A. Property – any tangible or intangible good, idea or concept one can own through acquisition, possession, exchange/dispose or control (exclude others from having).
Tangible – personal possessions, land
Intangible – I.P – concept, idea; copyrights, trademarks, goodwill in a business
a. Blackstone—“Property is the sole and despotic dominion that one claims and exercises over the external things of the world, in total exclusion of the rights of any other individual in the universe.”
b. Cohen— Property is anything to which you can attach the following note: “To the World: Keep off X, unless you have my permission, which I may grant or withhold. Signed: private citizen (endorsed by the state).” – Legal Positivist Approach
c. Pound’s “Bundle of property rights” – each element/right (six rights – enjoyment of fruits or profits, use, dispose, exclude, possess, destroy) is a stick in the bundle. The sticks can be separated, but you would still be the owner (renting or leasing an apartment to someone – you still own apartment, but you are giving away the right to exclude others for the period of time person rents apartment from you). One need not have all the rights in order to have a legally protected interest in a thing.
B. Acquisition by Discovery–Johnson v. M’Intosh – Plaintiffs had land conveyed to them by the Piankeshaw Indians, Defendants had same land conveyed by US.
a. Court held the Indian title was invalid, because of the “doctrine of discovery,” which said whoever got to an unclaimed piece of land in America first claimed it in the name of his European sovereign, who recognized it as held by the discoverer, giving him the right to exclude other people and have the title.
b. Europeans owned the land, but Native Americans had a right to occupancy, but this right to occupancy didn’t mean they had a right to convey title.
Occupancy Theory: “first in time, first in right” – dominant property theory at the time of case
Chain of Title – tracking the ownership of something back to the original owner – term of art
Terra Nullius – unoccupied land – “land owned by no one” (occupancy determined by civilized, socially complex people, like Christian nations such as European nations – just b/c Indians are on land doesn’t mean they are civilized; therefore land was considered unoccupied)
Under discovery doctrine, Europeans may only take over land from original occupants in 3 instances:
Conquest – allowed only in the event of a just war (only happens in self-defense), and when the land was annexed into your country
Cultural Interpretations of Possession – European view is that owning land is exercising dominion over land, doing things to it, and excluding others from it. Indian view is that Earth is organic and no one owns it. Rather, occupants are stewards of the land. One leaves a small environmental footprint on land.
Five Main Theories of Property Rights:
Occupation Theory – “possession and exclusion of others” justifies the societal protection of the occupier’s claims – implicit in this theory is “first in time, first in right.”
Labor Theory – promoted by John Locke. We own our own bodies, so we have a moral right to ownership of product of that body; therefore, we have a moral right to product of one’s own labor
Contract Theory – Private property rules express a contract, or agreement, between the individual and society as a whole to protect established expectations about how we share stuff.
Natural Rights Theory – some sort of natural, or divine, law dictates we protect private property.
Social Utility Theory – (most relied upon today) Legal protection of private property promotes the maximum fulfillment and protection of human needs. Social utilitarians say that all laws should fill needs and aspirations, so property laws are justified, because they successfully satisfy the human rights and human needs more than other theories do.
C. The Law of Capture
The law of capture allows an individual to perfect a private personal right in a wild animal by establishing possession of it. The law of capture can promote scarcity. Pursuit is not capture.
If there’s an infinite amount of a certain resource, we don’t need any rules about how much we are allowed to take (air, water) – the second we realize we live in a finite world with finite resources, scarcity kicks in and rules regarding private property rights have to be set in place to determine who gets what – can lead to overinvestment in capital resources (bigger boats, etc).
Wild animals in their habitat are the property of no one.
Owner of land owns no property interest in wild animals on the person’s land
U.S. Possession Rule – Possession requires actual deprivation of animal’s liberty, by killing, capturing, or mortal wounding combined with pursuit & near certainty of capture. Short of actual capture or killing, you must establish capture somewhere between the practical impossibility of escape and certain capture being insufficient.
Ex: Fisher had 28 feet net and encircled fish with net. Net had hole in it. Hole left practical possibility of escape. Court determined that it was practically impossible for fish to find hole; therefore, capture had occurred and possession had been established, and a property right existed.
· Policy is that it encourages people to capture wild animals, and the rule helps protect the time and resources of the people who are investing in materials to help them catch wild animals, so they can rightfully enjoy the benefits – consequence is that it creates scarcity.
