Krier – Property – Fall 2013
Initial Considerations:
1. Property is what the law defines it as – any legal right to property is a property right.
2. Courts have two concerns regarding property: (1) fairness, and (2) economic efficiency
3. Most property law formulated by state courts and legislature, very little federal
4. Most states’ property law is based off of common law, so most have very similar concepts
5. Two types of property:
a. Real – land and any structures on it
b. Personal
i. Tangible – can be seen and felt
ii. Intangible – bank account, right not to be kicked out of law school
6. “Bundle of Rights” – when you own land, you have a relationship with others regarding your property – can sue for damages if broken, right to get it back if borrowed, etc.
7. Types of Arguments
a. Formalistic – precedents/rules with internal logic, dominant in 20th Century
b. Instrumental – reasoning from policy ends. Must consider policy goal, most reliable/efficient way of achieving, AND EX ANTE EFFECTS later on
CHAPTER 1: FIRST POSSESSION
1. Rules set so that we:
a. Reward labor
b. Protect investments in resources
c. Encourage people to bargain instead of fight
B. Acquisition By Capture – FIRST CAPTURE RULE
1. Rule Rationale
a. Administrability – easier to figure out who captured first as opposed to who saw it or who tried the hardest, who should have gotten it first
b. No Other Possibilities – equal merit? Who needs it more?
c. Encourages competition – no one is entitled to it until they actually have possession
2. Capture of Animals
a. First Capture Rule – prior capturer has right to wild animal
i. Rationale
1. Promotes competition – we want animals to be captured (foxes kill cattle, ducks are food) – ultimate captor should be rewarded
2. Administrability – capture is easy to prove, pursuit is difficult to administer. Not worth spending a lot of resources on finding out who should have right to animal.
3. BUT – this has lead to overcapturing and endangerment.
ii. Pierson v. Post – Post pursuing fox, Pierson kills and captures. Pierson gets possession because he captured first.
1. Majority – administrability argument: easier to figure out who wins. It would cost a lot to administer otherwise
2. Dissent – instrumental argument: we want to reward those who put in the work to catching the foxes. People will stop hunting if this is the rule.
b. Relativity of Title – whoever has claim earlier in time has right of possession over them.
i. Rationale: without relativity, everyone would take incredible defensive measures to ensure their property is not taken
ii. Jus Tertii – cannot defend owner rights by disputing rights of someone else
iii. If A steals from O and gives to B, B cannot refuse to give back to A because it is stolen. That would require everyone to prove they have not stolen property when they want it back.
c. Trapped/Wounded Animal Rule – if animal is mortally wounded or trapped, considered captured. Must take animal’s liberty.
i. Captor must take just reasonable precautions against escape – doesn’t have to be completely escape-proof
d. Custom Rule – If there is a custom that furthers the objective, that can dictate a different result than the capture rule.
i. Based on self-interest of the particular group, efficiency
1. With custom, less reason to innovate
ii. Ghen v. Rich – fishermen who killed whales had possession over whale – finder was supposed to return it to killer for a finders fee.
1. R (harpooner) – The custom was found to be valid.
2. P didn’t have unequivocal marks on the whale denoting it was him.
3. Custom = externalities. We shouldn’t adhere to custom unless it bears on us universally. People are self-interested, will do things that allow them to operate with smallest cost (not necessarily beneficial for industry)
a. Custom only benefits customers and participants. Custom should only apply if both parties are members of benefitted class.
e. Interference Rule – when one person is pursuing animal, another can interfere if he is competing and trying to capture himself (or same end). A person trying to interfere without trying to accomplish capture is liable.
i. Rationale – we want the animals caught. Promotes competition. Competition is a zero-sum game, if you are interfering, imbalance.
ii. Interference v. Competition
1. Don’t care about maliciousness, intent. All we care about is whether it contributes to competition. (scaring away does not promote competition)
2. If the act promotes public welfare, it is competition
iii. Keeble v. Hickeringill – P hunting ducks on his land, D shoots off gun to scare away. No attempt to capture them. P had constructive possession on property. D liable to D.
