Business Law- Ch. 20 PDF

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chapter 20 business law
Prof. Fichtenbaum...

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Business Law Chapter 20: Personal Property and Bailments Personal Property Personal property in context  Property refers to rights that individual may possess in piece of land or that thing or object. o Includes rights of any person to possess, use, enjoy, and dispose of thing or object of value  Real property- land and all rights in land. o Ex: oil tanks; things attached to earth, buildings/trees  Personal property- property that is movable or intangible, or rights in suck things o Ex: intellectual property: writings, computer programs, inventions, trademarks.  Personal property consists of: o Whole or fractional rights in things that are tangible and moveable (like furniture/books) o Claims and debts  Choose in action- intangible personal property in nature of claims against another, such as claim for accounts receivable or wages. o Intangible property rights  Ex: trademarks, copyrights, and patents Title to personal property  Acquired in different ways: o Gift, finding lost property, occupation, and escheat o Ex: property is commonly purchased; governed by law of sales  No title is acquired by theft o Theft acquires possession only, and if thief makes sale/gift of property to another, latter acquires only possession of property o True owner may reclaim property from thief or thief’s transferee Gift     

Title to personal property may be transferred by voluntary act of owner without receiving anything in exchange Gif- title to an owner’s personal property voluntarily transferred by party not receiving anything in exchange. Donor- person making a gift Done- recipient of gift Donor can give gift b/c of things done has done in the past or is expected to do in the future o Not deemed consideration and don’t alter “free” character of the gift

Inter vivos gift  Ordinary gift that is made b/t two living persons  Inter vivos gif- any transaction that takes place b/t living persons and creates rights prior to death of any of them.  Takes effect when donor: o Expresses an intent to transfer title o Makes delivery, subject to right of donee to disclaim gift within a reasonable time after learning that it has been made  B/c no consideration for gift, no enforceable contract o Intended donee can’t sue for breach of contract if donor fails to complete gift.  Intent: intent to make gift requires intent to transfer title at that time o In contrast, intent to confer benefit at future date is not sufficient intent to create any right in intended done o Delivery of property without intent to make gift doesn’t transfer title  Delivery: required to make gift will be an actual handing over to done of thing that is given o Symbolic delivery/constructive delivery- delivery of goods by delivery of means of control, such as key or relevant document of title, such as negotiable bill of land o Failure to meet “delivery” requirement will result in an ineffective gift o Completed gift is made when decedent mails a certified check to done prior to his death, even though check is received after decedent died  Donor’s death: if donor dies before doing what is needed to make effective gift, gift fails o Agent/executor/administrator of estate can’t perform missing step on behalf of decedent. Gifts causa mortis  Gif causa mortis- gift, made by donor in belief that death was immediate and impending, that is revoked or is revocable under certain circumstances.  Conditional gift and donor is entitled to take property back if: o Donor doesn’t die o Donor revokes gift before dying o Donee dies before donor Gifts and transfers to minors  When custodian holds property for benefit of minor under one of uniform acts, custodian has discretionary power to use property to support minor, but custodian may not use property for own personal benefit.  Gift is final and irrevocable for tax and all other purposes on complying with procedures of acts  Under uniform acts, custodianships terminate and property is distributed when minor reaches age 21 Conditional gifts  “This car is yours when you graduate” o Gift is subject to condition precedent — graduation

