SCHOOL OF LAW
LAW OF BAILMENT
ORVILLE W. COOLIDGE
Circuit Judge of the Second Judicial Circuit of Michigan
AMERICAN CORRESPONDENCE SCHOOL OF LAW
CHICAGO, U. S. A.
AMERICAN CORRESPONDENCE SCHOOL OF LAW
ORVILLE W. COOLIDGE.
Orville W. Coolidge was born in Edwardsburg, Cass County,
Michigan, in 1839.
After passing through the grammar schools, he entered Michi-
gan University where he graduated in 1863, and later on in due
course graduated from Harvard Law School in 1865 with the
degree of LL.B.
After graduating, he immediately entered upon the practice of
law, locating at Niles, Michigan. His practice steadily grew and
he participated in many important lawsuits, meeting with
marked success. In 1893 he was singled out by his fellow prac-
titioners and selected as Circuit Judge of the Second Judicial
Circuit of Michigan.
When his term of office expired, he was re-elected. Again,
acknowledged by all to be one of the most efficient and popular
udges, in 1905 he was re-elected, this time without opposition,
and is now serving his third term.
His career on the bench has been marked with distinction and
his opinions have always been painstaking and respected.
His service on the bench of nearly sixteen years has given him
a distinction scarcely equalled by but few lawyers.
His lecture on Bailments, delivered to the students of the
American Correspondence School of Law, carries with it not only
the expression of ripe experience, but also the thought of one
who has throughout life maintained a high character for integrity
and fidelity to the trust bestowed upon him.
LAW OF BAILMENT
Bailment, which, is derived from the French word>
"bailler," "to deliver," is denned as a delivery of per-
sonal property by one party 'to another, to be held ac-
cording to the purpose or object of the delivery and to
be returned when that purpose is accomplished, or other-
wise dealt with according to the directions of the Bailor.
The party delivering is called the "Bailor" and the
party receiving, the "Bailee." The principles of the
English Law of Bailment were first systematically and
tersely expounded in the famous opinion of Chief Justice
Holt, one of the most eminent and enlightened of the Eng-
lish judges in the case of Coggs vs. Bernard two centuries
ago. In Lord Campbell's Lives of the Chief Justices of
England, the author says that "in a short compass Holt
expounded the whole Law of Bailment with admirable
clearness and accuracy." The fundamental doctrines of
the Law of Bailment as laid down by Holt still remain to
a large extent the law both in England and the United
States, although the Law of Bailment has since been ap-
plied to new conditions which did not exist in Holt 's time,
and its general scope and field of operation have been
greatly enlarged. The immense increase in the develop-
ment of new methods and facilities of handling and trans-
porting goods and chattels in recent years have made the
Law of Bailment one of great importance.
Questions requiring nice discrimination and clear in-
vestigation are constantly arising, growing out of the
complicated transactions involved in the transportation
and management of personal property by transportation
6 American Correspondence School of Law
companies, by land and by water, by express companies,
wharfingers, warehousemen, banks and other classes of
The object of this Review of the Law of Bailment is
to give simply a general view of the fundamental princi-
ples of the common law governing the relation of Bailor
These principles have to some extent been modified
by statute in different states and the rights and liabilities
of certain classes of Bailees have been lessened or ex-
ESSENTIAL ELEMENTS OF A BAILMENT.
The Contract may be oral or written, express or im-
plied by law where no express agreement exists. It is
essential to constitute a contract of Bailment that the
title to the property delivered shall remain in the Bailor.
In this respect a Bailment differs from a sale, for while
the title to the property in the latter passes to the vendee,
in the former it remains unchanged in the Bailor. The
Bailee is under obligation to return the Article bailed to
the Bailor, or to deliver it according to his directions at
the termination of the Bailment. In a sale there is no
obligation on the part of the vendee to return the specified
article, but the party receiving it may return another
thing of equal value in the form of money or otherwise.
It is not always essential that the Bailee should return
the identical article received by him to the Bailor. Thus
when grain is deposited in a warehouse or elevator, to be
commingled with other grain, the Bailee may, according
to the custom of trade, return an equal amount of grain
of the same kind and grade.
So the article returned may not in certain cases be
identical in form with that received. Thus materials may
be sent to be manufactured into goods to be returned. So
Law of Bailment 7
the delivery of milk to be manufactured into cheese and
butter for the people constitutes a Bailment.
When property is received by one person from another
with the understanding that the former may purchase it
on certain terms and conditions and that if he pays for
it within a certain specific time he shall become the owner,
but that if he does not pay for it within the specified time
he shall pay for the use of the article, the contract is one
of Bailment and not of sale.
