Personal property includes rights that are intangible, such as accounts receivable or intellectual property such as a patent or trademark. It also includes movable property. Movable property includes things you can touch, such as furniture, car, and a computer. Personal property does not include rights in real property (i.e., land, things embedded in land, such as gasoline tanks, and things attached to the land, such as buildings).
Title can be acquired in different ways:
- Acquiring by purchase is probably the most common way we think of acquiring title.
- Gift.
- Finding lost property.
- Transfer by a nonowner.
- Occupation (i.e., taking and retaining property).
- Escheat.
GIFTS
A gift involves transferring title by voluntary action of the owner without receiving anything in exchange. A gift of property is a:
- passing of title;
- made with the intent to pass title;
- without receiving money or value in consideration for the passing of title.
Gifts can be classified as:
- Inter vivos gifts;
- Gifts causa mortis.
- Gifts and transfers to minors.
- Conditional gifts.
- Anatomical gifts
The donor is the person making the gift, and the donee is the person receiving the gift. A gift may be made as a result of something the donee has done, but this is not consideration unless receiving the “gift” is a condition of doing something – then it is not a gift.
An inter vivos gift is what we think of as an ordinary gift between two persons. An inter vivos gift is made if a donor intends to convey all rights to the property at the present time and delivers the property to the donee. The gift takes effect upon the donor’s intent to transfer ownership and making delivery. The donee can refuse the gift. If there is no acceptance, the gift is not complete. Delivery ordinarily involves handing the gift over to the donee. This can be accomplished by physically delivering the gift or by symbolic delivery. An example of symbolic delivery would be delivery of keys to a car (the means of control) – symbolic of giving the car to someone. Giving a deed to a house to someone can be symbolic delivery of the real property.
An inter vivos gift must be made before the death of the donor or it will fail.
A gift causa mortis is a conditional gift made by a donor who believes that he or she will soon die, and it is made with the intent that a donee will own the property if the donor dies. This gift is conditional, and the donee must give it back if the donor does not die; the donee dies first; or the donor takes back the gift before death.
The Uniform Gift to Minors Act and the Uniform Transfer to Minors Act (UTMA) allow property to be given or transferred to a minor by delivering the property to a custodian. Mississippi has adopted the UTMA. The custodian may use the property for the minor’s benefit, education, and support. Under these Acts, a minor is usually entitled to possession of the property at age 21. A gift cannot be revoked once it is made in accordance with these Acts.
A conditional gift transfers rights only when certain stated conditions are met. A gift may be subject to a condition precedent or a condition subsequent. For example, “This car is yours when you graduate.” Marriage and engagement gifts are generally conditional gifts. Most States allow recovery of an engagement gift only if the person seeking to recover the gift did not unreasonably terminate the engagement.
Anatomical gifts are gifts of organs or body parts. The Uniform Anatomical Gift Act allows anatomical gifts to be made by persons who are 18 or older, or by certain members of a decedent’s family.
Finding Lost Property
Property is lost when the owner does not know where property is located, but intends to find it. Another definition is, Lost property is property that an owner has misplaced without intending to give up ownership. A person who finds lost property does not acquire title to the property. At most, a finder of lost property is entitled to possession of the property until it is claimed by the owner.
Some States have statutes that permit the finder of lost property to sell or keep it after a certain period of time. Usually, these statutes require some sort of publication of notice.
TRANSFER BY NONOWNER
The general rule is that only an owner of property can transfer title. A person who does not own property cannot pass title to the property. If property is stolen, and the thief sells the property, the buyer gets possession, not title.
An exception to the above rule is that an agent of an owner can transfer title if authorized. For example, transferring property by means of a power of attorney is appropriate and will pass title to the property if the power of attorney authorizes such transfer.
OCCUPATION OF PERSONAL PROPERTY
Sometimes title may be acquired by taking and keeping possession of the property. Abandoned personal property is an example. This property is deemed abandoned when the owner gives up possession with the intent to give up ownership. For example, throwing something in the trash would be abandoned personal property.
ESCHEAT
Escheat statutes typically provide that a State owns personal property that is not claimed by anyone. These types of statutes are used in unclaimed property situations like corporate dividends, bank deposits, insurance payments, and refunds. Title passes to the government under certain conditions. Many States have the Uniform Disposition of Unclaimed Property Act.
