U.S. Fire Ins. Co. v. Paramount Fur Service, Inc.

• Decision Date: 28 January 1959
• Docket Number: No. 35506,35506
• Citation: 7 O.O.2d 267,168 Ohio St. 431,156 N.E.2d 121
• Parties: , 7 O.O.2d 267 UNITED STATES FIRE INS. CO., Appellee, v. PARAMOUNT FUR SERVICE, INC., Appellant.
• Court: Ohio Supreme Court

Page 431

168 Ohio St. 431

156 N.E.2d 121, 7 O.O.2d 267

UNITED STATES FIRE INS. CO., Appellee, v.PARAMOUNT FUR SERVICE, INC., Appellant.

No. 35506.

Supreme Court of Ohio.

Jan. 28, 1959.

Syllabus by the Court

1.Where an owner of property makes a contract with a bailee for its storage and that contract does not authorize the bailee to make a subcontract that is made with a second bailee for the storage of that property, but where the second bailee does not know and has no reason to know that the contract of bailment made with him was not authorized and that the first bailee had no power or authority to deliver the property to the second bailee pursuant ot the terms of the contract made with him and where the owner of the property has not notified the second bailee of his interest in the property, the acceptance and storage of such property by the second bailee pursuant to the contract of bailment made with him will not amount to a conversion by the second bailee.

2.Mere negligence of a bailee in caring for the bailed property will not amount to a conversion.

3.A person's failure to exercise ordinary care in doing or failing to do something will not amount to actionable negligence unless such person owed to someone injured by such failure a duty to exercise such ordinary care.

4.Where, otherwise than by a mutual contract of bailment, one person has lawfully acquired the possession of personal property of another, the one in possession is, by operation of law, generally treated as a bailee of such porperty and may therefore be referred to as a constructive bailee.

5.Ordinarily, such a constructive bailee, like any other uncompensated bailee, does not owe to the owner of the bailed property the duty to exercise ordinary care to protect such property, and is not therefore liable to the owner thereof for mere negligence in protecting such property.

6.Where an owner of personal property alleges and proves that he delivered that property to a bailee under a contract of bailment that he made with such bailee and that such bailee thereafter delivered the property to a second bailee under a contract of bailment made between the first and the second bailees and where the contract of bailment that the owner made provides that the value of the bailed property shall be considered as not over $100 and that liability for its loss shall be limited to that amount, the owner of the property is bound by that agreement in an action against the second bailee for a loss of the bailed property alleged to have been caused merely by the failure of that bailee to exercise ordinary care for its protection.

7.In such a case, if the first bailee had no authority to make a contract of bailment with or deliver the property thereunder to the second bailee and if the owner elects to treat the first bailee as a converter for doing so, the owner cannot thereafter take the inconsistent position that he may recover from the second bailee for loss caused to the property by a mere failure of the second bailee to exercise ordinary care for its protection

8.In a case such as stated in paragraph six of the syllabus, when the subcontract of bailment between the first and second bailees contains an agreement that the value of the property bailed shall be considered as $1 and liability for its loss shall be limited to that amount but there is no evidence that would support a conclusion that the owner either authorized or consented to or knew about the bailee agreeing to such a limitation, the owner is not bound thereby.

This action was instituted by the plaintiff, an insurance company, to recover $1,800 that it paid to its insured, a Mrs. Bunin, on account of the loss of her fur coat which such insurance company had insured against loss.To simplify consideration of this case, Mrs. Bunin will be referred to herein as 'the owner.'

The petition contains the following allegations:

'In May of 1949, * * * [the owner] arranged with * * * Goldman * * * to, and did, store a certain beaver coat of the value of $1,800 during the summer months.

'Because of inadequacy of storage space * * * Goldman * * * then arranged to, and did, store the said coat * * * with the defendant, a corporation engaged in the wholesale storage of furs.It was a part of the storage contract last mentioned that the defendant's employees should pick up, store and redeliver to * * * Goldman * * * all furs handled for it by said defendant.

'On * * * November 12, 1949, * * * defendant's employees were engaged in delivering certain furs, including the said furs of * * * [the owner] to various retail establishments * * * and while so doing failed and neglected to lock or guard the panel-type truck containing said valuable cargo of furs.As a proximate result of this negligence, a person or persons unknown were able to and did enter said truck, while left so unlocked and unattended, and were able to and did remove therefrom the fur of * * * [the owner] * * *.