KINDS OF DEPOSIT.
According to the most common classification there are
five kinds of Bailment, viz. : Deposit, Mandate, Gratui-
tous Loan, Pledge or Pawn, and Bailments for Hire.
Deposit is generally defined as a naked Bailment of
goods and chattels, which are to be kept for the depositor
without reward, and to be returned whenever the deposi-
tor demands it.
Mandate occurs when it is agreed that the Bailee shall
do some particular act with regard to the article deliv-
ered to him without reward.
Gratuitous Loan arises when it is agreed that the
Bailee may use the article delivered to him for a certain
time or until demand without paying for the use.
Pledge or Pawn is a Bailment of personal property
when the Bailee receives and holds the article delivered
to him as a security for the payment of some debt or for
the fulfillment of some obligation incurred by the Bailor
to the Bailee.
Bailments for Hire include those kinds of Bailments in
which the Bailee hires the use of the bailed article or in
which he is hired by the Bailor to perform or bestow some
labor or services upon it. The latter class includes the
keeping of goods by a warehouseman and 'the carriage of
goods for hire.
8 American Correspondence School of Law
DUTIES OF BAILEE. DEGKEES OF DILIGENCE.
In carrying out the trust involved in every contract of
Bailment, a certain degree of diligence is required of the
Bailee, the degree of diligence depending upon the nature
of the Bailment to be hereafter referred 'to. Diligence
in this connection is divided into three degrees, viz.:
Ordinary Diligence, Extraordinary Diligence and Slight
Ordinary Diligence is that diligence which persons of
common prudence exercise over their affairs in the com-
munity and age in which they live. The correlative term
often used in lieu of the phrase "want of ordinary dili-
gence" is ordinary negligence.
Extraordinary Diligence. This is that diligence which
very prudent persons 'take of their own concerns. The
correlative term^for the phrase "want of extraordinary
diligence" is slight negligence.
Slight Diligence is that diligence which persons of less
than common prudence or of no prudence take of their
own concerns. The correlative term for the phrase "want
of slight diligence" is gross negligence.
Several courts of high authority have criticized the use
of words denoting comparative degrees of negligence as
of doubtful use or application.
See N. Y. R. R, Co. vs. Lockwood, 17 Wall (U. S.),
382; Steamboat New World vs. King, 16 How. (U. S.),
Whether the appropriate degree of diligence has been
exercised in a given case depends upon the circumstances
of each particular case. Whenever the facts are at all in
controversy the question is one of fact for the jury. In
determining this question the age, the country and the
condition of society, in which the Bailee lives, the cus-
toms and usages of trade, the nature and the value of the
thing bailed and its liability to loss or injury must be
Law of Bailment 9
DEGREE OF DILIGENCE IMPOSED UPON DIFFERENT CLASSES
(1) When the Bailment is solely for the benefit of the
Bailor and the Bailee has no reward, the latter is only
liable for the exercise of slight diligence and is therefore
only responsible for losses occasioned by gross negli-
gence. Thus if a person about to go away from home
leaves an article for his own benefit and convenience with
his neighbor without reward to the latter to be kept till
the Bailee shall return home, the Bailee is only liable
for the exercise of slight diligence and is responsible for
loss of or injury to the article only in case of gross negli-
gence on his part.
(2) In case of gratuitous loan or when the Bailee bor-
rows an article from the Bailor without hire or reward
and for the sole benefit of the Bailee, the latter is respon-
sible for the exercise of extraordinary diligence over the
thing bailed, and is liable for losses occasioned by slight
neglect ; thus if a person borrow a horse of another with-
out compensation to go on a certain journey, and the
Bailee travels in a different direction than agreed upon,
or to a greater distance, the Bailee is liable for any in-
jury which may occur to the horse though accidental.
The borrower is not liable for inevitable accidents which
could not have been foreseen and against which he could
not guard, but he is answerable for the least neglect.
(3) When 'the Bailment is for the mutual benefit of
both parties the Bailee is required to exercise ordinary
diligence and is answerable only for ordinary negligence.
The Bailee in this class of cases in 'the absence of a
special agreement is not generally an Insurer of the
goods intrusted to his care. To this rule there are some
exceptions as in the case of common carriers to which
reference will be made hereafter. The Bailee is not liable
for losses occasioned by dangers necessarily incident to
10 American Correspondence School of Law
the use of the articles intrusted to his care, .nor for the
losses occasioned by inevitable accident or irresistible
By inevitable accident is meant every casualty pro-
duced by physical causes which are irresistible in their
nature, such as fire, storm, inundation, perils of 'the sea
or sudden death.
