Chapter 8 Protecting patrons' property.
Risks to Property in the Hotel
Limitations on the Absolute
Clothes and Other Personal Property
Estoppel: Loss of Limited Liability
Liability during Check-In and Check-Out
Hotel guests bring a variety of personal property to hotels, including money, jewelry, computers and other electronic devices, clothing, sports equipment, and cars. Business travelers may bring merchandise samples or inventory for sale. Hotels often provide safes for such property, but guests may choose not to use them. Sometimes property may be left in the lobby, a restaurant, the pool area, other rooms in the hotel, or in a guest's car parked in a hotel parking lot. Occasionally, guests' property is stolen. This chapter will discuss the liability of a hotel or restaurant when property disappears.
Risks to Property in the Hotel
Hotel theft is a problem the hospitality industry has not fully solved. The liability of the innkeeper for losses has lessened over time. Whereas the law long ago imposed full responsibility on the innkeeper for goods stolen from the premises, states today have chosen to relieve the hotelier of a significant portion of that liability.
Unfortunately, hotel thefts are not rare. Hotel crime is an industry-wide problem. Most hotel thieves are professionals seeking money, jewels, or credit cards. They often register as guests in the hotel they plan to burglarize. The many tricks of the hotel thief include offering money in exchange for confidential information from maids, bartenders, or other hotel personnel. These thieves generally do not carry a weapon; if surprised in the act, they may convincingly feign drunkenness.
Hotels have developed numerous strategies to stem the increase of hotel thefts, including increasing the number of security personnel; hiring trained professionals; warning guests to lock their rooms and put their valuables in a hotel safe; installing closed-circuit televisions to monitor hallways; installing electronic lock devices for guest rooms, which are changed for each guest using the room; preventing access by retained keys; instituting tighter security checks on employees; and, in small hotels, installing electronic lobby doors that can be opened only by the desk clerk when a guest is recognized.
Alliances between the police and hotel security staff can enhance efforts to reduce crime. For example, big city police departments often have a hotel unit that concentrates on crimes committed at city hotels. The officers in the unit and the security forces at hotels meet regularly to share information and alert each other to potential problems. Issues discussed include new methods of committing breakins, security occurrences, and the latest in detection techniques and prevention devices.
Keycards and Keys
Most hotels today have abandoned the use of keys and instead use electronic keycards, also called punch-cards, which have a magnetic strip. These devices allow the hotel to change the code that opens the door every time a new guest occupies the room.
The keycard system, which has gained wide acceptance in the hotel industry, was inspired by problems associated with traditional keys. Some hotel guest-room keys could easily be duplicated. Guests often checked out of a hotel and failed to return the key, enabling an underground market among thieves for hotel keys. A hotel in Kentucky with 227 guest rooms had an average of 50 keys a month carried away, only about one-third of which were eventually returned. A would-be thief is often willing to pay a good price for guaranteed easy entrance to a hotel room.
To help avoid these problems, hotels that still use keys should avoid printing the name and address of the hotel or the room number on the key. Many hotels cross-code keys so that the number on the keys is not the room number.
Many people are not personally insured against the loss of their valuables. Therefore if their property is stolen while they are at the hotel, they are likely to sue the hotel seeking compensation. If a traveler whose property disappears does have insurance coverage and recovers the loss from the insurance company, the hotel is not relieved from liability. Normally the guest's insurance policy provides that the insurance company is subrogated (substituted) to the legal rights of the guest. This means that the insurance company can sue the hotel to recover the money the insurance company paid to the guest. If the hotel was liable for the loss, the insurance company will collect.
Absolute Liability for Guests' Goods
In prior times and according to common law, hotelkeepers were liable for any loss of guests' property occurring on hotel premises. This doctrine was called absolute or strict liability and applied to guests' property that was infra hospitium, literally meaning "within the inn." Thus, if property was stolen or otherwise disappeared from the hotel, the innkeeper was liable to reimburse the guest even if the innkeeper did nothing wrong. This strict rule originated several centuries ago when inns were not always safe and the innkeeper was often the culprit. The rule contributed in no small measure to an increase in the level of safety associated with travel because innkeepers sought ways to protect their guests' valuables and thereby avoid liability. The hotel industry has changed substantially since those early days. We will see shortly that the rule of absolute liability has likewise been modified.
Exceptions to the Absolute Liability Rule
Almost every rule of law has exceptions, and the outdated rule that held the innkeeper absolutely liable for guests' goods was tempered by three exceptions:
1. Loss was attributed to what the law calls an act of God, which includes earthquakes, lightning, snowstorms, tornadoes, and floods;
2. Loss caused by a public enemy, which includes wartime and terrorist activities; and
3. Negligence by the guest, such as leaving luggage unattended in the lobby.
Prima Facie Liability Rule--Minority View
Six states have adopted a rule that modifies the common law absolute liability rule as follows: Hotelkeepers are liable for property loss only if the loss occurs through their negligence; if the innkeeper can prove that the loss resulted from some other cause, for example, if the goods are stolen by robbers without the aid or negligence of the innkeeper, the innkeeper is not liable. This is called the prima facie liability rule. If, however, the innkeeper cannot prove that it is free from negligence, the innkeeper will be liable for the loss. The six states that have adopted this rule are Illinois, Indiana, Maryland, Texas, Vermont, and Washington.
Justification for the rule was stated in an early case from Indiana:
Innkeepers, on grounds of public policy, are held to a strict accountability for the goods of their guests. The interests of the public, we think, are sufficiently [served] by holding the innkeeper prima facie liable for the loss or injury of the goods of their guests; thus throwing the burden of proof upon [the innkeeper], to show that the injury or loss happened without any fault whatever on his part, and that he exercised reasonable care and diligence. (1)
Limited Liability--Modern Limitations on the Absolute Liability Rule
As hotels grew in size and the number of travelers increased, the difficulty of safeguarding property increased. Current law recognizes that the absolute liability rule is unnecessarily burdensome to modern-day hotels and innkeepers. All state legislatures have adopted statutes to limit significantly hotelkeepers' liability for guests' property losses, provided the hotels follow specific procedures. The result of these statutes is that a hotel that complies with the mandated rules will face liability of only a few hundred dollars, even if guests' property valued at many thousands of dollars or more is stolen.
While the details of these statutes vary from state to state, certain common provisions exist, as follows:
* The hotel must provide a safe for use by guests to protect their property;
* The hotel must post notices announcing to guests the availability of the safes;
* The hotel must post notices announcing that the hotel's liability for guests' property is limited; and
* The maximum recovery allowed to a guest for stolen or lost property is prescribed by statute and is usually substantially less than the value of the missing property. For example, a statute may specify that the maximum liability will be $1,000 regardless of the value of the lost property. If a hotel complies with the statute and a guest's $50,000 ring is stolen, the hotel will be liable to the guest for only $1,000.
In essence, limited liability statutes provide that if a hotel proprietor provides a safe or safe deposit box for the storage of valuables and posts conspicuous notice that a safe is available, a hotel guest who fails to use the safe or safe deposit box cannot hold the hotel responsible if his valuables are later lost or stolen. Alternatively, if the guest utilizes the safe, the hotel owner will be liable only for the limited amount provided in the statute. In a New York case a guest left several thousand dollars in cash and checks in his hotel room and they were stolen while he was at dinner. The hotel had properly posted notices that safes were available. The guest could not recover from the hotel for the loss because he had failed to store the items in the safe. (2) If the guest had locked the items in the safe and they were stolen, the hotel would have been liable to the guest, but only for a limited amount of money.
To qualify for the reduced liability, the hotel must strictly comply with the statute's mandates. Courts interpret them very strictly. If the innkeeper deviates from the requirements of the statute in any manner, the common law rule will apply and the innkeeper will have unlimited liability. Thus, innkeepers must be careful to provide the mandated safe, post the necessary notices in the required places, and otherwise strictly comply with the applicable state statute.
In this chapter, the laws that restrict innkeepers' liability will be called limiting liability statutes or limiting statutes. Each of the requirements for limited liability outlined above will be discussed separately.
Providing a Safe
Almost invariably, the limiting liability statutes require that the innkeeper provide a "proper safe" for guests' valuables. In the past, hotels uniformly provided a safe or safe deposit boxes in a central location, usually in the vicinity of the front desk. A popular alternative today is for hotels to provide individual safes in each guest room.
In Case Example 8-1, the hotel provided a central safe but it was not available late in the evening when the plaintiff sought to deposit two diamond rings. What impact do you think that fact had on the hotel's liability? See if your answer agrees with the judge's decision.
CASE EXAMPLE 8-1 Zaldin v. Concord Hotel 421 N.Y.S.2d 858 (1979) Plaintiffs, registered guests, bring suit on a theory of absolute liability for the loss of two valuable diamond rings that disappeared from their hotel room. In its answer, the defendant hotel pleaded [New York's limiting liability statute] by way of defense. Asserting that the hotel's vault was not available to guests at the time they attempted to place the jewelry there for safekeeping, plaintiffs moved for ... judgment.... [W]e hold that a hotel may not claim the limitations on liability afforded it by [the limiting liability statute] at times when it fails to make a safe available to its guests. [The limiting liability statute] reads: "Whenever the proprietor or manager of any hotel shall provide a safe ... for the safekeeping of any money, jewels, ornaments, bank notes, bonds, negotiable securities, or precious stones, belonging to the guests ... and shall notify the guests or travelers thereof by posting a notice stating the fact that such safe is provided ... in a public and conspicuous place and manner in the office and public rooms ... and if such guest or traveler shall neglect to deliver such property ... for deposit in such safe, the proprietor or manager ... shall not be liable for any loss of such property, sustained by such guest or traveler by theft or otherwise." ... The statute goes on to limit a hotel's liability for property so deposited with it, whether the loss is sustained "by theft or otherwise," to a sum not exceeding $500. ... It is agreed that on Friday afternoon, the plaintiffs William and Shelby Modell, accompanied by their daughter [Anna Zaldin] and son-in-law, checked into the defendant's large resort hotel. No one disputes but that the hotel provided a safe-deposit vault for the use of its guests and that shortly after the plaintiffs' arrival, the daughter requested and was assigned one of its boxes. Plaintiffs allege that she then placed two diamond rings belonging to her mother in the box and that late the following afternoon, she withdrew them from the box for her mother to wear while attending the Saturday evening festivities sponsored by the hotel. Sometime after midnight, however, upon the conclusion of the hotel's nightclub performance and before retiring, when the Modells and their daughter attempted to redeposit the jewelry, a hotel desk clerk informed them that the vault was closed and that they would have to retain possession of their valuables until it was opened in the morning. The defendant concedes that it would not allow guests access to the vault between the hours of eleven in the evening and eight in the morning. The Modells claim they thereupon secreted the jewelry in their room only to find, upon arising at about 9:00 a.m., that the chain lock with which they had secured the room had been cut from the outside and the rings were missing. They promptly notified the hotel and police of what they took to be a theft. In now applying the statute to this factual framework, we first remark on the obvious: The statute's wording is plain.... [W]hen, as here, a statute is free from ambiguity ... we must do no more and no less than apply the language as it is written. Thus read, the statute offers the innkeeper an option: "Provide" a safe for your guests and sharply restrict your liability; or, feel free to do absolutely nothing about a safe and continue the risk of exposure to open-ended common law liability. But, whichever choice you make, since the statute is in derogation of [deviates from] the common law rule, to obtain the benefit of the more circumscribed liability ... you must conform strictly to its conditions. The statute fixes no time when a safe may or must be provided. Nor does it mandate availability around the clock.... These matters are left entirely up to the hotel. The statute makes no effort to evaluate cost or convenience. Neither does it distinguish between large and small inns, between those that cater to the large convention and those that cater to the individual patron, between those that come alive at night and those that do so in the day, between those that have a wealthy clientele and those that do not. The legislative formula is uncomplicated. It says, straightforwardly, that "whenever" a safe is provided, the liability limitations shall be applicable. Conversely, at those times when an innkeeper chooses not to provide a safe for the use of its guest, he cannot claim the statutory protection.... More specifically, nowhere does [the limiting liability statute] suggest that an innkeeper may provide a safe part of the time and yet gain the benefit of the exemption all the time.... [Judgment for plaintiffs.] CASE QUESTIONS 1. Did the hotel violate any law by closing the safe during the night? 2. What was the consequence of failing to make the safe available at all hours?
In another case, several guests wanting to deposit jewelry in the hotel safe waited for the night clerk for up to 40 minutes in the early morning hours. Without success they went to bed, taking their valuables with them. Following a theft that night from their room they sued the hotel. The court held the hotel was liable for the full loss because the front desk was unattended and therefore access to the safe was unavailable. (3)
Another issue is the theft-resistant qualities of the safe. If a safe is not adequate to withstand theft or fire, the hotel may not be able to benefit from the limiting statutes. Innkeepers are well-advised not to scrimp on the purchase of safes.
Posting Notice of Availability of Safe
Virtually all limiting statutes require posting of one kind or another. "Posting" means displaying a sign that calls the guests' attention to the availability of a safe and the fact that, by law, the hotel's liability for valuables is limited. Each state's statute identifies the places where the notice must be posted and what the notice must state. The required locations and contents vary from state to state. Typically, notice must be posted at the registration desk, on the check-in form, and in guest rooms.
Strict Interpretation of Posting Requirements
Failure by a hotel to comply strictly with the posting requirements will result in loss of the limited liability. The law applied in such a case will be absolute liability as imposed by common law. If the relevant state statute mandates posting in three locations, compliance with two out of the three is not good enough. This principle is illustrated in Case Example 8-2.
In a similar case, liability for $35,000 worth of jewelry was at stake. The limiting liability statute required the hotel to post notices "in the office and public rooms" (such as the lobby) and in the guest rooms. Although the hotel properly posted in the guest rooms, it failed to post in all of the public rooms. Therefore, the hotel was strictly liable and forced to pay the $35,000. (4)
CASE EXAMPLE 8-2 Searcy v. La Quinta Motor Inns, Inc. 676 So.2d 1137 (La. 1996) Plaintiff checked into the La Quinta Inn.... She left the room and returned 45 minutes to one hour later, unlocked the door, and found her suitcase practically empty, with some of her things scattered around the room.... A notice was posted by the hotel in the registration area which read, "This property is privately owned and operated. The management reserves the right to refuse service to anyone for lawful and legitimate reasons. Safety deposit boxes are available at the front desk and money, jewelry and documents or other articles of value should be deposited for safekeeping. Unless deposited, the motel assumes no responsibility for any loss or injury to such articles." The writing was very small.... [The relevant Louisiana statute states that the hotel is liable for $500 if the guest is informed of a safe and uses the safe, and then the guest's property disappears. The statute also states that the guest has the right to negotiate with the hotel manager a special written agreement in which the hotel would have greater liability.] The notice posted in the registration area clearly only advises guests that the hotel is not responsible for the protection of personal property. This notice is totally inadequate. It does not contain either the complete text of the applicable Louisiana statute or the gist of the text. The correct notice was posted in the guest room and apparently was also contained on the check-in slip. However literal compliance with the statute requires that the notice also be placed in the registration area. The hotel did not comply with the statute.... Judgment is rendered in favor of the plaintiffs in the amount of $4,938.95.
