CH 1. What is property?
A. Two Conceptions of Property
1. Trespass to Land
Jacque v. Steenberg Homes, Inc. (Sup. Wisconsin, 1997):
Facts: Despite adamant protests by the property owners (P), D plowed a path through their snow-covered field and delivered a mobile home to their neighbor. D was issued a citation for $30 for the trespass, which the Sup. Ct. found to be insufficient.
Jury awarded P $1 in nominal damages and $100K in punitive damages in trespass action. Circuit court set the punitive damages aside (according to precedent: Barnard à not about intentional trespass; libel). P appealed, appellate court affirmed the judgment. P appealed again, and Sup. Ct. reversed judgment, and remanded for decision on amount of punitive damages.
Issues: 1) Can an award of nominal damages for intentional trespass to land support a punitive damage award? à Yes. Actual issue here is not really a property issue. rather a damage issue.
2) Does law for punitive damages apply to Steenberg? à Yes.
3) Was jury award excessive? à No.
Rationale: 1) The court held that when nominal damages were awarded for an intentional trespass to land, punitive damages may be awarded in the discretion of the jury.
2) Because the property owners’ legal right to exclude all others from their land was involved, the court noted that the law recognized that actual harm occurred in every trespass. In the case of intentional trespass to land, the nominal damage award represented the recognition that actual harm had occurred. The decision, which carved an exception to precedent, applied to the trespasser as a reward to the property owners who persevered in attacking an unsound rule.
3) The amount of punitive damages was not excessive because the trespasser’s conduct was egregious and deceitful.
– Why vindicate right concerning trespass with strict liability?
(1) if land owners know that they can be compensated through trial, less likely that land owners will revenge themselves.
(2) concern that trespassers may peek into the windows.
· Quiet title class
Whatever the compensatory or nominal damages are, presumptively punitive damage is excessive. Violates due process.
Maximum punitive damage for intentional trespass: $1,000
Hinman v. Pacific Air Transport (9th Cir, 1936):
FACTS: P claims that on many occassions, the defendants, an air transport company, have disturbed and invaded as well as trespassed on P’s land. D flew at altitudes of less than 100 ft., disregarding notices to desist from trespassing.
ISSUE: Does the P have property rights over the area above his land? à No, the complaint here did not state a case for injunctive relief.
-We own so much of the space above the ground that we can make use of.
-Traversing airspace above P’s land is lawful as long as it is done under circumstances that will not cause injury to P’s possession.
-Justinian said that “the air, like the sea, is by its nature incapable of private ownership, except in so far as one may actually use it.
-Damages not allowed, as acts of Ds will not cause actual or substantial damage to the P’s use of their land.
• ad coelom: whoever owns the soil owns also the sky and to the depths.
à not really a law now. It was good before the invention of planes. Never meant to be taken literally. Then, does the owner of the property lose all the rights to the sky?
General Principle the court lays out: – you can only make case for trespass only if you can show actual damage. (different from Jacque case! In Jacque, the right to property itself is enough.)
– we don’t know whether there was actual damage in this case.
– Why wouldn’t flight companies buy rights of fly on the sky? (b/c flight is such a useful device, why not make flight pay? Called transaction costs) à prohibitively expensive.
How can we square Jacque and Hinman?
(1) the act is trespass only when the owner is in the actual possession of the property in question. Jacque has actual possession (b/c it was constructive possession)
(2) Actual harm: in Jacque, there was no actual harm. No specific economic harm.
(3) Hinman actually is a trespass. But the owner was not given with the compensation.
(4) Recognition of sky as a public property (like navigable lake)
à SCOTUS embraces this point.
– Facts: flight was 83 ft from the land. as a result of the noise, the landowner had to give up chicken farm. Loss of 150 chicken productions a day.
– court: injury is as same as in the land.
– Take home points from this case: Ad coelum still has some force. Generally you can sell air rights. If flight comes close enough to affect the land use, that is a trespass. The other ad ceolum extends to the center of the earth. Minerals, resources under the ground is property of the landowner. Difference between In Rem and In Persona. In rem: rights that are good against the world (ex. not allowed on your land without permission); In persona: rights that are against particular people (ex. contracts).
