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Property I
University of California, Hastings School of Law
Depoorter, Ben W.F.

Property

Prof. Ben Depoorter

Fall 2012

· Main Issues: 4 Types of rules

o Allocation of resources (optimal allocation is key concern)

· Scarcity of resources, what is owned by the state, what is privately owned?

o Rules and regulation that govern the personal use of a property

· What can I do? Can I sell? Can I destroy it? (Historic houses)

· Can I build on it? Conservation Easement, Right of view

o Regulation of inter-personal use of resources

· My use of my property affects someone else

· Servitude law (i.e neighbor is allowed to cross my land …)

o State involvement in property rights

· Rules that regulate the boundaries of property rights and eminent domain

OWNERSHIP AND FORMS OF ACQUISITION

1. Ownership by Capture

o Policies & Goals:

· Clear Signs: Establish to society the new relationship between you and resource

§ Occupancy/Possession good indication of ownership

· Requirements: 1) First in time 2) Control (deprive it of its natural movement)

· Control necessary for showing possession

§ Mere pursuit isn’t enough, need restrict natural liberty

· Mortal wound shows intent, observable by others.

· Policy

§ Certainty in the law; don’t want ambiguous laws that create conflict

§ A good property rule is one people can see and respect, sets precedent.

§ Maximize usage: Economic Efficiency (i.e. Efficient capture of wild animals)

o Sources of law/norms

· Criteria of using custom as law:

§ Widespread in that industry – low information cost

§ Narrow/distinct industry – don’t transfer to industries where custom not useful

o Ghen v. Rich: The court may use custom to determine law. Custom used because encompassed entire industry, industry is narrow (specific type of whale)

· Policies: rewarding efforts of hunter maximizes econ efficiency (here: Sweat of brow = efficient capture of wild animals)

· Established custom, widely accepted and known, the judge ruled based on the norm.

§ Precedent overrules custom; no precedent here

· Repeat players in small community, with working custom

· Rationale of using custom:

§ Already in practice – no need to make laws when something works.

§ Avoid conflict by clarity

§ Reward sweat of the brow

§ Help industry survive

§ Customs works well and can work better than laws in small groups where people know one another and are interdependent.

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· Ghen v. Rich

§ Application

· P followed custom for catching, common usage in the industry. Industry has grown with custom, nothing wrong with it.

· close knit community, interdependence, market test: success, low information costs

· Public policy: no one would enter into trade if the product could be taken from them

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· Costs of Customs:

§ Efficiency/inefficiency

· market/conditions change, customs may be poorly suited to evolve, may lose effectiveness

· overfishing/whaling etc, customs encourage consumption, may lead to demise

· Collective action issue – leads to market failure

· Full benefit to individual, at fraction of cost (cost shared by group)

§ Information Cost – if across entire industry, preferable

· Lower information costs because group is close, repeat players

· Customs survive through knowledge in community, no enforcement by the law

· Works well in small groups, but may conflict between groups

· Law can act as coordination between related customs

· Substitute norm for law (custom and law are different, and custom is followed)

§ Ellickson book: identical neighboring areas have a different law

· Open range vs closed range (ranchers vs farmers)

· Closed range, had to fence in your crops

· Open range, herder had duty to control/monitor herd

· Denizens didn’t know the difference in the law, or that it was even there

· Norm is antagonist to the law

§ File sharing – custom

· Old – High production and distribution costs, justifies strict copyright law

· New – Cheap production/distribution, still have strict copyright laws

· Interactions between norms and law

§ Expressive function of the law

· Passing the law, even if you can’t enforce, expresses a societal value

§ Focal point: Law gives signal of what other people prefer

· Others expect you to follow the rule (3rd party enforcement)

§ Rule of Law preference: Some communities approve and value obeying law

· If you break the law, your are demoted by society

§ Legal endowment effect: Law gives a right to the public

· No smoking, you have right to be free from smoke

· When someone violates law, they deprive you of your right

o FIRST POSSESSION

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· Pierson v. Post

§ Rule

· Property of wild animal by occupancy or mortally wounded and pursued by hunter.

§ Application

· P pursued only, did not deprive fox of natural liberty, catch or wound.

· Public policy: want to encourage catching foxes, no matter who it is. Goal is to kill fox. Giving rights just for pursuit would lead to quarrels, unclear claim of title/possession of fox.