Omitting the required posting in public places was likewise the hotel's downfall in Case Example 8-3, resulting in liability in excess of a million dollars.
CASE EXAMPLE 8-3 Paraskevaides v. Four Seasons Washington 292 F.3d 886 (D.C. 2002). Thelma and Christine Paraskevaides, together with their insurance company, American Home Assurance Company, brought suit against Four Seasons Washington after $1,000.000 worth of their jewelry was stolen from a convenience safe located in their hotel room. The Four Seasons defended on grounds that their liability was limited by District of Columbia law [limiting liability statute] ... Because the Four Seasons failed to comply fully with the Innkeeper Statute ... we reverse [the decision that was made in favor of the hotel] ... The Paraskevaides checked into the Four Seasons Washington ("the Four Seasons") in Washington, DC. They brought with them close to $1,200,000 worth of jewelry to wear to various political functions around the city. The Paraskevaides stayed in a suite that consisted of two bedrooms adjoined by a living room. Each bedroom and the living room contained a "convenience safe" that was located in the back of a closet and accessible via keys provided by the hotel. The Paraskevaides placed their valuables (i.e. jewelry, travel documents, traveler's checks, etc.) in the bedroom safes rather than the safety deposit boxes that were provided by the hotel and located near the hotel's reception area. The Paraskevaides left their hotel room with their room and safe keys. Upon returning to their suite, they discovered that their room had been entered (although not forcibly) and that their bedroom safes were open and empty. Both hotel security personnel and the Washington Metropolitan Police Department were notified, but the items were never recovered ... [The court next quoted the Washington, DC limiting liability statute, which states that, if a hotel provides a "suitable" safe and "displays conspicuously in the guest and public rooms" of the hotel a copy of the statute, its liability for loss of property will be limited to $1000.] On the back wall of each bedroom closet in the Paraskevaides' suite that contained a convenience safe, the Four Seasons had posted a notice that explained the hotel's limited liability.... These disclaimers were only located on the back walls of closets that contained convenience safes; they were not posted anywhere else in the hotel. The hotel had also placed a disclaimer sticker that summarized the hotel's limited liability on the door of each safe itself.... The Four Seasons asserted an affirmative defense of a statutory limitation of liability.... Under the general common law doctrine of infra hospitium, an innkeeper is strictly liable for loss or damage to a guest's property "unless the property is lost or destroyed by an act of God, the public enemy, or fault by the guest." Many jurisdictions, however, have limited an innkeeper's common law liability to his guests through statutory enactment.... In limiting a hotel's liability, these statutes deviate from the general common law and must therefore be strictly construed. The plain language of the statute states quite clearly that a hotel must "display conspicuously in the guest and public rooms of the hotel a printed copy" of the limiting statute (or summary thereof). It is undisputed that the Four Seasons only posted a copy of the limiting statute in the guest rooms of the hotel, thereby failing to post notices in any of the hotel's "public rooms". The Four Seasons nonetheless contends that its posting of the "summary of the statute and the accompanying disclaimer notice was sufficient to place the Paraskevaides on notice of the liability limitations provided by the Innkeeper Statute ..." Perhaps the Paraskevaides had notice; perhaps not. But whether they did is irrelevant to our disposition of this case. The statute says what it says: a hotel must "display conspicuously in the guest and public rooms of the hotel a printed copy" of the statute in order to limit its liability to guests. The Four Seasons undoubtedly displayed a copy or summary of the statute in its guest rooms. It may even have done so "conspicuously," although that remains unclear. What is clear is that the Four Seasons did not display, conspicuously or otherwise, a copy or summary of the statute in its public rooms. Therefore, when we strictly construe this statute, as we must, we conclude that the Four Seasons failed to comply fully with the statute's requirements for limiting its liability to the Paraskevaides.... If a hotel provides a suitable depository [safe] but does not post the statute in the guest and public rooms--in effect, if a hotel only complies with part of the statutory requirements--then the statute does not apply. Because the Four Seasons failed to post a copy or summary of the statute in its public rooms, we hold that the Four Seasons cannot rely on the statute to limit its liability to the Paraskevaides....
The Four Seasons Hotel made a very expensive mistake: Rather than facing liability for the limited amount provided by statute of $1,000, it opened itself up to liability for the full value of the plaintiff's loss--excess of a million dollars. The lesson is clear: Familiarize yourself with your state's limiting liability statute and comply with it exactly.
In yet another case where the hotel learned the hard way of the need to comply strictly with the posting requirements, a guest's suitcase containing $500,000 in jewelry and $8,000 in cash was stolen. The inn had displayed the necessary notice on the registration card but not in the guest rooms, rendering the hotel ineligible for the statute's limits on liability. (5)
One aspect of the decision provides some consolation to the innkeeper. The jury found the guests were contributorily negligent, allocated 40% liability to them, and reduced their recovery accordingly. Rather than the hotel being liable for the full $350,000 loss, the plaintiff's award was reduced to $210,000. Had the hotel complied with the notice requirements, its liability would have been reduced by the relevant state statute to the much lesser amount of $2,000.
While strict compliance is required in most states, a few states are more forgiving. For example, Kentucky has enacted a statute that provides,
[A]ll statutes of this state shall be liberally construed with a view to promote their objective and carry out the intent of the legislature ...
Kentucky's limiting statute requires hotels to post notice in the office and public rooms of the inn. A hotel posted notice only on the doors in each of the guest rooms; it failed to post notice in the hotel office or public rooms. The Kentucky court held the innkeeper had sufficiently complied with the statute. This decision was based on the quoted statute. (6)
Most limiting liability statutes require that the posted notice be conspicuous, meaning that the notice must be displayed in such a way that people are likely to see it. If, for example, the posted notice in a lobby is obscured by the branches of a decorative tree or a banner announcing a special event, the notice would not be conspicuous. If the print is not easily readable, the notice likewise is not conspicuous. In one case, the hotel placed the notice under the glass on a dresser table in a hotel room. The notice was two and one-half inches square and was displayed among promotions describing the hotel and its features. In determining the notice was not conspicuous, the court stated that a guest who glanced at the total display of printed material on the dresser would likely assume its general import was advertising. (7)
In another case, a court strongly suggested that posting notice on the inside of the closet in a motel room was not conspicuous. (8)
Some hotels print the information required to be posted on registration cards or on the register in which arriving guests sign their names. This is generally not a permissible substitute for mandated posting elsewhere.
If the only notice of limited liability is posted near the room-key drop-off, where guests would see it only after their stay was completed, the conspicuous posting requirement likely has not been met. (9)
Posting Notice of Hotel's Limited Liability
It is not enough for a hotel to post conspicuously the availability of a safe. Virtually every state's limiting statute requires that the posted notice also inform guests that the hotel's liability is limited. Without that notice, guests are led to believe that if valuables are deposited in the safe, the guest will be protected for the full value of the deposited items. Absent notice of limited liability, the common-law rule will apply and the hotel will be fully liable.
This principle is illustrated in a case in which a Days Inn hotel was sued for $142,834.00--the value of jewelry stolen from a safe located in a guest's room. A sign was located on the front check-in desk that read, "Because We Care: For your safety and convenience, a SAFEKEEPER is provided for you in the privacy of your room to secure and protect your valuables." Also located at the front desk was another posted sign that stated, "The hotel is not responsible for loss of valuables left unprotected. A personal safe with contents insurance in case of forced entry is located in each room." When the plaintiff returned to her room one night she observed that the SAFEKEEPER had been forcibly removed from the wall and floor. In the ensuing lawsuit, the court held the hotel liable for the full value of the jewelry--$142,834.00--because the inn failed to inform the guest of limits to its liability. (10)
In another case, $10,000 of a guest's money stored in a hotel safe was stolen. The posted notices said, "We have safe deposit boxes that are available for you without charge. We will appreciate your cooperation." A note on the registration card read, "Money, jewels and other valuables must be placed in the safe in the office, otherwise the management will not be responsible for any loss." The hotel sought the benefits of limited liability. The court held that the notices led guests to believe that if they deposited their valuables in the safe, no limitation of liability applied. The hotel was ordered to pay the full $10,000 loss. (11)
Languages Other than English
If a hotel can anticipate guests who speak languages other than English, the hotel is well advised to post notices written in those other languages in addition to English. By so doing, the hotel avoids an argument by non--English-speaking guests that they had not been provided notice of the availability of a safe or of the hotel's limited liability.
What Property Belongs in the Safe?
Not all property brought to a hotel by a guest is appropriate for a safe. If it is not and the property is stolen, the hotel may have no liability. Most state statutes require the following property to be deposited in the safe: money; jewels; ornaments; banknotes; bonds; negotiable securities; precious stones; and other articles of similar value. However, ambiguities exist. For instance, are cufflinks "ornaments"? How much money may guests keep in their rooms outside of the safe? Must they put a watch in the safe?
A court ruled that cufflinks valued at $175 were not ornaments and a watch is neither a jewel nor an ornament; (12) it is instead a timepiece, an article of ordinary wear used daily by most travelers of every social class. A gold money clip was likewise found not to be jewelry. (13) However, in a case in the state of Washington involving an expensive watch, the court treated it as more than a timepiece and the result was different. The guest left his $3,685 watch on a nightstand and went out to dinner. When he returned, the watch was gone. The court ruled that the watch should have been deposited in the safe. Since it was not, the hotel was relieved of all liability. (14)
Gambling chips were determined to be included within the list of valuables that the statute requires to be stored in a safe. In a New Jersey case a high-stakes gambler won $76,000. Before retiring to his hotel room he converted his winnings into $25,000 cash, 10 chips of $5000 each, and a $1000 chip. He left the cash and chips on the dresser when he went to bed and they were stolen during the night. Defendant sought recovery from the hotel which asserted as a defense the limiting statute. The court denied recovery noting that the hotel had properly posted the necessary notices of both the availability of the safe and the hotel's limited liability. While gambling chips were not expressly included within the statute's list of items that should be kept in the safe, they can be exchanged for cash and so were included within the statute's catch-all phrase, "and other articles of similar value." (15)
In a New York case the president of a design company was a guest at a Sheraton hotel when belongings were stolen from her room. Among the missing items were orders for the design company's services and the president's business cards. The hotel asserted as a defense the limiting liability statute. The court held the stolen items did not constitute any of the types of property covered by the statute--"money, jewels, ornaments, banknotes, bonds, negotiable securities or precious stones." (16)
Theft during Check-Out
Consider the circumstances where a guest is in the process of checking out of the hotel. She has already retrieved her valuables from the safe and, while settling her account with the hotel, her jewelry is stolen. In a case addressing this circumstance, the court held that the hotel would not be liable. Said the court, "A hotel guest who fails to use the safe deposit box cannot hold the hotel responsible if his or her valuables are later lost or stolen.... The hotel's freedom from liability is not altered by the fact that the loss occurred as the guest was preparing to leave the hotel." (17)
Hotel Guest in Hotel Restaurant
An interesting case involved a hotel guest whose purse was stolen in the hotel restaurant. In the purse were cash and valuables. The guest sued the hotel and lost because, said the court, even in the restaurant she retained her status as hotel guest since the eatery was owned and operated by the hotel. The limiting statute precluded the guest from recovering for lost cash and valuables that were not placed in the safe. (18)
Door Locks and Window Fastenings
Some states' limiting statutes require a hotel seeking to benefit from limited liability to maintain suitable locks and bolts on doors and fastenings on windows. The reason for this requirement is that these devices help deter in-room thefts.
Clothes and Other Personal Property
What about property not required to be placed in a safe, such as clothes, sporting equipment, inexpensive watches, or merchandise samples? Does a hotel have unlimited liability as to those items? The generally applicable answer is no. Most states have a statute that limits the hotel's liability for these items.
The typical limiting statute restricts a hotel's liability for damage or loss of a guest's apparel and other personal property, such as a camera, to a specified maximum; for example, $500. The amount may vary from the hotel's maximum liability for lost money and jewels required to be in the safe. Where, however, the loss or damage to clothes and other personal property is caused by negligence on the part of the hotel, in most states the hotel is not entitled to the benefit of the limiting statute and will be liable for the full amount of the guest's loss.
The limiting liability statute in Florida treats clothes and personal property a bit differently. Florida's statute relieves the hotel from any liability for loss caused to guests' clothes and personal property unless the hotel was negligent. If it is negligent, the hotel's liability is limited to $500. The application of this provision is illustrated by a case in which two guests sharing a hotel room in Florida discovered that the lock on the door to their room was broken. They called the front desk and requested it be repaired. The hotel sent a repairman, but he negligently went to the wrong room. The room of the guests' with the broken lock was burglarized and property was stolen. In the lawsuit that followed, the guests sought reimbursement for the full value of their loss, which significantly exceeded $500 each. The court held the hotel was negligent and so it had some liability to the plaintiff-guests. Based on the Florida limiting statute the maximum liability was $500 to each. (19)
Some states' limiting statutes differentiate between clothing lost or damaged in the lobby, hallways, and guestrooms, on the one hand, and property lost in a checkroom. While many provisions of limiting statutes may apply only to hotels, those laws that have a separate section for checkrooms may also cover restaurants because both hotels and restaurants typically have a coat-check area. Later in this chapter we will look closer at the rules applicable to checkrooms.
Most states' limiting statutes restrict a hotel's liability for loss or damage caused to guests' property while stored in a baggage or storage room. The hotel's liability will be limited to a specified maximum amount, such as $100. If, however, the loss or damage to property stored in the baggage room is caused by negligence on the part of the hotel, the statutes customarily provide that the hotel is liable for the full amount of the guest's loss.
The term merchandise samples refers to goods for sale brought to a hotel by a salesperson-guest. Even in common-law days, the strict liability rule governing an innkeeper's liability for guests' property recognized a distinction between items brought to the hotel for personal use and property brought for commercial purposes. The unlimited liability rule applied only to the former and not the latter.
