Property with Professor Vicki Been



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Property

with Professor Vicki Been

outlined by Lane McFadden

Spring 2000
First Possession - establishing incentives in the law

Pierson v. Post (NY 1805) - P(Pierson) found and chased a fox as part of a hunt; D(Post) then stepped in, killed the fox, and carried it away. The court held that “mere pursuit” gave P no legal right to the fox, and D had a legal right to intervene.

Always read property holdings narrowly. So here, the holding only applies to foxes on unclaimed land, and rights v. an interloper. It would be different if Pierson owned the land or if it was a beaver.

Imagine a continuum along which we reward effort and labor:

Pursuit Amount of time in pursuit Reas. prospect Certain prospect Mortal wounding Capture Intent to use?

Dissent in Pierson would allow less labor than the majority because the policy goal is eliminating pest. Point? Consider the incentives when making policy. Here, greater certainty provides greater incentives.

Does Pierson provide certainty? Arguing “mere pursuit is not enough” decreases the risk of ambiguity. Best ways to do this are:

Establish a brightline

Decrease the number of subjective criteria used

Decrease the number of issues. (Dissent would increase - “reasonable prospect”)

Wild animals are unowned until they are captured, at common law.
Why first possession? common law approach – clear-act + reward-to-labor = useful labor will be the clear communication of notice (the act). Provides certainty in the law (by providing objective evidence of a claim of entitlement).
Do we want certainty in the law?

NO

Unjust in certain situations



Not adaptable to circumstances

Strictness of the rule might favor one group

Inflexible when dealing with changes in circumstances or mores

May not deter overinvestment

May deter technological innovation.

YES


More likely to lead to equal treatment of people under the law

Less likely to cause mistakes

Allows for more predictability

Protects your investments (the SQ is more stable)

This ºmore productivity

úTransaction costs (no need for prior agreements or for ex post litigation

A more certain rule is more likely to trigger consent notions
First Possession II - using custom to create the law

Ghen v. Rich (Mass 1881) p. 26 - Judge legalizes the custom used by whalers of marking their finds so that when they wash up, others can’t take them.

Things considered by Ghen v. Rich judge when codifying custom:

The number of people affected

A smaller number means there’s more likelihood that people have consented to the custom.

Law should follow people’s expectations

Or else it might just get disregarded

It’s worked up until now (because there’s never been a legal challenge)

Problems with codifying custom

When custom is established by a small group but the actions affect an outside group who has little or no say.

Which interests do the custom-makers represent?

Custom might not be as recognizable or easily followed as a law.
The Rule of Capture

Things to capture:

Before domain name statutes were passed, this was a great example of unrestricted capture. This demonstrates the worth of “initial recognition of value” on the continuum of effort above.

Geothermal nodes on the ocean floor.

A rule of unrestrained capture poses several risks:

Overinvestment in the search (and related search technologies)

Overconsumption

Monopolistic control of resources by the person who gets there first.

Tends to reward size and might

Tends to destroy natural storage value (oil, gas, or water)

Results in less efficient consumption (no consideration for what the cheapest methods of acquisition or extraction would be overall)

Where the fugitive resource is captured, then re-released, the capturer has not been held responsible for damage done through the rerelease. Hammonds, the slant-drilling oil case.

Had court addressed policy concerns, it might have wanted to separate the question of original ownership from the question of liability for reintroduction.


More capture and first possession

Keeble v. Hickeringill (Eng. 1707) p. 30 - P claimed that he had set some decoys on his own pond to lure ducks for hunting, and that D fired guns nearby to drive the ducks away. Court found D liable because he acted out of spite and malice, but said that if he had done it for purposes of business competition, that would be okay.

Identical to Pierson - Another “savvy interloper”, question is whether the pursuer had a right to stop interference by others; same underlying policy arguments.

But Mr. Keeble doesn’t get any socially acceptable benefits.

Theories of the origins of property

Preserving order

Justified by the peacekeeping aspects of property law; but doesn’t really explain why this is the chosen method.

Productivity

Also doesn’t explain why this is the chosen method, rather than “might makes right,” e.g.

Territoriality

Property as personhood

What property represents personhood? Money?

Nature vs. nurture; this notion of property is culturally determined

Political

A way to give people the ability to overthrow their government

Utility


A way to internalize costs as new technology develops (Demsetz)

Labor


Locke.

Locke clearly limits his treatise to situations where his conditions are met, which includes leaving enough for others. I.e., not a market with scarce resources.

Copying (as in AP) - labor theory would say this is stealing. But:

Problem: What has one person’s labor contributed to a product/piece of property? How do we separate the value of the good inherently (e.g., news) and of the labor? How much did Moore contribute to the advent of a new cure v. all the other donors?

