I. Theories of the Creation and Recognition of Property
A. Acquisition of Property by First Possession: Capture/Occupancy
Property: A repertoire of structures that the law recognizes that allows people to organize relationships with respect to objects or resources. Property law recognizes only a subset of these structures: leases, mortgages, etc. And allows people to amend or not amend these by contract
Pierson (∆) v. Post (π) Supreme Court of New York (1805) – FIRST IN TIME TO CAPTURE/KILL/MORTALLY WOUND
Majority: Capture, kill, mortally wound (Pierson) à cause fox killing, competition and entrance into the sport. Dissent: Above + reasonable chance of capture (Post) à custom of hunting/sports clubs; protect investments
POLICY FOR THE MAJORITY: Certainty – reduces litigation, aids planning (the more certain a rule, the more certain parties are of who owns what, and more transactions can occur), social peace (less quarreling by hunters). Why would majority’s rule encourage foxhunting? Encourages competition (more entrants). Incentive to get more technology to get fox faster.
POLICY FOR DISSENT: majority rule will lead to more jostling and fights among hunters, b/c with pursuit meaning possession, other hunters will back off. Protect initial investment argument.
Securing fox (nets, etc.)
®pursuit with “reasonable prospect”
Ancient writers ambiguous
Times change; so should law
Custom vs. Law
Encourage fox killing
Encourages fox killing; protect initial investment
GOAL: WE SHOULD TRY TO COME UP WITH A RULE THAT HAS THE LOWEST AMOUNT OF ADMINISTRATIVE COSTS AND DEAD WEIGHT LOSS.
DEAD WEIGHT LOSS: Gap between the optimal (most efficient) policy and the rule in place
Incentives to try to limit dead weight loss:
1. Proportional Rule – try to correlate work and reward.
-Let’s say Post did 2/3 of work, Pierson did 1/3
-Post would get 2/3 of value of Fox, Pierson 1/3
-Would have low dead weight losses. High correlation b/w rewards and effort
-Would lead to disputes about %%
-Disputes about who did what (in terms of work).
-SO proportional rule has HIGH ADMINISTRATION COSTS
2. Actual Possession Only Rule – must have full possession (wounding doesn’t count).
-Administration costs are low
-High deadweight losses, b/c encourages lurkers, disheartening honest hunters, don’t get gains for cooperation, etc.
3. Any Pursuit Rule – First hunter to pursue fox has exclusive right to capture the fox so long as he remains in pursuit. Does not need reasonable prospect of success.
-Administrative costs are low (b/c don’t have to decide prospect of success).
-Hunters with better chance of catching whales could get scared off (poor hunters that start pursuit first still have right), so DEAD WEIGHT LOSSES HIGH.
4. DISSENT RULE: Killing, capturing, mortally wounding, reasonable success of catching after pursuit
-Rewards good performance of hunt.
-Creates incentive to cultivate skill.
-Moderate dead weight losses
-Moderate administrative costs
5. MAJORITY RULE: Kill, capture, mortal wounding
-Low-moderate administrative costs
-dead weight losses moderate
1. Distinguishes between wild animals that go free on their own accord, and wild animals that are “let free” i.e. someone opens their cage and lets them escape. If let free by someone else, owner still has claim.
2. In order to assume something is wild, consider;
1. if it’s domestic or wild by species
2. if it’s in its natural habitat
3. if it’s marked as a condition of ownership (collar or brand)
3. Principles of Pierson v. Post are applied by analogy whenever we bring in fugitive resource
Ghen (π) v. Rich (∆) United States District Court (MA, 1881) –RULE OF POSSESSION DEMONSTRATED BY CUSTOM
Facts: Fin-back whale was killed by libellant, drifted 17m ashore and was picked up by the finder and sold at an auction. Normal custom would have 3P finder notify whale company for small finders fee. Cheat system. Rule: If the fisherman does all that is possible to do to make the animal his own, it is sufficient to call the whale the fisherman’s property. Custom can stand for law (exception) à Encourages entrance into whaling
-Group (with the custom) knows its own needs; had development over time.
-Legitimate expectations of the group, changing the rule on custom wouldn’t necessarily mean new rule is followed.
-Implicit ratification argument – b/c state doesn’t change a rul
of capture. “minerals ferae naturale” – power to escape without volition of the owner. Moves often. May cause overproduction, overinvestment to extrapolate
Water: Renewable, West (prior appropriation rule – first to use it reasonably wins). English rule of absolute ownership, followed by American Rule of reasonable use – wasteful use was unlawful, reasonable ok.
Fugitive resources and wild animals tend to be over-consumed.
Tragedy of the Commons: Rational beings seek to maximize individual gain. In a pasture that is open to all, each man is locked into a system that compels him to increase his herd without limit. +1, -1 fraction. “Freedom in the commons brings ruin to all.” Open access commons/closed access commons/anti commons
How are problems mitigated (Medieval): low transaction costs, communication, small communities, high cost of cheating (social pressures). Solutions: Unions, government/central owned, parcelization, law. Anti-commons cause under-consumption, commons/fugitive overconsumption to reduce to property. Is the solution property law?
– Hohfield distinguishes between privileges and rights.
o Right to exclude. Privilege to enter
– Rational beings seek to maximize individual gain. In a pasture that is open to all, each man is locked into a system that compels him to increase his herd without limit. +1, -1 fraction. “Freedom in the commons brings ruin to all.”
– Open access commons/closed access commons/anti commons
– How are problems mitigated (Medieval): low transaction costs, communication, small communities, high-cost of cheating, long term (social pressures).
– Solutions: Unions, government/central owned, parcelization, law.
– Anti-commons cause under-consumption, commons/fugitive overconsumption to reduce to property.
Solutions to the Tragedy of the Commons:
o Custom, contract, policies
o Parcelization: forces people to internalize their externalities/makes it easier to negotiate
o De facto closed-access commons: (ex: lobster zones in ocean)
§ Do they have property rights?
· Not according to state law
· But in practice they do, because social pressures will keep out cheaters
o Law making (ex: prior appropriate rule to water in West)