Types of Ownership
When two or more persons have rights to an item of personal property, this is a co-tenancy. When two or more people own rights to the whole property, this is tenancy in common. Tenants in common own an undivided fractional interest in the same property. For example, my wife and I may own 100 shares of General Motors as tenants in common (and this may be designated as such on the stock). We each own 50% of the whole certificate. If I die, the remaining stock does not automatically go to her. My Will, or statutory law if I have no Will, will control who gets the 50% that I own.
It is possible for property that is owned in tenancy in common to be partited. The subject of the partition action is divided, for example, in our stock example, each party would take 50 shares.
Joint tenancy ownership means that two or more persons jointly own property. This is a similar concept to tenancy in common. The main difference is that on the death of one, the survivor automatically takes the property. For example, in our stock example, if I died, the stock automatically would go to my wife outside of the Will.
State statutes usually require the words with right of survivorship or the ownership will be deemed to be tenancy in common. If a joint tenant transfers his or her interest in property to a third party, the owners become tenants in common. In many states, the deposit of money in a joint account raises a “presumption” of joint tenancy with right of survivorship. This presumption can be overcome by satisfactory evidence.
In certain States, most property acquired by either spouse during marriage is community property. For example, in California, property acquired by a husband or wife during the marriage is community property. Some statutes provide for the right of survivorship; others provide that half of the property of a deceased spouse shall go to the heirs of that spouse or permit the half to be disposed of by Will.
Bailments
A Bailment is the temporary placement of control over, or possession of, personal property by one person, the bailor, into the hands of another, the bailee, for a designated purpose upon which the parties have agreed.
The term bailment is derived from the French bailler, “to deliver.” It is generally considered to be a contractual relationship since the bailor and bailee, either expressly or impliedly, bind themselves to act according to particular terms. The bailee receives only control or possession of the property while the bailor retains the ownership interests in it. During the specific period a bailment exists, the bailee’s interest in the property is superior to that of all others, including the bailor, unless the bailee violates some term of the agreement. Once the purpose for which the property has been delivered has been accomplished, the property will be returned to the bailor or otherwise disposed of pursuant to the bailor’s directions.
A bailment is not the same as a sale, which is an intentional transfer of ownership of personal property in exchange for something of value. A bailment involves only a transfer of possession or custody, not of ownership. A rental or lease of personal property might be a bailment, depending upon the agreement of the parties. A bailment is created when a parking garage attendant, the bailee, is given the keys to a motor vehicle by its owner, the bailor. The owner, in addition to renting the space, has transferred possession and control of the vehicle by relinquishing its keys to the attendant. If the keys were not made available and the vehicle was locked, the arrangement would be strictly a rental or lease, since there was no transfer of possession. A gratuitous loan and the delivery of property for repair or safekeeping are also typical situations in which a bailment is created.
Categories: There are three types of bailments: (1) for the benefit of the bailor and bailee; (2) for the sole benefit of the bailor; and (3) for the sole benefit of the bailee.
A bailment for the mutual benefit of the parties is created when there is an exchange of performances between the parties. A bailment for the repair of an item is a bailment for mutual benefit when the bailee receives a fee in exchange for his or her work.
A bailor receives the sole benefit from a bailment when a bailee acts gratuitously — for example, if a restaurant, a bailee, provides an attended coatroom free of charge to its customers, the bailors. By virtue of the terms of the bailment, the bailee agrees to act without any expectation of compensation.
A bailment is created for the sole benefit of the bailee when both parties agree the property temporarily in the bailee’s custody is to be used to his or her own advantage without giving anything to the bailor in return. The loan of a book from a library is a bailment for the sole benefit of the bailee.
Elements: Three elements are generally necessary for the existence of a bailment: delivery, acceptance, and consideration.
Actual possession of or control over property must be delivered to a bailee in order to create a bailment. The delivery of actual possession of an item allows the bailee to accomplish his or her duties toward the property without the interference of others. Control over property is not necessarily the same as physical custody of it but, rather, is a type of constructive delivery. The bailor gives the bailee the means of access to taking custody of it, without its actual delivery. The law construes such action as the equivalent of the physical transfer of the item. The delivery of the keys to a safe-deposit box is constructive delivery of its contents.
