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

I. What is Property?

Property is a right to a thing, good against the world
“Bundle” of rights with content that varies according to context and policy choices

A. Trespass
Trespass: wrongful entry onto another’s real property.

Property must be capable by its nature of exclusive possession, w/o this, no right in it can be maintained

In trespass, actual harm is the loss of ability to exclude

Intentional Trespass: intrusion on property that deprives owner of some use, done w/ full intention/knowledge.

Intentional trespass is a strict liability tort; there is no inquiry into the balance of interests between the P and D or whether the intrusion was reasonable.

No harm requirement for intentional trespass

Policy: Society has an interest in punishing and deterring intentional trespassers beyond that of protecting the interests of the individual landowners; private landowners should feel confident that wrongdoers who trespass upon their property will be appropriately punished – reasons for strictly enforcing:

1. To avoid potential violence (self help, etc.)
2. To protect privacy rights – personal violation, threat to security, etc.
3. We want ppl to follow the law, not “take the hit” of a ticket à preserves integrity of law
4. ppl have autonomy so can do whatever they want with their property—allowed to be irrational
· We want ppl to seek permission before going on land bc: 1) there may be economic incentives to giving prior permission, and 2) owners can warn of dangers on land

Jacque v. Steenberg Homes, Inc. (1)
Facts: D dragged mobile home across P’s land after being told not to, constituting intentional trespass. No detriment to land, no compensatory damage. Court awarded $1 in nominal and $100,000 in punitive damages, D appealed.
Issue: Whether an award of nominal damages for intentional trespass to land may support a punitive damage award.

The Barnard[1] rule should not apply when the tort supporting the award is intentional trespass to land because of the individual interests invaded and society’s interest in preventing intentional trespass.
Because a legal right is involved, the law recognizes that actual harm occurs in every trespass.

Damage from every direct entry upon the land of another bc lose ability to exclude

People expect wrongdoers to be appropriately punished, and punitive damages accomplish this.

Nominal damage award represents the recognition of actual harm, though immeasurable in dollars.

An appropriate punitive damages award probably will restrain the trespasser from similar conduct in the future, when they would be unlikely to restrain from similar conduct without punitive damages.

Holding: When other requirements for punitive damages have been met, nominal damages may support a punitive damage award in an action for intentional trespass to land.

Hinman v. Pacific Air Transport (9)
Facts: Landowner getting over-flights from D, less than 100ft above land. Told D to stop, D disregarded. P seeks injunction restraining flights in the airspace above P’s land.

Ad Coelum: “whoever owns the soil, owns to the sky and to the depths” isn’t logical in modern day

Trespass can only be asserted if committed upon land, and P is entitled to at least nominal damages without proving or alleging any actual damage.
Use of air or space above land by others is lawful unless it hinders P’s use/impairs enjoyment of his land

MUST be under injurious circumstances AND establish actual and substantial damage to have a claim for relief
note: these are NOT traditionally elements of trespass! But we are not dealing with land…
Here, the Ps don’t allege any facts as to actual/subst damage which may warrant a remedy

Holding: Failure to state a claim for injunctive relief; practical result/legal implications of honoring P’s claim contravenes the understanding that navigable airspace and waterways are public property.
i. Conceptions of Property
Philosophical Perspectives
· Essentialists seek to uncover the single true definition of property as a legal concept. The understanding that there is one correct meaning of property.
· Skeptics believe that it is fruitless to try to come up with a single canonical conception of what property means in a legal system. “Property” is just a word until we spell out exactly what it means in a given context.
· Penner – 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
o Right to exclude and right to use are opposite sides of the same coin
o “right to exclude” is about the thing itself, not necessarily who is involved – unified theory
o Jacques: court honors right to exclude
· Grey: property is a contingent bundle of rights—no unified view; different rights and each one is contingent—we shouldn’t talk about “property” it’s all just gov’t regulation
o Hinman—is right to exclude over-flights one of the sticks in the bundle? Court says no.
· 2 types of rights:
o In rem creates duties against a large and indefinite class – everyone has this duty, it is inherent in the thing (most property has this)
o In personam creates a duty against only a small and defined class; contracts (i.e. leasing a car)

B. Nuisance
Nuisance: condition, activity, or situation (i.e. loud noise, foul odor) that interferes with the use or enjoyment of property; annoys/disturbs free use of one’s property or renders use uncomfortable

Trespass is said to protect the interest in possession of land (right to exclude), generally strict liability
Nuisance is said to protect the use and enjoyment of land

Invasion upon land committed by small objects like particles of gas or sound or light waves
Non-invasive interferences with use and enjoyment of land (i.e. spite fence) will be governed by the law of nuisance rather than trespass.
MUST SHOW HARM SUFFERED

Public nuisance: affects general public (i.e. eyesores)
Private nuisance: affects individual or small number of ppl, subst’l, unreasonable interference with the private use and enjoyment of another’s land

Conduct must be intentional and unreasonable, negligent, or reckless, or that results in an abnormally dangerous conditions or activities in an inappropriate place.

Any determination of liability for a private nuisance must include an examination of the private use and enjoyment of the land seeking protection and the nature of the interference (balancing test)

RULE: Restatement Balancing Test for Reasonableness: Weighs gravity of the harm vs. social value

Interference is unreasonable when the gravity of the harm outweighs the social value of the activity alleged to cause the harm.