Do you value your labor speculatively or retroactively? What is the cell worth?

Reliance


Of people; they can’t enjoy land (and won’t invest in it) if it could be taken away from them.

Third parties rely on people being able to continue to use their land the way they have been.

Examples: AP, marital property, first in time rules such as Pierson v. Post.

Reliance should be reasonable.

You shouldn’t rely on something if you’re told not to (you’re on notice).

Guido Calabresi

Property rule - the owner has exclusive rights, including exclusion

Protected by an injunction

Liability rule - society can intervene, and pay the owner compensation

Protected by damages

Inalienability rule - the owner retains control at all costs


Public Choice Theory
The communal property problem

Say a village of 100 people owns 1000 trees - each person has a 1/100 undivided interest in maintaining those trees. Now say Larry chops down a tree.

He bears 1/100 of the cost, and society bears 99/100 - this is the externality.

When the rule of capture is at play Larry has externalized the cost of cutting down the tree, so this will lead to overconsumption by the first possessor.

When benefits are externalized (Larry only gets 1/100 of the profit), this öunderinvestment.

More problems:

Say the trees are v=$20, but future value (present value discounted) is v=$30. Demsetz claims communities can’t take this into account, but individuals can.

Why? Transaction costs are too high

Transaction costs in general for communal decisions are too high:

Identifying owners

Meeting costs

Legal/administrative costs

Enforcement of agreement

“Hold Outs”

“Free Riders”
Demsetz is a jive-talking bastard

Ambiguity of terms

Does “communal property” mean sharing or with capture?

Ambiguity in scope of argument

All communal regimes or just some?

Identification of key assumptions

The rule of capture governs

Internal consistency of the arguments

Posner and Rose point out that people can’t agree to have private property if they can’t even agree on the sharing rules

Inconsistent application of standards

He’s not as strict on costs of a private property system

Failure to account for other interests

What if a communal system increases quality of life by providing a psychological benefit?

Factual errors

Is it historically and anthropologically correct?

Conquest - Acquisition by Discovery

Johnson v. M’Intosh - discovery overruled by conquest

M’Intosh got a land grant from the US, Johnson’s predecessor in interest bought it directly from the Indians. Marshall frames the question: “Can the courts recognize the title of the Indians?” A question of institutional competence.

No. The court can’t recognize title granted by the Indians.

The Indians maintain a right of occupancy, to continue their use.

The new rule is necessary because of the savage, warlike character of the Indians. If they would cooperate, then some negotiations might be had.

Settled expectations; Marshall is unwilling to toss out every title in the country.



Mabo v. Queensland

Turned out in favor of the native people, but mostly to prevent racial discrimination. The question is framed as, “Can the government annex previously held land?”

Any questions raised by the court (compare to Johnson v. M’intosh) were quickly solved through legislation.

Finders, Keepers”



Finders aren’t really keepers. They only hold the property in trust for the true owner. But, finders have rights superior to those of everyone except the true owner.

Armory v. Delamirie (Eng. 1722) p. 99

A chimney sweep’s boy found a jewel - he took it to a goldsmith, whose apprentice stole it. Ruled that the chimney sweep’s boy had a right to keep it as against the goldsmith. Also, you presume the value of the stolen good was as high as possible.



Thieves are protected against subsequent thieves - a finder has a right to possession as against everyone except the original owner.

May as well protect thieves b/c we can’t distinguish b/t thieves and finders, and we want to stop the “chain of thievery.”

Consider property rights in terms of “X has rights with respect to...”

Hannah v. Peel (Eng. 1945)p. 103

Soldier quartered in a house in which the owner never lived found a brooch, and the homeowner claimed possession of the brooch.

Expectations of whether a homeowner owns what’s on his or her property differ. Here, the court held that while the soldier had no rights against the original owner, and the homeowner normally owned everything on her land, here the homeowner hadn’t really established possession of the land and so the brooch should remain with the soldier.

McAvoy v. Medina (Mass. 1866) p. 110

A woman leaves a pocketbook, and P (a customer) picked it up and turned it in to D (shopowner). P came and asked for the money three times, but D refused. Court ruled that the property was not lost, but “mislaid,” and the D had a duty to hold it in trust.

Policy: let’s increase the chance that the true owner will get their property back.
International News Service v. AP (USSC 1918)

INS takes AP bulletins and publishes them as their own news, selling it to their clients. Majority argues that true news is common property, but that these bulletins are the product of labor, and this is about unfair competition. The news is not abandoned, and AP’s actions intervene at the precise moment the AP becomes profitable. Publication is for limited purposes (profitability). Ruled: INS can’t use it for several hours.

