2009 – Property Outline (Balganesh)
I. WHAT IS PROPERTY
A. Two Conceptions of Property
1. Property as a right to a thing against the world
a. Penner: Right to exclude, grounded in our interest in the use of property (we exclude
so that we can use)
b. Minority rule seen in the right to exclude
2. Property as a collection (“bundle”) of rights, with content that varies according to
context and policy choices
a. Grey: By nature, no property is absolute. Property interest is a bundle of rights. You
never know what is in the bundle until something happens. This will lead to the
decline of property as a central category of legal thought.
b. Dominant theory because of preeminence of nuisance law, emergence of utilitarian
balancing and efficiency rules, eminent domain
3. These conceptions don't give a basis for property – does it stem from reasons of
efficiency, morality, natural law, social norms, autonomy, something else?
4. Case: Jacque v. Steenberg Homes (pg. 1)
a. Facts: Despite protests, Steenber Homes delivered a mobile home across the
property of the Jacques
b. Procedural posture: Suit for intentional trespass. Jury awarded $1 in nominal
damages and $100,000 in punitive damages.
c. Issues and Holdings
i. Whether an award of nominal damages for intentional trespass of land (rather
than compensatory damages) may support a punitive damage award – yes
ii. If so, whether the law should apply to Steenberg or only prospectively – applies
here
iii. If it applies here, whether the $100,000 punitive damages awarded by the jury
are excessive – they are not excessive
d. Reasoning:
i. Right to exclude is fundamental to the notion of property – must enforce that
right
ii. Even where there is no physical damage, every interference with the right to
exclude is sufficient harm for the purposes of property
iii. It is in the interest of society that people have some kind of security in their
possession and right against trespass, so the state needs to enforce it
e. Comments:
i. Probably motivating the court is autonomy
ii. Minimal irreducibility of ownership – the property system defers to the owner's
reasons for something. This is the basis of the autonomy justification
iii. Right to exclude is closely connected with the autonomy conception (an
efficiency theorist would have allowed the defendant to buy the right to enter)
iv. Necessity defense – an exception to the absolute right to exclude. If there are no
alternatives at all, not intentional trespass (because no intent). But what counts
as necessity? Physical impossibility, economic impossibility, moral
impossibility?
5. Case: Hinman v. Pacific Air Transport (pg. 9)
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2009 – Property Outline (Balganesh)
a. Facts: Defendants have flown planes repeatedly over plaintiff's tract at low altitudes.
Plaintiff sued alleging trespass and requesting an injunciton and damages.
b. Holding: Use of airspace only constitutes trespass when it creates a barrier to
possession or full enjoyment of the property
c. Reasoning:
i. Ad coelum doctrine is not the law in CA – it is a legal fiction and was never
really the law taken literally
ii. The doctrine arose in a time when people's use of airspace was confined to
reasonable limits, really there can be no ownership of infinity
iii. Possession of property is limited to what people have dominion over – can't have
dominion over more than one can use
iv. If the airplanes constitute a barrier to plaintiff's full enjoyment of his property, he
may be entitled to relief, but otherwise, there is no trespass
d. Comments:
i. Efficiency/cost-benefit analysis – opposite ruling would put airline industry at
the mercy of landowners
ii. Court begins to move away from the right to exclude approach associated with
trespass, but not completely; still frame possible damage in terms of trespass
iii. Nuisance would be the complete move to bundle of rights approach
B. Trespass and Nuisance
1. Nuisance – a tort law doctrine that connects tort law to the principles of property
a. Corrective justice or trying to balance utilitarian concerns?
2. Trespass is said to protect the interest in possession of land (possessory interest, right to
exclude)
a. Simple on-off switch based on right to exclude, no balancing
3. Nuisance is said to protect the use and enjoyment of land
a. Normally relies heavily on balancing and associated with cost-benefit analysis
4. Private nuisance (from Hendricks): “a substantial and unreasonable interference with the
private use and enjoyment of another's land... that is intentional and unreasonable,
negligent or reckless, or that results in abnormally dangerous conditions or activities in
an inappropriate place.”
a. Should look not only at the harm, but also at the nature of the interference
(Hendricks)
b. Intentional: the actor knows or should know that the conduct is causing a substantial
and unreasonable interference
i. About knowledge, not about malice
ii. Constructive knowledge
iii. Cannot always know that the action will be unreasonable
c. Unreasonable: balance the harms and benefits to each party (gravity of the harm and
the social value of the interference) (Hendricks)
i. Doesn't look at minimal irreducibility of ownership or right to exclude
ii. Rather, it is a cost-benefit analysis, but one often done through speculation, not a
real full analysis
iii. Do not look at temporal priority
iv. This views property from an efficiency perspective
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2009 – Property Outline (Balganesh)
5. Unlike trespass, harm is essential to the concept of nuisance
6. Other theories of nuisance:
a. Doctrine of coming to the nuisance – will determine who started first. The other
person won't have rights because he came later and the thing was already done
i. Could lead to parties trying to preempt each other just in case
ii. But with two natural uses, what other way is there to decide?
b. Nuisance as a little “invasion”
i. Then the septic system would be a nuisance (particles) but not the water well
c. Neighborliness – something done out of malice will be considered a nuisance
d. Normal use theory – but what is more natural, a well or septic system?
7. Case: Hendricks v. Stalnaker (pg. 23)
a. Facts: Henrickses wanted to put in septic tank, but Stalnakers beat them to it with a
water well. Hendrickses sued asking that the well be declared a nuisance.
b. Holding: The well does not constitute a private nuisance
c. Reasoning:
i. A private nuisance is “a substantial and unreasonable interference with the
private use and enjoyment of another's land... that is intentional and
unreasonable, negligent or reckless, or that results in abnormally dangerous
conditions or activities in an inappropriate place.”
ii. Should look not only at the harm, but also at the nature of the interference
iii. This interference is not negligent or reckless, and does not result in abnormally
dangerous activities (so left with intent and reasonableness)
iv. To establish reasonableness, must weigh the gravity of the harm and the social
value of the interference
v. Well was intentional and a substantial interference
vi. But the value of the two proposed activities is equal, if into weighted towards the
well (because it is the septic system that needs the extra buffer space and so
interferes across the property line)
d. Comments:
i. Temporal priority is not a factor of reasonableness (as the court frames it), yet
the court looks at the situation ex post, not as if the well hadn't been built yet –
doesn't make sense
C. Property and Equity
1. Four factors that can create a need for equity (from E-Bay v. Merck Exchange):
a. Inadequacy of ordinary remedies
b. Irreparability
c. Balance of convenience/hardship
d. Public interest
2. General Principles:
a. Equity will only help those who come with clean hands
b. Equity will only be provided when there is no remedy at law
3. Property Rules and Liability Rules
a. Calabresi and Melamed
b. Property Rules – the government lets private parties arrange any transfer at their
agreed upon value. Property cannot be taken without holder's consent. Injunctions,
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property law, personal injury law. (Pile)
c. Liability Rules – the government will mandate the transfer if the purchaser is willing
to pay the price it sets. Damages, torts, contracts, eminent domain. (Golden Press)
d. Inalienable Entitlements – the transfer of entitlement is restricted. People, body
parts, cultural artifacts.
e. Court first decides whose is the entitlement, and then whether to protect that
entitlement with a property rule or liability rule:
Plaintiff
Property Rule
Liability Rule
Pile
Golden Press
Defendant Hinman
f. Make these decisions based on:
i. Economic efficiency
ii. Distributional preferences
iii. Other justice considerations
g. Property rules guard autonomy interests
h. Normal default is liability rule – damages, especially after E-Bay v. Merck
4. Repeated trespasses
a. There is a remedy in equity when there is a series of trespasses so as to avoid the
trouble of a series of suits, or when the trespasser will continue to trespass despite
the remedy at law (like continuous trespass, a series can be given injunctive relief)
i. Unquantifiable – Damages are inadequate where the harm caused is
immeasurable or unquantifiable
ii. Numerocity of actions – When there is going to be a series of trespasses that
would require many actions
b. Case: Baker v. Howard County Hunt (pg. 42)
i. Facts: Defendant allowed dogs to run through plaintiff's land, disrupting his
chickens and scaring his wife. This happened on numerous occasions. Bakers
filed suit for injunction.
ii. Holding: Equity may provide for injunctive relief against trespass.
iii. Reasoning:
(1) Common law holds that if a dog causes damage to another's property, the
owner is only liable if he knew that the dog had a propensity to commit
damage or if he led the dog to a place where it was unlawful for the dog to be
(2) The dogs were trespassing since the owners knew that they could cause
damage (they had been warned) and they knew that they would go onto the
land in following the scent (so at fault either way)
(3) Baker did not act improperly in shooting a dog because he had the right to
protect his person or property or others' persons
(4) There were numerous and damaging trespasses
(5) The resulting damage cannot be remedied in an action at law
(a) Many damages were intangible – fright to Mrs. Baker, interference with
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experiments, creating refuge for small animals, quiet enjoyment
(b) Would need to take multiple actions, each time for trifling damages
(c) Remedy at law would not be as efficient or practical in establishing
justice
(6) There is a remedy in equity when there is a series of trespasses so as to avoid
the trouble of a series of suits, or when the trespasser will continue to
trespass despite the remedy at law
5. Building Encroachments
a. Rule (from Golden Press): For a willful encroacher, a mandatory injunction would
ordinarily follow. But for an unintentional encroachment (good faith), the court
should consider relative hardship (balance of convenience)
i. Shift from right-to-exclude approach of Pile
b. Case: Pile v. Pedrick (1895) (pg. 50)
i. Facts: Due to error of the district surveyor, defendant built a factory of which the
foundation stones were 1 3/8 inches over their property line with the plaintiffs.
Plaintiffs refused offer to make it a party wall or to knock off the extra stone
from the plaintiff's side.
ii. Holding: Injunction (to remove the building) was correct
iii. Reasoning:
(1) Defendant had no right to have his building on plaintiff's land
(2) Judge can look at all of the circumstances of a case and the conduct of the
parties in determining costs (which were split here) for an equitable remedy
iv. Comments:
(1) Seems to take the right-to-exclude approach
(2) No choice but to let plaintiff insist on removal – it is intentional trespass
(3) Value of autonomy, despite extreme hardship on defendant
(4) But flexibility of equity allows playing with the costs, at least
c. Case: Golden Press, Inc. v. Rylands (1951) (pg. 51)
i. Facts: Foundation of defendants' building cross 2-3.5 in. over the property line
ii. Holding: Injunction is not an appropriate remedy in this case
iii. Reasoning:
(1) Though an injunction can normally be used to compel removal of
encroaching structures, each case must be considered individually
(2) If the encroachment was intentional, the court should order an injunction
regardless of costs
(3) But where the encroachment was unintentional, the court should consider the
hardship imposed by such an order
(4) Hardships should not be balanced equally
(5) Here the encroachment is unintentional and slight, the plaintiff's use is not
affected and his damage is small and compensable
(6) The cost of removal would be great
(7) Assumption is good faith
(8) No evidence that the plaintiff attempted to obtain an injunction before
completion of construction, and plaintiffs refused to allow removal from
their side
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(9) Would be unconscionable to require such a costly removal given the small
benefit to the plaintiffs
(10) No injunction here, but plaintiffs can recover damages
iv. Comments:
(1) Views of efficiency and morality
(2) Equitable relief requires balancing test
(3) Exception for when defendant acted in bad faith (possibly for deterrence)
(4) No longer using rigid definition of right to exclude (though possibly still
using that somewhat)
(5) Court holds bad faith against plaintiff (for not allowing removal from their
side or bringing action earlier)
(a) Doctrine of laches – if you sit on your rights, the court will hold it against
you
(6) Conception of property here account for more than just the owner's
autonomy
(a) Waste
(b) Morality – bad faith/good faith
D. Restitution
1. Restitution will follow an action where there is: (1) an “enrichment” of the defendant (2)
at the expense of the plaintiff (3) under circumstances that are unjust
2. Improver has four options:
a. Remove the improvement, paying damages that occur from the removal
b. Be compensated for the improvement
c. Pay the pre-improvement value and become owner of the land with improvement
d. The court will auction off the property and divide the money according to the
respective interests
3. Some courts still hold by old rule and give the landowner the windfall of the
improvement, or he can opt to have it removed (Pile-like remedy)
4. Case: Producers Lumber & Supply Co. v. Olney Building Co. (pg. 68)
a. Facts: Defendant sold land to plaintiff, then forgot and built on it. When defendant
found out, they notified plaintiff but they failed to come to a settlement. Defendant
sent a wrecking crew and destroyed the building without plaintiff's permission.
b. Holding: Plaintiff can collect for the value of the building, the costs of restoring the
land to the pre-building condition, and damages
c. Reasoning:
i. Defendant maliciously destroyed the building
ii. Defendant constructed in good faith, but because of the destruction he cannot
prevail on a plea of improvement in good faith
iii. Old rule was that if someone constructed an improvement on another's property,
the improvement became the property of the landowner without remedy
iv. Now, remedy is available when the person placed the permanent improvement in
a good faith belief that he was the owner of the land
v. Then the options for relief are:
(1) Improver can move the building, if possible
(2) If not possible, court can find the value of the improvement and allow the
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improver to recover that value
(a) Landowner can pay
(b) If unwilling or unable, improver can purchase the land at the preimprovement price
(c) If neither can pay, court can order sale and have the money divided
(d) Or court can give the improver a judgment for the amount with a lien
against the lot
vi. Improver is never authorized to go onto the other's land without his knowledge
or consent and demolish
vii. By doing so, he commits waste, and must pay the landowner for such waste
viii.
Defendant resorted to self help, so cannot now come into court of equity
with unclean hands and try to claim the value of the improvement
ix. Plaintiff never had an obligation to pay the value of the improvement, because
there was never a judgment for that in court
d. Comments: Both the majority and the dissent focus on remedies rather than trying to
grapple with the issue of who owns what (like Golden Press); but it seems that the
dissent would let the improver the right to exclude the landowner from the
improvement
II. ORIGINAL ACQUISITION
A. First Possession
1. Being the first to possess something
a. What is unclaimed by anyone else?
b. What does it mean to possess something?
2. Theory behind possession as a basis of ownership:
a. Notice – the practical matter of signaling to the rest of the world is done through
control and possession
b. Custom – a long established custom that says that possession is ownership is enough
as a matter of efficiency for determining ownership
c. Mixing in skill – Locke's theory; not enough to just declare possession, must go and
actually do the work to get it
d. Incentive – generates incentive for the industry to exist
3. Wild Animals
a. Ferae Naturae – animals are “wild by nature”
b. Ratione Soli – “by reason of the soil,” common law principle that allowed property
owners exclusive privilege to hunt on their land or license hunting to others, but only
applied to game, not to foxes
c. Constructive possession – possession need not be actual physical; you own the
animal if you mortally wound it and are in unequivocal pursuit (Pierson)
i. Mortal wounding and unequivocal pursuit provide dominion and notice
d. Must have possession to use, and use is the basis for right to exclude, so much have
possession in order to exclude
e. Case: Pierson v. Post (pg. 81)
i. Facts: Post found and started to hunt a fox. Pierson killed the fox and carried it
off.
ii. Holding: Post did not, by pursuing the fox, establish a claim to the fox. Thus no
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action against Pierson.
iii. Reasoning:
(1) Fox is an animal ferae naturae (wild by nature), and thus is only acquired by
occupancy
(2) Historical conceptions of occupancy:
(a) Justinian's Institutes – must actually take the animal, even wounding is
not enough
(b) Puffendorf – actual corporal possession (traditional reading of
Puffendorf), or mortally wounded or greatly maimed while the person
who inflicted the wound continues to pursue (more relaxed reading)
(c) Bynkershoek – same as Puffendorf
(d) Barbeyrac – unclear, but not mere pursuit. Depriving him of his natural
liberty and brought within pursuer's certain control (mortal wounding,
trapped in net)
iv. Dissent:
(1) Foxes are a plague on farmers and barnyards
(2) Should encourage hunting and killing foxes
(3) No one will hunt if the fox may be stolen from him in the last minute
(4) Follow Barbeyrac – no need for physical capture, but should go to the hunter
as long as he had a reasonable prospect of taking the fox
(5) He inevitably would have possessed this thing, so he has a right in it
v. Comments:
(1) Constructive possession – possession need not be actual/physical, only need
to mortally wound the animal and be in unequivocal pursuit
(2) Notice is important – a signal to the rest of the world that a person owns
something
(a) Lowers transaction costs by signaling to the rest of the world
(3) Notice and dominion together constitute reasonable custom for ownership
vi. Locke: Labor theory of property. If you mix your labor into something
unclaimed – it becomes yours. Locke did not think the same was true if you
mixed your labor with something that belonged to someone else.
f. Case: Ghen v. Rich (pg. 88)
i. Facts: Whale killed with bomb lance that had identifying marker. Ellis found
whale on the beach and sold it to defendant. Plaintiff hunter sued.
ii. Holding: The plaintiff did establish property rights in the whale by killing it
iii. Reasoning:
(1) This is the common custom of acquiring ownership
(2) A whole industry has grown up around this usage
(3) First actor does the only things possible at the time of the killing – it would
be impossible for him to collect the carcass right away
(4) Without this custom, the industry will die because no one will invest the time
to kill whales they won't own
(5) Examine whether the custom was reasonable:
(a) Time – the custom is established, been around for a long time (in
common law – immemorial antiquity)
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(b) The custom has been effective enough to allow for the large growth in the
industry. Custom is integral to the industry.
iv. Comments
(1) Right in rem created by custom, even with regard to those outside the group
(2) Ellis probably did not know the custom
(3) Court is concerned with in-group and out-of-group categories
g. Case: Keeble v. Hickeringill (pg. 92)
i. Facts: Plaintiff owned a decoy pond to which wild fowl would come, and he
would capture them with nets. Defendant out of malice shot his gun in the
vicinity to scare the birds away permanently
ii. Holding: Cause of action because a person cannot hinder another's business
maliciously, but cannot collect for the fowl
iii. Reasoning:
(1) Plaintiff lawfully uses his property for enjoyment and profit
(2) A person is liable for hindering another's trade or livelihood
(3) A person can compete with another business, but cannot hinder maliciously
(4) However, the plaintiff cannot collect for the fowl – he had no ownership of
them and cannot claim a quantity taken from him
(5) Rather, the action is one against the injury done to profession and skill
iv. Comments: Can collect for what is essentially nuisance, but not for trespass
(taking his ducks)
B. Discovery
1. Discovery gives someone a right to possess something, whereas first possession requires
someone actually to possess something
2. Discovery of minerals on federal public domain land – mining camps
3. Case: Johnson v. M'Intosh (pg. 110)
a. Facts: Indian tribe sold land to Johnson. The US later sold the ceded Indian land to
M'Intosh
b. Holding: The Indians did not have a title that they could transfer to others
c. Reasoning:
i. Discovery gives rise to title (recognized by European nations at the time)
ii. This title gives sovereignty
(1) Sovereignty is the idea that a group or a nation has exclusive jurisdiction and
exclusive control over a territory (often defined as: the absence of a higher
authority)
(2) Sovereignty gives you the exclusive right to extinguish the title of the
occupants – either by purchase or by conquest
(3) The Indians are fierce savages and could not live under the system of the US,
and thus their claims were negated
iii. The title in itself doesn't remove all rights from the occupants, but it does impair
them
iv. The rights of the Indians were impaired in that they could no longer sell their
lands because they did not have sovereignty
C. Creation
1. Usually relates to information – intellectual property
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2009 – Property Outline (Balganesh)
a. Post-production cost of copying or reproducing information is zero, or close to it
b. Information is nonrival – one person's use doesn't inhibit another's
c. So the only reason to give property rights for information is to encourage its further
production
d. Non-excludable – leads to need for de jure control (legal protection)
2. Principal regimes of intellectual property rights are:
a. Patents – applies to new, useful and nonobvious inventions
b. Copyright – applies to original works of authorship
c. Trademark – applies to words or symbols that identify commercial enterprises,
goods, and services
3. Novelty
a. Requires some kind of originality
b. For a patent, need to have: novelty, utility, and non-obviousness
i. These give rise to a property right, but not automatically – must go to patent
office, etc.
