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Property I
University of Pennsylvania School of Law
Wagner, R. Polk

Property Outline Wagner– Fall 2012
I. What is Property? :  Two Conceptions of Property
Two Conceptions of Property:
Traditional (Essentialist – Penner): in rem – a right to a thing; a good against the world
§ Unified theory of property: exclusion 
§ Seek to discover one true conception of property
§ Duty is to the property, no matter who owns it; transfer to someone else, doesn’t change duties
§ Right of property is the right to exclude others from things, grounded in the interest we have in the use of those things
§ Blackstone: “…that sole and despotic dominion which one man claims and exercises over the external things of the world, in total exclusion of the right of any other individual…”
§ Jacque v. Steenberg
“Bundle of Sticks” (Skeptic – Grey): property as a bundle of rights, content that varies according to context and policy choices
§ No Unified theory of property: rights/duties and each one is contingent
§ Impossible to come up with one definition of property
§ Owner = someone with one or more interests; Things can be owned by more than one person ; Property can be abstract – money, stocks
§ “Property” no longer a legal conception
§ Hinman v. Pacific Air
Property v. Contracts 101
In rem: right to a thing enforceable against ‘all the world’   In personam: right binding only on specific others
Ad Coelum Doctrine
Whoever owns the soil owns also to the sky and to the depths
Jacque v. Steenberg Homes, Inc.
                                             Supreme Court of Wisconsin, 1997                 
Hinman v. Pacific Air Transport
US Court of Appeals 9th Circuit, 1936
Mobile homes and snow; Right to Exclude
Overflights; re-interpretation of the ad coleum rule
Determinative Facts
§ Jacques – elderly couple who own 170 acres. Steenberg – sells mobile homes. 
§ When neighbor of P bought mobile home from D delivery was included in  price; D decided easiest route for delivery was across P’s land (other route was private road w/ sharp curve and 7 ft of snow)
§ D asked P whether it could move home across their farm field and P refused several times (sensitive about allowing others to use their land – previous case of adverse possession)
§ Delivery on February 15, 1994:  Asst manager gave directions to go ahead w/ delivery through P’s land anyway; Used bobcat to cut path through P’s snow-covered field and hauled home across land to neighbor’s lot
§ D’s argument:  punitive damages must be supported by award of compensatory damages (here: only $30 fine)
§ P’s argument:  compensatory damage award requirement is inapposite when wrongful act is an intentional trespass to land
§ Holding: Court agrees with P; punitive damages can be awarded and $100,000 is not excessive
§ Alleged that D are engaged in business of operating commercial air line and that after May 1929 they disturbed, invaded and trespassed upon P’s land by operating aircraft in airspace at altitudes less than 100 ft above surface
§ P has notified D to desist from trespassing in airspace, but they refused
§ P asks for injunction restraining operation of aircraft through airspace over P’s property and for $90,000 damages from each D
§ Holding: Court did not follow ad coleum doctrine
Right to Exclude
When nominal damages are awarded for an intentional trespass to land, punitive damages may, in discretion of the jury, be awarded
Reinterpretation of Ad Coleum: Possession Theory
An owner owns as much above and below him as he is using; to constitute a trespass, P must show actual harm or interference with his enjoyment of the land
§ Even when there is no damage, intentional trespass is an actual harm because it infringes upon the owner’s right to exclude
§ Society’s interests: preserving the integrity of the law; deterrence; punishing the wrongdoer; prevents “self-help” violence; privacy rights
§ Was invented in past when use of space above land was very narrow (no planes)
§ Literal application of this doctrine would be absurd b/c the sky had no definite location and there can be no ownership of infinity
§ People will invest more in protected land
§ Reinforces privacy/autonomy/liberty (individual’s concerns).  Property as a sense of self (here – Steenberg is a corporation.  Not the same).
