Bailor

A bailor is a person who trusts another person to keep property safe until that property can be returned to its owner. This agreement is usually established under a contract of bailment. The bailor is not always the owner of the property, but may instead be entrusted by the owner of the property. An example of a bailor is someone who holds on to someone’s missing prized possession, like a piece of jewelry, until the owner is found. To explore this concept, consider the following bailor definition.

Definition of Bailor

Noun

  1. Someone who delivers an item of personal property to another person, under a contract of bailment, while retaining ownership.

Origin

1595-1605       Anglo French

What is a Bailment

A bailment is a term used to describe the legal relationship between a bailor and a bailee. In a bailment, someone transfers the physical possession of personal property (the “bailor”) over to another person (the “bailee”). A bailment relationship is formed when someone gives property to another for the purpose for safekeeping.

A bailment is different from a sale or a gift of property because it concerns only the transfer of possession, and not ownership. The property is also typically off-limits to the bailee in that he is not permitted to use it while it is in his possession, though this is not a requirement.

There are three types of bailment that can exist:

  • A mutually beneficial bailment for the bailor and the bailee
  • A bailment that solely benefits the bailor
  • A bailment that solely benefits the bailee

Bailments that mutually benefit both parties exist when there is an exchange of services between the parties. This is known as a “constructive bailment.” For instance, when a parking garage is in possession of a car for the purposes of repairing it, the owner will ultimately pay for that repair. The car’s owner benefits, because his car is fixed, and the garage benefits after receiving payment for services rendered.

A bailment that benefits the bailor only is one wherein the bailee acts out of the goodness of his heart. For example, the bailor may need to leave something like a car with a bailee while he is out of town. The bailee agrees to watch the car for the bailor without any promise of compensation, such as money or a gift, in return. The bailee is simply agreeing to do the good deed without expecting anything in return.

Similarly, a bailment that only benefits the bailee occurs when the bailor acts in a way that does not benefit himself. Perhaps the most common example of this kind of situation is a library lending a book to a patron. The library, or bailor, does not benefit from this transaction, but the patron, or bailee, certainly does. Bailments that only benefit one party to the relationship are called “gratuitous bailments.”

Bailor and Bailee

A bailment is defined by the intent of the bailor to give temporary possession of the property into the bailee’s care, and the intent of the bailee to accept responsibility for the property. For example, when a person gives the keys to his car to a valet, he is entrusting his car into the valet’s care. The car owner is the bailor, and the valet is the bailee.

Once the bailor’s business is complete, however, and he returns to the parking garage, the bailor must return the car to the bailor, as he does not own the car. This is different from parking a car in an unattended parking garage, because the garage does not “intend” to possess the car, whereas a valet does.

Terms of a Bailment

There are three types of relationship that a bailment can spawn, and these are determined by the terms of a bailment.

Voluntary vs. Involuntary

In a voluntary bailment, the bailee is responsible for the goods he is in possession of. Conversely, in an involuntary bailment, the bailee takes possession of the goods without intending to do so. For instance, a voluntary bailment occurs when someone leaves goods with someone with the expectation that he will receive a service, like leaving a shirt with a dry cleaner and expecting the dry cleaner will clean it. The bailee (the dry cleaner) must keep that shirt safe until the bailor can reclaim it within a reasonable amount of time.

In an involuntary bailment, one person takes possession of someone else’s property by mistake, such as when someone loses his car keys and another person finds those keys on the street. In this example, the bailor rightfully expects the bailee to protect those keys until they can be properly returned to their rightful owner. The terms of the bailment here are implied by law.

For Consideration vs. Gratuitous

In a “for consideration” bailment, the bailee is held to a higher standard because he is accepting a fee, or some other compensation, in exchange for holding on to the bailor’s property. This is another situation wherein a car valet would be a good example.

Valets are not always paid per se for their services, but they do often receive tips, and tips will not be given for subpar service. This is an incentive for the valet to do a good job so he can potentially receive a benefit when he returns the car to its rightful bailor.

A parking lot, however, is a gratuitous bailment because it provides a service without expecting something in return. A parking lot does not necessarily hold responsibility over the cars in its lot, depending on the rules of the jurisdiction in which it resides, yet it still provides a service to the bailor who leaves his car in that lot.

