Daily Development for Wednesday, June 13, 2001

By: Patrick A. Randolph, Jr.
Professor of Law
UMKC School of Law
Of Counsel: Blackwell Sanders Peper Martin
Kansas City, Missouri
prandolph@cctr.umkc.edu

PERSONAL PROPERTY; FINDERS; CLASSIFICATION OF FOUND PROPERTY: When a box containing a large sum of money is found hidden in a motel, the motel owner has possessor rights to it (as a gratuitous bailee), superior to those of its finder.

Terry v. Lock Hospitality, Inc., 37 S.W.3d 202 (Ark. 2001), 343 Ark. 452 (2001).

Contractors ("Finders") were renovating appellee's ("Owner's) motel, when they found a dusty box behind a ceiling which contained over $38,000.00 in old currency. Owner was in the room at the time of the finding, and Finders actually gave Owner the box. Later, they sued to determine the right to possession of the box pending the (unlikely) return of the "true owner" of the money. Finders sought an injunction against Owner, asserting both that the Owner was holding the money in a constructive trust for Finders.

The Supreme Court of Arkansas, commenting that the issue was one of first impression in Arkansas, approved the lower court's adoption of the "classification" approach to sorting out the relative rights of finders and the owners of property on which the find occurred. It further affirmed the lower court's holding that the box of money was "mislaid" and was not "lost" or "treasure trove." Therefore, Owner had superior possessory claim over Finders.

The court relied heavily on the opinion of the Supreme Court of Iowa in Benjamin v. Lindner Aviation, Inc. 534 N.W.2d 400 (Iowa 1995), the DIRT DD for 11/28/95, which embraced one of the traditional common law approaches to the problem of sorting out the rights of finders vs. owners of the property where found. This approach establishes. four categorizations of found property, as follows:

a. Abandoned property: property that is thrown away or forsaken by its owner or that which is involuntarily lost without expectation of being found. Abandoned property becomes the property of the finder, subject to the superior claim of the owner.

b. Lost property: property from which the owner has involuntarily parted with and "unwittingly suffered to pass out of his possession". The finder of lost property is its rightful owner against all others except for its original owner.

c. Mislaid property: property "which is intentionally put into a certain place and later forgotten." "A finder of mislaid property acquires no ownership rights in it, and, where such property is found upon another's premises, he has no right to its possession." The owner of the premises in which the mislaid property was found has superior rights of ownership.

d. Treasure trove: property in the form of gold or silver or bullion, the owner of which is unknown, "found concealed in the earth or in a house or other private place, but not lying on the ground." To be categorized as treasure trove, the property must have been hidden" so long as to indicate that the owner is probably dead or unknown." "Title to treasure trove belongs to the finder, against all the world except the true owner."

(The court acknowledged that species, rather than bullion has sometimes been viewed as treasure trove.)

The trial court had found that "the money in controversy was intentionally placed where it was found for its security, in order to shield it from unwelcome eyes" and was therefore "mislaid property". The court further reasoned that the money was not old enough to be deemed treasure trove. The Supreme Court agreed, noting that the box appeared to be placed intentionally above the ceiling for later retrieval. As the box was found on the premises of the motel owner and presumed to belong to a hotel guest, such owner has the right to possess the property as a gratuitous bailee, with a duty to use ordinary care to return it to its owner.

Comment 1: Most readers will remember wrestling with these issues during the early days of their first year Property classes. Professors deal with questions like this early because they give students a sense of how much confusion can exist in the common law, how courts can sometimes blindly embrace ruleoriented approaches without any sense of policy, and because, candidly, so little is at stake.

The court here describes no policy rationale for the categorization process at all; it just cites precedent. But some of the other cases on which it relies suggest that "mislaid" property should go to the owner of the place of finding because the party that mislaid the property likely will return to that place when looking for it. Unfortunately, the analysis is often applied to circumstances, as here, where it is more likely that, after concealing the box in the ceiling, the true owner of the property either died or formed the intent (perhaps in prison) not to return for the money.

In the editor's view, that was also the case in the Iowa decision in Benjamin.

Further, there is a quick answer to the argument that giving mislaid property to the owner of the property is most likely to result in return to the true owner. If the finder knows that if he reveals the fact that he has found something valuable, the owner of the place where the find occurs will get control it, the finder most likely will quietly disappear with the find, and no one the wiser. This, of course, is the least likely circumstance in which the found property will get to its true owner.

(In the instant case, since Owner was present when the find occurred, there is a greater likelihood that the owner of the real estate is the bailee with the greatest chance of returning the property to the true owner of the money, but the circumstances suggest that that true owner will never return)

Comment 2: In his Property class, the editor compares the "categorization" rule to the several other approaches developed by the courts, and asks the students to think about whether the complexities of this analysis ought to matter very much. Neither the owner of the real estate nor the finder of the personal property has any legitimate claim to benefit from the found property. So perhaps the court should establish the cleanest, simplest, rule, for the sole purpose of keeping these cases from cluttering up the courts. In the editor's view, this rule is "finders/keepers" except when the finder is trespassing or exceeding his license to be on the property.

In the one case in which there might be some meritorious equitable claim where the found goods are treasure and the finder has used expertise looking for them we already follow the "finder's keepers" rule for treasure trove, so my suggested approach would be consistent.."

Note that in Oregon decision in Danielson, one of the cases cited with approval by the Arkansas court here, , the court applied categorization to resolve the dispute even when the finders were trespassers. Further, treasure trove also is said to pass to the finder even when the finder is trespassing. The editor would reject both rules, in the interests of adopting an approach that discourages trespassing. In the modern world, preserving the integrity of exclusive possession is an issue gaining greater prominence.

But that's just the editor's opinion, and, as another sage sometimes comments, "I could be wrong."

Comment 3: There's a pretty thorough discussion of the competing theories on this issue in Brown on Personal Property, which I believe is now being updated by Barlowe Burke.

Readers are urged to respond, comment, and argue with the daily development or the editor's comments about it.

Items in the Daily Development section generally are extracted from the Quarterly Report on Developments in Real Estate Law, published by the ABA Section on Real Property, Probate & Trust Law. Subscriptions to the Quarterly Report are available to Section members only. The cost is nominal. For the last six years, these Reports have been collated, updated, indexed and bound into an Annual Survey of Developments in Real Estate Law, volumes 1‑6, published by the ABA Press. The Annual Survey volumes are available for sale to the public. For the Report or the Survey, contact Maria Tabor at the ABA. (312) 988 5590 or mtabor@staff.abanet.org

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