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Property I
Villanova University School of Law
Aagaard, Todd S.

Property

Aagaard

Spring 2014

I. Introduction

1. Conceptions

a. Property as a right to a thing good against the world

b. Property as a collection (bundle) of rights, w/ content that varies re: context & policy choices

2. Theories

a. Penner – The Idea of Property in Law

i. Exclusion thesis: property law is about the right to exclude (to be able to enjoy use, need right to exclude)

ii. In rem – rights respected by everyone (torts); in personam – rights respected by small group (contract)

iii. Right to exclude gets you to right to use (don’t want one without the other)

iv. Could use to explain Jacques – right to use includes potential use; protecting any potential right to use with right to exclude

v. Doesn’t really explain Barnard/Hinman because they end up not being able to exclude

vi. B&P critique: although it’s relevant to concept of exclusivity, Penner doesn’t go far enough (the importance of stable ownership ensures value of land)

b. Grey – Disintegration of Property

i. Bundle of rights thesis: right to use/exclude can’t be given to everything

ii. Penner’s single owner/exclusion thesis doesn’t explain property law any more in a capitalist economy (all we have left is bundle of rights)

iii. Doesn’t explain Jacques case

iv. Explains Hinman/Barnard – protecting right to exclude would halt flights (don’t need the stick so we aren’t giving it to you – social balancing)

v. Katz’s critique: ownership isn’t a concept that constrains judges in the resolution of use of conflicts

vi. B&P critique: emphasizes the importance of establishing property rights, regardless of whether they are intangible

c. Katz – Exclusion and Exclusivity in Property Law

i. Exclusivity thesis – owner’s agenda

ii. Owner’s agenda include right to exclude, but isn’t the only thing included in owner’s right (can apply to intangible property unlike bundle of rights)

iii. Critique of exclusion thesis is that it’s a piece of the puzzle, but it isn’t wide enough (doesn’t encompass all the important things)

iv. Best for explaining Jacques case – owner’s should be allowed to set the agenda

v. Can explain Barnard/Hinman – interference with agenda only if Hinman’s build building (otherwise no agenda over the sky)

d. Bell and Parchomovsky – Value Theory

i. Value theory: looking at utility and stability – care more about utility, but recognize that you need stability (not just weighing the utility of each party)

ii. If people are breaking property laws – has to be enforced for reasons of stability (so people don’t have to worry about protecting their homes – can go to work/be socially productive)

iii. Property protects people because they benefit from being able to transfer

iv. Case-by-case assessment would create instability (takes it a step further than Penner)

v. Jacques – owners’ idiosyncratic values and bargaining position are protected (not about utility in that case – B&P would recognize that)

vi. Hinman/Barnard – depends how you’re measuring value

Penner

Grey

Katz

B&P

Penner

X

X

X

Grey

X

X

Katz

Broader

X

B&P

X

Using Theories to explain Jacques, Hinman, Barnard:

Penner

Grey

Katz

B&P

Jacque

Right to exclude, fundamental rights need protecting

Agenda setting, best theory for the case, owners should control their property’s use

Value theory – P thinks crossing his land will diminish value

Hinman and Barnard

Right to use is ground for right to exclude (don’t use airspace)

Decide based on property rights in context, allows for variation, bundle of rights

Agenda setting, best theory for the case, owners should control their property’s use

Value

e. Coase Theorem

i. Main idea: if parties have property rights and there is a conflict, then parties can negotiate terms beneficial to both if transaction costs are low/nonexistent

ii. Reciprocal (but causation and fault aren’t the same)

iii. Optimal result: maximize overall value

1. Optimum allocation of resources; if contracting is costless, parties will keep contracting to modify the initial assignment of rights until they have exhausted all possible deals that would be to their mutual advantage

2. Final stopping point will be the using of the resources that creates the greatest joint wealth (because once this is reached, neither can offer the other a deal that will make them both better off)

iv. Doesn’t mean that the liability outcome doesn’t matter (have to know your rights to bargain effectively; outcome will affect your bargaining power – winner/loser)

v. Transaction costs – ID’ing other party, approaching other party, negotiating terms, monitoring compliance with terms)

1. Prevent parties from negotiating to an outcome that overcomes the law

2. Legal rules should be designed so that results are what people would agree to if transaction costs weren’t an issue

vi. Examples

1. Hinman suffers in the amount of $90K per year when UA flies low over his property; UA benefits $100K per year by flying over Hinman’s property. H sues UA and wins. If they settle for $95K that’s the optimal result for both because both benefit and get what they want/what’s better than before

2. Depends on what it’s worth to each party (that’s what they’ll be willing to negotiate to)

3. In real Hinman case – the value of flying over is greater to UA than the value Hinman gives to not having the planes fly over

3. Damages

a. Nominal – when you can’t monetize the loss

b. Compensatory – when you can prove a monetary loss

c. Punitive – to punish/deter

II. Trespass

1. Definition

a. Elements

i. D enters P’s land/property without permission

ii. Deprives of possession of property (including

as no right to occupy P’s land

3. Facts: P sued when D built factory whose foundations extended 1 inch on to P’s land

ii. Gold Press v. Rylands Rule (balancing approach): 1) D’s encroachment is slight and unintentional (requires good faith); 2) P’s use is not affected/his damage is small and fairly compensable; and 3) cost of removal is so great to cause grave hardship or render removal unconscionable

1. P gets damages, not an injunction

2. Rejects Pile’s absolutist approach

3. Facts: P sued when D constructed a building whose foundations extended onto P’s land by 3.5 inches

iii. Unintentional (good faith) encroachment causing slight damage to P and grave hardship to D to remove – courts generally award damages, not injunction (Golden Press)

iv. Building encroachment becomes continuing trespass once encroacher knows true property lines and the structure remains

v. Encroachment is trespass regardless of reasonableness or harm caused

6. Restitution & Mistaken Improver

a. Restitution = law governing non-bargained for agreements

b. Elements for restitution [note: it takes 2 to make a claim for restitution]

i. Enrichment of D

ii. At expense of P

iii. Under circumstances that are unjust

c. Mistaken Improver – A mistakenly improves B’s land/fixtures belonging to the landowner

d. Producers Lumber v. Olney: If person erects an improvement on another’s land in good faith belief that she owns the land and trespasses on land and destroys the improvement then they’ve committed waste and the improver has to pay the value of the destroyed waste

i. Prohibits the destruction of improvements made in good faith without the knowledge or consent of the landowner (if building can be removed without great injury to building or land, court may permit improver to move it)

ii. Court wants to punish waste and self-help (in PL v. O, D used self-help)

e. Olwell v. Nye & Nissen Co.: Restitution = you get benefit to D, rather than harm to P; has to be an unjust benefit to D in order to have restitution

i. Olwell – Right to exclude makes D’s benefit unjust/makes this an unjust enrichment case and the basis for a restitution claim

ii. Restitution = must be unjust benefit (an action for restitution arises out of a duty imposed by law developing on D to repay an unjust and unmerited enrichment)

iii. In Olwell, unjust enrichment applies because D benefited from its use of the machine and P incurred a loss of his exclusive rights to use his property

f. Policy – not wasting a good house just because it doesn’t have value to P or D (it has value to someone); makes potential improvers more careful

*Defense to trespass = necessity (see section 5 of outline)