Fixed Term vs. Indefinite Term

A fixed term bailment is a bailment that comes with a specific time limit. A bailor can leave his property with the bailee, but he must retrieve it within the period specified. If he fails to do so, the property is considered abandoned, and the terms of the bailment dictate that the bailee then becomes the rightful owner, and can do whatever he wants with the property.

A bailment with an indefinite term, however, is not constrained by a set time limit. However, should the bailor want to dispose of the property, he must give the bailee adequate notice of his intention. If the bailee still refuses to pick up his property, the property is considered abandoned and the bailee forfeits it to the bailor.

For instance, a bailor who leaves property in a bank safe and does not pick it up within a certain period, or after the bank gives him notice that it wishes to get rid of the property, will then sacrifice his property to the state. In the case of a storage unit, a bailee may require the bailor to sign a contract that specifies that the bailee can dispose of the property to satisfy overdue rent.

Bailor Example Involving a Towed Car

Sam Gilchrist, the owner of Gilchrist Towing Company in South Carolina, housed vehicles that his company towed. One day, Mark Hadfield, a medical student, went to retrieve his 1988 Lincoln Continental from the parking spot where his wife had parked it. However, she had accidentally parked the car on someone else’s private property, and the car had already been towed by Gilchrist’s company by the time Hadfield got there.

Gilchrist towed Hadfield’s car to his facility, which was secured by a chain link fence around the area. Gilchrist also employed an employee to be present on the lot 24/7 to keep an eye on the cars. Part of the employee’s duties was to periodically leave the office to check on the storage area, which was located a good distance away from the main office.

Hadfield called Gilchrist’s company to get his car back, but he was told he would have to wait until the next morning to pick it up. He was informed that he would also be responsible for paying the related towing and storage fees. Hadfield did exactly that when he went to pick up his car the next day, but when he went to the storage area to retrieve his car, Hadfield saw that it had been significantly vandalized.

The vandals had gotten into the storage area by cutting a hole in Gilchrist’s fence. In addition to stealing Hadfield’s radio and smashing the car’s windows, the vandals had also ripped electrical wires out of the dashboard. Hadfield’s car never functioned properly again after this incident, as it depended heavily on computers to function.

Hadfield attempted to persuade Gilchrist to pay for the damages, but Hadfield’s efforts were fruitless. He was ultimately forced to leave the car on Gilchrist’s lot because he simply could not afford to repair it. After 60 days had passed, Hadfield sold the car for $1,000 and sued Gilchrist for the damages.

At trial, Hadfield called an Assistant Manager from another company to the stand. The witness testified that the damages Hadfield had incurred amounted to approximately $4,000. The magistrate ruled that Gilchrist was liable for the damages as the bailee of Hadfield’s car, and entered a judgment against him in the amount of $4,035.00. Gilchrist appealed to the Circuit Court, which affirmed the lower court’s decision.

The case was then escalated to the Supreme Court of South Carolina. The Court was tasked with determining the type of bailment that existed in this case. Here, the Court ruled that a constructive bailment was created in that both parties benefitted from the relationship. Gilchrist benefitted from the fees associated with towing and storage that the customer must pay before he could get his car back, and Hadfield benefitted from getting his car back after paying those fees.

Determining the type of bailment that existed was pertinent to assigning the appropriate level of responsibility to the bailee. In this case, the Court affirmed the Circuit Court’s decision, stating, “We find a constructive bailment, for the mutual benefit of Hadfield and Gilchrist, was created,” and that the bailee in this case needed to show that he used “ordinary care” in his storage and safekeeping of the property. The Supreme Court affirmed the circuit court’s ruling, and the judgment entered against Gilchrist Towing Company.

Related Legal Terms and Issues

  • Damages – A monetary award in compensation for a financial loss, loss of or damage to personal or real property, or an injury.
  • Intent – A resolve to perform an act for a specific purpose; a resolution to use a particular means to a specific end.
  • Judgment – A formal decision made by a court in a lawsuit.
  • Personal Property – Any item that is moveable and not fixed to real property.

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