♪ [music playing] >> all rise please. department one of the orange county court is now in session. the honorable russell a. boss is the judge presiding. >> your honor, we feel that the plaintiff in this case has utterly failed to establish the necessary grounds on which it would be entitled a judgment. we think there are two basic reasons for this. first of all-- >> counsel, do you have any other witnesses or evidence you wish to produce at this time? ♪ [music playing] >> do you swear to tell the truth the whole truth and nothing but the truth so help you god? >> i do. >> you may be seated. please state your full name, spelling your last name for the record.

>> property can be broadly classified in two ways: as personal property or as real property. real property includes land; interests in land; and all things that are permanently attached to the land such as: buildings, storage facilities, trees, and fixtures. personal property is any property other than real property. it may be divided into two categories. the first of these is tangible personal property --property that can be moved, felt, tasted, or seen, like a coat, a piece of furniture, or a company's products.

the other type of personal property is called intangible personal property-- property that can't be physically possessed or held in one's hand, like copyrights, patents, trademarks, or a firm's goodwill, as reflected in a company's balance sheet. while it's important to a businessperson to fully understand what personal property is, the different types of personal property, it's even more important to know how personal property can becquired and protected. >> there are a number of ways that personal property can be acquired. one meth is through the original creatn of the property, the original development of the property. this is true whether you're talking about a painting; or whether you're tking about an iention and then gaining a patent on it; a copyright from writing a so or a book or a movie.

the person takes whatever that was there before and comb it into a new form or takes something that wasn't therbefore and creates it, and in doing so, acquis ownership rights in that property. >> you can also acquire title by voluntary transfer. someone can make a gift to you, and it can be either an in vivos gift, where someone gives you the christmas gift, the birthday gift, and that's a transfer of title of personal property to you. or it can be a testamentary transfer, where someone dies and leaves you their car, their clothing, their silver, any jewelry th they might have. those are examples of testamentary transfers of title of personal property. there's also another form of transfer that's called a gift causa mortis, and that's a gift in contemplation of death. and there--in every state there are certain requirements for making a valid gift in contemplation of death,

because it is a way around a will. when someone doesn't have a will and is on the deathbed and makes a gift to someone, you have to comply with certain requirements. but it is a valid transfer of title. finally, you can acquire title to personal property involuntarily. it can be an involuntary transfer of title to the property. for instance, you might find propertyt's be or misla. the distction er twlost pperty, or misla. crsthat t true ner d't really kno where he put the property or where hlosthey. in mislaid propey, the owner ually puts it down and intendback r anckt up perhap wre he put it down or forgets to pick it up sometimes proptycan be ab.

people whobandon propty, though, givetheir ownership intest. ey put it away with thentt that they don't want it ain, wheawith mislaid pperty or lost proper, the propty later on. [narrator] >> another way to acquire property by involuntary transfer is through process called acceson. this occurs when someone takes property he or she and sells it to someone, who, in turn, adds a stereo. when the original owner gets the car back, this individual also gets the stereo by accession. >> there was an excellent case where a fabric company was making custom-made drapery material for a business, and accidentally got the shipmes crossed, and shipped the wrong drapery fabric to a drapery manufacturer. and not understanding the differce or that there w

much difference een thlor and the fabric, the drapery manufacturer went ahead and de thepes. anthe orinal buy, who wanted his custom-made fabric, then wanted the material back, but the title had transferred due to the fact that the individual had put work into it although it did not belong to them; the original fabric, they'd put work into it, and thereby the process called accession, then gained title to the property. >> there are, perhap rarer sewherpropera- ople can acquire rig prorty that somewunusl. wh it sa. in essce, it a it's a mixi up to t point at youan't strahten

evything out. an example we: i mix a bushel of corn that i've harvested with a bushel of corn myeighbohas harvested. and we both grew the same types of corn; they both, in essence, look alike. and when they're all mixed togeer, i cannot pick out the corn that was originally in mbushel basket, and my neighbor can't pick out the corn that was originally in their bushel basket. th's confusn. both ous sti have our intest in our-- the corn, buw we would, if we divvd it up again, thenldy t bausl cor and my neighr would ge back a bushel of corn, but obviouslwe wld t back some ofach. i wouldn'geback t origin cthat i h [narrator] >> an owner of personal property has certain rights by vtuof being an owner. for exampl the right to keep the property or sell it; the right do with the property