 Condition precedent must be satisfied before any gift/transfer takes place  “This car is yours unless you drop out of school” o Gift is subject to condition subsequent — dropping out of school  Absent a finding of an intent to create trust, donative transactions will be analyzed as gift subject to conditions  Most courts regard engagement ring as conditional gift subject to condition subsequent of failure to marry Anatomical gifts  Persons may make gifts of parts of their bodies o Like kidney transplants  Persons may make postdeath gifts  Uniform Anatomical Gift Act permits persons 18+ to make gifts of their bodies or any parts thereof o Gift takes effect on death of donor o Gift may also be made, subject to certain restrictions, by spouse, adult child, parent, adult brother/sister, or guardian of deceased person Finding lost property  Personal property is lost when owner doesn’t know where it’s located but intends to retain title to or ownership of it  Person finding lost property doesn’t acquire title but only possession  Finder of lost property is required to surrender property to true owner when latter established ownership o Finder is entitled to retain possession as against everyone else Finding in public place  If lost property is found in public place (like hotel), then finder is not entitled to possession of property  Finder must give it to proprietor or manager of public place to keep it for the owner  Exception doesn’t apply if it appears that property was not intentionally places where it was found o That case, not likely that owner will recall having left it there Statutory change  Some states have adopted statutes permitting finder to sell property or keep it if owner doesn’t appear within stated period of time  Finder is required to give notice to attempt to reach owner Occupation of personal property  Title to personal property may be acquired by occupation, by taking and retaining possession of property Wild animals  Not owned by any individual if living in state of nature  Person who acquires dominion/control over wild animal becomes its owner in absence of restriction imposed by game laws

If animal is killed/captured on land of another while hunter is on land without permission of landowner, animal, when killed/captured, belongs to landowner not hunger. Abandoned personal property  Deemed abandoned when owner relinquishes possession with intention to disclaim title to it  May be acquired by first person who obtains possession and control of it  Person becomes owner at moment of taking possession of abandoned personal property  Abandonment occurs only when owner voluntarily leaves property Conversion  Tort of conversion has its origins in ancient common law writ of trover created “as remedy against finder of lost goods who refused to return them”  Tort of conversion was limited to property that could be lost and found (tangible as opposed to real property) 

Escheat  Escheat- transfer to state of title of decedent’s property when owner of property dies interstate and is not survived by anyone capable of taking property as heir  Most states have statute providing for transfer of unclaimed property to state government Multiple ownership of personal property  Severalty- ownership of property by one person o When all rights in particular object of property are held by one person  Cotenancy- when two or more persons hold concurrent rights and interest in same property o Various forms:  Tenancy in common  Joint tenancy  Tenancy by entirety  Community property Tenancy in common  Tenancy in common- relationship that exists when two or more persons own undivided interests in property  Form of ownership by 2+ persons  Interest of tenant in common may be transferred/inherited, take becomes tenant in common with others Joint tenancy  Joint tenancy- estate held jointly by two or more with right of survivorship as b/t them unless modified by statute  On death of joint tenant, remaining property take share of deceased tenant  Last surviving joint tenant takes property as holder in severalty  Joint tenant’s interest may be transferred to third person, but this destroys tenancy

o If interest of one of two joint tenants is transferred to third person, remaining joint tenant becomes tenant in common with third party  If no words of survivorship are used, transfer of property to two or more persons will be construed as creating tenancy in common Tenancy by entirety  Tenancy by entirety/entireties- transfer of property to both husband and wife  Differs from joint tenancy in that it only exists when transfer is to husband and wife  Right of survivorship can’t be extinguished if one spouse’s interest can’t be transferred to third person  Only creditor of both husband and wife under same obligation can obtain execution against property  Tenancy by entirety is, in effect, a substitute for will b/c surviving spouse acquires complete property interest on death of other Community property  Community property- cotenancy held by husband and wife in property acquired during their marriage under law of some of states, principally in southwestern US  Some statutes provide for right of survivorship; others provide that half of property of deceased husband or wife shall go to heirs of that spouse or permit such half to be disposed of by will.  Prima facie- evidence that, if believed, is sufficient by itself to lead to particular conclusion

Bailments 

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Bailment- relationship that exists when personal property is delivered into possession of another under an agreement, express or implied, that identical property will be returned or will be delivered in accordance with agreement Bailor- person who turns over possession of property Bailee- person who accepts possession of property Bailments may take many forms in our society Law of bailments also applies to resolution of ownership and possession rights of historical documents and manuscripts

Elements of bailment Agreement  Bailment is based on agreement  Agreement may be expressed or implied  Contains all elements of contract  Bailment transaction consists of: o Contract of bail o Actual bailing of property  Usually no requirement that contract of bailment be in writing

Subject of bailment may be any personal property of which possession may be given o Real property can’t be bailed Delivery and acceptance  Bailment arises when, pursuant to agreement of parties, property is delivered to bailee and accepted by bailee as subject to bailment agreement  In absence of prior agreement to contrary, valid delivery and acceptance general require that bailee beware that goods have been placed within bailee’s exclusive possession or control. 

