Property – Final Exam Outline
Professor Katz
Fall 2008
First Possession: Acquisition of Property by Discovery, Capture, and Creation
General Observations
Property is fundamentally about entitlements: who has entitlement and what limitations and qualifications act on it
Property is not only about possession and capture, but it is also about obligations
Future value: $100 today is worth more than $100 in time because amount required to put away today (to gain interest) to become $100 in time is much less than $100; because of future value, timing of payment is crucial (delaying payment reduces value of what one must pay)
Acquisition by Discovery
First-in-Time Rule: first person to take possession of a thing owns it (rule of capture)
Discovery gives one merely an inchoate title, which must be perfected (through conquest, occupation, settlement, industry, etc.); it is only the first step
Social conception: extends to acquisition by discovery (feeling that you can only claim as much property as you can “grab” or “reach
Johnson v. M’Intosh (1823): Johnson claims grant directly from Indians (two separate deeds: 1773 and 1775); M’Intosh claims 1818 grant from United States government; both claims overlap; disputed land covers large amounts of Illinois
M’Intosh grant is valid; Indians are only occupants who cannot transfer absolute title to others
Discovery: gives exclusive title to those who make it; since Indian occupants did not own land (did not exercise dominion over it like Europeans), they could not transfer ownership rights
First European discoverers (English government) had exclusive right to acquire land (through conquest or dealings with Indians)
This right passed to the United States government
o Social conception and labor: case may not have come out same way if disputed tracts were significantly smaller
§ Johnson would have mixed labor with land and improved it, which is main reason why Indians are denied title (then court probably would have awarded it to Johnson; sense here that he has done nothing to “perfect” his title or make good on it)
o Problem too big: can’t turn back clock – Indians have been conquered and there really is no remedy
§ Pragmatic: remedy is impossible (i.e. sending Americans back to Europe)
Acquisition by Capture (What counts as possession? Contentious)
Pierson v. Post (1805): Post was on a fox hunt (sport heavily based on custom – horsemanship); Pierson recognized he was pursuing a fox, but he killed and carried away fox anyway (Post brought suit out of wounded pride – affront to reputation as sportsman); parties agreed on the facts, but Pierson demurred (didn’t think facts supported a claim by Post); trespass on case
Both parties agreed to state incident occurred on uninhabited, unpossessed land (beach) because it removed third party (owner of land) from equation (so no one could make trespass claim or claim that animals on his property belong to him)
Holding: individuals do not have property in wild animals until they deprive them of their natural liberty (through killing or capturing)
Mere pursuit is not sufficient
o Bright-line rule: in contrast to Johnson, matter here is so trite that court wants to make precedent for future cases (claim is not worthy of serious litigation)
§ Best way to resolve disputes is to make rule of certainty and rule for Pierson (no subjective “reasonable” standard)
o Dissent: allow tradesmen to decide cases like this
§ Problem with deferring to custom is that it allows party to be judge in its own case (custom is relative term that applies to one class of people and can thereby be prejudicial against another)
§ Here, deferring to tradesmen would allow hunters to advance own interests (i.e. sport) over those of everyone else (capture, resources)
o Paper money matches fox in legal interpretation (usually hard to recover lost money in court because it is meant to be fluid – immediately transfer ownership upon changing hands, just like animals); want paper money to act like wild animals
Rationale for rule of capture:
Competition: society’s object is to capture animals (put them in market); society rewards the captor because this promotes more effective means of capture (rather than rewarding pursuer)
Administrative efficiency: bright-line rule where stakes are not high
Ghen v. Rich (1881): Ghen killed whale; Ellis found whale and instead of returning it to Ghen for finder’s fee as custom dictates, he sold products; Rich bought whale oil
Ellis most likely knew custom of whale hunting and then Ghen killed the whale
Custom: in past disputes like this, judges have merely relied on custom; but these have involved whaler-whaler disputes; court fears using custom in this case would impinge on third party, since it is whaler-non-whaler dispute