what he or she pleases; to use it personally or to invest with it. in the case of a business, the property can have value as a revenue producer or as an asset to the company. this is a critical point, because if the pperty or its title is lost, a business owner can also lose the revenur asts the propty pr. to avoid this, personal property must be protected. if t oer fails to take adequate steps to protecthe prorty, it may taken by someone else. foexample, one way in which an owner can lose property is through what's known as escheat. escheat provides that if the rightful owner cannot be located, that ps's property can be taken by the government. at first glance, it may seem highly unlikely that aone would simply forget about or abandon property. but it's something that happens with surprising frequency. newspapers often publish long lists of inactive bank

accounts--accounts that have essentially been abandoned by their owners. if the owner of such an account doesn't eventually materialize, the proceeds in that account will be transferred--not to the bank in whose custody the funds have been, but to the state, on the grounds that the state is more deserving of the property than anyone else, apart from the actual owner. another way in which an owner can lose property is through a judicial sale. this can happen when an individual or a business loses a lawsuit and is ordered by the court to make a payment to the other party. if that payment isn't made, the property of the debtor may be seid and sold to satisfy the debt. to makpayments otheir car as specified in their contractual agreement, the lien holder may repossess their property. but property can also be lost if it's used as collateral

to secure a loan on something else. in the case of ridgeway hardware, cash flow was always a problem. and as a result, loans were an ongoing part of business life. in order to secure these loans, the owners of the store, mike and phil ridgeway, used inventory as collateral. for the 28 years that ridgeway hardware was in business, this never proved to be a problem. but with the emergence of chain stores in the area, ridgeway steadily lost market share, until business finally got so bad that the ridgeway brothers were unable to make critical loan payments that were due. and eventually, the bank took the inventory that had been pledged as security for the loan. one final way in which an owner can lose personal property is through what's called conversion. this refers to situations in which someone without authorization simply takes the personal property of the owner, or at least assumes control over it.

this is considered unjustified interference with the owner's use and control of the property. one example of conversion involved the widely reported use of a trade name without the owner's permission. in this case, a small town newspaper wanted to use the name "small street journal" which closely paralleled the name of the well-known business newspaper. the court determined this was conversion because the local newspaper was, in essence, attempting to capitalize on the good name and reputation of the larger, better known financial daily. to prevent this from taking place, or to at least discourage it, property owners need to protect their possessions; and the same need for protection applies to companies who are working on the development of new products. one recent case involved a brilliant computer programmer named rolf considine, who worked for tricode incorporated, a major software developer. considine pioneered a startling breakthrough

in telecommunicatis software, and asked tricode for a share of the expected profits. while tricode appreciated considine's effort company policy stated that any software development done by employees during their stay at tricode was the property of the company. so rolf considine resigned his position with tricode, determined to take his expertise with him and manufacture the program on his own. fortunately for tricode, they had secured a copyright on the program before considine decided to go off on his own. whenever ts kind of conversion occurs, the company in question needs to protect itself. it can do so by preventing the former employee from establishing ownership of the product whose development the company itself may well have financed and patented or copyrighted. so to sum up, escheat, judicial sale, rossession, and conversion are four of the ways by which property owners can lose their property.

there's another legal term, known as a bailment, that applies to personal property; not when property is lost, but en it's entrusted byhewn tsomeone else as when the owner of aicycle takes her bik to a store for repairs. a bailment is t a sale of property, a permanent transfer propey. e neof the bicle r example, wl wa hebike bk te i's en fixed. a banto ocr, e neof the bicle the owcondiol wa the bailor, generay the owner of the property, must retain title. in the case of the bike, a bailment wouldn't exist if the bike owner sold her bicycle to the shop owr. 's so necessary tt possession of the proper be delivered to the baee e rs who receives thpr. agcl ase ne 't ly drop the bikeff when theicyclehop islod orn there's no bailee pre to receive the prope

thilee must al accept possession of the property. a standard receipt, haed to a customer by a shop owner, do mthcustomer with the item. it also estaishes that the bailee, the store owner, has accepted the propert delivered the bailor, the cuomer. the bailee must take possession for a specific purpose, such as to make repairs, and must have temporary control of the property. finally, the parties must intend that the property will be return to the bailor unless the bailor directs trty iv to s ee. enli's good ideao the bailor unless the bailor directs that both bailor and bailee understand the duties and liabilities involved. >> when a bailment occurs, the bailee has a duty to use reasonable care in taking care of the property, and to return the property to the bailor at the end of the bailment period.

