► Listen on DSound
► Listen from source (IPFS) In this presentation, we will discuss personal property. At the end of this we will be able to:
• Describe types of personal property
• Define and discuss lost property, misplaced property, and abandoned property
• Explain what constitutes has a gift
• Describe laws related to stolen property and
• Define and discuss the concept of bailment
Personal property can be broadly defined as anything that can be owned, typically excluding real estate. When we think about personal property we break that out into two major components, one being the tangible personal property, and the other being intangible personal property.
Tangible personal property is anything that we can touch. Tangible means that we can touch, and it is something that we could move around typically. That's going to be something like a TV, something like a computer, something like a car or a truck. These are all things that are going to be tangible types of personal property.
The other major component of personal property is going to be intangible personal property, and these are going to be things that we don't touch we can't really touch typically things that we have a future claim to oftentimes a future claim to money. If someone owes us money regarding a note that is owed in the future that would be a form of intangible property. Something like accounts receivable or something is owed to us under an insurance policy under the contracts of the policy. Those would be situations where we are owed something in the future due to a past transaction. We have an expectation of being able to receive typically the money within the future and therefore there is value.
Intangible property owned by one individual, one individual has claim to property, we call that severalty. When property is owned by two or more individuals then we call that cotenancy. Clearly, when the property is owned cotendency, when there's more than one owner, that's going to be the more complicated type of situation.
There are a few different types of situations that we can own property in coteteancy including tenancy and common, joint tenancy, and community property. The distinction between property that is tenants in common and property that is joint tenants is going to be important because it relates to what happens to the property or one of the principal components is what happens to the property after the death of one of the individuals who has part of the cotenancy is part of the owners of the property.
Under tenants in common, that means that at the death of one of the individuals that are cotenancy have tenants in common own part of the property then that property would pass to their heirs. Whatever portion they have would then be passed on in accordance with their wishes, in accordance to if they set up a will, the will that would be set up.
When we talk about joint tenants however that would mean that the individuals after death it wouldn't go to the heirs. It would then go to the other tenant. In other words, at the point of death if there's two individuals that own a piece of property and we talked about joint tenants then the other individual that is still surviving would then have the piece of property that was owned out by the individual who passed away which is why property that's held in joint tenancy as often calls up joint tenants with the right to survivorship meaning the survivor of the property will then have the claim to the property at the time of death of the other people that owned the property under the joint tenants agreement.
The concept of community property is one that has to do with a marriage agreement. For the states that have community property and there currently are nine of them that would mean that anything that was purchased or most anything purchased during the marriage would be community property and be the property of both individuals. When we think about community property, we can kind of think of it as if in the form of marriage. We go from two individuals to by law in many situations one individual, so the married couple is now considered to be one couple, one individual, one essence. Community property lines up with that type of idea in that now whatever is purchased during that or earned or accumulated during the time of marriage would be that one entity's property and therefore be community property and would belong then equally to both the people involved within the marriage.
What that means then is upon death if there were death of the spouse if there's no will then their share would be passing to the surviving spouse within the community property states. There are other implications that are with the community property states that will differ from states to states that do not recognize the community property and the states that do recognize community property include Arizona, California, Idaho, Louisiana, Nevada, and New Mexico, Texas, Washington, and Wisconsin.
If an individual finds lost property, for example, if we were to find a valuable ring in the gutter in the street somewhere then we would typically have a responsibility to look for the owner of that property and then if we could not find the owner of that property with a some type of reasonable search then under most states the ring would then belong to or they lost property would belong to the finder. Posting an article in a newspaper is typically a way that we could show that we looked for an individual. We also may under today's world have some type of digital post to show and search for the owner. If no owner, then is able to be found then the property typically would be reverted under most states as property of the finder.
If we were to find that same ring not in the street but and say something like a restaurant on a booth of a restaurant or on the table of a restaurant then we would think that that ring is not yet lost but misplaced, meaning the owner of the ring would then maybe recall where they were to locate the ring and therefore we can't take possession of the ring. We should not take possession of the ring but possibly give it to the proprietor of in this case the restaurant in that case rather than take possession ourselves. If on the other hand, we find it somewhere that is very unusual. If we find it you know in the doorway or something like that then it may be more likely that the it wasn't misplaced and the owner wouldn't be able to go back and locate where it was and therefore we may in those circumstances be able to take possession of it ourselves and go through the process of lost property to go through the process of looking for the individual ourselves with an article and or some type of post and if we could not reasonably find the individual then considering it lost property most states will revert it to the finder.
Abandoned property of property that's considered to be left or discarded by the owner and the owner then having no intention of reclaiming the property.
