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

Chapter 1 What is Property?
Two conceptions of Property
 
A person may be said to hold a property interest, in the broadest sense if he has any right which the law will protect against infringement by others.
 
1.       ESSENTIALISTS: J.E. Penner, Property as a single, true definition of property as a legal concept
Unified Theory/ Right to Exclude (J.E. PENNER): 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. (18) (Jacque)
 
2.       SKEPTICS: Tom Grey: prop rights as “bundle of sticks”—emphasis on flexibility. Property as a collection (bundle) or rights with content that varies according to context and policy choices; fruitless to try to come up with a single canonical conception of what property means in the legal system
a.       Metaphor implies that one can add to or subtract from the bundle more or less without limit, and still talk about the bundle as property
b.       things that are owned by persons; each is it own right and you need to look case-by-case to see if that right exists(Hinman)
 
3.        Two kinds of rights:
a.       IN REM: rights against a large & undefined/indefinite class
b.       IN PERSONAM: rights against a small & defined class
 
 
The Stick
Property Laws that Protects
Limits
Right to Exclude
Trespass 
Trespass to Chattels
Eminent domain,
Adverse Possession
Easements by necessity
Easements by prescription
Right to Enjoy
Nuisance
Regulations
Zoning
Right to Transfer and Sell
Recording acts
Inalienability
RAP
 
 
 
Trespass
·         (R2d Torts 158) Any intentional intrusion that deprives another of possession of land, even if temporary Intentional trespass is a S/L tort
·         Some courts allow a defensive of necessity to an action of trespass (9)
·         We have trespass to protect (1) Loss of Privacy (2) Loss of control/security? (3) Violation of personal space (property as extension of self) NOTE: we are more possessive of physical things.
 
Airspace—exception to ad coleum
·         Ad Coleum you own everything from the center of the earth to the heavens.
a.       Two theories:
(1)     You own everything from heaven to center of earth
(2)     Possession: you have to be able to possess it in some way. Hinman.
·         4 doctrinal moves for the overflight exception
a.       As long as the owner of the surface has not asserted dominion and control over the portion of the column of space in which airplanes fly, the owner cannot sue in trespass. Prob: constructive possession is enough for a claim of trespass it doesn’t have to be in use
b.       Can sue if they cause harm to the surface owner Prob: actual harm is traditionally not an element of trespass (Causby, the chicken farmer)
c.        Yes overflights are trespass, but owner is being implicitly compensated by being allowed to do the same to othersProb: not evident that there would be widespread social good from flying when airplanes first came out
d.       Airspace = public property; Prob: taking of private property
SCOTUS: Congress has effectively asserted federal government control over navigable airspace.
Epstein:
1.       Yes, you down the column (ad coleum) but… b/c the damages are so small, too bad.
2.       Also, you get benefit of flying.
3.       Only compensate for actual harm (not really a property rule)
4.       Airspace—social good—public property (waterways), taken collectively, not compensation b/c it’s implicit.
 
Encroachments
Typical Case: A builds a structure thinking it’s on A’s land, but a portion happens to be on B’s land, creating a continuing trespass through a building encroachment. Even if initially unintentional, becomes intentional trespass after mistake is revealed but building remains.
Nuisance
·         Anything which annoys or disturbs the free use of one’s property or which renders its ordinary use or physical occupation uncomfortable.
·         Action can be declared a nuisance per se (by statute) or per accidens (depending on the context in which the offending use occurs).
·         Courts look at whether the “nuisance” is (1) intentional, (2) negligent, (3) reckless, and (4) an abnormally dangerous activity.
 
Private nuisance
non-trespassory and unreasonable interference with a private landowner’s use and enjoyment of land.
Public nuisance
general nuisance to everyone in society (eyesore)
 
Elements of Nuisance
1.       Type of group (private- select group victim only; public—everybody)
2.       intentional/unreasonable
3.       negligent/reckless
4.       OR dangerous conditions
 
Restatement on nuisance
Balancing tests is applied in a cost-benefit type manner (comparing the value of the uses)
 
Other ways of determining nuisances
Possible decisional rules to break tie (Reciprocal Harms situation)
·         First in-time rule (inefficiency caused by rushing)
·         Look at what is a normal use of the land (abnormal use might actually be something that is socially valuable)
a.       PROBLEM: arbitrary!
·         Look into the community norms→ can be good b/c it predicts and guides behavior but also bad, b/c what if there is something better than the current norm.
·         Invasion theory for nuisance: it’s only a nuisance if it invades into someone’s property (Stalnaker would win)
a.       Eg. Noxious smell
b.       Here, it became a burden of proof issue. Hendricks hasn’t shown nuisance; it’s break even (reciprocal harms)
 
