CHAPTER XXI. BAILMENTS. SECTION I. Bailment defined.-Bailment is a delivery of goods to another in trust, upon a contract, express or implied, that the trust shall be duly executed and the goods returned to the bailor, or dealt with according to his direction, as soon as the purposes of the bailment have been accomplished. It is a very important branch of the law, defining the duties and liabilities in many of the most common transaction of life, such as the borrowing, lending, hiring and keeping of chattels, and the carrying or working upon them for another. The term "bailment" is derived from the French word "bailler", meaning "to deliver", hence that which is delivered to another, usually for one of the purposes above mentioned, is said to be bailed to him. The one who delivers the thing is called the bailor; and the one receiving it, the bailee. The relation of the parties becomes such that the bailee cannot dispute the title of the bailor or dispute the legality of the bailment after it has once been made. A bailment must be distinguished from a sale. Generally, if the identical thing is to be returned, it is a bailment; if another thing of equal value, or its value in money, is to be returned, it becomes a sale and the title to the property passes to the party receiving it. Thus, if A loans B a horse and B is to return the same horse, it is a bailment, but if B is to return any horse as good as the one loaned, it is not a bailment but the title to the horse passes to B and B becomes indebted to A for a horse. There is one exception to this rule in the case of grain or similar commodity deposited in a warehouse or elevator. In such transactions, if there is no agreement to the contrary, the identical grain need not be returned, but only grain of like quality; nevertheless the ware houseman is only a bailee. There may also be a bailment where the goods are to be re-delivered in a different form, as where A delivers a quantity of logs to B to be sawed into boards, B receiving one-half of the boards as compensation; this is a bailment and not a sale. Kinds of bailment. There are many kinds of bailments, and while no classification can be made which includes them all, most of them fall within one of the following three classes: 1) Those for the benefit of the bailor; 2) those for the benefit of the bailee; 3) those for the mutual benefit of the bailor and bailee. It is important to determine under which of these classes a bailment comes, as the degree of liability involved is fixed accordingly. The subject will be considered under these three heads, and the relation of the parties discussed as well as space will permit. Degrees of care.-1) If the bailment is one for the benefit of the bailee alone, the bailee receiving no compensation for his services, the bailee is liable only for gross negligence or breach of good faith; he is required to exercise slight care. Where a person, in the presence of imminent danger to another, has a duty to perform to prevent such person from being injured, and with knowledge of the danger and present means and capacity to prevent it, rashly, recklessly or wantonly fails to do what he can to prevent such injury, his conduct is grossly negligent. 2) If the bailment is one for the sole benefit of the bailee, he is liable for slight negligence, and is required to exercise extraordinary care. Slight negligence is an absence of that degree of care which persons of extraordinary prudence and foresight are accustomed to use. (3) If the bailment is for the benefit of both parties, the bailee is liable for ordinary negligence and is required to exercise ordinary care. Ordinary negligence is the want of such care as persons of ordinary prudence observe, or the mass of mankind observe in the same or similar circumstances. What constitutes "ordinary care" in respect to property, depends upon the character, value and situation of the property; the question in that case being what care would usually be exercised by men of ordinary prudence in respect to property of the same kind, and similarly situated. It is a relative term, and denotes the degree of caution which would be exercised by a person of ordinary prudence under the particular circumstances ot the case. Bailment for the benefit of the bailor.-In this class of bailments the bailee is liable only for gross negligence or breach of good faith. The consideration which gives validity to a gratuitous bailment is that the bailor suffers disadvantage on the faith of the bailee's undertaking. The gratuitous bailee can be held responsible for not performing or badly performing the trust he has undertaken, but not for failing to accept the trust and performing according to the naked promise. - Deposit. A deposit is a delivery of property to another to be kept and returned when desired, without compensation. A deposit must be such that the identical property is to be returned, otherwise the relation of debtor and creditor arises. Thus, in a Wisconsin case, where the money of A was left for safe keeping with B with the understanding, not that the identical money shall be kept for and returned to him, but only that a like sum shall be repaid by B, this was held not a bailment or special deposit, but a general deposit in the nature of a loan and B is absolutely liable to A for an equal amount, although the money may have been lost without his fault. No one is obliged to become a bailee against his will, and the relation may be terminated by the bailee by tendering the property to the bailor and giving him a reasonable time to remove the same. The bailor may demand a return of the property at any time, but cannot sue before a demand was made and the return of the property refused. The bailee is entitled to any reasonable expense which he may have incurred in the preservation of the property. Mandate.