ii. US is the only country in the world to have a first-to-invent patent system as
opposed to a first-to-file system
c. Case: Trenton Industries v. A. E. Peterson Manufacturing Co. (pg. 154)
i. Facts: Plaintiff got patent for a high chair. Defendant looked at it and studied it,
thinking to manufacture it for the plaintiff, then returned it. A short while later,
defendant put a similar chair on the market. Plaintiff sued for patent
infringement and unjust enrichment.
ii. Holding: No patent infringement because the new product was not a result of
inventive faculty. Defendant is liable for unjust enrichment
iii. Reasoning:
(1) Patent
(a) To qualify for a patent, something must not only be a new product, but
creative
(b) Something that anyone with the knowledge and skill of a member of the
inventor's profession could have made, will not qualify
(c) If everyone patents every small improvement, industry and innovation
will be crippled
(d) Do not need a stroke of genius, however
(e) In this case, the novelty of the chair was known and disclosed in earlier
patents, even if never marketed, so did not qualify for a patent
(2) Unjust enrichment
(a) If someone communicates an idea with the intention that the other will
use it and compensate him, the other is liable for such use if he
appropriates the idea
(b) Only need an understanding of confidence – not express
(c) Not limited to patentable inventions
(3) Comments:
(a) Supreme Court had created a “flash of creative genius” test that was
eased after the 1952 Act lowered the standard for patents
(b) For a patent, need to have: novelty, utility, and non-obviousness
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4. Misappropriation and Quasi-Property
a. Only expressions are covered by copyright, not the underlying facts or ideas
i. Copying the underlying facts would be plagiarism, but no cause of action for that
b. Case: International News Service v. Associated Press (pg. 135)
i. Facts: Defendant INS bribed AP members to release the AP news to them before
publication and copied the news off of the earliest newspapers and reprinted it in
their own publications. This allowed them to use the AP news on the west coast
as early as the AP members themselves.
ii. Holding: The defendant engaged in unfair competition in copying news from
early editions of the plaintiff's newspapers
iii. Reasoning:
(1) News itself cannot be copyrighted as long as the facts are expressed in
different ways (different words)
(2) The parties are competitors, and each party must conduct his business so as
not to injure the other unfairly
(3) Even though neither can have property rights over news against the public,
therefore, they can against each other
(4) Between them, news must be regarded as quasi property
(5) Defendant's acts are clearly unfair competition
(6) Allowing this would make the industry unprofitable
iv. Holmes dissenting:
(1) Mixing labor to create value is not enough to create property
(2) Unfairness lies only in non-attribution, and that is a kind of fraud
(3) Would enjoin INS from printing the news for a certain number of hours
unless it acknowledges its source
v. Brandeis dissenting:
(1) No copyright to news
(2) Defendant's acts might be improper, but not illegal
(3) This may in fact aid in the dissemination of news
(4) Court should not make a new rule here, it is unequipped to do so (that is for
the legislature)
vi. Comments:
(1) Quasi property
(a) A property right is normally a right in rem (applies to everyone else)
(b) This sort of property is a right in personam
(c) Will apply only to newspapers in direct competition
(2) Why this right?
(a) Because of the time, skill, and energy they invested into the newsgathering process
(b) Lockean justification, but not concerned with Locke's reasons, rather that
there won't be investment in news without this rule
(c) Worried about reaping without sowing
(3) Can't operate against the world generally because that would have First
Amendment implications, only applies to direct competitors
(4) The property right arises only when the defendant does something wrong,
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until then the property right is nascent or nonexistent
(5) Holmes may think that this falls under Locke's “enough and as good”
exception – labor only creates property if there is enough and as good left
over for others
(6) Brandeis uncomfortable with judicial lawmaking and with creating a
property right (in rem) from a dispute between two people
(7) INS v. AP is no longer good law from a doctrinal perspective because Erie
did away with the federal common law, but it has been adopted by state
common law (hot news doctrine – NBA v. Motorola)
5. The Right of Publicity
a. Case: Midler v. Ford Motor Company (pg. 147)
i. Facts: Defendant hired someone who imitated Midler to do a commercial.
Defendant had rights to the song. Many people thought the voice was Midler's.
ii. Holding: Famous voices are subject to protection
iii. Reasoning:
(1) Copyright law does not apply here, nor unfair competition (no direct
competition, nor would the 1-minute commercial curtail her market)
(2) But the voice is closely linked with Midler's identity, and that the defendants
stole
(3) When a company seeks to imitate a distinctive voice of a professional singer
who is widely known, they have committed a tort in California
iv. Comments:
(1) The court seems to be creating a property interest even outside of context (it
can be transferred)
(2) Property right is attached to identity and non-contextual
(3) “What is worth copying, is worth protecting” - this seems to recognize that
the defendant's actions are the triggering event; a right only in context
(debatable, but really it is non-contextual)
(4) Hegelian theory – property interest in oneself
(5) Hegel – personality theory of property
(a) People inject their internal wills or personalities into extrinsic things and
the material world
D. Accession
1. Principle of accession – Ownership of some unclaimed or contested resource is assigned
to the owner of some other resource that has a particularly prominent relationship to the
unclaimed or contested resource
a. “Fruits of our garden, the offspring of our cattle, the work of our slaves” - Hume
b. If you mix your owned resource with an unowned resource, you can expand your
ownership
2. Doctrine of accession – a narrower common-law doctrine that is part of this larger
principle
a. The doctrine that applies when someone mistakenly takes up a physical object that
belongs to someone else and transforms it through her labor into a fundamentally
different object
b. The owner of large goods gets rights over small goods, not vice versa, because there
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is a greater relation to the whole
c. Unclear how different this is than the innocent improver doctrine in land seen in the
Golden Press encroachment case
i. Difference in land and chattel – reversibility, land is divisible and cutting off a
small piece for the improver does not interfere with the primary purpose of the
land
ii. So this is possibly just a special case of the innocent improver doctrine,
regarding chattel that has been completely transformed and is indivisible
d. Case: Wetherbee v. Green (pg. 166)
i. Facts: Wetherbee cut timber from plaintiff Green's land in good faith, relying on
permission from people he thought had the right to give it. He turned the $25
wood into hoops worth $800. Plaintiff filed suit for the hoops.
ii. Holding: Property that has been transformed in good faith belongs to the
transformer if he has significantly altered the identity of the material
iii. Reasoning:
(1) If someone does this intentionally, forfeiture applies – he loses his property
(2) But if in good faith, an accidental mixing happens, there is no forfeiture
(3) Old test to determine whether there was mixing was the rule of identifiability
– can you see the original resource in the new object
(a) But this can be arbitrary – can see the wood in a piano but there has still
been a transformation and significant change in value
(b) This test is outmoded and arbitrary
(4) New test – whether the improvement in value of the new, transformed item is
significantly more than the value of the old, original resource
(5) If the new value makes the value of the original material insignificant, it
belongs to the transformer
(6) Here the old value was $25, new value is $800, even though you can see the
wood in the hoops, this was a significant transformation
(7) Ownership gets automatically transferred to the person making the most
significant transformation to the resource. The new owner has to compensate
the original owner.
iv. Comments:
(1) Lockean – the labor mixed has increased the value and thus transferred
ownership
(a) But really unclear what Locke would say – Locke was worried about the
stability of ownership and was really talking about claiming unowned
land
(b) Where forfeiture applies: Nozick's pouring out tomato juice in the ocean
does not give someone the ocean (as opposed to Locke)
(2) Unclear if relative value (51%) would be enough, or if the transformer needs
to put in significantly more value
(3) Balance this against wanting people to be secure in their reliance interest so
they will invest
3. Doctrine of increase – Hume's cattle example; without contrary agreement, partus
sequitur ventrem (the offspring follows the mother and belongs to the mother's owner
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4. Ad Coelum Rule
a. From the center of the earth to the sky
b. Case: Edwards v. Sims (1929) (pg. 175)
i. Facts: Edwards discovered a cave under his land and turned it into a profitable
tourist attraction. Lee, an adjoining landowner, filed suit claiming that part of
the cave was under his land, asking for injunction and damages. Lee sought a
survey to assess which parts of the cave were under his land.
ii. Holding: A court can order the survey of a person's land to determine whether he
violates the ad coelum rights of another
iii. Reasoning:
(1) The matter of dispute can easily be resolved by a survey
(2) It is in the power of a court of equity to order a survey upon showing of
possible trespass
(3) Irreparable damages resulting from that survey need not be given
consideration because the court is not acting erroneously
iv. Logan dissenting:
(1) Ad coelum rule is unreasonable
(2) The rule should be that he who owns the surface is the owner of everything
that may be taken from the earth and used for his profit or happiness
(3) A person should not be able to own that which he cannot benefit from
(4) A cave should belong to him who owns the entrance
(5) Edwards invested the time and money in the cave, it is not justice to ruin that
through a court order
v. Comments:
(1) Majority is endorsing the ad coelum rule, Logan holds like Hinman
(2) Logan uses Lockean justifications as well
5. Fixtures
a. Fixtures – things which, although originally movable chattel, are by reason of their
annexation to, or association in use with land, regarded as part of the land
b. These disputes are most prominent between:
i. Purchaser and seller
ii. Tenant and landlord (landlord wants tenant's addition to remain)
iii. Borrowers and lenders (mortgagor wants the mortgagee's addition after default)
c. Three part test for determining what is a fixture (from Strain):
i. Actual fixation of the chattel to the realty
ii. Evidence that the fixation was intended to be used for the property to which the
chattel was affixed (not just being stored)
iii. The party's intention
d. Case: Strain v. Green (pg. 188)
i. Facts: Greens sold their house to the strains and took with them the hot water
tank, Venetian blinds, certain lighting fixtures, and three mirrors (two of which
were firmly attached to the walls). Greens left a smaller and older tank in place
of the hot water tank that they took, and left other interior lighting in place of the
chandelier they took. Strains sued.
ii. Holding: The lighting fixture and the mirrors that were firmly attached were
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fixtures
iii. Reasoning:
(1) Intentions are taken into consideration, but only those that are expressed or
generally known
(a) Objective intent, unless the subjective intent is evidenced in the facts and
evidenced to other parties (told the party)
(b) So a presumption that a tenant generally does not mean to enrich the
property, whereas an owner does
(2) Three factor test:
(a) Actual fixation of the chattel to the realty
(b) Evidence that the fixation was intended to be used for the property to
which the chattel was affixed (not just being stored)
(c) The party's intention
(3) Lights are an essential part of the house, so the lighting was a fixture
(4) The two affixed mirrors that were ripped off the walls, leaving holes and
discoloration, were also fixtures, though not the hanging mirror
(5) Title to these objects passed with the deed of the house
iv. Comments:
(1) First test of actual fixation – is it a legal test or a factual test
(a) If it is a true factual test, how is it to be calculated – amount of labor
spent in affixing, amount of labor needed to remove, the damage to be
caused in removing, something else?
(b) Or is it a test of what was implied in the contractual terms – implied
contract theory
(c) This seems like merely a legal test – a way for courts to justify their
conclusions ex post facto
(2) Theory of misrepresentation – the way the Greens showed their house made
the Strains believe these things were part of the house
(3) This three part test is the dominant test – but not necessarily any underlying
logic behind it
(4) Presumptions also continue to dominate
E. Adverse Possession
1. When an owner sits on his rights to exclude and the statute of limitations for challenging
the original unlawful entry expires, a new title is assigned in the adverse possessor
a. Applies to both real and personal property
b. Mix of substantive and procedural law – can't enforce substantive rights to exclude
because of a procedural reason, so the courts will allow the other party to
c. Bilateral dispute which results in title being recognized in the adverse possessor,
which title is good against the world at large
d. Possession will relate back to the time of initial entry
2. Five factor test (from Ewing) – possession must be:
a. Actual
b. Continuous
i. Thus the statute of limitations clock has never restarted
ii. Can be done through tacking (usually through privity of contract) (Kunto)
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c. Exclusive
i. Excluding the true owner and others
d. Open and notorious
i. Must be notice to the true owner (Chaplin) – odd that this element is for the
benefit of the true owner, even though the interest that is created operates in rem
ii. Either constructive notice (Ewing – open to the neighbors) or actual notice
should suffice
e. Adverse under claim or color of title or under claim or color of right
i. Adverse means without permission of the true owner
ii. Claim of right means intent to possess – ouster
iii. This by itself does not connote good or bad faith, but some jurisdictions have a
good faith criteria, some a bad faith criteria, and for some the state of mind is
irrelevant
3. Purposes of the rule:
a. Reliance interests that the possessor may have developed through long-standing
possession
b. Discourage owners from sleeping on their rights, encouraging someone to be a
gatekeeper and thus avoiding the abuse of the commons
c. Reduces the transaction costs of determining title to assets that last a long time
4. Case: Lessee of Ewing v. Burnet (pg. 194)
a. Facts: Two parties have a deed for a lot that is useful for its sand and gravel.
Defendant has been using it for 21 years and allowing some and excluding others.
Plaintiff sued for ejectment.
b. Holding: Adverse possession
c. Reasoning:
i. Defendant's use was exclusive – he had commenced actions for trespass
ii. Open and notorious – neighbors all believed that the defendant was the owner
iii. Continuous – no evidence to the contrary
iv. Actual possession – possession is doing with the land what it is suited for; there
need not be a fence, occupancy, or cultivation of the land
v. Adverse under claim or color of title – need to have some claim, otherwise the
entry is trespass
d. Comments:
i. Need ouster (intent to dispossess) as opposed to trespass for adverse possession
(1) Determined based on intent at the time of entry
(2) Use objective context and circumstances to establish the intent
ii. Normally the requirement of actual possession is a factual matter – part of notice
to communicate to the true owner that the possessor has ousted
iii. In this case, the court does not separate its discussion of actual and adverse
iv. So in fact, these are legal tests, not factual ones
(1) Actual possession is based on intent – trespasser v. ouster
(2) Adverse is based on good faith/bad faith
v. Ouster need not be directed at anyone – just an intent to own exclusively
vi. Court says that the type of use (trespass or ouster) is more important than good
faith/bad faith
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vii. Court tries to avoid discussion of good faith/bad faith because of an Ohio statute
5. Case: Howard v. Kunto (1970, WA app.) (pg. 208)
a. Facts: Everyone in the neighborhood had the wrong deed. The Howards found this
out and traded with the Moyers so that they had the deed to the Kuntos' land. The
Kuntos had been on the property for only a year. The Howards sued the Kuntos.
b. Holding: The requisite “continuousness” was present for adverse possession
c. Reasoning:
i. Possession must be in the ordinary way that owners would hold and manage
property of the nature of that in question – thus summer occupancy works in this
case
ii. Though there is no privity of contract, public policy would mandate that the
court allow tacking for purposes of finding the time of entry
d. Comments: Good faith requirement overruled by Chaplin
6. Case: Chaplin v. Sanders (1984, WA Supr.) (online)
a. Facts: Hibbard, the Sanders' predecessors set up a trailer park on their property and
on a strip of land of their neighbors', the McMurrays, who notified the Hibbards of
the error. The Sanders brought the land with vague knowledge of this and an
agreement not to claim that strip – but thought that the clause referred to a different
piece of land. The Sanders kept up the land in question. The Chaplins (successors
of the McMurrays) sued for encroachment, wanting to build on the land.
b. Holding: There was adverse possession
c. Reasoning:
i. Throw out the old “good faith” requirement as not serving the purposes of
adverse possession
ii. Claim of right element requires only that the claimant treat the land as his own as
against the world throughout the statutory period
iii. Permission to occupy by the true owner will still negate the element of hostility
iv. The use was open and notorious and the true owner had actual notice
d. Four part test for adverse possession
i. Exclusive
ii. Actual and uninterrupted
iii. Open and notorious
iv. Hostile (or adverse) and under a claim of right
e. Comments:
i. Rejected the good faith/bad faith test
ii. Only requires that the claimant treats the land as his own
iii. Objective test, his subjective belief regarding his true interest in the land and his
intent to dispossess or not, is irrelevant to this determination
iv. Permission by the true owner will still negate the element of hostility, however
(1) This is either because permission speaks to the mindset of the possessor (thus
an exception to the objectivity rule)
(2) Or because the permission colors the character of the use (so still objective)
7. Case: Songbyrd, Inc. v. Estate of Grossman (pg. 214)
a. Facts: Byrd recorded music, Songbyrd is his successor. Bearsville got possession of
some of Byrd's songs. Songbyrd requested them, but they were never returned.
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Years later, Bearsville licensed the right to produce some of that music. Bearsville
moved for summary judgment saying that action is barred by statute of limitations.
b. Holding: The time began to run at the time of conversion (holding the property)
c. Reasoning:
i. Sporn test says that statute of limitations begins to run at the time of conversion
ii. Guggenheim test says that it runs when there is a demand for the title and the
person refuses – but this only applies to a bona fide purchaser of a good, so does
not apply here
iii. Conversion – tort for wrongful possession of chattel
(1) Must deny the dominion of the original owner
(2) Said to begin when it denies the owner rights (like ouster)
iv. Statute of limitations has expired here – grant summary judgment
d. Comments:
i. Conversion is a tort of general intent, not of specific intent – volition is all that is
necessary (good faith/bad faith does not matter)
ii. Court seems to say that adverse possession here is a procedural matter (true
owner ha lost ability to reclaim title) rather than a substantive transfer of title
iii. Good faith/bad faith is irrelevant with chattel
F. Sequential Possession
1. Relativity of title – title in a common law dispute is considered relative between the two
parties, but in practice the right is in rem
2. Title is a proxy for ownership. Title is premised on possession. Thus possession is 9/10
of ownership.
