Subrogating Under a “Bailment” Theory

A bailment is defined as a delivery of personalty for some particular purpose, or on mere deposit, upon a contract express or implied, that after the purpose has been fulfilled it will be redelivered to the person who delivered it, or otherwise dealt with according to that person’s directions or kept until it is reclaimed.[1] A bailment generally involves someone giving an item to someone else to hold. The most common example of a bailment is a parking garage, where you pay someone to hold your car for you. In determining whether a bailment exists, the courts will look at whether the owner of the item relinquished possession and control over it. [2]

I recently had a trial involving a lost wedding ring. Mrs. Insured (accompanied by her husband) went to have an MRI and other tests done at an imaging facility. She was not told to remove jewelry prior to the date of the testing. She was not advised when she checked in at the front desk to remove her jewelry. Nor were any signs posted and no lockers were available for use. A few minutes prior to her exam, after she had already changed into a hospital gown, a technician noticed her diamond wedding ring and asked that she remove it. She handed the ring to the technician, who assured her: “Don’t worry, I’ll take care of.” The ring was allegedly put on Mrs. Insured’s stack of clothes on top of a laundry bin. The technician never advised Mr. Insured (who was nearby) that the diamond ring had been removed and never handed the ring to Mr. Insured. When Mrs. Insured completed her tests, the ring was missing. When the imaging company declined to reimburse the Insureds, a claim was made and paid by the Insureds’ homeowner’s carrier. I sued the imaging company and the matter proceeded to a small claims court bench (i.e., non-jury) trial. The court issued a decision finding in favor of my subrogating carrier. The court rationalized that a bailment was created when the technician took physical possession of the ring and assured Mrs. Insured that he would “take care of it.” The court found that the bailment was “gratuitous” (ie., the technician was not paid to take care of the ring – he did it voluntarily), but that the imaging company was nonetheless liable for the cost of the ring due to their failure to safeguard and return the ring.

Bottom Line:Consider using a bailment theory for subrogation recovery. In the case of a parking garage, be careful to investigate whether the garage has any limiting language posted on signs or on your receipt for your car which might limit the garage’s liability in case your car is stolen or damaged.
[1] 9 NY Jur Bailments & Chattel Leases §1 citing Herrington v. Verrilli, 151 F. Supp. 2 d449 (SDNY 2001)

[2] Schaefer v. Grausmall Restaurant Corp., 196 AD2d 692 (1 Dept 1993)