§ Physical safety and security expectation
§ Lowers costs associated with lack of security/increased liability
§ Punitive damages make the most sense when levied against one reaping an economic gain from their trespass. (Corporation v. Midnight dash)
§ Jacques rule channels people to seek permission
Ways to allow overflights and the ad coleum rule:
§  Possession – must be using land to sue (however, constructive possession is enough for trespass)
§  Actual harm (trespass doesn’t require actual harm)
§  Implicit In Kind Compensation: all benefit from airplane travel; compensation is social good (Epstein)
§  Airspace as public property (takings?) (US v. Causby rule)
I. What Is Property? : The Trespass/Nuisance Divide
Trespass involves interference with possession of land.
Nuisance involves interferences with use/enjoyment (U/E) of land caused by some activity on neighboring land (pollution, noise)
·         Public nuisance – unreasonable condition on land that causes general problem
·         Private nuisance – 1) identifiable victim; 2) intentional/unreasonable or negligent/reckless or creates abnormally dangerous conditions
Hendricks v. Stalnaker
Supreme Court of Appeals of West Virginia
Water well v. Septic Tank
Determinative Facts
§ 1985:  D owns 10 acres of land.  Constructed house and two water wells w/ one located behind his house and the other near P’s property; Except for small strip of land next to P’s property all of D’s land was disturbed by former strip mine and therefore other well produced poor quality water.  Had attempted to treat water from rear well but was unsuccessful
§ 1984:  P purchased acres adjacent to D’s property for home site or trailer development
§  Dec. 1985 – met w/ sanitarian to determine location for water well and septic system, but because land was too hilly or had been disturbed in order to build a pond, only location for septic system was tract of land near D’s property
§  Health Department requires distance of 100 feet between water wells and septic systems before it will issue permits
§ When D found out about his neighbor’s plan to construct septic system near his property, he received well drilling permit for second well and the well was completed on Jan 25th but not connected to home until Jan 1987
§ P was informed on January 15, 1986 – that no permit for his proposed septic system could be issued b/c the absorption field for his septic system was w/in 100 feet of D’s well à P installed septic system w/out a permit however system was left inoperative pending outcome of suit
§ Holding: a well is not unreasonable, therefore, it is not a nuisance
Private Nusiance
Substantial and unreasonable interference w/ private use and enjoyment of another’s land. Includes conduct that’s intentional and unreasonable, negligent or reckless, or results in abnormally dangerous conditions or activities in an inappropriate place.  Recovery is limited to Ps who suffer a significant harm to their property rights or privileges from the interference. 
§ Not negligent, reckless or abnormally dangerous activity
§ Intentional (needed water) but not malicious
§ Not unreasonable: Court must balance the social value of the activity and the alleged harm cause by the activity (Restatement definition of unreasonable).  Here balancing landowner’s competing interests.
§  Septic system with potential for drainage places more invasive burden on adjacent property (septic system is the one needing a 100 foot margin) (invasion theory – only have nuisance where there is an invasion over your property)
§  Neither party has an inexpensive or other alternative and both water well and septic system are used for housing
§  Court found that balancing interests are equal or slightly favoring water well à P did not show water well was a nuisance and that balancing of interests favored septic tank                        
§ Rule of Decision (Temporal priority):  first use to be established is given presumption of validity relative to a later, incompatible use (here, water well)
§ Problem: Could encourage racing
§ Onus on agency to assess whether or not there are pending permits
Exclusion and Governance: Two Strategies for Delineating Property Rights
Exclusion: decisions about resource use are delegated to an owner who acts as the manager/gatekeeper of the resource.
Likely to be used when a resource has multiple potential uses, and owner has discretion to choose which use is most valuable. 
Task of judges/law is to back up the owner’s authority.
Governance: prescribes rules about prohibited and permitted uses without regard to other attributes of the resource
Can be derived from social norms, contracts, govt regs, or CL.
Tends to be used in situations where particular uses are of heightened significance (strongly favored or disfavored)
Ronald H. Coase – won Nobel Memorial Prize in Economics in 1991 for identifying the importance of transaction costs when assessing the economic effects of alternative institutional arrangements.  Property rights are framed by bargaining around the law.