3. Considerations:
a. Equities between the parties (finder vs. convertor)
b. Practical exigencies of ownership (underlying need to return property to the original
owner)
c. Doing both of the above while laying down a principle to justify the court's position
4. Jus tertii claims may not be asserted – in a case where the true owner is not present,
neither party can use the owner's interest as a valid argument in a bilateral dispute of
title. Why this rule?
a. Gives parties incentives
b. Policy concerns
c. Procedural concerns – the court may not have the power to subpoena the owner
d. Giving parties the incentive to find the owner and have him come to court
5. Case: Armory v. Delamirie (pg. 220)
a. Facts: Chimney sweep finds a jewel. He takes it to be appraised, and the goldsmith's
apprentice converts the jewel. Plaintiff sued for the stones.
b. Holding: The finder, Armory, owns the jewel
c. Reasoning:
i. The finder of an object, though in finding he does not acquire an absolute
property or ownership in the object, has such a property as will enable him to
keep it against all but the rightful owner
ii. Suit against master through vicarious liability
d. Comments:
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i. Court could have said that a finder holds it against a subsequent converter, but
chose to establish this broader principle
ii. Why should the finder win?
(1) Balance of the equities – works in this case, but could cause problems later
(2) Temporal priority – the need to protect that person's expectations.
(a) Allowing the finder to use it gives him some security to rely on
ownership in order to make efficient use of the resource
(b) Could go to an earlier thief under this reasoning
6. Case: Clark v. Maloney (pg. 222)
a. Facts: Clark found logs floating in the river and secured them. Defendant later
found the logs floating again. Clark sued.
b. Holding: The first finder has a property interest over that of the second finder
c. Reasoning:
i. First finder had only special ownership as a finder, but that gave him some
property interest in the logs
ii. Plaintiff never gave up his special property in the logs, and can thus recover over
the defendants
iii. In the same way, the original owner would be able to recover against the plaintiff
d. Comments:
i. First finder has rights over second finder
ii. Different than Armory – the second finder doesn't seem to have rights over all
but the rightful owner. In this case it seems to come down to temporal priority in
possession.
iii. Balance of equities is the same – both finders
iv. Special property interest is temporal priority
v. Temporal priority matters here
(1) Justification: want people to invest time, energy, resources to make efficient
use of the possession. Temporal priority gives the initial finder that certainty
7. Case: Anderson v. Gouldberg
a. Facts: Anderson cut down trees belonging to a third party. They were then converted
by the defendants (claiming that they were given permission by the true owner to
take them). Anderson sued for the trees.
b. Holding: Possession of property, though wrongfully obtained, is enough to sustain
an action of replevin against a stranger who takes it from him
c. Reasoning:
i. Once obtained, the possessor of property has legal title against all but the
original owner
ii. To hold otherwise would lead to endless seizures after the property left the
possession of the real owner
d. Comments:
i. Possession creates a presumption of title; that presumption can be rebutted by
showing a superior title in oneself
ii. Relative title – need only to have a lawful possession against the one who is
trying to deprive you of the property
iii. Title and lawfulness are being made relative
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(1) It seems that the nature of acquisition doesn't taint the possession
(2) Lawfulness here is only as between two parties
iv. Narrows the application of Armory
v. Efficiency regarding theft:
(1) Recognizing the first convertor's title legitimizes his theft
(2) Allowing the second convertor to keep the property encourages future theft
8. Summary of the above three cases:
a. Armory – set up principle of rights of finder against all but true owner
b. Clark – created temporal priority
c. Anderson – property will go to the one with the better title, even if it is not lawful
9. Can reconcile the above cases by limiting Armory in the way that Anderson did – the
concept of ownership is relative to the parameters of the case – so an original converter
is the true owner to a subsequent finder (but then why was the holding in Armory
formulated so broadly)
10. These cases seem to stress that possession counts – possession is 90% of ownership
G. Competing Original Acquisition Principles
1. Case: Fisher v. Steward
a. Facts: Plaintiff found a bee hive on defendant's land. Plaintiff told defendant and
marked the tree. Defendant came and took the honey.
b. Holding: The plaintiff did not have property in the honey through the finding
c. Reasoning:
i. The property interest of the landowner trumps the property right of the finder
ii. Marking the tree was trespass and thus cannot help the plaintiffs
2. Case: Goddard v. Winchell (pg. 229)
a. Facts: Meteorite fell on plaintiff's land. Hoagland went and dug it out in the
presence of the tenant. He then sold it to Winchell. Goddard sues for possession.
b. Holding: This case is best governed by annexation (accession), not first possession
c. Reasoning:
i. Blackstone: Occupancy gives rise to ownership. When movable property is
found abandoned or unclaimed, it is deemed to be returned to the common stock
and thus subject to be owned based on first possession.
ii. Here the meteorite was wedged into the ground – like a fixture, thus is not
movable property under Blackstone's rule
iii. Meteorite was a rock and thus not property that could be considered abandoned –
so not the type of property governed by Blackstone's rule
iv. Principle of accretion – when soil that is moved from one person's property to
another by wind or water, those owners are made to gain or lose
v. Cannot claim back the soil
vi. Doesn't matter that the value of the rock arises from its scientific value
vii. Armory does not apply (that the finder has rights against all but the true owner –
here, no one) because the meteorite is not a lost object
H. The Commons/Semi-Commons/Anticommons
1. The commons
a. No one holds rights to exclude others from using an asset, its use is open to all
b. No one internalizes the spillover effects → overuse
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2. Common property
a. Tries to simulate the functioning of property
b. An easily identifiable group of insiders controls the use and management of the
resource and holds exclusive user rights, which outsiders do not enjoy
c. Inside the group, the property operates as a commons, but to outsiders, it operates as
private property
3. Open Access Problems:
a. No incentive to invest in the land – net benefits won't equal the costs. Thus open
access resources are normally used in their natural state (grazing as opposed to
planting)
b. Excessive withdrawal and perverse timing (pick unripe berries, over fish) leads to
depletion of resources; “now or never” drive
4. Solutions:
a. Contracting among users to limit excessive withdrawal. But this will lead to new
members not bound by the contract to join, so must give insiders exclusive rights.
Possibly through a single firm or some communal arrangement
b. Have a private owner or the state control the resource and use prices to regulate
access
5. Anticommons
a. Where too many have the right to exclude and consequently no one is able to use a
resource. Too many permissions are required so that rights to a larger resource may
never be assembled.
b. Giving many people a veto may be a good thing in creating stability and in
protecting a resource (such as a park against development)
6. Semicommons
a. When a given resource is subject to private exclusion rights in some uses or along
some dimensions, but is open access for other purposes or along other dimensions.
b. Land that is common for grazing during some times of year, and private for farming
during others; copyrighted material that is available for fair use
III. VALUES SUBJECT TO OWNERSHIP
A. Personhood
1. Inalienability Rules
a. Reasons:
i. Reduce externalities – the transferee would likely use the thing in a way that
would cause more harm to third parties
ii. Moralisms – someone is harmed simply by seeing the transfer done; emotional
harm
iii. Paternalism – a person is better off if he is prohibited from bargaining
b. Margaret Jane Radin
i. Distinguishes between property for personhood and fungible property
ii. Commodification
iii. Buying and selling certain things can diminish human dignity and the value of
human life. These things should be made inalienable to prevent the creation of
markets that distort the value of human life.
iv. Three reasons for inalienability
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(1) Prophylactic rule – we assume that some things a person would not sell, so
there must have been coercion if they want to sell it (themselves into slavery,
the poor selling personal things, etc.)
(2) Assimilation to prohibition – we do not want certain things to become
commodities
(3) Domino theory – assuming that for some things the noncommodified version
is morally preferable, there may be some things where the commodified and
noncommodified versions cannot exist
2. The Human Body
a. Not only is formal slavery not allowed, but the Supreme Court has also invalidated
schemes that would permit peonage – systems of servitude based on unpaid debts
b. Justification is that people, as autonomous moral agents, should not be regarded as
objects or commodities to be bought and sold by other people
3. Artists' Moral Rights
a. Massachusetts's Art Preservation Act and Droit Moral
i. Statute tries to graft onto the common law the civil law concept of droit moral,
whereby a creative artist retains certain inalienable rights with respect to his or
her creation
(1) The right is inalienable – cannot be transferred
(2) The right is waivable – because it depends on the artist bringing the claim
ii. Right of integrity – can prohibit the physical defacement or alteration of a work
during the lifetime of the artist and for 50 years after his death
iii. Right of paternity – the rights of the artist to claim authorship of the work, or for
“just and valid reason” to deny it
iv. Why the rights?
(1) Personality – the person is invested in the work through his time, expression
of personality
(a) Looks to be Hegel's theory, but really he applied his theory of personality
to a full property right (market transferable)
(b) Not clear if droit moral is creating a property interest or a personal
interest
(c) If this were the only reason, why only protect art until 50 years after the
artist's death? Older pieces are what we should be more concerned with
(2) Reputation – the real interest being protected here is the artist's reputation
and the value of his future work
(a) If his previous work is defaced, that might hamper his ability to sell or
get commissions in the future
(b) Allows the artist to be the gatekeeper for his reputation on the market
v. Hart to characterize droit moral as property rights – they are not alienable and
they are not rights to exclude
vi. But the right is vested with the artist (rather than just being a zoning-style
restriction) so that he can waive the right
vii. Unclear if droit moral is a property right or a restriction on property rights
b. Case: Moakley v. Eastwick (MA Supr, 1996, pg. 277)
i. Facts: Moakley was commissioned to create a tile wall art portraying history of
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the city. Church was bought and the art was partially demolished. The church
decided to remove the rest because it was objectionable on religious grounds.
Artist sued to enjoin against further defacement based on the Art Preservation
Act and for damages.
ii. Holding: The Act does not apply here because it was not intended to apply
retrospectively to works created before its enactment and owned by someone
other than the artist.
iii. Reasoning:
(1) The purpose of the Act is to safeguard the professional reputations of artists,
thus only protects their work for 50 years after their death
(2) Act not intended to apply retrospectively
(a) Unless evidence otherwise, assume that a law was only meant to apply
prospectively
(b) Previous versions of the law contained retrospectivity clauses, but the Act
was enacted without it
(c) Legislature must have realized that applying the law retrospectively
would have changed the rights of owners
(d) Artists working before the Act were clearly not relying on the Act
(3) Deny claim of IIED, because the defendants' conduct was not outrageous
iv. Comments:
(1) Court says that the art is an expression of the artist's personality, but does not
say how much time Moakley spent creating the art
(2) Court does not bring up the religious motives – wants to stay away from
freedom of religion constitutional issues
4. Cultural Patrimony
a. Case: United States v. Corrow (Fed App 10th, 1997, pg 284)
i. Facts: Corrow purchased the yei b'chei (masks considered to be living gods)
from the widow of a Navajo hataali (religious singer). They were normally
passed to another hataali in the clan, or loaned to another Navajo clan. He
suggested that he would deliver them to another Navajo chanter. He then sold
them to an undercover operative. Corrow charged under the Native American
Graves Protection and Repatriation Act.
b. Holding: NAGPRA was not unconstitutionally vague
c. Reasoning:
i. Two objectives to NAGPRA:
(1) Protect Native American human remains, funerary objects, sacred objects,
and objects of cultural patrimony presently on Federal or tribal lands
(2) Repatriate the same currently held by Federal agencies and museums
ii. Also “human rights legislation”
iii. To be judged “cultural patrimony,” the object must have:
(1) Ongoing historical, cultural, or traditional importance, and,
(2) Be considered inalienable by the tribe by virtue of the object's centrality in
tribal culture. That is, its cultural function precludes it from being any
individual tribal member's personal property
iv. Corrow says this second point is unintelligible and thus does not give fair notice
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(is unconstitutionally vague under due process clause)
v. Much debate over the alienability of these objects
vi. But Corrow had familiarity with the culture and knew how the Navajo felt about
the objects
vii. His deception (suggesting that he would pass them to another hataali) showed
this
viii.
Corrow had notice about the law from someone
ix. Even if the law applied in other cases would be unconstitutionally vague, applied
to Corrow it was not
d. Comments:
i. Inalienability
(1) Congress's version of inalienability is market inalienability. Tries to protect
the asset by reducing the demand for it ← making it illegal
(a) Instrumental inalienability
(b) Question of whether it works or just send the market underground
(2) Navajo's version of inalienability is different – connected to culture
(a) Objects should not go outside the 4 mountains
(b) But really, widows are allowed to sell the objects
ii. So it seems that we are imposing our legal terminology of inalienability on them
iii. NAGPRA's purpose is not the same as the Navajo's, but here the instrumental
purpose tracks the intrinsic ones – so the law connects inalienability to whether
the Navajo think the property is inalienable
B. Public Trust
1. Navigation
a. In English law, the king owned all navigable waters (those subject to tides)
b. All waters, however, were subject to a general public easement of free navigation
and fishing
c. The federal government has the power to regulate navigation through the commerce
clause
d. US v. Causby gave regulation of airspace to the government, made obsolete the ad
coelum doctrine
e. Purpestures: encroachments on navigable waterways or public highways
i. Dealt with through public nuisance actions
2. Public Trust Doctrine
a. There are certain kinds of resources that are inherently public in nature, endowed
with a public interest conception
b. Thus, the bundle of rights than an owner has in relation to them is limited by the idea
of public interest
c. But possibly, this doctrine was really developed to get around the 5th Amendment
i. If the rights were never the owner's, the government can take them without
compensation
ii. Unclear where you draw the line in figuring out what has public interest such
that it is subject to public trust
d. Ex ante – says that the resource was vested with public trust since the origination of
the resource, prior to the court's opinion
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e. Ex post – says that the resource is being taken (made a public trust) now
i. Contrary to reliance interests of property, allowing people to be sure in what they
own and make the best use of the resource
ii. This is why the doctrine has not really taken off
f. Today the doctrine is largely an abstract idea
i. Used mostly in regard to environmental protections
ii. Thus, when a company is given rights to a resource, if it violates the
environmental protections, a revocation is not a taking
g. States cannot abdicate their control over the public trust (established in Illinois
Central RR v. Illinois, below)
3. Case: Illinois Central Railroad v. Illinois (SCOTUS, 1892, pg. 314)
a. Facts: RR claimed land reclaimed from Lake Michigan where it had tracks, depots,
and other structures and submerged land. Act passed in 1869 granted the submerged
land to the RR in perpetuity with the conditions that they could not impair the
public's right of navigation, nor could they pass title to someone else. In 1873, that
Act was repealed. Suit over title of the land.
b. Holding: The legislature was not competent to deprive the state of its ownership of
the submerged lands in the harbor of Chicago and of the consequent control of its
waters by granting them to the RR
c. Reasoning:
i. The Act's conditions do not have teeth – at least the first existed separately under
federal law
ii. These lands are held in public trust
(1) The state is the trustee and retains control of the property
(2) The public is the beneficiary
iii. In furtherance of this public interest, the state can grant limited tracts to private
actors for development
iv. However, the state cannot abdicate its control by this transfer
v. If there were an abdication, that grant is either void or revocable
vi. Two circumstances in which the state can abdicate its trust:
(1) In the instance of parcels for the improvement of the navigation and use of
the waters
(2) When parcels can be disposed of without impairment of the public interest in
what remains
vii. The state can delegate its control to a municipality or a private party, but that
delegation is always revocable
d. Dissent:
i. The state can take back the property and compensate the RR under the takings
doctrine – this decision gets around that
ii. Or the state should wait until there is some harm to the public trust and then it
can take back the land
e. Comments
i. Landmark in that it established that states cannot abdicate their control over the
public trust
ii. Before this, they could abdicate their control within the scope of the Federal
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Navigation Rights Act
iii. Court probably partially motivated by corruption in passing the act
iv. Not clear that public trust needs to be vested in the state; private owners could
act as trustees
4. Resources covered by the public trust doctrine
a. The public trust doctrine can be extended beyond water resources to adjoining land
(beach front here)
b. There is a public interest, and the court tries to find a theory to best justify it. This
doctrine will allow the court to preclude profit-based uses based on reasonableness
c. Says that the public has always had rights of access to the property in question and
any private rights are subordinate to that
d. Would include property that has externalities – beaches provide recreation, which
educates and socializes us. Large expanses create this socialization on a larger scale
5. Case: State of Oregon ex rel. Thornton v. Hay (OR Supr, 1969, pg. 333)
a. Facts: Hays own a tourist facility on the beach. They were enjoined from
constructing improvements in the dry-sand area between the ordinary high-tide line
and the vegetation line (around 16ft elevation)
b. Holding: the State has the power to prevent the landowners from enclosing the drysand area because its citizens have a right in the land as a matter of custom
c. Reasoning:
i. A 1967 statute says that any public easement rights shall remain vested in the
state
(1) This statute is not to be understood as a taking
ii. There are a few reasons why the land belongs to the public:
(1) Doctrine of implied dedication – the owner had intent to dedicate part of his
property for the public use. This intent estops them later from interfering
with the public use. But there are evidentiary problems to figuring out if
there was that intent in this case.
(2) Prescriptive easements – an easement can be created in favor of one person
in the land of another by uninterrupted use so long as the user is open,
adverse, under claim of right, but without authority of law or consent of the
owner. In Oregon the prescriptive period is 10 years. [Like adverse
possession, but it easement only establishes use rights, not full possessory
rights.]
(3) English doctrine of custom – a custom is a usage as by common consent and
uniform practice that becomes the law of the place
iii. Requirements of a custom:
(1) It must be ancient. Blackstone says it must go back as far as any can
remember. Cooley says that “long and general” usage is sufficient. Here,
even the Indians all used the land to collect firewood.
(2) The right was exercised without interruption
(3) Use be peaceable and free from dispute
(4) Reasonableness – the use has always been in a manner appropriate to the
land and to the usages of the community; unclear what reasonableness is
(5) Certainty – visible boundaries
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(6) Obligatory – no landowner ever challenged the public use of the dry sand
area; it falls on everyone with the same type of land; a custom becomes law
when people conform to the custom thinking that it is obligatory; test of
whether people observe the custom because they feel bound by it
(7) Not repugnant or inconsistent with other customs or with other law
iv. The public had been using the land for so long that there was clear notice to any
buyers
d. Comments:
i. The court thought its easement theory was valid, but adopted another because it
thought it was better
(1) Easement would have allowed any type of use (selling drinks on the beach)
(2) Maybe court only wanted to protect certain uses
ii. So instead the court relies on custom
iii. There is a public interest, and the court tries to find a theory to best justify it.
This doctrine will allow the court to preclude profit-based uses based on
reasonableness
IV. OWNER SOVEREIGNTY AND ITS LIMITS
A. Protecting the Right to Exclude
1. Criminal Laws
a. Criminal Laws Protecting Personal Property
i. Larceny
(1) Larceny at common law was defined as a trespassory taking and carrying
away of the property of another with intent to steal it
(a) Focused on possession rather than intent
(b) More concerned with preventing a breach of the peace than protecting the
property interest
(c) Distinction between interactions between strangers and someone who
was already in lawful possession of something
(d) Chance of violence is higher when a stranger takes something than when
a mechanic won't give back a car
(e) Thus, someone would not be guilty of larceny if they had obtained lawful
possession of the property from the owner
(f) This includes a customer who first examines an object with intent to buy,
and then walks out with it
(2) Courts expanded the notion of larceny by holding that people temporarily
holding an object had not acquired possession, but merely custody
(a) This was a move towards emphasizing intent, that accompanied a shift
towards protecting property as well as the person
(b) This afforded greater protection of the person's autonomy and right to
exclude
(3) Courts now focus on the actor's intent and the exercise of dominion and
control over the property, that is, the exercise of rights inconsistent with the
owner's dominion and control
(4) There also needs to be movement of the merchandise for larceny to exist
(5) Different than conversion in that conversion is a tort of general intent – do
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not need intent to steal
ii. Robbery
(1) Taking personal property in a way that directly endangers persons is robbery
(2) Larceny plus the element of taking using force or by putting the victim in
fear of immediate serious bodily injury
iii. People who damage but do not take personal property are guilty of criminal
mischief
iv. Case: People b. Olivo (Ct of App NY, 1981, pg 394)
(1) Facts: Three cases where defendants were stealing goods and were caught
while still inside the store.
