What’s So Different About Bailment?, 0320 COBJ, SC Lawyer, March 2020, #28

• Author: By Judge James A. Turner
• Position: Vol. 31 Issue 5 Pg. 28

What’s So Different About Bailment?

Vol. 31 Issue 5 Pg. 28

South Carolina BAR Journal

March, 2020

By Judge James A. Turner

A funny thing happened while considering oral arguments the other day in a negligence case. The attorneys changed their legal positions and insisted bailment law actually applied. Both counsel also agreed that the controlling case in South Carolina was Hatfield v. Gilchrist, which counsel urged the court to review carefully prior to reaching a decision.¹ Economic policy motions frequently provide support for legal principles. For example, the legal standard of care for Gilchrist as a constructive bailee was interpreted as identical because he still received an economic benefit. I happened to be the trial judge in that case. The trial and subsequent appellate rulings culminated in a scholarly and comprehensive appellate opinion written by Judge Ralph King Anderson that clarified the nuances of bailment law in our state. The factual background of the case involved the towing of a private vehicle that was illegally parked in a section of downtown Charleston. Those familiar with parking in downtown Charleston are aware that visitors frequently park in areas without a meter marked by a posted sign with a time limit. Testimony varied as to the length of time that the vehicle remained parked. At trial, plaintiff adduced evidence of extensive damage done to his vehicle by vandals while the vehicle was at defendant’s storage facility.

The threshold inquiry required a determination of whether a bailment had actually occurred. Williston defines bailment as “the rightful possession of goods by one who is not the owner.’’² Case law, however, has traditionally emphasized that a delivery by the bailor must occur.³ Thus, what type of bailment has occurred if a towing service towing away a car can be construed as meeting the criteria of delivery by the bailor?

Prior to Hatfield, it was well settled in South Carolina that three exclusive bailment classifications existed. The first classification is a bailment for the sole benefit of the bailor. Under this classification, the bailee is held to a duty of mere slight care and liability attaches only upon proof of gross negligence. McLaughlin v. Sears Roebuck & Co. is the classic case illustrative of this standard.⁴ There, the South Carolina Supreme Court reasoned that although purchasing new tires and leaving the old ones might initially suggest a bailment for mutual benefit, an action based on the old tires being unavailable months later moved the analysis to that of a bailment for the sole benefit of bailor. Unfortunately, McLaughlin also explains the heightened gross negligence standard of conduct in terms of failing to use ordinary care, which sounds like simple negligence.

The second classification of bailments is that of the bailment solely for the benefit of the bailee. The paucity of authority that exists on this classification is essentially confined to Am.Jur. and C.J.S. annotations. Query whether a tow and storage ultimately resulting in monetary payment to the bailee without the perception of ascertainable benefit to the bailor might conform to this classification. If so, the bailee would have been held to a duty of great care and liable for slight negligence. The third and final classification is the most frequently applied and litigated: the bailment for mutual benefit, which requires the bailee to exercise ordinary care while in the custody of the article.⁵

These classifications remain the law in our state and were applied in the seminal case of Hatfield. This represents a unique doctrinal resistance to modern trends most starkly illustrated in the distinctly different burdens of proof required to prevail in a bailment action as contrasted with a claim sounding in negligence. It is well settled that a plaintiff in a negligence action is required to prove by the preponderance of the evidence each and all the elements of negligence.⁶

Conversely, in a bailment case, the bailor need only prove by a preponderance of the evidence that the item was delivered to the bailee in good condition and that the bailee received the article in expectation of receiving payment or other benefit.⁷ It is at this point that South Carolina law follows a minority view and shifts the burden of proof to the defendant bailee to prove by the preponderance of the evidence that the bailee exercised ordinary care. The decisions of this Court both prior and subsequent to Fleischman would seem to leave no doubt that the burden is upon the bailee to prove due or ordinary care on his part, to the satisfaction of the jury, if he is to relieve himself of liability for goods not returned in accordance with the contract of bailment. Whether a bailee has exercised due care with regard to stored goods has to be determined with reference to all the circumstances of the particular case. The bailee is required only to exercise ordinary diligence, but diligence being a relative term, the circumstances surrounding each particular case must be considered. The standard of care is necessarily variable with respect to the facts, although it may be uniform with respect to principle. What is due care or ordinary diligence and what is to the contrary, negligence, are questions more of fact than of law. Arkwright Mills v. Clearwater Mfg. Co., 217 S.C. 530, 61 S.E.2d 165; Scott, Williams & Co. v. Crews, 2 S.C. 522. The last cited case contains a most interesting discussion of the degree of care on the part of a bailee demanded by prudence at variant times and places.⁸

Consistent with general legal principles, this burden by the bailee is not satisfied through general posted disclaimers in a business.⁹ However, there is authority to support a defense by the bailee of placing a bailor on actual express notice of special terms or hazards where that bailor expressly accepts the conditions and those terms are not in violation of law or public policy.¹⁰

