Bailment

BAILMENT is a contract by which the possession of chattels is delivered by one person (the bailor) to another person (the bailee) either to be delivered by the bailee to a third person or to be redelivered to the bailor when the purpose of the bailment is at an end.

According to the common enumeration there are six kinds of bailment—depositum, commodatum, locatio et conductio, vadium, locatio operis faciendi, and mandatum. Of these depositum and mandatum are for the benefit of the bailor alone, and the bailee is liable only for gross negligence in the performance of his duty. Commodatum is for the sole benefit of the bailee, who is therefore liable for even slight negligence. The other kinds are for the benefit of both bailor and bailee, and the bailee will be liable for ordinary neglect. The foregoing degrees of negligence are required by law to make the bailee liable, but by express agreement he may bind himself to more or less care, and then he will be held liable accordingly. Moreover, when a bailee possesses any special skill, the omission to use that skill in the execution of the trust committed to him will be imputed as gross negligence even if he derived no benefit from the bailment.

A deposit is a bare naked bailment of goods delivered by one man to another to keep for the use of the bailor without reward. The depositary in general is not allowed to use the deposit, for it is given to him to keep for nothing; he is bound to exercise the same care of the deposit as he does of his own goods, but he will only be answerable for gross neglect.

A mandate is the delivery of goods or chattels to somebody who is to carry them or do something about them gratis. The mandatary, like the depositary, is liable only for gross neglect, but if his situation or profession is such as to imply skill, the failure to use that skill will be imputable as gross neglect.

A loan is the lending of goods or chattels to another to be used by him gratis. As the borrower obtains the use of the thing lent for nothing he will be answerable for even slight negligence, and he is not justified in using it for a longer time or for other purposes than was agreed upon. He is not responsible for reasonable wear and tear. The lender on his side is responsible for defects in the chattel with reference to the use for which he knows the loan is accepted, of which he is aware, and owing to which directly the borrower is injured.

In the contract of hiring where goods are lent to a person in consideration of payment, the hirer is bound to use ordinary care of them such as a prudent man would take of his own goods, and he will be responsible for ordinary negligence.

Pawn or pledge is a contract by which goods or chattels are delivered to another to be security to him for money borrowed of him by the bailor. The pawnee must use ordinary diligence in the custody of the pledge which he is not permitted to make use of except when its keep entails expense, as in the case of a horse, and then the pawnee may make reasonable use of it so as to indemnify himself for its keep.

The pawnee may recover his debt by giving notice to the pawner that he will sell the subject of the pledge, or he may sue for his debt, or if he pleases he may adopt both remedies. A pledge differs from a lien in that this only gives the right to retain property, and from a mortgage of personal estate which passes the actual property in the goods to the mortgagee.

Pawnbrokers form a special kind of pawnees, but although transactions dealing with loans above ten pounds are governed by the common law, loans of ten pounds and less are subject to the Pawnbrokers Act, 1872. By this Act every pledge must be redeemed within twelve months from the day of pawning, with seven additional days of grace. If a pledge is not redeemed within that time, and the amount for which it was pledged does not exceed ten shillings,’it becomes the absolute property of the pawnbroker; if it was pledged for above ten shillings, it may be redeemed until actual sale, and such sale must be by public auction, and the surplus after the costs of the sale and the amount of the pledge and interest must be accounted for.

The pawnbroker is made liable for loss in case of fire, against which he may protect himself by insurance, and he may treat the person who produces the pawn-ticket as entitled to redeem the pledge.

The last species of bailment is a contract by which goods or chattels are delivered to be carried, or something is to be done about them for a reward to be paid by the bailor to the bailee. With regard to the liability of such bailees a distinction is made between persons exercising a public employment, such as public carriers, and private persons. The former are responsible for all losses except such as happen through the act of God and the King’s enemies. The latter are only bound to exercise the reasonable care which is to be expected from a skilled storekeeper acquainted with the risks to be apprehended; and this care must be shown not only in obviating the risks, but in taking all proper measures for the safety of the goods or of a portion of them when the risks have occurred. There are special laws which govern the liability of railway companies and innkeepers.

In some orders it was customary for the religious to have money, books, eatables, for their own use, and such allowance was called the peculium of the religious. Such a practice is against the purity of religious poverty, and it was forbidden by the Council of Trent, as well as by several Roman Pontiffs. Indeed, if it was understood that subjects had the right to use and dispose of the peculium as they pleased, in perfect independence of the will of their superior, it would be against In many orders the the very essence of religious poverty. custom is still sanctioned of having a peculium in more or less dependence on the will of the superior.