(2) Holding: A larceny conviction can be sustained in certain situations even if
the shoplifter was apprehended before leaving the store
(3) Reasoning:
(a) Traces the development above
(b) Store owners only allow customers to possess the goods for a limited
purpose
(c) Larceny occurs not when the customer leaves the store with the good, but
when he acts inconsistently with the continued rights of the owner
(d) This can include furtive or unusual behavior, concealing the goods under
clothing
(e) It is also relevant that the defendant moves towards the store's exits
(f) In all of thee cases, the defendant crossed the line between the limited
rights of the customer to deal with the merchandise and the store owner's
rights
b. Criminal Laws Protecting Real Property
i. Criminal law seems to be about human values and protecting people
ii. Criminal law only protects objects as far as the impact human elements
iii. Case: State v. Shack (NJ Supr, 1971, pg 401)
(1) Facts: Landowner employs migrant workers on his property and houses them
there. A health services worker and lawyer try to meet with their clients and
the landowner refuses to let them meet except in his office. The services
workers refuse. The landowner brought charges for criminal trespass.
(2) Holding: The services workers had a right to see the migrant workers in their
homes on the property.
(3) Reasoning:
(a) Property rights serve human values and do not include dominion over the
destiny of other people
(b) Migrant farmers are a disadvantaged population
(c) Congress passed legislation to aid them, and communication with those
workers is necessary for that aid
(d) Real property rights are not absolute
(e) One should not use his property as not to hurt others
(f) Necessity, public or private, may justify entry upon the lands of another
(g) The farmer has no right to deny the worker the opportunity for aid
available from governmental service or recognized charitable groups
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seeking to assist him
(4) Comments:
(a) This is a standard, not a rule: the employer may not deny the worker his
privacy or interfere with his opportunity to live with dignity and to enjoy
associations customary among our citizens
(b) This makes it seem like the property rights are a highly contextual bundle
of rights wherein the court determines the right ex post by balancing the
migrant worker's rights against the landowner's right to exclude
2. Civil Actions
a. Real Property
i. Trespass q.c.f. – trespass “because he broke the close” – used to vindicate the
interest of exclusive possession of a plaintiff who is in actual possession
ii. Ejectment – used to vindicate the interest of a person who has title to land
against a person wrongfully in possession
iii. Nuisance – protects the interest in use and enjoyment of land
b. Personal Property
i. Where the owner of the chattel has been dispossessed, he need not show injury
to the chattel
ii. However, where he has not been dispossessed, there is only liability if the intermeddling was harmful to the physical condition, quality, or value of the chattel,
or that the possessor is deprived of the chattel's use for a substantial time
iii. This is unlike land where the owner is given nominal damages for harmless
trespassing
iv. Why the difference?
(1) Because of the movability of chattel, the information costs for third parties
are going to be continuously changing and modifying (so they know what
not to touch). When you move your property, others have to compensate for
it. But with land, the information cost is constant.
(2) Epstein: the theory of live and let live. Because everyone owns chattel, there
is a social norm that says that we will allow each other to interfere with it in
a minimal way. Also ensures that people are not prosecuting minor cases that
are not cost optimal
v. Intel v. Hamidi put an end to the doctrine of cyber-trespass. Generally the idea
has not been applied
vi. Case: Intel Corporation v. Hamidi (CA Supr, 2003, pg. 412)
(1) Facts: Hamidi had worked for Intel. He sent e-mails criticizing the company
to numerous employees on Intel's e-mail system. He breached no computer
security barriers and caused no physical damages to the computers. Staff
time was spent trying to block the e-mails, but Hamidi got around this. Suit
for trespass to chattels.
(2) Holding: This tort does not encompass an electronic communication that
neither damages the recipient computer system nor impairs its functioning
(3) Reasoning:
(a) Where the owner of the chattel has been dispossessed, he need not show
injury to the chattel
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(b) However, where he has not been dispossessed, there is only liability if the
inter-meddling was harmful to the physical condition, quality, or value of
the chattel, or that the possessor is deprived of the chattel's use for a
substantial time.
(c) In Compuserve, the spam slowed down the computers, causing
reputational harm with Compuserve's customers. Here there was no
harm (no property in the time of employees)
(d) Intel is trying to enlarge tort liability with a theory of “impairment by
content,” but there is a difference between the content and the medium
used to transport that content
(e) It is the content that is bothersome here, not the use of the e-mail
(f) Epstein in an amicus brief says that the company's intranet and its server
ought to be treated as analogous to realty. This would create the right
social result by having them internalize positive and negative
externalities.
(g) Other scholars (Lemley and Hunter) say that this is the wrong social
result; everyone would be paying for his e-mails by worrying about
committing trespass. This would make everyone have to read the terms
and conditions and would lead to high transaction costs for using the
internet
(h) Do not resolve this issue of propertizing the internet
(i) Intel's solution lies in self-help
(4) Brown dissenting:
(a) This interference is repetitive and self-help is not effective
(b) Any property owner has the right to exclude unwanted interferences
(c) It is true that the normal resort for the owner of chattel where interference
does not create damage is self-help, but where that does not work, Rest
Torts §218 provides for injunction as a possible remedy
(d) A right without a remedy is meaningless
(5) Comments:
(a) CAN-SPAM Act and other legislation intervened
3. Self-Help
a. Many courts have forbidden self-help because of the potential for breach of peace
b. UCC §9 still leaves self-help available for secured property
i. This is a strong exception
c. Unclear if self help includes only benign defenses against a taking, or also retaliation
i. Intel v. Hamidi seems to say it includes retaliation because the first option has
not worked for Intel
d. Case: Berg v. Wiley (MN Supr, 1978, pg 428)
i. Facts: Berg violated lease by making changes to the building structure and
failing to operate the restaurant lawfully and prudently. A clause in the lease
allowed the lessor, Wiley, to retake the premises upon breach of the conditions of
the lease. Wiley had demanded entrance, but police mediated an agreement to
preserve the status quo. Then Wiley came with a locksmith and police officer
and changed the locks on Berg. Berg sued.
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ii. Holding: Wiley had no right to lock Berg out of the store she was renting
iii. Reasoning:
(1) It was reasonable to conclude that Berg had not abandoned or surrendered
her lease – she requested more time to comply with Wiley's demands
(2) Historic common law rule for how a landlord can lock out a tenant:
(a) The landlord is legally entitled to possession, such as when a tenant holds
over after the lease term or where a tenant breaches a lease containing a
reentry clause, and
(b) The landlord's means of reentry are peaceable
(3) The first part of this test was satisfied
(4) But if Berg had been at the premises, violence could have resulted
(5) The common law is very strict about this in the interest of avoiding breaches
of the peace
(6) Modern trend is to say that it is never legal to resort to self-help in
dispossessing a tenant
(7) From now on, the only lawful means to dispossess a tenant who has not
abandoned nor voluntarily surrendered but who claims possession adversely
to a landlord's claim of breach of a written lease is by resort to judicial
process
(8) If Wiley was in a hurry, he could have used the expedited “summary
procedure”
iv. Comments:
(1) Court ignores the fact that Wiley brought a police officer
(2) Court changes the law – no more self-help
e. Case: Williams v. Ford Motor Credit Company (Fed App 8th, 1982, pg. 434)
i. Facts: Williams' car was in default. She was awoken at 4:30 am and saw it being
towed away. She was allowed to take her personal belongings from the car. The
repossessors were very polite. Williams sued.
ii. Holding: Ford did have the right to repossess Williams' car
iii. Reasoning:
(1) The UCC §9 allows for a secured party to take possession of the collateral on
default, if it can do so without breach of the peace
(2) Purposes are:
(a) To help creditors collect collateral without having to resort to the judicial
process
(b) To benefit debtors by making credit available at lower costs
(c) To support a public policy discouraging extrajudicial acts that are likely
to result in violence
(3) Here there was no threat of violence or breach of the peace
(4) The repossessors were very polite
iv. Heaney dissenting:
(1) There was no violence only because Williams refrained from causing it
(2) Not clear that there was no risk of violence
(3) This allows for repossession unless and until violence results in fact – this
rule can lead to tragic consequences
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B. Exceptions to the Right to Exclude
1. Necessity
a. We relax trespass for human value (life), morality, efficiency (traveler getting around
obstruction)
b. Necessity defense invokes balancing on a case by case basis
c. Necessity – only one way of doing something, and that involves trespass. But there
can be only one way for whatever reason – morality, efficiency, life
d. Calabresi and Melamed – where is this right vested? Unclear in Ploof
i. Liability rule vested with landowner (Vincent)?
ii. Property rule vested with the trespasser?
e. Case: Ploof v. Putnam (VT Supr, 1908, pg. 439)
i. Facts: Plaintiff and family were on a sloop on a lack. A tempest threatened to
destroy the sloop. Plaintiff docked at defendant's dock on an island. D's servant
untied the sloop. The sloop was destroyed and the family injured. P sued for
trespass (negligence for interfering).
ii. Holding: The plaintiff, as a matter of necessity, had a right to moor at the
defendant's dock
iii. Reasoning:
(1) Necessity: “an inability to control movements inaugurated in the proper
exercise of a strict right”
(2) Necessity may justify entries upon land and interferences with personal
property that would otherwise have been trespasses
(3) This applies to the preservation of goods, and even more so to that of human
life
(4) Examples of necessity:
(a) Used dogs to get sheep off someone else's land. No trespass because
owner could not control his dog but had a right to get his sheep back.
(b) Traveler on a highway can pass upon adjoining land to avoid an
obstruction
(c) May go on to someone else's land to save goods (which are yours or
which you are getting for the lawful owner) that are in danger of being
lost or destroyed by water or fire
(d) May sacrifice the personal property of another to save your life of the
lives of others (throwing property overboard to save the ship)
iv. Comments:
(1) In all 4 examples there was the inability to control movements
(2) There was also a right of the trespasser or someone else
f. Case: Vincent v. Lake Erie Transp. Co. (pg. 441)
i. Facts: D kept boat tied to dock longer than P wanted it there to keep it from
being destroyed by a storm. Damage to the dock.
ii. Holding: D was justified in keeping the boat tied, but he had to pay for the
damage to the dock
iii. This is clearly a liability rule vested in the landowner
2. Custom
a. Customary norms can give rise to property rights (Ghen v. Rich)
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b. Customary norms can also give rise to an exception
c. Case: McConico v. Singleton (SC, 1818, pg 442)
i. Facts: Plaintiff ordered defendant not to hunt on his lands. Defendant did hunt
deer on the plaintiff's unenclosed and unimproved lands.
ii. Holding: Defendant did have a right to hunt on the plaintiff's lands
iii. Reasoning:
(1) Custom has always said that a person has a right to hunt on unenclosed and
uncultivated lands
(2) He cannot cause injury to the owner
(3) Hunting is important for society – teaches skills necessary to public defense
(4) The custom has created the law
3. Public Accommodations Laws
a. Common law distinguishes between property not open to the public and property
that offers itself as a “public accommodation”
i. Property not open to the public – the owner has the right to exclude for any
reason or none at all, subject to the defense of necessity and exceptions based on
local custom
ii. Public accommodations – more qualified right to exclude
b. Subject to a general duty of nondiscrimination
i. Must provide services to customers on a first-come, first-served basis; provide to
any person who requested service provided it was available
ii. Must charge only reasonable rates for the services they provide; could charge
different customers different prices as long as each price was reasonable
c. Category of public accommodations was gradually narrowed to innkeepers and
common carriers
i. They had economic or legal monopolies and thus should remain open to all
ii. Common carriers applied to these activities under the king's writ and tehre was
often public assistance (subsidy, eminent domain authority, use of public
property, establishment of a legal monopoly)
iii. Jim Crow era narrowing to allow other businesses to discriminate through
separate but equal facilities
d. Right to reasonable access – common law right not to be excluded arbitrarily or
based on discrimination
e. When a property owner opens his property to the public, they take on some
restriction – the right to reasonable access
f. Public accommodations doctrine sits between two theories:
i. Economic theory – emerged out of monopoly of innkeepers or carriers
ii. Notion that discrimination is bad – discrimination against two customers who are
identical as far as the use of the property goes, is wrong
g. A way for courts to prevent discrimination where the Constitution and statutes do
not do so
h. Civil Rights Act of 1964 prevented discrimination on grounds of race, color,
religion, national origin, and expanded definition of public accommodation,
including hotels, restaurants, theaters, stadiums, other places of entertainment
i. Case: Uston v. Resorts International Hotel, Inc. (NJ Supr, 1982, pg 448)
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i. Facts: Resort excluded Uston because he was a card counter. Casino Control
Commission approved this.
ii. Holding: The defendant did not have the right to exclude Uston
iii. Reasoning:
(1) Casino Control Act gave Commission control over the rules of blackjack
(2) Uston followed all the rules – he cannot be excluded because he is good at it
(3) No common law right to exclude anyone for any reason, here
(4) Property owners may not unreasonable exclude people when they open their
premises for public use
(5) This includes all property owners who open the property to the public
(6) Uston does not threaten the security or functioning of the casino
(7) Absent a rule against card counting, Uston possesses the usual right of
reasonable access to the Resort's blackjack tables
iv. Comments:
(1) Why the right?
(a) Quid pro quo – property owner benefits from the presence of the public,
and in return he must give up some control
• But then how do you define benefit?
• Can a non-profit exclude?
• Based on consent, which is problematic
(b) Public trust doctrine
• Can't be this – gambling is certainly not in the public interest
• This would make the public trust doctrine very arbitrary
(c) There is a monopoly, so that necessitates the court's intervention to
regulate the market
• Not clear that his totally motivates the decision
4. Antidiscrimination Laws
a. Variables that the courts look at:
i. The nature of the class that is being discriminated against or excluded
(1) Highest protected class is one that is constitutionally protected (Shelley v.
Kraemer)
(2) Under that is statutorily protected classes (AG v. Desliets)
(3) Lowest protected class is everyone else – someone abitrarily excluded from a
casino, or someone who arbitrarily decides to exclude everyone based on hair
color
ii. Nature of protectible interest for the plaintiff
(1) Highest level of protectible interest is direct private property interest
(2) Below that is indirect private property interest – someone who does not have
direct interest in excluding someone, but surrounding the property,
community (Shelley v. Kraemer)
(3) Lowest protected interest is a public interest concern; instances of the public
trust doctrine
iii. Public accommodations – areas where the plaintiff's interest must be understood
in its relationship to monopoly, the courts would want to diminish the right to
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exclude
b. Case: Shelley v. Kraemer (SCOTUS, 1948, pg. 456)
i. Facts: Shelleys bought a house from the Fitzgeralds, who had signed a restrictive
covenant not to sell to blacks. Kraemer and other neighbors sued.
ii. Holding: Judicial enforcement of a discriminatory contract would amount to
state action under the 14th Amendment
iii. Reasoning:
(1) The contract is valid as between two private parties
(a) There would be no legal cause of action if it were enforced by unilateral
refusal or self-help
(2) The action of state courts and judicial officers is action under the meaning of
the 14th Amendment – there was state action here
(3) In granting judicial enforcement, the state denied the Shelleys the equal
protection of the law
(4) Enforcement of a substantive common-law rule may result in the denial of
rights guaranteed by the 14th Amendment
iv. Comments:
(1) Unclear how you would limit this rule
(2) Seems like an open-ended incursion into the right to exclude
(3) No court has extended it so far
(4) Court tries to make a procedural/substantive distinction to limit the effect of
the opinion and it carves out a self-help exception
(5) What theories can be used to limit Shelley?
(a) Case about property rights. Shelleys acquired property lawfully, and this
protects them from being dispossessed. Protects reliance interests and
ability to sell property in any way one wants.
(b) Shelley is about permissible zoning. The covenant was trying to get
around zoning restrictions.
(c) The case is about a lesser interest that the owner may have had in the
property – about a 3rd party seeking enforcement of a covenant related to
a buyer and a seller. The seller was not a party in this case. The parties
were not protecting their own interest. May be different when the
property owner brought suit – a direct protection of his property interest
c. Case: Bell v. Maryland (1964)
i. Sit-in in a restaurant that did not allow African Americans. Owner brought
trespassory claim to evict them.
ii. Court avoided the issue because Maryland changed its laws
iii. Black's dissent said that the benefits of ownership derive from constitutionally
protected principle of liberty, so need to balance constitutional values
d. Case: Attorney General v. Desilets (MA Supr, 1994, pg. 471)
i. Facts: Defendants own apartment building. Refuse to rent to an unmarried
couple for religious reasons. Law forbids refusing to rent based on marital
status.
ii. Holding: The MA law is unconstitutional as applied to these owners
iii. Reasoning:
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(1) The defendants are discriminating based on status (and not conduct, because
the status determines the conduct)
(2) Yoder test is a balancing act: Balancing the burden of the defendants' right
against the compelling state interest in imposing the burden
(3) Must determine in this case:
(a) Whether the defendants have shown that he prohibition against housing
discrimination based on marital status substantially burdens their free
exercise of religion
(b) If it does, whether the State has shown that it has an interest sufficiently
compelling to justify that burden
(4) The state does significantly burden the plaintiffs by making them enter into a
contract contrary to their religious beliefs
(5) This burden makes the free exercise of religion difficult and costly
(6) The defendants weren't using their religion as an excuse to gain, their
interests really were religious
(7) For the state's interest, it is not enough to say that discrimination is bad
(8) Two indicators that the interest is not so compelling:
(a) Marital status is at a lower level – not protected by the constitution like
other statuses are
(b) State law recognizes difference between married spouse rights and those
of an unmarried man and woman living together. There is also a criminal
statute against fornication.
(9) Thus, the state clearly recognizes that these statuses are of diminished
interest
(10) Not clear that allowing this religious freedom would severely restrict the
housing market for unmarried couples
(11) Remand to lower court to decide based on evidence that the lack of
housing for this class of citizens necessitates putting restriction on what
landowners can do
iv. Comments
(1) Court ignores that discrimination might have a stigmatizing effect – this
cannot be shown in the empirical evidence that the court is interested in
(2) Also cannot see the harm done to the person being turned away
(3) So in demanding to weight the interests based on empirical evidence, the
state is excluding looking at a lot of the reasons for not having the
discrimination
C. Other Powers of the Sovereign Owner
1. Licenses
a. The power to give permission to someone else to gain access to property
b. A license is an authorization to use someone's resource in a certain way given the
owner
c. Defined in the negative: a situation where a property owner waives the right to
exclude towards a grantee
d. The old distinction between a grant and a license has been abandoned. Licenses are
now viewed through the lens of contract law.
