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1. INTRODUCTION THE BIG PICTURE

A. COMMON THEMES THROUGHOUT PROPERTY LAW

1. Property law = a system to allocate scare resources

a. The question is how efficiently does the particular property regime do so?

2. A series of rules defining a persons relationship to a thing that others must respect

a. Property law is not about one persons relationship to a thing; it is about relationships between and among persons with regard to a thing

i. Relativity of title a person can have a relatively better title or right to possess than another, while simultaneously having a right inferior to yet another person

b. Property law is about tenures the many ways in which property may be used or possessed (i.e. it is NOT about the property itself)

i. The rights of property (a.k.a. the bundle of rights)

1. The right of a person to exclude another from using a thing

2. The right to use e.g. gain rents, profits, income from the thing

3. The right to possess4. The right to transfer give the thing to one person and not another (i.e. to transfer title), sell the thing

3. Property is about balancing societal interests against economic development (big theme see eminent domain, nuisance, infra)

4. Property rights arise only through government (i.e. not through natural law)

a. This is the legal positivist view

5. A key question throughout property law: What were/are the parties expectations?

a. Start with this, then think about whether or not the law should honor them

B. BASIC PRINCIPLES AND THEORIES

1. Starting point: what is the absolute function of government?

a. Schumudde: it is to maximize happiness

i. Samuelson: Happiness = consumption/desire

1. Increase happiness by increasing consumption or decreasing desire

a. How can property law achieve this?

2. Property law = state law

3. Ownership is title

4. Possession is physical or constructive controla. Easier to prove than ownership (only land and cars really have clear titles)

5. Levels of possession

a. Occupancy

b. Possession

i. The right to possess/occupy the land but not to transfer title

ii. Consists of two elements

1. Intent to possess on the part of the possessor

2. Actual control or holding of the property

iii. Indicative of ownership, but does not necessarily prove it

c. Ownership

i. Confers the bundle of rights (supra)

ii. Very few pieces of property in which this can be fully proved (e.g. house, car)

6. Types of property

b. Personal property movable things

i. Chattels tangible, visible personal property

ii. Intangible personal property intellectual property, stocks/bonds

c. Real property land and the improvements on it

6. Types of ownership

a. No one owns the property

b. Communal ownership no one has the right to the property, but all can use it (everyone owns it)

i. E.g. condominiums, Indian property system

ii. Provides incentive to use the resources first e.g. overfishing the communal pond ( first one there to fish wins, overexploitation/overuse ( tragedy of the commons

iii. The anticommons regulation is extensive, not allowing free use of the property; administrative costs and regulations are high ( high costs of ownership, development is discouraged ( underuse

c. State ownership the state owns the property and makes all the economic decisions

i. Ideological architect would be Karl Marx

ii. E.g. communist regimes

iii. Shortages result when the market is not free to govern what should be produced and how it should be allocated

1. Price controls ( shortages

iv. More jobs produced but at the cost of economic growth ( inefficiency (e.g. 3 guys doing a job that one can do)

v. In defense: unrestricted free market leads to profiteering by some at the expense of others

d. Private property (i.e. free enterprise)

i. Ideological architect would be Adam Smith

ii. Demsetz private property regimes developed because the other systems have many costs, particularly in the form of externalities

1. Externality an external cost which has no effect upon the person engaged in the activity, but has a cost on someone else engaged in society

a. The goal is to make actors internalize these costs how?

i. Tax them in amount equal to externality

ii. Legal action

iii. Cap and trade (e.g. buying and selling the right to pollute)

b. But this goal is difficult because of negotiation costs ( costs of negotiating a settlement of external costs (how do we allocate them among many actors?)

i. Coase Its difficult to get a large group of people to agree to a solution

1. If small number of actors, bargaining should be used

2. If large number, need regulation and legislation

c. With externalities, a persons self interest deviates from societys interest

d. Externalities ( overconsumption (if producer had to internalize external cost, he would produce less)

iii. Benefits of private property

1. Encourages owners to increase the value of their property

a. Demsetz on why private property regimes developed if you dont own the property you lose the incentive to make the property more valuable

i. No one washes a rented car

b. Beneficial for communities as whole

2. Confers a reward ( deserved on the basis of ones efforts (a la Lockes theory)

3. Confers power and economic strength

4. Facilitates exchange in the free market (presumably better allocation as a result)

5. Essential human dignity landownership increases notions of success and self worth (runs in sync with US dream, upward mobility, etc)

7. Theories of property law

a. First in time (first occupancy) I was here first, so I should have it

i. Critique: explains property rights, but doesnt justify them why does the occupier have a better claim?

b. Labor-Desert (Locke) I put my labor and sweat into this, so I deserve to have it

i. People are entitled to the property that is produced by their labor

ii. See also, doctrine of accession

1. One who in good faith applies labor to anothers property acquires title to the resulting project if this process (1) transforms the original item into a fundamentally different article or (2) greatly increases the value of the item.

iii. Critique: people should own the value they add to the property, not the property itself

iv. Critique: assumes an infinite supply of natural resources

c. Utilitarianism (Traditional) I will make the best use of this property, so I should have it

i. Property exists to maximize the overall happiness of all citizens ( property rights are allocated and defined in the manner that best promotes the general welfare of society

1. Property is a means to an ends (happiness)

ii. Dominant American theory

iii. But a lot of studies show that increasing ownership of property can lead to a lot of initial happiness, but it will only help marginally thereafter above a certain level (once you have your basic needs covered) it will have minimal effects

1. Law of diminishing returns

d. Utilitarianism (Law and Economics approach) My use of this property will generate the most economic value, so I should have it

i. Analyze property rights to the point where the best economic use is realized ( decisions are based on the highest and best use of property

ii. Ideological architect is Posner

iii. Critique: underlying assumption that social value can be appropriately measured only by ones willingness to pay is shaky

iv. Critique: doesnt measure basic human qualities like dignity, love, self-esteem

e. Liberty My right to vote stems from my ownership of this property (less relevant theory today)

i. Ownership of private property is necessary for democratic self-government

ii. Property rights give people the freedom to use their own economic and political judgment

f. Personhood This property represents who I am (I am my fucking khakis)

i. Private property is essential to the full development of the individual

ii. Some things are seen as so closely connected to a persons emotional and psychological well-being that they become part of the person, thereby justifying broad property rights over such items.

1. E.g. wedding rings

2. This theory explains holdouts well

2. WHO IS THE OWNER?

A key question throughout property law: What were/are the parties expectations?

