Duties of the Bailee. K-2 Petroleum, Inc, and El Dorado Oil and Gas, Inc, were en-gaged in a joint-venture drilling project. They operated under an agreement whereby El Dorado provided a working electric generator for K-2's working interest in the well

Question

The generator be-came nonfunctional, and K-2 sought to have El Dorado replace or repair it. El Dorado refused. K-2 subsequently contracted with Stewart & Stevenson Services, Inc (S & S), for the repair of the generator. Shortly after receiving the generator for repair, S & S was notified by El Dorado that it was the true owner of the generator. El Dorado identified it by model and serial number and demanded its return upon completion of repairs. Because S & S knew of the common practice among oil field companies of switching, loaning, and borrowing equipment among themselves, it allowed El Dorado to take possession of the generator after El Dorado had paid for the repair. Before K-2 received any notice of S & S's delivery to El Dorado, K-2 and El Dorado terminated their joint venture and agreed that all salvageable equipment and supplies from the project were the property of K-2. K-2 later filed suit against S & S, claiming that S & S's failure to return the generator to K-2 and its delivery of the generator to El Dorado constituted the tort of conversion. Discuss K-2's claim.

Answer 1

Duties of the bailee
As a general rule, a bailee has a duty to return the bailed property to the bailor, and failure to do so constitutes a tort of conversion. There is an exception when the bailee delivers the property to the true owner. A joint venture is an association of two or more persons with the characteris-tics of a partnership, except that a joint venture is usually limited to a single or restricted pur-pose. Generally, a joint venture is governed by the same basic rules that are applied to a part-nership. In a partnership, every partner is an agent of and for the partnership. It follows, then, that El Dorado was an agent for the joint venture, and delivery by S & S to El Dorado was in ef-fect also delivery to K 2. Thus, S & S made a proper delivery of the bailed goods to the owner and cannot be liable for conversion.