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Property I
University of Pennsylvania School of Law
Balganesh, Shyamkrishna

PROPERTY OUTLINE; Balganesh, Fall 2009

I. What is Property?

no consensus on a definition for legal or philosophical purposes

A. Two Views of Property (page 1)

1. Bundle of Rights

o bundle of rights, liberties, privileges, and immunities vested in the “owner” which varies according to context and policy choices

2. Right to Exclude

o right to a thing good against the world
o note: casebook authors are leading proponents of this view of property

Conceptions of Property – Philosophical Perspectives (page 15)

1. Essentialists: seek single true definition of property as a legal concept

o i.e. Blackstone, Jacque

2. Skeptics: property is a bundle of rights that one can add to or subtract from without limit, meaningless until spelled out by legal system

J.E. Penner, The Idea of Property in Law (1997) (page 16)

essentialist view
property rights are in rem rather than in personam (transactions btwn LO and a specific other do not change the duties of everyone else not to interfere with the property)

· exclusion thesis: the right to property is a right to exclude others from things which is grounded by the interest we have in the use of things

Tom Grey, The Disintegration of Property (page 20)

skeptical view – property as “shadowy” and contingent bundle of rights (a la Hinman)

Trespass v. Nuisance
1. Trespass to Land (page 1)

any intentional intrusion that deprives another of possession of land, even if only temporarily

Jacque v. Steenberg Homes (Wisc. 1997) (page 1)
facts: Steenberg (D) delivered mobile home by dragging it across Jacque’s (P) property where P explicitly refused permission to do this; jury finds for P, awarding $1 in nominal damages and $100,000 in punitive damages; court upholds punitive damage award
issue: may punitive damages be issued where nominal damages (no actual damages) are awarded for intentional trespass to land?
holding: upholds punitive damage award – even if there is no measurable harm, any interference with the RtE to be sufficient harm needing to be punished

generally, Barnard rule – compensatory damage requirement – if P cannot show actual harm, has but a nominal interest; hence, society has little interest in having the unlawful, but otherwise harmless, conduct deterred; therefore, punitive damages are inappropriate
here, finding that individuals and society have significant interest in deterring intentional trespass to land, worthy of judicial protection, to deter resort to self-help
à fundamental importance of absolute RtE

o autonomy conception of property (over morality or efficiency)
o “minimum irreducibility of ownership” (J.W. Harris)
o Locke’s labor theory of property
o thus, no inquiry into LO’s reasons for exclusion

Hinman v. Pacific Air Transport (CoA 9th Cir. 1936) (page 9)
facts: P seeking injunction and damages for planes flying over property
issue: does LO have right to airspace above property?
holding: dominion over land is necessary to rely on property rights; no injunction granted

rejects ad coelum (presumption of ownership from center of the earth below to the high skies above LO’s property) as legal fiction
dominion requires that LO be in possession of land before being able to claim trespass
transaction costs of absolute RtE would negatively impact air travel industry (policy motivation)
no actionable trespass, but could have nuisance claim if lost use or enjoyment of land
à right to exclude not absolute

o rather, property as a collection of rights, and the question whether this includes the right to exclude airplane overflights depends on consideration of competing social interests, not any a priori conception of what ownership entails

B. The Trespass/Nuisance Divide

trespass is said to protect the interest in possession of land, while nuisance is said to protect the use and enjoyment of land

1. Nuisance (page 23)

interference with use/enjoyment of land cause by some activity on neighboring land
a civil wrong always dependent on actual harm someone suffers
note: public and private nuisances

Hendricks v. Stalnaker (WV 1989) (page 23)
issue: whether Stalnaker’s well near property line was a nuisance since it prohibited the installation of a Hendricks’ septic system
holding: water well not an unreasonable use of land, and therefore not a private nuisance, so Stalnaker not liable for its effects

nuisance = intentional + unreasonable
reasonableness determined by a balancing of competing LO’s interests – either use (well or septic system) burdens adjacent property, with septic system being slightly more burdensome, so balance of interests at least equal or slightly favoring water well (which was also there first, doctrine of coming to the nuisance), so not unreasonable use of land
BoR property conception as LO rights here are fact-specific
à private nuisance is utilitarian assessment of LO interests

2. Exclusion and Governance (page 29)

trespass and nuisance as two different strategies for resolving disputes about how scarce resources are used
exclusion: decisions about resource use delegated to O who acts as manage/gatekeeper of resource

o likely to be favored when resource has multiple potential uses and it’s desirable to give O discretion to choose which use is most valuable
o judicial system to backstop authority of O
§ e.g. Jacque

governance: focus on particular use of resource, prescribes particular rules about permitted and prohibited uses without considering all possible uses

o used when particular use of property of heightened significance, because strongly favored or disfavored
o judicial system determine how property will be used
§ e.g. Hendricks