In an early United States Supreme Court case, a salesman sued a hotel to recover for the theft of his samples. The court held for the hotel, saying:
Although Fisher [the salesman] was received by the defendants into their hotel as a guest, with knowledge that his trunks contained articles having no connection with his comfort or convenience as a mere traveler or wayfarer, but which, at his request, were to be placed on exhibition or for sale in a room assigned to him for that purpose, [the innkeeper] would not, under the doctrines at common law, be held to the same degree of care and responsibility, in respect to the safety of such articles, as is required in reference to baggage or other personal property carried by travelers. The defendants, being owners or managers of the hotel, were at liberty to permit the use of one of the rooms by Fisher for such business purposes, but they would not, for that reason and without other circumstances, be held to have undertaken to hold and safely keep them. (20)
Many limiting liability statutes provide that innkeepers have no liability for damage to or loss of merchandise samples unless the innkeeper receives written notice that the samples are in the hotel and acknowledges in writing that a guest has such property and its value. If the guest gives the necessary notice and the hotel makes the required written acknowledgment, the statutes customarily limit the hotel's liability. Strict compliance with the statute is mandatory if the guest seeks to hold the hotel liable, as evidenced in Associated Mills, Inc., v. Drake Hotel, Inc., 334 N.E.2d 746 (Ill. 1975). The plaintiff had manufactured a prototype (working model) of a new product and used the prototype to demonstrate the benefits to be offered by the finished product. The plaintiff rented a room at the defendant's hotel for display of the model to potential customers. The hotel had orally agreed to "plug and seal" the room where the model was being displayed to prevent overnight entry and removal of the model. The hotel had also orally agreed that it would order its employees not to enter or clean the room during the night. The next morning the plaintiff discovered the room had not been sealed; it had been cleaned, and the model was missing.
The plaintiff claimed the hotel was liable for $87,000, the value of the proto-type, because the hotel had breached its agreement with him. The hotel denied liability, arguing that the prototype was a merchandise sample within the meaning of the limiting statute and the plaintiff failed to give written notice of the presence of the model. The court agreed with the hotel; the plaintiff lost the case.
Some states' limiting statutes require that a guest who keeps merchandise samples in his room to inform the hotel of the value of the merchandise. Without that notification, the hotel is not liable if the property is stolen. For example, a dealer in the business of buying and selling baseball cards attended a baseball card show. He took with him five briefcases full of cards. While out to dinner one night, he left the cards in his room at a Marriott hotel. When he returned he discovered that all of his inventory had been stolen. In the resulting case against the hotel, the evidence was undisputed that the dealer failed to declare to any employee of the hotel the value of the cards. Therefore, the hotel was not liable. (21)
Property in Transit
Occasionally, hotel personnel will take possession of guests' suitcases or other property before arriving at a hotel. For example, a guest arriving at the airport may take the hotel shuttle bus to the hotel and give the driver his luggage. Without a limiting statute, the hotel would have unlimited liability in this circumstance. In a New York case predating that state's limiting statute, a bellhop was sent to pick up a guest's trunk at the railroad station. He made a stop while returning from the station and left the bag unattended. The trunk was stolen, along with its contents, which consisted of expensive furs and dresses valued at $10,000. The guest sued the hotel for the full value of the lost property and won, based on common law unlimited liability. (22)
Today, most states have limiting statutes that restrict a hotel's liability for guests' property while in transit. For example, currently in New York, liability in this circumstance is limited by statute to $250. These statutes customarily provide that if the loss is due to the hotel's negligence, the hotel's liability is unlimited.
Property Not Covered by Limiting Liability Statutes
The limiting liability statutes do not cover all property that might be stolen or disappear in or around a hotel. These statutes apply only to property of hotel guests; they do not cover property of nonguests. The limiting statutes also do not apply to cars.
The liability of a hotel or restaurant for cars, property of nonguests, and property of restaurant patrons is based primarily on the law of bailments, discussed in detail later in this chapter.
Just as the innkeeper was liable at common law for virtually all losses to guests' property occurring at the hotel, the innkeeper was likewise liable where the loss was caused by fire. This was true even if the innkeeper was not responsible for starting the fire.
Consistent with the statutory limitations on innkeepers' liability that we have been studying in this chapter, most states have passed laws limiting or eliminating the hotel's liability for damage caused by fire where the fire was not the result of the hotel's negligence. If, however, a fire is caused by the hotel's failure to exercise reasonable care, the hotel will be fully liable for the resulting loss.
Estoppel: Loss of Limited Liability
Hoteliers or their agents may make comments to a guest that result in the hotel losing the benefits of a limiting liability statute. This is known as the doctrine of equitable estoppel, a legal principle that precludes a person from claiming a right or benefit because that person made a false representation to another person who relied on the untruthful statement to his detriment.
Implying Greater Liability
An example of estoppel is the following. A desk clerk at a hotel tells a guest that the hotel maintains safe deposit boxes that she can use free of charge to safeguard her valuables. The clerk further tells the guest that if she deposits the jewelry in one of the boxes, there will be no limit on the hotel's liability if the jewelry is stolen. As a direct result of the clerk's statement, the guest places her jewelry in a safe deposit box. The jewelry disappears without explanation. The guest sues the hotel for the full value of the jewelry; the hotel asserts the limiting liability statute as a defense. The guest claims that the desk clerk orally modified the terms of the statute and that the guest incurred the loss only because she relied on the desk clerk's representation. The hotel will likely be estopped from denying liability for the full loss.
Now assume one change of the facts in that scenario. When the hotel clerk informs the guest about the safes, the clerk tells the guest that if the jewelry is stolen from the safe, the hotel's liability will be limited according to statute. Under these circumstances, the hotel will be entitled to the benefit of limited liability.
The principle of estoppel will also be imposed if the innkeeper or an employee misleads a guest into believing that property can be left safely at a particular place in the inn, causing the guest to disregard posted directions for safekeeping property. The hotel in Case Example 8-4 was estopped for this reason.
CASE EXAMPLE 8-4 Fennema v. Howard Johnson Co. 559 So.2d 1231 (Fla. 1990) The material facts of this case are undisputed. In August, 1985, plaintiffs Robert J. Fennema and his wife Kimberly A. Fennema came to Dade County, Florida from the state of Washington so that Robert Fennema could become a university professor at Florida International University. They traveled to Dade County in a Chevrolet Camaro and a rented 24-foot U-Haul truck which, in turn, towed their 1970 Toyota Land Cruiser; they placed all their possessions in the U-Haul truck. Mr. Fennema drove the U-Haul truck, and Mrs. Fennema drove the Camaro. Upon their arrival in Dade County, they stopped at a Howard Johnson Motor Lodge located at 1430 South Dixie Highway, Coral Gables, Florida, at approximately 6:00 p.m. on August 10, 1985. This lodge was owned and operated by defendants H. William Prahl, Jr. and Robert A. Prahl, under a franchise from the defendants Howard Johnson Company. Mrs. Fennema went into the motel office and registered for her and her husband. She specifically advised the registration clerk that they had a Toyota Land Cruiser towed by a large U-Haul truck with nearly all their personal belongs in it; she asked where would be a safe place to park this vehicle. The clerk directed her to park the vehicle in a particular area of the motel parking lot behind a building where presumably it would be safe from vandalism or theft. Mrs. Fennema conveyed this information to Mr. Fennema who, in turn, parked the vehicle in the place designated by the clerk. Although there had been numerous incidents of criminal activity including motor vehicle thefts on or about the grounds and parking lot of this motel, the plaintiffs were not provided with this information nor warned of the risks of leaving their vehicle in the lot. The Fennemas thereafter spent the night in the motel without incident, and, the following day, went for a drive in the Camaro. When they returned to the motel at 3:00 p.m. that afternoon, they discovered that the U-Haul truck with all of its contents and the attached Toyota Land Cruiser had been stolen by unknown third parties from the place in the parking lot where the clerk had told them to park it for safekeeping. Plaintiffs brought a negligence action ... against defendant innkeepers for the property loss sustained as a result of the above theft in the amount of $177,000. They alleged that the defendants were negligent in failing to warn the plaintiffs that there had been criminal activity in the motel parking lot, and that defendants failed to take other steps to warn their guests and/or to prevent criminal activity from occurring in the parking lot. Plaintiffs also claimed that defendant Howard Johnson, as owner, departed from a standard of care nationally advertised by it, that all defendants knew the parking lot was dangerous, and that, as owners, lessees and operators of the motel, they had an obligation at a minimum to warn their guests. Defendant filed an answer denying any liability for the theft loss and setting up various affirmative defenses, including that plaintiffs' recovery was limited by ... Florida's limited liability statute.... Plaintiffs [argue that] ... the statute had no application to their vehicle and its contents under the circumstances of this case.... It is settled in Florida that "[a]n innkeeper owes the duty of reasonable care for the safety of his guest" (person and property) ... and that an innkeeper's knowledge, as here, of prior criminal activity on or around the grounds of his inn imposes a duty to take adequate security precautions for the safety of his guests and their property.... With respect to any damage to or loss of a guest's property, however, an innkeeper's negligence liability is specifically limited by ... [Florida's limiting liability statute]--provided a copy of that statute is posted "in the office, hall, or lobby or another prominent place of such public lodging ... establishment...." It does not follow, however, that an innkeeper may, under all circumstances, rely on the ... statute to limit his liability even if the statute is properly posted at the inn. [W]e conclude that an innkeeper is estopped to rely on the innkeeper's limitation of liability statute if he personally misleads his guest into believing that the latter's property may be safely placed at a particular location in the inn, as this causes a guest to disregard whatever posted statutory procedures there might be for safeguarding a guest's property generally.... [I]n our view, the defendant innkeepers are estopped to invoke whatever protection ... [the limiting liability statute] may afford. This is so because the defendant's motel clerk affirmatively misled the plaintiffs into believing that their motor vehicle and its valuable contents were safe if parked at a particular location in the motel parking lot. Mrs. Fennema specifically informed the motel registration clerk concerning the valuable contents of the plaintiffs' motor vehicle and asked where would be a safe place to park the vehicle; the clerk, in turn, directed the Fennemas to park their vehicle at a particular spot in the motel guest parking lot behind a building where presumably the vehicle would be safe. Plaintiffs had every right to believe and did believe that their vehicle would be safe at that location; they parked their vehicle in the exact spot as directed and later the vehicle was stolen from the spot. Having affirmatively misled the plaintiffs that it was, in effect, safe to leave their vehicle and its contents at this location in the motel parking lot, the defendant innkeepers are in no position to claim the limited liability protection.... Plaintiffs had every right to rely on defendant's affirmative assurance of safety for their property and to believe that these personal assurances of safety overrode whatever statutory procedures might exist for safeguarding guests' property generally.... [T]he defendants, by their conduct, are estopped to rely on the protection of the subject statute because they, in effect, misled the plaintiffs into disregarding the procedure stated in the posted statute as being unnecessary, given the motel's personal directive which they followed for safeguarding their property.... CASE QUESTIONS 1. What was the representation made by the hotel that enabled the guest to invoke the doctrine of estoppel? 2. What was meant by the court's statement, "Plaintiffs also claimed that the defendant Howard Johnson, as owner, departed from a standard of care nationally advertised by it"? What was the significance of that statement on the outcome of the case?
The court in another case with similar facts likewise held that a hotel, whose clerk affirmatively misled a guest into believing his belongings would be safe in the car, would be estopped from seeking the protection of a limited liability statute. (23)
As we have learned, most limiting statutes do not protect an innkeeper in situations where the loss of guests' property is due to the hotel's negligence. Case Example 8-5 illustrates this principle.
CASE EXAMPLE 8-5 Bhattal v. Grand Hyatt-New York 563 F.Supp. 277 (N.Y. 1983) ... Plaintiffs, residents and citizens of India, registered as guests in defendant's Grand Hyatt Hotel in Midtown Manhattan on July 19, 1981 and were assigned Room 2946. Following the customary practice in first-class hotels in this City of the sort operated by defendant, plaintiffs turned over to the bell captain various pieces of personal luggage, which are now said to have contained valuables of great significance, and this luggage was duly transferred by defendant's employees to plaintiffs' assigned hotel room. Plaintiffs did not request that any of their valuables be placed in the safe depository provided by the hotel.... Shortly after arriving at their room with the luggage, plaintiffs left the hotel for luncheon with friends, locking their door with a key provided by defendant. On returning [early] the same evening, plaintiffs discovered that their luggage and the contents thereof were missing.... Apparently defendant's front desk relies heavily on computer support, and as a result of computer error, employees of defendant transported plaintiffs' luggage from plaintiffs' room to JFK International Airport, along with the luggage of aircraft crew members of Saudi Arabian nationality, who had previously occupied Room 2946. In other words, the computer omitted to notice that the room had been vacated and relet to plaintiffs, and hotel employees responding to computer direction, included plaintiffs' luggage along with the other luggage of the departing prior guests. This is not to suggest that the Grand Hyatt-New York is a hotbed house, but apparently it was operating at 100 percent occupancy with no lost time between the departure of the Saudi Arabian aircraft crew members who had previously occupied the room, and the arrival of plaintiffs. Needless to say, plaintiffs' luggage departed for Saudi Arabia and has not since been seen. A missing pearl is always a pearl of the finest water, and accordingly plaintiffs demand damages in the amount of $150,000.... The [case] presents the question of whether [the limiting liability] statutes limit the liability of an innkeeper in a case where the innkeeper, by his own agents, intentionally and without justification, took custody and control of plaintiffs' luggage and contents, without plaintiffs' authorization, and intentionally, although inadvertently, caused the luggage to be transported to Saudi Arabia. The Court concludes that the statutes do not extend so far as to protect the innkeeper under these facts.... Here, defendant's employees entered plaintiffs' locked room, without plaintiffs' permission or knowledge, and removed their luggage, commingled it with the luggage of the Saudi Arabian aircraft crew members and placed it on a bus headed for Kennedy Airport. The Court infers that if the luggage was not stolen at Kennedy Airport, it arrived in Saudi Arabia and was eventually stolen by a Saudi thief who still had the use of at least one good hand. In this instance, the intentional acts of the defendant clearly constituted conversion [unauthorized exercise of ownership over goods] under New York law. ... New York [limiting liability laws] were adopted in the middle of the 19th century to relieve an innkeeper from his liability at common law as an insurer of property of a guest lost by theft, caused without negligence or fault of the guest.... These statutes and the cases cited thereunder by the defendant extend to the situation where there is a mysterious disappearance of valuable property, either as a result of a theft by an employee of the hotel--or a trespass or theft by an unrelated party, for whose acts the innkeeper is not responsible. The statutes are also intended to protect the innkeeper from the danger of fraud on the part of a guest in a situation where the property said to have disappeared never existed at all, or was taken or stolen by or with the privity of the guest. The reason for limiting a hotel's liability ... is to protect against just such a situation. When a hotel room is let to a guest, the innkeeper has lost a large measure of control and supervision over the hotel room and its contents. While housekeeping and security staff can enter the room at reasonable hours and on notice to any persons present therein, essentially, for most of the time at least, property of a guest which is present in a hotel room can be said to be under the exclusive dominion and control of the hotel guest, rather than the innkeeper. ... In this case ... employees of defendant, acting within the scope of their employment and relying on the accuracy of the employer's computer, intentionally converted the luggage of the plaintiffs by removing it from plaintiff's room and delivering it to an aircraft bound for Saudi Arabia. [The limiting statute does not limit the liability of the hotel in this case. Rather, the hotel is liable for the full value of the loss.] CASE QUESTION 1. What would have been the outcome of the case if the luggage had been stolen by a thief through no fault of the hotel?