Irresistible force includes the confiscation of goods by
military authority, the injuries from a hostile army and
losses by robbery or burglary.
Shop-keepers, inn-keepers, restaurant proprietors and
bath-house keepers are obliged to exercise ordinary care
in the protection of property entrusted to their keeping
as an incident to their business. They are not liable how-
ever for losses occasioned by accident or by some cas-
ualty which occurred without their fault. The same prin-
ciple applies to an artisan to whom is entrusted mate-
rials to work up into manufactured articles for the Bailor.
This principle applies in general to all cases of locatum
or hired services in connection with a chattel. Locatum
has been divided into four classes : (1) Hiring of a thing
for use as hiring a horse and buggy at a livery stable.
(2) Hiring of work to be done on a chattel as hiring a
tailor to make a suit of clothes from cloth furnished. (3)
Hiring of care and service to be rendered about a specific
chattel to be kept by the Bailee for him as in the case of
a warehouseman, inn-keeper and men who pasture cattle
for hire. (4) Hiring of the carriage of goods.
In all these classes ordinary care is required of the
Bailee and he is liable for all losses occasioned by ordi-
nary negligence on his part.
EIGHTS AND LIABILITIES OF BAILOR AND BAILEE GENEEALLY.
If the article be lost or injured while in the possession
of the Bailee the presumption, according to the weight
of modern authority is that the loss or injury occurred
Law of Bailment 11
through the default of the Bailee and the burden of proof
falls on the Bailee to show that he exercised the degree of
care required by the particular contract of Bailment, or
that the loss occurred from some cause which prima facie
A Bailee may by special agreement, as a general rule,
limit the extent of his liability but it seems to be estab-
lished by the weight of authority that he cannot go so
far as to prevent his liability for losses occasioned by his
So the Bailee may enlarge his liability by special agree-
ment so far even as to become an insurer of the property.
The Bailee is liable for the conversion of the property.
This embraces an unauthorized use of the article, such as
using it in a different way or for a longer time than that
contemplated by the contract. Thus where one hires a
horse to go for a specified distance, and he goes beyond
that distance, he becomes liable for an unlawful conver-
sion of the horse. So the Bailee cannot sell, pledge, mort-
gage or exchange the property, and if he do so he is liable
for a conversion. The Bailee has no right to use the
property in any way not contemplated by the parties to
the contract of Bailment.
The Bailee, until the termination of the Bailment, has
a special property or possessory right and interest in the
article bailed, and may maintain replevin to recover -pos-
session from a person wrongfully taking the property or
maintain trespass or trover against any person interfer-
ing with his possession. As a general rule the Bailee is
estopped from denying the title of the Bailor in the prop-
erty bailed. This rule however is subject to some quali-
fication. Where a third person claims title to the prop-
erty the Bailee may choose to have the title tried at law,
but if he does so, he undertakes the defense at his peril.
He can in no case, however, set up title himself or avail
himself of the title for his own benefit; he is not liable
however for conversion when a paramount title to that
12 American Correspondence School of Law
of the Bailor has been established or when the property
has been taken from him by due process of law.
Either party may maintain an action against a third
person for any wrong done to the property bailed, but a
recovery by one is a bar to a recovery by the other. The
Bailor may recover possession of the property if sold,
pledged or mortgaged by the Bailee to a third person
who has taken possession, unless the Bailor has done
some act which estops him from claiming the prop-
erty. This may occur when the Bailee has asserted his
ownership to the property with the knowledge of a Bailor
and without objection on the part of the latter. So it may
occur when the Bailor has allowed the Bailee to so use
and manage the property as to amount to a publication
to the world that the Bailee is the owner.
If work and labor are bestowed by the Bailee upon the
article bailed he is entitled to compensation unless the
circumstances are such that it can be reasonably inferred
that the services were to be rendered without compensa-
tion. In the absence of an express agreement the law
will imply a promise to pay what the services are reason-
LIEN OF BAILEE.
The Common Law always recognized the right of a
tradesman or an artisan to have a specific lien upon the
particular article delivered to him for the purpose of
having work done upon it, for the price or value of the
work done. The right to this lien has however been ex-
tended to all cases where value has been conferred upon
the thing bailed by his skill and labor, when such lien was
not inconsistent with the terms of the contract.