A gift is one form of transfer of personal property. Personal property is often then gifted or transferred in the form of a gift. To qualify as a gift one individual or party must give it to another individual or party and the other party must then accept the gift. We call the person giving the gift the donor. The donor must intend to give the gift to the done, the donee being the receiver of the gift. The gift must be delivered to the donee from the donor and the done, the receiver of the gift, must then accept the gift for a gift to qualify as a gift.
The concept of what is a gift and what qualifies as a gift seems pretty straightforward and in most cases it is but it's also going to be very important to distinguish what is a gift versus what is not a gift because if something is going to be some type of negotiation process then there's got to be a compensation that was received and it might then indicate that there should be some revenue that should be reported and possibly some tax transactions or tax effect for that.
If a gift is given to a minor, there's also going to be some issues as well. For example, if we have wealthy individuals with higher tax brackets they an incentive to put some money into the name of possibly their children to take advantage of lower tax brackets. In other words, if we put a substantial amount of money into say an account that would generate revenue dividends or interest possibly then that revenue could be taxed at a lower rate than it would at the parent’s rate. That could give a strong incentive to put money, a substantial amount of money possibly that would be gifted. The idea here of course is that if we were to do that from a tax planning standpoint that we wouldn't want a miner to be in control of that much money. That wouldn't really make a lot of sense. It's probably only happening in most cases just to get a lower tax rate and the parents still want to maintain control over that money.
The Uniform Transfers to Minors Act basically makes it clear that we have to have that money that would be given to the miners that is intended for the use of the miners and typically has the money that is going to be claimable by the miners at some point possibly at the point that they reach adulthood at some point in the future they may then have access to the money. That within guarantee that the money or be closer to guaranteeing that the money is indeed a gift and then has a purpose of a gift for the use of the miner and that could be accomplished with some type of trust. If we were to put a trust in place, we can say well we're not going to we're gifting it to the miner, but we don't want the miner to have complete control over it and often these types of things have to do with control. Who has control over the money? Who can use the money? Do the parent maintain control over it or has it really transferred to the miner in some way and one way you can try to deal with that is to say we're going to put it into a trust which is to the miner. However, we don't want to give them full access to it. Possibly we'll give them full access to it at some point in the future.
In a case where personal property is stolen, we have a situation where the person who owns the property, who has possession of the property, is not the person who has title or claim to the property. The default type of course would be that the person who has physical possession does also have title to the property, but it is possible in some cases such as the case of theft for an individual to have ownership of the property but not have title of the property and it is then, of course, possible for someone to have possession of the property but not have title of the property. Clearly, if the stolen property should be reclaimed or can be reclaimed if it was reclaimed from the person who originally stole it. A more interesting or confusing type of situation is one where the person who stole it then sells it in good faith to another individual. If someone purchases stolen property and purchases it even in good faith it's still a situation where it's not the purchasers property because the original owner never relinquished property or their property rights the title to the goods and therefore it is still a situation where if the original owner was to find the property, even if sold to another individual in good faith, they knew they had no awareness that it was stolen property, it should then still be something that would be reclaimed by the original owner because they had never relinquished their title to the property.
The concept of a bailment refers to a situation where we relinquished control of some form part of our personal property to another with the intention of them then returning that property at a later point in time. This actually happens all the time, but we never really used the term bailment but whenever we do something like we take our car in for service so if we take our computer in for some service we expect that the car be returned at some point in the future and our computer to be returned at some point in the future. The same is true if we have a valet take care of our car. We expect to receive the car back at some point in the future and typically we make these types of transactions, and there's nothing to them. However, if there is a problem. If there's a case in which we receive our car back and there's a problem with it, then we want to know what the law is related to bailments.
The person who transfers the property. In our case the individual who was dropping off the car for service would be the bailer and the person to whom the property is transferred in this case that would be the service station that is receiving the property would then be named the bailee. We can categorize bailments depending on that the specific circumstances within the bailment process. For example, a Mutuu bailment would be an example where the property is going to be loaned out, used up, and then replaced in some way as it is returned. For example, if we were to rent a car use the gas lane within the car, typically we would need to replace the gasoline when returned in the car, so we've used it up and replace it with some like-kind type of property.
We can also have a gratis bailment, and that's going to be a situation where there's a lack of consideration, meaning property is transferred from one person to another without asking for any type of payment, and therefore we have no consideration within that type of situation, no payment for the bailment process.