3. The Coase Theorem (page 30)

in a world with zero transaction costs, the initial allocation of entitlement does not matter because the same outcome will be realized
theory assumes (a) people are rational utility maximizers, and (b) people are even able to estimate their preferences and the value
BUT, real world always has positive transaction costs, so the initial placement matters a great deal because parties will not always bargain
think doctor/confectioner – causation is necessarily reciprocal, so the only way to overcome this is to have the institutional feature account for and minimize transactional costs
reciprocal harm – need to find solution that voids the more serious harm, which is not clear unless we know the parties’ subjective valuation of their rights and sacrifices

o ex: Jacque – ex ante Jacques should have consented and charged anything less than what it cost Steenberg to take private road, but they didn’t perhaps because their valuation was more than Steenberg willing to pay or maybe there was bad blood btwn them that hindered bargaining à extremely important where law places the entitlement

Coasean Bargains (resolving property disputes by contract)
impeded by high transaction costs:
1. Assembly problems – trying to assemble property rights from a large number of owners in order to undertake some project (e.g. Hinman plane comp would have to identify and get permission from every LO; e.g. a holdout)
2. Bilateral monopoly – situations where owner of property needs something that can be provided by only one other person; each party has nowhere else to seek an equivalent transaction (e.g. Jacque, Hinman); increases likelihood of strategic bargaining and risk of bad blood preventing cooperation
à identify potential assembly problems and bilateral monopoly problems before becoming trapped in situation the preclude any kind of Coasean bargaining

C. Property and Equity (page 40)

equity developed to overcome common law rigidity; focus on remedies; injunctions and specific performance granted in equity

1. Repeated Trespasses
Baker v. Howard County Hunt (CoA MD, 1936) (page 42)
issue: can an injunction be awarded for trespassing that was not continuous but repeated?
holding: injunctive relief possible when multiple trespasses occur as part of a single course of action even if not continuous

exceptions to general rule that equity will not enjoin a mere trespass:


Assignment of Entitlement/Mode of Protection

Property Rule

Liability Rule


rule 1 – (Pile) – P has all bargaining power, chooses whether or not to consent to give up entitlement

rule 2 – (Golden Press) – D can take P’s entitlement w/o P’s consent, upon payment of court-determined damage price


rule 3 – (Hinman) – D has entitlement and P can take it only by getting D’s consent

rule 4 – P can obtain right to exclude and force D to give up entitlement by paying compensatory price

today, property rule = injunctive relief, liability rule = damages
Coase – when transaction costs low, consensual exchange of entitlement a realistic possibility, so use property rule protections; when transaction costs are high, efficiency concerns favor liability rules
Ex Ante (before)/Ex Post (after) Problem (page 62) – in deciding btwn property and liability rules, it matters whether analyzing situation as it exists before the conflict over resources or after the conflict

o ex post analysis focuses on fairness and situational concerns, while ex ante analysis consider incentives for future conduct

D. Restitution – Mistaken Improver (page 67)

action for restitution: (1) enrichment of D; (2) at the expense of P; (3) under circumstances that are unjust
restitution reflects preference for owner autonomy (i.e. Jacque, Baker) and “property rule” protection

Prodcuers Lumber & Supply Co v. Olney Building Co. (CoA TX, 1960) (page 68)
• facts: Producers owned land; Olney began building a home on the land, acting in good faith believing that they owned the lot; came to light that Producers actually owned the land; negotiations attempted for under one week; then Olney went onto property and took extreme measures to demolish the building (“went to town”)
• issue: what remedy is available where D acts in good faith to build and improve upon P’s land?
• holding: damages awarded to Producers for value of dwelling built and removed/destroyed by Olney, compensatory damages for restoring land to condition before construction and removal, and punitive damages for malicious removal (court valuing fairness/autonomy over efficiency)
· options for relief: (1) Olney may remove the bldg and pay for associated damages; (2) Producers can pay for enhance value and keep the bldg; (3) Olney can pay value of land before they build on it; (4) court can auction off land
· though perhaps owed value of dwelling constructed had Olney waited for court finding that constructed in good faith, Olney cannot now recover for enhancement to land b/c unclean hands
· here, bilateral monopoly and remedies available under law seems to suggest liability protection with high transaction costs
· entitlement a good faith improver may have under equity is strongly conditional on other factors à bundle of rights conception