Property_Fall 2013
Professor Long
Mandatory Rule = needs to be followed
Default Rule = needs to be followed unless contracted around.
LEGAL V. MORAL
Moral –> Ought Ought (Morals, Traditions, Virtue, Religion, Norms)
Legal –> Is
COURT APPROACHES: FORMALISM V. INSTRUMENTALISM
Courts can take two forms (Good example in Pearson v. Post): Formalism & Instrumentalism
• Formalism = law says so
• Instrumentalism = this will be the best outcome
Property is the Relationship between me and you. An owner of property rights possess the consent of fellowmen to allow him to act in particular ways.
Where do property rights come from?
• Agreement between 2 people about what happened = It’s mine because we agree that it’s mine
• Who owns the private property?
◦ Economic Efficiency determines ownership
◦ There is a close relationship between property rights and externalities.
▪ Externalities are costs or benefits that not taken into account when X a property owner decides to do something without thinking about the consequences of the action, either costs or benefits
▪ example: In early times the overhunting of game was an externality
▪ it soon led to establishment of private property
What is property?
• Right to posses, use, and ejoy a determinate thing (tract of land or chattel)
◦ What is a right?
▪ A Right to rely on coercive power of the government — be protected by government. If you can’t use government (higher power) to prove something is yours, it’s not a right
• Property rights specify how persons may be benefited and harmed
◦ Communal property rights have more costs due to the cost of internalizing, i.e., I pay you to stop building the damn, but can’t secure the right that no one els will
◦ On the other hand, personal property rights can have costs due to “Externalities.” Externalities exist when X makes a decision to use his property in a certain way, without taking full account of the effects of the decision.
▪ Externality is an effect that the first person is not forced to take into account. p.49 have good examples.
▪ Externalities are a function of transaction costs, and they encourage the inefficient use of resources
▪ Utilitarian view today, dominant among many lawyers, says that a primary function of property rights is to promote the efficient use of resources
◦ Main Idea: When transactions are high, the external effects of using resources are unlikely to be taken into account through any sort of bargains, and resources are likely to be misused.
◦
• Private Property
◦ Benefits of Privatization
▪ less externalities
▪ increases economic efficiency
▪ benefits > costs
◦ However, His use of land does not take into account the effect on others property
• Communal Property
◦ Someone could overuse it
◦ Negotiations to the costs could be high
◦ Policing the negotiations would also be a problem
◦ Costs on Future generations are hard to predict
▪ Future generations don’t have an agent who can advocate for them
▪ They must speak for themselves
◦ Communal property results in great externalities
VARIOUS THEORIES ON PROPERTY
• First in Time
◦ Dates back to Romans
◦ Generally though to be rather week, but influential in many cases
• John Locke’s Labor Theory
◦ “Whenever you mix labor with something nature created, it becomes your property.
▪ What about the law of accession?
▪ What if someone adds to a property of another?
ACQUISITION BY DISCOVERY
• Johnson v. M”Intosh (1823) p.3
◦ Property rights are only a “right” if we have the power to rely on State Power. Ownership is power over persons (others, who are denied property rights because of you), not merely things.
◦ Plaintiff does not exhibit a title which can be sustained in the Courts of the U.S.
◦ Law of accession: when one person adds to the property of another, by labor alone — who’s property?
ACQUISITION BY CAPTURE
Constructive possession turned up in Keeble, but was not ruled on that basis. Constructive possession of wild animals on an owners land means that landowners are regarded as the prior possessors of any animals (wild) on their land, until the animals take off. A trespasser who captures a wild animal on the land of another might still have not rights to the animal as against the landowner, even though the landowner never had actual physical possession or control and even though the trespasser does. Court might say that the landowner had “constructive” possession.
• Pierson v. Post (1805) p.18
◦ Facts: Post was chasing a fox with his hounds through a wild area. Pierson interferes and kills and takes the fox.
◦ Policy’s behind Majority and Dissent Opinion:
▪ Both:
▪ Tried to reach a decision that would avoid dispute
▪ Tried to promote certainty
▪ BOTH wanted a Rule that would be Economically Efficient, i.e., killing the fox for public benefit
▪ The fox was a “pernicious beast” that was a nuisance to the public.
▪ Majority rule: Mortal wounding of fox by one who is not abandoning pursuit
• Ghen v. Rich (1881) p.26
◦ Facts: On 9th of month Ghen shoots and
eps underground into a neighbors property, who owns rights to it?
▪ Courts have applied a “wild animal” property to them — if they escape they are not owners anymore
▪ Rule has been under sever criticism because, what if someone injects something into the reservoir ruining the reservoirs capacity to product whatever it produces? Who is liable? Hammonds ruled that injector was not liable
◦ Water
▪ Groundwater
▪ Used to be in England that whoever first captured water was owner.
▪ America has a rule of Reasonable use
▪ Governed by legislate and administrative programs
▪ Surface water
▪ In western states surface waters (and some groundwaters) are allocated according to an explicit rule of first in time — prior appropriation. Mostly due to scarcity.
▪ Prior Appropriation: person who first appropriates (captures) water and puts it to reasonable an beneficial use has a right superior to later appropriators
▪ Eastern States have abundance and thus follow Riparian Rights
▪ The owner of the land with water has rights to the water, subject to the rights of other Riparians
▪ Benefits and Costs
▪ Riparian Rights
▪ Take little account of the relative productivity of the land the water serves
▪ encourages development of uneconomical parcels of land perpendicular to the banks
▪ Rations poorly when stream levels are low
▪ Prior Appropriation
▪ Encourages premature development and excessive diversion
▪ Also rations poorly when supplies dwindle
• What are the consequences of applying “first in time” to all these various examples? Applying the rule of capture to wild animals — and then to oil, gas, water, and other natural resources?
• Who Owns Air?
◦ Tragedy of the Commons
ACQUISITION BY CREATION
• Intellectual property: Weigh two interests – Rewarding/encouraging investment v. social interest (Competition v. Creativity).
• Copying is ok if it promotes social good and no unfair competition.
• Public – consumed by all without affecting others capacity to consume
• Private – consuming affects others capacity to consume
