A bailment involves a delivery of the thing bailed into the possession of the bailee, under a contract to return it to the owner according to the terms of the agreement. A relationship of bailor-bailee arises when the owner, while retaining general title, delivers personal property to another for some particular purpose upon an express or implied contract to redeliver the goods when the purpose has been fulfilled, or to otherwise deal with the goods according to the bailor's directions. In bailment, the owner or bailor has a general property interest in the goods bailed. The bailee, on the other hand, has mere possession of items left in its care pursuant to the bailment.
The plaintiff jewelry manufacturer, B.A. Ballou and Company, Inc., alleges that the defendant, Citytrust, wrongfully appropriated the plaintiff’s scrap metal while it was in the possession of a third party, Bridgeport Rolling Mills Company (Brimco), a metal fabricator. Brimco supplied Ballou with sheets of stock brass, and Ballou shipped its leftover brass back to Brimco, which commingled it with scrap brass received from other companies. Brimco shipped the accumulated scrap to a processing mill, which added new base metal and formed the finished brass that Brimco kept in its inventory for future orders. Because Brimco commingled the scrap metal and had it remanufactured by a third party, there was no way of determining whether any of the scrap sent to Brimco by Ballou ever returned to Ballou as finished brass. Brimco entered into a security agreement with defendant Citytrust for a line of credit, secured by an interest in all of Brimco’s inventory. Without Ballou’s knowledge, Brimco led Citytrust to believe that it owned all the scrap metal in its possession and when Citytrust took possession of Brimco’s assets, Ballou brought an action against Citytrust for its alleged conversion of Ballou’s scrap metal. The trial court held that a bailment existed and entered judgment in favor of the manufacturer, which Citytrust appealed, claiming that the trial court incorrectly concluded that a bailment existed, improperly shifted the burden of proof to Citytrust to prove that a bailment did not exist, and improperly calculated the damages.
Does a bailment exist when the property in question, scrap metal, has been altered and comingled with new metal, leaving it unrecognizable as the property it once was?
There was no evidence that the property returned was the product of the property delivered. The court concluded that the arrangement between the manufacturer and the mills company could not constitute a bailment. The court reversed the judgment in favor of the manufacturer in its action to recover damages for an alleged conversion of the manufacturer’s property.