Property Outline
Professor Aussness
Spring 2014
Original Title/Sources of Ownership
Chp. 1: Acquisition of Property by Discovery, Capture and Creation
1. To acquire ownership of land without a deed or anything you can:
a. Discover
b. Capture – often applies to natural resources
c. Creation
i. Ex: patent law, copyrights etc.
2. Chain of Title
a. In Johnson v. McIntosh, the Court held that the title from the US was better than the previous title from the Indians because they were conquered people.
i. The Indians rights were subservient to the dominant society
1. Extremely Eurocentric approach
ii. Only the US had the exclusive right to purchase land from the Indians, not individuals.
iii. Indians are savages and merely occupants of the land they live on. They have the right to possession, but are incapable of transferring the absolute title to others.
b. Law of Conquest
i. Private property rights are not disturbed by the mere act of conquest.
1. It takes additional actions by the Conqueror
2. The Indians should have title until the conqueror tells them they don’t.
ii. Law of Conquest was developed to deal with civilized people. Since the Indians were ‘savages,’ they had no right to pass title.
c. Law of Discovery
i. RULE – the discover gets the exclusive right to the title but the Indians have the right to occupancy.
ii. Europeans get Title, and the right to sell the property.
1. This was the winning argument in Johnson, because the majority of America would have to be given back to the Indians if this doctrine were not followed.
iii. How to Discover land:
1. Discovery AND Physical Possession
2. It takes more than placing a flag on a piece of property to discover.
d. REMEMBER – To convey land, you must have good title.
3. Theories of Property
a. Principle of first in time/first occupancy
i. Backed by strong moral justification
ii. Ex: natural resources (gold, water, etc.)
b. Labor dessert theory (deserving)
i. If you create or improve something, you have the rights to it.
ii. The person who puts the labor into something should be entitled to it
iii. Ex: patent law, IP, etc
1. Utilitarian – if you don’t protect intellects, they’ll stop working because there is no incentive to do so.
c. Economic (allocative efficiency) – property rights need to enforce the efficient allocation of resources.
i. Property should be used the most efficiently
ii. Ex: w/o externalities, the person who will pay the most for land should get it
iii. Freely transferred land but with moral constraints
d. Property & Personhood – property rights were made for power
e. Critical Legal Studies – power and money drive legal principles. They reject the notion that legal principles are neutral.
ORIGINAL TITLE
1. Discovery and Indians
a. Even under the Discovery rule, why didn’t the Indians own it?
i. Because discovery involves physical occupation. Implies permanence.
ii. The Indians treaded too lightly and weren’t the owners.
1. Needed more occupation
2. Were not sufficiently established
2. Capture and Wild Animals (ferae naturae = wild by nature)
a. How do you get title over wild animals?
i. Majority – fox/animal must be captured or killed for one to claim possession. Mere pursuit is not enough.
b. It’s assumed that no one owns a wild animal. To own them, you must capture, kill or mortally wound.
c. Domesticated animals aren’t wild, and belong to the LO even after leaving property.
d. Ratione Soli – Owner of land has constructive possession of animals on his property (and ownership goes in comes with the animal leaving)
i. In the fox Pierson v. Post case, the Court assumes that no one owns the land.
e. Malicious Interference with Trade
i. Fair competition is fine, but you cannot maliciously interfere with one’s lawful activity.
ii. Ex: In Keeble, the neighbor cannot frighten the ducks away on P’s pond. He could try to lure them away, but cannot do so maliciously.
iii. Policy reasons for this rule:
1. We like cheap ducks (allocative efficiency) and we want to reward those who put in the work (labor dessert).
3. RELATIVE TITLE – one person’s claimed property right is usually good only in relation to others. Ex: If P killed the animal on D’s land, D would have better title because it’s D’s land and he has a right to exclude P as a trespasser. Also, the LO has “constructive” possession of the animal.
a. Ex: p. 33 – Trespasser, T1, captures a wild animal on O’s land and takes it home. T2 then steals the animal from T.
b. Order of Title: LO > T1 > T2
i. T1 has a claim against T2, but LO can sue both T1 and T2.
c. LO has a right based on constructive possession
d. Justification – ratione soli.
4. Rule of Capture
a. Advantages: easy to administer, low cost of enforcement
b. Problems:
i. Distributional Concerns
1. Tends to favor the wealthy and disadvantage the poor
ii. Economic Efficiency Concerns
1. Generally arise in ‘common pool resources’
a. Wild animals: in rule of capture, there is a tendency to overhunt
b. Oil and Gas
r has the weakest right
2. Pure Rule of Capture that is self-regulation.
3. Water rights are separate from the land
a. Originally, this right was based on diversionary uses.
b. Now it has been expanded to some non-diversionary users (i.e. the Sierra Club).
4. Western US
iv. Water Permit Systems (most recent and advanced development, has very high regulatory costs). Involves several factors:
1. Hydrology – system must be hydrologically sound
2. Beneficial Use- what’s the standard for getting a permit?
3. Duration/Renewal – how long should they be good? (forever in the West, shorter in the East)
4. Administration – who does it? Cannot be self-regulating, need procedural rules
5. Water Emergencies – all rules go out the window for water permit systems here. Big Problem, but no one will address it.
6. Regulatory Takings – hard to change the system via statute.
Demsetz Article
· Externalities can sometimes lead to resource misallocation
· Demsetz theory – the primary function of property rights is the guiding of incentives to achieve increased internalization of externalities.
o Ex: Beaver population on Labrador peninsula
§ The beaver population went down because of the externalities.
§ There was no incentive to conserve under the common property system. If you didn’t trap the beaver, someone else would. So you take as many as you can get.
§ By creating property rights, they internalized these costs, but the only did so when it became economic to do so (whole Demsetz theory!!!!)
· Land Ownership
o Communal – high negotiating costs and administrative costs. Results in great externalities.
§ Also leads to the misallocation of resources. Thanks to the high transaction costs.
o Private – much better because the cost of negotiating an internalization is low.
o The primary function of property rights is to promote the efficient use of resources.
Coase Theorem – in the absence of transaction costs, resources will be put to efficient use, regardless of where the initial entitlement is located. (look at notes from 1/17 for an example)
