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Property I
University of California, Hastings School of Law
Crawford, John

 
Property – Crawford – Spring 2015
I.        WHAT IS PROPERTY?
A.    Two Conceptions of Property:
1.     Essentialism (Penner): Property = right w/respect to a thing that is good against the world. At least one stick that’s always in the bundle = right to exclude (Jacque)
2.     Skepticism (Grey): Bundle of sticks/rights – property doesn’t actually mean anything until we express in other words what we meant (Hinman)
                                i.      Right to exclude *the biggest stick
                               ii.      Right to transfer
                              iii.      Right to possess and use
                              iv.      Right to destroy
B.    Rights in rem and in personam:
1.     Rights in rem: respect to the thing; rights good against the world (torts)
2.     Rights in personam: rights against individuals; binds only specific people (contracts, injunctions)
C.    Tangible v. Intangible Property:
1.     Tangible Properties: Things that you can see, feel & carry around such as personal property or chattels. (cars, textbooks etc); Real Property: Land, houses
2.     Intangible Property: Intellectual property (patents, copyright, trademark) (stocks, bonds, money etc)
                                i.      Financial assets – shareholder considered the ‘owners’ but no rights to use or exclude anyone from the property. It’s the managers/executives that maintain control but shareholder has right to vote for directors; nothing prevents them from making more shareholders so that you own less
D.    CA Statute 654 (1892) starting point: The ownership of a thing (property) is the right of one or more persons to possess and use it to the exclusion of others
E.    Exclusion v. Governance: managing property
1.     Exclusion: delegate resource use decisions to a gatekeeper, then support that gatekeeper (trespass law)
                                i.      Key right under essentialism and skepticism
                               ii.      Intentional trespass (losing exclusion right) so egregious & important that we’ll award punitive damage even no damage (Jacque) – 9:1 punitive: compensatory limit in later State Farm case
2.     Governance: prescribing rules of permitted/prohibited resources usage then determine individual cases based on those rules (nuisance law)
F.    AD COELUM RULE: Principle that land ownership extends from the depths to the heavens
1.     Rule today: Some force; deeds stated in terms of land, but generally understand that one can build a basement and 3 stories (as long as consistent w/zoning regulations). Entitled to as much as owner uses
2.     Below land: still pretty strictly enforced (Edwards: can only trespass underground in very narrow cases)
3.     Not codified in CA
G.    Trespass v. Nuisance:
1.     Trespass: Right of landowners to exclude. Invasion of land. Strict liability (good faith, knowledge, fault irrelevant)
                                i.      Rationale:
a)     Landowners will be less likely to resort to self-help remedies & more likely to resort to courts
b)    Concern that if people aren’t punished for trespassing, individual privacy will be violated
                               ii.      Elements to Trespass:
a)     Intentional act
b)    Physically enter the property
c)     No harm necessary
                              iii.      JACQUE v. STEENBERG HOMES, INC. (Wis. 1997):
a)     D drove mobile home delivery through P’s land after P explicitly said no several times. P had previous problem with adverse possession & lost their property.
b)    Trespass was the damage; every trespass has harm (infringing right to exclude), no economic harm
c)     Barnard Rule: General rule is that nominal damages can’t support punitive damages
d)    Court said that punitive damages ok w/only nominal damages (Mcwilliams & Merest cases have punitive damages w/o compensatory damages) where the tort is intentional trespass to land
e)     Rule: infringing on a property owner’s right to exclude is sufficient harm to support an award of punitive damages
f)     Punitive damages: more than 9x compensatory damages award are automatically suspect (State Farm v. Campbell)
 
 
 
 
 
 
                            iv.        HINMAN v. PACIFICAIR TRANSPORT (9th Cir. 1936): [ad coelum rule] a)     P argues owns air above property to the heavens; so doesn’t want airplanes to fly above.
b)    Court held ad coelum applies to the space above you that you’re using but others can use the space you aren’t using. Only trespass if there’s actual economic damage. Don’t have the right to exclude over flights if it doesn’t interfere w/ your enjoyment (US v. Causby)
1)     Taking ad coelum literally would be impractical & difficult to apply. Transaction costs would be ridiculous.
c)     No trespass unless there is actual & substantial damage (in Jacque, trespass itself was the damage)
d)    Dominion: property must be capable of exclusive possession
1)     Air & ocean incapable of private ownership: you possess it while you use it, then it reverts back to public domain
                             v.        Trespass is actionable regardless of:
(1) Intent – strict liability; and
(2) Actual harm – physical or economic
·         The harm is the violation of the legal right to exclude. Trespass is clear & strict can be brought w/o physical or economic harm
2.     Nuisance: interferes w/enjoyment & use; caused by some activity on neighboring land (ex. pollution, excessive noise)
                              i.        Balancing test whether gravity of harm exceeds activity:
(1) Substantial harm, unreasonable + intentional (maliciously or indecently); OR
(2) Unintentional + abnormally dangerous, negligent, reckless
a)     Unreasonable: gravity of harm outweighs utility of conduct/social value of activity
                             ii.        Gravity of harm factors:
(1) Extent of harm;
(2) Character of harm;
(3) Social value the law gives to type of use/enjoyment invaded;
(4) Suitability of use/enjoyment invaded to the locality;
(5) Burden of person harmed of avoiding the harm
                            iii.        Public nuisance: interferes w/public safety, convenience; interferes with use of land that is unreasonable in relation to particular locality
a)     Elements of private nuisance:
(1)   Substantial
(2)   Unreasonable
                            iv.        HENDRICKS v. STALNAKER (Ct. App. WV 1989):
a)     Health dept had regulation to keep septic system 100ft away. D got his well first by sneaky maneuvering; P sued for nuisance
1)     Recovery for private nuisance limited to Ps who have suffered a significant harm to their property rights or privileges. Here, not recovery being sought but specific performance
b)    Here, substantial but not unreasonable; nuisance isn’t clear or strict; needs considerable physical or economic harm or interference w/the land – Appellate court says wasn’t unreasonable use of land b/c either use burdens adjacent property; balancing landowners’ interests come out equal or slightly favoring D
                             v.        Enforce general understanding of what constitutes normal uses of land. Abatement only for invasion of land that causes harm above some threshold level.
3.     The Trespass/Nuisance Divide
Trespass
Nuisance
Protect possession
Protect use/enjoyment
Clear and strict
Not clear or strict
No harm
Need to show considerable harm
Invasion of land made by something big (ex: mobile home)
Invasion of land small (ex: gas, light, etc.)
Exclusion strategies (court only cares about if landowner can exclude) à gatekeeper/owner
Governance strategies (court determines how one can use land) à use
 
