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Property I
Wayne State University Law School
Dolan, John

Property – Professor Dolan

Winter 2013

Chapter 1: What is Property?

· Bright Line Rule

o When something is now owner, whoever gets there first owns it.

o “First in time, first in right”

Section 1: Legal Theory, Economics, and Philosophical Answers

· Robert H. Lowie – Incorporeal Property in Primitive Society

o Disputes Morgan’s theory (early civilizations did not have a notion of property)

o Infants (18 and under) cannot own property – no cause of action (candy example – law does not recognize that candy belongs to the child, even though an ordinary person would think so)

· Edwin R.A. Seligman – Principles of Economics

o Occupation

o Natural Rights – this was overruled probably because it was abused in the early ages

o Labor

o Social Utility

· Jeremy Bentham – Theory of Legislation, Principles of the Civil Code

o Property is nothing but a basis of expectation

o Should this be supplemented with the natural rights theory?

· Garret Hardin – Tragedy of the Commons (Sustainability)

o Suggests the need for social control or intervention in situations where individual rational decisions eventually will produce collectively irrational results… (Unlimited à limited)

o Tragedy: “when social stability (threats of war or disease no longer threaten numbers) is achieved, the rational man has incentive to increase his resources without limit in a limited world.

§ Taking something away from the commons until it is destroyed

o Pollution: Tragedy in reverse

§ Adding something into the commons until it is destroyed

o Property Rights – mechanism for avoiding the tragedy

§ Want people to produce, but need to protect the fruit of their labor through property rights. Property rights create incentives to use resources efficiently.

§ How to Avoid the Tragedy with Property Rights:

· Privatization – auctioned to highest bidders. Market will provide incentives to transfer the property to maximize efficiency.

· Auction Right of Access – auctions access but will not exceed capacity

· Alternative allocation – merit/lottery/first come basis

· Richard A. Posner – Economic Analysis of the Law

o You cannot have property rights unless:

§ Universality

§ Exclusivity

§ Transferability

Section 2: Judicial Answers

· Kremen v. Cohen Network Solutions

o Rule: Domain name is viable property. Therefore, it does not need to be reified, and reification does not apply. Domain names constitute as intangible property interests subject to conversion under California law.

§ Reification – RST 2nd Torts Section 242: There is a conversion of intangibles; when they are merged (that is, the right to the intangible is represented by a document). The document reifies the intangible; the document itself becomes the interest. The document has value itself and the law will protect it. When the document moves, the interest moves with it.

§ Conversion – to establish conversion, P must show: (1) ownership or the right to possession of property, (2) wrongful disposition of the property right, and (3) damages.

· (2) to establish a property right, there must be: (a) an interest capable of precise definition, (b) it must be capable of exclusive possession or control, and (c) the putative owner must have established a legitimate claim to exclusivity.

o What is Property? Remedies inform rights. Therefore, we do not care whether you have a contract or not – we care about the remedies.

· Moore v. Regents of California

o Rule: Conversion claims do not apply to tissue removed from your body. An individual does not retain title or ownership rights in bodily tissue, fluids, and organs such that a patient may rely on the tort theory of conversion in a suit against medical personnel for using the harvested or removed tissue, fluids, and organs for pecuniary gain.

§ Conversion – strict liability tort. Any innocent party who processed the materials would be liable, and this would hinder beneficial research in this field. You are liable for the value of damages for the value of the property at the time of the conversion.

§ Body parts are not property – you can give your kidney away, but you can’t sell it.

Chapter 2: Attributes of Property

· Three General Attributes:

o Right to exclude (exclusivity)

o Right to transfer to others (transferability)

o Right to use it (universality)

Section 1: The Right to Exclude

· Scholars on Exclusivity

o William Blackstone – exclusivity is essential and absolute

o Rose – There must be a balance of interests. There is no such thing as absolute exclusivity. It is made up of: individual rights, shared rights of other parties, rights shared with the larger community.

· Jacque v. Steenberg Homes, Inc.

o Rule: Property owners have a right to exclude others and exercise dominion of their property. If you tell someone not to enter or have a no trespass sign, then a trespasser can be held liable for criminal proceedings. On the other end, you are always civilly liable, regardless of how you get on the property because trespass is a strict liability tort. Courts will protect those rights, even if there is no actual damage but the award is given because your rights have been imposed upon.

§ NOTE: Here, there was no actual damage to the property but in order to award punitive damages, you must have actual damage. Therefore, the court awarded $1 in nominal damages to be able to impose punitive damages. Dolan says sometimes it is advisable to tell the client to just “deal with it” because the costs of litigation will outweigh the damages

· State v. Shack

o Rule: The right to exclude others is not absolute. State property laws cannot be applied to keep people from visiting migrant farmworkers.

§ Property rights serve human values and should not subvert human rights of people on their property. In each case, the court weighs the interests of the landowner (in privacy, productivity, and security) against the public interest.

o This case is important because it narrows the rule of trespass. The holding here proves Rose’s theory of exclusivity is predominant over Blackstone’s.