A. ACQUISITION BY DISCOVERY

1. General rule: the first person to take possession of a thing owns it (i.e. first in time)

a. Terra Nullis a thing or territory belonging to nobody

2. Johnson v. MIntosh (1823)

a. P wants D off land that was given to him by Indians in 1773. D says land was granted to him by US gov. thereafter via a patent (a deed for first issuance of property rights)

b. Chain of title you look back at where the persons claim comes from (both chains are short here)

c. Who has a better chain of title, P or D?

i. Who had the right to transfer the property, Indians or US gov.?

d. The discovery of Indian-occupied lands vested absolute title in the discoverers and rendered Indian inhabitants incapable of transferring title. Only the Gov. has the right to purchase from the Indians. Discovery gave the Europeans, and later the US government, the exclusive right to grant and extinguish the Indian title of occupancy (via purchase or conquest)

i. Ps chain of title fails because the Indian right of ownership was invalid (only a right of occupancy)

1. Occupancy does not confer the right to transfer title

e. Court says property was taken by discovery

i. Major rationale for holding: economic theory Indians were fierce savages, they wont use the property well Americans are civilized and will make better economic use of the property

f. Positivist holding property rights exist because they are recognized by the government under whose dominion the rights are asserted

i. In the US, dominion is often based on the concept of discovery, validated in cases like this one

g. BUT reasoning for discovery is suspect because everything in opinion points to acquisition by conquest (taboo at the time)

i. Court needed to uphold US right to this property or else face loss of claim on most of the nation ( the holding was there before the reasoning lead to it

B. ACQUISITION BY CAPTURE

1. General rule: the first one to take possession (actual or constructive) acquires ownership

a. Pursuit alone is not enough

b. Same as first in time rule ( first to possess is first in right

c. Ratione Soli by reason of the soil

i. A landowner is in constructive possession of wild animals that are on his property

1. If the animals wander off his property, he relinquishes possession (but see, animus revertendi infra)

2. Others cant come on land and hunt without permission

2. Wild animal cases are used as a prototype for other problems emerging in property law that adhere to this rule (fugitive resources, infra)

a. Ferae naturae wild animal

b. Examples of fugitive resources: oil, gas, water

3. Common theme in the animal cases: society wants the animal caught the legal regime established should facilitate that goal

4. Pierson v. Post (1805)

a. P on hot pursuit of fox in an uninhabited area, D intercepts, kills fox and claims it.

b. Court finds for D the first person who has physical control has ownership ( hot pursuit does not constitute constructive possession here ( pursuit alone vests no property right (i.e. need a plus factor like actual possession or mortal wounding (constructive possession))

i. Appeal is in the fact that the rule is simple, easy to apply and fosters competition

ii. Additional justification: A finding for P (that pursuit is possession) would cause a lot of quarrels/litigation

c. Close pursuit after a mortal wounding gives a hunter a right to possession of the fox that is superior to another hunters subsequent intervention

i. A mortal wound (constructive possession) is:

1. Something that objectively is likely to prove fatal to the animal

2. Which will, in time, deprive the animal of his natural liberty

3. Shows subjectively a manifest intention to seize the animal

a. That the hunter isnt just out to enjoy the chase he actual wants the fox

d. Dissent: should follow rule of custom hot pursuit = possession

i. Look to incentives/outcomes of adopted rule

1. This rule will discourage the hunting of pernicious beasts like foxes because why would you make great effort to hunt when the spoils of your labor can be so quickly taken from you by scavengers?

a. Externality effect on other/potential hunters

2. We want to encourage people to hunt foxes

a. No longer the case

3. Problems with using custom

a. It benefits the actors involved, but it may neglect the interests of those outside the specific group

i. Should we let the NRA set gun laws?

b. In can be dangerous to those in industry

c. It can be wasteful of the resource

d. It can lead to overinvestment in technology

4. Generally, custom prevails only when it coincides with the laws needs

e. Dissent and Majority disagree about what defines possession

5. When should custom set the law (trumping the rule of capture)?

a. Glen v. Rich (1881)

i. Rule: A court may look to the custom or usage in an industry to determine when property is acquired.

ii. P spears finback whale with marked iron but doesnt capture it, D finds the dead whale ashore, sells it, P sues

1. More than mere pursuit because whale was killed

iii. Court evaluates 3 customs that define possession:

1. Fast fish, loose fish the animal is owned only when it is captured (actual possession)

a. Increased danger is a problem with this rule many fishermen died as a result of attempting actual possession

2. Iron holds the whale whale is owned when a harpoon is fixed to it as long as the claimant is still in hot pursuit (constructive possession)

3. Value of the carcass is split between the first harpooner and the ultimate seizer ( the guy who finds the whale gets a cut

iv. Court finds for P under iron holds the whale logic

1. Why break with rule of capture and go with custom?

a. If an entire industry embraces a custom that affects very limited people and is unlikely to affect the rest of mankind (i.e. virtually no externalities), then we can adopt industry custom as the law

b. Public policy rationale we dont want to discourage people from hunting whales (same as with Pierson v. Post) ( if scavengers can reap the fruits of your labor, why would you take the effort to hunt?

i. If D wins, whale hunters will have to stay with whale and hope to capture it then and there ( makes it more dangerous to hunt whale ( less people would do it, etc

c. In sum, holding is limited to whaling and necessary for maintaining incentive to whale (also it works well in practice)

6. Malicious interference (with capture)

a. Malicious interference with anothers (B) livelihood is not allowed, even if done on interferers (A) own property, provided that:

i. B is earning a livelihood in a legal fashion

ii. A is not trying to promote his own livelihood

Keeble v. Hickeringill (1707, Queens Bench)

P has decoy duck pond used for capturing ducks, D comes by and shoots guns to scare away Ps ducks. D argues no cause of action because P didnt own the ducks. Judgment for P. Court says violent or malicious act to interfere with a trade is unlawful; harming by competition is not ( e.g. schoolmaster starting a new school and luring away students from established school is OK. Scaring them away from attending established school with gun is not OK. ( Every man may use his property legally for his pleasure and profit; and where a malicious act is done to a mans occupation, there an action lies in all cases.

iii. Court said the action is not brought to recover damages for the loss of the fowl (via constructive possession), but for the disturbance of the Ps taking possession of them

b. Focus is on means (fair competition, e.g. luring away) and intentions (promoting your own livelihood)

7. Animus Revertendi If wild animals escape from a possessor, the possessor loses property rights, but if the animal has a habit of returning, then the original possessor does not lose title he still owns the animal

a. Locke-like theory: the taming of wild animals (to return) is a method of adding value to the animal ( domesticated animals are valuable to society and the effort to tame wild animals is rewarded

8. If a wild animal with no animus revertendi escapes, the captor loses possession.

a. BUT, if the animal is not native to the area, the new captor may be put on notice that the animal has escaped and someone else has prior possession ( legal effect of notice is unclearb. Inquiry notice - when someone takes something into possession that he may have an inkling did not belong to him and that someone may be looking for it

c. Constructive notice trespasser should really know that property is being sought by the original owner.