Consider a circumstance when the hotel and the guest are both negligent and the guest's loss is due to the combined negligence. What liability does the hotel have? According to Vasilios Nicholaides v. University Hotel Associates, 568 A.2d 219 (Pa. 1990), at least in states that have adopted the comparative negligence rule, the hotel's liability will be reduced by the percentage of responsibility for the loss attributed to the guest. In that case, the plaintiff brought to the defendant's hotel a coin collection valued at $34,973. The plaintiff placed the collection in a dresser drawer in his guest room under some garments. Two days later, he discovered the collection missing. The jury determined that both the hotel and the guest were negligent (the facts supporting the determination that the hotel was negligent were not provided). It allocated to the guest 49 percent of the responsibility for the loss. The guest recovered only 51 percent of his damages.
Nevada's Limiting Statute
Nevada, well-known for its casinos and related tourist attractions, is very protective of its innkeepers. The state's limiting liability statute is quite different from that found in most other states. Its limitation of liability (maximum $750) applies even if the hotel is not only negligent, but grossly negligent.
Liability during Check-In and Check-Out
Should there be a period of time while guests are checking in and out of a hotel that the statute does not apply? When guests first enter a hotel and have not yet completed the registration process, they have not had time to access the safe. When they are packing and preparing to check out, they will likely remove their valuables from the hotel safe. Generally, when goods are stolen or disappear during check-in or check-out, courts have found the limiting statutes applicable and the hotel not liable for the full loss.
If the person whose property disappears during check-in or check-out is a hotel guest at the time of the loss, the limiting statute applies. In two cases the owner of the missing property was found to be a guest; thus, recovery was limited.
A guest of the Hilton Hotel in New Orleans inadvertently left two rings in her hotel room after washing her hands. She checked out of the hotel that day and did not realize the rings were missing until she was partway home. She immediately called the hotel and an investigation was made. The rings, valued at $10,000, were never found. Like most limiting statutes, Louisiana's applied only to guests. The owner of the rings sued the hotel for their value, claiming the innkeeper-guest relationship had terminated before the loss occurred and thus the limiting liability statute should not apply. The court ruled the loss occurred when she left the rings in the room, which happened while she was still a guest. Therefore, the hotel was only responsible for $500, the maximum provided by the applicable limiting statute. (24)
In another case a jewelry salesman had been a guest at the hotel for several days. On the last day of his stay he attended a sales presentation to which he took $150,000 worth of diamonds. After the presentation, he returned to his room to pack and took the diamonds with him. A few minutes before leaving his room, he was beaten and robbed of all the diamonds. He sued the hotel, claiming the limiting statute should not apply since, at the time of the theft, he was about to leave. The court disagreed and ruled the statute was applicable. The salesman should have deposited the diamonds in the safe before he went to his room to pack. (25)
Liability at Check-In
When during check-in do the limiting liability statutes take effect? The following examples inform us that the statutes take effect almost immediately upon a guest with a reservation entering the hotel to register. Although timing may not have enabled a guest to yet utilize the safe, the limiting liability statute's benefit to the hotel is nonetheless in effect.
In a Nevada case a jewelry salesman, upon arrival at the MGM Grand Hotel in Las Vegas, checked his luggage and jewelry samples with the bellhop at the door. He told the bellhop that the samples were valuable. After checking in and going to his room, his luggage was delivered but one case of jewelry samples worth $19,000 was missing. The salesman sued the hotel for the value of the jewelry. The plaintiff argued that he was not a guest at the time he gave the luggage to the bellhop since he had not yet registered and therefore the limiting liability statute should not apply. The court held that the innkeeper-guest relationship was established when the plaintiff checked his luggage with the bellhop. Therefore, the salesman could only recover the limited statutory amount, which in this circumstance was $750. (26)
CASE EXAMPLE 8-6 DeLema v.Waldorf Astoria Hotel, Inc. 588 F.Supp. 19 (N.Y. 1984) Plaintiff Jose Maria Berga de Lema, a Brazilian resident, arrived in New York. His luggage consisted of three suitcases, an attache case, and a cylindrical bag. The attache case and the cylindrical bag contained jewels. Plaintiff says the jewels in the case exceeded $300,000 in value. Plaintiff went from JFK Airport to the Waldorf Astoria Hotel ("the Hotel"), maintained by defendant, where he had a reservation. Plaintiff handed over the three suitcases to hotel staff in the garage. He then ascended to the lobby, carrying the attache case and cylindrical bag, and first encountered an assistant manager, Mr. Baez, sitting behind a desk with a sign proclaiming his title. Plaintiff told Baez he had a reservation. Baez rang a bell and summoned a room clerk, Mr. Tamburino, to assist plaintiff. Plaintiff carried the case and bag from Baez's desk to a place at the counter opposite Tamburino, and put them on the floor. While plaintiff was filling out the reservation form, paying $300 in cash as an advance, and Tamburino was filling out a receipt for that amount, a blond woman jostled plaintiff, apparently creating a diversion. When plaintiff next looked down, he discovered that the attache case was gone. The case and its contents have never been recovered. This suit followed. Both parties recognize that the case is governed by [New York's limiting liability statute] ... The courts have not lost sight of the legislature's original purpose: to benefit hotel owners.... it is the duty of the guest to make the deposit [into the safe] ... This rule may be inconvenient to guests but the statute was not intended for their benefit. It was manifestly enacted for the protection of the hotelkeepers. It is clear that under this rule, the plaintiff's claim for damages at large fails. By virtue of plaintiff's advance reservation, his occupancy of a room at the Waldorf was in the definite contemplation of both parties. At the time of the loss, plaintiff was in the process of actually registering. These circumstances are sufficient to bring about the relationship of guest and hotel keeper. In consequence, the Hotel may claim the benefit of the statute's limited liability. It is also common ground that the Hotel maintained an appropriate safe or safety deposit boxes, and that the requisite notices called for by the statute were given.
Liability after Check-Out
In many cases, guests retain their status after check-out, and limiting liability statutes still apply. In Nagashima v. Hyatt Wilshire Corp., 279 Cal.Rptr. 265 (Cal. App. 1991), the plaintiff was in the hotel lobby in the check-out line, having just removed from the hotel safe her jewelry valued at $72,000. While she waited for her turn to check out, someone grabbed the jewelry from her possession and it was never recovered. The court held the limiting statute applied, and so her recovery was restricted to $500. In response to the plaintiff 's argument that application of the statute in her case was unjust, the court suggested she address her argument to the legislature, which alone has the power to change the statute.
In Case Example 8-7, the court held that guests who had checked out of a hotel retained their status as guests for purposes of the limiting statute where they left their luggage in the hotel's luggage room while they went shopping for the day.
CASE EXAMPLE 8-7 Salisbury v. St. Regis-Sheraton Hotel 490 F.Supp. 449 (N.Y. 1980) On the morning of November 22, 1978, Mr. and Mrs. Roger Salisbury concluded a three-day stay at the St. Regis-Sheraton Hotel in New York. While Mr. Salisbury paid the bill and surrendered their room key, Mrs. Salisbury checked their luggage with a bellhop in the lobby. The couple was to spend the day in town and return for the luggage that afternoon. Mrs. Salisbury did not inform the hotel when she checked the luggage that one of their pieces, a cosmetic case, contained jewelry and cosmetics worth over $60,000 and did not ask that the case be kept in the hotel's safe.... When the Salisburys returned to the hotel to retrieve their luggage at about 4:30 that afternoon, the cosmetic case containing the jewelry was missing. Mrs. Salisbury sued to recover the value of the case and its contents. It is undisputed that posted conspicuously in the public areas of the hotel was a notice informing guests that the hotel provided a safe for the safekeeping of their valuables, and notifying them of the provisions of the [limiting liability statute] of the New York General Business Law.... The question, then, is whether Mrs. Salisbury ceased to be a "guest" within the meaning of the limiting liability statute when she checked out of the hotel, even though she arranged to have the hotel hold her luggage for the day.... The lost luggage was not stored with the hotel for a lengthy period, but simply held for the day as an accommodation to departing guests.... It is not uncommon for a hotel to hold luggage for a few hours after guests check out as an accommodation to them. This would appear to be one of the services that a hotel performs for its guests in the normal course of its business, and there is no reason why it should be deemed to alter the otherwise existing legal relationship between them. Accordingly, we conclude that the limiting liability statutes are fully applicable in the circumstances of this case and preclude any recovery against the hotel for the loss of Mrs. Salisbury's jewelry and limit any recovery for the loss of the case and its other contents to $100. CASE QUESTION 1. On what basis did the court determine that the plaintiffs were still guests at the time of the loss?
At what point in the check-out process does a guest cease to be a guest for purposes of a limiting liability statute? According to Case Example 8-8, a guest is no longer considered a guest if she has checked out of the hotel and given luggage to a bellhop to place in the vehicle in which the guest will depart the hotel.
CASE EXAMPLE 8-8 Spiller v. Barclay Hotel 327 N.Y.S.2d 426 (1972) Plaintiff, a guest of the Barclay Hotel, sued for the value of the property, primarily wearing apparel and jewelry, lost on the steps of the hotel while she was in the process of leaving. Plaintiff testified that after her two bags were brought to the lobby floor, she asked a bellboy to take them to the cab area and to watch them while she checked out. When she came to the cab area, only one of her bags was there and the bellboy was not present. A search failed to disclose the missing bag or its contents. No directly contradictory testimony was presented. A representative of the hotel did testify to a telephone conversation in which plaintiff allegedly gave a different version of the event and described the personal property as business samples. However, I accept as substantially accurate plaintiff's trial testimony as to the property that was lost and the manner in which it was lost.... The claim for the items of lost jewelry presents a troublesome problem. [New York's limiting liability statute] excludes recovery by a hotel guest for loss of, among other categories enumerated, jewels, ornaments, and precious stones where the hotel provides a safe for such items, gives appropriate notice of that fact, and the guest does not use that facility. It was conceded that the hotel maintained such a safe and had posted the required notice.... What seems to me decisive here is that [New York's statute] was not designed to apply to a loss occurring under the circumstances of this case. [New York's statute] clearly contemplates a procedure for safeguarding the specified categories of property during a guest's stay at a hotel. Its provisions do not seem to me to be reasonably applied to a loss that takes place when a guest is about to leave, has gathered together her property preparatory to an imminent departure, and is arranging for the transfer of luggage to a vehicle for transportation. Although that situation presents some conceptual difficulties, I am satisfied that the sensible and fair approach is to consider a loss occurring at that point in time neither in terms of the provisions of [New York's limiting statute], nor in terms of the traditional common law liability of innkeepers, but rather on the basis of the presence or absence of actual negligence.... Having found that the loss here resulted from the negligence of a hotel employee, acting within the scope of his employment, I hold that plaintiff is entitled to recover the value of the lost jewelry.... CASE QUESTIONS 1. On what ground did the court find the hotel liable for the full value of the jewelry? 2. If the missing property had been merchandise samples, what would the outcome of the case likely have been?
Another basis of potential liability for a hotel when a guest's property is lost or stolen is the law of bailment. A bailment is a transfer of possession of personal property from one person to another, with the understanding that the property will be returned. The person transferring possession of the property is called the bailor; the person receiving possession is the bailee. For example, if a guest leaves a shirt with room service for ironing, the guest is the bailor, the hotel is the bailee, and the arrangement is a bailment. Other examples of bailment include hotel guests who give their car and keys to a valet (the guest is the bailor and the hotel is the bailee); a hotel that rents projection equipment from a rental company for use by conference attendees (the rental company is the bailor and the hotel is the bailee); and a diner at a restaurant who leaves her coat with a coatroom attendant (the diner is the bailor and the restaurant is the bailee).
The essential elements of a bailment are:
1. Personal property. Bailments involve only moveable, tangible objects such as cars, clothing, sporting equipment, and the like. Bailment does not apply to real property (land and buildings), nor to a liquor license which is not personal property but rather a privilege to engage in the sale of alcohol. (27)
2. Delivery of possession. Possession of the personal property must be transferred to the bailee.
3. Acceptance of possession by the bailee. The bailee must knowingly accept possession of the bailed property.
4. Bailment agreement. Part of every bailment is an agreement, express or implied, by the bailee to return the bailed goods to the bailor.
If a bailment exists, the bailee is expected to return the goods at the end of the bailment period or otherwise comply with directions from the bailor. Provided the bailee does so, it has no liability. In a Rhode Island case a jeweler gave jewelry to a Westin Hotel with directions that it be given to a certain guest at the inn. The Westin complied. Therefore the hotel was not liable when the jewelry subsequently disappeared. (28)
Assume a hotel lent its hospitality van to another hotel during a week when the first hotel was closed for renovations and the second hotel expected a high demand for van services. The parties agreed that the second hotel would return the van at the end of the week. A bailment was thus created. Assume further that the second hotel/bailee thereafter sold the van rendering return of it impossible. The bailee thereby breached the bailment agreement and will be liable to the first hotel/bailor for the value of the vehicle. (29)
Consider the example of a restaurant patron who leaves her coat with a hatcheck person. The coat is personal property; possession has been given to the attendant; and an implied agreement exists that the hat-check attendant will return the coat when the patron (bailor) is ready to leave.
Let us change the facts a bit. Suppose the patron enters the restaurant, removes her coat, and hangs it on an unattended coat rack near the table where she is sitting. Does a bailment exist? The answer is no. Although the coat is personal property, the restaurant has not accepted possession since no one on behalf of the restaurant physically took possession of the coat.