Hendricks v. Stalnaker (23)
Facts: Neighbor digs a well in the only suitable place on his property after finding out the neighbor has applied for a septic tank permit. A septic tank cannot be built within 100 feet of a well and vice versa.
· Court uses basic balancing test: neither is particularly invasive, both are necessary for housing, so Hendricks cannot show that balancing of interests favors their septic system.
Holding: The evidence presented does not demonstrate that the water well is an unreasonable use of land, and therefore does not constitute a private nuisance.
Alternatives to Balancing Test:
· “First to use” problematic b/c may encourage racing, wastefulness, and not clear/easy to determine
· Also, could evaluate norms, whether conduct was “neighborly” though this is not necessarily most socially valuable

Exclusion and Governance
Exclusion Strategy: decisions about resource use are delegated to an owner who acts as the manager or gatekeeper of the resource.

To implement this delegation of gatekeeper authority, the law allows the owner of the resource to repel any and all intrusions that do not have the owner’s consent.
Exclusion is likely to be favored where particular resources like land have multiple potential uses and when we think it desirable to give owners discretion to choose which use is most valuable (Jacques).

Governance Strategy: focuses on particular uses of resources, and prescribes particular rules about permitted and prohibited uses without regard to the other attributes of the resource.

Tends to be used in situations where the particular uses of property are of heightened significance, either because they are strongly favored or disfavored (Hendricks).

Resolving Property Disputes by Contract
Bilateral Monopolies: each can only get what they want from the other

high transaction costs because each of the parties has nowhere else to turn in order to engage in an equivalent transaction.
problems: strategic behavior, irrationality by one causes huge probs—holdouts, etc.

Assembly Problem: difficulty in identifying all affected owners and trouble communicating/agreeing

The Coase Theorem: Ronald H. Coase, The Problem of Social Cost

Paper is concerned with the actions of business firms which have harmful effects on others
Problem of reciprocal harm: Should A be allowed to harm B or should B be allowed to harm A?

o Avoid the more serious harm!
o In a world with no transaction costs, the efficient outcome will come about regardless of entitlement à parties will bargain
o Even here, in the end legal entitlements do not matter bc the person who values the property the highest will get it (because he will pay the most for it) = COSEAN BARGAINING
o Parties take into account their own subjective values as a means to achieving the maximum social utility for both themselves and society when bargaining

Coase’s point is NOT that entitlements don’t matter—they do because in the real world there are transaction costs (lawyers, etc.), so if you’re given the entitlement and the other party is not willing to pay as much for it, you will likely end up with it, or if an entitlement is muddled, process is complicated

à ENTITLEMENTS SHOULD BECLEAR SO THAT BARGAINING CAN BE EFFICIENT

His idea is that even in spite of an ex ante entitlement, you can still negotiate around it and work out a way to mutually benefit, because ppl find ways to tra

up with the entitlement. The entitlement ends up in the hands of the party who values it the most, in terms of being willing to pay the most for it. And the parties themselves will have made the valuation of the entitlement, ensuring that no subjective or idiosyncratic values have been overlooked by the court.

Courts favor property protection whenever bargaining would produce the best outcome

Successful when transaction costs are low

Efficiency concerns satisfied by possibility of exchange/bargaining so property will end up with the person who values it most/willing to pay most

Property rules NOT used when:

Imperfect knowledge may hinder parties’ abilities to bargain
When there are more than 2 parties involved so bargaining is difficult (assembly probs, holdouts)
Bilateral monopoly situations – high stakes, strong incentives
Where actors are irrational

RULE 2: Liability Rule

Entitlement can be taken by a forced sale—owner has no choice but to give it up for money
Collective decision as to value of entitlement without the need for a voluntary transaction
A destroyer of an initial entitlement must pay an objectively valued sum to the holder of the entitlement

Liability may be preferred where:

Transaction costs are high
Assembly problems (large numbers of parties—easier to take/pay)

Courts may be drawn to a liability rule for handling building encroachment controversies b/c:

bilateral monopoly problem that exists in the ex post situation
real possibility that there will be no post-injunction modification of rights

However, courts may have more limited information than the parties about the benefits and costs of allocating entitlements

RULE 3: Inalienability Rule

Entitlement’s transfer is not permitted between a willing buyer/willing seller—allocation can’t be changed
The state intervenes to determine the initial entitlement, to forbid its sale or purchase, and to determine compensation to be paid if it is sold or destroyed

Mode of Protection

Property Rule – Injunction

Liability Rule – Damages

Plaintiff
(P)

Rule 1: P can insist on injunction tearing building down (Pile)

Rule 2: D can take P’s entitlement without P’s consent, typically on payment of damages (i.e. market value of land occupied by encroachment)

Defendant
(D)

Rule 3: building stays put, P can get it removed by getting D’s consent to tear it down (Hinman)

Rule 4: P can force D to transfer the entitlement to the P in return for payment of money compensation (Spur v. Del Webb)

Assignment or
Entitlement

RULE 4: Forced Transfer for Payment

Like in Spur v. Del Webb, P can pay the D off to stop D from continuing activity/nuisance

Ex Post / Ex Ante

Important consideration in deciding between property or liability rules is whether we analyze the situation as it exists before the particular conflict (ex ante) or after that conflict arises (ex post)
Courts naturally drawn to ex post analysis b/c that is how controversies are presented to them–this does not necessarily mean that the ex post perspective is correct for thinking about such problems

Property rules might be inefficient from an ex post perspective, and yet still be the more efficient rule in the long run from an ex ante perspective that stresses incentive for future behavior.

Analysis of warehouse encroachment problem: (65) warehouse vs. single family home
Ex Ante: more likely to consider incentives for future conduct
find where

[1] No recovery of punitive damages if only nominal compensatory damages are found.