A requisite to the creation of a bailment is the express or implied acceptance of possession of or control over the property by the bailee. A person cannot unwittingly become a bailee. Because a bailment is a contract, knowledge and acceptance of its terms are essential to its enforcement.
Consideration, the exchange of something of value, must be present for a bailment to exist. Unlike the consideration required for most contracts, as long as one party gives up something of value, such action is regarded as good consideration. It is sufficient that the bailor suffer loss of use of the property by relinquishing its control to the bailee; the bailor has given up something of value — the immediate right to control the property.
Rights and Liabilities: The bailment contract embodying general principles of the law of bailments governs the rights and duties of the bailor and bailee. The duty of care that must be exercised by a bailee varies, depending on the type of bailment.
In a bailment for mutual benefit, the bailee must take reasonable care of the bailed property. A bailee who fails to do so may be held liable for any damages incurred from his or her negligence. When a bailor receives the sole benefit from the bailment, the bailee has a lesser duty to care for the property and is financially responsible only if he or she has been grossly negligent or has acted in bad faith in taking care of the property. In contrast, a bailee for whose sole benefit property has been bailed must exercise extraordinary care for the property. The bailee can use the property only in the manner authorized by the terms of the bailment. The bailee is liable for any injuries to the property from failure to properly care for or use it.
Once the purpose of the bailment has been completed, the bailee usually must return the property to the bailor, or account for it, depending upon the terms of the contract. If, through no fault of his or her own, the return of the property is delayed or becomes impossible — for example, when it is lost during the course of the bailment — the bailee will not be held liable for nondelivery on demand. In all other situations, however, the bailee will be responsible for the tort of conversion for unjustifiable failure to redeliver the property as well as its unauthorized use.
The provisions of the bailment contract may restrict the liability of a bailee for negligent care or unauthorized use of the property. Such terms may not, however, absolve the bailee from all liability for the consequences of his or her own fraud or negligence. The bailor must have notice of all such limitations on liability. The restrictions will be enforced in any action brought for damages as long as the contract does not violate the law or public policy. Similarly, a bailee may extend his or her liability to the bailor by contract provision.
Termination: A bailment is ended when its purpose has been achieved, when the parties agree that it is terminated, or when the bailed property is destroyed. A bailment created for an indefinite period is terminable at will by either party, as long as the other party receives due notice of the intended termination. Once a bailment ends, the bailee must return the property to the bailor or possibly be liable for conversion.
Common Carriers
Common carrier refers to a person or entity in the business of transporting goods or people for hire, as a public service. A private carrier, in contrast, is employed to transport good for people for specific needs on an individual case basis. For example, city buses are a common carrier, as opposed to a private carrier such as a moving company which is hired on a one-time basis. A common carrier runs according to a regular schedule on a designated route.
Under common law rules, a common carrier is generally liable for all losses which may occur to property entrusted to his charge in the course of business, unless he can prove the loss happened in consequence of the act of God, or of the enemies of the United States, or by the act of the owner of the property. Common carriers are publicly licensed to provide transportation services to the general public.
Strict Liability: Common carriers are absolutely liable, regardless of negligence, for all loss or damage to goods in their possession, except if it is caused by an act of God, an act of a public enemy, an order of a public authority, an act of the shipper, or the nature of the goods.
Limits to Liability: Common carriers can limit their liability to an amount stated on the shipment contract. The shipper bears any loss occurring through its own fault or improper crating or packaging procedures.
Connecting Carriers: When connecting carriers are involved under a through bill of lading, the shipper can recover from the original carrier or any connecting carrier. Normally, the last carrier is presumed to have received the goods in good condition.
Warehouse Companies
Warehouse companies are liable for loss or damage to property resulting from negligence [UCC 7–204(1)]. A warehouse company can limit the dollar amount of liability, but the bailor must be given the option of paying an increased storage rate for an increase in the liability limit [UCC 7–204(2)].
Innkeepers
Those who provide lodging to the public for compensation as a regular business are strictly liable for injuries to guests (not permanent residents).
Hotel Safes: In many states, innkeepers can avoid strict liability for loss of guests’ valuables by providing a safe. Statutes often limit the liability of innkeepers for articles that are not kept in the safe.
Parking Facilities: If an innkeeper provides parking facilities, and the guest’s car is entrusted to the innkeeper, the innkeeper will be liable under the rules that pertain to parking lot bailees (ordinary bailments).