HYPO: Jacque trespass on Steenberg? Same result? Or different b/c it’s a corporation? Don’t need as much $ for deterrence (Jacques aren’t running a business)? NOTE: difference in corporate vs private property.
The problem of social cost by Ronald H. Coase
a.       Most cited article in law; won nobel prize at 21
b.       As long as there is a clear entitlement people can bargain around to settle at the win-win.
c.        Why doesn’t the entitlement matter?
(1)     Because either way, whoever values it most will still end up with it. Just has to pay the person w/entitlement.
(2)     Under what conditions?
(a)     Where there are no transaction costs (that doesn’t really exist)
d.       So entitlements DO matter, b/c transaction cost may limit ability to transfer use to those who value it the most and entitlement should go to the highest value user.
e.        So law/econ is not neutral, it’s in favor of efficiency as the king.
f.        Limits to Coase
(1)     Rational actor model (assumes everyone is rational)
(2)     Limits of bargaining (multi-party); bilateral monopolies, holdout problem
(3)     Behavioral economics (do ppl act at all like rational actors?)
Jacque v. Steenberg Homes (WI, 1997) pg1
Punitive damages for intended trespass is OK! Even w/o actual harm because the trespass itself is a harm.
Why uphold 100 K in punitive damages?
1.       Protect property b/c it’s important (circular)
2.       Deterrence of future intentional trespass (send the msg)
a.       Prevention of violence (by having civil ct enforcement, instead of self help)
b.       Preserve privacy
c.        Preserve integrity of legal sys—to say the law MEANS something.
3.       Recognition of harm even if immeasurable.
4.       As part of a society, we give up some rights/preserve certain rights.
Hinman v. Pacific Air Transport (9th Cir, 1936) pg 9
It’s only trespass if you’re actually using the space that is intruded upon.
People can’t complain about the air travel intrusion b/c they too can benefit from air travel.
Hendricks v. Stalnaker (W. Va. Sup Ct. of Appeals, 1989) pg 23
π wants to install a septic system, but can’t b/c the Stalnaker’s 2nd well.
HOLD: NOT a private nuisance b/c both are equally potentially nuisances, both are important interests, and not enough evidence to tip the favor for one or the either.
 
Exclusion and Governance
 
Resolving Property Disputes by Contract
·         Bargaining in the shadow of the law
1.       Ex ante: know where the property rights are→ people know what they can /can’t do and what they should bargain over.
2.       Ex-post: even after the court decides where the right is, people can bargaining.
·         How do we encourage bargaining ex-ante? Make the rights clear, which will Lower transaction costs: Coase says that this will make it more likely that the person who values it most gets it.
·         When do you not want bargaining?
1.       When people have unequal bargaining power, unequal resources, information
2.       Strategic behaviors such as hold out,
·         Why does bargaining fail?
1.       Not everybody is a rational actor
2.       Bilateral monopolies
3.       Solutions: Set regulations
·         Assembly problems:  Too many people with rights; not able to convert a whole area into something greater than the parts
Solutions: (1) Don’t buy sequentially, (2) Condition clauses that make a sale contingent on other people also selling
Property and Equity
1.       Equity was a different court from the regular Common Law Courts… had some different rules and consequences.
2.       Emergence of equity courts as alternative to common law pleading in which the case had to be presented in terms of standardized writs. Courts of Equity (or Chancery) would resolve disputes by issuing mandatory decrees directing individuals to perform certain acts (e.g. injunctions: order directing party to act or stop doing an act.).
3.       These decrees “operated in personam”: they were binding on the parties to the cause, but were not judgments of record binding on anyone else. Courts gave relief if: (1) the rigid rules of the common law did not provide it and (2) fairness required it. This relief is known as equitable relief.
4.       Application to the law of trespass:
a.       At common law, the only remedy for trespass was action for damages.
b.       Landowners would go to court of equity seeking injunctions. At first court said no injunctions for “mere trespass,” but over time a variety of exceptions were developed.
 
Traditional Four-Part Analysis for Injunctions
1.       Irreparable harm
2.       Remedies at law are inadequate
3.       Balance of the hardships (only if the encroachment is innocent/good faith)
4.       The public interest
 
Repeated trespasses: Damages are not an adequate remedy (e.g. damages are intangible and incapable of measurement) and therefore the court may (issue an injunction. The concern is with the repetition of the action; the trouble of prosecuting multiple trespasses makes a remedy at law inadequate.
 
Building Encroachment: The continuing presence of an encroaching structure is an intentional trespass. An injunction will issue only if a weighing of interests between the parties (“balance of the equities”) favors giving the plaintiff the extraordinary relief of an injunction rather than damages.
 