H.    Property & Equity:
1.     Coase Theorem: Search for efficient outcomes by taking into account transaction costs. If contracting is costless, parties will keep contracting to modify the initial assignment of property rights until they have exhausted all possible deals that would be mutually advantageous. Final stopping point will be when the use of resources creates the greatest joint wealth for the parties, b/c once this point reached, no deal which puts either in better position.
                              i.        Two Articulations:
a)     If zero transaction costs, the efficient outcome will occur regardless of the choice of legal rule = invariance
1)     Society’s use of resources will be the same regardless of who started out w/ right
                                                        i)        Legal rule: which party will bear liability for losses
                                                       ii)        Efficient outcome: amount or number of things

se damage
1)     BAKER v. HOWARD COUNTY HUNT (1936):
i)    D repeatedly hunted/trespassed on P’s and. Repeated trespass but not continuous (4x in 5 years)
ii)    Rights of foxhunters are subordinate to rights of landowners. Owner had clean hands b/c shot dogs that were attacking his wife; club had notice of dogs’ past offenses. Experiments were ruined & wife left him: intangible & incapable for measurement, damages not enough.
iii)    Competing rights: P’s right to enjoy property; D’s right to hunt
iv)    If there is trespass: automatic equitable remedy – money damages. Injunction needed b/c of elements.
                           ii.        Key Features LAW: legal remedies are about awarding damages; don’t need clean hands
a)     Rules: set, fixed (ex. speed limit is 65mph)
b)    Breach of K only gives rise to COA for damages but K to sell property will be specifically enforced
7.     Encroachment: continuous trespass
                            i.        Intentional: encroachment
                           ii.        Unintentional: (apply both for exam)
a)     PILE v. PEDRICK (1895): traditional rule
1)     Absolute right to injunction no matter how small the encroachment – automatic
2)     Surveyor’s mistake so wasn’t purposeful trespass. The parts of the wall went over by couple of inches. D offered party wall but P refused. Judge applied ad coelum principle, made D take down whole wall even though super expensive; remove all encroachment. Incentive to be careful
b)    Injunction may be denied and P given money damages if all 4 met:
1)     D’s encroachment is unintentional & slight;
2)     P’s use of land not affected
3)     P’s damages small and fairly compensable
4)     Cost of removal expensive, grave hardship for D
5)     [Cal. Good Faith Improver Act: failure to get surveyor/negligence would violate good faith] c)     GOLDEN PRESS v. RYLANDS (1951): majority/modern approach for good faith violators
1)     D constructs building that encroaches 2 inches underground. P never objected until building complete.
2)     In absence of evidence, there is a presumption of good faith
3)     Court considers D’s good faith since encroachment was unintentional & small, P’s use isn’t affected. P wanted building torn down. Cost was high. P could’ve brought suit sooner but waited until a lot of money was put in; gaming the system (estoppel). Court didn’t uphold injunction.
4)     Most courts follow Golden Press today
d)    Requirements:
1)     Clean hands (no bad faith)
2)     Only available when remedies at law are inadequate
8.     IP Infringement: Owner of patent not automatically entitled to injunction when patent is infringed. (Pile) Court may sometimes deny injunction. (Golden Press)
9.     Note Pile & Golden Press: Both cases have: underground & very small (inches) encroachments, Ds engaged in more intensive use of land  (business), Ds offered to chip off offending encroachment & Ps refused, Ds would have to tear down wall to start over, courts have strong sense of ad coelum. Courts see Ps as inequitable.
10.  Ex Ante & Ex Post:
                                i.    Ex post: equities or efficiencies of case after it has occurred; backwards looking (ex. wasteful)
a)     What makes the most sense & seems fairest in retrospect
                               ii.    Ex ante: effective legal ruling can affect parties, how ruling can change behavior in the future
Courts must apply both, but appellate courts seem to put more effort on ex ante