1. Objective – put ducks on the table.
2. Limits – what if we allowed people to go onto each other’s land and steal their shit? Property law much better suited than fences and ladders. (See discouraging trespassing, below)
iv. Problems (p. 33)
1. Hunter shoots deer before another hunter (promotes competition)/Hunter scares away deer before another hunter shoots it (does not promote competition)
2. Schoolmaster lures students to his school (promotes competition)/Schoolmaster scares students away from another school (does not promote competition)
f. Constructive Possession/Trespass
i. Constructive Possession: Landowner wins against any trespasser – landowner has constructive possession over all things on his land.
ii. Want to discourage trespassing – make the trespasser bargain for whatever he wants on O’s land.
1. If trespassing were OK, we’d have a world of fences and ladders – makes everything inefficient because everyone using defensive measures.
g. Owned Animals vs. Wild Animals
i. Animals with habit of return (animus revertendi) are considered captured – if they are roaming, cannot be captured by someone else.
1. Rationale: domesticated animals are more productive for social welfare
2. Concern: how are other captors supposed to know whether an animal is domesticated or wild? Common sense, and requiring that owners signify domestication, such as a bell on the neck.
ii. Wild animals are open for grabs, even if they were previously owned and escape. (no animus revertendi)
1. Exception: if the animal is clearly unusual and was brought to the area by a possessor, hunter is on notice that it is already owned.
a. Concern: don’t want hunters wasting resources figuring out if an animal is from that area
iii. Unlike common law time, animals are now scarce – states take measures to conserve under their police powers to protect resources.
iv. RELIANCE INTEREST – trusting that others will comply
1. The more reliance interest, the more compelling a claim of property rights (protecting investments).
h. Rule of Increase/Linear Offspring
i. Offspring belong to the owner of the female.
1. Ratio
uld be a most efficient use for society of the resource.
b. Main Thesis – In the beginning, there was a universal commons. Eventually resources became scarce or there was a change in demand and protecting property with private rights became cheaper than attempting to negotiate with everyone regarding the property.
i. Property rights guide incentives to achieve a greater internalization of externalities. Communal property has incredibly high externalities.
c. 4 Types of Property
i. Common Property – no one has a right of exclusion
1. Effects of a person’s actions now are not taken into account. In order to reach agreement, many transaction/negotiating costs.
ii. Private Property – sole proprietorship, one person has right to exclude all others
1. Externalities minimized – any use is a cost on that person, so forces efficient use of the property.
iii. State Property – private, but entrusted to the government
iv. (Krier adds) Limited-Access Commons/Semi-Commons – group private, people within the group have common property, but exclude those not in the group (ex. – joint bank account, DAC room)
1. Best for small groups with similar values and can exploit decently well.
d. Common Ownership
i. Universal commons – each commoner has the right to exploit, subject everyone else’s right to exploit. No exclusion.
ii. Leads to exploitation and overconsumption. Fine when there are ample resources available, but bad when resources become scarce.
e. Tree Example
i. Someone cuts down a tree, the community gains whatever that person gets in exchange for the loss of the tree. While that person reaps the benefits, the community has the external cost of one less tree to use in the future. Fine if resources are abundant.
ii. Someone from the outside comes in and pays for the tree (can’t take it himself, not part of the community). Now that people can sell the trees, an arms race to cut down trees begins. Resources become scarce.
iii. Leads to everyone using the resources as quickly as they possibly can, so overinvestment in capture technology. No one considers future worth of trees because they will be gone.
iv. Or, they can organize, but negotiating costs huge. Holdouts DOMINATE because they can refuse to stop unless paid enormous amount.
v. Private property arises, and each person internalizes the cost of using their own resources. Negotiating costs go way down because now they only have to negotiate with the few people around them.
vi. HOWEVER, doesn’t cover all externalities, such as pollution. Regulation must be established to prevent those (see Coase).