In a case involving a health club, a member left his expensive Rolex watch and $400 in cash in a secured locker in the men's locker room while he worked out. When he returned he discovered the lock had been pried open and his valuables removed. He sued the health club claiming the club was liable as a bailee. The court determined the member had not delivered the items to the club, nor had the latter accepted the watch and money. Therefore, no bailment had been created. (30)
Does a bailment exist when you park your car at a parking lot? The answer is--it depends. A critical factor is whether or not you leave your key with a parking lot attendant. In most circumstances, if you park the car and take the key with you, the law holds that you have not delivered possession to the lot attendant because he does not have the ability to move the car. If, however, you leave the key, a bailment exists. We will discuss bailment of cars in more detail later in this chapter.
Effect of Bailment on Liability
The existence or nonexistence of a bailment directly affects liability. If no bailment exists, neither does liability. For example, if you leave your coat on an unattended coat rack in a restaurant and it is stolen during your meal, the restaurant is not liable. Because the restaurant was not a bailee, it is not responsible for the coat. Case Example 8-9 illustrates this point. Also note the court's determination that the limiting liability statute was not applicable to the property involved in this case.
CASE EXAMPLE 8-9 Augustine v. Marriott Hotel 503 N.Y.S.2d 498 (1986) Plaintiff attended, for a fee, a dental seminar at the Marriott Hotel. The seminar sponsor rented a banquet room, furnished with seats, from defendant. At the request of the sponsor, defendant furnished a movable coat rack, placing it outside the [seminar] room, in the public lobby. Plaintiff placed his coat on the rack before entering the seminar. At the noon recess, plaintiff exited the seminar room, but found that the rack had been moved a distance down the lobby and around a corner, near an exit. Unfortunately, his cashmere coat was missing. He then commenced this action in the Small Claims Part of this court. Under the common law an innkeeper was an insurer of property, infra hospitium [within the hotel facility], of his guests, and liable for the loss thereof or damage thereto unless the loss was caused by negligence of the guest, act of God, or the public enemy. By statute, such liability has been limited.... The relationship of guest on the part of plaintiff, and that of hotel keeper on the part of defendant, vis-a-vis each other never arose. The occupancy by plaintiff of a private [guest] room was never contemplated by the parties. Plaintiff was a patron of the seminar sponsor, who rented facilities from defendant. The status of plaintiff was like that of a wedding guest of individuals who rent banquet facilities from a hotel.... Therefore, the New York limiting statutes is in no way applicable to the facts presented here. The relationship of bailor and bailee never came into existence because plaintiff did not entrust his coat to defendant. Not only was there never a delivery to defendant, but defendant never was in actual nor constructive custody of plaintiff's coat. The sole question remaining is whether defendant owed a duty to plaintiff to provide a guard for the coat rack. Defendant placed the rack in a position near the door to the seminar room, at the request of the seminar sponsor. This created not only an opportunity but an implied invitation on the part of the sponsor, to patrons of the seminar to use the rack. However, there was no evidence to indicate that users of the rack were led to believe either by the sponsor or by defendant that there would be a guard for the rack. Under the circumstances presented, it was clear that there was merely a rack available for those who wished to use it. Defendant did not lull plaintiff into a sense of security, by which there was created a duty to provide a guard. There being no duty on the part of defendant, there can be found no breach of duty upon which to underpin a finding of [liability]. Furthermore, a reasonable man would have wondered about the safety of his coat which he hung on a rack in a public lobby of a hotel ... The claim must be dismissed. CASE QUESTIONS 1. Why was the limiting liability statute not applicable in this case? 2. Why did the court determine a bailment had not been created?
This case illustrates the principle that if no bailment exists, no liability exists. If, on the other hand, a bailment for property not subject to limiting liability statutes does exist, the bailee is not automatically liable. A bailee is liable only if it fails to exercise the amount of care required by law in tending to the bailed goods. The requisite care varies depending upon the type of bailment. Bailments are classified into three types:
1. For the sole benefit of the bailor;
2. For the sole benefit of the bailee; and
3. For mutual benefit.
The required level of care differs for each classification. The duty in each circumstance is discussed below.
Bailment for the Sole Benefit of the Bailor
A bailment for the sole benefit of the bailor exists when the bailee receives no benefit from the bailment. For example, a Caribbean hotel is located on the predicted path of a hurricane. Hoping to avoid damage to its computers, the hotel removes them and stores them with another hotel located outside the expected course of the hurricane. Under the circumstances, the second hotel does not charge a fee to hold the items. The first hotel, the bailor, benefits from this arrangement. The second hotel, the bailee, does not.
In a bailment such as this, entered for the sole benefit of the bailor, the bailee is obligated to exercise only a slight degree of care over the bailed goods. Stated differently, the bailee is liable only for gross (extreme) negligence.
Bailment for the Sole Benefit of the Bailee
A bailment for the sole benefit of the bailee exists where the bailor lends property to the bailee and receives nothing in return. For example, assume that your restaurant is catering four parties this weekend. You are in need of extra serving dishes. A friend owns a restaurant in the business district that is closed on weekends. She agrees to lend you serving dishes for the weekend at no cost. You benefit from this arrangement but your friend, the bailor, does not.
In this type of bailment--for the sole benefit of the bailee--the bailee is required to take great care of the property and exercise a degree of care higher than a reasonable person ordinarily exercises in connection with her own property. To avoid liability, you should ensure the serving dishes are utilized only by trained wait staff to avoid breakage, and that they are securely stored when not in use to avoid theft.
A mutual-benefit bailment, also called a bailment for hire, is one in which both parties receive some benefit from the bailment. Examples of this type of bailment include a traveler renting a car, and a restaurant leasing a tent in which to stage a wedding reception. In the first example, the traveler (bailee) receives the use of the car, and the car rental company (bailor) receives money. In the second example, the restaurant (bailee) receives the use of the tent, and the leasing company that owns the tent (bailor) receives money. In mutual-benefit bailments, the bailee's duty is to exercise ordinary care over the bailed goods. The difference in the duty owed in a mutual-benefit bailment and a bailment for the sole benefit of the bailor is illustrated in Case Example 8-10.
CASE EXAMPLE 8-10 First American Bank v. District of Columbia 583 A.2d 993 (D.C. 1990) ... First American Bank employed Ronald Armstead as a courier whose duties included making deliveries between the bank's various branch offices and the main office. One afternoon, at approximately 4:20 p.m., Armstead parked the bank's station wagon near the entrance of Branch 13 on 7th Street, N.W., in violation of "No Parking Rush Hour Zone" signs, which were in clear view of Armstead. Four locked bank dispatch bags, marked as such, which Armstead had just picked up from four different branches, were in the rear luggage compartment of the station wagon and in plain view of anyone looking into the vehicle. The dispatch bags contained checks and other valuable documents. Armstead had received tickets for illegal parking at this particular spot on at least five prior occasions and had been warned against future violations by traffic enforcement personnel. Traffic enforcement personnel had counseled Armstead to park across the street during rush hour to avoid being ticketed or towed. Armstead, who had received numerous parking tickets during his employment with the bank, would simply give the parking tickets to a supervisor for payment. The bank did not reprimand or discipline Armstead, nor did it dock his pay, for the parking tickets. Within a short time after Armstead entered Branch 13, a parking control aide approached the bank's station wagon and began writing up a ticket for illegal parking. Almost immediately thereafter, a tow truck owned by Transportation Management, Inc. (TMI) arrived at the scene. While the parking control aide was completing the ticket and the tow truck operator was simultaneously preparing to tow the car, one of the employees at Branch 13 alerted Armstead that the bank's vehicle was being towed. Armstead, carrying a dispatch bag, ran out to the vehicle and told the tow truck operator that, as the driver of the vehicle, he was prepared to drive the vehicle away immediately. When the tow truck operator ignored his request to return the vehicle, Armstead asked that he be allowed at least to remove the dispatch bags from the vehicle. The tow truck operator, however, also ignored this latter request, and instead entered the truck and began to drive away with the bank's vehicle in tow. The ... form filled out by the tow truck operator indicated that the doors, trunk, and window of the bank's station wagon were locked when it was towed from 7th Street. When the tow truck operator arrived at the Brentwood impoundment lot at 4:45 p.m., the dispatch bags were still inside the luggage compartment of the vehicle. The tow truck operator observed the District's lot attendant test all the doors and the rear gate of the vehicle. The lot attendant found them all locked and so certified on the same form. One and a half hours later, the bank's supervisor of mailroom couriers paid for the vehicle's release and retrieved it from the impoundment lot. The bank supervisor found the driver's door unlocked and one dispatch bag missing. There were no signs of forced entry, nor were there signs of the tape which is customarily affixed to car doors at the impoundment lot. The dispatch bag was never found, nor have the police identified or apprehended anyone who may have removed it from the vehicle. The value of the checks and other papers contained in the dispatch bag was determined to be $107,561.... First American brought suit against the District of Columbia and TMI for breach of bailment ... The trial court ruled that the District and TMI were gratuitous bailees [bailment for the sole benefit of the bailor] and therefore liable only for gross negligence. The trial court further ruled that First American [was not] grossly negligent.... We reverse on the bailment issue. There is no dispute here that TMI and the District had sufficient possession and control of the bank's vehicle to establish a type of bailment.... The question we must resolve is whether the bailment was gratuitous or for hire. A bailee that takes possession of goods solely for the benefit of the owner is a gratuitous bailee and liable only for gross negligence, willful acts or fraud.... In contrast, a bailee that receives compensation for its services is held to a standard of ordinary care.... A bailment for hire [mutual benefit bailment] relationship may be created even in the absence of an explicit agreement.... All that is required is the existence of a mutual benefit.... The District and TMI actively took possession of the bank's vehicle with the expectation of deriving benefit therefrom. In addition to furthering its interest in insuring the smooth flow of traffic, the District tows and stores illegally parked vehicles for compensation. Likewise, TMI is under contract with the District for the purpose of towing illegally parked vehicles to impoundment lots. Owners of vehicles, on the other hand, receive the direct benefit of having their vehicles safeguarded in the city's impoundment lot until they are ready to retrieve them. As users of the District's roads and highways, they also benefit indirectly from the District's practice of towing illegally parked vehicles that impede the flow of traffic.... We hold, therefore, that the District and TMI are held to the standard of ordinary care when they tow and impound illegally parked vehicles.... In view of the foregoing, we remand this case [for a trial] for a determination of whether the city and TMI exercised ordinary care in safeguarding the bank's vehicle and its contents.
DUTY OF BAILOR IN MUTUAL-BENEFIT BAILMENT
In a mutual-benefit bailment, the bailor has responsibilities as well as the bailee. The bailor is obligated to warn the bailee of any defects in the bailed property that might result in injury to the bailee or interfere with use of the property. This is a form of strict liability; the bailor is liable for failing to disclose defects even if it is unaware of their existence. For example, Jerry rented a car for one day. While he was driving the vehicle, the steering gear broke causing an accident in which he was injured. Jerry had not been warned by the bailor that the steering mechanism was defective and he sued for injuries. The bailor responded that it did not know of the defect. Notwithstanding the bailor's lack of knowledge, it is responsible for any loss or injury suffered by the bailee as a result of a defect in the bailed goods. A company in the business of leasing goods, such as a car-rental company, should make regular and frequent inspections of its inventory. To avoid liability it must correct any problems discovered or alert the bailee of potential risks.
A case from Louisiana is illustrative. It involved the rental of a freezer that was represented as having the capacity to quick-freeze a specified number of shrimp per hour. Gulf American, a processor of shrimp, leased the freezer and discovered it could not process the advertised number of shrimp. Instead, the appliance malfunctioned and the frozen shrimp were "extremely dehydrated, white, and sometimes came out in clumps of two or three." Gulf American sued the lessor of the freezer for damages. The court held that the lessor, by failing to disclose the freezer's defects, breached its duty as bailor. It was liable to Gulf American for its damages. (31)
Proof of Negligence in Bailment Cases
A bailor does not usually monitor the bailee while the latter is in possession of the bailed goods. Therefore, when the goods are lost or stolen, a bailor would typically have difficulty in proving that the bailee failed to exercise the required degree of care. Because of this, bailment law does not require the bailor to prove that the bailee was negligent. Instead, a bailor need only prove delivery of the bailed property to the bailee, acceptance by the bailee, and either a failure by the bailee to return the bailed property, or return of the property in a damaged condition. Such proof establishes a prima facie case, that is, a case sufficient to warrant a judgment for the plaintiff if the defendant does not contradict it with other evidence. With such proof, a presumption arises that the bailee was negligent (failed to use reasonable care); the bailee will lose the case unless it presents evidence to dispute the presumption of negligence or proves that the loss or damage occurred from a cause other than its own negligence. If the bailee can establish either of those circumstances, it will not be liable for the loss. Application of the presumption and an example of a successful rebuttal is illustrated in Case Example 8-11.
CASE EXAMPLE 8-11 Value Rent-A-Car, Inc. v. Collection Chevrolet, Inc. 570 So.2d 1376 (Fla. 1990) Value Rent-A-Car (Value) ... left its car in Collection Chevrolet, Inc.'s (Collection) care for repairs. When Value returned to pick up the car, the car and its keys had disappeared. Collection reported the car's disappearance to the police. The police subsequently recovered the car, stripped and heavily damaged. Value brought suit against Collection for negligence arising from the disappearance of its car. Collection denied having been negligent.... Value rested its negligent bailment case upon the stipulation of the parties that: (1) Value delivered the car to Collection; (2) Collection had exclusive possession and control of the car; and (3) Collection failed to return the car to Value. Collection presented testimony about the extensive security measures that existed at the area from where the car was taken. No witness for Collection was able to explain how the car and its keys were removed from Collection's lot. [Value seeks a] verdict based on the general rule that a bailee who has sole, actual, and exclusive possession of the goods is presumed to be negligent if he cannot explain the loss or disappearance of the goods. The trial court [held that] Collection had established due care in its storing of the car, that the evidentiary presumption of negligence had vanished, and that the burden of establishing Collection's negligence had shifted to Value.... Value contends the trial court erred in ruling that the presumption of Collection's negligence, as bailee of the car, vanished, where Collection was unable to explain the loss or disappearance of the car. Collection asserts that proof of its due care overcame the presumption of negligence. Collection further argues that theft of the car was the only logical explanation for its disappearance because the car had been recovered by the police, stripped and vandalized. As Value correctly argues, and Collection agrees, the well-settled rule in bailment cases is that: [A] bailee who has the sole, actual, and exclusive possession of goods is presumed to be negligent if he cannot explain the loss or disappearance of the goods, and the law imposes on him the burden of showing that he exercised the degree of care required by the nature of the bailment.... This presumption, however, is a vanishing presumption. Once the bailee introduces evidence of its due care, the presumption of negligence vanishes and the case is decided by the trier of fact [jury] without regard to the presumption.... In this case, the presumption, which was enveloped in a protective bubble, burst, when Collection presented evidence of its due care, that is, its extensive security measures, and the only logical inference from the evidence presented was that the car had been stolen.... A ruling that the presumption continues even though the bailee has presented evidence of its due care, would effectively result in the bailee becoming the insurer of the bailed goods. This is not the rule in Florida. Florida agrees with the weight of authority that a bailee is not an insurer of the bailed goods and if the bailee is not negligent or at fault, the risk of loss by theft is on the bailor.... Accordingly, the ... judgment [for Collection] is affirmed. CASE QUESTION 1. On what basis did Collection Chevrolet rebut the presumption of evidence?
