Property Law – UC Hastings
Fall 2011 – Prof. Depoorter
1. Ownership and Forms of Acquisition
A. Ownership by Capture
a. First Possession
1. Mere pursuit is insufficient to confer rights of first possession.
i. Holding the animal / ensnaring it, wounding the animal while pursuing it, or trapping the animal in a trap owned by you.
ii. Mortal wounding – “deprive the fox of his natural liberty.”
iii. Better to have a stricter rule for first possession to preserve peace and order.
1. Less Confusion = Less Litigation
2. First capture is a type of possession of un-owned property: oil, wild animals, etc.
3. Ratione Soli – If you catch an animal on someone else’s land than you get into a divided property situation with the owner.
i. Wrongful exercise of dominion over or interference with someone else’s personal property. Must have possession to claim conversion.
ii. Gray’s Rule
1. First person to pick up the loose ball (Popov case) and secure becomes its possessor.
iii. Ball had a “cloud” on its title when Hiyashi picked it up because Popov lost it while getting assaulted, so both men have an equal claim to the ball.
5. Pre-possessory interest: actor took significant action that placed an interest on the property in question. Actor’s efforts were interrupted by the unlawful acts of another.
b. Every man that has property may employ it for his own pleasure and profit.
1. Duck blind case
2. Cannot maliciously interfere in another’s legal use of their property.
i. Competitive vs. malicious actions
3. Cannot interfere with another man’s trade or livelihood.
4. Constructive Possession: Power to control an asset, but no actual possession.
i. P had constructive possession of the ducks that were on his land, so D was interfering with his property.
c. Discovery is a “first in time” rule, and can be a source of ownership. (M’Intosh v. Johnson)
1. Case involved Indians ability to transfer land.
2. Court recognized the Indian’s right of occupancy, but U.S. gov’t through discovery has the superior right, and the right to extinguish that right to occupancy.
3. Indians do not hold a transferrable title.
4. Two people cannot hold title to the same property àSignificance: establish a clear title system.
5. Recognizing the Indian’s right to possession = cloud on all U.S. land grants + uncertainty
ii. Law of Customs – if a judge does rely on custom, then it becomes precedent
a. Customs as a source of law (Ghen v. Rich, whaling case)
b. Substitute for laws – societal norms. Varies community to community.
1. Close-knit community allows customs and norms to work instead of the law.
2. When norms change in society, then the law changes with these norms.
c. Antagonist to law – contrary to law – illegal file sharing is a norm. Many norms originate in protecting one’s own self interest.
d. Public policy: If people’s internal norms and customs align with the law, then it saves society the cost of police, judiciary, and legislative action.
e. Reasons to not adopt customs
1. Some are inefficient
2. Goes against societal norms
i. Segregation started as a custom that was later deemed against societal norms.
3. Leads to distributional outcomes that are inappropriate, unfair, or wrong.
4. Some customs present information costs
f. Who is affected by the custom?
1. In the whaling case, everyone knew the custom, so the costs to inform are low.
i. If the judge ruled against the custom in the whaling case then many people in the industry would be unaware of the change à Conflict amongst industry participants.
2. Emphasis is on productivity – the custom results in productive use of resources.
3. Industry has grown and supported this custom.
4. Application is reserved to people in this industry.
iii. Possession in property law is a presumption of title
a. Needs to be respected by other individuals
b. “Self Help” (vigilantism) is frowned upon in the legal system.
1. Whale Wars example
2. 3rd party enforcement is not productive for the rule of law by society.
i. Monopoly of force belongs to society.
iv. Right of First capture applies to oil drilling
a. Distributional issue can arise when the oil field extends beyond property bounds.
1. Creates a Tragedy of the Commons where the first person to drill has an incentive to capture the oil as fast possible.
i. Can result in inefficient capture.
ii. Coordination is required amongst parties.
v. Supplemental reading: “Possession as the Origin of Property”
a. Property ownership is determined by the prevailing power.
1. Possession will be defined by customs of governing society.
b. Approaches to the Origin of Property, steps to obtain ownership:
1. Locke argued that the original owner is one who mixed his or her labor with a thing, and by mixing labor with a thing establishes ownership of it.
2. Locke proposed another theory, original owner got title through the consent of the rest of humanity.
3. Common law: possession or “occupancy” is the origin of property
i. First possession is the root of the title.
ii. Analogies to the capture of wild animals show up time and again when courts have to deal with “fugitive” resources such as oil, gas, or water.
c. Everyone wins when property claims are unambiguous because it enables efficient property trading and use at its highest value.
B. Ownership by Find
a. Bringing something into the ownership system that was un-owned or previously owned by someone else.
b. Goals of “finders law”:
1. True owner gets the property back
i. Own something = value it & become attached to it. “Endowment Effect” (Duke basketball tickets) – people value property more when they possess it. People have a loss aversion trait. Letting go of property is costly.
ii. Owner could be “demoralized” if just by losing something it would never be returned to them ever.
2. Encourage people to return the property to the true owner: Rewards
i. Getting to keep the property if no one claims it.
ii. Reporting requirements of lost property have changed. It is easier to report lost property now with the Internet.
3. Punish people for not reporting a find.
4. As a societal norm people would like their property to be returned to them if they were on the losing end.
ii. Classifications of Found Property
a. Lost: Unintentionally and involuntarily parting with property.