It is not against poverty to administer money in the name of another, for such administration is not an act of ownership. A religious may, then, act as the almoner of another, but he must not distribute alms in his own name as if the money were his own. To keep a deposit of money with the obligation in justice of accounting for it is against religious poverty.

I. Notion of deposit. Deposit is a contract by which someone hands over to another a thing to be kept, and the other receives it with the burden of keeping it and afterward returning it in kind.

II. Obligations of the depositor. The depositor is bound to reimburse to the depositary the expenses made for conserving and returning the thing.

III. Obligations of the depositary. First, the depositary should not inquire what the deposited thing is, if the thing is closed or sealed. Besides this, he is bound:

1. To keep the deposited thing diligently.

2. Not to use it without the given or legitimately presumed consent of the one depositing. Consent should not easily be presumed, not even with respect to the use of money, though neither closed nor sealed; indeed not even then, when it could immediately be returned to one who asked. Nevertheless, the depositary, by using a deposited thing neither closed nor sealed, does not sin gravely if he is certain that he will be able to return in due time a thing equally good (St. Alphonsus, III, 748).

3. To return the thing to the depositor, and this in kind, as soon as it is asked, and together with the fruits which it has produced. It is said:

a) As soon as it is asked; this does not prevent him from retaining the thing until that which must be paid by reason of the deposit has been paid to him. Indeed, with natural law alone considered, it is licit also, observing what must be observed, to compensate oneself from the deposited thing (St. Alphonsus, III, 753).

b) Together with the fruits; except, however, industrial fruits, which the depositary has received, although illicitly, by using the deposited thing.

4. To what extent the depositary is held for damages arising from juridical fault alone, see n. 1009.

IV. Sequestration. Sequestration is a species of deposit by which a litigated thing is deposited with a third party under this law, that afterward it be handed over to him who has emerged victor.

It is distinguished as twofold, conventional and judicial, according as the thing has been deposited by the mutual consent of the litigants, or by order of the judge.

The obligations of the sequestrator are sufficiently clear from the notion itself and from the things said about deposit.

I. Notion of commodatum. Commodatum is a contract by which someone grants to another the use of a thing gratuitously, under this law, that the latter return the same thing at a determined time. It is said gratuitously; if something is demanded for the use of the thing, there is had a species of letting. Commodatum is called precarium if the use of the thing is granted revocably at the nod of the lender; the name of precarium comes from this, that the one receiving, in the case, is judged continually to pray that he may be able to retain the thing. Commodatum differs from mutuum, in which ownership of the thing is transferred (St. Alphonsus, III, 744, 745, 754).

II. Obligations of the lender. The lender is bound:

1. To manifest harmful defects to the borrower, if he knows them; otherwise he is bound for the damage that follows.

2. Not to demand the thing back before the time fixed.

3. To reimburse to the borrower extraordinary expenses necessary for preserving the thing (St. Alphonsus, III, 747).

III. Obligations of the borrower. He is bound:

1. To keep the thing diligently, and to bear ordinary expenses.

2. Not to use the thing except for the use signified by the contract or by the very nature of the thing; otherwise he is bound for the damage that follows.

3. To return the thing at the time fixed, or when the use has been completed.

4. To what extent he is held for the destruction of the thing and for other damages arising from juridical fault alone, see n. 1009.

Note. Sacred things should not be lent for a use repugnant to their nature (can. 1537).

Forms of Contract.—The chief forms of contract are the following:

(a) gratuitous contracts, which are those that confer advantage on only one of the contractants, or those in which no payment or compensation for his acts or goods is made to one party by the other party. They include unilateral contracts, which produce obligation on one side only (e.g., a promise, gift, testament), and bilateral contracts, which produce obligation on both sides. The bilateral contracts are also known as bailments, or understandings whereby a thing or business is transferred from one person to another in trust, on condition that a return will be made to the owner, They include the following contracts: loans, in which return must be made of the identical things borrowed (commodatum), or of a thing similar in kind (mutuum); deposit, in which a thing must be returned after safekeeping (depositum); an agency, in which one conducts the business of another with the obligation of making returns, either from express contract (mandatum) or from imputed agreement (negotiorum gestio). In commodatum and mutuum the advantage is had by the bailee, in the other three by the bailor;

(b) onerous contracts of certain event, which are those that confer an advantage on both parties, and in which the thing agreed on is certain and definite. They include contracts in which one party transfers ownership to the other (e.g., buying and selling, barter, loan at interest, contracts for annuities, stocks and bonds) or useful dominion (e.g., lease of property, contractor’s agreement, hire of labor), and contracts in which both parties transfer rights to a moral person of which they are the members (partnership);

(c) onerous contracts of uncertain event, which are those that confer advantage on both parties, but in which the thing agreed on is contingent and uncertain. Examples are insurance, wager, gaming contracts, lottery, and stock market speculation;

(d) subsidiary contracts, which are those that are made in order to give security to principal contracts to which they are annexed or for whose sake they are made. Such are guaranty and surety, pledge and pawn, and mortgage.