9. Hypo - T takes animal off Os land and brings it to its own land. T2 takes the animal off Ts land. T sues T2 for the animal, and T2 says T never had rights to the animal to begin with. Who wins?

a. T b/c in the case between them T2 is the trespasser and T solidified possession by bringing the animal on his own land ( we protect possession, the earlier possessor (even though someone else has a greater claim to the property)

10. Government regulates wild animals to prevent extinction, but it is not responsible for the damage they may cause ( gov assumes ownership for purposes of regulation

a. They can deregulate in the face of overpopulation

11. Oil and gas two ways of looking at it

a. Rule of capture like wild animals, the person who subdues the oil reserve, owns it (actual possession)

i. We want to encourage people to extract these resources

ii. A landowner can make a well on his property to drain a reservoir that is under his, and anothers, property

1. BUT you cant angle the well down and across to tap the neighbors reserve ( trespass/conversion

b. Proportional ownership you have to figure out how much each person owns (difficult to determine) (constructive possession)

i. Whoever owns the surface owns to the depths of the earth

ii. Helps to discourage overdrilling and saves oil for future

c. Also, state statute and regulations allocate usage

12. Surface water

a. Geography determines rule water-scare Western states vs. water-rich Eastern (a.k.a. riparian) states

i. Riparian states each person with land abutting a water course may take water from it for any reasonable use

1. Limits on this rule in times of scarcity

a. Cant use water to benefit non-riparian lands

ii. Western states prior appropriation the person who first appropriates the water and puts it to reasonable and beneficial use has a right superior to later appropriators

b. In many ways, once allocated, water is treated like personal property the right to use it can be transferred (treated separately from the land on which it is used)

13. Groundwater (2 types)

a. Underground stream groundwater that flows in a channel

i. Same rules as surface water are used

b. Percolating waters groundwater that doesnt flow in channel

i. Two legal approaches

1. Owner of the property has an absolute right to withdraw percolating water and use it as he wills, on the land or elsewhere

2. Reasonable use doctrine (the American rule) the water must be used solely on the overlying land if elsewhere would cause hardship to other landowners with access to the common underground pool of water

ii. Minority approach correlative rights doctrine divvy up the water to all owners in proportion to land acreage owned

C. ACQUISITION BY CREATION

1. General rule: one can acquire property by creating it

a. A person might invent or create a thing, and be entitled to obtain a patent or copyright under federal law, or a right to sue to prevent its misappropriation

b. Well supported by Lockes labor theory (sweat of the brow/accession) and personhood theory

2. Intellectual property property created by the exercise of the mind

a. E.g. patents, copyrights, trademarks, ideas/persona

b. Trade secrets

i. E.g. the formula for coke

c. Patents a new idea that someone has developed

i. Protection for novel, useful, and nonobvious processes or products

ii. Greatest protection in IP is for patents

iii. 20 years of protection and profits generated are taxed as long term capital gains (i.e. 15%) ( huge tax incentive

iv. Downside is that patent lifeline starts at application, not approval

d. Copyrights original works of authorship (books, songs, writings)

i. Protect the expression of ideas

ii. Protected for your lifetime plus 70 years

iii. Also, the right of publicity the right of each individual to benefit from their own publicity

e. Trademarks words, names, symbols, or devices used to distinguish some goods from others ( anything which invokes a recollection of the product

i. Protection is lost when insignia is abandoned or when the mark becomes generic (e.g. aspirin)

3. INS v. AP (1918) protection for quasi-property (at common law)

a. AP would come out with stories, INS would copy them and provide them to their member outlets (also bribed AP employees for access to news)

i. Between two competing news services, the systematic misappropriation of hot news stories by INS was sufficient to justify an injunction until the commercial value of the stories dissipated

ii. Turns on the issue of unfair competition in business

1. By putting time, effort, and money in bringing a product to market, you create a quasi-property right in that product against competitors in the field

a. You cant own the news itself, but you can own the writing of the story until it reaches wide dissemination

4. Two competing theories in intellectual property law

a. Economic we grant limited monopoly power to innovators in order to create an incentive for them to take the risk in developing a new product

i. Very significant grant of power

1. But hopefully not enough to quell competition

ii. Controversial with stuff like new/life-saving drugs

1. Other countries dont give as much protection here, but US is largest producer of new drugs (( system works)

2. Two tier system sell drugs for reduced prices in 3rd world

b. Creative we give legal protection in order to spur/encourage creativity and reward creativity

5. The problem is finding the right mix between creativity and economics how do we nurture creativity and reward labor without going too far by creating monopolies stifling creativity

a. We want to encourage competition, too

6. General exception to above rule: intellectual property protection is going to be limited when its good for society to do so

a. Smith v. Chanel (1968) If no patent, one can copy, imitate and even say theyre equivalent to the product (but they cant claim to be that product)

i. The copyist serves an important public interest by offering comparable goods at lower prices

7. There is no common law intellectual property protection ( its only enforced in a limited sense via legislation (statutory protection)

a. Common law copying and imitation are allowed generally

Cheney Brothers v. Doris Silk (1929)

P makes seasonal patterns, one in five is successful. D copies a pattern and undercuts price.

INS did not create common law patent or copyright protection ( absent some recognized right at common law or under a statute, a mans property is limited to the chattels which embody his invention ( the intellectual property can be imitated at will.

8. Cheney is no longer good law ( Today anything expressive can be copyrighted, provided the expressive aspect can be separated from the functional

9. Additional cases

a. Nichols v. Universal (1930) Ds movie too unlike Ps play to be an infringement, despite that in some respects D used Ps work

b. Diamond v. Chakrabarty (1980) Ps nonnaturally occurring micro-organism can count as a manufacture or composition of matter within the statute ( Congress contemplated wide scope for patent laws

c. (Vanna) White v. Samsung Electronics (1993)

i. Majority: the right of publicity extends beyond name and likeness, to any appropriation of Whites identity anything that invokes her personality (e.g. robot with blonde hair in front of wheel)

ii. Dissent: Slippery slope that will choke off creative elements of society. Unlike Midler case, no one would think White is endorsing this product Overprotecting intellectual property as harmful as underprotecting it. (also, right to parody is key)

d. MGM v. Grokster (2005) D distributes free software products that allow computer users to share electronic files. P argues that much music is being pirated ( One who distributes a device with the objective of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties.

i. Affirmative steps = advertising an infringing use, instructing use

ii. Diff from VCR b/c VCR was capable of commercially significant noninfringing uses ( where an article is good for nothing else but infringementtheres no injustice in imputing an intent to infringe

1. Infringing potential is not enough for liability

10. Ownership in ones own body

a. Every man has property in his own person Locke

b. The law generally acknowledges the authority of people to control the destiny of their body parts, but restrictions apply

c. Blood, hair, semen have long been sold on market, but not organs

d. Moore v. Regents of University of California (1990)

i. D kept Ps excised cells after treatment, developed and marketed them into commercial success without Ps permission

ii. For conversion, P must establish an actual interference with his ownership or right of possession

iii. Court is concerned with public policy repercussions

1. Majority: All researchers who come in contact with cells would be liable for conversion (strict liability tort)

a. Statute limits patients control over hazardous biological waste

b. Cell line is product of Ds invention

2. Concurrence: A market for body parts / selling ones body for profit is no good issue for legislature to decide

iv. Look to the parties expectations ( P did not expect to retain possession of cells, but now wants to benefit

v. P does not have property right to the cells (no conversion claim). D acquired original ownership. P could sue for breach of fiduciary duty and lack of informed consent though (rights still protected)

vi. Dissent: P at least had the same right to own his cells as D did

1. Concerned with bundle of rights

11. The Right to Exclude (Bundles of Rights, supra)

a. You have a right to exclude people from your property

i. Jacque v. Steenberg Homes D had mobile home to deliver, fastest way was over Ps land, P refused access, D went anyway ( Right to exclude has no practical meaning unless protected by stateb. But there are exceptions to this right in certain situations (public/private necessity, state-sanctioned services, etc) ( its not an absolute right

i. State v. Shack P tries to stop state employees (D) from seeing migrant workers housed on his farm ( Title to real property cannot include dominion over the destiny of persons the owner permits to come upon the premises

1. One should so use his property as not to injure the rights of others

c. The right to exclude and the right to include are both necessary conditions of transferability

D. ACQUISITION BY FIND

1. General rule: the finder acquires an interest superior to everyone but the true owner (but there are exceptions)

a. Finder must satisfy the two elements of possession (control & intent)Armory v. Delamirie (1722)

Chimney sweeper (prior possessor) who finds jewel is entitled to its return from goldsmith who refuses to return it.