Brandeis’ dissent: The news is not property b/c it’s ideas. INS isn’t trying to profit from AP’s reputation, just from something they found. They weren’t trying to hurt AP either. Creating new property rights out of a common good has serious consequences; let’s not go there. Brandeis doesn’t want to infringe on “the free use of knowledge and ideas.”

Neither can have a property right in the news as against the public; only against each other. “Is there property in the news?” is a meaningless question.

AP does get an exclusive right to first publication as against INS.

See discussion of copying above under the labor theory.

Cheney Bros. v. Doris Silk Corp. (USSC 1930) p. 60-61

Same situation as AP, but court sees it differently; silk isn’t important to society, and mimicking technological innovations isn’t bad. So people should be able to copycat designs. Court says AP is distinguished because it was a very narrow holding. Protecting a design from copy would be an incredible slippery slope problem. (But of course there are patents!)

In Smith v. Chanel (9th Cir. 1968) p. 63 the court held that a copyist actually served a beneficial public interest by “offering comparable goods at lower prices.”

Moore v. Regents of UC (Cal. 1990) p. 66

People can’t sell their organs; a statutory requirement. You don’t continue to own your cells once they are extracted as a medical procedure, even if they’re used for things.

We don’t want scary, evil organ markets. Fucking conservative idiots.

We do want to limit liability on good faith users who unknowingly benefit from a drug based on cells whose property was not properly acquired through purchase by the original researchers/doctors.

The court did hold that Moore could sue the extracting physician for breaching fiduciary duty if he intended to sell them w/o telling Moore.

Bundle of rights: Moore could have been given the right by the court to exclude the Ds from commercially exploiting his cells at the time of extraction, but not the right of transfer!

This conception prevents the slippery slope. Calling it “property” doesn’t ± infinite rights.
Institutional Competence: both the dissent in AP and the majority in Moore pass the buck to the legislature. Do we want to make these decision more democratically?

What about regulatory capture?

Legislative approach; an individual focus. Judicial decisions are broad.

Things we want our decision-makers to have

Accountability

Administrative/enforcement powers

Promptness/responsiveness

The court can act now, and the legislature can undo it later.

What about SOP? Should the court make law?

Innovation

Does the common law system constrain innovation in new paradigms for the court (like Moore)?

Adverse Possession

Hypo: NY has a 15-year SOL. O buys property in 1968, T(respasser) moves onto it in 1975.

1968: O’s rights protected by a property rule - she owns the land in fee simple absolute.

1975: Same rights apply, plus she has a cause of action against T. T now has rights to the land as against anyone except O.

1990: SOL is tolled. T now has rights against everyone. AP actually clears the title.

Why allow adverse possession?

Reward labor and productivity

Comply with people’s expectations

To punish a sleeping owner; we want to encourage policing by owners, not by the State.

Redistribution; possibly, the wealthy lose land to the poor.
Van Valkenburgh v. Lutz (NY 1952) p. 120

Conflict over the lot behind the Lutz house; the lot they had built a shack and garden on was bought by the Van Valkenburghs after Lutz chased their children with an iron pipe. A series of lawsuits went on, but in the first one Lutz claimed only a right to use the causeway, and that Van Valkenburgh owned it. Eventually the court gave Lutz an easement to access the road, but ruled that Van Valkenburgh owned it because of the prior admission.





Why not some other solution: neighborly disputes are irrational, and dividing up the lot doesn’t work. You want to avoid this situation:


A big question was whether the cultivation was large enough to count as AP. This is a question of subjectivity which hearkens back to Johnson v. M’Intosh.
Claim of right (hostility)

England doesn’t look at state of mind at all; SOL begins running immediately.



Majority rule: “claim of right” = “hostile.” T need only not have O’s permission.

Minority rule: requires a “good faith” T. T cannot know that s/he is trespassing, and must have a bona fide belief that she has title to the property.

This happens even in majority courts; unwilling to give land to a knowing T.

Why not require “bad-faith” possessors to pay fair market value to O, and then give them the title? This would prevent wrongful activity w/o compensation but still maintain AP for the reasons we listed above.

Aggressive trespasser: Courts always presume that you intend to take the property, even if you intended to give it back when O showed up.



Manillo v. Gorski (NJSC 1969) p. 138

D built steps behind her house to the side door which encroached 15 in. onto P’s property. She had this piece of the land for twenty years, and mistakenly thought it was hers by deed. Court holds that mistake can qualify and they overturn requirements of “open hostility.” Manillo is now the majority rule.