-A mandate is where one undertakes without compensation to do some act for another in respect to the thing bailed. The labor and service are the principal object of the parties, and the thing bailed is simply accessorial. If the bailee does not enter on his trust, he is not liable for his failure, but if he undertakes to perform, gratuitously, some work or service relating to it, and actually enters upon the execution of the business, then he is bound to use a degree of diligence and attention suitable to the undertaking and adequate to the performance of it. Thus, where A handed a sum of money to B requesting him to take it to a certain bank, and pay it to the cashier and have it credited upon a note in the bank, and B took the money agreeing to do so, but handed the money to the bank teller on the street and it was not paid in at the bank, or credited on the note, but was lost to A, B was liable to A for the amount. The degree of skill required depends upon the circumstances of the case. The bailee has a lien on the bailed article for any expense incurred in the preservation of the same. It is the duty of the bailee to return the thing itself to the bailor, together with all the increase or profits thereon, if a return is contemplated. Bailment for the benefit of the bailee.-This is a gratuitous loan of properpy to another to be used by him for a time without recompense to the lender. The borrower is required to use extraordinary care and is liable for the slightest negligence, but if such care has been exercised, any loss occurring to the subject of bailment thereafter, is that of the bailor. The bailee is no insurer of the property. A gratuitous loan is considered a personal trust, unless the contrary appears. Thus, if A loans his coat to B, B cannot loan it to C, as A might not be willing to loan the coat to C. Under these circumstances, if anything happened to the coat while it was in the hands of C, B would be absolutely liable for it. And where A loaned a safe to B and B returned the safe, but refused to give up the combination, B was held liable. Otherwise, the general principles of bailment apply. Bailment for the benefit of both parties.-This is the class of bailments most common in daily affairs. Under it come the subjects of pledge, bailments for the hire of things, and bailments for the hire of services. The contracts of carriage, warehousemen, and innkeepers also belong under this head, but their liabilities are different and these important subjects will be treated separately. SECTION II. PLEDGE. Pledge or pawn.-This is a delivery of goods by a debtor to his creditor to be kept by him until a certain debt or obligation is discharged. The contract of pledge may be oral and the delivery of property as security is sufficient consideration. It is a bailment for the benefit of both parties, and the bailee is liable for ordinary negligence and is required to exercise ordinary care. A pledge differs from a chattel mortgage in that in the former a special property only passes to the pledgee, the general property remaining in the pledgor, while in the latter, the legal title passes conditionaly to the mortgagee; in a pledge the possession of the property passes to the pledgee, while in a mortgage it usually remains with the mortgagor. All goods and chattels may be the subject of pledge, including choses in action; in fact, it may be generally stated that whatever may be assigned may also be pledged. Thus, a certificate of stock can be pledged, and this may be done by delivery of the certificate indorsed in blank by the owner as security for a debt, without entry of the transfer of the legal title on the books of the corporation but if stock in a corporation is held by a person in his own name, and appears on the books to be so held, he is liable as a stockholder, whether he holds the stock as collateral security or as his absolute property. In such a case, he would have the right to receive dividends and vote the stock. Property by law exempt from execution may also be pledged, and the pledgor thereby waives his right to claim the property as exempt. In order to have a pledge, some claim or obligation must exist between the parties to cover which the pledge is given. The proceeds of collaterals pledged to secure a specific debt can only be applied to the payment of that debt. Only by agreement can it be made to cover obligations not yet incurred. The contract to pledge may be, and usually is, oral, but there must be an actual or constructive delivery of the property pledged, to the pledgee. Such a delivery as the nature of the thing will admit of, however, is sufficient. A symbolic delivery, as by the transfer by delivery and indorsement of a bill of lading, warehouse receipts, bonds, notes, etc. is sufficient, and in a Wisconsin case it was held that a mere transfer of a warehouse receipt for flour in a warehouse, which instead of running to bearer, was "deliverable only on return of this receipt," created a pledge, it being shown to be the custom that they were transferred without indorsement. Good faith on the part of the pledgee does not render the pledge valid in the absence of the delivery of the possession, either actual or constructive. As a general rule, agents, trustees, and bailees cannot pledge the property held by them as such unless they have express authority. If a principal empowers his factor to purchase and retain a negotiable warehouse receipt, or transfers to him the possession of same, the factor has power not only to sell, but to pledge the receipt to one dealing with him in good faith. Mere notice that he holds as factor is not notice of any limit of his power so sell |