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Property I
University of Pennsylvania School of Law
Balganesh, Shyamkrishna

Property Spring 2015

Professor Balganesh

WHAT IS PROPERTY?

Two Conceptions of Property

Basic Definition

Property is socially contingent
Describes the relationship between people with respect to things, not the relationship between persons and things

Bundle of Rights Conception

Understands property as consisting of a “bundle” of rights, privileges, immunities, that are invested in the owner.
The precise content of the bundle and relationship among rights in the bundle varies from one circumstance to another, one case to another, one legal system to another- determined by individual cases

No absolute rights
Problem: If this is the case, does property really mean anything?
Bundle of positive rights to use property
Policy reasons why this is the most popular conception: importance of nuisance law, efficiency, and importance of eminent domain

The Right to Exclude

Tells us that a right is a property right if it includes the right to exclude everyone else from a certain resource
Property rights should be viewed as a duty to exclude oneself RATHER than a right to use something in a certain way
Problem: How can this right, if taken as absolute, work in a complex society?
Negative duty imposed on oneself to exclude oneself (premised on the idea that we want to be able to use things by excluding other people)

5 Principles for Establishing Property

First possession
Discovery
Creation
Accession
Adverse Possession

Jacques v. Steenberg Homes

Facts: D had a home to deliver to the neighbor of the Jacques, wanted to take it through the Jaques yard because the road was narrow and snowy. P said no several times, D did it anyway
Holding: Jury awarded $1 nominal damages, $100,000 punitive damages- Right to Exclude
Reasoning: individuals and society have significant interests in deterring intentional trespass to land, regardless of measurable harm that results

Doctrine: Stands for the idea that you can exclude someone from your property for any reason you want, or no reason at all

Discussion

Note generally the threshold for actionable “act” in intentional trespass is incredibly low
Nominal damages are a vindication of a right

vindication = declaration that you have the right

Individual Interest à right to use land in any way such that it does not harm others. This is the relevant argument for the case as it did away with the “use” and “protection” arguments.
Right to exclude really about the duty it imposes on the world to exclude themselves. Moreover, the right to exclude conception of property is handcuffed to autonomy (shell of a turtle metaphor), which is problematic in that it creates an absolute right (e.g., ambulance needing to cut across land, but can be denied under this conception of true owner says “no”)

the harm in the case, then, is in the breach of one’s duty to stay off land when w/o permission—a denial of the Jacques’ right to exclude.
The court cared deeply about the punitive damages availability.

Hypo: If ambulance needed to cut across land to save someone’s life, would the court uphold the Jacques’ right to exclude?

under their reasoning, yes. Even though there’s a pareto improvement, the absolute right to exclude as articulated by the court is generally incompatible with efficiency.

Ad Coelum Doctrine

The common law rule that a landowner holds everything above and below the land, up to the sky and down to the earth’s core, including all minerals. Governs the ownership of hard, immovable materials such as coal, but not volatile materials such as oil and gas. Generally not used, but when used, connected to the idea of dominion- that owner has rights over everything so long as they can subject it to their dominion

Hinman v. Pacific Air Transport

Facts: P wanted to get an injunction and damages against P for flying over their house daily at less than 100 ft.- wants to call it trespass
Holding: There is no trespass for flying in the airspace over P’s house- ad coelum rule does not apply- it was never even the rule in California. So long as you cannot use the space, you cannot control it
Legal reasoning summary: Ad coelum is a legal fiction. Ownership requires dominion. Owner of land did not have dominion over air. Therefore, there was no trespass to owner’s property.

Ct. rejects ad coelum doctrine
Ct says that whole basis of property is control over it, however, that statement is qualified with respect to ephemeral resources (e.g., air and sea)

Why can we not own the air or sea privately? Because it’s an artificial construct to prevent turning property law on its head.

Ownership is coterminous with use and enjoyment of the air
Ct. says, from policy view, that the incredible onus on airplane corp’s is far too great to bargain with all affected parties individually

KEY LOGICAL CHAIN: The goal is to demonstrate “possession” which helps demonstrate owner

and well were equal, maybe slightly favoring the well b/c of the septic potential for leakage.

“Private Nuisance” requires significant harm as an element, which distinguishes itself from intentional trespass.
Conduct a risk-utility analysis to determine unreasonableness, except that the court’s decision turns largely, if not entirely, on impressionistic terms.
The court is motivated by economic efficiency, but they are injecting normative intuitional preferences into a theoretically utilitarian (i.e., empirically based) analysis.

If the court followed its own rules, it ought to have engaged in empirically driven analysis.

Since the court engaged in contextual balancing, this is a hallmark bundle of rights analysis.

Coase Theorem – Transaction Costs

Summary: Ideal world would have determined the precise value of well and septic tank use by parties. The person who valued that use more greatly would compensate the other party to the extent he was deprived of that use. This does not happen in the actual world, so the court awarding entitlement to well owner makes a big difference in relative outcome.

Precept 1: “in a world with zero transaction costs, the initial allocation of entitlement doesn’t matter” because with no transaction costs, parties would be able to negotiate and come to an efficient outcome.
KEY Precept: BUT, we do not live in a world of no transaction costs- they are always positive. Therefore, initial allocation of entitlements are all important.
In a non-transaction-cost world, a major assumption is that both parties will readily enumerate their preferences, and the preferences are quantifiable
In a world of positive transaction costs, original allocation really matters, because depending on how high the transaction cost is, people will be more or less likely to negotiate
Thus the goal of courts should be to minimize transaction costs as much as possible as minimized transaction costs leads to more economically efficient outcomes.