BAILMENTS OF PERSONAL PROPERTY
Sec, 37. Definition of bailments. Possession of property is
often temporarily surrendered by the owner. In such cases the
person taking possession may perform some service pertaining to
the goods, after which he returns them to the owner. Upon many
occasions one person borrows or rents an article which belongs to
another. A contract whereby possession of personal property is
surrendered by the owner with provision for its return at a later
time forms a bailment. The owner of the goods is known as the
bailor, while the one receiving possession is called the bailee. From
the foregoing definition it appears that three distinct requisites of
a bailment exist. If these essentials are thoroughly understood, the
student should encounter no difficulty in distinguishing a bailment
from other contractual relationships. The three requisites are:
(1) retention of title by bailor; (2) possession and temporary con-
trol of the property by the bailee; (3) ultimate possession to revert
to the bailor unless he orders it transferred to some designated third
Sec. 38. Distinguished from a sale. It often becomes impor-
tant to determine whether a particular transaction is a bailment or
a sale. To illustrate: A surrenders possession of fifty sheep to B,
who, by the terms of the agreement, is to return to A, at the end of
a three-year period, fifty sheep of like kind, age, and weight. Is
this transaction a sale of a certain fifty sheep for fifty other sheep?
Or is it a bailment? If it is a sale and one half of the sheep die, the
loss falls upon B rather than upon A. Furthermore, creditors of B
may levy upon the sheep, provided it is a sale; whereas, if a bail-
ment has been created, only the creditors of A may assert an interest
in the sheep. A purchaser may pass title to goods purchased to a
third party, whereas a bailee has no right to pass title to goods of the
bailor unless he also happens to be acting as the bailor's agent. The
test used in the foregoing illustration to determine the nature of
the transaction is the application of the third requisite of a bail-
ment. Are the identical articles delivered to be returned to the
bailor? A close analysis of the terms of the particular agreement
shows that a delivery of fifty other sheep of like kind and character
would satisfy all requirements. Thus, a sale of fifty sheep for fifty
BAILMENTS OF PERSONAL PROPERTY 335
sheep to be delivered later has taken place; and B is a purchaser
rather than a bailee.
A mere change in the form of the property while in the hands of
the bailee does not affect the relationship. Thus, A floats logs
downstream to B, to be sawed into lumber by the latter. B is as
much a bailee of the lumber as he was of the logs.
Sec. 39. Types of bailment. Bailments group naturally into
three classes: bailments for the benefit of the bailor; bailments for
the benefit of the bailee; and bailments for the mutual benefit of
the bailor and the bailee. Typical illustrations of the first group
are found in those cases in which the bailor leaves goods in the safe-
keeping of the bailee under circumstances which negative the idea
of compensation. Inasmuch as the bailee is not to be paid in any
manner, the bailment is for the exclusive benefit of the bailor. A
bailment for the benefit of the bailee is best exemplified by a loan
of some article. Thus, A borrows B's watch to carry for the day.
The bailment is one for the sole benefit of A.
The most important type of bailment is the one in which both
parties are to benefit. Contracts for repair, carriage, storage, or
pledge of property fall within this class. The bailor receives the
benefit of some service ; the bailee benefits by the receipt of certain
agreed compensation ; thus both parties profit as a result of the bail-
Sec. 40. Degree of care required. Provided proper care has
been exercised by the bailee, any loss or damage to the property
bailed follows title and consequently falls upon the bailor. Each
type of bailment requires a different degree of care. In a bailment
for the benefit of the bailor, the bailee is required to exercise only
slight care, while, in one for the benefit of the bailee, extraordinary
care is essential. A bailment for the mutual benefit of the parties
demands only ordinary care on the part of the bailee. Ordinary
care is defined as that care which the average individual usually ex-
ercises over his own property. 1 Slight care and extraordinary care
vary from ordinary care in that the one is a lower, and the other a
higher, degree of care than ordinary care.
Furthermore, the amount of care demanded varies with the na-
ture and value of the article bailed. The care found to be sufficient
in the case of a carpenter's tool chest would probably not be ample
for a diamond ring worth $10,000. A higher standard of protection
is required for valuable articles than for those less valuable.
Property leased by the bailor to the bailee must be reasonably fit
for the service desired. For this reason it is the duty of the bailor
to notify the bailee of all defects in the property leased, of which he
'Bowen v. Isenberg Bros. Co., 1907, 22 Del. 230, 67 Atl. 152; p. 752.
336 PERSONAL PROPERTY
might reasonably have been aware. The bailor is responsible for
any damage suffered by the bailee as the result of such defects,
unless he notifies the bailee of them. This rule holds true, even
though the bailor is not aware of the defect if, by the exercise of
reasonable diligence, he could have discovered it. If, on the other
hand, the article is merely loaned to the bailee a bailment for the
benefit of the bailee the bailor is in duty bound to notify the
bailee only of known defects. 2 A bailor who fails to give the re-
quired notice of a defect is liable to any person who he might an-
ticipate would be using the defective article as a result of the bail-
ment. Employees of the bailee and members of the bailee's family
might well recover of the bailor for injuries received as a conse-
quence of the defect.