This lien is confined to the particular demand which
the Bailee has for work and labor done upon or about the
Law of Bailment 13
article bailed. He has no lien as a general rule upon such
articles for services rendered at another time or occa-
sion for the Bailor. In a few exceptional cases a general
lien has been allowed to secure the payment of a balance
arising from mutual dealings. Thus Factors, Insurance
Brokers andWharfingers have been allowed a lien for a
balance arising from mutual dealings.
A lien will not attach for services unless the parties to
the Bailment contemplate compensation for services,
although the law may imply a legal liability to pay the
reasonable value of such service.
The lien may be lost or waived by the voluntary sur-
render of the property by the Bailee or by giving credit
to the Bailor, or by accepting a third person as the payor.
ENFORCEMENT OF A LIEN.
At common law the lien could be enforced only by
keeping possession of the property till payment was made
and no sale could be made by the Bailee to secure the
payment of his services unless a special agreement to
that effect had been made. Courts of Equity have allowed
rules to be made in order to enforce the lien in cases
where a custom or usage had become well established
with regard to a particular trade.
Generally however statutes have been enacted in the
different states providing a remedy to enforce a Hen by
EE-DELIVEEY BY BAILEE.
It is the duty of the Bailee to return the property bailed
to the Bailor at the time agreed upon for the termination
of the Bailment.
When the time is not regulated by agreement the re-
delivery must be made within a reasonable time after de-
14 American Correspondence School of Law
mand. What is a reasonable time after demand must be
determined by the circumstances of each particular case.
Non-delivery is excusable in case the property has
been destroyed without the fault of the Bailee or by some
act over which he had no control, or when the property
has been taken by due process of law, or by a person
having paramount title or in case the title of the Bailor
It is the duty of the Bailee to give notice to the Bailor
of seizure of the property by process.
TERMINATION OF THE BAILMENT.
The Bailment may be terminated by the following
causes: (1) By the expiration of the time for which the
article was bailed. (2) By the destruction of the article
bailed or because it became unfit for the purpose for
which it was bailed. (3) By the accomplishment of the
object for which the article was bailed. (4) By a rescis-
sion of the contract upon grounds recognized as valid by
the law of contracts. (5) By an act of illegal conversion
of the property by the Bailee.
When the Bailment is for the benefit of both parties
and the contract specifies no time for fulfillment, either
party may terminate the Bailment by giving notice, the
party receiving the notice having a reasonable time with-
in which to comply. The same rule applies to a case of
Bailment where it is made for the sole benefit of the
So the death of either party may terminate the Bail-
SPECIAL CLASSES OF BAILEES.
Finder of Lost Goods. The finder of lost goods be-
comes a depositary. He can defend his rights as against
all but the true owner." It is his duty to restore the goods
Law of Bailment 15
to the true owner when discovered. He is not entitled
to compensation unless he has been put to necessary ex-
Inn-keepers. An Inn-keeper is one who keeps his house
open regularly and for reward for the lodging, refresh-
ing and entertaining of travelers. Saloons, restaurants
and boarding houses are not regarded at common law
The common law was very rigid in requiring the inn- ,
keeper to keep the goods of his guests safely. He was
liable for any loss of goods which was not occasioned by
the act of God, the public enemy or the negligence of the
guest or his servants.
This rule has been modified by some authorities which
have held that the Inn-keeper is not liable for losses
occasioned by accidental casualties or riots.
The common law liability has been modified in many
states by statutes limiting his liability among other things
to ordinary baggage necessary for the journey and suit-
able to the guest's station in life.
The Inn-keeper has a lien to secure the payment of his
charges on the goods deposited by his guest.
COMMON CAERIEKS OF GOODS.
A common carrier is one whose business it is to trans-
port goods for hire and who holds himself ready to carry
them for all persons who apply and pay the hire. The
transportation may be by land or water. A private or
special carrier is one who undertakes to carry goods for
reward for special persons or on special occasions and
who does not make hired transportation his general call-
ing. Within the term "Common carriers" are embraced
railroad companies, ferry-men, canal boatmen and owners
of carrying vessels.
The subject of common carriers is one of vast scope.
16 American Correspondence School of Law
Our purpose in this Review is only to set forth briefly
the general and underlying principles which govern the
rights and liabilities of common carriers as Bailees of
goods and chattels.