If goldsmith does not return it, reimbursement for jewels will assume they are of highest quality/value

2. The finder acquires title superior to everyone else except (1) the true owner and (2) sometimes the landowner

3. 3 factors dominate the analysis of finders rights

a. The presumed intent of the original owner

b. The identity of the competing claimants

c. The location where the item is found

4. First Stage of Analysis: The presumed intent of the original owner

a. The rights of a finder (vs. other claimants) turn on which of the 4 traditional categories the found object fits into

i. Abandoned property

1. Owner intentionally and voluntarily relinquishes all right, title, and interest in the property

2. First to take possession (i.e. finder) acquires title valid against everyone (including prior owner)

ii. Lost property

1. Owner unintentionally and involuntarily parts with his property through neglect or inadvertence and does not know where it is

2. Owner retains title

3. Finder has superior claim to the property over landowner

Hannah v. Peel (1945)

D buys house, stands empty for years, then is requisitioned by the army. P is stationed there, finds brooch. Turns it in, is given to D ( a man possesses everything which is attached to or under his land. However: a man does not necessarily possess a thing which is lying unattached on the surface of his land even though the thing is not possessed by someone else.

iii. Mislaid property

1. Owner voluntarily puts his property in a particular place, intending to retain ownership, but fails to reclaim it or forgets where it is

2. Owner retains title

3. Landowner (i.e. owner of the locus in quo) has superior claim to property over finder

a. Rationale: best way to protect rights of true owner

i. Landowner becomes bailee for owner

McAvoy v. Medina (1866)

P, customer in shop, finds wallet on table. Leaves in care of D, shop owner. After a while, when unclaimed, P wants, D doesnt give ( mislaid property belongs to the owner of the locus over anyone but the true owner

iv. Treasure trove

1. The property (usually gold, silver, currency, etc) has been intentionally concealed by an unknown owner in a secret location

a. Old rule was that it would escheat to the sovereign

b. Nowadays, it is treated under the lost/mislaid/abandoned rule

2. Shipwrecks - finder is entitled to abandoned shipwreck unless the wreck was embedded in land owned or possessed by another

a. But under maritime law, it stays owners property, but subsequent possessors get salvage award

5. Second Stage of Analysis: Identity of claimants & location of property

a. Rights to property found in public places

i. Analysis will consist primarily of first stage intent of owner

b. Rights to property found under soil

i. If found under or embedded in soil, it is awarded to the owner of the premises, not the finder

1. Treasure trove is an exception intentionally buried with intent to return to claim it, supra

c. Rights to property found on private land (finders actual possession vs. owners constructive possession)

i. Lost objects found either within a house or embedded in the soil are generally awarded to the landowner, not the finder.

ii. Status of finder is relevant sometimes

1. Long term tenant finder will often prevail over landowner

a. See Hannah v. Peel (landowner was never in possession ( unaware of articles in house)

2. Finder who is landlords employee usually wont prevail

a. If finder on premises for limited purpose usually owner is entitled to property

6. Statutes Defining Rights of Finders

a. Many states have statutes governing rights in found property which supersede the common law.

b. Typical statute requires finder to turn over the item to the local police department; the find is then advertised and the true owner has a set period to file a claim. If no claim is made within this period, the item belongs to the finder. If the true owner makes a timely claim, some jurisdictions require that she pay a reward to the finder.

7. Causes of Action Involving Personal Property

a. Replevin give it back (specific remedy)

i. Similar to ejectment in real property

b. Trover pay for your use/control (damages)

i. Similar to trespass in real property

E. THE LAW OF BAILORS AND BAILEES

1. Bailment the rightful possession of personal property by someone who is not the owner

a. The relationship created by the transfer of possession of personal property by a bailor to a bailee without a transfer of title and for the accomplishment of a certain, limited purposei. E.g. borrow book from library, rent car, lend someone $5, etc

b. Return of the property in the same (undamaged) condition is contemplated

i. Or disposal of the property according to the terms of the bailment

c. Property in bailment is usually tangible, but securities, etc can be used too

2. Elements of a Bailment

a. Delivery by bailor (actual, constructive, or symbolic)

b. Acceptance by bailee

i. Bailee must acquire possession

1. Physical control and intent to exercise control

ii. Bailee must consent to bailment

1. Similar to intent aspect of possession

2. Mere custody of a chattel is insufficient to constitute possession

iii. Knowledge of propertys presence

1. Bailee must be aware of the item creating the bailment

2. Bailment does not exist in regard to something concealed within the property that is the subject of the bailment

a. E.g. a garage attendant takes possession of your car, not whats inside the glove compartment

3. Constructive Bailment

a. Possession of personal property is acquired and retained under circumstances in which the recipient should keep it safely and return it

i. Arises when delivery and/or acceptance are lacking

1. E.g. context of mislaid property found in shop

4. Bailment vs. Lease vs. License

a. Important distinction because of liability issues

b. If parking your car in a lot constitutes a bailment, the lot operator becomes bailee and is responsible to care for your car

c. If the lot operator merely gives the owner a license to use the space to park his car, no bailment arises and car remains under owners control

5. Bailees Liability

a. A failure to redeliver (i.e. misdelivery) renders the bailee strictly liable

i. Some states have replaced this with a presumption of negligence

b. Liability in negligence arises when the bailed property is lost or damaged

i. 3-pronged rule

1. When the benefit to the bailee (from the bailed property) is slight, the care required of the bailee is slight ( only liable for gross negligence

a. E.g. gratuitous bailment, such as taking care of object for friend

2. If the bailment benefits both bailor and bailee mutually and is equally beneficial, the standard of care rises and bailee is liable for negligence ( duty of reasonable care under circumstances

3. If the bailment benefits the bailee, the bailees standard of care rises again ( merest neglect renders bailee liability

a. E.g. repair shops, transport companies

F. ACQUISITION BY GIFT

1. A gift is a voluntary, immediate transfer of property without any consideration

a. If there is consideration, law of gifts does not apply (law of contracts does)

b. A gratuitous promise/agreement to make a gift in the future is not binding

i. But see, promissory estoppel in contract law

2. There are 2 types of gifts

a. Inter vivos gift given during the donors life

i. 3 elements

1. Donative Intent donor must intend to make an immediate transfer of ownership to the donee

a. Statements and actions of the donor usually provide best evidence of intent

b. If donor intends the gift to take effect in the future, it is invalid

c. A gift cannot be subject to a condition precedent

d. No gift is made if donor retains the right to revoke

2. Delivery usually the actual physical delivery of the gift

a. If manual delivery is not practical, there are 2 alternatives

i. Constructive delivery delivering something that will provide access to or control of the gift (e.g. a key to a car, safe)

ii. Symbolic delivery handing over something symbolic of the property given (e.g. a written instrument declaring the gift)

b. BUT if an object can be handed over, it must be

i. See, Newman v. Bost (constructive delivery is sufficient if actual delivery isnt possible)

c. You can deliver through, but not to, a third person

d. Manual delivery of check is no good b/c check simply orders the bank to perform the delivery