 
Property Rules & Liability Rules
 
 
Property Rule
Liability Rule
Inalienability
Rights
Holder of entitlement has to give consent before the entitlement can be taken away.
Entitlement can be taken away without consent upon payment of an amount, which is usually determined by the court or is given the fair market value.
transfer is not permitted between willing buyer and willing seller
Remedy
Injunction
Damages
Inj./Dam
Amt of State Intervention
State enforces performance
State determines value
State forbids transaction, heavy state involvment
Who values entitlement?
Parties
State
State
Pros
Clear and thus may lower transaction costs.
Encourages bargaining ex ante.
 
~ Better when transaction costs are too high.
~ May be

on the land. (ignored the trees the π had planted). Then the Δ destroyed the house when negotiations over the house got nowhere.
HOLD: Δ has to pay for the $5000 (value of house) + $300 ( exemplary damages) + $600 (trial ct award)
RULE: if you accidently do something nice for someone else’s property, it becomes THEIR property unless it can’t be removed without damage (all that determined in ct).
 
Chapter 2 Original Acquisition/ Acquisition of Property
 
Getting some property for yourself:
1.       First possession→ being the first to take from what is “common”
2.       Creation→ Intellectual property, building wooden hoops, etc.
3.       Accession→ when things are created.
4.       Sequential possession
a.       adverse possession
b.       finding lost property
First Possession = first to get + intent to possess
 
Possession is important for establishing ownership over property because:
1.       We want to reward effort/labor/time investment and protect it.
2.       It provides notice and the ability to protect it because it is observable, clear, shows right to exclusion and that someone has already developed a claim in it
3.       Possession does not always confer ownership—borrowing, bailments, theft, license, public goods.
 
Interaction of Custom with Normal Default Rules of Possession
1.       Custom can determine who is the first possessor.
a.       Court followed whaling custom of “iron holds the whale” where your bomb lance claims the whale with a fee going to the finder. Ghen v. Rich. (note, there is still NOTICE by bomb, and MORTAL WOUND)
b.       Dissent in Pierson wanted to use hunting custom.
2.       When do courts defer to custom?
a.       If developed over time,
b.       It’s fairness
c.        Only when
(1)     Universally followed
(2)     Doesn’t contradict existing law
(3)     Works well
3.       Downside: technology can change, or other context changes that makes custom obsolete
 
Wild Animals
 
Mortal Wounder gets first possession over wild animals.
Must “deprive of natural liberty”, eg. A mortal wound.. See Pierson v. Post
Implication: possibility of leading to extinction since it’s not sustainable!
Where is best to put possession?
1.       Earlier (spotting)→ wastes less energy in dual efforts by both A and B but spotter (A) may not be the best killer, and others don’t have notice that A spotted it!
2.       Killer (B)→ unfair since A saw it first and “pursued”
 
Pierson v. Post (Supreme Ct of NY, 1805)
Post was chasing a fox and Pierson saw him, and instead killed the fox and took it. Pierson gets the fox b/c chasing an animal is not enough to make it yours. You have to do something MORE to deprive the animals from it’s “natural liberty” in order to call it your property.
Dissent: use hunting custom!
Ghen v. Rich ( US D. Ct. MA, 1881) p 88
Ghen shot and killed a whale on April 9, 1880; Ellis found it on the beach in Brewster, sold it to Rich via auction, ignoring the custom that the finder informs the killer of the whale for a fee. Ghen sues, Judge awards to Ghen b/c (1) he did everything under custom/possible to mark the whale as his (2) he followed custom and the custom [obviously] works accd to the judge since the industry is going strong!
fast fish rule: whale belongs to the first harpooner as long as whale was attached to his boat, and he gets to keep the whole thing
iron holds the whale rule: first harpooner gets exclusive rights as long as he was in fresh pursuit. (pserm whales)
Keeble v. Hickeringill (Queens Bench, 1707) p 92
Keeble was trying to get ducks, but then Hickeringill shot guns by the duck decoy pond to scare them away.
Judge finds for Keeble, fines Δ 20 pounds. It stays b/c the damages were for the disturbance, not the actual number of ducks.
Keeble enforcing right to enjoy property in trade of CHOICE, not FIRST POSESSION of ducks, since duck on pond doesn’t include mortal wound or possession!
Unclean hands→ even if Hickeringill had right to duck decoy, shooting gun is not okay.
 
 
Other Applications of First Possession
 
Comparing “first possession” in Property Law vs. Patent Law
Property law
Patent law
Notice of intent
Conception
First possessor
First to reduce
Due diligence towards possession
Reasonable diligence towards reduction to practice
 
Home run baseballs, Popov v. Hayashi (Sup Ct. SF, 2002)
Judge said both have possession over the world b/c Popov “caught” and Hayashi got “possession”. Sell and split proceeds 50/50.
Pre-possessory interest: right not to get intervened with. Cf. Pierson v. Post
Open Access, Commons
 
Problems of Open Access:
1.       Supply side: no incentive to improve