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e. Case: Wood v. Leadbitter (pg. 482)
i. Facts: Someone bought a ticket to watch races. Without any apparent reason, he
was thrown out of the grounds before the races were over
ii. Holding: No action against the owner of the grounds
iii. Reasoning:
(1) Distinction between a mere license and a license that is coupled with a grant
(2) A grant gives someone an interest in a resource
(3) For instance, if someone is given a grant to go hunt on the land and keep
what he finds there
f. Case: Marrone v. Washington Jockey Club of DC (SCOTUS, 1913, pg. 481)
i. Facts: Plaintiff not allowed to enter a race track after purchasing his ticket.
Excuse was that he had doped a horse entered by him for a race a few days
before.
ii. Holding: The ticket was a license and thus subject to revocation
iii. Reasoning;
(1) Tickets do not create a right in rem (only a right in personam)
(2) A ticket only binds the person as the maker of a contract – it does not convey
an interest in the race track, because by common understanding it did not
purport to have that effect
(3) Since there was no right in rem, the ticket holder had no right to enforce
specific performance by self-help
(4) His only right was to sue for breach of contract
(5) The ticket was a license, and thus subject to revocation
g. Case: Hurst v. Picture Theatres (Eng, 1914, pg. 483)
i. Facts: Hurst went to the movies, paid for a ticket, and sat down. He was then
asked if he had bought a ticket and asked to speak to a manager. He refused and
a porter physically lifted Hurst, who then walked out.
ii. Reasoning:
(1) Jury found that Hurst had a ticket
(2) It is contrary to good sense to say that a theater can keep kicking out ticket
holders
(3) Leadbitter was not decided on the ground that the ticket did not convey a
right to see the show
(4) Rather, decided based on the fact that at that time, a grant of interest in
property needed to be made in writing and under seal – and that was not done
(a) So no grant based on a procedural wrinkle
(5) But this procedural requirement has since disappeared with the merger of law
and equity
(6) But in this case, there was a grant – the right to see the show from beginning
to end
(7) Therefore, can sue for specific performance if the license is revoked prior to
the termination of the grant
iii. Dissent:
(1) The ticket is a mere license
(2) Leadbitter was not based on the procedural distinction discussed by the court
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(3) A ticket cannot be a grant of an interest in land
(4) A grant must be a conveyance of interest that includes some ability to
exclude others – a ticket does not do that
(5) Thus the ticket is revocable, and the only remedy is to go to court for breach
of contract and receive money damages
iv. Comments:
(1) If the basis for Leadbitter was true, then the categories of license or grant
have no substantive content on their own – they are mere procedural
categories
(2) Court says that the right to exclude is contingent on the right to use and enjoy
(3) If you give someone the right to use and enjoy, you must also relax the right
to exclude, and are implicitly doing so
(4) The right to use and enjoy is meaningless without relaxing the right to
exclude
h. Case: ProCD v. Zeidenberg (Fed App 7th, 1996, pg. 491)
i. Facts: ProCD has a phone number database. It charges different amounts to
private consumers and to commercial users. Zeidenberg bought the product and
made it available over the internet at a lower price that ProCD charged. Inside
ProCD's shrinkwrap was a license (contract) meant to become effective on the
consumer's opening the shrinkwarp. The license prohibited Zeidenberg's
activity. Zeidenberg sued for injunctive relief.
ii. Holding: Shrinkwrap licenses are enforceable unless their terms are
objectionable on grounds applicable to contracts in general
iii. Reasoning:
(1) ProCD made the license so that they could price discriminate (limits the use
of the program to non-commercial purposes)
(2) Shrinkwrap license – by opening the shrinkwrap, you are agreeing to the
license. The person who opens the package knows that there is a license
inside, but he does not know the exact terms and conditions until he opens
the shrinkwrap – so no way to presume constructive consent before he opens
it
(3) It would be impractical to print all the terms on the outside of the box
(4) It is adequate to put a notice on the outside, terms on the inside, and give a
right to return the software for a refund if the terms are unacceptable
(5) ProCD's product met these requirements
(6) It would be inefficient to require consent at the very beginning – high
transaction costs
(7) Rather the terms are incorporated by reference – by a notice on the box
(8) Many items are sold before all the terms are known – tickets, etc.
(9) The purchaser can return the item if he does not like the terms, but using the
item is acceptance of the full license
(10) This contract is not preempted by federal copyright law – that law was
not meant to preempt contracts, only to disallow states from expanding the
federal copyright law
(11) A contract is between only two parties, and so it is different – it creates
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rights in personam and not rights in rem
iv. Comments:
(1) Functionally, there is no difference in that the contract creates rights in
personam and the copyright creates rights in rem
(a) Could make it so that every instance of use of the product required
assenting to the contract – functionally creates an in rem right
(b) But Easterbrook makes a conceptual distinction, so that the contract is
not preempted
(c) Easterbrook's continues to be the leading opinion
2. Bailments
a. The power to transfer temporary custody of property to someone else
b. A bailment arises when the owner of property (The bailor) temporarily transfers
custody of the property to another (the bailee)
c. A bailment is not a complete transfer
i. A bailment gives something for a particular purpose and usually for a particular
amount of time
ii. In a case where the bailee exceeds those terms, there is a cause of action for
conversion
d. Usually a bailment is created by a contract and the parties have some special purpose
in mind that requires the transfer of possession of particular property
i. After the purpose is accomplished, it is understood that the property will be
returned to the owner
ii. Examples: giving clothes to a dry-cleaner for laundering, or a car to a valet for
parking
e. In the case of a contract, it is clear that there is a bailment. But when there is not
contract, it is not as clear if there is a bailment.
f. The courts can imply a bailment from the parties' conduct
g. Some of the bailor's rights associated with ownership, particularly the right to
exclude others, are also transferred to the bailee. Thus, insofar as third-parties are
concerned, the bailee's rights with respect to the thing are similar to those of an
owner
h. Bailee's duty of care:
i. Standard of care to prevent theft is reasonable care – but usually this is
contracted out of
ii. Generally there is standard of reasonable care for all bailments – this takes into
account all the circumstances including whether the bailee received
compensation or whether the bailment was for the benefit of the bailee
i. There is a distinction between a volutnary bailment and an involuntary bailment
(Cowen)
i. An involuntary bailment is not really a bailment – it is an offer to create a
bailment
ii. It is a situation where someone is still in possession but that has the possibility of
fructifying into a full bailment
iii. The acceptance of the bailment is to be implied by the potential bailee's exercise
of dominion
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iv. An involuntary bailment gives rise to no liability
j. A voluntary bailment gives rise to absolute liability under a claim of conversion
(which includes misdelivery); now there are exceptions, so really strict liability
(Cowen)
k. Case: Allen v. Hyatt Regency (TN Supr, 1984, pg. 497)
i. Facts: P parked his car in D's parking garage. Received ticket from a machine at
the entrance. On back of ticket were terms and conditions. The ticket did not
identify his car, only the time he entered. On way out, gave ticket to attendant
who collected payment. If attendant was not there, the gate was open and cars
could exit without payment (no ticket needed). P's car was stolen.
ii. Holding: There was a bailment between the car owner and the garage owner
iii. Reasoning:
(1) The terms on the back of the ticket are not controlling because there was not
knowledge or even constructive knowledge of those terms – no real
expectation that the car owner would read them
(2) Possible approaches:
(a) Realist approach:
• NJ looked at issues of possession and control
• Did not try to categorize the relationship as bailor-bailee or anything
else
(b) But TN courts look to see if there was a bailment
(3) Dispeker – a person left his car with a valet. There was a way to operate the
car keylessly, and the owner showed the valet how to do that. The valet
damaged the car. Held there was no bailment.
(4) Scruggs – a car owner left his car in a garage where the ticket was dispensed
by a machine, locked his car. Held there was a bailment.
(5) Rhodes – car owner parked in outside lot that was totally unattended. Put
coins in meter. Held no bailment.
(6) Rhodes is different because there was no attendant, so certainly no
acceptance of the chattel for purposes of a bailment
(7) Rather, the lot owner was giving a license to use the parking space in return
for payment
(8) But here, as in Scruggs, there was delivery
(9) There was an attendant and guards who could accept the chattel
(10) Thus there was a bailment, and on nondelivery the car owner was entitled
to statutory presumption of negligence
iv. Dissent
(1) Scruggs was wrongly decided
(2) There is a big difference between giving the car to a valet in Dispeker and
leaving it in a garage
(3) Because the owner here kept the keys, there was no transfer
(4) The garage owner was not performing the traditional role of bailee
(5) Traditionally, the bailee performs the identification function of giving the
correct chattel back to the bailor
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(6) In this case, the ticket was not identifying
v. Comment:
(1) The court may just want to be finding liability because they think that the D's
employees were negligent
(2) Majority seems to be motivated by the fact that there was an attendant
(3) Dissent seems to signal that if the garage had required proof of ownership on
leaving, that would signal some responsibility for protecting against theft
(4) Garage could have minimized liability by posting terms around the facilities
– the courts have often interpreted this as effective constructive notice such
that those terms are incorporated into the license
l. Case: Cowen v. Pressprich (NY App, 1922, pg. 506)
i. Facts: P's delivery boy delivered wrong bond to D through delivery slot. D gave
the bond back to the wrong person. P sues for value of the bond.
ii. Final holding: There was no implied contract of bailment, so no responsibility to
return to true owner
iii. Reasoning:
(1) Defendants were an involuntary bailee, or constructive or quasi bailee
(2) It is clear that the voluntary bailee has a duty to return the article to the right
person – no possible showing of care can excuse delivery to the wrong
person – absolute liability
(3) The involuntary bailee, as long as his lack of voiltion continues, is not under
the slightest duty to car for the subject of the bailment and cannot be held for
even the grosses negligence
(4) But if the involuntary bailee exercises any dominion over the thing, he
becomes as responsible for it as if he were a voluntary bailee
(5) In this case, there is absolute liability
(6) Bailee could have sent the bond back with one of their own delivery boys
iv. Dissent:
(1) There is no way according to the majority not to have the involuntary
bailment become voluntary
(2) The defendant was doing the logical thing in trying to return the bond
(3) The slot at the defendant's office was not an offer to receive all bonds, but
rather an invitation to make an offer (to put it in contractual terms)
(4) Here, the defendants did not exercise dominion because they did nothing
inconsistent with the rights of the owner
(a) This is the true test for dominion – exercise of rights inconsistent with the
rights of the true owner
(5) Bailment only arises through an express or implied contract – that was not
present here
(6) Attempting to return the bond in good faith did not create an implied contract
(7) So no negligence here – only a logical, good faith effort to return the bond
v. Overturned on appeal upon the dissenting opinion
vi. Comments:
(1) A bailment needs acceptance because this is a contractual relationship – so
seems that an involuntary bailment is not really a bailment, but rather a
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nascent bailment that can become actual upon acceptance
(2) As long as the lack of volition continues, it is an involuntary bailment
(3) But as soon as there is any volition, it becomes a voluntary bailment – to the
majority, this happens when there is any exercise of an act of dominion over
the object
(4) But there would be no way to the majority to get over the bailment (even
keeping it and telephoning the company to come get it would be an act of
dominion)
(5) So the majority is really concerned about misdelivery
(6) Dissent is motivated by the need to create a way for the bailee to divest
himself of a wrongful delivery
(7) There is a distinction between a volutnary bailment and an involuntary
bailment
(a) An involuntary bailment is not really a bailment – it is an offer to create a
bailment
(b) It is a situation where someone is still in possession but that has the
possibility of fructifying into a full bailment
(c) The acceptance of the bailment is to be implied by the potential bailee's
exercise of dominion
(d) An involuntary bailment gives rise to no liability
(8) A voluntary bailment gives rise to absolute liability under a claim of
conversion (which includes misdelivery)
m. Case: The Winkfield (Eng, 1901, pg. 513)
i. Facts: Two ships collided. One sank, and with it some mail that was onboard.
The owners of the other ship (the Winkfield) admitted partial liability.
Postmaster made a motion to recover the value of letters and other mail in his
custody as bailee and lost on board the other ship.
ii. Holding: A bailee can sue for damages against a stranger even if the bailee is not
liable to the bailor (has a good defense)
iii. Reasoning:
(1) Overturn previous law – bailee can now collect damages for lost bailed
goods, even when the bailee is not liable to the bailor
(2) Like Armory v. Delamirie – there is the possibility of having a right in rem
that works against the whole world except the true owner
(3) Similarly, the wrongdoer cannot look to the relationship between the bailor
and the bailee to deny liability
(4) Wrongdoer must treat the possessor as the owner of the goods for all
purposes – cannot claim jus tertii
(5) Historically, bailor could not sue because the wrongdoer is interfering with a
contractual relationship, not with the bailor's possession of the chattel; so
only a bailee could sue
(6) Unclear if the bailee had the action because he was liable or if he was liable
because he had the action
(7) If the bailee is able to collect, he needs to share (some of) the money with the
bailor
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iv. Holding:
(1) Court incentivizes the bailee to sue (by letting him keep some of the recovery
because his possessory interests were interfered with)
(2) Minimizes transaction costs – allows bailee to serve as gatekeeper rather than
having a multiplicity of legal actions
3. Abandonment and Destruction
a. The powers to abandon and destroy property
b. Difference between real property and chattel: chattel is abandoned all the time, but
traditional rule is that real property cannot be abandoned
i. Probably relates historically to the incidents and services that landowners were
supposed to perform in feudal England
ii. Or has to do with externalities – example of real property that is a hazardous
waste disposal site
c. Abandonment has to do with intent – owner must intend to relinquish all claims to
the property
d. Case: Pocono Springs Civic Assoc. v. MacKenzie (PA App, 1995, pg. 518)
i. Facts: MacKenzie purchased a vacant lot. He could not put in a sewer system
due to bad soil. No one would buy the land, so they tried to abandon it. Plaintiff
sues for association fees that are required by the deed.
ii. Holding: The defendant did not successfully abandon his lot
iii. Reasoning:
(1) Tried to abandon the lot:
(a) Tried to turn it over to the plaintiff – plaintiff refused to accept
(b) Attempted to give the property to plaintiff as a gift to be used as a park –
plaintiff declined
(c) Ceased paying real estate taxes and the tax bureau offered the property
for sale due to delinquent tax payments – no purchasers
(d) Two years later, the tax bureau again tried to sell the land, then placed the
lot on its “repository” list
(e) Mailed notarized statement to all interested partied expressing their
desire to abandon
(f) Do not accept mail regarding the property
(2) In PA, abandoned property is that to which the owner has voluntarily
relinquished all right, title, claim and possession with intent to terminate
ownership
(3) Defendants here have not relinquished their rights, title, claim, and
possession of the lot – they remain the owners in fee simple with a recorded
deed and perfect title
(4) Perfect title under PA law cannot be abandoned
(5) Intent is irrelevant
iv. Comments:
(1) Court is basically saying that real property cannot be abandoned
(2) Why?
(a) Notice – probably not, because then should be able to unregister title.
MacKenzies tried to give notice to neighbors, post office, and others.
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(b) Dignitary interest – maybe someone so invests himself in land that the
only way to divest oneself is to have someone else invest himself in it.
But why is a family heirloom different just because it is chattel?
(c) Utilitarian – the land is likely to become a liability to the community and
thus the public interest requires that someone be a gatekeeper to take care
of it. But in this case there was no such liability.
(3) So unclear why intent is not important and abandonment of real property is
not allowed
e. Case: Eyerman v. Mercantile Trust Co. (MO App, 1975, pg. 523)
i. Facts: Johnston dies and by will directs her executor to raze the house on her
land and sell the land. There is a trust indenture on her land meant to keep the
neighborhood of the highest class. Plaintiff neighbors sue to stop demolition.
ii. Holding: Cannot destroy the house
iii. Reasoning:
(1) Demolition would result in an unwarranted loss to the estate
(2) The plaintiffs would be negatively affected by the value of their homes being
devalued
(3) The home was designated a landmark of St. Louis
(4) There is a need in the community for housing
(5) No one benefits from the destruction
(6) Demolition contravenes public policy
(7) Something is against public policy if it conflicts with the morals of the time
and contravenes any established interest of society
iv. Dissent:
(1) Can't use public policy because the public is not a party to the suit
(2) Public policy must rely on precedents or statutes – judges cannot create it
v. Comments:
(1) Policies against allowing the house to be razed:
(a) Economic waste
(b) Executor carrying out will rather than person effecting his own wishes;
court is concerned with dead hand control
(c) Diminishing of value
(d) Housing stock reduction
(e) Public policy
(2) Court seems to be utilitarian – looks at overall economic waste
4. Transfer
a. The power to transfer property to someone else, either by sale or gift
b. Common law rule against restraints on alienation
i. Any absolute restraint will be invalidated
ii. Partial restraints are evaluated under the understanding that they will be upheld
only if they are reasonable
c. Statute of Frauds
i. Exists in some form in every state except LA
ii. Provides that any conveyance of a property right in land (other than a short term
lease) and any contract for the assignment, surrender, or sale of a property right
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in land must be in writing and signed by at least one of the parties
iii. This provides security of property rights
iv. Creates stability and security, and thus enhances the overall transferability of
property
d. Delivery requirement
i. In several contexts, the law requires that for a transfer to take place only, the
thing being transferred or some evidence of title must be delivered to the
transferee
ii. Thus, a deed must be signed, sealed, and delivered before the transaction is
complete
iii. Gifts or a deed of gift must also be delivered
e. Case: Irons v. Smallpiece (Eng, 1819, pg. 537)
i. Facts: Father promised his son two colts but did not deliver them. Six months
before father died, son saw how expensive hay was. Father agreed to supply hay
at a stipulated price. Three to four days before the father died, he delivered the
hay. Plaintiff sued for the colts.
ii. Holding: The colts were not transferred because there was no delivery of the gift
iii. Reasoning:
(1) In order to transfer property by gift, there must be a deed or instrument of
gift, or actual delivery of the thing to the donee
(2) Here the gift was only verbal
(3) Son did not pay for the hay, so no transfer
f. Case: Foster v. Reiss (NJ Supr, 1955, pg. 539)
i. Facts: As she was going into surgery, Ethel Reiss wrote a note to her husband
telling him where to find money to give to certain people. Ethel was in a coma
for 3 days after surgery and probably died without regaining consciousness.