A common carrier is under obligation to carry all
goods tendered to it for transportation, if it holds itself
out as willing to carry such goods and is tendered proper
charges. The goods must be transported promptly and
within a reasonable time. If there is unreasonable de-
lay in the transporting and the delivery of the goods the
carrier is liable for whatever losses may result to the
shipper as a proximate consequence of the delay. What
is unreasonable delay is a question of fact which must
be determined from the circumstances of each particular
case, such as the* state of the weather, the mode of con-
veyance, the character of the freight, the season of the
year, the distance to be transported, and the ordinary
facilities of transportation. It is the duty of a Railroad
Company not only to accept goods tendered by individual
or private shippers but also from connecting lines of
transportation, providing that the goods are such as are
ordinarily shipped by Railroad Companies and the trans
poration is according to the usual course of business.
The carrier may by public advertisement within proper
and reasonable limits designate and fix the nature of the
articles which it proposes to transport, and the kind of
cars and conveyanees which must be used to transport
certain classes of goods. He may refuse to carry danger-
ous articles, such as dynamite, and also goods that are
so defectively packed as to entail extra risk. The accept-
ance of goods by the carrier however is a waiver of all
rights to object on these grounds.
Law of Bailment 17
LIABILITY FOR LOSS OK INJURY TO THE GOODS.
A common carrier of goods is regarded as an insurer
for the safe transportation and delivery of the goods en-
trusted to it for carriage. In this respect the degree of
liability of common carrier differs from that of Bailees
in general. To this rule there are some exceptions.
The common carrier is not liable for losses occasioned
by the act of God or by the public enemy. The act of
God or inevitable accident is such irresistible disaster as
results at once from natural causes and which cannot be
attributed to human agency. This will embrace damage
by earthquakes*, tempests, floods, lightning, sudden frosts
and similar occurrences. The act of God must be the prox-
imate cause of the injury in order to excuse the carrier
and the carrier must himself be free from contributory
negligence. Accidents from fire, explosions and collisions
are not regarded as an act of God.
The carrier is not liable for losses occasioned by an
armed force large enough to render resistance fruitless,
nor for those occasioned by Indian tribes in a state of
war, by pirates and privateers. By the weight of author-
ity the common carrier is .not liable for losses occasioned
by mobs when it has exercised reasonable care in taking
LIMITATION OF LIABILITY BY AGREEMENT.
The common carrier may limit his common law liability
by special contract but it has been held by many courts
that he cannot be allowed to prevent his liability for his
negligence by stipulation. It is well established that he
cannot exempt himself from liability for losses occasioned
by his own gross negligence. The Supreme Court of the
United States has held that the common carrier cannot
18 American Correspondence School of Law
limit his liability by special contract so far as to release
him from responsibility for losses occasioned by his own
negligence, although the contract may be valid, in the
state where made.
A general public notice is not sufficient. The modifica-
tion of the common law liability must be brought home
to the notice of the shipper or approved by him before
the shipment is made.
What constitutes notice to the shipper has been the
subject of some controversy in the Courts. It seems to
be held by the weight of authority in the United States
that when the shipper accepts a receipt or a Bill of
Lading from the common carrier which contains a limi-
tation of the common law liability such instrument is
binding on the shipper, when it is not unreasonable or
A warehouseman is one who receives and stores goods
and chattels as a business for compensation and profit.
The warehouseman is under obligation to provide a
building for storage, reasonably safe and suitable for
the purpose and safe against common and ordinary occur-
rences. He must use ordinary care and diligence in the
protection of the property entrusted to him. What con-
stitutes ordinary care must be determined from the sur-
rounding facts and circumstances. Local usage or custom
may govern the degree of care required.
The warehouseman is not liable for losses of goods by
fire which are not the result of his own negligence. Nor
is he liable for loss by theft when he has exercised ordi-
When grain is deposited in a mass a warehouseman
must deliver to the depositor an equal amount of the same
Law of Bailment 19
An express company is regarded as a common carrier
and is therefore liable for all losses or damages done to
goods intrusted to it for transportation unless such loss
or damage was occasioned by the act of God or the public
If the shipper fraudulently conceals the real nature or
value of the goods and thereby misleads the express com-
pany the company in any event is liable only for the ap-
parent value of the goods. The express company how-
ever, is generally bound to make inquiry as to the value
of the goods and the shipper must make a true answer.
The express company is under obligation to deliver the
goods to the consignee or his duly authorized agent at his
residence or place of business. This may be varied by
custom or usage at small way stations when the business
is small. In such cases the goods may be held at the sta-
tion to be delivered there to the consignee upon prompt
notice of the arrival of the goods. The custom however
must be reasonable, of long continuance and notorious.
If the consignee refuses to or neglects to receive the
goods and pay the express charges when sent C. 0. D. the
company then ceases to be a common carrier and assumes
the obligations of a warehouseman. The company must
however notify the consignor at once that the goods are
held subject to his order.