FENNELL WINTER-SPRING 2017
PROPERTY I & II OUTLINE
Intro
Exclusion
Basics
Relative title: Courts decide which title is superior, not who has ultimate title. There is always the legal possibility of a superior claim.
Locke, Labor, and Waste
Ownership requires that labor be mixed with property.
Concerned with waste. Men may hoard only when the surplus is a durable, tradable good. Money makes trade easier, and therefore makes hoarding more acceptable.
Is Locke necessary? Given infinite time and rational people, property will always end up being put to most valuable use.
Progressive Property Theory: The idea that property is a social good, and that ownership of part bestows a duty to the lesser owners in the community.
Property is often recognized as a “bundle of sticks,” each of which represents a right that the property owner has. These are the main rights that are talked about:
right to exclude
right to use
right to possess
right to destroy
right to alienate during life
right to dispose of it after death
right against the world
Right to Exclude:
property defined by exclusion, enforced by the state – relationship among human beings such that the so-called owner can exclude others fro mcertain activities or permit others to engage in those activities and secure the assistance of the law in carrying out this decision
Limitations on this right include:
Can’t exclude in a way that injures the rights of others
Can exclude when entry is justified by necessity
Reliance interests of others –
Once owners grant access to their property to others, they’re not unconditionally free to revoke
Property vs. Liability Rules:
The state can protect your property interests in either of the 2 ways (or sometimes both)
Property rules –
Protects your property by enforcing your rights in a strong way
Arguments for Property Rules
Not forced to sell/lose your property
You can set your own price
There is subjective value that might make the court’s approximation of value incorrect if liability rules were used
Injunctive relief (pre-violation)
Should injunctions be inalienable? (i.e. if a P says he wants the injunction and not damages, should he then be able to bargain afterwards?)
Advantages to making inalienable:
Prevents/controls strategic behavior
Disadvantages to making inalienable:
If a court sets the wrong amount in damages, a solution would be:
make injunction inalienable, BUT
defendant can voluntarily choose a higher damages amount than what the court would award
Super-compensatory (after violation)
Liability Rules:
Awards damages that compensate for the damages caused
Basically amounts to a force of sale, because you are getting the value of the object back, as if the person had bought it from you
L rules do a much better job of letting all transactions that should happen to occur but then they also let through some transactions that should not
L rules make sense when you’re in high transaction cost situations but characteristically we’re protected by P rules
Cases
State v. Shack
Background: Defendants enters upon private property to aid migrant farm workers employed there à P sued for trespassing
Holding:
An employer housing migrant farm workers cannot exclude union organizers from coming onto the property.
Rule of law:
The migrant worker must be allowed to receive visitors there of his own choice so long as there is no behavior hurtful to others.
Right to prevent trespass doesn’t extend so far to deny migrant workers the ability to receive visitors
Reasoning:
No trespassing because the defendants invaded no possessory right of the farmer and therefore was beyond the reach of the trespass statute.
It is against the will of society for disadvanteged people to lose all rights of communication when they enter upon the owner’s land
Shack is different than Jacque because if the people live on your property you can’t deny them human rights or rights that the government has given them as migrant workers.
It is helpful to think of the migrant workers as tenants on the land (because they are paying rent through their labor)
Just because you own property, you don’t own the destinies of people who come onto your land.
Occupants can’t contract away what is essential to their health, welfare or dignity.
Jacque v. Steenberg Homes
Background:
P gets $100k in punitive damages against a man who willfully moved a trailer across P’s land over P’s objection
Rule of law:
The right to exclusion and exclusive enjoyment of their own property for any purpose that doesn’t invade the rights of others are essential rights of property owners.
Reasoning:
Punitive damages award in the case was allowed by WI supreme court at the discretion of the jury even though there was no physical damage done to their property
WHY? à the damage was about violating the property right and going against their permission and if we say there were only nominal damages permitted there wouldn’t be a strong enough protection for the P’s property rights
Idea of HOLDOUTS vs. HOLD INS
Holdouts make us think of people who have a monopoly on something and want to extract as much as possible from ity
Hold ins are people who are not being strategic and who actually just place that high of a value on something
The Jacques here are HOLD INS
Pile v. Pedrick
Defendant built a wall that encroached on the Plaintiff’s land by an inch and a half.
The encroachment was underground, but it was still trespass.