Husband defendant found the money and kept it. The will gave defendant only
$1. Decedent's trustees filed suit for the money on basis of gift causa mortis.
ii. Holding:
iii. Reasoning:
(1) Gift causa mortis – when a person in his last sickness, knowing that death is
near, delivers or causes to be delivered to another the possession of any
personal goods, to keep in case of his decease
(2) Requires actual, unequivocal, and complete delivery during the lifetime of
the donor, not merely taking of possession by the donee
(3) No delivery here
(4) Even if the husband's taking was delivery, Ethel was in a coma at the time
and unable to transact business, thus the gift would still not be effective
(5) No gift, so property should go to her trustees, not the defendant
iv. Dissent:
(1) Delivery requirement is an outdated rule
(2) Here the donor's wishes were freely and clearly expressed in a written
instrument, so no need for delivery to make that clear
(3) Public policy points towards upholding the gift
(4) Her incapacity is why Ethel wrote the note, and not a reason to prevent the
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husband from taking possession
v. Comments:
(1) If the person doesn't die, the court will not enforce a donatio causa morits
(DCM)
(2) Will requires signature and two witnesses (to prevent fraud)
(3) A DMC does not have thee requirements
(4) Because of this, court says that there needs to be affirmative act of delivery
for there to be an actual transfer (to prove intent)
(5) This requirement makes the documentary requirement of a DMC redundant
(6) Court wants to undermine the use of DMCs
(7) Dissent says that they have been around for a long time and may have some
utility, so we should allow them and look at the intent, not require formal
rules
V. FORMS OF OWNERSHIP
A. Divisions by Time, Estates in Land, Present and Future Possessory Interests
1. Note: An old system left over from the common law
a. Should not look at these cases from a functionalist perspective
b. The common law treats these categories differently, often with little if any practical
significance
2. Present Possessory Interests
a. Fee simple – the best interest that you can transfer, no natural end. Freely
transferrable and inheritable.
b. Life estate – grantor transferring to grantee for the life of the grantee. Places no
restrictions in itself on what the grantee can do. Grantee can alienate the estate, but
the person to whom he alienates it, takes it under the same rights that the grantor
had.
c. Defeasible fee simples:
i. Fee simple determinable – grant of property subject to a certain condition. When
that condition is violated, the property comes back to the original grantor. Uses
terms like “as long as,” “so long as,” “while,” “during,” and “until.”
ii. Fee simple subject to condition subsequent – same as fee simple determinable,
but upon the condition occurring, the grantor must take future action in order to
regain possession (self-help or lawsuit). Uses terms like “but if,” “on condition
that,” “provided that,” “provided however,” “if.” In case of doubt, court will
imply this rather than a fee simple determinable (from Mountain Brow Lodge v.
Toscano).
iii. Fee simple subject to an executory interest – same as fee simple determinable
but when the property would transfer not back to the grantor but to a third party
3. Future Interests
a. Reversion – a transfer back to the grantor that will happen after the conclusion of a
life estate. Here it is sure that the grantor or his heirs will get something back.
b. Possibility of reverter – an automatic transfer back to the grantor that will happen if
a condition is satisfied; follows a fee simple determinable. There is a possibility that
the grantor or his heirs will never get anything back
c. Right of entry/Power of termination – interest retaineid by the grantor that follows a
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fee simple subject to condition subsequent
d. Remainder – the interest left over by a life estate held by someone other than the
grantor. Only difference between this and a reversion is who holds the interest
(grantor or third party). What remains in a grantee after a life estate.
i. Indefeasibly vested – the identity of the takers is known and no condition can cut
short the remainder
ii. Contingent – some uncertainty remains as to the identity of the class of takers or
the occurrence of the condition
iii. Vested subject to complete defeasance – the remainder is granted subject to some
condition happening
iv. Vested subject to partial defeasance (or subject to open) – when the group that
gets the remainder is an open class to which more can be added
e. Executory interest – what remains in a grantee in the situation of a fee simple
determinable (like a possibility of reverter)
4. Vesting – an interest vests in possession when the interest becomes a present possessory
one. But an interest vests in interest before it vests in possession (uncertainties about the
interest have been resolved).
B. Maintaining the System
1. Conservation of Estates
a. When a transfer is made, all of what the grantor had must be accounted for, even if
this means implying a reversion
b. The last interest must be a fee simple when it becomes possessory
c. If a holder in fee simple dies without heirs, the property escheats to the state
d. If you invalidate an executory interest, it does not mean that the previous estate
fructifies into a fee simple absolute, but rather there becomes a possibility of reverter
(vested in the grantor) (Klamath Falls)
e. Can try to discern from the surrounding circumstances what could have been the
testator's intent (Williams)
f. Disclaimer – can disclaim an estate, and thus it goes to the next taker; would use this
to avoid paying double taxes
g. Case: Williams v. Estate of Williams (TN Supr, 1993, pg. 563)
i. Facts: Grant to three daughters. Unclear if the grant was for a life estate or an
interest in fee simple
ii. Holding: Testator's intent shows that the land was to be given as a life estate
iii. Reasoning:
(1) Will look at the predominant intention of the will
(2) Intent was that the daughters should have a residence and support during her
life or until she should marry
(3) Upon the death of all three, therefore, the testator's purpose will have been
accomplished and the testator's heirs would inherit the property by intestate
succession
(4) This is generally the case when a will gives land for life until her marriage
(5) Here, the heirs held a reversion in fee simple subject to the determinable life
estates and the executory interests in the named daughters
(6) That reversion would vest in possession, at the latest, upon the death of the
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survivor of the three named daughters
iv. Comments:
(1) The court is missing some interests here (the daughters have remainders as
well)
(2) Must identify every potential interest
h. Case: City of Klamath Falls v. Bell (OR App, 1971, pg. 568)
i. Facts: Corporation donated land to city so long as it was used as a library, then
title to the shareholders. The city terminated use as a library.
ii. Holding: The title should go to the descendants of the shareholders of the now
dissolved donor-corporation
iii. Reasoning:
(1) The estate was given as a fee simple subject to executory limitation (because
the corporation had its own identity separate from that of the shareholders)
(though the opinion says a fee simple determinable)
(2) The executory interest was unenforceable as being hit by the RAP (by ruling
thus, the court recognizes that the remaining interest was an executory
interest and not a possibility of a reverter – as it would be if the original grant
actually was a fee simple determinable)
(3) If an executory interest fails, it does not cause the interest before it to fructify
into a full fee simple
(4) Rather, the failure creates a possibility of a reverter back to the corporation
(5) Since the corporation was dissolved, its heirs get the assets of the
corporation, including the possibility of reverter
(6) Thus, the heirs now get title
2. Numerous Clausus
a. The set of property interests that you can create is closed, not freely customizable by
parties
b. Cannot create a “fancy” and then have that converted into a property interest (a right
in rem)
c. Concept arises from the civil law system
d. Fee tail – creates a non-transferable life estate that passes through the blood line of a
family – legislators have invalidated fee tails
e. Can work within the system to create most desired situations (Whiton)
f. Unclear to what extent these same rules work for personal property. One problems
is that of notice – for most items of personal property there are no registries where
people can find out who has an interest in an object
g. Justifications:
i. Autonomy – since people could bind strangers, it was an infringement on
autonomy interests
ii. Merrill and Smith (the dominant theory, pg 579)
(1) Based on Keppel v. Bailey which sought to create a positive obligation on
future purchasers of an iron works to purchase limestone from a particular
quarry and use a certain railroad to transport it
(2) Information costs would be too high – the buyer and seller will have fancies
internalized into the purchase price, but it would also affect third parties
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(3) But those creating new property rights would not account for the effect they
would have on third parties
(4) Everyone would not have to investigate what rights property has in order to
keep from violating them or in deciding to purchase property
(5) Compulsory standardization of property rights limits the number of basic
property forms, allowing a market participant to limit his inquiry to those
forms
(6) Frustration costs, on the other hand, arise from a limited number of forms
preventing parties from making legitimate arrangements
(7) Numerous clausus strikes a balance between complete regimentation and
complete freedom of customization – optimal standardization
(8) Price discrimination – those able to afford the lawyers to craft these
inheritances will be able to do so to get around the numerous clausus. By
requiring this higher cost, numerus clausus will limit these new forms to
cases where they are very important
h. Case: Johnson v. Whiton (MA, 1893, pg. 587)
i. Facts: Whiton gave land to five grandchildren. One of them, Sarah, was to get
1/3. That part was given to Sarah and her heirs on her father's side. Plaintiff
sued to recover deposit paid on agreement to purchase, because Sarah could not
convey a fee simple absolute.
ii. Holding: Sarah had a fee simple, because of rereading of the will
iii. Reasoning:
(1) Whiton was really giving the property to Sarah in fee simple, but such that if
she dies intestate and without children, the property would only go to the
father's heirs and not the mother's
(2) Holmes says this is a new kind of interest, essentially trying to create a fee
tail
(3) Thus, Sarah should get a fee simple with no restrictions
(4) Read the “heirs on her father's side” to be words of limitation, not words of
purchase
(5) Thus, these words are of no legal significance and are not binding, only
indicate intent
iv. Comments:
(1) Whiton could have duplicated this within the system by creating a fee simple
subject to executory limitation: Grant it to Sarah in fee simple, but if at the
time of her death she still owns the property and dies intestate, then it passes
to her heirs on her father's side. Executory interest vested in those heirs.
i. Case: Garner v. Gerrish (NY, 1984, pg. 589)
i. Facts: Donovan leased to Gerrish with no end date – at will of tenant. He died
and executor Garner sought to eject Gerrish.
ii. Holding: Tenant has a life tenancy terminable at the tenant's will, so cannot be
ejected
iii. Reasoning:
(1) Traditional common law assumption was that at the will of the lessee is also
at the will of the lessor – it should be terminable at the will of either
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(2) This presumption is no longer valid
C. Conflicts over Time
1. Waste
a. When two or more people hold interests in a single piece of property, there will be
potential for conflict
b. The current holder will favor current consumption and investments that produce a
quick return
c. Holders of remainders will prefer conservation of the asset and longer-term
investments
d. Holder of a life estate can use the property for his comfort and profit, but he cannot
substantially change the property (Brokaw)
e. Doctrine of changed circumstances is a limitation (Brokaw on Pabst)
f. Looking at the case before the change has happened, the court will defer to the
autonomy of the remaindermen. But look at it ex post, the court wlil look to more
factors including what is happening on the ground (Brokaw and Pabst)
g. Doctrine of waste is governed by a multiplicity of values
i. Courts will apply it however they want, sometimes talking about the autonomy
of remaindermen
ii. But if there will be economic loss, the court will try to carve out an exception
iii. Can also get around the doctrine by looking at the case ex post/ex ante
h. Types of waste
i. Affirmative waste – when someone does something that hurts the reversionary or
remainder interest. Judged by “normal” use of the property
ii. Permissive waste – nonfeasance. Also judged by “normal” behavior
iii. Ameliorative waste – significant changes that increase the property's market
value. Most jurisdictions do not permit this, but a minority do
i. If all interest holders agree to the change, it can be made
j. Case: Brokaw v. Fairchild (NY, 1929, pg. 596)
i. Isaac Brokaw gave to his four children a life estate in one of four separate
houses. Each life estate was followed by a remainder to the issue of the life
tenant, or if the life tenant should die without issue, then a remainder interest in
the remaining heirs of Isaac. George Brokaw is one of the children and has a
daughter. George wants to demolish his mansion and build an apartment
building that will bring in more profit and increase the value of the property.
Defendants (other children who have remainder interests in case George outlives
his daughter) argue that the proposed demolition is waste.
ii. Holding: Do not allow the demolition
iii. Reasoning:
(1) The test is not one of waste, but of identity
(2) The property needs to pass to the remainderman or reversioner resembling
the one that was received as nearly as practicable
(3) Tenant has no right to exercise an act of ownership
(4) He can make use of the property, but cannot change it
(5) He cannot determine what would be an improvement, doesn't matter if it
adds value
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(6) Different than Melms v. Pabst Brewing because in that case there were no
other residences around and the alteration was made in good faith (Brewing
Co thought they had a fee simple)
iv. Comments:
(1) Though owner of life estate has the right to exclude, he does not have full
dominion to make changes to the property
(2) Owner of a life estate is functionally like a tenant
(3) Court seems to be worried about the autonomy interests of the remaindermen
who will later have a fee simple
(4) Doctrine of changed circumstances is an exception (as in Pabst where the
whole area had changed – no residential value remained in the area at all)
2. Restraints on Alienation
a. Any attempt directly to restrain alienation will be held void as contrary to public
policy
b. Nevertheless, can put conditions on the use such that alienation is theoretically
possible, put practically impossible (Toscano)
i. The debate here is whether to take a realist/functionalist approach to see who
could use/purchase the property, or a formalist approach to see if alienation is
theoretically possible
c. This is true because (from a footnote in Toscano):
i. It is absurd and repugnant to reason that a tenant in fee simple should be
restrained of all his power to alienate
ii. Taking land out of the flow of commerce is detrimental to the economy
iii. Encourage improvement of property
iv. Hampering effective use of property if the buyer could put it to better use than
the seller
v. Removal from trade of increasing amounts of capital
vi. Not allowing an individual to appear more prosperous than he is
vii. Balance of dead hand control
d. Case: Mountain Brow Lodge, Independent Order of the Odd Fellows v. Toscano
(CA, 1967, pg 607)
i. Facts: Toscanos died and left property to the Lodge. Habendum clause (which
explains the scope of an interest) said that if the lands was ever sold or
transferred by the party or not used for the purposes of the Lodge, it would revert
to the grantor (as a fee simple subject to condition subsequent). Lodge brought
action to quiet title in the land, saying that this restrictive language amounts to an
absolute restraint on its power of alienation and is void.
ii. Holding:
iii. Reasoning:
(1) The condition in question is an absolute restraint against alenation and is
void ab initio
(2) But this will not nullify the whole grant
(3) Look at the intent to give meaning to the “use” clause
(4) Grantors gave the land out of “love and affection” and meant for the use to
be for fraternal lodging and the other uses of the organization
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(5) The use clause is not also a restriction on alienation because it was not meant
as one, that was only intended in the “sale” clause, not the “use” clause
(6) Taking the functionalist approach would require striking down bequests to
churches and other charitable institutions
(7) So though the Lodge won't be able to sell the land because that would violate
the “use” clause, that is not to be considered an invalid restraint on alienation
3. Rule Against Perpetuities
a. “No interest is good unless it must vest, if at all, not later than 21 years after some
life in being at the creation of the interest” - John Chipman Gray
b. Look at measuring life + 21 years. If there is any possibility of the interest vesting
beyond that, it is void
c. If the grant is hit by the RAP, it is void ab initio – it is a stillborn grant, void at the
moment it was created
d. The measuring life need not be a party specifically mentioned in the interest, but
then it must be someone who can affect the vesting. Debated who is a related party
e. Purpose: similar to a restrain on alienation
i. Clouds title and thus renders the value of a property less valuable because the
exact nature of someone's interest will only be known in the future
ii. In the market, this uncertainty diminishes price
f. Exception: The rule of two charities – an exception in most jurisdictions where the
grant is to a charity and the executory interest is vested in another charity
g. Interests affected by the RAP: contingent remainders, executory interests, and vested
remainders subject to partial divestment
i. Does not apply to a reversion, possibility of reverter, or right of entry
h. Analyzing the RAP:
i. What categories of interests are we dealing with? (only affects those listed
above)
ii. Is there any possibility that the interest in this clause will vest beyond a life in
existence + 21 years? If so, the grant is hit by the RAP.
(1) Life in existence must have a reasonable nexus to the will
iii. Are there any exceptions or limitations that might apply to the traditional
common law rule?
(1) Wait and see rule
i. The court in Symphony Space used flexibility in the first step, taking into account
public policies, but had to apply the last two rules rigidly
j. Case: Symphony Space, Inc. v. Pergola Properties (NY, 1996, pg. 620)
i. Facts: Broadwest sold a building to a non-profit theater group Symphony at a
reduced rate and rented back the commercial space for $1/yr. Broadwest
retained a buyback option, which was to be transferable. Broadwest sold its
interest under the lease and its other buildings to someone who transferred it to
Pergola. Pergola sought to exercise the buyback option.
ii. Holding: Buyback option is invalid as hit by the RAP
iii. Reasoning:
(1) The option was to last at least 25 years
(2) An option is not a vested right, but a right to exercise that right in the future
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(3) Since no people were named in the contract, the RAP hits after the default of
21 years here (corporations cannot be a measuring life – they are immortal)
(4) NY does not take the wait and see approach
(5) Interest could have vested after 21 years, so the option is invalid
(6) Will not enforce the intent of the parties, RAP means to work against that
intent on the basis of public policy
(7) The language was too clear here to read it any differently that as being
violate of the RAP
(8) RAP operates as a bright line rule
(9) Rule utilitarianism – this type of rule takes into account all of the utilitarian
factors, so that when it is applied to each case, the most utilitarian result will
automatically be produced. Do not need to go through all the factors in each
set of circumstances
(10) Act utilitariansim – apply the rule by looking at each individual case to
figure out if applying the rule in those circumstances will further the purpose
of that rule
(11) RAP embodies rule utilitarianism
(12) An option is hit by the policy rationale of the RAP, though it is not one of
the three interests – the right of possession, which is essential to market
transfer, is reduced here by the option
(13) A preemption clause is not a restrain on alienation in the same way – can
still be sold at the market price, just gives a party the preemptive option
D. Conflicts Between Co-Owners
1. Categories of Co-Ownership
a. Tenancy in common – each tenant has a separate but undivided interest. Separate in
that it is independently descendible, conveyable, and devisable. Undivided in that
each tenant in common has the right to possess the whole of the property. No
principle of survivorship. Need not hold equal shares. This is the tenancy presumed
unless there is manifestatio nof contrary intent.
b. Joint tenancy – each joint tenant has a separate and undivided interest. Unlike
tenancy in common, a surviving joint tenant automatically acquires the interest of
another joint tenant when the other tenant dies. Joint tenancy requires four unities at
the time of creation. If one of the first three is broken, the joint tenancy is severed
and a tenancy in common is created:
i. Time – each interest must be acquired or vest at the same time
ii. Title – each must acquire title by the same instrument or by joint adverse
possession, never by intestate succession or other act of law
iii. Interest – each must have the same legal interest in the property, such as fee
simple, life estate, lease, etc. although not necessarily identical fractional shares
iv. Possession – each must have the right to possess the whole
c. Tenancy by the Entirety – only possible in a minority of states and only available for
married couples. Like the joint tenancy but neither can unilaterally sever the
tenancy.
2. Partition
a. The most important legal remedy available to concurrent owners
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b. Any cotenant can sue for partition for any reason or no reason at all
c. Default is a partition in kind – but this rule as applied in Delfino really looked at the
balance of the equities of the parties. So it is not a strict rule.
i. Can only move to a partition by sale if partition in kind would be impracticable
or inequitable and if a partition by sale better promotes the interets of the owners
(Delfino)
d. Why is t
e. Case: Delfino v. Vealencis (CT, 1980, pg. 637)
i. Facts: P has a 99/144 interest in a piece of land, and D has a 45/144 interest. D
occupies the dwelling and a portion of the land, from which she operates a
garbage removal business. Ps want to develop the lot into residential lots. Ps
want a partition by sale, D wants a partition in kind.
ii. Holding: Partition in kind because it is practicable to divide the land
iii. Reasoning;
(1) Partition in kind is preferable to a partition in sale
(2) Partition in kind is the default rule
(3) Only have partition in sale when:
(a) The physical attributes of the land are such that a partition in kinds is
impracticable or inequitable, and
(b) The interests of the owners would better be promoted by a partition by
sale
(4) In determining practicability – nature of the land
(5) In determining inequitable – where the monetary value does not necessarily
track the extent and value of the land that is partitioned
(6) Here, partition in kind is practicable – lot is rectangular and there are only
two interests in it
(7) Trial court was concluding that D's business was unlikely to continue long or
that P's plans would not be approved because of the nature of D's business
(8) Must balance the interests of both sides
(9) In a sale, the D would lose her home and it would jeopardize her livelihood
(10) Here the interests of the owners will be better promoted if a partition in
kind is ordered
iv. Comments:
(1) This does not seem to be a real test, but rather ways that the court can use its
discretion
(2) Court seems to be motivated by the particular facts and equities in this case
(a) Defendant got her will because she was invested in the property and lived
there
3. Contribution and Accounting
a. For there to be an ouster, there must be notice by the assertion of a legal right by
one, and the nonaccommodation of that right by the other (Gillmor)
i. So you need a fact specific analysis showing this notice and an act that the court
will consider to be an indirect act of exclusion
ii. The standard for exclusion here is lower than that in adverse possession law
b. Case: Gillmor v. Gillmor (UT, 1984, pg. 645)
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i. Facts: Plaintiff sued defendant for ouster and wanted contribution of the profits.
