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12/11/90 FIRST AMERICAN BANK v. DISTRICT COLUMBIA

December 11, 1990

FIRST AMERICAN BANK, N.A., APPELLANT
v.
DISTRICT OF COLUMBIA AND TRANSPORTATION MANAGEMENT, INC., APPELLEES



Appeal from the Superior Court of the District of Columbia; Hon. Gladys Kessler, Trial Judge

Ferren, Belson and Farrell, Associate Judges. Opinion for the court by Associate Judge Belson. Dissenting opinion by Associate Judge Farrell.

The opinion of the court was delivered by: Belson

This case arises from the unexplained disappearance of a bank dispatch bag from a vehicle owned by First American Bank after the vehicle had been towed to an impoundment lot because it was parked illegally in a rush hour zone. The main issue on appeal is whether the bank can recover from the District of Columbia and the towing company on a showing of failure to exercise ordinary care. We hold that it can.

The facts, as found by the trial court after trial without jury, are not in dispute. Appellant 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, 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 crane 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 crane 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 was able to recoup $57,616.71 of its loss, *fn1 but asserts that the cost of its recoupment effort was $10,555. *fn2 First American brought suit against the District of Columbia and TMI for breach of bailment and for conversion of its property.

The trial court ruled that the District and TMI were gratuitous bailees and therefore liable only for gross negligence. The trial court further ruled that First American did not meet its burden of proving that the District and TMI were grossly negligent, and that even if the defendants had been grossly negligent, First American was precluded from recovering because it was both contributorily negligent and assumed the risk. As for the claim of conversion, the trial court ruled that there was no conversion because the initial seizure of the vehicle was lawful. We affirm the Disposition of the claim of conversion, but 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. See Bernstein v. Noble, 487 A.2d 231, 234 (D.C. 1985) (bailment is created when possession and control over an object pass from bailor to bailee). *fn3 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. See Bernstein, supra, 487 A.2d at 234; S. WILLISTON, LAW OF CONTRACTS § 1038, at 900 (1967). In contrast, a bailee that receives compensation for its services is held to a standard of ordinary care:

A person becomes a bailee for hire when he takes property into his care and custody for a compensation. The nature and amount of the compensation are immaterial. The law will not inquire into its sufficiency, or the certainty of its being realized by the bailee. The real question is, was the contract made for a consideration? If so, then it was a locatum, and not a depositum, and the defendant was liable for the want of ordinary care. . . . The law does not undertake to determine the adequacy of a consideration. . . . It is sufficient if the consideration be of some value, though slight, or of a nature which may inure to the benefit of the party making the promise.

WILLISTON, (supra) , § 1032, at 832 (quoting Prince v. Alabama State Fair, 106 Ala. 340, 17 So. 449 (1895)) (emphasis in original); see also 8 AM. JUR. 2D Bailments § 21 (1980).

A bailment for hire relationship may be created even in the absence of an explicit agreement. See 8 AM. JUR. 2D Bailments § 62. All that is required is the existence of a mutual benefit. As stated by one legal treatise:

For, as in gratuitous undertakings, there may exist what we call a quasi bailment, or bailment not strictly upon contract; namely, one whose conditions are satisfied with the voluntary acceptance of possession by one who expects some reward for his service; as, for instance, the lawful captors of a vessel, salvors . . . and further, where their employment in rem goes not unrecompensed, sheriffs, clerks, and other officers of the law. All of these, because of a mutually beneficial possession in fact, are, regardless of an owner's permission, treated, for convenience, as hired bailees.

J. SCHOULER, A TREATISE ON THE LAW OF BAILMENTS ยง 94 (1897) (footnote omitted) (emphasis in original); see also J. STORY, LAW OF ...


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