if the bailor returns and requests the property, and the bailee cannot return it, the bailee will be liable to the bailor for that property unless the property was destroyed or damaged through no fault of the bailee-- possibly through the fault of the goods themselves, possibly through the way they were packaged, or through the act of some foreign enemy or some act of nature-- otherwise, the bailee will be liable for those goods. [narrar] he degree of reasonable care required dends onhe typofaient,whether 's mt bailment, a bailment solely for the benefit of the bailor, a blment ly for e benefit of the bailee. >>f it ia bailnt soly for e benefit of the bailee-- for exple, the bailee borrows your car, the bailee uses your golf club-- -in those situations it's solely for the bailee's benefit,

and in that case, there's a great duty of care imposed because the bailor gains nothing from it and the bailee is expected to use the highest degree of care in watching over the personal property. >> i might ask my neighbor if i can borrow their car that mine is broken down and i need to get to work. and generally i don't--it isn't like renting a car, it's strictly a bailment that is created for my benefit, and i'm the bailee. and so i think we would anticipate, in that type of situati, that a very hh duty ocare; at must take very exeme prtion inms of ottion of thaproperty. d ifomethi hpe to tt operty e'esptn ategli the wardt prer enow gr iig ateglinot ha b but usi'inontrol of dinth pd ofe,

beted then iave tose a verghegre of cartordthotecon of that operty othother hand, i'm going out of town an oto and cancar in your dreway, and you ree and y're notoing torica that is a bailor benefit. ini'm the or becsed you ree andmy carnotoing you're sring it r mes a favor. hauty ofgh cad u' onlli s neglen. icould be that my neighbor asked me to keep their dog while they're going on vacation for a week. i have a fenced backyard and so it's not going to inconvenience me that much, and so i put the dog in my backyard. well, that is a bailment situion as well. although you might not think of an animal as property in that sense, it really is. and during the course of a week,

i have to use reasonable care to take care of the dog. but at the same time, the duty towards that property is significantly different because the bailment isn't primarily to benefit me as a bailee, 'prary mnehbor; and't reiving anythiotheth, perhaps, the goodwill ofy neighbor. t mm tes of bai are mualit baients. this is a contra between the bailor andaie in whichailor getting a benit, the bailees getting a benet; e bailee here s a ty ofsonae care for the type of ods inlved >> for example, if yr car is bei repaired, that's a bailment. you get your car repaired, the mechanic gets paid

same thing with jewelry repair. so in that situation, both parties stand to benefit. in that case, the bailee owes a duty of ordinary care, and that's the reasonable man standard. how would a reasonable man take care of your car if it were left here? and if they meet that level of care, then they're not liable for the losses that result. >> if i take a flight to another city rather than drive. i get to the other city and i need a car. and i rent a car from a car rental agency. that is a mutual benefit bailment. i'm expected to use the car in the manner for which it's designed. i'm not supposed to go out and drag race with it; and if i do, i'm going to be liable. i'm supposed to just use it for regular transportation. and if i do that, aside from normal wear and tear, if i don't have any accidents, i will not be liable. if i'm going out of town for a substantial time period and i want someone to store my furniture because i'm moving

out of my apartment, and i tell them they can use it in exchange for storing it, that's a mutual benefit bailment. if they're using the furniture and it gets a minor scratch or a dent or some such inormal wear and tear, there will not be any liability. if i come back and my furniture has all been smashed and destroyed because somebody was dancing on it, then there would be liability--that's not using it in a manner for which it's intended. [narrator] >> while there is a duty of reasonable care associated with any bailment, a bailee can attempt limit his or her liability. undeno circumstances, however, can the bailee completely avoid any liability. >> most commonly, a bailee will try to limit through the contract. th'll some rm of limitatioof liability in the contract. the courts don't tend favor a baile who limits his liability. yohave to look to the localtatutes to see if a bailee may mit his liability.

