Property Law
Professor Krier
Fall 2010
Goals of Property Law
· Productive efficiency
o Provide socially optimal incentives.
· Distributive justice
· Minimizes externalities
o Coase-Transaction costs are the root of externalities (tragedy of the commons)
o The reason resource allocation is so important is because in a world with transaction costs property doesn’t necessarily flow to the most efficient owner
· Demsetz-utilizies an invisble hand theory to suggest all property laws will, over time move towards productive efficenies through the mechanism of cost-benefit relationships.
o Move from communal to private ownership
o In a world with scarcity private ownership is superior to common ownership
Acquisition by Capture
· Wild Animals
o Owned if capture is practically certain
o Animus revertendi=ownership
o Escaped animals aren’t owned unless there is notice that it is an escaped wil animal. (Escaped tiger in North America is not fair game for capture)
o Rule of increase-offspring go to owner of mother.
· Pierson v. Post (1805)-giving chase of a fox was not sufficient to establish occupancy. Physical possession required to establish ownership. If thing escapes possession is forefeit.
o Exception: Constructive possession- a property owner is said to have possession even if he doesn’t actually possess incentivize ownership
§ Formalism has forced us into these kinds of exceptions.
· Provides incentive to invest and invent (sometimes over invest)
· First in time-the earliest possession of a thing.
· Ghen v. Rich (1881)-a killed and marked whale is owned (feared rule of capture would kill industry)
o Utilized instrumentalism favoring whaling custom to “save” industry
· Keeble v. Hickeringill (1707)-A party can recover against another for maliciously interfering with his ability to participate in trade (shooting guns to scare away ducks)
o Decided best on social utility, trade is good, interfering is bad.
o Court is the arbiter of what is interference. If it is desirable we call it competition, if it is bad we call it interference
· Property rights are aimed at incentivizing good and discouraging bad.
· Animus Revertendi-animal with the habit of return. Concept protects ownership rights of cattle in order incentivize cattle ownership.
· Ferae Naturae-is an unowned wild animal.
· Oil and gas
o Governed by rule of capture because oil has a“fugitive character” like animals
o Property owner owns as long as it is on their property.
o Goal is fast extraction, over incentivizes withdrawal (called “common pool problem”)
o Bottoming rule-wells must go straight down under your property
Acquisition by Creation
· If you build it’s yours.
· INS v. AP (1989)-Taking headlines off bulletin boards isn’t stealing but it is disincentivizing a useful service so it’s not allowed. (interference)
o News isn’t property because it isn’t creative
o Baird-information is non-rival imitation is good (so long as it doesn’t discourage innovation).
· Cheney v. Doris (1929)-stealing uncopyrightable designs just isn’t that bad because the first mover and best producer will tend to win. Law can’t reach everything.
· IP- provide temporary monopoly to incentivize innovation.
o Copyright- producers life+70 years, exceptionally narrow.
o Patents-20 years, narrow, products of process, must be novel, useful, and non-obvious.
o Trademark- Permanent, protect brands, symbols, and names. Expires when those are no longer unique or informative, provides an incentive for brand differentiation and protection.
· White v. Samsung (1993)-celebs can own their likeness
Acquisition by Finding see page 23 (Gilbert’s)
· Armory v. Delamirie (1722)-all we care about is hierarchy of ownership rights. Finder has rights superior to everyone later (first in time). (chimney sweep finds gem)
· Hannah v. Peel (1945)-Finder is owner even against property owner unless owner is true owner.
· Lost v. Mislaid (goal is to get it back to the property owner)
o McAvoy v. Medina (1866)-mislaid wallet remains with property owner
o Lost things belong to finder
· Homeowner has prior possession for found things
· Business owner does not.
· Mislaid things belong to property owner not finder.
· Lost thing belongs to finder.
· Three goals
o 1) Protect true owners-goal is to get things back to true owner as in McAvoy
§ This is intended to disincentivizing stealing/lying
o 2) Reward honest finders (providing an incentive to find) as in Hannah
§ In order to prevent over investment in finding admiralty law provides only 50% of find goes to finder.
o 3) Protect locus (temporary) owner
· In finder litigation the true owner is rarely present
· Prior possessor (first in time) wins.
· Intentionally abandoned property belongs to the finder.
Adverse Possession
· Adverse possession is a statute of limitations against the previous owner’s ability to eject a trespasser.
· Goals- Earning theory-reward people who use land, sleeping
s transferred through feoffment)
o Fee Simple Absolute (FSA)-lifetime possibility to last forever
§ Heirs don’t have future or present interest.
o Fee Simple Defeasible-fee simple that terminates upon some event
§ Determinable-automatically terminates at the occurrence of some event. Direct language about duration (“so long as”) (usually devisable by will).
· Future interest remains with previous owner
· Gives rise to a possibility of reverter.
§ Subject to Condition Subsequent-doesn’t automatically transfer, previous owner retains “right of entry” in FSA (words of condition “may” or “but if”) (divests a vested interest) (typically devisable by will)
· Right of entry can’t be created in someone else, but you can create it in yourself and then transfer it.
· Subject to equitable doctrine of laches that puts a statute of limitations on it.
§ Subject to Executory interests-automatically transfers to a third party (third party has “executory interest”) (typically devisable subject to contractual limitations)
· Creates executory interest.
§ “Promise” language gives rise to a covenant, not a determinable.
o Fee Tail-life time for each heir in a line of descent. Expires when the blood line is extinguished. Then property reverts to heirs of transferor. (Creates reversion future interest in the estate of the original owner) (“to heirs of his body”)
§ Today they are rare. Can be terminated by transferring FSA (who could transfer it back to you) because transferring right of FSA is part of the rights of a fee tail (otherwise it would transferring more than is owned which is not allowed.)
§ Most states no longer have fee tails. (three options 1) grantee takes life estate and heirs get FSA 2) grantee gets FS 3) grantee gets FS that is only good if at their death they have issue, otherwise it reverts to grantor.)
o Life Estate-lifetime of grantee. Life estate holder can transfer to another for his lifetime. (Stays with 3rd party until death of 3rd party or death of grantee)
§ Value based on present value life expectancy of possession.