If the bailee is unable to prove it acted reasonably in caring for the bailed property, the bailee will be liable for any resulting loss or damage. An application of the presumption is illustrated in a case involving valet parking. The plaintiff gave the key to his car to a hotel bellboy to park in the hotel parking lot. After going off duty, the bellboy returned to the lot and, without authorization, took the car out for a joyride. Unfortunately, he was in an accident and the car was destroyed. The court held that the hotel was liable for the damage. When the car was originally delivered to the bellboy, a mutual-benefit bailment was created between the plaintiff and the hotel. The hotel was required to return the property to the bailor (plaintiff) when he requested it. Since the hotel was unable to do that, a presumption arose that the hotel was negligent. The presumption arose even though the plaintiff did not prove negligence on the part of the hotel. Had the hotel been able to prove that it exercised reasonable care, it would not have been liable. However, it was not able to prove freedom from negligence. Therefore, the court ordered the hotel to reimburse the plaintiff for his loss. (32)
Case Example 8-12 illustrates another circumstance where a bailee was unable to prove it acted reasonably.
CASE EXAMPLE 8-12 Proliance Insurance Co. v. Acura 2001 WL 766894 (Oh. 2001) ... [O]n June 13, 1999, Gallagher delivered a car to Lindsay Acura to have repairs or maintenance performed on it, thereby creating a bailment contract. Contrary to the bailment, Lindsay Acura failed to return the car to Gallagher in an undamaged condition at the termination of the bailment. Instead, the vehicle was stolen and damaged in an amount approximately $6,700. Without his car, Gallagher was required to rent a replacement car at a cost of $500. The cost to repair the vehicle was $6,600.26. Proliance, Plaintiff's insurance company, paid plaintiff the amount of his loss and sued Acura for reimbursement.... William Lytle, Lindsay Acura's service manager, [had] considerable familiarity with the typical operation of a dealership's service/parts department, including the one at Lindsay Acura. Lytle stated that he was aware that on or about June 13, 1999 Kevin Gallagher's 1998 Acura automobile was stolen from the Lindsay Acura dealership lot. Gallagher left his vehicle when the dealership was closed by using what is commonly referred to as the "night drop" or "early bird" drop. He parked his vehicle on the dealership lot and would have placed the keys to his car in an envelope that would have been dropped in the "early bird" slot. ... [E]very new car dealership had a similar procedure and Lindsay Acura's is the same or similar in construction to those used at other dealerships. Lytle also stated that before the incident with Gallagher, Lindsay Acura never had a similar problem with a car left by a customer in that manner.... In describing the premises, Lytle stated the lot was fully lighted and the level of security taken by Lindsay Acura in its "early bird" service is commensurate with the level of security customarily employed by new car dealerships in the area.... Proliance responded to Lytle with Kevin Gallagher who stated ... When he returned to Lindsay Acura the next day, he observed that the door "which held the slot for the early bird drop off was about one inch above the floor. Keys are placed in envelopes and dropped into the slot and land on the floor. "When my car was finally recovered, the envelope which had contained the keys to my car was inside the car." The parties had a mutual benefit bailment. Lindsay Acura failed to return the car in an undamaged condition. Accordingly, the burden shifted to Lindsay Acura to set forth evidence explaining its failure to redeliver the bailed property. Lytle claims that although the car was stolen from the lot, the theft happened despite Lindsay Acura providing all the typical security found in new car dealerships throughout the area. Proliance responds by asserting that the theft occurred because a gap in Lindsay Acura's door negligently allowed the thief to pull the envelope from under the door and steal the vehicle. Proliance thus has come forward with evidence that counters Lindsay Acura's evidence and allows an inference of Lindsay Acura's negligence in the theft of Gallagher's car.... In the final analysis, Proliance met its initial burden of making a prima facie case for failed bailment. Lindsay Acura claimed it exercised ordinary care as required by its obligations as a mutual-benefit bailee. Proliance responded with evidence which, if believed, identifies the negligence of Lindsay Acura that allowed the theft. Accordingly the trial court improperly granted summary judgment to Lindsay Acura. CASE QUESTION 1. Why was Lindsay Acura's rebuttal of the inference of negligence not sufficient to save it from liability?
In another bailment case, an employer operated a service garage for cars and large machines. It required that employees furnish their own tools. For the convenience of the employees and employer, the latter allowed workers to leave their toolboxes at the garage. Two employees' tools were stolen from the employer's storage area. The court found the employer accepted the plaintiff 's tools for storage, and thus a bailment occurred. The failure of the employer to return the tools to the workers constituted a prima facie case of breach of the bailment agreement. The burden of proof then shifted to the bailee to establish that it exercised reasonable care. There was testimony that the office door had a deadbolt lock, the garage door had a lock placed in the roller guide track so that the door could not be lifted, and some windows were covered with security bars. However, the window broken on the night of the theft did not have bars. That window measured four feet by eight feet in size and was four feet from the ground in an unlighted area. Further, the premises had no security system. The court ruled in favor of the employees stating, "Although there was evidence that appellant exercised some care, it was reasonable to conclude that appellant failed to exercise due care." (33)
Items inside Bailed Property
Is a bailee liable when valuable property is located inside the bailed property and its presence is unknown to the bailee? For example, suppose you put a valuable ring in the pocket of your leather coat, which you leave with a hat-check attendant at a restaurant. You do not inform the attendant of the presence of the ring. The attendant took a coffee break, during which the coats were unattended. While the attendant was gone your coat was stolen. The restaurant will be liable for the value of the coat because it was negligent for leaving the garments unattended. Will the restaurant also be liable for the value of the lost ring?
The answer becomes obvious if you apply the elements necessary for a bailment. The bailee must knowingly accept possession of the property. In this example the hat-check attendant knowingly accepted possession of the coat. But did he knowingly accept possession of the ring? The answer, of course, is no; he did not even know of its existence. Therefore, the restaurant was not a bailee of the ring and will not be liable for its loss.
Similarly, when you park your car in a parking lot and leave the key with an attendant, a bailment of the car is created. If you have a valuable camera in the trunk but fail to inform the attendant of its existence, no bailment is created as to the camera. If the car is stolen due to the attendant's negligence, the parking lot will be liable to you for the value of the car. The outcome is quite different for the camera. Since no bailment of it existed, the parking lot is not liable for its loss.
In a case involving the bailment of a car, the plaintiff checked into a hotel, removed clothing from the back seat of the car, and then delivered the car and key to an employee of the hotel for parking. The bell captain had observed the guest remove a cosmetic case from the trunk and from where he was positioned could not see anything else in the trunk. He asked if there was any more personal property in the car, but the guest did not respond. The car was then parked by a hotel employee in a nearby garage. A few days later when the plaintiff checked out, the hotel was unable to deliver his car or its contents, nor could it account for its disappearance. The car was located some time later, but drums claimed by the plaintiff to have been in the trunk were missing. The plaintiff sued the hotel for the loss, claiming the hotel was liable to him as a bailee.
The court determined a bailment existed between the plaintiff and the hotel as to both the car and any contents the hotel employees knew about. An employee would be aware of property in a car if the guest pointed it out or it was in plain view. Here, however, there was no evidence to show the hotel employee knew that drums were in the trunk. Therefore, there was no bailment of the instrument, and the hotel was not liable. (34)
One exception applies. Most cases hold that, although a bailee may not have known of specific property in a car, a bailment of that property will nonetheless exist if the bailee could reasonably anticipate that the property would be in the vehicle. For example, a country-club bailee should reasonably anticipate that the trunk of a car might contain golf clubs, tennis rackets, and sportswear. (35) Likewise, a bailee should reasonably expect that the trunk of a car might contain spare tires and jacks, but not massage equipment such as a portable massage-therapy table, massage oils, a portable cassette player, massage-therapy tapes, and sheets and towels. (36)
Rules Particular to Bailment of Cars
A hotelkeeper or restaurateur who takes care of a patron's car assumes a great responsibility. The value of an automobile can range from as low as a few hundred dollars to over $100,000. The limiting statutes do not apply to cars. Public parking lots often attempt to limit their liability for stolen or damaged cars by claiming on signs and parking receipts that they are not liable. Because of the quasi-public nature of the hospitality industry, hoteliers are not allowed to do so; they are not permitted to limit their liability for loss or damage to bailed property caused by their own negligence. Therefore, such disclaimers of liability on signs or receipts are not effective. Case Example 8-13 clearly illustrates this point.
CASE EXAMPLE 8-13 Ellerman v. Atlanta American Motor Hotel Corp. 191 S.E.2d 295 (Ga. 1972) Plaintiff, a guest at a motor hotel operated by the defendant, placed his automobile in the defendant's parking facility. He was required by the defendant to leave the ignition key with the defendant's employee, and the latter parked the vehicle in an area unknown to plaintiff. At the time, plaintiff was given a claim check which plaintiff admitted reading. It provided in part as follows: "Liability. Cars parked at owner's risk. Articles left in car at owner's risk. We reserve privilege of moving car to other section of lot. No attendant after regular closing hours." Prior to delivering the ignition key and the car to the attendant, the plaintiff removed a raincoat from the interior, placed it in the trunk of the car, and kept the trunk key. When plaintiff checked out of the hotel, his car was found missing. The car and its contents have never been recovered. Plaintiff's suit sought to recover the value of the items of personality contained in the trunk that he alleged were allowed to be stolen through the defendant's negligence. Plaintiff had been paid by his insurance company for the loss of the automobile.... The defendant contends that the depositing of the automobile with the defendant's attendant under these circumstances does not give rise to a bailment relationship because of the disclaimer of liability printed on the claim check given to plaintiff. He relies upon our decision in [a previous case] as controlling. As we view this issue, [that case] is not in point. [It] dealt with an ordinary parking lot. This case involves a parking facility operated by a motel as a part of its service, and this creates the relationship of innkeeper and guest.... It is recognized that an ordinary bailee by contract may limit or completely exculpate himself from any liability for loss or damage to the bailed property as a result of his own simple negligence. However, an innkeeper is not an "ordinary" bailee. Many courts and texts have described an innkeeper as a "professional" bailee.... Unlike an "ordinary" bailee, the "professional" bailee is often precluded from limiting by contract liability for his own negligence as violative of public policy. The reasoning utilized is that the public, in dealing with innkeepers, lacks a practical equality of bargaining power and may be coerced to accede to the contractual conditions sought by the innkeeper or else be denied the needed services. We think that both the principle precluding the limitation of liability and the reasoning underlying it are sound ... [A]ny ... contract purporting to ... exculpate the innkeeper is contrary to the public interest and policy and cannot be enforced. CASE QUESTION 1. The court distinguishes between a hotel parking facility and a public parking lot.Why does the court make this differentiation?
A hotel with a parking lot or garage that takes possession of guests' car keys must establish effective security procedures and systems to avoid liability. The high cost of cars dictates the importance of proper management and planning.
An example of negligence on the part of a hotel when acting as bailee is leaving the ignition key in a parked, unattended car, unless the parking lot is carefully monitored at all times. Also, leaving in a place easily accessible to patrons a board or other device on which car keys are kept constitutes negligence. Easy access to car keys facilitates the thief 's job. A much better practice is to place all the keys in a specified location accessible only to authorized employees.
Significance of a Car Key
We have discussed car bailments as involving transfer of the key. Customarily, if a person parks a car in a lot and retains the key, in the eyes of the law he has not delivered possession of the vehicle to the lot owner and therefore no bailment exists.
A case in Tennessee expanded, at least in that state, the circumstances under which leaving a car in a parking lot will be viewed as a bailment. A guest at a Hyatt Regency parked his car in the hotel parking garage, taking with him his key and a ticket received when he entered the garage. Upon his return, he discovered the car was missing. It was never recovered. The owner sued the hotel for his loss. Without a bailment, the hotel would not have been liable. Although the driver did not leave the key with the attendant, the court determined a bailment existed based on the particular facts of the case.
Entrance to the garage in question was made via a single entryway controlled by a ticket machine. A lone exit was controlled by an attendant in a booth located just opposite the entrance and in full view therefrom. The hotel hired security guards, two of whom were on duty most of the time. They wore a distinctive uniform so as to be easily identifiable and patrolled the hotel buildings and grounds. The guards were instructed to make rounds through the garage, although not at specified intervals. Finding from the facts that a bailment had been created, the court said, "Appellee's vehicle was not driven into an unattended or open parking area. Rather is was driven into an enclosed, indoor, attended commercial garage which not only had an attendant controlling the exit but regular security personnel to patrol the premises for safety." (37)
This case is not widely followed by other states. Most other states require in cases involving parking lots that a transfer of the car key to the lot attendant for a bailment to exist. Case Example 8-14 is more typical of the rules applied to bailment of cars.
