Court of Appeals Decision Reminds Bailees That They Have a Duty to Care for Bailors’ Property While it is in Their Possession

Posted on: April 29th, 2019

Plaintiff and Defendant were business associates, who had an oral agreement regarding a salvage yard business. Plaintiff locked Defendant out of the business and filed suit for breach of an oral contract. Plaintiff also obtained a temporary injunction that prevented Defendant from returning to the business property, where many of Defendant’s tools, equipment, and inventory remained. While the injunction was in place, Plaintiff allowed his son to operate the salvage yard, including access and use to all of Defendant’s tools, equipment, and inventory, that remained on the property. Plaintiff stored some of Defendant’s tools, equipment, and inventory in a warehouse, while some items, including three motors, were placed in a bus and ultimately became rusted. Defendant filed a counterclaim against Plaintiff for breach of contract, conversion of property, unjust enrichment, and bailment.

Following a bench trial, the district court found Plaintiff had breached the oral contract with Defendant and had converted Defendant’s property. The district court awarded Defendant a total of $64,990.23 for the full value of the converted property, which included vehicles, equipment, and cash. Plaintiff appealed, arguing that the district court erred in concluding that Plaintiff was negligent in storing and caring for Defendant’s property.

On April 17, 2019, the Court of Appeals affirmed the district court’s decision in part and reversed in part, finding the evidence sufficient to show conversion of some but not all of Defendant’s property. In support of its decision, the Court noted that “[t]he law imposes specific duties upon bailees to care for the bailor’s property while it is in their possession. The degree of care required to be exercised by a bailee depends upon the type of bailment.” In this case, the temporary injunction created a gratuitous or involuntary bailment and Iowa law imposes liability on the bailee “if a reasonable degree of care is not exercised.” The Court found Plaintiff failed to exercise reasonable care in storing and caring for the items that he placed in the bus, including the three motors, and Plaintiff’s failure rendered these items valueless.

Heal v. Anderson, No. 18-0565 (Iowa Ct. App. Apr. 17, 2019).

Read more news articles »