Sec. 41. Contracts against required care. Certain classes of
bailees have found it desirable to provide in the bailment agree-
ment against any liability resulting from their negligence or that of
their employees. Such a provision found in the contract of a quasi-
public bailee, such as a railway or a hotel, is illegal and, therefore,
ineffective. The ordinary private bailee, however, may insert in
the contract any provision which he desires, so long as the bailor is
willing to enter into the agreement under the particular terms. If
the latter is unwilling to accept the particular terms, he is at liberty
to contract elsewhere. Where the provision is such as to defeat the
real purpose of the contract and to shock the sense of justice of
the court, the provision will not be enforced. Thus, A stored ap-
ples in jB's private warehouse to protect them against the winter
weather. The agreement provided that they were left at the own-
er's risk. B failed to heat the building and the apples were frozen.
It was held that such a provision did not relieve B from liability.
Sec. 42. Effect of exceeding the bailment contract. The
bailment agreement governs the duties and rights of the bailee.
Should he treat the property in a different manner, or use it for
some purpose other than that contemplated by the contract, he be-
comes liable for any loss or damage to the property in the interim. 3
This result appears to be true, although the damage can in no sense
be attributed to the conduct of the bailee. To illustrate: Let us
assume that A stores his car in B's public garage for the winter. B,
because of a crowded condition, has the car temporarily moved to
another garage without the consent of A. As the result of a cy-
clone the car is destroyed while at the second location. The loss
falls upon B, as he has exceeded the terms of the bailment contract.
In a restricted sense, the bailee is guilty of conversion of the bailor's
2 Gagnon v. Dana et al., 1898, 69 N.H. 264, 39 Atl. 892; p. 753.
3 McCurdy v. Wallblom Co., 1905, 94 Minn. 326, 102 N.W. 873; p. 754.
BAILMENTS OF PERSONAL PROPERTY 337
property during the period in which the contract terms are being
Sec. 43. No right to deny title of bailor. The bailee has no
right to deny the title of the bailor unless he has yielded possession
to one having paramount title. In other words, the bailee has no
right to retain possession of the property merely because he is able
to prove that the bailor does not have title. In order to defeat the
bailor's right to possession, he must show that he has returned the
property to someone having better title, or is holding the property
under an agreement with the true owner.
Sec. 44. Definition. A common carrier of freight is defined as
one who holds himself out as being ready and willing to carry goods
for anyone who presents them. A common, or public, carrier is dis-
tinguished from a private carrier in that the former stands ready to
serve anyone desiring the service, while the latter operates under a
contact only. A common carrier usually operates between defi-
nite termini or over a definite route. A private carrier transports
freight from point to point, as demanded by his contract with the
shipper. A private carrier becomes a public one as soon as it begins
to cover definite territory at somewhat regular intervals and carries
goods for anyone desiring to ship them. An ordinary drayman is a
private carrier, but the operator of a truck between two cities on a
regular schedule would, under most circumstances, be a common
A common carrier rests under a duty to accept goods for trans-
portation whenever they are presented. It may, however, limit its
business to a particular kind of property. The mere fact that a
truck owner limits his business to the transportation of milk does
not render him a private carrier if he stands ready to carry milk for
anyone. An express company is not bound to accept any or all
personal property presented. Its business is limited to somewhat
small and valuable articles.
Sec. 45. Care required o the common carrier. The contract
for carriage of goods constitutes a mutual benefit bailment, but the
care required of the carrier greatly exceeds that of the ordinary
bailee. A common carrier is an absolute insurer of the safe delivery
of the goods to their destination. This rule is subject to only five
exceptions. Any loss or damage which results from (1) an act of
God, (2) action of an alien enemy, (3) order of public authority,
(4) inherent nature of the goods, or (5) misconduct of the shipper
must fall upon the one possessing title. Thus, any loss which re-
sults from an accident or the wilful misconduct of some third party
338 PERSONAL PROPERTY
must be borne by the carrier. For example, A, in order to injure
a certain railway company, sets fire to several boxcars loaded with
freight. Any damage to the goods falls upon the carrier. On the
other hand, if lightning, an act of God, had set fire to the cars, the
loss would have fallen upon the shipper.
Any damage to goods in shipment which results from the very
nature of the goods or from the failure properly to crate or protect
the property must be suffered by the shipper. Thus, the damage to
a shipment of fresh strawberries, caused by excessive heat during
the period of shipment, must be borne by the shipper, provided the
carrier has offered proper refrigeration.
Goods may be damaged while in the possession of either the re-
ceiving or a connecting carrier. Damages arising while goods are
being transported by a connecting carrier may be recovered by the
shipper from either of the two carriers. If the shipper files his
claim against the original carrier, it, in turn, demands restitution
from the connecting carrier.