CASE EXAMPLE 8-14 Waterton v. Motor Inc. 810 NYS2d 319 (2006). In this Small Claims action the Court must determine the standard of liability to apply to an innkeeper when a guest's automobile is vandalized while parked in a garage on the premises. Claimant Viola W. Waterton and her husband, Andy Henry, took a room at Defendant's Linden Motor Inn. They knew the facility and had been guests before. When they arrived, they parked Claimant's 1990 Honda Accord in the belowground garage on the premises, checked in at the front desk, and retired to their room. There was no gate or other barrier controlling entry to or exit from the garage, and no attendant or security guard. They paid no separate fee to park in the garage, did not register the vehicle with the front desk, and retained the keys. There was no discussion at all with the desk clerk about the vehicle, nor any discussion about the hours that the desk would be attended. At the front desk, however, there was a monitor that showed the interior of the garage, obviously through a security camera. Ms. Waterton and Mr. Henry denied seeing any sign in the garage that purported to disclaim or limit the Motor Inn's responsibility for any loss of, or damage to, the vehicle or its contents while parked in the garage. ... The following morning, when they returned to the car, they found that it had been vandalized, that installed audio-visual equipment had been removed, and that some "expensive" items left in the car, including a video camera, had been stolen. Claimant presented receipts totaling $1,322.45 representing the cost of parts and repairs to the vehicle and the cost of the stolen items. At common law an innkeeper was an insurer of goods delivered into his or her custody by a guest, and so was absolutely liable for the loss or destruction of such goods "unless caused by the negligence or fraud of the guest, or by the act of God or the public enemy." The "infra hospitium" concept, with its associated rule of innkeeper liability without fault, had its origins in considerations of public policy. The traveler was particularly exposed to depredation and fraud. He was compelled to repose confidence in a host. By mid-nineteenth century the days of violence, which in early times required this protection to the traveler, had passed away and [state legislatures] enacted a series of statutes to restrict the innkeeper's exposure. The common law rule has been abandoned in favor of the traditional negligence standard of reasonable care under the circumstances.... The court finds and concludes that there was no bailment of Claimant's automobile or its contents.... There were no assurances, or even any discussion, that would have led Claimant and her husband to reasonably expect that Defendant was undertaking care and custody of the vehicle. The circumstances were similar to the typical park-and-lock transaction, except here Claimant maintained even more control over the vehicle because there were no barriers to access to, or removal of, the car at her will. Unlike the presence of a security guard, a security camera evidences no dominion and control over the vehicle by Defendant. Even without a bailment, however, Claimant may recover if she has proved that Defendant was negligent in failing to take reasonable protective measures against reasonably foreseeable criminal activity on the premises, and that Defendant's negligence caused her loss. To establish foreseeability, the criminal conduct at issue must be shown to be reasonably predictable based on the prior occurrence of the same or similar criminal activity at a location sufficiently proximate to the subject location. Claimant presented no evidence that theft or vandalism in the garage was reasonably predictable, and the presence of a security camera is, in itself, insufficient. Claimant and her husband were familiar with the area, but were not concerned about leaving items, which they characterized as "expensive", in the vehicle overnight. Assuming duty, Claimant must also establish the failure to exercise ordinary care. Proof that the damage occurred by vandalism, without more, does not suffice to establish the absence of reasonable care. There was insufficient evidence for the Court to conclude that Defendant's clerk failed to use reasonable care in monitoring any activity in the garage. CASE QUESTIONS 1. What circumstances were missing that led the court to determine a bailment did not exist? 2. What additional factors would the plaintiff have had to prove to establish negligence by the hotel?
Similarly, a hotel was not liable for a stolen car left in the hotel parking lot where the car's owner retained the key. The hotel avoided liability notwithstanding the car was left as part of a promotional "Park and Fly" package, offering guests one night's accommodation, free transportation to the airport, and parking for up to two weeks. (38)
Liability for a Patron's Property in a Restaurant, Bar, or Cloakroom
The only portion of many limiting liability statutes that apply to a restaurant or bar covers no-fee checkrooms where the customer is given a receipt for the checked property. In all other circumstances, the only basis for liability for lost property in a restaurant or bar is bailment. As Case Example 8-15 illustrates, if a bailment does not exist and the patron did not receive a receipt, the bar is not liable.
CASE EXAMPLE 8-15 Kuchinsky v. Empire Lounge, Inc. 134 N.W.2d 436 (Wis. 1965) Kuchinsky entered the Empire Lounge as a customer and hung his coat on a clothes tree near his table. His coat was stolen while he ate.... The rule ... is that before a restaurant keeper will be held liable for the loss of an overcoat of a customer while such customer takes a meal or refreshments, it must appear ... that the overcoat was placed in the physical custody of the keeper of the restaurant or his servants, in which cases there is an actual bailment.... In [another case], the plaintiff was a guest at a luncheon held at the defendant's hotel. She hung her mink jacket in an unattended cloakroom on the main floor across from the lobby desk. After the luncheon and ensuing party, the plaintiff went to the cloakroom to retrieve her jacket and discovered it was gone. The court held that no negligence had been established against the defendant and stated: "... In any event, we do not feel that it is incumbent upon a hotel or restaurant owner to keep an attendant in charge of a free cloakroom for luncheon or dinner guests or otherwise face liability for loss of articles placed therein. The maintenance of such rooms without attendants is a common practice, and where the proprietor had not accepted control and custody of articles placed therein, no duty rests upon him to exercise any special degree of care with respect thereto...." Ruling of the Court: [Complaint dismissed]
In another case, a diner whose coat had fallen off his chair was directed by the waitress to hang it in an unattended cloak room. The coat was stolen from the room and the patron sued. The court held the restaurant was not liable because the coat had not been delivered to or accepted by the restaurant and so a bailment was never created. (39)
If a bailment does exist, the hotel or restaurant will be liable if it fails to exercise the necessary care. In Case Example 8-16, the restaurant learned this rule of law the hard way. The case also illustrates a constructive bailment, which is a bailment created by law as a result of special circumstances rather than by agreement between the parties. A constructive bailment, like a mutual-benefit bailment, requires the bailee to exercise reasonable care of the bailed goods. In this case, a constructive bailment was created where a restaurant patron mistakenly left her pocketbook by her table when she departed and it was found by an employee.
CASE EXAMPLE 8-16 Shamrock Hilton Hotel v. Caranas 488 S.W.2d 151 (Tex. 1972) ... Plaintiffs, husband and wife, were lodging as paying guests at the Shamrock Hilton Hotel in Houston on the evening of September 4, 1966, when they took their dinner in the hotel restaurant. After completing the meal, Mr. and Mrs. Caranas, plaintiffs, departed the dining area leaving her purse behind. The purse was found by the hotel busboy who, pursuant to the instructions of the hotel, dutifully delivered the forgotten item to the restaurant cashier, a Mrs. Luster. The testimony indicates that some short time thereafter, the cashier gave the purse to a man other than Mr. Caranas who came to claim it. There is no testimony on the question of whether identification was sought by the cashier. The purse allegedly contained $5.00 in cash, some credit cards, and 10 pieces of jewelry said to be worth $13,062. The misplacement of the purse was realized the following morning, at which time plaintiffs notified the hotel authorities of the loss. Plaintiffs filed suit, alleging negligent delivery of the purse to an unknown person and seeking a recovery for the value of the purse and its contents.... [W]e find that there was indeed a constructive bailment of the purse. The delivery and acceptance were evidenced in the acts of Mrs. Caranas' unintentionally leaving her purse behind in the hotel restaurant and the busboy, a hotel employee, picking it up and taking it to the cashier, who accepted the purse as a lost or misplaced item. The delivery need not be knowingly intended on the part of Mrs. Caranas if it is apparent that were she ... aware of the circumstances (here the purse being misplaced), she would have desired the person finding the article to have kept it safely for its subsequent return to her. As stated above, the evidence conclusively showed facts from which there was established a bailment with the Caranases as bailors and the hotel as bailee. The evidence also showed that the hotel, as bailee, had received Mrs. Caranas' purse and had not returned it on demand. Such evidence raised a presumption that the hotel had failed to exercise ordinary care in protecting the appellees' property. When the hotel failed to come forward with any evidence to the effect that it had exercised ordinary care ... the appellees' proof ripened into proof by which the hotel's primary liability was established as a matter of law. Further, this bailment was one for the mutual benefit of both parties. Appellees were paying guests in the hotel and in its dining room. Appellant hotel's practice of keeping patrons' lost personal items until they could be returned to their rightful owners, as reflected in the testimony, is certainly evidence of its being incidental to its business, as we would think it would be for almost any commercial enterprise that caters to the general public. Though no direct charge is made for this service, there is indirect benefit to be had in the continued patronage of the hotel by customers who have lost chattels and who have been able to claim them from the management. Having found this to have been a bailment for the mutual benefit of the parties, we hold that the appellants owed the appellees the duty of reasonable care in the return of the purse and jewelry, and the hotel is therefore liable for its ordinary negligence. Ruling of the Court: [J]udgment for plaintiff.
In another case also ostensibly involving forgotten property, the plaintiff guest placed in his room a paper bag filled with $9,000 in cash and left the hotel temporarily. The housekeeper found the money while cleaning the room. Seeing no personal effects of the guests in the room, she wrongly assumed he had checked out. Consistent with hotel procedure for lost property, she gave the money to her immediate supervisor, who in turn gave it to the general supervisor. He absconded with the money, which was never recovered. The general supervisor had been employed by the hotel for three years and had in that time been given items of value to turn into the office on several occasions. He had consistently done so until the time in question. The guest sued the hotel; it denied liability for the full $9,000, based on the limiting statute. The plaintiff argued the hotel should be liable, notwithstanding the statute, on a bailment theory since it took possession of the money for safekeeping. The court hedged on whether the law of bailment should supersede the limiting statute, but stated that even if bailment law applied, the hotel was not negligent and therefore would not be liable because the housekeeper and her supervisor gave the money to the proper person and that person had always acted responsibly with regard to guests' valuables in the past. The court further held the hotel was not liable for the general supervisor's theft of the money on a respondeat superior theory since, when he stole the money, he was acting outside the scope of his employment. Instead, the hotel's liability was limited by the statute. (40) A significant factual difference between this case and Shamrock is that in Shamrock the bailee of the purse was negligent; in this case the court held the bailee was not.
Many hotels, restaurants, clubs, concert halls, museums, and other public businesses have checkrooms available to safeguard guests' valuables. A bailment is created between the customer who leaves property with a checkroom attendant and the facility. The attendant on duty accepts patrons' garments or other property and issues a receipt as proof that the property was delivered and accepted. In many states, the limiting liability laws cover attended checkrooms and baggage rooms. If applicable these statutes limit the facility's liability for losses occurring there. In New York, for example, the maximum liability for a checked item is $200.
If the coatroom is unattended, the limited liability statute is not applicable. Since typically no bailment arises when a coatroom is unattended, the hotel or restaurant will customarily have no liability for property lost or stolen there.
Case Example 8-17 involves Studio 54, a once-famous upscale New York City disco. (A movie about the club was produced in 1999.) The case addresses three issues: (1) the liability of a discotheque when a coat is missing from the coatroom; (2) the effect of a sign in a coatroom purporting to limit liability for lost articles; and (3) the method for calculating damages when a coat is missing. The case also discusses many of the issues we have studied--bailments, limiting liability statutes, and conspicuous notice. This case again highlights the courts' requirement of strict compliance with limited liability statutes. As we have seen repeatedly in this chapter, unless all the terms of the statute are satisfied, the limitation of liability is not applicable.
CASE EXAMPLE 8-17 Conboy v. Studio 54, Inc. 449 N.Y.S.2d 391 (1982) The issue that I must decide is whether the [New York limiting liability statute] provides a monetary haven for a discotheque.... On January 23, 1982, the claimant, his wife and a group of friends convened for a party at Studio 54 (Studio) in Manhattan. Studio, licensed by the New York City Department of Consumer Affairs as a cabaret, is a discotheque, where patrons dance to recorded music usually played continuously on high-fidelity equipment.... Often a psychedelic light show accompanies the music and provides background and impetus for the free-spirited patrons who pay $18 per person to dance to the deafening and often overwhelming disco music played continuously on the sophisticated sound system.... No food is sold or served here-not even a single peanut or pretzel to accompany the alcoholic and soft drinks available for purchase. The Conboy party checked their coats, 14 in all, with the coatroom attendant. They received 7 check stubs after paying the 75[cents] charge per coat. A bailment of the coats was created. After their evening of revelry, they attempted to reclaim their coats. Mr. Conboy's one-month-old, $1,350 leather coat was missing. It has not been found and accordingly, he has sued Studio for $1,350. Under traditional bailment law, once the goods were delivered, the failure of the bailee (Studio) to return them on demand created a prima facie case of negligence. The burden of coming forward with evidence tending to show due care shifted to Studio. Studio did not come forward with any evidence to meet this burden. Mr. Conboy is entitled to a judgment. Studio, relying on [New York's limiting liability statute], contends that its liability is limited to $75. Its argument is incorrect ... The statute offers innkeepers and restaurant proprietors who comply with it a reduction of the innkeeper's common law insurer-liability as to guest's property deposited with them. That being said, it need only be noted that the statute offers its protection to restaurants, hotels and motels, not discotheques which appear to be modern-day versions of dance halls. Simply put, a discotheque may qualify as a restaurant but there is no logic in giving it that classification unless one of its principal activities is the furnishing of meals. Certainly, Studio should not be classified as a restaurant, because it serves no food.... The limitations on liability set forth in the statute are therefore not applicable here.... Studio claims however that their liability may nevertheless be limited by the posting of a sign in the coatroom. The sign states: "Liability for lost property in this coat/check room is limited to $100 per loss of misplaced article." ... [T]he posting of the sign [is not] a useless act, for it may still function as a common-law disclaimer. To bind Conboy to this limitation, I must find however that he had notice of the terms of the disclaimer and agreed to it. Studio did not establish that the sign was posted in a conspicuous manner. I hold that Conboy is not bound by the posted disclaimer of liability. As to damages, Conboy is entitled to the "real value" of the coat. Real value, especially with respect to used clothing or household furnishings that are lost or damaged is not necessarily its market value which presumably would reflect a deduction for depreciation. In fact, the real value may be measured by the price paid when new for the lost or damaged goods. One commentator has offered a reason that the strict market value approach is not favored: No judge buys his clothing second hand and none would expect any owner to replace his clothing in a second hand store. Hence no judge expects to limit the cost of replacing clothing to a market no one should be expected to use. I therefore hold that Conboy may be compensated on a basis that will permit him to replace the very same coat purchased new--$1,350. Judgment for claimant in the sum of $1,350. CASE QUESTIONS 1. Why did the limiting liability statute not apply in this case? 2. Why did the disclaimer sign hung by Studio 54 not relieve the discotheque from liability? 3. If Conboy's coat was three years old rather than one month, do you think the court would have awarded him its full value of $1,350? Why? Alternatively, why not?
Often a hotel or perhaps a restaurant will contract with a concessionaire (an independent contractor) to operate the checking facilities (luggage and coats). Usually the concessionaire pays the hotel a fee in exchange for the business opportunity. Such an arrangement saves the hotel from having to manage and staff the checking operations. Several plaintiffs whose checked property was not returned from concessionaires have argued that the concessionaire is not entitled to the benefits of the limiting statutes because those statutes were designed to protect only innkeepers and restaurateurs. Courts have accepted this argument and denied the concessionaire limited liability. (41)
act of God
bailment for the sole benefit of the
bailment for the sole benefit of the
limiting liability statutes
prima facie liability rule
The liability of hotels and restaurants for their guests' and patrons' property has appropriately changed over time. The common law imposed unlimited liability on inns and food establishments. Most states have since passed limiting statutes that significantly reduce this liability.
