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Property I
University of Illinois School of Law
Smith, Bruce

Outline of Property
I. What is Property?
  A. Definitions
·         rights and responsibilities of people concerning things. 
·         not relationships b/w people and things, but relationships b/w people regarding things.
·         Property is whatever interest in a thing is protected by the legal system.
·         bundle of rights.
 B. Theories
·         “first in time” – goes back to Romans. Grotius – riches of earth once  held in common. avarice leads to scarcity leads to private property. necessary to preserve peace.
·         Lockeian labor theory – mix labor w/unowned property, becomes yours
·         Utilitarian – bc of scarcity, we desire protection for our stuff, social contract
·         Economic efficiency – externalities are internalized when you own the property
                        overfishing the lake see p. 2 outline, p. 43 casebook
·         Coase theorem(U of C 1959) – When transaction costs= 0, a change in the rule of liability will have no effect on the activities that are pursued.   The parties will bargain for efficient allocation of resources irrespective of the initial entitlements. Argues for injunctive relief instead of damages.
II. Possession (careful to distinguish b/w physical act and legal conclusion)
The Right to Exclude
            most fundamental right in the bundle
Jacque – can’t move mobile home across my land. right to “exclusive enjoyment… for any purpose that does not invade the rights of another person”
State v. Shack – can’t bar poverty agency from access to migrant workers on your land. rights are relative.   agree w/holding, badly written rule.
            eBay v. Bidder’s Edge – Trespass to Chattel? 
not given legal protection by an action for nominal damages for harmless intermeddlings with the chattel. (vs. strict liability for trespass to land)
A. First Possession – How do unowned things come to be owned?
 1. by capture– “fugitive resources”
            lots of possible rules. some in conflict with others. results in relative title
policy considerations and/or trade customs control.
            animus revertendi (domesticator wins) vs. animus ferae (capturer wins)
            rule of increase – offspring to owner of mother. care and certainty.
            app to oil and gas. B drills into common pool under prop of B and A
                        Barnard rule – free to do so, A can compete.
                        Union oil rule – A can require restraint on B from overdrilling
                        B can’t drill at an angle under A’s land “ad coelum doctrine”
                                    doctrine modified for policy reasons for airplanes.
            app to water. groundwater English rule – first to capture
                                                            American rule – reasonable use
                                    surface water – West first in time – prior appropriation
                                                            East – riparian rights (p.38)
 2. by discovery
            first in time rule modified in Johnson v. M’Intosh for policy reasons
            really got the land by conquest. socially contingent nature of property
            Indian title – aboriginal title occupancy but not absolute title.
                        sell to US gov’t only. US is monopsonist.
3. by creation
            hot news doctrine – quasi property right b/w competitors. online aggregators.
            personal image of celebs is a valuable prop. right. overprotect hurts free speech
            Diamond v. Chakrabarty genetically engineered bacterium breaking down oil spills
            Moore–discarded spleen. no conversion. that stick not in this bundle of rights.
B. Subsequent Possession
 1. Acquisition by Find – Review hypos in notes. Highly Testable!
            finder has relative title.
            employee finder – old cases goes to employer, modern cases to employee
                        desire to incentivize honest finders, if no reward, won’t report.
            invitee finder – goes to landowner
            treasure trove – in England, goes to crown. In US normal rules apply
            trespassing finder – goes to landowner
            If thief steals property and then loses it. common law gives it back to thief,
but equity usually gives it to second honest finder.
            a. lost – goes to finder against all but true owner
            b. mislaid – goes to owner of premises. improves odds of return to true owner
c. abandoned – goes to finder against all the world.  
above are

cause of action and current possessor.
            thief steals from O sells to B – good faith purchaser. In US, can’t acquire good
                        title from thief. not so in Europe. market overt.
            Smith’s economic efficiency analysis – avoidance costs should be undertaken                 by the                                     party in the best person to insure against them. if the avoidance cost of the owner is lower than the                                              cost to the buyer, then owner should insure. buyer should be permitted to acquire good title. if                                             avoidance cost to the buyer is lower than the cost to the owner, buyer will not get good title.
 b. Rationale
            Stability theory+ economic efficiency > sleeping on rights theory.
                        unclear title drops property value. reward person who improves property
                        difficult to prove ancient titles. error costs.
III. Freehold Estates
People don’t actually own land, they own estates in land.   legal abstraction. rights to land carved out over time. 
Possessory estate – legal right to occupy the land immediately
Future interest – legal right (or possibility) to possess land in future.
Possessory estates – Freehold and Leasehold.
Types of Freehold Estates:
A. Fee Simple
            -potentially infinite duration
            -freely alienable
            -“to A and his heirs”
                        to A = words of purchase
                        and his heirs = words of limitation. heirs don’t actually get anything.
                                    heirs = who gets it if O dies intestate (vs. devisees)
                        modern presumption that “to A” = fee simple. not so at common law.