D has exclusively used the grazing lands. P and D were tenants in common.
ii. Holding: There was ouster, so D owes part of the profits minus an offset for
repairs to the property
iii. Reasoning:
(1) Each tenant has a separate and undivided interest in the whole property, so
just because one tenant used the whole property does not amount to an ouster
(2) There is an ouster if one tenant acts to exclude another
(3) Without a direct act of ouster (locking out), must determine if there is an
effective act of exclusion
(4) D was having his sheep graze over the whole property
(5) If P had let her sheep graze there, it would have been overused
(6) P could not use the land or it would be destroyed
(7) P notified D that she wanted to use the land, but D did not respond
(8) D knew that the land could not be used more or it would be overgrazed
(9) Normally, if there is no consent to the repairs, the cotenant would not owe
any contribution for such repairs
(10) There is an exception for cases where the repairing tenant acts in the good
faith belief that he is the sole owner, or where the repairs were essential to
preserve or protect the common estate
(11) Here, the repairs were necessary, so will offset the profits
iv. Comments:
(1) The plaintiff had to make a clear and unambiguous demand of her rights to
enter and sue the land
(2) The defendant who directly or indirectly refuses to accommodate her has
committed an ouster
(3) The act must be capable of interpretation as a denial of the other's rights
(4) The necessity of repairs is held to an objective standard, not one determined
by the repairer
4. Severance
a. Either party can sever a joint tenancy and create a tenancy in common by selling
b. Usually this was achieved through conveyance to a third party (strawman or straw)
who would then reconvey to the grantor
c. Now, one can probably convey to oneself and effect a severance of the joint tenancy
d. Case: Harms v. Sprague (IL, 1984, pg. 650)
i. Facts: P had a joint tenancy with his brother. John Harms (the brother)
mortgaged his share to someone else. His friend (Sprague) had wanted to buy a
house, so John Harms cosigned the load to provide security. John Harms died
and left his property to Sprague.
ii. Holding: A mortgage is a mere lien and does not sever a joint tenancy, nor does it
survive the life of the mortgagor
iii. Reasoning:
(1) Must consider whether the transaction at hand (a mortgage) was a mere lien
or a transfer of title
(a) A lien does not sever a joint tenancy – no transfer of title
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(b) Under the title theory, the title is actually transferred to the creditor until
the money is repaid, but for all other purposes, the owner retains title.
(2) Mortgage
(a) A trust deed is executed when you set up the obligations of the mortgage
(b) A master's deed is executed upon foreclosure of the mortgage and the
title of the property is transferred
(c) It is only the latter transaction (the master's deed) that transfers title
• There was no master deed in this case, and thus, the mortgage is only
a lien and does not sever the joint tenancy
(3) The property is transferred by survivorship, unencumbered since the
mortgage was an in personam contract that was eliminated when John Harms
died
(4) First the mortgage ends, then survivorship operates, so the encumbrance is
not transferred [but this is dicta addressing a law not brought up in the trial
court, so unclear if the court is serious about this circular argument]
iv. Comments:
(1) Decided that the mortgage only creates a right in personam, not in rem
(2) In acquisition through survivorship, the joint cotenant does not acquire the
interest by virtue of a relationship with the decedent
(3) An acquisition in succession does occur because of the relationship with the
decedent
(4) Therefore, the encumbrance does not transfer in an acquisition by
survivorship
VI. ENTITY PROPERTY
A. Leases
1. General Introduction
a. Landlord-tenant relationship is the most common one in residential spaces
b. Leases become a very worthwhile method or risk spreading
c. Question of whether a lease is a conveyance of an interest that changes the way that
lease is viewed than if it had been a pure contract
d. Contracts are bilateral, dependent covenants – one's breach allows the other to stop
performance
e. But if a lease conveys a property interest, that is a right in rem and a breach of one
party does not allow the other to stop performance – an independent covenant
f. Lease types:
i. Term of years – a lease that has a fixed time at which it terminates or ends
ii. Periodic tenancy – a lease that automatically rolls over for a stated period of
time; requires that each of the parties give notice to the other if they desire to
terminate the lease
iii. Tenancy at will – a tenancy that lasts only so long as both parties wish it to
continue; either party can terminate at any time for any reason
iv. Tenancy at sufferance – when an individual who was once in rightful possession
of property holds over after this right has ended
2. The Independent Covenants Model
a. Independent covenants model: landlord has an obligation not to interfere with the
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tenant's quiet use and enjoyment, tenant has an obligation to pay rent (Paradine)
i. Each of these covenants exists and operates independently of the other
ii. If one side breaches, this does not absolve the other side of his duty of
performance
iii. Contract law uses model of dependent covenants (doctrine of frustration)
b. Case: Paradine v. Jane (Eng, 1647, pg. 691)
i. Facts: D rented land in agricultural lease. Enemy invaders prevented him from
accessing it, and he was unable to use the property. Plaintiff sued for rent.
ii. Holding: The defendant's lack of access to the land does not exempt him from
paying rent
iii. Reasoning:
(1) The lease did not explicitly specify that payment of rent was an obligation,
just set the rate
(2) The obligation of payment was implied because that is standard in a lease
(3) A lease by its nature entails the obligation to pay rent, and this will be
enforced
(4) Just because the lessee could not use the land, does not free him from his
obligation to pay rent
(5) He can still gain casual profits from the land during the time it was occupied
by the enemy
(6) If the lessee takes the changes of the benefit, he must also take the risks
(7) Defendant's obligation to pay rent is not modified by factors beyond the
control of the parties
iv. Comments:
(1) Independent covenants model: landlord has an obligation not to interfere
with the tenant's quiet use and enjoyment, tenant has an obligation to pay
rent
(2) Each of these covenants exists and operates independently of the other
(3) If one side breaches, this does not absolve the other side of his duty of
performance
(4) Contract law uses model of dependent covenants (doctrine of frustration)
3. Extensions of the Independent Covenants Model
a. Forfeiture clauses moved away from the independent covenants model. They
provided for landlords being able to repossess property upon the nonpayment of
rent, thus making one of the two covenants dependent
b. This was a one-way benefit for the landlord
c. Courts tried to counteract this through two new doctrines: constructive eviction and
surrender
d. Constructive eviction doctrine makes the covenant of payment of rent dependent on
the covenant of quiet enjoyment (Blackett)
e. Surrender needs vacating of the premises (by the tenants) and acceptance (LL) (In re
Kerr)
f. Since LL has more market power he drafts the lease. Therefore, any ambiguities
will be interpreted for the tenant since the LL had the opportunity to make his intent
more clear (In re Kerr)
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g. Case: Blackett v. Olanoff (MA, 1977, pg. 703)
i. Facts: LL let property to tenants for residential purposes. Leased another
property for a commercial purpose (as a lounge). The lounge produced a lot of
noise and tenants complained. LL discussed the problem with commercial
tenants but noise continued. Residential tenants vacated the premises
prematurely and refused to pay rent, claiming constructive eviction. LL sued for
rent
ii. Holding: There was constructive eviction and thus no obligation to pay rent
iii. Reasoning:
(1) Intent
(a) LL argues that there is a requirement of intentional act by the LL to
deprive tenants of enjoyment in order for constructive eviction
(b) But need only look at the natural and probably consequences of the
actions of the landlord
(c) If those show constructive eviction, there is no need for intent
(d) Here, the natural and probably cause of the LL's actions (letting to
commercial tenants and not stopping the noise) was that the residential
tenants would be disturbed
(2) Doctrine of common tenants
(a) LL argues that if one tenant hurts another, the LL is not responsible
(b) But here the LL positively acted by entering into lease with a commercial
tenant, knowing that tenancy might interfere with the residential tenancy
(c) Must look also a the first step of creating the lease, not only the issue of
later control
(3) Distinction between malfeasance and nonfeasance
(a) LL says this is nonfeasance so no liability
(b) But refuse to perpetuate this formalist distinction, rather, the court prefers
functional/realist view
(c) Shouldn't matter since nonfeasance and malfeasance can result in the
same consequences
iv. Comments:
(1) Constructive eviction doctrine makes the covenant of payment of rent
dependent on the covenant of quiet enjoyment
(2) Could argue that the court is highly realist in trying to restore the LL-tenant
balance
h. Case: In re Kerr (Fed SDNY, 1939, pg. 707)
i. Facts: Bankrupts had a lease for commercial building. After the tenants stopped
paying and filed for bankruptcy, landlord rerented the premises for 2 years
longer than the bankrupts' lease. He gave the new renters a discount until the
time the original lease would have expired. The lease had authorized the LL to
do this
ii. Holding: The LL's rerental constituted an acceptance of surrender of the lease
iii. Reasoning:
(1) Bankrupts understood the LL's re-letting the property for longer than the
original lease as an acceptance of the surrender of their lease
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(2) First step to surrender is the tenant must vacate the premises – this happened
(3) IF the LL relets the property for longer than the period of the original lease, it
shall be considered an acceptance of surrender by NY law
(4) If the meaning of the lease is unclear, it should be interpreted against the LL
who drafted it, because he had the opportunity to make his intent more clear
(5) LL has more market power so will generally draft the lease
(6) So should construe any ambiguities in favor of the tenants
4. Dependent Covenants Model
a. Court has moved almost completely toward a view of dependent covenants
b. Court in Javins explicitly recognizes that the default interpretation for leases should
be contact law; Medico-Dental hid this by talking about privity of estate
c. Implied warranty of habitability allows for offset in residential leases (Javins)
d. Later the courts found other implied warranties for commercial leases, but the
protections are less than for residential leases
e. Case: Medico-Dental Building Co. v. Horton and Converse (CA, 1942, pg. 712)
i. Facts: LL owns Medico-Dental Building. LL entered into lease with Horton.
Lease stipulated that the lessor would not let or sublet any part of the building to
another company that would sell drugs from there. In addition, the tenant would
only use the property as a drug store. Dr. Boonshaft entered into lease with LL
with stipulation not to open a drug store. Boonshaft had a drug room. He
originally got from Horton, but then switched suppliers. Horton complained and
Ll tried to do something but didn't stop Boonshaft. Tenants refused to pay rent
claiming breach. LL sued for rent.
ii. Holding: There was a breach of a dependent contract, so relieved of obligation to
pay rent
iii. Reasoning:
(1) Parts of a lease will be contract based and parts will be property based
(2) Since this is a set of reciprocal obligations, the terms in question must be
considered as dependent covenants, under the contract model
(3) The term went to the whole of the consideration – the tenant would not have
signed the lease without it
(4) Since the term went to the whole of the contract, it is a dependent covenant
(5) Material breach – since the tenant would not have signed without this clause,
this is a material breach and the tenant can rescind the contract
(6) The LL can be held responsible for Boonshaft's activities – don't distinguish
between nonfeasance and misfeasance (since looking at this from a contracts
perspective and not torts)
(7) Covenants are interdependent and therefore the tenant was authorized to stop
fulfilling its obligations to pay rent since the LL committed a material breach
and the tenant treated this as a rescission of the contract
iv. Comments:
(1) The court may be motivated by policy concerns
(2) But here both parties were commercial, so no real inequality of sophistication
(3) But these rules will be expanded beyond commercial leases, so still affected
by policy concerns
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f. Case: Javins v. First National Realty Corp (Fed App, 1970, pg. 719)
i. Facts: Residential lease. Tenants refuse to pay rent because LL refused to
perform maintenance. They alleged that this was below-standard housing. They
had been in possession of only a few months, but claimed all 1500 violations of
the code arose after they took possession.
ii. Holding: A warranty of habitability (measured by the housing regulations) is
implied into residential leases and breach of this warranty gives rise to the usual
remedies for breach of contract
iii. Reasoning:
(1) Shift the view of leases from independent covenants model of property law
to the dependent covenants model of contract law
(2) Three reasons for this change:
(a) Factual changes – historically leases were agricultural and thus
possession of the land was of primary importance, not being able to sue
the land for residential purposes. This has changed today and people
enter into leases for residential purposes. Also, people are moving more
so tenants don't want to invest the time and money into repairing and
improving leases
(b) Consumer expectations – requirement of merchantibility. Traditional rule
of caveat emptor, but the law provides a warrant that the good will be
usable. Here there is an implied warranty that applies not only at the
beginning of the lease, but continues since there is an ongoing
relationship between LL-tenant that is renewed every month when the
rent is due. Tenants expect a well known package of goods and services
including heat, ventilation, light, etc.
(c) Policy reasons – unequal bargaining power due to a shortage in the
housing market leads to a need to protect tenants.
(3) Even independent of the common law, the code requires this outcome
(4) Implied warranty of habitability will not necessarily allow a tenant not to pay
any rent at all, but it will provide for an offset
iv. Comments:
(1) Important that the conditions were not preexisting or the lease would have
been invalid ab initio and the LL would have been able to eject the tenants
(2) Most of the opinion is dictum, but the court wants to change the law
(3) Extends warranty beyond the time of the commencement of the lease
g. Case: Sommer v. Kridel (NJ, 1977, pg. 735)
i. Facts: Tenant didn't move in and sent letter to LL telling him he wouldn't. LL
did not respond. LL refused to rent apartment to a ready (no potential for
holdout, agreed to all the terms), willing, and able (the buyer had the ability to
make payment) tenant. LL did not show apartment to other prospective renters.
LL sued for rent due under the full 2 yr lease.
ii. Holding: LL has a duty to mitigate damages by making reasonable efforts to relet an apartment wrongfully vacated by the tenant
iii. Reasoning:
(1) Implement this rule because of the increasing complexities of life, the
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landlord-tenant imbalances, and the nature of the housing market → need to
look at a lease like a contract
(2) LL must take reasonable efforts to re-let – dictated by fairness
(3) LL must treat the apartment as one of his stock of vacate apartments
(4) The burden to prove those efforts is on the LL because he is in the best
position to tell you what efforts he made
iv. Comments:
(1) Use this theory instead of surrender doctrine because of a complete shift
from dependent covenants model to independent covenants model
5. Transfer of Interests
a. There are some way in which leases still do act like property – lessee is the general
gatekeeper of the property and can exercise the in rem rights of exclusion associated
with possession of property
b. Transfers of the landlord's reversion or the tenant's leasehold to third parties also
raise property-like issues
c. A lease covenant runs with the land if it touches and concerns the land – must confer
a benefit on the land
i. This is a mandatory rule – parties cannot stipulate that they intend for a covenant
to run with the land
ii. Cannot bind future parties with a fancy – like numerous clausus
d. With regard to transfers, the court falls back on traditional rule and looks at it
through a propertarian framework
e. Case: Mullendore Theatres v. Growth of Realty Investors Co. (WA, 1984, pg. 743)
i. Facts: Conner Theatres had lease in the Jones Building. Put up a deposit to be
used in case of default of payment; to be returned if no default. The lease and
reversion were both transferred. Mullendore (tenant) sued for return of the
deposit.
ii. Holding: Unless the lease requires that the deposit, if forfeited, be used for the
benefit of the leased property, the deposit does not run with a land (so no
obligation to return it in this case)
iii. Reasoning:
(1) A lease covenant does not run with the land unless it touches or concerns the
land
(2) To do so, it must be so related to the land as to enhance its value and confer a
benefit on it
(3) Otherwise, it is a collateral and personal obligation on the personal lessor
iv. Comments:
(1) Court takes a formal reading of the touch and concern doctrine – the
covenant must be directed at an improvement of the property
(2) Intent does not matter at all, touch and concern arises from an objective
interpretation of the contract
(3) This is a mandatory rule; cannot bind future parties with a fancy
6. Transfer of Interests – Subleases and Assignments
a. Sublease – primary tenant wears two hats: he is a tenant to the landlord, and a
landlord to the subtenant. A sublease moves downward and the lease keeps getting
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b.
c.
d.
e.
f.
g.
h.
i.
j.
k.
l.
m.
n.
narrower. No one ever falls out of the chain.
Assignment – a tenant who assigns the lease to a new tenant no longer wears two
hats. He has transferred the entirety of the interest that he had to the assignee.
Privity of estate – there needs to be a direct carve-out of the original interest
(nesting), and one of the parties must be in actual possession of the property
Privity of contract – there is a contract between the two parties, the contract has their
names on it
In a sublease, there is privity of estate only between two people directly connected in
the chain. Those also have privity of contract.
In an assignment, there is normally privity of estate between the original landlord
and the assignee
A sublease is shorter than the original lease and create a new level in the hierarchy
Assignments transfer the whole interest of the lease
Clauses in the original lease will be binding between an original landlord and an
assignee if the covenant runs with the land (if it touches and concerns the land)
Assumption – when an assignee expressly agrees as part of an assignment to be
bound by the terms of the original lease. Thus he is bound by privity of contract as
well as privity of estate
i. Intent is relevant when you can discern intent from the actions of the assignee to
assume the covenants of the original contract
Novation – when the parties agree to erase any privity of contract liability on the part
of the prime tenant
i. Says that the original contract no longer exists
Assumption and novation can occur independently, though logic dictates that they
usually go hand in hand
At least in commercial setting, LL does not have absolute discretion to withhold
approval for assignment of a lease. He must have a commercially reasonable reason
(Kendall)
Case: Jaber v. Miller (AR, 1951, pg. 750)
i. Facts: Commercial lease provided that in the event that the building was
destroyed by fire, tenant would not have to pay rent. Prime tenant transferred
lease to someone else. Building burned down.
ii. Holding: This transfer was an assignment, and thus the assignee must continue to
pay rent
iii. Reasoning:
(1) Common law rule is that if the transfer is for the remainder of the term in its
entirety, it operates as an assignment, otherwise as a sublease
(2) This rule is arbitrary and can be unjust if the parties wanted a sublease that
ran for the rest of the term
(3) Only lawyers will know to get around this by having the sublease end one
day early
(4) Rule originates in the feudal nature of land possession, so is no longer
applicable
(5) Must look at the intent of the parties in determining whether the transfer was
an assignment or a sublease
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(6) Here intent was for an assignment – seen by the title of the document and the
payment in addition to rent (consideration for the assignment)
(7) Thus, there is privity of estate but not of contract
(8) The term does not run with the land (does not touch and concern)
(9) If the transfer were a sublease, the sublease would end when the original
lease ended and thus end the obligation to pay rent
iv. Comments:
(1) When it comes to transferring leases, the court returns to the conveyance
model
o. Case: Kendall v. Ernest Pestana, Inc (CA, 1985, pg. 755)
i. Facts: LL rented airport hangar for 25 years. Then subleased with a restriction
on assignment without the consent of the LL. LL refused to agree to an
assignment of the sublease except with increased rent
ii. Holding: The LL may only refuse to allow assignment for commercially
reasonable reasons
iii. Reasoning:
(1) The law generally favors free alienability of property
(2) Normally leaseholds are freely alienable
(3) Contractual restrictions on alienability are permitted
(4) These restrictions are justified as reasonable protection of the interests of the
less, so the restrictions must be reasonable
(5) A commercially reasonable objection, therefore, can be the only basis for
denying consent to alienate a lease
(6) Reasons for the change and taking the minority rule:
(a) Public policy and a shortage in commercial spaces
(b) Duty of good faith and fair dealing in a contractual relationship
(7) Reasonableness consists of weighing the justification of the restraint against
the costs of the restraint
(8) Legitimate reasons include:
(a) Financial responsibility of the subtenant (worry that the LL won't get
rent)
(b) Fitness of the property for the proposed use (agricultural, commercial)
(c) Legality of the proposed use
(d) Alteration of the premises
(e) Nature of the occupancy
(9) Four reasons that would argue against this rule
(a) The lease is a conveyance. The LL should have personal choice in
deciding whom he deals within giving a conveyance
• But this is already restricted by the duty to mitigate
(b) Do not want to rewrite the contract on behalf of the parties. To do so
would be to alter the consideration
• But this provision is not clear and unambiguous, so the court is just
interpreting. Ambiguous terms are interpreted against those with
more bargaining power.