· Intel Corporation v. Hamidi

o Rule: Under CA Law, trespass to chattels does not encompass an electronic communication that neither damages the recipient computer nor impairs its functionality. To bring a trespass to chattel claim, there must be some actual harm, or threat of future harm (impair its usefulness or availability). Otherwise, there must be deprivation of chattel for some significant period of time.

o Conversion v. Trespass to Chattels

§ Conversion – normally the remedy is the full amount of the property

§ Trespass to Chattels – the remedy is the amount of damages

· Comparing Jacque & Hamidi

o In Hamidi, there was clearly no conversion, just use of property. But, use along is not enough. In Jacque, there was no real damage, but court gave relief – can’t use the land if you don’t close the gate. Are these cases consistent? The potential damage in Jacque is much greater than the potential damage in Hamidi (according to the majority). Real estate is more sacred than chattles.

Section 2: The Rights of Disposition (Transferability)

· General:

o Like exclusivity, right to transfer is not absolute. If you cannot sell something it has no value. For example, if somebody gives you a Corvette you do not want, but tells you that you are not allowed to sell it. The Corvette is now “worthless.” This is called “restriction on alienation,” which means the property is limited regarding who you can sell it to.

· Jones v. Alfred H. Mayer Co.

o Rule: Congress may ban private owners from racially discriminatory sale of their property.

§ This case stands for the proposition that American law often subverts the individual’s right to do whatever he wants with his property to the public good. Even “absolute” owners cannot use their property in ways that undermine the law. At one time, ownership rights were more absolute and less dependent on public policy. Back then, the theory was that “a man’s home is his castle,” to do as he pleases with it. Still, no society ever allowed owners absolute freedom to abuse their property. Today, modern law balances the individual’s ownership rights against those of society and the public interest, with the latter often winning.

§ Civil Rights Act of 1968 – The 14th Amendment applies usually only to state action, but this act prevents state and private owners from such actions. If the phrase, “everyone shall have the same rights as white people” only applied to states, it would be undermined. The Fair Housing Act of 1988 expanded protection to include sex, religion, national origin, race/color, families with children, persons with disabilities.

· Restrictions on the Right to Use

o Land use controls imposed by government – zoning, subdivision ordinances, environmental regulations, limits on heights o building, etc.

o Covenants that are privately imposed – restrict the uses of land in residential subdivisions and condos. Usually imposed by the original developer.

o Common Law decisions – ex. doctrine of nuisance, which requires that the use of land does not unreasonably injure the land of another.

Chapter 3: Objects and Classifications of Property

· What are objects of property?

o Most external things of the world (land and chattels) and some intangible things (bank accounts and websites). In the modern world, intellectual property is also recognized (patents, copyrights, and trademarks). Some things, such as illegal weapons/drugs or the ocean are beyond the right of private o

erican occupied land by either purchasing occupation rights from them or by conquering them and pushing them aside. In either case, the Native Americans could not transfer title to the lands they occupied to any person or entity other than the U.S. or the several states In other words, proper legal title of land owned by Native Americans can be gained only through and from the government. What is obviously ignored here, however, is the falsity of the idea that Europeans discovered the New World. The underlying suggestion, touched upon in the Court’s somewhat rambling opinion, is that true power flows from the barrel of a gun.

§ U.S. gets title form the notion that the King owns everything and the land was transferred to us (Feudal System).

· Richard T. Ely

o Property is exclusive in its nature and not absolute… it excludes others but it is not without limitation or qualification. There are two sides to private property: (1) individual side; (2) social side (essential – taxation and domain).

· Morris Cohen – Property & Sovereignty

o Cohen discusses the “moral v. immoral” aspect of property, however this is no longer part of our legal vocabulary.

o The theory of the natural rights of the individual took not only an absolute but a negative form; man has inalienable rights, the state must never interfere with private property, etc. The state, however, must interfere in order that individual rights should become effective and not degenerate into public nuisance.

o To allow people to do whatever they want with their property would make it valueless: (1) limitations of private property are necessary for public safety, peace, health and morals, as well as for those enterprises like housing, education, the preservation of natural resources, etc, which the community finds necessary to entrust to the state rather than to private lands; (2) living in a free land economy we have lost the sense of how exceptional in the history of mankind is the absolutely free power of directing what shall be done with our property after death; (3) at no time can the state be wholly indifferent to the use which the owners make of their property; (4) no absolute principles of justice require direct compensation for taking away a man’s property.

· Shelley v. Kraemer

o Rule: State judicial enforcement of private agreements is “state action,” As that term is construed under the Fourteenth Amendment and is thus subject to all 14th Amendment-based limits on state action. It cannot be doubted that the 14th Amendment protects the rights to acquire, enjoy, own and dispose of property. Equality in the right to enjoy property rights was regarded by the Framers as an essential pre-condition to the realization of other basic civil rights and liberties which the Amendment was intended to guarantee.

§ State action, as that phrase is understood for the purposes of the 14th Amendment, refers to exertions of state power in all its forms, including this form. In granting judicial enforcement of such restrictive covenants, the States have denied the petitioners the equal protection of the laws and that, therefore, the action of the state courts cannot stand.

§ NOTES: (1) Regarding restrictive covenants, they run with the land. If A sells to B, B is now bound by the covenant. (2) If a city made a restrictive covenant, then it is illegal. Cities are given their power by the state. Same applies to universities that are made under the state constitution. (3) You CAN discriminate sometimes, but you need to have some justifiable basis for it. For example, putting “Christian roommate” in an ad is allowed. This is private, not public. However, the city or the state (or anyone getting power from the constitution) cannot do this.

· Ross D. Netherton – Control of Highway Access

o Demands which public use and private property may make upon each other are constantly changing. These situations are sensitive to economic factors and social opinion than most other legal concepts.