They also hold that tiny encroachments are not “open and notorious,” and that requiring surveys would be an undue hardship.

Property only protected by a liability rule if there is actual notice (by notoriety)



Hostility still important: consider leasing or if someone said “Can I use your land for a bit?”
Color of title: where the deed is mistaken. This can grant you adverse possession taken under color of title, called “constructive adverse possession” by Emmanuel’s.
Adverse possession requirements:

Actual - often conflated with “open and notorious.” Used to determine when the SOL starts. You have to use a reasonable percentage of the land.

Open and notorious - usually just requires using the property as a true owner would. Sometimes difficult to determine. Also means, O must be reasonably expected to know that another person has entered the property.

Hostile / Adverse - lack of O’s permission is required.

Continuous - interrupted by ouster (by anyone) or re-entry by O.

Exclusivity -

defeated if:

You’re sharing with O

You’re sharing with other members of the public (like if you have an easement)

Two people can only jointly and become joint owners under AP


AP of chattel

Georgia O’Keeffe v. Snyder (NJSC 1980) p. 153

The SOL is held not to start running until the true owner knows or should have known of the theft and the identity of the theft (what was stolen).

This is really hard; maybe AP should only be for land.

Here it means the SOL never runs, and the paintings can never be sold.



Marital and Intellectual Property

In re marriage of Graham (ColoradoSC 1978) p. 379

Woman wants rights to her husband’s masters degree after divorce.

Court uses the “looks like, smells like” property test- The degree isn’t saleable/transferable.

Courts aren’t treating intellectual property the same way they do land.

Different theoretical approaches

Labor theory - paying for it ÷ a right to share in it

Rewarding her gives him less incentive to work for the degree.

The value of his degree is so speculative (like a cell for research!)

Reliance theory - wife forwent opportunities for herself to invest in his degree

Expectations - she expected to be married to an MBA. Not a popular notion, this one.



Estates

Characteristics

Estates are or may become possessory

So easements and restrictive covenants can’t be estates

Estates are measured in terms of duration
Remainders

Vested

If there’s no condition precedent (except the expiration of the prior estate)

Must be possible to identify who will take the remainder when possessor expires

Vested remainder “subject to open” means O÷A for life, then to B’s children.



Contingent

If its subject to a condition precedent (other than expiration)

Or it it’s Created in favor or an unborn beneficiary

Or if it’s Created in favor of a living but unidentifiable beneficiary

Any time the last interest is a contingent remainder, there’s a reversion interest in O.

At CL, vested remainders were transferable but contingent ones weren’t.


Executory Interest

Any interest for a TPB that’s not a remainder.

An executory interest can divest (cut short) the primary estate.

Examples:

O÷A for life, but if B should marry then to B and B’s heirs. So even if A were still alive, B could take the estate by marrying.

O÷A for life, then 1 year later to B. This is a “springing” executory interest, b/c it reverts back to O when A dies, then springs back from O to B.



The Free Market is a Communist Plot

Demand side problems

Unjust initial distribution - let’s just intervene a little, no big deal.

Preferences aren’t “internal” - shaped by culture and advertising. This is just nature vs. nurture.

Imperfect information -

E.g., people underestimate voluntarily assumed risks, and overestimate risks that are imposed on them (remember Risk Comm.?)

There may not be a viable market mechanism for public goods

Zoning restrictions - the example Been gives

People are irrational cretins

Transitivity might not work; a bipolar choice may force comparison of different factors of the same good than does a choice over the three. So maybe rationality doesn’t require this.

There’s no “social welfare” outside the aggregate of individual welfare. But maybe people do act differently in their roles as citizens than as consumers

Utility is incommensurable - “happiness units” can’t be compared across people.

Supply side problems

High costs of entry and exit

Natural monopolies

Information withheld by collusion and high entry barriers

Sellers don’t act to maximize profits (racist landlords, Ben and Jerry) - they value informal norms and cultural affirmation as well as money.

De minimis number of sellers for competitiveness


Coase

Mistaken assumptions of Coase

He thinks there’s equal distribution of wealth.

He thinks parties have equal bargaining power.

We assign fault for all sorts of normative reasons to make parties liable for bad behavior.

The “offer-ask” disparity. People will ask for a lot more to surrender a right than they would have paid for it initially.

When government steps into the shoes of the neighbors, it has a different set of interests than they do when they act as citizens or neighbors compared to when they act as consumers.

Coase’s theorem always cautions against inalienability.

Coase theorem suggests that regulating market transactions skews other markets in unforeseen ways. Also, all government actions have opportunity costs that must be considered.


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upload documents -> Constitutional Law – Thematic Outline


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