We also have situations where we have bailments for the sole benefits of the bail or the person who is giving the property. In this case, we have a more of a one-sided type of transaction. For example, we can imagine a situation where possibly we're giving our coat to a bailor in order to hold on to it and that's going to be a service and we don't have any kind of payment needed although there probably would be a tip but in essence it would be a free type of transaction and the only benefit being then to the bailor in that transaction or in that bailment or in that service.
The opposite type of situation would be bailments for the sole benefit of the bailee. In other words, the bailey the person receiving the goods or services it would then be the sole beneficiary of that type of situation that type of bailment
Then we have mutual benefit bailment when both parties to the process they both the bailee and bail or are going to benefit from the bailment.
When considering situations when there are bailments for the sole benefit of the bailor meaning the person loaning or giving the property over to the bailee then the bailee does have responsibility for the safekeeping of that property but only a slight care responsibility. In other words, they would have to be not grossly negligent, and that is a slight care because they're not receiving any benefit so they don't have the type of level that of care that they may have or would have if they were receiving compensation in order to care for the property.
On the other hand, if we're talking about bailments for the sole benefit of the bailee then the person receiving the property is receiving benefits and therefore are due to a greater level of care within this bailment process, a level of great care within the bailment process. In other words, they can be held responsible if they are not holding up to the degree of slight negligence.
When we're talking about a mutual benefit bailment, we're talking about a situation where both the bailee and bailor benefit from the bailment process. The bailee is due to a reasonable care level of care. We'd have to have reasonable care in this process. They are receiving compensation but it's more of a mutual type of compensation rather than a one-sided compensation, and that means the degree of care that a reasonable prudent person would use under the same circumstances. We have that term of reasonable person what a prudent person would use and of course, that's language that can be interpreted a bit differently but it's as specific as we can make it. Within reason within what a normal person within what a reasonable person would expect. They have to be held to then the ordinary negligence level rather than the slight negligence level. In other words, if they had no benefit from the bailment process, then they would have to be held grossly negligible. If they were the only benefit to the process, then they would have to be held to the degree of slight negligence. Even if we determined that they were slightly negligent in that case in other words, they can be held responsible. In the case of mutual benefit we're looking for ordinary negligence. A situation where we had bailments for the sole benefit of the bailor we had gross negligence that they could be held accountable for. We're going to lower the threshold here and say if we are up to the level of slight negligence then they could be held accountable for liability.
Within mutual benefit bailment, those bailments with both the bailee and bailor benefiting from the bailment process then the bailee, the individual that's going to be responsible for the care of the property, who has received the property, must show reasonable care over the property, which means the degree of care that a reasonably prudent person would use under the same circumstances. The level of negligence that they would have to show to be held accountable we're going to say is ordinary negligence.
A consignment is going to be an example of a bailment as well, and a consignment is a case where we have one individual giving goods to another individual for that second party to then sell the goods for the first individual and take some form of profit within the sailing profits. That means that there's going to be a bailment with mutual benefit here and it would then fall under the responsibilities of the mutual benefit of reasonable care and be subject to ordinary negligence by the Bailee.
An example a consignment might be if we were a painter in town or an area and we wanted to our paintings possibly into say a local restaurant to be displayed in the restaurant for free to the owner of the restaurant but also having the option to sell those paintings within the restaurant. Therefore the owner the restaurant gets to show the paintings and then would sell the paintings and possibly take a profit of the paintings and give the rest of the profits to the owners of the paintings. In that case, the owner still owns the paintings even though they are in the restaurant. They're basically loaning the paintings to the restaurants in this case both to be used and then to be sold, and that's going to be the process.
When considering bailment cases court cases, we consider the term burden of proof. The term burden of proof has a few different meetings and can refer to who is responsible for providing the burden of proof in this case the proof of negligence or not having negligence within the case of a bailment case typically a case where we have property that was damaged then the question would be: was their negligence? was there simple negligence? was there gross negligence within that case? Who has the proof or burden of proof to prove that? The second form of the burden of proof is how much proof would be needed to either prove negligence or prove that there was no negligence within that situation?
Most courts shift the burden of proof to the bailee the person who had control over the goods and one rationale for that would be that the bailee is going to be the one who has the most information about what happened. In other words, if there's a case about damaged goods or stolen goods that happened during a bailment process, then the person who has the most information over that is the person who was actually owning or possessing but possessing the goods at the point in time that it was lost or damaged. That would then be the bailee so the bailee would typically be the person defending in that case and trying to prove that there was no either no negligence in some form. Whether that be simple negligence, ordinary normal negligence, or gross negligence depending on what the case may be in terms of the type of bailment that was involved. It’s up typically then to the Bailee to provide the level of proof necessary to prove that there was no negligence that resulted in the problem that happened either the lost inventory or the damaged inventory within the bailment.