3. Acceptance the donee must accept the gift

a. This is presumed when a gift is unconditional and valuable to the donee (rebuttable though)

ii. Inter vivos gifts are irrevocable

1. Some states have exceptions, like for engagement rings

Gruen v. Gruen (1986)

Father gives P painting for his birthday by letter, but says father will hold onto it until he dies. Then writes new letter without life estate provision ( a valid inter vivos gift can be made where the donor has reserved a life estate and the donee never has had physical possession of it (reservation of the life estate didnt invalidate the gift). Also, Actual delivery was impractical / redundant b/c donor retained possession letter was sufficient b. Gift causa mortis given by donor in contemplation of and in expectation of immediate approaching death (cant be real estate)

i. Control over the gift is immediate, but absolute upon death

1. An attempt by donor to reserve control until death invalidates the gift b/c it is subject to a condition precedent

ii. A transfer of property (by will) after a persons death is not a gift

iii. 4 elements

1. Donative Intent, supra

a. Donor must have present intention to deliver absolute ownership at death

2. Delivery, supra

3. Acceptance, supra

4. Anticipation of imminently approaching death

a. Expectation of imminent death is subjective

b. The illness/peril/etc prompting the expectation must be objective (e.g. minor surgery is insufficient)

iv. Death must result from the same illness/peril/etc that gave rise to the expectation of death, not some other illness/peril/etc

1. BUT initial illness/peril/etc doesnt need to be sole cause

v. Courts are typical hostile to a gift causa mortis great chance of fraud, should have made will ( more restrictions on these gifts

1. High standard of proof to uphold these gifts

2. E.g. If donee is already in possession of the property, there must be a redelivery to effect a valid gift causa mortis, but not if the gift is inter vivos

3. Will = usually must be written and have 2 witnesses (otherwise intestate succession is utilized)

vi. A gift causa mortis is revocable

1. If donor recovers, gift is revoked by operation of law

2. If donor changes his mind (before he dies) its revoked

vii. Subject to the claims of creditors of the donors estate

3. WHO CAN TAKE TITLE?

A. ADVERSE POSSESSION (ACQUISITION BY THEFT)

1. Adverse Possession is a process through which a person who uses property for a statutorily determined period of time becomes owner of the property

a. If owner doesnt take legal action (during timeframe) to eject a possessor who claims adversely to the owner, the owner is thereafter barred from bringing an action in ejectment and adverse possessor has title to land

i. Filing an ejectment action stops the statute, not actual ejection

b. Adverse possession creates new title to land by operation of law

i. Adverse possessor's right to possession, which had been good against everyone except the true owner, is now perfected against the true owner as well (as title)

ii. Adverse possessor can take ownership by using property long enough and visibly enough, as would its true owner

c. Clearing title this has been the state of affairs for so long that we should give the imprimatur of the state and keep the status quo

2. Theoretical support

a. Earning theory possessor is using the land more productively by putting in work and putting property to better use ( focus on merits of possessor

b. Sleeping theory if the owner has seen so little use of this property as to not even care that someone is using it, then we shouldnt protect their interest ( focus on demerit of actual owner

c. Expectations theory this has been the state of affairs for so long that we should keep it, give imprimatur of the state ( honor/reward expectations

Van Valkenburgh v. Lutz (1952)

L gets lots, builds house, makes pathway through adjacent property, builds garden and builds house for his brother there. VV moves nearby, start to hate L, buy the property adjacent to Ls where L has built house, garden, pathway, brings action to eject L, builds fence to block pathway ( you must satisfy all the elements of adverse possession to get property rights (i.e. title) ( possession must be actual, exclusive, open, notorious, hostile under CoR, continuous ( NY statute goes further than common law elements possessor must have substantial enclosure and have regularly cultivated and improved the property (L didnt)

3. The elements of adverse possession (statute and case law)

a. Actual Possession

i. Adverse possessor must physically use the land in the same manner that a reasonable owner would given its nature, character, and location (e.g. paying taxes, etc)

1. Adverse possessor generally gains ownership of only so much of the property that he actually possesses

a. BUT under color of title this can be expanded to the entire property ( constructive possession of whole

i. BUT true owners actual possession of part of property negates constructive possession reach and it goes back to the original tract

ii. Color of title possessor claims ownership pursuant to a written document (i.e. deed) that transfers it to him, but it is defective

1. In most states, it has important advantages for the adverse possessor ( Some states have reduced statute of limitations for color of title claimants

2. Hypo X and Y own adjacent lots, A enters Xs lot but not Ys under color of title for both lots. After SoL, what does A get? Probably just Xs lot ( turns on a fairness issue Y never had notice of the adverse possessions claim

b. Exclusive Possession

i. Adverse possessor cannot share possession with either the true owner or the general public possession must be as exclusive as would characterize an owners normal use for such land

1. BUT persons acting in concert can adversely possess

a. They become tenants in common, or joint tenants under very specific circumstances (2 adverse possessors taking the land under a faulty deed which names them as joint tenants)

c. Open and Notorious Possession

i. Adverse possessors possession must be so visible and obvious that a reasonable owner who inspects the land will receive notice of an adverse title claim ( gives reasonable notice to owner/community

Mannillo v. Gorski (1969)

Tiny protrusion of porch steps onto neighbor's land did not provide notice ( when encroachment of adjoining owner is of small area and not apparent to naked eye, it is not open and notorious. Also, court abandons Maine doctrine for Connecticut doctrine, infra.

ii. You can best protect yourself here by getting a survey

iii. Sometimes this element can be tricky

1. Marengo Cave underground nature of a cave did not give adjacent owner notice of the encroachment on his rights

d. Hostile or Adverse Possession (Under a Claim of Right)

i. Adverse possessor does not have the true owners permission to be on the land ( e.g. leasing it, having permission, etc is no good

ii. 3 approaches as to what satisfies this element

1. Good faith view possessor actually believes the land he is on is his ( good faith belief that he owns the land

a. I thought I owned it

2. Bad faith view possessor knows the land he is on is not his but intends to make it his regardless (i.e. trespassing)

a. I thought I didnt own it but I intended to make it mine

b. Called Maine Doctrine in boundary dispute cases

3. Objective view possessors state of mind is irrelevant

a. Majority rule

b. Connecticut Doctrine in boundary dispute cases

i. NJ Doctrine adds the Mannillo exception

e. Continuous Possession (For the Statutory Period)

i. Adverse possessors possession must be as continuous as those of a reasonable owner, given the nature, location, character of the land

Howard v. Kunto (1970)

Survey reveals that everyone on a beach strip actually owns the property one over from to where their house is on. Dispute is over summer home that D possessed but was on Ps land. D purchased house from previous adverse possessor (to P) ( summer occupancy is ordinary use of ownership (i.e. satisfies continuity) & tacking b/c previous & current possessors in privity

ii. The filing of an ejectment action stops SoL, not actual ejectment

iii. Period of time needed for adverse possession varies by state

iv. Tacking successive periods of adverse possession by persons in privity can be combined to satisfy the full statutory duration requirement ( final adverse possessor gets title

