Property Outline
Wonnel
Spring 2013
I. Acquisition of Property – Possession or Act of Title (First Possession) ⋆
a. By Discovery
i. Johnson v. M’Intosh (P.3) ⋆
1. Facts: P buys land from Indian tribe, defendant buys the land from the US Govt.
2. Holding: Supreme Court finds for the defendant because the person who has land from the US government is more entitled because the US discovered the land
a. European custom said ownership from discovery or conquest, and judicial role is to find and follow preexisting custom.
ii. Doctrine of First Possession
1. Foundation of Doctrine of Discovery
2. If You are there first, it is yours
a. Good because clear and avoid cost of dispossession and people naturally value what they possess.
i. rent seeking problem: cant gather x and dissipate it for distributional gains
b. Bad because Creates Race: people will be racing to be first which may lead to inefficiency. and could be unfair to those who come later.
c. Now is a weak argument
iii. John Locke v. Robert Nolick
1. Locke (P.14) ⋆
a. Labor Theory: Person owns self, and when mixes labor with something then own that.
b. “as much and as good for everyone else”
c. ex. farming land.
d. doesn’t make sense when finite amount of land
2. Nolick
a. not about leaving as much land, but leaving as much value
b. ex. take land but give as much value to next person by making land useful.
b. By Capture
i. Pierson v. Post (P.8) ⋆
1. Facts: Post in pursuit of a fox, Pierson intervenes and kills it.
2. Issue: Who owns it?
3. Holding: Person who captures owns it.
ii. Ghen v. Rich (P.26)
1. Facts: P shot whale, and the D found and sold it.
2. Holding: Follow custom, which says that person who shoots it owns it.
iii. Keeble v. Hickeringill (P.30)
1. Facts: Plaintiff had pond where he hunted ducks. Defendant (Hickeringill) fired pistol to frighten and drive away ducks.. just out of malice.
2. Holding: K can recover money for malicious interference with his ability to use his land. but Hickeringill could also set up decoys to trap ducks.
iv. Rule of First Capture/Posession
1. Can Create an arms race ⋆
a. ex. Rule with oil is whoever captures oil first owns it. This causes everyone to want to drill fastest and deepest.
b. efficient = value of oil captured minus total cost of capturing.
c. Arms race à inefficiency. Solved by a unitization district – set drilling limits.
2. Water Rights (p.37) ⋆
a. Ground water was governed early on by English rule of absolute ownership, allowing each landowner to withdraw freely – so whoever captured water first was owner.
b. American Rule: Reasonable Use. Same rule except if wasteful/harmed neighbors then considered unlawful.
3. Prior Appropriation: Whoever first captures and puts it to reasonable and beneficial use has a right superior to later appropriators. (developed as result of scarcity of water)
c. Efficiency / Economics of Property ⋆
i. Tragedy of the Commons: common area overused. One present user v. Another Present user.
ii. Tragedy of the anitcommons (P.53): common area underused (unlike commons, where few rights to exclude, in anticommons multiple rights to exclude others)
iii. Poreto Efficiency
1. makes someone better off and no one worse off.
iv. Kalder Hicks Efficiency
1. beneficiaries from change benefit enough that they could compensate losses from change and still be better off.
v. A package of Kalder Hicks Efficient chanes can be Poredo Efficient (if end product is Poreto Efficient)
1. ex. Good custom will benefit everyone overtime: Looking at Ghen v Rich depending on if you are harpooner or finder you will either benefit or not, but given the custom will be efficient over time.
vi. Harold Demestz Theory of Property Rights (P. 39) ⋆
1. Externalities – (P.46)
a. Problem: Present use v. Future use, or tragedy of commons etc.
b. Positive: Total benefit is greater than the cost
i. ex. Cost- $50, Benefit to me-$40,Benefit to you $20. However while total benefit is>cost, wont engage in this activity because only care about self.
c. Negative: externalities may cause things to be inefficient.
i. ex. Doing something costs me-$50, Benefit to me-$70, Cost to you-$30. This is inefficient but I am still motivated to do it.
d. How solve a problem of inefficiency caused by externality? ⋆
i. get rid of externality by forcing person to take it into account. Can do this through tax or through contractual bargaining.
