Peet v. the Roth Hotel Co.
191 Minn. 151, 253 N.W. 546, 1934 Minn. LEXIS 745 (1934)
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Rule of Law:
A bailment is formed by the delivery and acceptance of property even if the bailee is unaware of its true value, provided its identity is not concealed. The bailee then owes a duty of ordinary care and bears the burden of proving a loss did not result from its negligence.
Facts:
- Ferdinand Hotz, a manufacturing jeweler, was a regular guest at the St. Paul Hotel, which was operated by the Roth Hotel Company.
- Byrl M. Peet owned a valuable platinum ring with a large sapphire and diamonds, which Hotz had made for her.
- After a small diamond was lost from the ring, Peet arranged to leave it for Hotz at the St. Paul Hotel for repair while he was a guest there.
- On November 17, 1931, Peet went to the hotel's cashier desk, took the ring off her finger, and handed it to the cashier, Miss Edwards.
- Peet instructed the cashier that the ring was for Mr. Ferdinand Hotz and spelled out his name.
- Miss Edwards accepted the ring and placed it in an envelope with Hotz's name on it.
- The ring was subsequently lost or stolen from the cashier's counter where it was placed.
- Peet learned about a month later from Hotz that he never received the ring.
Procedural Posture:
- Byrl M. Peet sued the Roth Hotel Company in a Minnesota trial court to recover the value of the lost ring.
- The case was tried before a jury, which returned a verdict in favor of Peet for $2,140.66.
- Roth Hotel Company (defendant) filed a post-trial motion for judgment notwithstanding the verdict or, in the alternative, for a new trial.
- The trial court denied the defendant's motion.
- Roth Hotel Company appealed the denial of its motion to the Supreme Court of Minnesota.
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Issue:
Does a valid bailment contract form when an item is physically delivered to and accepted by an agent, even if the agent is unaware of the item's unusually high value, as long as its identity is not concealed?
Opinions:
Majority - Justice Stone
Yes, a valid bailment contract forms under these circumstances. Mutual assent necessary for a contract can be expressed by conduct; the plaintiff's delivery of the ring and the hotel cashier's acceptance of it created a bailment. The defendant's argument that it did not assent to the contract because its agent was unaware of the ring's high value fails because there was no mistake as to the item's identity, only its value. Citing precedent, the court affirmed that a mistake as to value, unlike a mistake as to identity, does not prevent the formation of a contract. This was a bailment for the mutual benefit of both parties, as providing such a service for a guest is part of the hotel's ordinary course of business. Therefore, the hotel owed a duty of ordinary care, defined as the care commensurate with the risk, and bore the burden of proving the loss did not result from its negligence.
Analysis:
This decision solidifies the modern standard for bailment liability, moving away from archaic distinctions between degrees of negligence. It clarifies that for a bailment to be formed, the bailee need only accept the property with knowledge of its identity, not its specific value. The ruling's most significant impact is its affirmation of the Minnesota rule that places the burden of proof squarely on the bailee to disprove its own negligence once a bailor shows that property was delivered and subsequently lost. This pro-bailor standard makes it more difficult for commercial bailees to evade liability for property lost while in their care.