u have to look at w we he communices this attem to limit in the ctract. is this something conspicuous that the bailor saw, is this some finerint that wasn't well communicate because with a failure to communicate, the attempt to limit will be ineffective. so you'reoi to have to look at the val ofhe bailed itemlocal custom, the contract itself, and the conspicuousness or lack thereof ofhe attempt to disclar limit liability in the bailment to seef the limitation is valid. >> let's say i s an aiort d i was, perhaps, had carry-on luggage that was heavy, and i had a four-hour layover, and so i look for a locker to put that luggage in. and so i didn't find a locker, but i found a room where they would take my luggage and, in exchange,

they gave me a little ticket. and so i went off and enjoyed myself while waiting in an airport for a while, and i came back with my ticket and-- to claim my luggage --and it wasn't there. and so they weren't able lugg what can i do? well, the airport basically says, look at your ticket, and my ticket says their liability is limited to $25. all i could see was just a number. i didn't have my glasses on, but i could read the big number and not that fine print on the other side. in most of those tes ofituas, theai and a ilee w wants to fectivy lit liily muste aware that the ilor is informed

on the limation or exclusion the te thcoraentereinto [narrato >> in theory, it wld a aen a rhttuat in fact, hower, the question of whether or not there's a bailment can be difficult to answer. >> it was one of thoseays when nothing seemed to go righ i was running late for a meeting that was really important. traffic was unbelievably backed up. and when i finally got there, with maybe 30 seconds to spare, i couldn't nd a parking space anywhere on the street. and, of course, they didn't have a lot. anyway, i finally found a lot about a block away. and i let e attendant pa my car, i left my keys with him, and he handed me my ticket stub. and i ran off to my meeting. end of the day, i walk back to the lot, went to put my briefcase in the trunk of my car, and there was a huge dent in it. neless to say, i wasn't eased. >> the thing as, nobody's trying to say her car wasn't damaged.

e says the dent wasn't there when she brought the car in that y. i don't have any proof one way or the other. so, you know, let's take her at her word and figure she's telling the truth. even if it happened while the car was in our lot, it was not our fault. i mean we can't be responsible for every driver who comes barreling through there. you ought to see the way some people drive. i tried to explain that to her. i was real polite and everything. and she acts like we owe her a new car or something. and then when i pointed out that we have a sign there that says we're not responsible for loss or damage to property, she really blew up at me. i mean i can understand that she'd be upset, but all she had to do was read the sign. it's not like it was hidden or anything. e didn't like it that we wen'ing toake responsibility for what happened to her car. my feeling is she should have gone and parked somewhere else. [narrator] >> while the parking attendant may have felt pam belsky was out of line, ms. belsky herself felt quite

differently, and ultimately deded to pure thkeestion, of crs is oere wasedy a ilment involved; and, if so, was the parking lot liable for damages to belsky's car. >> the parking lot owner would argue that this situation does not create a bailment at all. belsky was simply renting space at the posted rate of $5.00 per hour. >> this is clearly not just a property rental. a bailment was created, and all the requirements of a bailment were met. first, belsky retained title to her car. second, she delivered the car to the parking lot. third, the parking lot accepted possession of the car when the parking lot attendant gave belsky her ticket stub. fourth, the parking lot retained control of the car by keeping the keys in order to park the car. and finally, they returned possession of the car to belsky at the end of the bailment. >> but even if a bailment were created, the parking lot would still not be responsible for the damages to belsky's car.

there was a sign clearly posted in the parking lot, visible to all customers, which waived responsibility of the parking lot for any damage to customers' cars. >> since there was a bailment, the parking lot is responsible for the damage. they had a duty to take reasonable care of belsky's car while it was in their possession. since they had the keys to the car, they could have moved it to a safer place if that were necessary. moreover, the sign waiving liability was not specifically pointed out to belsky when she left the car in their possession. therefore, the parking lot is responsible for the damages. >> most courts would agree that a printed ticket stub or a posted sign may not adequaly inform a bailor of a baie's liability limitations unless such limitatns e ecificly pointed out to the blor or are so vious that the bailor should have noced the limitations. inam belsky's case, e court was not convinced that the parking lot gave adequate notice

of the limitation, so the court ruled in belsky's favor. regardless of who benefits from a bailment--whether bailor, bailee, or both, reasonable care must be given to the property. because personal property has value in its own right, as well as in business for the revenue it can produce, that propert must be protected; not only against loss by conversion, judicial sale, repossession, or escheat, but against damages caused by those who wish to enjoy the benefs of a baient without accepting the liabilities. ♪ [music playing]

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