'* * *

'The said loss to * * * [the owner] was the direct and proximate result of the negligence of * * * defendant * * * through its officers, agents and employees, in the following respect:

'1.The failing to replace its said drivers * * * when it knew, or, in the exercise of ordinary care, should have known that such drivers had shown a careless, negligent and indifferent attitude * * *.

'2.In failing and neglecting properly to train its personnel * * * when it knew or, in the exercise of ordinary care, should have known that such improper training could result only in a careless, negligent and indifferent attitude * * *.

3.In assigning, to work on the trucks carrying such valuable furs, drivers with insufficient training and experience to safeguard properly their valuable cargoes when they knew or, in the exercise of ordinary care, should have known that assigning such improperly trained drivers endangered the safety of the valuable cargoes * * *.

'4.In failing and neglecting to furnish proper equipment in the form of automatic locks on the doors of its trucks when it knew, or should have know, the careless, negligent and indifferent manner in which its drivers were leaving their truck doors unlocked * * *.

'5.In the failure and neglect of its drivers to lock the said truck and in leaving it unattended * * *.

'6.In the failure and neglect of either of its two drivers * * * to remain with and to properly safeguard said * * * furs.

'7.In the failure and neglect of its two drivers immediately to report the said loss to the * * * police * * *.'(Emphasis added.)

In its answer, defendant alleges that, by the contract of bailment that the owner made with Goldman, a valuation of $100 was placed on the coat and thereby Goldman's liability is limited to that amount; and that Goldman, as the agent of the owner, delivered and stored the coat under a contract of bailment with defendant, and, as agent of the owner, placed a value of $1 on the coat and thereby limited defendant's liability to that amount.

The owner testified as follows:

'* * * when I placed * * * [the coat] there for storage I asked [Goldman] what is the minimum cost to me for the purpose of storage, and the minimum * * * was $3 to storage the coat, as including the valuation of only the minimum for that which would have been $100; and inasmuch as my coat was insured for the true value, I wanted to just pay the minimum for the storage, which is reasonable.'

The owner further told Goldman that she had $1,800 insurance on the coat.

Plaintiff introduced into evidence the fur storage receipt given to the owner by Goldman which states that the valuation of the coat was $100 and provides so far as pertinent:

'3.Terms of storage insurance provide that liability never exceeds the agreed declared value of the goods insured as evidenced on the face of this receipt.'

Plaintiff also introduced into evidence a storage receipt given by defendant to Goldman indicating receipt of a number of coats including plaintiff's coat.

The evidence discloses without dispute that this receipt was issued pursuant to a contract between Goldman and defendant which plaintiff introduced into evidence and which provides in part:

'* * * [the defendant] will place a value of $1 on any item sent in without a declared value.This shall be the extent of our bailee liability. * * *'

There is no evidence that any value was declared for the owner's coat when sent to defendant by Goldman.The service charge for storing the owner's coat under the contract between Goldman and defendant was 75 cents.

The trial court charged the jury that, if defendant failed to exercise ordinary care for the owner's coat, such failure would constitute negligence, and, if such negligence was a proximate cause of the loss of the owner's coat, plaintiff could recover, but that any recovery by plaintiff should be limited to $100.

The jury brought in a verdict for plaintiff for $1, upon which verdict, judgment was rendered for plaintiff.

On plaintiff's appeal to the Court of Appeals, that court held that, since the verdict of the jury had determined that defendant was negligent, plaintiff was entitled to recover; that, since the bailment by Goldman to defendant was made without the knowledge or consent of the owner, such bailment constituted a conversion by Goldman so that the contract between the owner and Goldman with respect to the valuation of the coat was abrogated; and that therefore plaintiff could recover from defendant for the full value of the coat.The Court of Appeals thereupon rendered final judgment for the plaintiff for $1,800, an amount which the undisputed evidence disclosed as the value of the coat.SeeOhio App., 145 N.E.2d 844.

This court allowed defendant's motion to certify the record, and was influenced in doing so partly because of an apparent conflict between the judgment of the Court of Appeals and the judgment of another Court of Appeals.SeeEmployers' Fire...