What is Deposit, and how is it contracted? - Resp. To the 1st: Deposit is a contract by which a thing is handed over to someone to be guarded gratuitously, under this law, that the same thing be restored whenever it is requested. L. 1 Depositi; C. I. 1835; C. G. 1915; C. A. 957; C. H. 1758, 1760; C. L. 1431; C. B. 688. - A thing, namely movable. Deposit can be constituted only in movable things, C. I. 1831; C. G. 1918; C. H. 1761.

Even in immovables, C. A. 960; L. 746. - Gratuitously; for if a fee or interest has been established, deposit passes into lease and hire, or into loan at interest. L. 1 § Si vestimenta C. h.t.; C. I. 1837; C. G. 1917; C. L. 1432; C. B. 689. - To be guarded; if the depositary is permitted to use it, it almost passes into commodatum or mutuum. L. 24, 26 § 1 h.t.; C. A. 959; C. H. 1768. Almost, since the deposited thing must be restored whenever it is sought. It is handed over, for it is a real contract, which is perfected by delivery of the thing. C. A. 957; C. B. 688.

Resp. To the 2nd: Deposit is contracted expressly or tacitly. Expressly, when such a contract is made explicitly; tacitly, when a thing is brought to those who by reason of office are bound to its custody, such as innkeepers, stable-keepers, and sailors. L. 1 in fi. Naut. Cauponae, etc.; C. I. 1866; C. G. 1952; C. A. 970, 1316; C. B. 701; C. H. 1783. According to the same Italian, French, and Austrian Law, those who exercise transport by land are held to the same obligations for deposited things as innkeepers. They answer for things to be transported as soon as these have been entrusted to them in port or at a station of goods. Loss and deterioration of goods entrusted to the carriers themselves is imputed to the carriers, unless they prove that a fortuitous event or greater force was the cause. But as regards other craftsmen, if they contribute nothing except work to the making of another's thing, when loss of the thing occurs, they are not bound to compensation unless fault has intervened. C. I. 1630, 1631, 1636; C. G. 1782, 1784, 1789; C. A. 970, 1160, 1316.

What are the obligations of the depositor? Necessary expenses made by the depositary must be refunded by the depositor, and the damage which perhaps the depositary suffered on account of the deposit must be compensated. Under this title the depositary can retain the deposit until complete payment of the debt. His office ought to be damaging to no one. L. 5, 23 Depositi; L. 60, 62 § Quod vero 5 de Furt.; C. I. 1862, 1833; C. G. 1947, 1948; C. H. 1779, 1780; C. A. 967; C. B. 693, 694; C. L. 1450.

Whether compensation can be made by retaining a thing handed over to the creditor in deposit or on loan? Many deny it, relying on the positive dispositions of the law. C. I. 1289.; C. G. 1293.; C. H. 1200, 1747.; C. A. 1440.; L. ult. § 1. C. de Compensationibus; C. Bona fides de Deposito. "Yet others more probably teach that those laws proceed only in the external forum, in which it is presumed that the debt could have been recovered by another way, and the faith of deposit preserved.... The reason is that the fact that the thing has been deposited with you does not make it more its owner's than before, nor does it oblige you to defend it against the true owner, who wishes to vindicate it, or against him who has a true right to receiving it, if that right is certain to you: indeed you ought to give it, if damage threatens you from another source. Therefore similarly you will be able to take it for yourself, if you have true dominion of it, or a true right against its owner for recovering your debt." Lugo d. 16, n. 89.; Gousset in a. 1293.; C. B. 273, 274.

283. We treat all these gratuitous bilateral contracts very briefly, because it is sufficient for the confessor to apply the principles given concerning contracts in general.