The wall had to be removed, even though it held up the building
Court here went with a property rule and forced the defendant to remove the encroachment within a year
This was COMMON LAW rule that no longer exists à in modern law, you see that people mistakenly build over the line like this from time to time and often courts will just balance the hardships and impose a damages remedy
building would probably not be torn down today, instead that part of the land would probably be “sold” to the defendant or there would be an easement granted so the building could remain.
So a “good faith improver” usually gets much more relief than the defendant did in this case
acquisition
rules of capture
Basics
First in Time: This is the master-theme for most principles of property law.
General Rule of Capture: the FIRST person to take possession of a thing owns it; person who first captures otherwise unowned resource is entitled to it;
Nation receives title. Otherwise certainty of ownership would be in question.
Possession: (1) notice to the world through a clear act, (2) reward for useful labor
The determination of possession relates intimately to the production and protection of social welfare.
Considerations for Possession:
Capture technologies
Custom and usage
Competition vs interference
In the BACKGROUND, it’s important to think of state power and that we’re working within a governmental structure that gives people the right to take and own things that weren’t previously owned
Difficulty –
Tendency to think about it as having a physicality to it
But it’s much more of a LEGAL conclusion that depends on what the law has decided you have to do
Sources of disagreement
Ends: different views about what goals we’re trying to achieve (think environmentalists vs. whalers)
Means: require empirical judgments about what is going to be worthwhile and what’s going to work
Lockean Labor: One possible rule is to give possession only to those who exert labor in pursuit of capture/ownership. This prevents waste of labor and encourages valuable uses.
Certain Control: Another way to determine who has “captured” is the Pierson majority’s rule of certain control. This rule, in an open field, may be proper, and lead to innovation in tools for capture.
May incentivize overinvestment.
Reasonable Opportunity: The Livingston rule says that a person has an interest in the capture as soon as he has a “reasonable opportunity” of capture. While this rule discourages anti-social behavior, it creates the possibility of endless litigation.
Custom and Ellickson: In Ghen and in the Ellickson article there is an argument that in certain industries/areas the rule developed by tradition and custom may be wealth maximizing. A c
t to employ their property for their own pleasure and profit and if people violate another’s trade by malicious or violent acts, they are liable (this was the plaintiff’s job and it was for the good of society for him to do this work).
Notes:
This case would be decided differently if the defendant had lured them away. This would just be competition.
Idea that interference from a noncompetitor, which does not promote the capture of the animal, should be dissuaded
Variations of capture rules
Basics
Different possible capture rules – if capture is NOT a physical fact, but a legal conclusion, there are all kinds of ways the law can delineate a protocol for claiming property
Homestead Act:
Protocols for people to eventually own land that encouraged western migration
The land is given away to you if you perform several acts
File in certain ways
Live on the land
Property/capture only exists with the legal power giving protection to the right of someone to capture/own it.
Goal was to get people out on this land, working the land/creating homesteads is good.
It’s about how much they can use, not how much they can grab
Baseballs
Gray’s Rule: normal rule for baseballs hit into the stand- actor must retain control of the ball after incidental contact with people and things. Doesn’t apply here because there was no incidental contact, it was willful and malicious contact.
Natural Resources
How do wild animal cases compare to natural resources?
Here there is a concern of SCARCITY
Those are limited resources and therefore when it is used, there is less for everyone else
The ends are not to capture and capture some more because there are limited resources.
Oil and Gas
Issues arise when there are parcels of land with a natural resource spread across them all
What if someone owns ¾ of a pool of oil and someone else has ¼ of the pool. The ¼ owner has a well on his own land, but is drilling out of the entire pool.
most persuasive reason for applying rule of capture to oil and gas is that it gives an incentive to produce oil and gas
Water
Different systems developed in eastern and western states
Eastern system – Riparian
“riparian land” – all land under a unit title contiguous to a body of water, provided the land is within the watershed of the body of water
a riparian right is “attached” to the riparian land and can never be transferred to a nonriparian owner b/c the right runs with the land
Western System – Prior Appropriation
Rejects common law riparian rights as unsuitable b/c they hinder investment in commercial irrigation and other water uses
Uses a doctrine of capture, where water rights are determined by priority of appropriation of the water
Once a right to water is established, it is an interest independent of the land—called a water right—and can be severed from the land and sold to another for use on other land
Has the advantages of the rule of capture à encourages development of water uses and is predictable; also is efficient in that it permits the transfer of a prior appropriation right to a user who puts a higher value on it
Grants stronger property rights to party that is first able to build a diversion work and put the water to beneficial use
The question of how these rights get appropriated replicate some of the issues in re capture of wild animals
