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Property II
University of Georgia School of Law
Turner, Christian

TURNER PROPERTY II SPRING 2011 OUTLINE
1.0 ADVERSE POSSESSION
ELEMENTS (POECH)
1. Actual possession
2. Open and notorious
3. Exclusive
4. Continuous (as an owner of the property would use, e.g., summer home)
5. Hostile “objectively hostile to formal title of record owner.”
6. For statutory period (tacking as addendum)
7. Sometimes: claim of right or color of title; payment of taxes; good faith
STAKE — Theory of Adverse Possession
COSTS: diminishes utility by discouraging owners from allowing others to use their land; cost of monitoring; requires exclusion of harmless uses. Inhibits neighborliness. (Permission can become irrevocable) permission defeats, but rejection of permission defeats defeat.
·         Monitoring costs: scan your land for APs.
·         Promotes use over nonuse, although property may be best not used.
·         Encourages litigation.
JUSTIFICATIONS:
·         Punishes O’s negligence in not guarding own property. Record owner is negligent.
·         Clears title – making land more readily alienable. Don’t have to worry about ancient deed error. Occupation is enough.
·         Gives land to those who value it most – distributive justice — who is it worse to take the land from? Efficiency – whoever values the land most, gets it.
USE: People who are using the land must value it more than people who aren’t. (Rests on presumption that use is better than non-use.)
MONITORING: doctrine encourages monitoring. Checking is its own reward, encourages people to look at their land, find out if people want to buy the land.
TRANSACTION COSTS: reduced by giving land to AP.
Declining utility of wealth: (POSNER) the more dollars I have, the less each additional dollar is worth to you. If APs together with the land they possess are less wealthy than the true owners, giving the land to the AP is more valuable than giving the land to the true owner.
Endowment effect: people have different offer and ask prices. (coffee cup experiment – whoever has the coffee mug wants more than they’re willing to pay to get it initially)
1.1 Personal Property
1)    O’Keeffe v. Snyder (AP in relation to personal property)
a)    RULE: nemo dat- one can only give away what one has.
i)     A thief does not acquire good title and cannot transfer title
ii)    Fraudulent conveyance can result in voidable title
b)    UCC Exception: A bona fide purchaser (BFP) can acquire title if bought from a merchant who normally deals in the types of goods purchased, even if stolen
c)    ISSUE: When does the SOL begin to toll?
i)     Discovery rule: SOL begins to toll when a person should have reasonably through due diligence discovered the COA (NJ medical wing nut case)
(1)  Equitable rule, developed to avoid unfair results from strict adherence to SOL statute
(2)  3 Factor Test for Applying Discovery Rule
(i)    Due diligence on part of owner at time of theft and thereafter?
(ii)  Availability of alternative effective methods to find property at time of theft?
(iii) Could the owner have done anything more to put the world on notice that someone other than the possessor were the true owner?
1.    Benefit: The discovery rule gives the true owner control, allowing their conduct to dictate
ii)    Demand rule: SOL tolls at the time the original owner demands return of the goods
d)    Purpose of SOL is to incentivize “activity and to punish negligence” and “promote repose by giving security and stability to human affairs”
e)    OLD RULE of AP: Title to chattels by obtained by AP when the SOL accrued
i)     Possession must be actual, open/visible, exclusive, continuous, and hostile
ii)    Tacking applies here as in land cases, b/c without this an innocent purchaser might be in a worse position than the wrongdoer
f)     REAL ARG: HERE, no open and notorious possession, the paintings were kept in a private residence
i)     To acquire title by AP the true owner must be put on notice…much more difficult with movable goods than with fixed land. Additionally, impossible to incentivize monitoring of the property.
g)    HOLDING: Discovery rule should be applied. Case remanded.
 
 
Entitlement in π
Entitlement in Δ
Protected by Property Rule (Pile)
Rule 1: Δ has to meet π’s asking price
Rule 3: π can only get Δ to stop by meeting Δ’s ask price
Protected by Liability Rule (Golden Press)
Rule 2: Δ can continue the conduct only if he pays π court set damages
Rule 4: π can force Δ to stop, but only if π pays damages
1.2 Encroachments       
– Problems arise in bilateral monopolies- transaction costs (strategic bargaining, holdouts…)
– How do we decide who wins?
 
Calabresi and Melamed (Property vs liability rules)
 
§  Property Rules – fix an absolute entitlement either to engage in the conduct (no liability) or to be secure from the harm (injunctive relief ordering defendant to stop committing the harm)
·         In either case parties can bargain to give up their rights to commit or be free from harm
·      

)   D wants to force a sale of the land at a court-set price or to get damages for amount of improvement
iv)   Under Pile, the D would have to tear down the building if P wants, P might be able to annex it
c)    ISSUE: Who gets the surplus ($17,500)?
d)    HERE, the court uses UE doctrine to make its ruling, ensuring that D has the value of the building protected by a liability rule
e)    HOLDING: Where there’s a reasonable mistake of fact that leads to good faith building on the wrong lot, the builder may be entitled in UE (equity) to either the value of the building or to purchase the land. The P can buy the building at court-set price or the D can buy the land at court-set price
f)     TURNER: Better remedy would be to give the D the expenses in constructing the building.
g)    DISSENT: Poses a third option, allow P to force a tear down (Pile). This will result in haggling over the surplus between the parties (ex post negotiation).
1.4 Problem (p. 33)              
See Marengo Cave Co. v. Ross on p. 39
Combination of AP, encroachment, improving trespassers, relative hardship doctrine, and Hinman
1)    Hinman v. Pacific Air Transport – Trespass
(1)  Old common law rule:  own from the depths to the heavens (ad coelum, ad infierno)
(2)  Right to exclusion
(3)  Ownership has always been a/b ability to use
(a)  Air is by its nature incapable of private ownership, except in so far as one may actually use it
(4)  Locke – own what you convert from the earth only so much as you can use it
(5)  Landowner filed suit against the airlines seeking injunctive relief and damages for alleged trespasses of airline flights over his land.  The court affirmed the district court’s dismissal of the landowner’s bills.  The court held that the landowner did not allege an injury by trespass that was legally sufficient.  The court found that traversing the airspace above the land was not a trespass but was a lawful act, and therefore, the landowner was not entitled to an injunction or nominal damages.