Nature of parties’ interests  Bailor and bailee have diff legal interests in bailed property Bailor’s interest  Bailor is usually owner, but ownership by bailor is not required  Sufficient that bailor have physical possession Bailee’s interest  Bailee has possession of property only  Title to property doesn’t pass to bailee, and bailee can’t sell property to third person  If bailee attempts to sell property, such sale transfers only possession, and owner may recover property from buyer Classification of ordinary bailments  Ordinary bailments are generally classified as being for: o Sole benefit of bailor o Sole benefit of bailee o Mutual benefit of both  Bailments may/may not provide for compensation to bailee  On basis of compensation, bailments may be classified as: o Bailments for mutual benefit- bailment in which bailor and bailee derive benefit from bailment o Gratuitous bailment- bailment in which bailee doesn’t receive any compensation or advantage  Bailments for sole benefit of bailor or bailee are sometimes described as gratuitous  If bailment is made to further business interest of bailor, as when something is loaned free to customer, bailment is not gratuitous  Constructive bailment- bailment imposed by law as opposed to one created by contract, whereby bailee must preserve property and redeliver it to owner o When this duty is delegated to private contractor to tow and store, constructive bailment for mutual benefit of contractor and owner exists Renting of space distinguished  When person rents space in locker or building under an agreement that gives renter exclusive rights to use that space, placing of goods by renter in that space doesn’t create bailment, for it doesn’t constitute delivery of goods onto possession of owner of space

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Renting safe deposit box or space in bank vault does create bailment

Duties and rights of bailee  Bailee has certain duties concerning performance, care, and return of bailed property  Bailee must perform his part of contract and is liable for ordinary contract damages for failure to perform contract  Bailee is under duty to care for bailed property, and duty of care owed differs according to classification, based in terms of “benefit”  Bailment may be for the sole benefit of the bailor  Most bailments are mutual benefit bailments  Bailee’s lien- specific, possessory lien of bailee upon goods for work done to them; commonly extended by statute to any bailee’s claim for compensation, eliminating the necessity of retention of possession o Bailee who is authorized by statute to sell bailed property to enforce charge or claim against bailor must give such notice as is required by statute o Bailee who sells without giving required notice is liable for conversion of property Breach of duty of care: burden of proof  True nature of liability is not contractual at all but based on tort principles  When bailor sues bailee for damages to bailed property, bailor has burden of providing that bailee was at fault and that such fault was proximate cause of loss  Prima facie right of bailor to recover is established, but by proof that bailor delivered property to bailee in good condition and subsequently couldn’t be returned by bailee or was returned in damaged condition o Bailee has burden of proving that loss/damage wasn’t caused by bailee’s failure to exercise care Liability for defects in bailed property  In case of mutual benefit bailment, bailor must not inform bailee of known defects but also make reasonable investigation to discover defects  Bailor is liable for harm resulting in such defects o If bailment is for sole benefit of bailee, bailor must inform bailee of known defects Contract modification of liability  Ordinary bailee may limit liability (except for willful misconduct) by agreement or contract  If bailee seeks to limit liability for its own negligence, wording of contract must clearly express this intention so that other party will know what is being contracted away  In some states, statutes prohibit certain kinds of paid bailees from limiting their liability for negligence  Statutes in some states declaire that party can’t bar liability for negligent violations of common law standards of care where public interest is involved...