· Majority opinion: depriving animal of natural liberty: mortally wounding, physical possession, cage/trap. Pursuit is not enough.

· Minority Opinion: Take time to mortally wound the fox, others can benefit from your work. Proposes that reasonable prospect is enough. You need to be rewarded for your labor. People should reap the benefits of their investment. Reasonable prospect offers the most incentive for killing the fox. Court says that this might not be the fairest rule, but that it will guaranty the most dead foxes.

· Minority encourages sweat of the brow.

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· Popov. v. Hiyashi

§ Rule

· Take steps to possess but intentionally interrupted by others, you have a pre-possessory right. Pre-possessory right entitles to protection from conversion.

§ Application

· Popov has a pre-possessory interest in property, based on attempt to capture and disruption by crowd; entitled to conversion claim. Hayashi is in complete control of the ball. Neither right supersedes the other. Equitable division, sell ball and split value.

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§ Rationale: Minimize baseball stealing in stadium, deter chaos, discourage possession through taking, clear signal on who owns ball

· Litigation Considerations

§ Transaction costs – what parties must pay during litigation to assert their rights (attorney’s fees)

§ Information costs – believe facts are on their side (optimism, predicating the outcome)

§ Commensurable – there is value in hearing court/jury decide in your favor

§ Strategic Behavior – don’t want to weaken position by initiating settlement, negotiations

§ Animosity – hatred between adverse parties

· Oil

§ Whatever you pull out of the ground from your land is yours

§ Multiple drillers on same reservoir, economic interest to pump ASAP

§ Bad practice because over drilling can reduce the pressure head in the oil reservoir, results in not extracting the maximum oil for efficient price

§ Use drilling restrictions, forced collective pooling of drills for common reservoir

· Two styles of poor use: depletion of renewable resource (over fishing) vs. inefficient use of finite resources (extracting max oil for cost).

· Water – now heavily regulated

§ General dif

property belongs to the finder against all others, including the former owner.

· Treasure Trove: consists of coins/artifacts. Contains element of antiquity. Hidden/concealed for such a long that the owner is probably dead or undiscoverable. Goes to finder.

o Prior Possession Rule: achieves multiple social goals

· protects an owner who cannot prove that he is the true owner

· protects individuals who entrust goods to others.

o entrusting goods to others promotes social welfare

o I entrust my clothes to laundry service without worrying that I get it back

o Protects the expectations of prior possessors who expect to prevail

o It promotes peaceable possession.

· if prior possessors did not prevail, individuals might begin to steal property, hoping that the law would protect them.

o Responsibility of Finder to True Owner

· Law of Bailment

§ Rightfully possess goods w/o being true owner

§ Various types with various repercussions

· Sole Benefit of Bailer – Custodianship

· Gross negligence standard

· Sole Benefit of Bailee – Borrowing

· Extraordinary care standard

· Mutual Benefit – valet

· Responsible for ordinary diligence

· Involuntary Bailment

· Slight care standard

o Lost Property (Armory v. Delamirie)

· Titles are relational/relative between parties

· Possession is a presumption of title

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· Armory v. Delamireie

§ Rule

· The title of the finder is good against the world, but the true owner.

§ Application

· Boy found it, goldsmith no proof of owning it. Goldsmith assumes liability for acts of apprentice. Without producing stolen stone as evidence, jury must assume of the highest possible quality.

· High potential damage is information forcing rule, incentivizes defendant to produce the stone, bring forward the information. Penalize the party withholding information.

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o Mislaid Property (McAvoy v. Medina)

· (F) mislaid property in barbershop

· Owner of premises given title of property, primary interest to return property to the true owner.

· Person likely to retrieve it at location lost. Better secures the rights of the true owner, best chance of true owner to recover.

· Bad incentive for finder: less likely to return mislaid property.

· Finder has no claim over property because it was not lost.

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· McAvoy v. Medina

§ Rules

· To place a wallet upon a table and forget to take it away is not to lose it, as meant by “lost property.” Mislaid is voluntarily placing and then forgetting. Lost is involuntarily separated from property.

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o Benjamin v Lindner Aviation

· Mislaid vs Abandoned vs Lost

· (F) Found money in airplane wing (R) Finder’s rights vary according to classification. Here: Mislaid.

· description of 4 types of lost property