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(c) Stare decisis – the majority rule is the other way
• But this comports with changes in society
(d) Owner has the right to get increased profits from any changes in the
value of the land. Benefits should accrue to the true owner, not the tenant
• But a tenant accepts a downside risk, so he should get the upside
benefits as well. Besides, the LL gets a windfall when the property
reverts to him and he has more valuable land. Tenant should get
some of the windfall
iv. Comments:
(1) Only seems to apply to commercial leases
(2) Court uses conveyance logic in its arguments regarding not allowing
restraints on alienation
(3) Contract logic in the good faith element
(4) Court acknowledges some benefits for the tenants in the old propertarian
framework (presumption against restraint on alienation)
B. Cooperatives and Condominiums
1. Cooperative – occupants lease their individual units but the tenants collectively own the
building by holding shares in a corporation that has title to the property
2. Condominium – collective ownership is limited to the common spaces, each person
owns his own unit.
3. There is normally a master's deed that sets up the condominium and a homeowners'
association
4. There are also rules and regulations, or by-laws, promulgated by the association
5. Apply modified business judgment rule to review of cooperatives' decisions (Pullman)
6. Coops and condominiums require some move back from a contract view to the
propertarian approach
7. Case: Nahrstedt v. Lakeside Village Condo Assoc. (CA, 1994, pg. 782)
a. Facts: Plaintiff in a condominium sued to prevent enforcement of a rule in the
project's declaration against keeping animals in the development. She argued it was
inapplicable to her since her 3 cats were kept inside and created no nuisance.
b. Holding: The restriction on pets must apply uniformly
c. Reasoning:
i. Subjective expectations don't matter – condominiums normally restrict owners
so the plaintiff should have expected that
ii. Florida cases say the governing board rules are subjected to a reasonableness test
(1) Rules in the declaration or mater deed, however, are only invalid if they are
arbitrary or in violation of public policy or some fundamental constitutional
right
(2) The master deed is not subject to a reasonableness test
iii. In CA, there is a statute promulgating a reasonableness standard
iv. There is a presumption of validity
v. Reasonableness should not be looked at on a case-by-case basis, but rather in the
collective
vi. Must look at the common interests of the development as a whole
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vii. Three things would make a restriction unreasonable:
(1) Arbitrary [this test really says nothing more than “unreasonable,” just an
open-ended term that gives the court discretion]
(2) Imposes burdens that outweigh the benefits of the collective [unclear whether
the court looks at the burden imposed on the individual or the benefit
imposed on the collective]
(3) Violates public policy [another open ended test to give the court discretion]
d. Dissent:
i. Indicates the open-endedness of the majority's opinion
ii. Balances and decides that the happiness conferred by pets outweighs the burdens
e. Comments:
i. The court seems to be laying down legal tests, but really is just creating more
bases for imposing its discretion. Test provides no real direction
ii. Presumption of validity seems to have no basis in the law
iii. Dissent makes no valid legal arguments – uses an open-ended test
8. Case: 40 West 67th Street v. Pullman (NY, 2003, pg. 793)
a. Facts: Defendant is a shareholder-tenant in plaintiff cooperative building. His
conduct was intolerable. He was demanding, complained about the owners above
him, lied about them, made alterations to his unit without approval (in violation of a
by-law). Board called a special meeting and the shareholders voted to kick out D. P
sent him a notice of termination of his lease and cancellation of his shares. He
refused to leave. P offered to give D any money from selling his unit.
b. Holding: Business judgment standard governs a cooperative's decision to terminate a
tenancy in accordance with the terms of the parties' agreement
c. Reasoning:
i. Business judgment rule – very deferential; just ensures that certain process
safeguards have been used, but beyond that does not examine the decision
ii. Other option is de novo review – court will look at all the evidence and find its
own independent decision
iii. Traditionally have applied business judgment rule – a cooperative is formally a
corporation, so that is the default
iv. This allows for the protection of the interests of the entire community of
residents in an environment managed by the board for the common benefit
v. Statute says that cooperatives must present competent evidence supporting its
decision to the court – protects the tenant
vi. Defer to the competent evidence of the shareholders' vote
vii. In order to trigger further judicial scrutiny, the shareholder-tenant must make a
showing that the board acted:
(1) Outside the scope of its authority – to be determined according to the terms
of the actual lease/constitution of the corporation
(2) In a way that did not legitimately further the corporate purpose (here it was
for the welfare of the cooperative), or
(3) In bad faith
viii.
Bad faith element opens up the possibility of the tenant bringing evidence
to show that he cooperative made the wrong decision
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ix. So the good faith requirement protects the tenant
x. Traditionally, the business judgment rule only checked for arbitrariness or
malice, did not open up the review to looking for competent evidence
d. Comments:
i. Applies modified business judgment rule, opening that rule up somewhat
ii. Thus, somewhat distinguished from the rule as applied to normal corporation
C. Trusts
1. The settlor leaves the “corpus of the trust” or the “res” to the trust
2. Trustee is entrusted with managing the assets
3. Beneficiary is appointed by the settlor to receive the benefits of the trust
4. These do not have to be three different parties, but the trustee cannot be the beneficiary
5. The usufructory interests are the benefits that come from the assets
6. Spendthrift trusts – a trust in which the settlor specifically makes the benefits of the trust
safe from the creditors of the beneficiaries
7. Courts have held that you may not set up a trust for yourself as a way to protect your
assets from creditors
8. Case: Broadway National Bank v. Adams (MA, 1881, pg. 804)
a. Facts: Adams was left a spendthrift trust through the will of his brother. Adams got
into debt and creditors tried to use the trust to pay off the debt.
b. Holding: Creditors cannot attach the money in a spendthrift trust before the benefits
are vested in the beneficiary
c. Reasoning:
i. Common law disfavors will that try to protect assets from creditors
ii. MA hereby rejects that rule
iii. Look to the intent of the settlor
iv. Intent here was clearly to protect the trust from creditors
v. Without a contrary public policy concern, we should follow the intent and goals
of the testator
vi. The trusts are documented, so creditors can do research and won't be fooled
regarding the assets of a potential debtor
vii. For creditors that are already owed money, this is not defrauding them – the
settlor had no obligation to the creditors so he didn't have to make the trust
available to them
d. Comments:
i. Court avoids deciding the case where the settlor is also the beneficiary
ii. Court does not adequately address the issue of defrauding creditors
9. Trust Fiduciary Duties
10. Fiduciary duties of a trustee (Rothko):
a. Affirmative duty to exercise diligence in executing the trust
b. Duties to refrain from acting with a conflict of interest to the harm of the trust
11. Must avoid conflict of interest – when a party puts himself in a position where it is
unclear what his motives for acting are, to whose benefit he is acting
12. Must avoid self dealing – trustee cannot use the trust for his or her own benefit (this is
one kind of conflict of interest)
13. Case: Rothko v. Reis (NY, 1977, pg. 809)
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a. Facts: Rothko was a painter who died. His three executors, Reis, Stamos, and
Levine, dealt with all 798 paintings in only about 3 weeks and with only 2 contracts.
The first 100 paintings were sold to MAG, the rest were consigned to MNY to sell
up to 35 a year for 50% commission. MNY had a similar contract with Rothko
during his life with a commission of 10%. Reis was an interest party in MNY.
Stamos was trying to curry favor with MAG.
b. Holding: The executors failed to meet their fiduciary duties
c. Reasoning:
i. NY law says that an executor is a trustee
ii. As trustees, defendants had a fiduciary duty (as above)
iii. May not accept employment from a third-party that is entering into a business
transaction with the trust (this is a conflict of interests)
(1) Temporal priority doesn't really matter. If someone already has employment
with such a company, he should excuse himself
iv. Must refrain from placing himself in a position where his personal interest or
that of a third person conflicts with the interest of the beneficiaries (this is selfdealing)
(1) Trustee can deal for his own benefit, but he must separate that from his
activities as a trustee
v. Reis has a conflict of interest here since he was employed by MNY
vi. Stamos was self-dealing
vii. Levine was guilty of willful blindness – he should have acted with due diligence
and prudence
viii.
Appreciation damages – the difference between the current market value
of the corpus that was sold and the market price at the time of sale
ix. Appreciation damages are not normally awarded
x. But that is only the case where the breach of fiduciary duty is for selling for too
little
xi. Where there are other breaches that rule does not apply
d. Comments:
i. Award appreciation damages as a policy measure – trying to discourage breach
14. Changed Circumstances
15. Cy pres doctrine operates where a settlor has express a specific charitable intent that,
due to changed circumstances, it is impossible to fulfill. Where the settlor has also
expressed a related general charitable intent, the courts will modify the will to fulfill
those interests.
a. Originates from law of equity
b. Default rule – can be contracted out of
c. Failure clause – if your specific purpose cannot be achieved, the trust will fail; look
elsewhere for directions on what to do with the trust
16. Seems to be that cy pres is a legal fiction not really about intent, but about furthering
policy objectives
17. Case: Wilber v. Owens (NJ, 1949, pg. 817)
a. Facts: Bamford left money in a trust to have his random notes turned into a book and
published. The rest would then go to further scientific and philosophical research at
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Princeton. The notes were irrational, unintelligible, and of no scientific value.
b. Holding: Modify the trust in accord with the cy pres doctrine
c. Reasoning:
i. The specific intent of the will cannot be carried out because the notes were of no
scientific value
ii. Here, the specific intent runs contrary to the general intent
iii. Can use the cy pres doctrine to use a general intent to defeat a specific intent
iv. There are clauses throughout the will that indicate a general charitable interest
d. Comments:
i. Has been argued that the cy pres doctrine is one of waste – tries to make sure
that the property is used in an efficient rather than wasteful way
ii. Legal fiction in that the court is still construing the intent of the testator, bur
really just doing this for the public interest
VII.
TITLE RECORDS AND TRANSFER
A. Nemo Dat
1. Baseline principle of our system of property regarding transfers of ownership is nemo
dat quod non habet - “no one can give that which he does not have”
2. In certain circumstances there is an exception for a good faith purchaser
3. A thief has “void title” in property and cannot transfer it
4. Case: Kunstsammlungen Zu Weimar v. Elicofon (Fed EDNY, 1981, pg. 885)
a. Facts: Plaintiff is a museum whose predecessor had possession of two paintings by
Durer until they disappeared during Allied occupation of Germany. They
disappeared from the castle where they were stored with the US ceded control.
Undisputed testimony that the paintings could only have been stolen since they were
transferred to no one. Elicofon bought paintings from an American serviceman, who
said he had bought them.
b. Holding:
c. Reasoning:
i. NY law is like the common law seen in Armory, that a thief can only transfer the
title that he has – that is, title against all but the true owner
ii. No genuine issue of fact as to the theft here
d. Comments:
i. Seems to be a small exception in the jus tertii rule because the plaintiff is only
the descendant of the true owner
B. Good Faith Purchaser
1. Good faith purchaser rule is an exception to nemo dat (for chattel falls under UCC §2403)
2. If A sells to B, but for some reason that transaction is flawed, and B sells to C, as long as
C purchases in good faith and as long as C gives value (not a gift), then the law will
generally give C title to the goods as a good faith purchaser
3. Good faith – the purchaser did not have notice that he was not getting the full rights to
the good legitimately
4. Actual notice
5. Inquiry (constructive) notice – notice that the item was suspicious and that should
prompt further inquiry by the purchaser. Objective intent. Impute knowledge to the
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purchaser
6. Record (constructive) notice – when there is public knowledge that would have shown
that he good was illegitimately gotten. Objective intent. Impute knowledge to the
purchaser
7. Good faith notice requirement is normally an element entirely of notice, but courts
commonly inject the inquiry with other character elements which to a showing of bad
faith (Kotis)
8. Case: Kotis v. Nowlin Jewelry (TX, 1992, pg. 891)
a. Facts: Sitton purchased Rolex from Nowlin by forgin a check. Sitton sold it to
Kotis. Kotis called Nowlin to see if they had sold it to Sitton. He didn't want to give
his name. They told him they had, but weren't sure if the check had cleared. The
called Kotis back and told him that the check had not been honored. Kotis wouldn't
talk to Nowlin, but his lawyer said they would sell the watch back.
b. Holding: Nowlin did not receive title through the good faith purchaser rule
c. Reasoning:
i. Sitton had voidable title (voidable at the option of one of the parties who has the
right to make it void)
ii. UCC §2-403 has three conditions to the good faith purchaser rule:
(1) Voluntary transaction
(a) Involuntary would include: theft, bailee exceeding his authority
(b) This was a voluntary transaction, though
(2) Voidable title
(a) When there is a theft, a void title is created
(b) When there is a forgery, as here, a voidable title is created
(3) Good faith purchaser
(a) Evidence shows Kotis not to be a good faith purchaser
iii. There was actual noticeh ere because Kotis called Nowlin, and the price was
exorbitantly low
d. Comments:
i. Court merges subjective and objective intent – looks at facts and the person of
the purchaser
ii. Good faith notice requirement is normally an element entirely of notice, but
courts commonly inject the inquiry with other character elements which to a
showing of bad faith
9. Culpable neglect – another except to nemo dat
a. Estoppel – a party is responsible for his own actiosn
b. If there is culpable neglect, he will not be able to take advantage of the nemo dat rule
10. Case: Hauck v. Crawford (SD, 1953, pg. 897)
a. Facts: Hauck is an uneducated farmer. Crawford approached him about an oil and
gas lease. Hauck signed the lease, but Crawford put in a deed to mineral rights
under the lease and didn't tell him about it. Crawford then sold those rights to White
and Duncan, bona fide purchasers
b. Holding: May be that the Hauck is estopped by the cuplable neglect from reclaiming
the land from the innocent third parties
c. Reasoning:
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VIII.
A.
B.
C.
D.
E.
F.
G.
H.
i. There was fraud in the actual signing of the document
(1) Fraud in the factum – a fraud that goes to the very existence of the
transaction or arrangement that the parties entered into. Goes to the very
essence of there being consent
(2) Fraud in the inducement – a fraud that does not to go the basis, but to an
issue that is collateral or supportive of the original arrangement. It induces
the contract, but is not at the essence of it
ii. This was a case of fraud in the factum
iii. Crawford misrepresented the document that Hauck was signing
iv. As a consequence, the transfer was void ab initio
v. Applying nemo dat, Crawford had nothing to give the third parties
vi. There is an exception where the original transferor has acted with culpable
neglect
vii. Must weigh the culpability of the original transferor against the complete
innocence of the third party purchaser
viii.
Hauck should have been more careful in what he was doing
ix. When someone signs something, he must read the document, regardless of the
circumstances
x. Thus, there is culpable neglect here
xi. Remand to trial court to determine whether the farmer acted with negligence
CONCEPTUAL TOOLBOX
Penner: Right to exclude, grounded in our interest in the use of property (we exclude so that
we can use)
Grey: By nature, no property is absolute. Property interest is a bundle of rights. You never
know what is in the bundle until something happens. This will lead to the decline of
property as a central category of legal thought.
Locke: Labor theory of property. If you mix your labor into something unclaimed – it
becomes yours. Locke did not think the same was true if you mixed your labor with
something that belonged to someone else. Enough and as good condition – people need to
leave enough and as good of the resource for others
Nozick: rebuttal to Lockean ideas; said that Locke is ignoring some variables, like the
quantity of the mixing – if I mix my tomato juice in the ocean is it mine?
Hegel: personality conception of property. Individuals manifested their wills/personalities in
things. (more arts, intellectual property)
Calebresi: transfers of property
• property right – entitlement stays with owner (injunction), owner can value subjectively
• liability right – can be taken, compensated through objective price – Damages. (eminent
domain)
• Inalienability – (sale is prohibited)
Coase: In a world with zero transaction costs, parties will be wealth maximizers who
bargain with each other until the best solution is reached. But since we do not live in such a
world, where entitlement is placed is important.
Margaret Jane Radin: Distinguishes between property for personhood and fungible property.
Commodification. Buying and selling certain things can diminish human dignity and the
value of human life. These things should be made inalienable to prevent the creation of
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markets that distort the value of human life.
IX. CONCEPTS
A. Formalism – Easterbrook in ProCD, says that contracts create rights in personam, not in
rem, so they cannot be preempted by federal copyright law
1. Conceptualist/formalist/legalist approach says that categorization in the law is
meaningful for its own sake. Accept the categorization automatically.
2. Functionalist approach says that categorization is only meaningful if it serves to further
some purpose – efficiency, etc. – and if it doesn't, you abandon the categorization
3. Foster v. Reiss – majority insists on delivery for formalist reasons, dissent would look to
intent
4. Mountain Brow Lodge v. Toscano – dissent says the “use” clause is as much a restraint
on alienation as the “sale” clause and so would strike it down as well – functionalist
5. From Symphony Space v. Pergola:
i. Rule utilitarianism – this type of rule takes into account all of the utilitarian
factors, so that when it is applied to each case, the most utilitarian result will
automatically be produced. Do not need to go through all the factors in each set
of circumstances
ii. Act utilitariansim – apply the rule by looking at each individual case to figure
out if applying the rule in those circumstances will further the purpose of that
rule
iii. RAP embodies rule utilitarianism
6. Blackett and In re Kerr – realist
a. Trying to restore LL-tenant balance without regard to formal categories
B. Notice
1. Allen v. Hyatt – majority would require constructive notice of no bailment (signs
posted), dissent thinks that there was no bailment because no signal (notice) that the
garage was accepting responsibility for protecting against theft
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