove due care
4. APPROACH TO PERSONAL PROPERTY
3. Contractual provisions to limit bailee’s duty of care allowed but strictly construed
4. Absolute liability if bailee:
a. Departs from terms of bailment
b. Breaches agreement to insure
c. Fails to redeliver
1) Absolute liability for improperly delivering bailed chattel to someone other
than bailor
2) Exception by some courts when delivery is to one holding indispensable
instrument
3) Exception for involuntary bailee who is not negligent
5. Conversion makes bailee an insurer and liable without regard to negligence
IV. COMMON CARRIERS
A. Requirements
1. A holding out to perform service for those who apply
2. The carriage must be for hire
3. The service must be one for carriage
B. Liability for Loss or Damage of Goods Shipped

1. Common carrier is generally insurer of the goods
2. Liability commences when goods are expressly or impliedly delivered to and
accepted by carrier for immediate transportation
C. Passenger Baggage
1. Carrier not generally liable for baggage in passenger’s control or possession

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PERSONAL PROPERTY

I. REAL AND PERSONAL PROPERTY DISTINCTIONS . . . . . . . . . . . . . . . . . . . . . 1

a. General Rule—Trespasser Cannot Recover . . . . . . . . . . . . . . . . 11

2) Lienor Must Add Value . . . . . . . . . . . . . . . . . . . . . . . . . 26

C. BAILMENT DISTINGUISHED FROM OTHER TRANSACTIONS . . . . . . . . . . . 32

1. Bailee’s Duty of Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

I. REAL AND PERSONAL PROPERTY DISTINCTIONS

II. ACQUISITION AND LOSS OF RIGHT OR TITLE TO PERSONAL PROPERTY

a. Requirements for Protection

2) Work Must Be New

a. Money and Negotiable Instruments

b. Owner Intended to Transfer Title

c. Owner Represented that Possessor Has Authority to Sell

6. Burden of Showing Title

C. LOST, MISLAID, AND ABANDONED PROPERTY

1) Distinguish from Lost

2. General Rules for Lost or Mislaid Property

a. Finder of Lost Property

1) General Rule—Finder Entitled to Possession Except Against True

2) Exceptions to General Rule

b) Highly Private Locus

(1) Private Place

(2) Public Place

b. Finder of Mislaid Property

c. Rights and Duties of Possessor

2) Duty to Find Owner

3) Duty of Due Care

3. Uniform Unclaimed Property Act

1. Accession by Innocent Trespasser

a. General Rule—Trespasser Cannot Recover

b. Original Owner’s Remedies

1) Damages for Conversion

c. When Original Owner Is Limited to Damages

2) Great Increase in Value

2. Accession by Willful Trespasser

b. Original Owner’s Remedy

F. ADVERSE POSSESSION—STATUTE OF LIMITATIONS

b. Open and Notorious

c. Hostile and Adverse

d. Exclusive and Continuous

c. Tolling the Statute

2) Defendant Out of Jurisdiction

3. Bona Fide Purchaser of Stolen Goods

a. Effect of Suing in Trover

b. Who Can Sue?

c. Who Can Be Sued?

1. Gifts Inter Vivos

1) Intent to Make a Present Gift

2) Promise to Make a Gift in the Future

3) Donative Intent Applies to Title

a) Actual Physical Delivery

c) Delivery by Written Instrument

(2) Physical Delivery Possible

2) Donee Already in Possession

3) Gift Through Agent

4) Special Problems in Delivery

(1) Check of Donor

(2) Check of Another

indorsed by the donor for proper negotiation, the manual delivery

d) Life Insurance Policy