1. Privity is satisfied if subsequent possessor takes by descent, devise, gift, transfer, deed purporting to convey title

2. Tacking is not permitted when:

a. One adverse possessor ousts a preceding one

b. One adverse possessor abandons and a new one then goes into possession

3. Hypo 10 year SoL, A enters Blackacre owned by O in 1996, B ousts A in 2003 and takes possession, in 2006, who has an action to recover from B?

a. A yes, A is a prior possessor

b. O yes, O is owner, Bs ousting of A isnt privity

4. What if A regains property 6 months after being ousted?

a. ALI says SoL was tolled for those 6 months, so now A can finish up the 10 year SoL now its 10 years, 6 months total

v. A change in ownership does not affect continuity element ( AP runs against different owners (but see, AP limitations, infra)

4. An adverse possessor may eject other trespassers and adverse possessors even before the statute runs, as long as he entered the property first

5. Adverse possessor may sell or give his interest to another person

6. The statute of limitations for an adverse possession will not run against a true owner who is under a disability when the adverse possession commences ( Statute is tolled until the disability is removed (b/c owner cant protect interests)

a. Essentially it is the later of SoL or when disability is removed

b. Usual disabilities are: owner is a minor, of unsound mind, imprisoned

c. Disability must exist on the date of the adverse possessors entry

i. No good if it arises later (wont toll statute)

d. You cant tack disabilities

i. E.g. Owner gets new one after old one is removed, heir (passed to before SoL is over) has disability ( neither will have any effect

e. Hypo

i. SoL is 21 years; time after disability is removed is 10 years

1. Whichever is later is the time it takes for AP

1980199620012006

Entry on land in AP; true owner is 2 years oldTrue owner's minority status ends; 10 year clock starts tickingAPer's claim becomes perfected under normal circumstancesTrue owner can make claim until this date 10 years after shedding minority status

f. A person taking from or through a true owner under a disability will also benefit from the tolled statute ( disability is deemed to end upon sale/gift

g. If owner disappears and is not heard from, after 7 years death certificate can usually be issued

7. Doctrines to resolve boundary disputes

a. Agreed boundaries an oral agreement to settle a boundary dispute is enforceable if the neighbors subsequently accept the line for a long period of time

b. Estoppel one neighbor makes representations about (or engages in conduct that tends to indicate) the location of a common boundary, and the other neighbor then changes his position in reliance on the representations or conduct ( first neighbor is then estopped to the deny the validity of his statements or acts

i. When one party remains silent and the other party acts to the first partys detriment by acts or expenditures

ii. E.g. A sits back and watches B build a house that comes onto As land B can argue estoppel here (and keep the house where it is)

c. Acquiescence long acquiescence though perhaps for a period of time shorter than the SoL is evidence of an agreement between the parties fixing the boundary line

8. The Mistaken Improver (like in Mannillo)

a. 3 approaches

i. Traditional common law anything built on the wrong land, whether in good faith or not, became the property of the landowner (subject to the boundary dispute exceptions, supra)

ii. Modern tendency ease the plight of innocent improvers

1. Force conveyance of land from owner to improver

2. Or give landowner option to buy improvement

9. Limits of Adverse Possession

a. Adverse possession is not available against land owned by the government

b. Future interests the statute of limitations does not run against the holder of a future interest (e.g. remainder) until that interest becomes possessory

i. If adverse possessor enters the property after conveyance to life tenant and remainderman, he can only divest the life tenant and the statute does not begin to run against the remainderman until the life tenant dies and the remainderman gets right of possession

1. BUT if adverse possessor enters land before conveyance to life tenant and remainderman, statute begins to run against both of them

ii. Possibility of reverter statute runs on happening of event

iii. Right of reentry happening of event does not trigger statute

c. Leins and Easements if land is subject to them so is adverse possessor

10. Adverse Possession of Personal Property

a. SoLs for personalty are typically shorter than similar ones for realty

i. Replevin action to recover the chattel itself

ii. Trespass action to recover damages for dispossession of chattel

iii. Trover action to recover the value of the chattel along with damages for its dispossession

1. Conversion is an action in trover (forced sale)

b. Traditional rule when chattels are fraudulently concealed, SoL is tolled

c. Biggest difficulty for AP claims is showing that the AP is open and notorious sufficient to give the true owner notice

d. 2 approaches

i. Demand and Refusal Rule cause of action (i.e. SoL) does not begin to accrue until the true owner discovers the chattels whereabouts (or possessors identity), makes a good faith demand for its return, and possessor refuses

1. Easier to apply and more protection for owners (discovery usually comes before demand/refusal)

2. This is the NY law See Guggenheim case

ii. Discovery Rule cause of action (i.e. SoL) begins to accrue when P first knew or should have known, through due diligence, the identity of the possessor (or whereabouts of chattel, etc)

1. Discovery of the facts is the key here ( no demand is necessary ( conduct of the owner is controlling

2. Burden is on owner to establish facts for SoL

3. Due diligence required will vary with nature, value, and use of personal property in question

4. Minority rule

OKeefe v. Snyder (1980)

Georgia OKeefes art is stolen, she doesnt report it for 26 years. Finally art shows up, possessor says he had possession (via chain of people) for long time, and it was on display at his house (he had also showed it at an art show), OKeefe sues for replevin ( Court adopts discovery rule (cause of action will not accrue until P discovers, or should have discovered, the facts which for the basis of the cause of action) ( possessor wins, but remand to see if painting was stolen ( if stolen, thief acquired no title and could not transfer good title to others regardless of their good faith and ignorance of the theft

iii. Exception Native American Graves Protection and Repatriation Act of 1990

1. Museums must inventory and return, upon request, sacred objects and other cultural artifacts to Native Americans ( to keep the object, museum must prove that its possession was obtained with the voluntary consent of one who had authority of alienation

11. Good Faith Purchasers and Thieves

a. A seller of personal property cannot pass on better title than he possesses

i. Two exceptions to this rule

1. Good faith purchasers

a. If you are a good faith purchaser for value (buyer paying fair market value and without notice that something sketchy is going on) and the seller has voidable title transaction is OK ( buyer can get good title (against true owner)

b. The key here is void title vs. voidable title

i. Voidable title = owner is tricked by fraud or misrepresentation into voluntarily parting with title (e.g. bad check, buyers false identity)

ii. Void title = no title (cant transfer title)

1. E.g. thief, bailee, etc have no title

iii. Voidable title is good until true owner rescinds ( then it becomes void

c. True owner still has recourse against seller

d. Donees receiving or inheriting gifts are not purchasers and are not protected by this rule

e. Market Overt Doctrine in some countries a bona fide purchaser for value may acquire good title if the sale takes place in an open market

2. Entrustments

a. When the owner of chattel delivers it to a bailee who is a merchant in goods of that kind and the bailee sells it to a person who buys it in the ordinary course of the bailees business, the transaction is OK ( buyer can get good title (against true owner)

b. Merchant can transfer good title to the purchaser in the ordinary course of business, regardless of any agreement between owner and bailee (e.g. dont sell this no matter what)

c. True owner still has recourse against bailee

B. EMINENT DOMAIN

1. Unlike private persons who must find a seller, governments can force unwilling persons to sell private property to the government ( taking property from its owners and reallocating it to government preferred uses

a. Eminent Domain the power to take private property

b. Condemnation the process by which the property is taken and just compensation is paid

