Reference no: EM131657934

Question: On December 14, 1998, Shepherd Machinery Co. sold five Caterpillar tractors to O.C.T. Equipment. At the time of the sale, the tractors were parked at the Keen Transport yard in Santa Paula, California, and were shown to Mike Clark, O.C.T.'s representative, on that date. The parties greed, among other things, that all of the tractors would be painted yellow and that a winch would be installed on one of the tractors before delivery. An invoice was faxed to O.C.T. on December 22, and it wired payment to Shepherd later that day. The tractors remained at Keen from the time Clark viewed them and agreed to purchase them. Shepherd sent instructions to Keen not to release any of the tractors to O.C.T.'s carrier until Keen had received a bill of lading for each tractor and a release from a Shepherd employee. On December 23, Shepherd sent O.C.T. a fax indicating that the tractors would be ready for pickup on December 28. O.C.T. had asked that each of the tractors be checked for antifreeze levels because of a concern they would be going through high elevations en route to Oklahoma. The levels were checked and sent to O.C.T. The list showed that tractor JAK0012531 had no antifreeze level, and Keen was asked to recheck that tractor for antifreeze. Keen contacted Shepherd on December 31 to advise it that on the prior evening, before the tractor had been picked up, a security guard at Keen had driven tractor JA0012531 at a point when it had no antifreeze/ coolant in it and that the engine was burned up and ruined. Shepherd then reported the problem to O.C.T. and also took the position that O.C.T. owned the tractor and would have to work with Keen to resolve the damage. O.C.T. refused to take delivery of the damaged tractor, and after it and Shepherd were unable to agree on who had the risk of loss to the tractor, O.C.T. brought suit to recover from Shepherd the $43,000 it had paid Shepherd for the tractor. Had the risk of loss passed to O.C.T. at the time the tractor was damaged while in the hands of the bailee?