For money, jewels, and securities, limiting statutes typically require that hotels provide safes and post notices in prescribed places announcing the availability of the safes and the hotel's limited liability. The specifics of these statutes vary from state to state. Only if the hotel strictly complies with the statutory requirements will it benefit from limited liability. Less than complete compliance may result in full liability.
For other property a guest brings to a hotel, such as clothes or sporting equipment, limiting statutes provide limited liability for hotels unless the loss is caused by the hotel's negligence. If it is, the hotel will typically be liable for the full value of the missing property. An exception is the state of Nevada, which limits the liability of innkeepers even when they are negligent.
For property not covered by the limiting statutes, the liability of a hotel or restaurant is based on laws regarding bailment. If no bailment exists, the business is not liable for loss or theft of property. If a bailment does exist, the hotel or restaurant will be liable for the loss only if it failed to exercise the requisite degree of care for the bailed goods. The level of care required varies depending on whether the bailment is for the sole benefit of the bailor, the sole benefit of the bailee, or a mutual-benefit bailment. If the hotel or restaurant renders the care required, the establishment will be free from liability even though property is stolen or otherwise disappears.
Preventive Law Tips for Managers
* Identify the specific requirements of your state's limiting liability statute and follow them exactly. The limiting statutes relieve a hotel from common-law strict liability. The statutes are generally not applicable unless the hotel strictly follows their mandates. Most states' statutes require that the hotel provide a safe and post notice conspicuously in specified places announcing the availability of the safe and the hotel's limited liability. To qualify under the statutes, a hotel safe must be secure and capable of withstanding burglary attempts. It should be available to guests twenty-four hours a day. Anything less jeopardizes the relief from full liability provided by the statutes.
The posted notices must not only inform the guest of the safe's availability, but must also state that if goods are lost or stolen from the safe, the hotel's liability will be limited. The notices must be posted each and every place the statute requires. For example, if the statute mandates posting by the registration desk, in the lobby, and in guest rooms, posting in less than all three locations is inadequate in most states and will not protect the hotel from unlimited liability. The notice must also be conspicuous, meaning easily seen and easy to read. For example, a notice hidden behind decorations or signs in the lobby or in a nonobvious place in a guest room will not satisfy the statute. In these circumstances, the hotel will be liable for the full value of the lost property.
Individual states may have additional requirements. For example, some states require "suitable" locks or bolts on the doors of guest rooms and "suitable" fastenings on windows. Check your state statute carefully and make sure your establishment is in full compliance. Loss through inadvertence or carelessness of the very significant benefit offered by these statutes can impact a facility's financial success and can easily be avoided by vigilant monitoring.
* Train appropriate employees how to use the safe. If a guest is unable to place valuables in the safe because staff does not know how to operate it, the safe is not "available" to the guest as required by statute and the hotel will have unlimited liability. Employees should be well trained on use of the safe and the importance of its being available around the clock. If an employee does not correctly operate the safe or fails to follow hotel procedures for its use, thefts may be facilitated.
* Instruct employees about the hotel's limited liability and the importance of their not overstating that liability. The consequence of an employee exaggerating a hotel's liability for property stored in a safe may be that the hotel has unlimited liability. The only way to avoid the principle of equitable estoppel from curtailing the limiting statutes' applicability is by ensuring your employees do not misstate the hotel's liability. Training and frequent reminders about the benefits of the statutes and what constitutes appropriate comments to guests about liability should minimize this potential problem.
* Adopt procedures to limit thefts of property from the safe. While the limiting liability statutes remove much of the liability a hotel would otherwise have when property is missing from a safe, such incidents are costly to the hotel in terms of good customer relations. Efforts should be made to minimize this loss. Security measures concerning the safes should be reviewed and updated regularly. The number of employees with access to the safes should be limited (but not too limited because guests must have access around the clock for limited liability to apply). Tight control should be maintained of keys to the safes and records that identify their contents. Other security measures appropriate to the particular circumstances of your establishment should be instituted.
* Regularly review procedures followed in checkrooms to minimize chances of theft. Many thefts in hotels and restaurants occur in the baggage checkroom or the coat-check area. Access to these rooms should be limited. Attendants should be instructed not to leave unless another attendant is available. They should be trained always to require a receipt or other proof of ownership before returning goods. The checkrooms should be equipped with security devices to enable attendants to notify security unobtrusively if a theft is in progress.
* Develop and strictly enforce procedures for parking guests' cars. Employees assigned to parking customers' cars should be screened for driving abilities and criminal records for theft and crimes relating to driving, such as driving while intoxicated and reckless driving. Their training should stress the importance of driving patrons' cars carefully. The establishment should have procedures for handling car keys designed to avoid loss or theft. The hotel should maintain adequate insurance to cover its potential liability for violation of its duties as a bailee.
* If the coat room is unattended, hang a sign stating the hotel is not liable. The sign alerts the customer that the establishment will not cover the loss and the patron leaves the goods at his or her own risk. This may motivate the customer to take extra precautions to avoid the disappointment of a loss.
* Adopt procedures enabling the hotel or restaurant, when acting as bailee, to prove it exercised reasonable care. The law of bailment creates a presumption of negligence on the part of the bailee if the bailor can prove delivery of property, acceptance by the bailee, and damage to or loss of the property. The bailee can rebut the presumption of negligence by showing it used reasonable care while in possession of the goods. Procedures for ensuring safekeeping should be developed and enforced so that the hotel can prove it exercised reasonable care.
* If a concessionaire operates the checkrooms, the contract should require safety procedures be utilized and insurance be obtained. A careless concessionaire can damage a restaurant or hotel's reputation. A guest is hardly ever aware that a service is being offered by someone other than the hotel or restaurant. When a guest's property is stolen while checked, the guest views the wrongdoer as the hotel, not the concessionaire. The hotel thus has a public relations interest in ensuring that concessionaires do not engage in conduct likely to alienate patrons. The hotel should be vigilant to ensure the concessionaire's practices maximize security and minimize theft. The contract should require that specified security procedures be followed and also that the concessionaire purchase insurance to cover the potential for unlimited liability.
1. According to common law, what is the innkeeper's liability for a guest's lost or stolen property?
2. What is a limiting liability statute?
3. What two key facts must be included in a notice posted pursuant to most limiting liability statutes?
4. Which of the following types of property are covered by limiting liability statutes that require hotels to maintain a safe?
C. A laptop (portable) computer
D. Diamond cufflinks
E. Expensive sporting equipment
5. What is the consequence of a guest failing to put valuables in a safe?
6. What is estoppel? What is its relevance to a hotel's liability for lost property?
7. At what point in the check-in process does a limiting liability statute become effective?
8. What is a bailment?
9. What is the difference between a bailment for the sole benefit of the bailor and a bailment for the sole benefit of the bailee?
10. What is a mutual-benefit bailment?
11. If you leave a watch with the jeweler to be repaired, who is the bailor and who is the bailee?
12. Does a bailment exist between a hotel and a guest when the guest goes out for the evening and leaves property in the guest room?
1. Describe two possible circumstances in which a hotel that provides a safe to its guests fails to satisfy the statutory requirements for a safe.
2. The Mandan Hotel posts the notice required by the limiting statute in the bathroom of guest rooms on the inside door of the medicine cabinet. Has the hotel posted the notice conspicuously? Why or why not? Suppose the notice is placed in an informational booklet about the hotel, which is placed on the desk in each guest room. Is this conspicuous posting? Why or why not?
3. Jan ate dinner at the Demrich Restaurant. After dinner she paid the cashier and went home without realizing she had left her purse at the restaurant. What liability does the restaurant have if the cashier does not notice the purse and it is stolen? What liability does the restaurant have if the cashier takes possession of the purse intending to notify Jan that it is at the restaurant?
4. Compare the liability of a hotel and a concessionaire for coats checked in a cloakroom.
5. Demitri left his coat with an attendant in the coat-check area of a restaurant. In his coat pocket was a cell phone. Does a bailment exist for the phone? Why or why not?
1. A limiting statute requires that a hotel post the necessary notice in the registration area, in the hotel lobby, and in the guest rooms. If a hotel posts the notice in the registration area and in guest rooms but fails to post in the lobby, will the hotel be entitled to limited liability? Why or why not?
2. A guest arrives at a hotel and informs the desk clerk that she has with her a large amount of cash. She expresses concern for its safety, and the clerk recommends she place it in a hotel safe deposit box. When she hesitates, he assures her that the money will be protected and further, even if it does become lost the hotel will be fully liable. Relying on this assurance, she deposits the money in the safe deposit box. When she sought to retrieve the money it had disappeared and has not been recovered. Is the hotel entitled to limited liability under these circumstances? Why or why not?
3. Terry is a computer salesperson. She is staffing a booth at a computer expo and has brought with her approximately $30,000 worth of laptops. What must she do vis-a-vis the hotel to obtain maximum protection for the equipment? What if she fails to do so?
4. Sandra is talking to the front-desk clerk and is in the process of checking out. While she is reviewing the bill, someone steals her briefcase, which was on the ground near her feet. The briefcase had in it various documents she needed for work, a spare pair of glasses, and a necklace with diamonds in it. Will the hotel be liable for the loss of any of these items? Why or why not?
Web sites that will enhance your understanding of the material in this chapter include:
http://www.nolo.com/lawcenter/faqs Once on this site, click on Consumer & Travel, then scroll down to Hotels and Other Accommodations FAQ. Several questions and answers address legal issues associated with guests whose property was stolen from a hotel or whose car was damaged while parked at a hotel.
http://www.palmersecurity.com This is one of numerous vendor sites that promote hotel safes for installation in guest rooms.
(1) Laird v. Eichold, 10 Ind. 212 (1858)
(2) Beam v. Marriott Corp., 655 N.Y.S.2d 566 (N.Y. 1997)
(3) Durandy v. Fairmont Roosevelt Hotel, Inc., 523 F.Supp. 1382 (La. 1981)
(4) Insurance Co. v. Holiday Inns, Inc., 337 N.Y.S.2d 68 (N.Y. 1972)
(5) Ippolito v. Hospitality Management Associates, 575 SE2d 562 (S.C. 2003)
(6) Roth v. Investment Properties, 560 S.W.2d 831 (Mo. 1978)
(7) North River Insurance Company v. Tisch Management, Inc., 166 A.2d 169 (N.J. 1960)
(8) Fennema v. Howard Johnson Co., 559 So.2d 1231 (Fla. 1990)
(9) Moog v. Hilton Waldorf-Astoria, 882 F.Supp. 1392 (N.Y. 1995)
(10) Days Inn v. Tobias Jewelry, Ltd., 751 So.2d 711 (Fla. 2000)
(11) Depaemelaere v. Davis, 351 N.Y.S.2d 808 (N.Y. 1973), 363 NYS2d 323 (N.Y. 1974)
(12) Federal Insurance Co. v. Waldorf Astoria Hotel, 303 N.Y.S.2d 297 (N.Y. 1969)
(13) Chase v. Hilton Hotel Corp., 682 F.Supp. 316 (La. 1988)
(14) Walls v. Cosmopolitan Hotels, Inc., 534 P.2d 1373 (Wash. 1975)
(15) GNOC Corp. v. Powers, 2006 WL 560687 (N.J. 2006)
(16) Susan Faris Designs, Inc. v. Sheraton New York Corp., 2000 W.L. 191689 (N.Y. 2000)
(17) Moog v. Waldorf-Astoria, 882 F.Supp. 1392 (N.Y. 1995)
(18) Summer v. Hyatt Corp., 266 S.E.2d 333 (Ga. 1980)
(19) Southernmost Affiliates v. Alonzo, 654 So.2d 1066 (Fla. 1995)
(20) Fisher v. Kelsey, 121 U.S. 383 (1887)
(21) Beam v. Marriott Corp., 655 N.Y.S.2d 566 (N.Y. 1997)
(22) Davidson v. Madison Corp., 247 N.Y.S. 789 (N.Y. 1931); aff'd, 257 N.Y. 120 (N.Y. 1931)
(23) David v. Prime Hospitality Corp., 676 So.2d 1049 (Fla. 1996)
(24) O'Rourke v. Hilton Hotels Corp., 560 So.2d 76 (La. 1990)
(25) Pacific Diamond Co., Inc. v. Hilton Hotels Corp., 149 Cal. Rptr. 813 (Ca. 1978)
(26) Pachinger v. MGM Grand Hotel-Las Vegas, Inc., 802 F.2d 362 (Nev. 1986)
(27) In Re The Ground Round, Inc. and Abboud v. The Ground Round, Inc., 326 B.R.23 (U.S. Bankruptcy Crt. 2005)
(28) Don-Lin Jewelry Co., Inc. v. The Westin Hotel Co., 877 A2d 621 (R.I. 2005)
(29) For a case with similar facts, see Hickman v. Cole, 1999 WL 254379 (Oh. 1999)
(30) Sisters of Charity of the Incarnate Word v. Meaux, 122 S.W.3d 428 (Tex. 2003)
(31) Gulf American v. Airco Industrial Gases, 573 So.2d 481 (La. 1990)
(32) Dispeker v. The New Southern Hotel Co., 373 S.W.2d 904 (Tenn. 1963)
(33) Templeton v. DiPaolo Truck Services, Inc., 2001 WL 584310 (Oh. 2001)
(34) Dumlao v. Atlantic Garage, Inc., 259 A.2d 360 (D.C. 1969)
(35) Jack Bowles Services, Inc. v. Stavely, 906 S.W.2d 185 (Tex. 1995)
(36) Klonis v. Carroll, 1991 WL 188693 (Tex. 1991)
(37) Allen v. Hyatt Regency-Nashville Hotel, 668 S.W.2d 286 (Tenn. 1984)
(38) Garrett v. Impac Hotels 1, LLC, 87 S.W.3d 870 (Mo. 2002)
(39) Black Beret Lounge and Restaurant v. Meisnere, 336 A.2d 532 (D.C. 1975)
(40) Gordon v. Days Inn, 395 S.E.2d 876 (Ga. 1990)
(41) Aldrich v. Waldorf Astoria Hotel, Inc., 343 N.Y.S.2d 830 (N.Y. 1973); Jacobson v. Belplaza Corp., 80 F.Supp. 917 (N.Y. 1949)
|Printer friendly Cite/link Email Feedback|
|Title Annotation:||UNIT III Relationship with Guests and Other Patrons|
|Publication:||Hotel, Restaurant, and Travel Law, 7th ed.|
|Article Type:||Professional standards|
|Date:||Jan 1, 2008|
|Previous Article:||Chapter 7 Guests and other patrons.|
|Next Article:||Chapter 9 Rights of innkeepers.|