Judge claims ruling against Ghen would eliminate whaling industry (but, Ellises of world have vested interest in keeping whale trade going, and whalers could respond by hiring own Ellises to secure whales)
Court rationalizes to show custom is really in best interest of all parties
o Court at end says it merely could have invoked Pierson in ruling Ghen did all he could to capture whale (get possession)
§ Differences in capturing whale and capturing fox; law must take these into account
§ Market: also, custom allows hunter to look for other whales without waiting for whale to rise
Keeble v. Hickeringill (1707)
Trespass on case: Keeble doesn’t want to prove he was in possession of birds (when they were in decoy pond)
Social benefits: malicious interference with trade is actionable because it benefits no one – society loses value of birds coming to market (Hickeringill’s actions are wasteful)
Fair competition: not actionable if Hickeringill had set up competing decoy pond (better one) and thereby taken ducks from Keeble’s yard; products would still make it to the market
Malicious motivation acceptable so long as it benefits society
“Fugitive” resources (oil, gas, water)
Analogous to wild animals because they have tendency to escape without owner’s intention; capture treated much the same way
O can drill for oil, gas, water on his own land even if it comes from underneath A’s land because of rule of capture
A can enjoin O from slant drilling because he must enjoy burdens and benefits of land and subsurface (cannot physically obstruct adjacent land)
o Hammonds: defendant reinjected gas that moved under her land; she sued to recover damages for use and occupation of her land
§ Defendant not liable because gas was no longer his under rule of capture (just like escaped animal would be)
§ According to this holding, Hammonds can take reinjected gas for herself once it comes onto her land; this seemingly prohibits cheap underground storage (b/c liquids subject to rule of capture)
o Incentive: capture rule gives incentive to produce oil, gas, and water, thereby bringing it to the market
o Solution to wasteful use: compulsory joint-ownership where individual producer’s
icient so rational actor will pay price between $501 and $999 to eliminate noise
Whoever gets initial entitlement will be richer even though society experiences same result
Limitations: unreal because humans themselves are transaction costs (i.e. emotions); there can never be world of no transaction costs
Courts: recognize transaction costs in rulings (i.e. how much additional suits would cost – i.e. Friendswood)
Property in Self – Moore
Each party needs the other (no value without Moore’s cells and researchers’ skills)
Court focuses on latter half; Moore not entitled to damages partially because there would be no value without ingenuity of researchers
Conversion: individual must show ownership or right of possession – court says Moore failed to show this
Court essentially says cells were Moore’s before they were wrongfully excised; now they no longer belong to him
Court overlooks fact that people have proprietary interests in body parts and can sell them (i.e. hair for wigs)
Conversion would allow Moore to acquire property value from any holders of it (i.e. Ghen decision)
Problem too big: court is worried that allowing this action will cause others to seek actions against researchers using cells (transaction costs)
Disclosure: majority says only sustainable action is for doctor’s failure to disclose use of the cells
Abandonment: court says it does not matter what happens after Moore’s cells were removed; he consented to there removal so he abandoned them
Problem is that issue of abandonment of proprietary interests is very complex (i.e. anger at people rummaging through garbage)
Abandonment with qualification: Moore agreed to abandon cells with qualification that they be destroyed (destruction of waste); transfer with qualifications
· Dissent: bundle of rights and entitlements
Court can avoid absurd conclusion that Moore had property right in cells until they were wrongfully removed by thinking of entitlement
Limited Entitlement: since all property is not freely alienable, court could give Moore property right but still restrict alienation of body parts (since it is worried about creating a market for body parts)
Court could say Moore has property right in his cells, but that entitlement is limited such that he cannot sell the interest in them (market inalienable)
o Damages: court could give Moore amount of money he could have expected to acquire in transaction at time of surgery (without benefit of 20/20 hindsight
§ This would protect property right and protect researchers as well
§ Alternatively, court could set up shared profit system
The Right to Include, The Right to Exclude
Key part of property ownership is right to exclude others (or, alternatively, right not to be excluded from one’s property)