2. Nor shall private property be taken for public use without just compensation 5th Amendment (confirms eminent domain power)

a. Incorporation via 14th amendment makes this applicable to the states and subject to due process requirements

3. 2 requirements of 5th amendment

a. The taking had to be for public use

i. Things that will benefit the public at large how it was commonly understood throughout history ( highest and best use of the land

1. This changed in the Poletown case (1981)

a. Detroit suburb (not blighted) in a downward trend, GM wanted to put a new manufacturing center in the town (create jobs, etc ( promote economic development), 7 holdouts are stopping project

b. Michigan Supreme Court held this was a public purpose, gave GM the property the GM facility ended up creating tremendous economic progress

c. This decision was later rejected by the Michigan Supreme Court, BUT this was the decision that opened up the meaning of public use broadened it to encompass economic development (economic development is a legitimate use of eminent domain ( supports expansion of ED to new arenas such as urban renewal and commercial development2. Holdouts people who will not agree to sell

a. A holdout problem economic analysis suggests they are simply holding out for more money (amounts in excess of the opportunity cost of the land) ( they get more leverage by holding out

b. Posner eminent domain must exist if only to deal with holdouts (its necessary to prevent monopoly)

c. Personhood theory also explains the holdout problem ( personal value exceeds economic value

ii. The achievement of a public purpose qualifies as a public use ( condemned property doesnt literally need to be put to public use

Hawaii Housing Authority v. Midkiff (1984)

SCOTUS held that Hawaii could condemn land and immediately transfer it to private citizens to use as private residences (went from landlords to tenants) ( taking must be rationally related to the furtherance of a legitimate state interest/purpose ( state had a legitimate state interest in diversifying land holdings in Hawaii (highly concentrated in a few owners) and condemnation was a legitimate means to accomplish that goal

iii. A public purpose may be found even when the taking transfers ownership from one private party to another (Kelo expands this)b. There must be just compensation in return for the taking

i. Just compensation is the fair market value of the property when the taking occurs ( the amount that a willing buyer would pay to a willing seller

1. This generally does not consider any sentimental or subjective value the property may have, but some personal value is factored in (as it would be for a market transaction)

2. Relocation compensation is included

ii. If only a portion of property is taken, state must compensate owner for the fair market value of the portion taken

4. ED procedure

a. Usually begins with the governments attempt to negotiate a voluntary purchase from the owner ( If negotiations fail, the condemning agency will bring suit a specialized form of litigation, but with limited issues (usually only real issue is the fair market value of the property taken)

5. Theoretical issues

a. ED comes down to balancing between private value and public benefit

b. To analyze ED questions, you must first face this question: is there an individual right to private property, and if so, where does it come from?

i. Fundamental right

ii. Economic right (i.e. you are given the right to the property by the legal system ( leads to the question of who will make the best use of the property ( back to Demsetz, supra)

iii. Life, liberty, pursuit of happiness

1. Within pursuit of happiness is the right to own property

iv. Other, less persuasive arguments: divine right to own property, natural law explanations, human right, etc

6. The Kelo Case and its impact (Kelo v. City of New London, SCOTUS 2005)

a. New London approves development plan to create jobs, increase (tax) revenues, revitalize economically distressed city. For plan, City condemned private property and transferred it to private nonprofit entity planning to build a coordinated village, conference center, marina, new residences, office spaces (for PFE), restaurants, stores ( legitimate public uses/purposes includes promoting economic development and increasing tax revenue ( government can take property, even if it isnt blighted, and transfer it to private developers to achieve the legitimate public purposeb. Important points from decision

i. Court recognized that the definition of public use varied across the country and across time (not necessary bad) ( it should adapt to the times, and circumstances

1. Public use is broadly interpreted to mean public purpose

ii. A showing of blight is not necessary (though in this case the area was sufficiently distressed to justify rejuvenation program)

iii. Court expressed great deference to the plan (affording legislatures broad latitude in determining what public needs justify the use of the takings power)

1. Schmudde thinks this is important

2. Court recognized that this was a very well thought out plan, hearings, group that was well-represented, and the plan was deemed to be important to the growth and recovery of city

iv. States are free to add more restrictions to eminent domain use

c. Impact of the decision

i. Overwhelming disapproval for states and public

ii. Tide since Kelo has changed significantly many states have changed their laws to make stuff like that impermissible and most courts have at least made it more difficult (e.g. finding blight first)

1. 8 states have reformed their constitutions

2. 34 states have amended laws on ED making it stricter

3. About 20 states require a finding of blight

a. If not blighted, is this just gentrification (w/o value added)?

4. 31 states adopted the bright line rule that P wanted economic development would not be public use

a. A few states interpret public use (literally) as use by the public/gov.

5. Some states have upped just compensation to 125% of fair market value

7. Permanent Physical Occupations (and Regulatory Takings)a. Usually ED involves government entity taking permanent physical possession of land, BUT government actions that, though not intended to take property, may be held by courts to have done so ( key Q: has a taking occurred?

i. An overly-restrictive land use regulation might also be a taking

1. But def not everything (e.g. laws against discrimination)

b. A taking may occur when the government physically invades or occupies private property, or by statute or regulation authorizes a third partys physical invasion or occupation of private property

Loretto v. Teleprompter Manhattan CATV Corp. (1982)

NY law required landlords to permit installation and maintenance of certain cable television wires on their property. Prior to Ps acquisition of property, D installed minor cable television wires on Ps property pursuant to the law and with the previous owners consent (and to Ps benefit) ( Court establishes per se (categorical) rule that any permanent physical occupation authorized by government is a taking without regard to the public interests it may serve ( good faith or public benefit derived from the government action makes no difference ( no degrees, no balancing test, permanent physical presence constitutes a takingi. Loretto added key distinction between permanent occupations (always takings) and temporary invasions (require balancing test)

c. Reverse legal posture (inverse condemnation) P claims government has physically occupied or taken some property right from him without compensation and without initiating the condemnation process (or that government has constructively taken the property via regulations)

i. P need only show physical invasion/occupation to prevail ( government has no legal defense for the invasion

d. Rationale for rule: because any permanent physical occupation effectively destroys all of the owners basic property rights, SCOTUS reasoned that a bright-line rule was appropriate ( a physical invasion doesnt just remove one stick from the bundle, it shortens each of them

i. Also, few problems of proof and easy to apply (no line drawing)

4. ESTATES IN LAND

It is revolting to have no better reason for a rule than that it was laid down in the time of Henry IV. It is still more revolting if the grounds upon which it was laid down have vanished long since, and the rule simply persists from imitation of the past Oliver Wendell Holmes1. ESTATES GENERALLY

1. In law, a person does not own land ( he owns certain legally-enforceable rights concerning the land

a. Interests refer to when ownership begins (now or later)

i. Present interest the right to possession now

ii. Future interest the (possible) right to possession later

b. Estates refer to when and how ownership ends

i. Estates are a subset of interests and further classify them

ii. The word estate is drawn from and implies status

2. There are 3 main ways to classify an estate

a. Freehold or nonfreehold

i. Freehold normal rights to hold (i.e. tenures)