2. Conceptions of Property-Philosophical Perspectives
1) Essentialists: attempt to uncover the single true definition of property as a legal concept. (Jacques)
2) Skeptics: it is fruitless to try to come up with a single canonical conception of what property means in a legal system. Uses metaphor that property is a “bundle of rights” or “bundle of sticks.” (Hinmanà ownership is not defined; it’s sky above the land infinitely)
B. The Trespass/Nuisance Divide
Hendricks v. Stalnaker (App. W.Va, 1989)
– Facts: D had drilled two wells on his land, one of which was within 100 feet of P’s land.
P sued D for nuisance b/c P could not build septic system.
– Issue: Does a well which prohibits the installation of a septic system constitute a nuisance? à No.
– Analysis: Because the well interferes only with the use of adjacent private land rather than the public at large, it amounts to at most a private nuisance.
A particular use of land constitutes a private nuisance when it is
(1) intentional à yes
(2) unreasonable à No. In fact, the septic system arguably constitutes a greater interference than the well because the former creates a risk of invasive contamination. Therefore, the P has not shown that D’s well is an unreasonable use of the land.
à No nuisance exists.
– Gravity of harm > Utility?
– Was Stalnaker malicious? No. Even if he was sneaky (he knew there would be harm to Hendricks), it was not just to harm. He was protecting his own interest.
1) not an invasion
2) digging a well is normal use.
3) temporal priority
4) was the D acting within the “neighborly” fashionà Stalnaker would be least likely to win
• Trespass v. Nuisance
1. Trespass: Possession; clear and strict; no need to show harm; made by big thing (like Bobcat), generally trespass.
2. Nuisance: Use and enjoyment; far from clear or strict; need to be able to show considerable harm; made by small things (smoke or light), nuisance.
2. Exclusion and Governance (in distinguishing btw trespass and nuisance)
1) Exclusion strategy: decisions about resource use are delegated to an owner who acts as the manager or gatekeeper of the resource.
– Exclusion is favored where particular resources like land have multiple potential uses
– they get to say who is excluded from it.
2) Governance strategy: focuses on particular uses of resources, and prescribes particular rules about permitted and prohibited uses without regard to the other attributes of the resources.
– court or legislature prescribes particular rules
Initial liability DOES matter!
If factory is liable, same result as before.
If factory is not liable, each resident suffer,
(2) $30 (each chip in for smokescreen) + $30 (transaction cost) = $60
(3) $50 è cheapest remedy now is to individually buy electric dryer.
<2 assumptions Coase makes>
(1) people are rational maximazers
(2) all goods may be expressed in monetary values
à Coase Theorem is useful for Property class because it assumes monetary values.
• Endowment effect (보유효과): you value the good more if you initially had the right to the good.
– Jacque: wasn’t a matter of money. Even if other party offers big amount of money, Jacque would not sell. Assume at least $2 million or more to change his mind. Then, S has to value as much as $2 million to cross.
– If Steinberg has easement (legal right w/o transaction cost), probably Jacques won’t pay S $2 million to prohibit them from crossing.
Endowment effect is huge on bears. Bears are usually scared off, but once the bear has the food in the hand, bear will never give up and fight to the death.
4. Resolving Property Disputes by Contract
• Two factors that create high transaction costs:
1) Assembly Problems: when someone wants to assemble property rights from a large number of owners in order to undertake some project.
– If no transaction cost: if flying over someone’s property yields more profit than paying for the right, it would not matter whether the landowner gives right or not. But if positive transaction cost (which is reality), landowners requiring money to airlines would destroy airlines. Thus, the gov’t starts with the distribution of rights for airlines to use air. efficient method is to allow air space.
– Disney World buying up large bulk of property in Fl, worried about Assembly problem that people would sell the property for too high cost. Disney bought piece of lands through shell corporation.
– Harvard as well.
2) Bilateral monopoly: localized monopolies – situations in which an owner of property needs something that can be provided by only one other person or entity.
• Lesson for lawyers: it is important to look down the road in order to identify potential assembly problems and bilateral monopoly problems before the client gets trapped in a situation that precludes any kind of Coasean bargaining.
– Court should assign entitlement in the first place so that the efficient outcome is the end result.
C. Property and Equity
: One of the traditional maxims of equity is that property rights enjoy special protection in a court of equity. While CL offer only awards of damages, Court of Equity resolve disputes by issuing mandatory decrees directing individuals to perform certain acts.
– Equity is about injunction, while law is about monetary remedy.
– Equity requires “Clean Hands”
– Equity is about judge’s discretion, law is about jury’s fact finding.
– Law à Rule: ex. drive under 65 mph
– Equity à Standard: ex. drive in a way that would not cause accident