Pierson v. Post Post was hunting a fox. Pierson, knowing this, killed the fox and carried it off.
Property in wild animals is only acquired by occupancy, and pursuit alone does not constitute occupancy or vest any right in the pursuer.
The mortal wounding of an animal or the trapping or intercepting of animals so as to deprive them of their natural liberty will constitute occupancy.
Possession involves actually killing or capturing the fox. You must have mortal wounding and the non-abandonment of your pursuit, and a virtual certainty of capture.
Dissent in Pierson took the instrumentalist approach – law ought to change with the time and laws ought to be designed to promote or advance some human interest
“Tragedy of the Commons” by Garrett Harden and “Wealth of Nations” by Adam Smith
Adam Smith Proposed Following Theories:
When we make decisions, we make decisions we believe will maximize our individual satisfaction – it’s not out of goodwill that the baker bakes bread or the butcher cuts meat; he does it to make him more money
If each of us acts to improve our own self interest, adding up those individual self-interests will maximize the aggregate social satisfaction (if individuals are better off, the community is better off)
We will participate in voluntary transactions if they lead to us being better off – I value a cup of coffee at two dollars, and you value it at four dollars; therefore, I will sell it to you for four, because that makes me better off by two dollars, and you are better off because you have the cup of coffee you desired.
Meets at the point where supply and demand intersect – this is the point where society is best off
Costs can be externalized if they are imposed on others
Ex: I have an industrial site on my property next to a river. It would cost me $1,000 a month to dispose the waste. For no cost to me, I can dump the waste in the water. I save $1,000 a month doing it, and I don’t experience consequences because I dump it at the mouth of the river, so I know where the fresh water is. However, this waste affects another in a great deal, so the pollution is an externalized cost to them.
Impediments to a transaction (sales tax, negotiation consequences, time)
These costs will narrow the range of possible trades
You receive the benefits that others experience and you don’t work for.
Adam Smith’s theory has flaws
Mutual coercion/mutually agreed upon means I agree to be bound by all of you to not act, in exchange for each of you being bound by me and others to not to do the act.
There’s no need for mutual coercion/mutually agreed upon without scarcity.
D. Harold Demsetz—Toward a Theory of Property Rights—1967
a. The Concept and Role of Property Rights—Property rights lead to certainty in society. They allow people to have certain expectations when dealing with each other and the government.
i. The primary function of property rights is to give incentives to increase efficiency to create a greater internalization of externalities.
ii. Property laws decrease the costs of internalization of beneficial and harmful effects, thus leading to greater efficiency.
b. The Emergence of Property Rights—Indians who hunted valueless animals for their own usage were fine, but when the economy changed with the Fur Trade, property claims began to emerge in response to over-hunting of certain areas.
i. By having your own plot, you accept burden of your own hunting, but don’t have to deal with the burden of others’. This is internalization of externalities.
c. The Coalescence and Ownership of Property Rights—Communal ownership is a right that can be exercised by all members of the community.
i. This is inefficient because it does not allocate a person’s burden to that person—it gives it to the whole community, so there is no consideration of present effects on future owners.
ii. Negotiating costs are prohibitive b/c the whole group can’t reach a decision.
iii. Eventually, the externalities will be so great that the communal property will be split into private ownership so private owners can concentrate and internalize externalities, decrease negotiating costs, and use the property more efficiently.
d. Three Types of Ownership
Communal ownership – area that everyone may access and use, and no one can prevent anyone from using that resource
Private ownership – the owner has the right to use the resource, but also has the right to exclude others from using that resource
State ownership – state actor is private property owner who has the right to both use and exclude others from using
THE LAW OF FINDERS
Mislaid – voluntarily placed it with intent to pick it back up, and that true owner forgot he laid it there.
Lost – involuntarily placed an object with no intent to abandon
Purpose of making this distinction is to return goods to their rightful owner.
Court makes distinction that if something is on a table or counter, the good can be categorized as mislaid. However, if something is on the floor, it is categorized as lost.
Disadvantage is that it could create a regime of dishonesty – people could alter goods to render them from mislaid to lost. Honesty makes you worse off.
Purpose of the law of finders:
Protect the interests of the true owners or prior possessors.
Try to honor the legitimate expectations of all parties involved.