A loan for use⁷⁸ is the gratuitous concession of some non-fungible thing for a sole and determinate use and for a fixed time.⁷⁹ If money is demanded for that concession, then it is already an onerous contract and is rather called letting and hiring, which will be discussed below, n. 305. The obligations of the lender and borrower for use are to be weighed a) from the agreement freely entered into; b) from the civil laws.

A precarium⁸⁰ is the same as a loan for use, with this difference: in a contract of precarium the thing lent can be demanded back at any moment at will, while in a loan for use this is not permitted until the stipulated time has elapsed.⁸¹

A deposit⁸² is a contract by which a movable thing is delivered to someone to be guarded gratuitously, on the condition that it be returned at the will of the depositor. According to modern practice, a thing to be guarded is often not received gratuitously, but some remuneration is demanded for its custody.⁸³ Positive laws are to be observed, especially if there is question of baggage deposited in railway stations, things entrusted to innkeepers, shares and bonds deposited in some bank, etc.

Generally it can be said:

1. The depositary, i.e., he with whom a thing is deposited, must exercise over the deposited thing that care which prudent and conscientious men have concerning such a thing. If he does not do this, he is compelled by a competent judge to repair any damage that may have arisen; indeed, he is bound even before the sentence of a judge, at least if his negligence was gravely culpable.

2. The depositary cannot use the deposited thing without the permission of the depositor, whether express or at least prudently presumed. This is evident of itself, for it is not lawful to use another's thing without the owner's permission. But if the depositary has illicitly used the deposited thing, e.g., money for trading, and has thereby taken profit, it must be seen whether such profit is an industrial fruit or a civil or natural fruit of the deposited thing. If it was an industrial fruit, he can retain the profit for himself; otherwise he must restore it to the owner according to the adage: "A thing bears fruit for its owner."⁸⁴

A sequestration⁸⁵ is a species of deposit; for it is a contract by which a thing in litigation is deposited with a third person under the condition that, when the litigation has been decided, it be restored to the victor.⁸⁶ It is conventional when it is made by the mutual will of the litigants; judicial when it is decreed by a judge. He with whom the thing in litigation is deposited is called the sequestrator. His obligations are: 1. in guarding and preserving the thing he must employ no less diligence than he employs for his own things; 2. he must not return the sequestered thing unless the judge so establishes or all the litigants so consent.

A mandate⁸⁷ is a contract by which one person undertakes to conduct a business in the name of another. Although this contract by its nature is gratuitous, it is nevertheless generally entered into for an agreed compensation. Civil codes are wont to establish very precisely the rights and obligations both of the mandator and of the mandatary. These statutes are to be observed also in the forum of conscience.

The management of affairs⁸⁸ is a quasi-contract by which someone undertakes the business of another without an express mandate indeed, but from the presumed will of the absent owner. The management of affairs is nothing other than a presumed mandate. It takes place, e.g., if someone finds a thing which he is bound to guard faithfully by the presumed will of the legitimate owner until the latter appears and pays all necessary expenses.⁸⁹

⁷⁸ Loan for use (Leihvertrag, prêt à usage, commodat, loan).

⁷⁹ Cf. German Civil Code § 598ff.; Swiss Code of Obligations art. 305ff.

⁸⁰ Gratuitous loan at will, a loan revocable at will (Bittleihe, Leihe auf Widerruf).

⁸¹ A precarium is defined in Roman law (L. 1, Dig. 43, 26) as that which is granted for use to one asking by entreaties for as long as he who granted it permits. In present-day laws, precarium is not wont to be considered a contract distinct from loan for use. Precarium must not be confused with the precaria of canon law. For precariae, or precaria in the singular, is a contract introduced by canon law by which, at entreaty and generally by reason of remuneration, the usufruct of some estate or other ecclesiastical immovable thing is granted to someone for the days of his life or for another time, under the law that every five years renewal of this concession or contract is to be sought (c. 1, 2, X 3, 14; cf. Ferraris, Prompta Bibl., s.v. "Precarium," n. 11). These precariae are the precursors of ecclesiastical benefices. Nevertheless, precariae were sometimes also granted to laymen (cf. Wetzer and Welte, Kirchenlexikon, s.v. "Precarium").

⁸² Contract of safekeeping or deposit (Verwahrungs- oder Hinterlegungsvertrag). German Civil Code § 688ff.; Swiss Code of Obligations art. 472.

⁸³ Cf. German Civil Code § 688ff.; French Civil Code art. 1917ff.

⁸⁴ Cf. St. Alphonsus, Theol. mor. l. 3, n. 748; French Civil Code art. 1936.

