Business Law II BA 304-01: N/A
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Chapter 21 - Personal Property and Bailments - Case Problem Solutions

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Case Problem Solutions:

1. Multiple ownership. Yes, the creditor is a creditor of the marital community, and, as such, has the right to attach it.

2. Abandoned property. Marlene has no rights for Joe merely took property that had been abandoned. Marlene’s rights ended.

3. Transfer by gift. The issues were whether the $5,000 was a gift or a contract that required Carl to repay what was due. The elements for a gift include intent and delivery. The money was delivered initially as a loan without the intent. But, Joyce’s later Christmas card note qualifies as sufficient evidence of intention. Therefore, before Joyce’s death, there was an inter vivos gift with all the required elements.

4. Multiple ownership. Ruth and Stella - joint tenants with Roy and Stella. Roy and Stella - tenants in common. Roy owns 1/2 and Stella owns 1/2. Stella’s interest goes to her heirs.

5. Lost property. No. Under the common law, the finder of lost property acquires possession of the property, but does not become its owner. Although this has been modified by statute in some states, it is likely that the informal method of giving publicity to the finding of the wallet would not meet the statutory requirements. Therefore, under most finders statutes, the result would be the same as at common law. Many students will be impressed by the fact that Mona acted in a reasonable manner and will want to decide the case in her favor. You can use this case to emphasize the high priority given by the common law to the social force in favor of protecting property: The title of the innocent owner of the wallet must prevail over the claim of the honest and reasonable finder.

6. Uniform Gifts to Minors Act. Judgment was for Joan on behalf of Eden and Alexander. In order to find that an inter vivos gift has been made, there must be donative intent and delivery. The UGMA expressly deals with delivery and provides that this element of a gift is satisfied by documentary compliance with the procedures of the statute. The issue of donative intent is not conclusively resolved by determining that there was documentary compliance with the statute. However, documentary compliance with the procedures set forth by the UGMA is highly probative on the issue of intent and is prima facie evidence that a gift was not only made, but intended. Murray’s allegations do not controvert the impressive documentary evidence of donative intent.

7. Multiple ownership - joint tenancy. The signature card providing “Joint Account - Payable to Either or Survivor” created prima facie presumption that a joint tenancy was created even though the words “Payable to Either or the Survivor” did not appear on the passbook or some ledger card. The withdrawals of most of the money by one depositor does not overcome the presumption. 8. Classification of bailment; duties of bailor. The case described is a gratuitous bailment. The father loaned the weapon to his son without charge. The duty of care owed by the father to the son in this case, which is a bailment for the sole benefit of the bailee, is to inform the bailee of known defects. Because Martin knew of no defects, he violated no duty owed to his son, and he is not liable for the injury.

9. Duties of bailee. Judgment was for Welge on the counterclaim. When Baena Brothers made a contract with respect to the furniture, it was required to perform that contract according to the ordinary principles of contract law. The concept of due care, which would protect Baena Brothers if the goods were damaged by a third person, an act of God, or an accident, does not apply when the question is whether the bailee has performed the contract. Because a failure to perform the contract occurred, Baena Brothers was liable for damages for such breach.

10. Duties of bailee, contract modification of liability. Judgment for Schroeder. When a bailee attempts to limit liability by printing such a limitation on a claim check, the limitation must be called to the attention of the bailor before it may become part of the bailment contract. The limitation on the claim check was not called to the attention of the bailor, Schroeder, when he left his automobile. Notice that a lot “closes at 6:00 P.M.” does not tell customers that cars remaining after such time are left at the owners’ risk.

11. Necessity of delivery of property to give rise to bailment; return of bailed property. John gave possession of his raincoat to the restaurant at the restaurant’s coatroom, and the restaurant, through its attendant, accepted possession of the coat. In accepting responsibility, the restaurant did not seek to limit the responsibility it assumed when it accepted the coat by communicating to John any limitation on its liability. All of the elements of a bailment were present. There was delivery of possession of the bailed item, the raincoat, and the acceptance of the item by the bailee. The intentions of the parties were clear from their conduct. The bailment was for the mutual benefit of the parties, with John to receive care for his coat and the restaurant to receive John’s luncheon patronage. As such, the restaurant had a duty to provide “ordinary” care of the raincoat or “reasonable care under the circumstances”. The facts indicated that the coatroom was left unattended while the attendant was on his break. This demonstrates that the bailee, the restaurant, did not exercise ordinary or reasonable care under the circumstances. Therefore, the restaurant was liable to John for the bailed property. Because the restaurant did not take possession of Lynn’s raincoat, no bailment was ever created, and Lynn would not be successful in her suit against the restaurant. Comment: The question may be asked whether the restaurant could disclaim responsibility for loss of articles of clothing by posting a large sign at the door of the coatroom stating that the restaurant is not responsible for lost or stolen articles of clothing. What if the disclaimer appeared only on the back of a claim check? (See the general discussion on modification of liability). It is suggested that the large sign is reasonably calculated to notify the bailor of the limitation of liability prior to leaving the article of clothing and should be binding on the bailor. To the contrary, a claim check is designed primarily to identify the owner of the bailed property for the purpose of claiming the property, and a disclaimer on the back of the claim check would not reasonably notify the bailor of the bailee’s attempt to disclaim liability.

12. Elements of a bailment; renting of space. No. By parking the car himself, locking it, and keeping the keys, Rhodes retained control of the car. And with no attendant on duty and no ticket verification system in effect, the parking lot did not exercise realistic control over the car. Therefore, the car was not in the possession of the parking lot, as the ability to control property is an essential element of possessing it. No bailor-bailee relationship existed. Rhodes had a mere license to park, or a lease of parking space.

13. Elements of a bailment. Judgment for PTAR Inc. There was no delivery of the jewelry to the exclusive possession or control of PTAR Inc. and no acceptance of the jewelry by PTAR Inc. The jewelry was placed on a wall peg within the control of Newman.

14. Bailor’s implied warranty. Judgment for Cintrone. Implied warranties are not restricted to sales and apply to bailments for hire. Because Hertz was in the business of renting trucks, it should have foreseen that a person renting a truck would rely on Hertz to have the truck in a safe condition and that the lessee would not inspect the vehicle to ensure proper operation. Hence, there was an implied warranty by Hertz that the truck was fit for its normal use. That warranty would continue for the duration of the lease would run in favor of third persons, such as employees of the Hertz customer and not be limited solely to the leasing customer.

15. Bailee’s duties; duty of care. The Mississippi court held the clothing manufacturer liable as a matter of law for damage to its customer’s fabric caused by a leak at the manufacturer’s facility and the lease held the manufacturer responsible for maintenance. The manufacturer did not establish ordinary care with respect to the fabric.

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