Coasean Theory and Coasean Bargaining (Contracts)
Coase Theory
·         Everything is reciprocal in nature (avoiding harm to B inflicts harm on A) à the problem becomes avoiding the more serious harm
§   Ex) straying cattle destroying farmer’s crops – do we want meat or crops?
§   Depends on value of what is obtained and value of what is sacrificed to obtain it
·         Cost-benefit analysis:  cattle-raiser will not increase size of herd unless value of additional meat produced is greater than additional costs including value of additional crops destroyed
·         Coase’s argument:  if it is costless to enter into contracts then the same number of cattle will be raised by the ra

t dog will probably damage property of OR he permits it to stray beyond his control
·         Issue of whether Baker had unclean hands by shooting the dogs in the heat of the moment; however, can kill in defense of person, property, etc.
Coase: Place entitlement with Bakers (more than one hunt club in area).  Each hunt club has to bargain with them.  However, there would be a lot of negotiations and high transaction costs – part of problem with Coase’s theory.
Building Encroachments: Repeated Intrusion of One Party
Pile v. Pedrick
                                                   Supreme Court of PA, 1895                       
Golden Press, Inc. v. Rylands
Supreme Court of Colorado, 1951
Mr. D, Tear Down This Wall!
Like the Case in Contracts – Jacobs
Determinative Facts
·         Inaccurate survey makes a foundation stone 1 & 3/8 inches over property line, underground.  Wall of building is within the property lines. 
·         Court considers two remedies:
·      1. permanent trespass, so compensation in damages,
·      2. requiring D to remove stones crossing the line
·         P choose #2, but won’t allow D to cross the line to chisel the stone. 
·         Holding: Court then requires D to take the wall down from their side to move the stone.  Court doesn’t weigh costs/benefits at all. 
·         P (Rylands and Reid) owned parcel of land upon which they resided and obtained a garage and some rental cottages
·         D constructed one-story brick and cinder block business building on property which adjoined P’s property on east
·         One wall of a building is on the property line and foundation extends 2-3 inches across, seven feet underground.
·          Holding: because the action was not intentional, damages of $55 (not injunction to tear down wall) is more appropriate
Repeated Intrusion
Court in equity requires injunction against repeated trespass – wall torn down.  Court does not weigh costs/benefits.
Cost Benefit Analysis: If not intentional, then damages
1.       A mandatory injunction to compel removal of an encroaching structure is common but not necessarily required; depends on the peculiar equities of the case. 
2.       If encroachment deliberate, INJUNCTION- willful, intentional taking of another’s land, equity requires restoration regardless of expense of removal.
3.       If encroachment in good faith, BALANCE INTERESTS – court should weigh circumstances and not act oppressively.  If unintentional and slight, P use unaffected, damage to P much smaller than the cost of removal so as to be unconscionable, then mandatory injunction can be denied and P compensated with damages.
§ Lower court had split cost of tearing wall down between the parties. 
§ However, courts in equity do not consider costs.
No evidence from record challenging good faith of D
·         Had employed a surveyor
·         No complaint of trespass until wall was completely constructed even though workmen were constantly trespassing on property
·         Encroachment here is very slightà no interference w/ present use of property (possibly future use if they wish to build a basement)
§ Incentive: be careful before you build
Doctrine Balance of Equities – Not looking merely at a balance of convenience, but relative hardship can be considered.  Also considered the unclean hands of P who watched the wall go up.  Only when the builder does not know they are on someone else’s land.
eBay Inc. v. MercExchange L.L.C. – whether owner of patent is automatically entitled to permanent injunction against D who has infringed patent or whether courts may sometimes deny injunction and award only damages. Side with Golden Press.  eBay pays for right not to shut down.  Bargaining happens.
Four Part Analysis for Injunctions:
§  Suffered irreparable injury
§  Remedies available at law, such as monetary damages are inadequate
§  Considering balance of hardships between P and D
§  Public interest would not be disserved by permanent injunction