⁸⁵ Deposit of a disputed thing (Hinterlegung einer strittigen Sache).

⁸⁶ Cf. French Civil Code art. 1955ff.; Swiss Code of Obligations art. 480; Code of Canon Law, canon 1672ff.

⁸⁷ Power of attorney, authorization (Vollmacht, Ermächtigung).

⁸⁸ Representation without authority (Vertretung ohne Vollmacht).

⁸⁹ Cf. above, concerning finding, n. 48.

584. Deposit in general (depot; bewaargeving, a. 1915) is the act by which someone receives another's thing to be guarded and to be returned in kind; but deposit properly so called is the contract by which a thing to be guarded is handed over to another, so that the same thing may be returned gratuitously and whole at the will of the depositor. Hence:

1. It is an essentially gratuitous contract (a. 1917): for if something must be paid for the custody, it does not remain a mere deposit but is as it were a letting;

2. As object it can have only movables (a. 1918);

3. It is a real contract which is not perfected except either by real delivery, or by supposed delivery of a thing which was already possessed by another title (a. 1919).

One deposit is voluntary, which is perfected by the mutual and express consent of the depositor and depositary (a. 1921); another is necessary, when the depositary is not chosen altogether freely, as happens in two cases: a) in case of fire, ruin, or shipwreck (a. 1949), and hence it is called a miserable deposit; b) when certain objects are entrusted by travelers to innkeepers or their servants, stable-keepers, sailors, and the like, all of whom are held concerning theft or any other detriment of things pertaining to travelers (a. 1953), unless armed force or another greater force intervened (a. 1954).

585. The obligations of the depositary are:

1. To preserve and guard the deposited thing diligently, with that fidelity and care with which he is accustomed to preserve his own things (a. 1927); whence, if it perishes or becomes worse from malice or other grave theological fault, he is held to compensate it.

This rule, according to a. 1928, is to be applied more strictly, so that then the diligence which a good father of a family applies in guarding his own things is required: a) if the depositary offered himself to receive the deposit; b) if an agreement intervened that he be held concerning any fault whatever; c) if he stipulated a wage for the custody of the thing; d) if the deposit was made for the advantage of the depositary alone. Nevertheless the depositary is never held if something happens by a superior greater force, unless he had already previously delayed returning the thing demanded by the depositor (a. 1929).

2. Not to use the deposited thing without the express, or at least reasonably presumed, permission of the owner; otherwise he will be held concerning the damage that followed (a. 1930).

3. To return without delay the identically same thing, as soon as it is demanded back by the depositor (a. 1932), unless by accident the latter demands it back in order to harm himself or others, or the thing is stolen and its owner demands it back (a. 1938), or unless the depositary has a just cause of retention, for example, if expenses made for conservation have not yet been restored (a. 1948).

4. To return the deposited thing only in that state in which it is found at the time of restitution (a. 1933). Hence if it was taken away by force, he is held to return what he received in its place; if it produced fruits, he must restore these also; but he owes no interest of the deposited money to the depositor, except from the day on which he was in delay in restoring (a. 1933 sq.).

586. The obligations of the depositor are:

1. To disclose a defect of the thing from which damage can come to the depositary, for example, a contagious disease of a horse.

2. To pay expenses if any must be made, or to repair damages if they followed in preserving or returning the deposit, for example, to pay for the nourishment of a horse (a. 1947).

3. To receive the deposited thing after the lapse of the established time, or even sooner, if the depositary can no longer retain the thing.

587. Sequestration (sequestratie) is a species of deposit. It is the contract by which a thing disputed among several persons, or judicially seized, is deposited with a third person, who is called a sequestrator, for the end that after the sentence of the judge or arbiter it may be handed over to him who has won the case (a. 1956); it should be noted, however, that not only movable things but also immovable things can be subjected to sequestration (a. 1959).

One sequestration is conventional, which is made by mutual agreement or the mere will of the parties; another is judicial, which is decreed by the sentence of a judge (a. 1955 sq.). The first, if it is gratuitous, is subject to the same rules as deposit properly so called (a. 1958); if it is not gratuitous, it is held as a hiring of work and is ruled by its rules. The other, which is left to the judgment of the judge to be prescribed, is not gratuitous by its nature, but the salary to be paid is determined by the law itself of sequestration (a. 1962).

But the depositary to whom the thing to be guarded has been handed over cannot be freed from the custody of the thing before the lawsuit has been settled, unless all whose interest it is have consented, or another legitimate reason is given (a. 1960).