Reward honesty, especially the honesty of the finder who discloses their find
Courts have started to strike a balance. They can give it to the finder, but split the cost where finder pays half. The second is the sell the object and split the value between the two. The third is to give the item to the shop owner and put up a reward that gives the finder some pay for finding it.
Finders’ law has been shaped by the idea of prior possession. Prior possession is a very categorical, “all or nothing” concept. If you have possession, you are likely an owner or you aren’t. There has been a move from categorical balancing to balancing by equity (we will imply certain duties even if they weren’t specifically contracted for).
The finder acquires superior title to all but true owner and prior possessors. A finder is someone who takes possession of lost or unclaimed property by having: (1) intent to control the object, and (2) a sufficient act of control. We must consider the fin
Standard: state of mind is irrelevant (majority view)
Punishes a sleeping owner
Focus on two things:
Lack of permission to be on the land
Occupier’s acts/statements objectively appear to be claims of ownership
Good Faith Standard: “I’m sorry, I thought I owned it.”
Best Supported by the Earning Theory (minority view)
Possessors who know that the property they are occupying is not their own can never acquire title by adverse possession in a jurisdiction applying the good faith standard.
Aggressive Trespass Standard: “I knew it wasn’t mine, and I intended to take it anyway.”
Best supported by Sleeping Theory (smallest minority view)
Continuous for the statutory period (Helton gives statutory period for test).
Continuous occupation does not mean constant occupation – you must treat the land as an actual owner would treat it.
If you are occupying a summer home, you don’t have to be there 12 months out of the year. The reason is a true owner wouldn’t occupy a summer home in the winter.
If the possessor ever abandons the property – intentionally gives up possession with no intent of returning – continuity is destroyed.
Types of Notice
Record Notice: You are on constructive notice of everything on the public record.
Inquiry Notice: Constructive knowledge of information that one would have obtained if one reasonable person would have given the required level of attention and questioning. Type of notice you would have had had you asked the questions you should have asked. If you see someone approaching your land, you are responsible for asking more questions.
Van Valkenburgh v. Lutz—Lutz traveled across a triangular tract to reach his home on a nearby parcel, and also built a shed and kept a garden on the tract, but in 1947 Van Valkenburgh purchased the tract at a tax sale, and when Van Valkenburgh demanded that Lutz vacate the land, Lutz obtained a judgment that granted him a right of way by prescription over the tract and then in a judicial proceeding established title to the tract by adverse possession.
i. Title to a parcel may vest in an adverse possessor who occupies the parcel under claim of right, protects the parcel by an enclosure, improves or cultivates the parcel, and maintains that state of affairs for the statutory period.
Rule of increase—Possession relates back to the date that started the statute of limitations, so if I adversely possess Blackacre, I also adverse possess all the parts that come from it, including those parts that came after I began possessing.
Claim of Title—You are trying to take property as a true owner would (adverse possessor). It is one way of expressing requirement of hostility or claim of right by adverse possessors.
Color of Title—a claim founded on a written instrument or a judgment or decree that is somehow defective or invalid. Adverse possessors who enter under color of title are deemed to possess all the land described in the defective deed, so long as it consists of a single parcel and the possessor has occupied a significant portion of the parcel.
a. Invalid titles may be wild title, or where the grantor didn’t have legal title, etc.
b. In some states, color of title is essential to adverse possession.
c. In others, it will simply decrease the statute of limitations necessary for adverse possession.
d. It can also decrease notice requirements
e. Always means defective title
f. Can allow for constructive possession
Constructive Adverse Possession—Actual possession under color of title of only a part of the property is constructive possession of everything the bad title describes.
If O is on any of his land, B will not have constructive adverse possession!
Constructive possession will not defeat a prior owner in constructive possession.
ii. It will defeat a prior owner who is not occupying any of the land, and therefore does not constructively possess any of the land.
iii. An owner constructively possesses all she owns (even if she doesn’t occupy all she owns) provided that she is present and actually occupies some part of the property.
a. Adverse possessor B with color of title to part of O’s property won’t defeat O’s original valid deed constructively;
b. However, if B occupies and adversely possesses part of O’s land, B can get it even if O has good title, provided that O does not occupy part and therefore constructively possess all of the land in question.
Manillo v. Gorski—Since Gorski had created a structure encroaching upon Mannillo’s property, not knowing that the structure so encroached, Mannillo argued that Gorski lacked the requisite hostile intent to obtain title by adverse possession.