1. Through Tax: Find the cost of the externality and charge it so it becomes internalized.
2. Through Contractual Bargaining
a. Coase Theorem: In world with no transaction costs, every legal rule would lead to an efficient result. whether efficient or inefficient transaction. because people would be forced to take externalities into account through negotiation. so to encourage private solutions to externality problems have to lower transaction costs.
i. Efficient ex. cost to me – $50, Benefit to others-$80: others will pay up to $80, I will accept anything above $50
ii. Inefficient ex. Cost to me- $80, Benefit to others – $50: Wont take on cost, could pay others anything between 50-80
iii. works between present and future users as well.
e. Time: Present actions can have external effects on future users.
f. Pecuniary (monetary): Competing using externality – external effects are accounted for in the price.
g. Pure: Cost inflicted that don’t have to be held accountable for.
vii. Invisible Hand of market
1. we would use whatever is cheaper because those prices are determined by which products are needed more for other things… don’t need to think of which resources are needed more later etc. because prices reflect it already.
a. socialism has to look at other market prices from other capitalist nations. (can turn out to be costly because our supply and demand different)
d. Property Rights
i. Prop rights will evolve in situations where the benefit of property rights will exceed cost of setting them up and enforcing them. (develop to internalize externalities when th
yourself?
ii. Locke stated that we owned ourselves. Turning yourself into a “thing” (which we are usually against).. so do we have property in ourselves?
iii. Moore v. Regents of University of California (P. 70) ⋆
1. Facts: Moore was a cancer patient at UCLA med center where doctor removed blood/other fluids which eventually became a cell line and was patented for commercial use. Moore brought various causes of action including conversion, breach of fiduciary duty, and lack of consent.
2. conversion: tort that protects against interference with possessory and ownership interests in personal property.
3. issue: were the cells Moore’s personal property?
4. Holding: Not conversion but was malpractice (breach of fiduciary duty). For conversion must establish an ownership or right of possession. Did not expect to retain possession of cells following their removal, and did not retain an ownership interest in them.. It was not his property after it was removed. No cause of action under conversion, but may prosecute on theories of breach of fiduciary duty or lack of informed consent.
5. Discussion: We don’t want to hinder inventive efforts of researchers. Don’t want to say body parts are property because property could be sold. (however notes say that this is not nec. true because something can be property for one purpose but not another)
6. Dissent. The Plaintiff’s body is unique and based upon ethical and equitable concerns the Plaintiff should have a proprietary interest in the cells and tissue of his body.
7. Concurrence. The Plaintiff wishes to have a legally recognized right to sell portions of his body for profit, and such a result is immoral.
iv. Sale of Organs – P.85 ⋆
1. Restricted by statutes
2. Pro: economic argument: trade between two people, one needs to sell the other needs to buy could help poor people, and those who need organs.
3. Con: would be corrupt.. slippery slope.
4. Currently we gift organs – gifts are of highly quality than what would be sold, but not enough from that and it cant be relied upon. But if let people sell they would sell faulty organs, no longer doing it out of kindness.
v. Sale of Labor
1. Instantaneous Sale of Labor Services: Plenty of this/ is ok.
2. Contract to sell labor services: This is more of an issue because have to work for someone (contractually bound), even though voluntary to engage in contract it is a slavery of sort However, it is generally accepted as ok because of damage liability.
3. Specifically enforceable contract to provide labor services: most controversial
a. apprenticeships: not used anymore, now would probably be regarded as indentured servitude.
b. Indentured Servitude: promise to work to get trip paid for. not accepted anymore.
c. Military Service: Still have remnants of this. Commit certain time to military and can be forced to follow through.
d. Prohibitory Injunction as Enforcement: ex. can get prohibitory injunction to only play for one team but this cant be forced. only available to unique employees.