In Hatfield, the evidence demonstrated that the defendant towing company stored the towed vehicle behind a locked fence. Additionally, an office area for a guard was nearby. The guard’s duties included periodically checking the storage area. Vandals entered the storage area by cutting a hole in the fence. Moreover, evidence of the guard being present at the time the vandalism occurred was lacking. These facts, neither then nor now, appear to conform with the three rigid bailment classifications then in effect. Similar to the wise rationale preventing the author from going anywhere near chainsaws, back-hoes, and pretty much all power tools, magistrates in our judicial hierarchy are typically disabused of any notions regarding creating new jurisprudence. Accepting the legal restrictions imposed yielded the inescapable logical conclusion that the standard of care must have been ordinary care, since any argument that the towing of a car constituted a gratuity bestowed upon that driver seems at the least disingenuous.

The appeals that followed resulted in the establishment of a fourth bailment category not heretofore seen in the state. Judge Anderson adopted the view of some other jurisdictions that a bailment could consist of an implied contract, and that such an implied contract could arise by operation of law and constitute a constructive bailment.

The law regarding damages in bailment claims is also somewhat different from standard negligence principles. The bailor is under no duty to mitigate damages. Additionally, if the chattel is lost or stolen and the liability of the bailee is established, the bailor is not obliged to attempt recovery of the personal property.¹¹ The measure of actual damages follows more traditional standards. The bailor may obtain damages in the amount that would compensate fully for the actual loss that was proximately caused by the bailee.¹² Thus, similar proximate cause analysis regarding cause-in-fact and legal foreseeability apply. The resolution of proximate cause issues is of course typically within the province of the trier of fact.¹³ Proof of delivery in good condition and return of the item in damaged condition is enough to create a prima facie case entitling the bailor to a verdict if no evidence is offered to prove due care by the bailee.¹⁴

The customary rules regarding punitive damages are applicable to bailments. Thus, a bailor may recover exemplary damages for conduct proven to be willful or wanton.¹⁵ The duty of care in a constructive bailment appears to be the same upon the bailee as a bailment for mutual benefit based on the Hatfield case. The facts of that case can certainly support the symmetrically linear policy notions that often underpin legal principles since because Gilchist received an economic benefit that the standard of care under our new constructive bailment category are consistent with those of a bailment for mutual benefit. Yet, suppose the bailee was a governmental agency not governed by the private market or suppose that emergency conditions had existed. The legal standard of care under the classification system utilizes a benefits approach by each party that is arguably less clear in the constructive bailment analysis. A bailment statute existed for some time in our state that contained a recording component. It is clear then that the burden has shifted both legally and, in a trial, factually. What is unique about a bailment under our state law in this regard that is so distinct from negligence theory and the requisite burden of proof seem to be unanswered questions. Suggestive that perhaps a more efficient analysis might simply permit the trier of fact to determine if the bailee demonstrated ordinary care under the circumstances that existed at the time the claim arose. Potential evidentiary difficulties arguably exist of course to retain the burden shifting concept, but the retention of a rigid classification system of liability may invite a fresh look into streamlining the focus for jurors and all triers of fact.

The Hon. James A. Turner is magistrate judge at Charleston County Small Claims Court.

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Notes:

[1] Hatfield v.

Gilchrist, 343 S.C. 88, 538 S.E.2d 268 (Ct.App. 2000).

[2] 4 Williston, Law of Contracts (1936).

[3] See Hatfield, at 96, 538 S.E.2d at 272 (“A bailment is created by the delivery of personal property by one person to another in trust for a specific purpose, pursuant to an express or implied contract to fulfill that trust.”)

[4] McLaughlin v.

Sears Roebuck & Co., 188 S.C. 358, 199 S.E. 413 (1938).

[5] See Kelly v.

Capital Motors, Inc., 204 S.C. 304, 28 S.E.2d 836 (1944).

[6] See Kelly v.

Capital Motors, Inc., 204 S.C. 304, 28 S.E.2d 836 (1944).

[7] Gilland v.

Peters Dry Cleaning Co., 195 S.C. 417,11 S.E.2d 857, 858 (1940)

[8] See Fortner v.

Carnes, 258 S.C.455, 460, 189 S.E.2d 24, 26-27 (1972).

[9] See Gaskins v.

Fowler Gin Co., 218 S.C. 201, 62 S.E.2d 119 (1950).

[10] Marlow v.

Conway Iron Works, 130 S.C. 256, 125 S.E. 569 (1924).

[11] Indus. Welding

Supplies v. Atlas Vending

Co. Inc., 276 S.C. 196, 277 S.E.2d 885 (1981).

[12] Hatfield, at 99, 538 S.E.2d at 274.

[13] Childers v.

Gas Lines, Inc., 248 S.C. 316, 324, 149 S.E.2d 761, 765 (1966).

[14] Gilland, at 417, 11 S.E.2d at 858.

[15] Harris v.

Burnside, 261 S.C. 190, 196, 199 S.E.2d 65, 68 (1973).

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