Sec. 46. Contract against liability of carrier. A common car*
rier may not contract away its liability for goods damaged in ship-
ment by the negligence of its employees. Such a provision in a bill
of lading is illegal. It may, however, where lower rates are granted,
relieve itself from the consequences of causes or of conduct over
which it has no control. Thus, a provision which relieves a carrier
from damage caused by fire is effective, where the fire is not caused
by any misconduct on the part of employees.
Furthermore, the company may limit its liability to an agreed
valuation. The shipper is limited in his recovery to the value as-
serted in the bill of lading. The rate charged for transportation
may vary with the value of the property shipped. It is for this
reason that the agreed valuation is binding. 4
Sec. 47. Beginning of the relation. The liability of the carrier
attaches as soon as the goods are delivered to it. The receipt of the
goods is usually acknowledged by a bill of lading, which sets forth
the terms and conditions of shipment. The carrier becomes re-
sponsible for a carload shipment as soon as the car has been deliv-
ered to it. If the car is loaded while located upon railroad prop-
erty, the carrier becomes liable at the moment the car is fully
Sec. 48. Termination of the relation. The extreme degree of
care required of the carrier may be terminated before the goods are
actually delivered to the consignee. Three views prevail in this
country as to when the relationship of carrier ceases. Some states
4 Carpenter v. B. & O. R. R. Co, 1906, 22 Del. 15, 64 Atl. 252; p. 754.
BAILMENTS OF PERSONAL PROPERTY 339
hold that the duties of a carrier end, and those of a warehouseman
begin, as soon as the local shipment is unloaded from the car into
the freight house. Others hold the carrier to strict liability until
the consignee has had a reasonable time in which to inspect and re-
move the shipment. Still other states hold that the consignee is
entitled to notice and that he has a reasonable time after notice in
which to remove the goods before the liability of the carrier as a
carrier is terminated. 5 To illustrate: Let us assume that goods ar-
rive at their destination and are unloaded in the freight house.
Before the consignee has had time to take them away, the goods are
destroyed by fire, although the carrier has exercised ordinary care.
Under the first of these views, the loss would fall upon the shipper,
as at the time of the fire the railway was no longer a carrier but a
warehouseman. Under the other two views, the loss would fall on
the carrier, as the extreme liability had not yet terminated, inas-
much as no time had been given for delivery.
The carload shipment is delivered as soon as it is placed on the
private switch of the consignee or "spotted" at the unloading plat-
form. Any subsequent loss, unless it results from the negligence of
the carrier, must fall upon the owner of the goods.
Sec. 49. Rates. Rates charged by common carriers must be
reasonable. Carriers engaged in interstate business are subject to
the regulation of the Interstate Commerce Commission and all tar-
iffs or rate schedules must be filed with it. Almost all the states
have railroad commissions for the purpose of establishing rates for
intrastate business. These commissions also require tariffs to be
filed with them. Any rate either higher or lower than that shown
in the tariff is illegal. Discriminatory rates by the use of rebates
are also forbidden, and the giving or receiving of rebates constitutes
A railway may insist upon the payment of the charges at the time
it accepts the delivery. Since it has a lien upon the goods as se-
curity for the charges, however, it customarily waits until the goods
are delivered, before collecting. The carrier usually refuses to sur-
render the goods unless the freight is paid, and, if the freight re-
mains unpaid for a certain period of time, it may advertise the
property for sale. Any surplus, above the charges, realized from
the sale reverts to the owner of the goods.
An undue delay on the part of the consignee in removing the
goods from the warehouse or the tracks of the railway permits the
carrier to add a small additional charge known as demurrage.
6 Walters et al. v. Detroit United Ry. Co., 1905, 139 Mich. 303, 102 N.W. 745;
340 PERSONAL PROPERTY
Review Questions and Problems
1. A bill of lading of a common carrier contains a clause relieving it of
liability for all loss to property in transit caused by fire. A fire, caused
by the negligence of the carrier's agent, destroyed goods in shipment be-
longing to 5. Has B an action against the carrier?
2. A y a customer of B Company, laid aside an old coat while trying on
a new one. After trying on the new coat, A discovered that the old one
had been stolen from the counter where it was laid. Is B Company lia-
ble for the loss?
3. A brought B some ore to be assayed and returned to A. B learned
that the ore did not belong to A and refused to return it. A brought an
action of replevin to recover the ore. Should he succeed?
4. A takes to B's mill certain wheat to be ground into flour. After the
wheat is ground into flour, but before the flour is returned to A, creditors
of B levy upon the flour. Are their rights superior to those of A?
5. What degree of care must be used by a bailee in a mutual benefit
bailment? A rents his car to B. What type of bailment is this? Is the
bailor ever under a duty to notify the bailee of unknown defects in the
6. What is meant by an act of God? Is a carrier an absolute insurer
of the safe delivery of goods shipped?
7. A uses the property bailed to him for purposes other than those stip-
ulated in the agreement. While it is being so used, it is accidentally de-
stroyed. Assuming that the bailee was exercising due care at the time,
is he liable for the loss?
8. Goods shipped over the B Railway are damaged by fire after they
reach their destination and are placed in the warehouse. Under what
conditions may the carrier be held liable?
9. Who establishes the rate charged by carriers?