1. Mindset of the true owner – unaware.
2. Stolen property found by someone who did not participate in the theft is lost property.
3. Belongs to: finder (against all but the true owner)
b. Mislaid: Voluntarily put in a certain place by the owner who then overlooks or forgets where the property is.
1. Knew you put it somewhere, but forgot.
2. Belongs to: owner of the property where it was found (against all but original owner); finder has NO rights to the property (finders weepers).
c. Abandoned: Owner intends to leave property behind, and relinquishes their right to the property.
1. Not returning to the property.
2. Abandoned property belongs to the finder of the property against all others, including the former owner.
3. Different viewpoints – some judges don’t understand how anything valuable can be mislaid, while others it makes perfect sense to abandon the property (drug money).
d. Treasure Trove: coins or currency with aspects of antiquity so the owner is probably deceased. Duration of time has passed since concealment of the property.
1. Mindset isn’t as important; this is a unique situation.
2. Antiquity element is very important in this classification.
3. Most treasure troves are classified as mislaid property (Shipwreck Act, Rolling Stone owner and his property being dug up).
4. Belongs to: finder (owner is usually dead or undiscoverable).
a. Armory v. Delamireie
1. Facts: Chimneysweep found a ring and took it to a jeweler to have it appraised, and he rejected the purchase offer. Jeweler returned the setting without the stones in it.
i. Finder of a piece of property does not acquire absolute ownership, but the title of the finder is good against the entire world, except the true owner.
ii. Possession is a good way to establish ownership, and the first finder has possession.
3. Holding: Jeweler was ordered to pay damages of maximum value for the stone because the jeweler would not produce the real jewel.
i. Reasons for giving max value
1. Protecting the rights of the chimneysweep.
2. Efficient way in which allocation works
· Information forcing rule (Penalty default rule) – a way to force information out of someone. Jeweler was withholding the ring, so the court gives him incentive to bring forth the real ring.
4. If the chimneysweep stole the ring he would still have possession over the jeweler. If not, it would encourage a 1st conflict (the find) to lead to a 2nd conflict with the jeweler taking the ring from the chimneysweep because
i. Mutually Beneficial Bailment
1. Valeting a car – you get rid of your car and pay someone a fee.
2. Both are gaining something.
3. A standard of ordinary diligence is employed here.
ii. One-Sided Bailment (Sole Benefit of the Bailor)
1. Telling someone to what your laptop while you get a drink, and the laptop is stolen by the time you get back.
2. Person watching the laptop gains nothing.
3. If there is gross negligence then the bailee is responsible for the loss.
iii. One-Sided Bailment (Sole Benefit of the Bailee)
1. Professor gives his notes to the bailee.
2. Professor gains nothing; student gains everything.
3. Extraordinary care is expected by the professor to keep the notes safe.
iv. Involuntary Bailment – Most finders are in this situation
1. Benefit of the arrangement is to the true owner of the property.
2. “Carrots” and “Sticks” make the system work – Rewards and Punishments.
f. What is the duty of the finder to the true owner?
1. Finder has some responsibility to the owner.
2. Behavior of the finder is taken into account
C. Ownership by Creation
a. Distinction between creative ideas.
b. Not all creative ideas lead to IP rights.
c. IP law is influenced by Locke’s reward for labor approach.
1. An artist should receive protection/ownership over his creations/inventions.
d. US Constitution uses Locke approach to promote the arts and sciences.
1. Gives incentives to the creator.
2. No rewards for labor = no investment in labor.
3. Entitling people to a reward for labor leaves unanswered questions:
i. How much do you reward?
ii. When do you reward them?
iii. Where does applying labor and obtaining ownership start and end (mixing labor concept, outrageous example of pouring a can of soup into the ocean, and claiming ownership of the entire ocean)?
e. IP rights have costs
1. Exclusive rights on the product to the artist/creator = incentive to create.
i. IP rights are essentially artificial monopoly rights.
ii. Creator is the only one who can make copies and sell a product.
iii. Monopoly holders can afford to set their price.
2. IP law limits access to books because of copyrights and limits on publishing.
3. IP law creates a trade off
i. Without protective incentives in place there may be less medicine / innovation.
f. If we provide more protection for artists/innovators now, then we may be slowing down future innovators because a lot of art/science builds upon past innovation.
ii. Copyright Law
a. Protects original works of authorship that are fixed in a tangible medium of expression.
b. 18 USC § 102: Subject Matter of copyright
1. Copyright protects original works of authorship…
2. In no case does copyright protection for an original work of authorship extend to any idea, procedure, process, system, method of operation, concept, principle, or discovery regardless of the form in which it is described, explained, illustrated, or embodied in such work.
c. 17 USC § 106: Exclusive rights to the copyright holder include:
1. Reproduce / make copies
2. Distribute / Publish
4. Display publicly
5. Perform publicly
d. Originality is a minimum level of creativity.
1. Needs to go beyond just facts.
2. Originality = “not copied.”
3. Courts have been apprehensive to judge the creativity and originality of something, which justifies the minimum level.
4. Copyright is automatic once something is written down.
i. Registration is still possible and gives evidence of the production.
1. Also helps with obtaining remedies.