I recently left an HVACR company I had worked at for several years. I want to start my own HVACR business in the same community. My former employer bought the parts inventory and customer list of a local contractor who went out of business. During a public auction of the former company’s used equipment and office furniture, I purchased several file cabinets. Inside one cabinet is what appears to be a great deal of files with customer information in them.

Are these files confidential and property of my former boss, or am I entitled to use them to establish contact with these customers? Would I be breaking any laws? After all, the information was inside the office equipment that I legally purchased.

Answer:

We have all heard the old adage about “finder’s keepers”; many are also familiar with that other adage, that “possession is nine-tenths of the law,” which might well lead many to believe that we are entitled to keep lost property that we happen to find. In this case, however, such a perception would be at odds with the actual state of the law.

Generally speaking, the law in most states makes a distinction between abandoned property and property that has been lost or mislaid. If property has been abandoned by the owner, anyone who finds it can take possession and ownership of it. However, if property has been lost or mislaid by the owner, then the owner retains ownership of the property — and title to it does not pass to the person who finds it, although the finder has a claim to the property that is superior to any other claims, except those of the rightful owner.

In fact, if a person who finds lost property chooses to take possession of that property, the finder is responsible to the owner for the safekeeping of the property and must return the property to the owner if asked to do so. The finder must also try to find the owner.

Some states’ statutes require a person who finds property under circumstances that allow the finder to determine who the owner of the property is to make all reasonable efforts to locate and notify the owner regarding the property. Some courts have ruled that a finder of property is guilty of larceny if the finder made use of the property for his or her own purposes when the finder knew who the owner of the property was, or had the means to determine his name.

Thus, the key question is whether the property has been abandoned, lost, or mislaid. Courts generally will not presume that property has been abandoned and the burden will be on the finder to prove that the owner intended to abandon the property. In deciding whether property has been abandoned, a court will generally consider all the circumstances surrounding the discovery of the property.

Some states’ laws govern lost and abandoned property. Such laws may establish procedures that a property finder must follow, that would allow the finder, after the passage of a period of time, to presume that the property has been abandoned rather than lost.

The answer to the question of whether our finder can make use of the customer information depends to some extent on the law of the particular state where the property is found. The answer will also depend on what the former employee purchased and took title to.

Our question indicates that the former employer purchased the contractor’s customer list. If the former employer’s purchase extended to the files that contain the customer information, then the files would become the property of the former employer and the issue would generally be whether the former employer had abandoned the customer information that was found, or whether the files had been lost or simply mislaid.

If the former employer had paid for the contractor’s customer list and presumably thought it had significant value, the finder might have a difficult time demonstrating that the owner intended to abandon the documents containing the customer information.

If, however, the former employer’s acquisition of the customer list did not extend to the files in question, it could be that no one had acquired these particular files from the contractor and they remained the property of the contractor, in which case it is possible that the now-defunct company would be viewed as having abandoned the files.

As a result, our finder should be careful about assuming that he or she gets to keep the customer information and use it for his or her own purposes, and that the former employer will simply have to weep over his loss.

Jackson is an attorney with the Washington, D.C., law firm of Kelley, Drye & Warren, LLP.

Note: This feature is intended only as a forum for information and general discussion. Any information provided is not in the nature of legal representation and is not intended to establish any attorney-client relationship. Any information provided should not be relied on without consulting an attorney to discuss the specific facts relevant to your situation.

Publication date: 01/27/2003