1. Forms of owning land

2. Possession under legal title

ii. Nonfreehold a less complete form of ownership than a freehold

1. Forms of leasing land

2. Mere possession

b. Absolute or defeasible

i. Absolute estates duration is restricted only by the standard limit that defines the category of estate

ii. Defeasible estates duration is subject to a special provision that may end the estate prematurely if a particular event occurs

1. Determinable, subject to condition subsequent, subject to an executory interest

c. Legal or equitable

i. This relates to the issue of trusts

3. There are 6 types of estates

a. 3 are freehold estates

i. Fee simple, life estate, fee tail

b. 3 are nonfreehold estates

i. Term of years tenancy, periodic tenancy, and tenancy at will

4. Fragmentation of ownership interests over time is the basic concept underlying present and future interests

a. Those who held estates in land found it advantageous to create new estates and new interests ( to carve out smaller pieces

i. 2 or more persons can have interests in the same land (at different times) ( Present and future interests

ii. 2 or more persons can have rights to the same land at the same time (now or later) ( Co-ownership or cotenancy

5. The system of estates is an elaborate hierarchy of interests in land

6. Estates and future interests originate in 2 main sources: deeds and wills

2. TERMINOLOGY

1. Tenure the right to hold

2. Seisen title with the right to possession

3. Devisability (aka testamentary power) the right to transfer or dispose of ones property by will after death

4. Alienability (aka power to alienate) the right to dispose of ones property during their lifetime

5. Descendible (aka inheritable) capable of passing by the states intestacy statute to heirs

6. Decedent a person who dies

7. Testate leaving a will when you die

a. Testator a person who leaves a will when they die

8. Intestate dying without a will

9. Heir people who survive the decedent and are designated as intestate successors under the states statute

a. No living person has heirs (yet)

b. Heirs do not have interests in property until decedent dies

10. Issue descendants (children, grandchildren, great-grandchildren, etc)

a. Going down

11. Ancestors parents, grandparents, great-grandparents

a. Going up

12. Collaterals all persons related by blood to the decedent who are neither issue nor ancestors (e.g. brothers, sisters, nephews, nieces, uncles, aunts, cousins, etc)

13. Escheat process by which a person dying intestate with no heirs has their property turned over to the state

14. Probate going to court to issue a directive to change title of property after someone dies

15. Condition subsequent the occurrence of nonoccurrence of an event that can cut short an estate

16. Words of purchase language signifying who owns an estate

a. E.g. To A

17. Words of limitation language signifying what type of estate was granted

a. E.g. and his heirs = fee simple

18. Fee simple the property is alienable, devisable, and descendible

a. Unrestricted right to transfer by will or deed, and no limitations on inheritability

b. Partial restraints on alienation of a fee simple may be allowed if reasonable in nature, purpose, and duration.

3. HISTORY OF ESTATE SYSTEM (THE FEUDAL FOUNDATION)

1. The English property law system can be traced to the Norman Conquest of 1066 ( When William the Conqueror became the King of England, he redistributed land (tenures) to his supporters in order to protect his reign from foreign and domestic opposition

a. King owned the land, lords (i.e. the knights) that supported him became the tenants in chief (land lords)

i. Through subinfeudation tenants had their own tenants

b. Tenants worked the land and gave stuff to the lord ( tenants in chief owed both service and incidents to the king

i. Service may include providing a specified number of knights on demand, making an annual payment, or performing another action

ii. Incidents were specific rights e.g. homage and fealty, aids, forfeiture, and certain liabilities at the death of tenant

1. E.g. the incident of wardship allowed the king to take possession of the land after the holders death until the orphaned son reached age 21

c. Over time, tenants in chief became interested in control of their land after their deaths (for their families, children etc) ( interested in 2 rights

i. The right to transfer or dispose of their property after their deaths

1. i.e. devisability or testamentary power, ability to set up a line of successors

ii. The right to dispose of their land during their lifetimes

1. i.e. alienability or power to alienate

2. Subinfeudation each tenant holding from the king (i.e. tenant in chief) could create subtenures with others (tenants of the tenants in chief)

a. One parcel of land could be the subject of many different tenures

3. Over time, services became less valuable (e.g. knights become obsolete by changes in war technology), and incidents became more important ( However, tenants could circumvent the incidents through subinfeudation

4. Statute of Quia Emptores (1290) abolished subinfeudation and established free alienation of land ( tenants are free to move somewhere else and to transfer their land without the overlords consent (and thus to profit from the sale of the land) ( first time this happens (i.e. freedom)

a. A transfer of land would be to A and his heirs ( giving A the right to pass it to his heirs (i.e. transferability)

i. Feoffment with livery of seisin a transfer of interest in real property with a taking

b. Black death wiped out so many people that wages became high for healthy people who could work

5. As feudalism declined, the system of free tenures gradually evolved into private ownership of land, in the form of three key estates: the life estate, the fee tail, and the fee simple

a. Between 1500 and 1700, a series of common law restrictions were adopted that curtailed future interests

4. ABSOLUTE FREEHOLD ESTATES

1. Absolute = duration is restricted only by the standard limit that defines that category of estate

2. Estates in land are possessory interests in land

a. They may be presently possessory (present estates) or they may become possessory in the future (future interests)

b. Nonpossessory interests include easements, covenants, servitudes, etc

3. Fee Simple Absolutea. The closest thing to complete ownership

i. The largest aggregation of property rights recognized under American law

b. Largest estate in terms of duration ( it may endure forever

c. Unrestricted right of possession

d. Alienable, dividable, devisable, and descendible

i. Owner may sell or give the property away, devise it by will, or die without a will and have the property go by operation of law under the canons of descent to his heirs

e. Invests owner with full possessory rights now and in the future

f. Denoted by this language: To A and his heirs

i. Though simply To A will suffice in most states

g. Presumed to be intended to pass by a grant of real property unless it appears from the grant that a lesser estate was intended

h. Owner has seisin

i. Estate can be defeasible or indefeasible

4. Fee Tail

a. Estate that limited inheritance to lineal descendants of the grantee ( a freehold estate in which there is a fixed line of succession limited to the heirs of the body of a grantee or devisee, by which the regular, default rules of succession are cut off

i. Potentially infinite duration, except that it will necessarily cease if and when the first fee tail tenant has no lineal descendants to succeed him in possession

1. Heirs is broader category than lineal descendants

ii. Basically a series of life estates to issue

b. Endures as long as grantees bloodline

c. Not devisable or generally inheritable because the property passes from one generation to the next under the terms of the fee tail grant

i. Current owner cannot cut off inheritance rights of issue

d. If no lineal descendants survived at the grantees death (i.e. without issue), the property either reverted to the grantor or her successors or passed to a designated remainderman

e. Abolished in most states

i. Only 4 states still have it, and in those states, the holder of the fee tail can disentail the property simply by conveying his interest in fee simple absolute to a third party

f. Denoted by to A and the heirs of his body

g. Owner has seisin

5. Life Estate

a. An estate that will necessarily end at the death of a person (usually the grantee)

i. Duration could be measured by the life of one (life estate) or more (life estate pur autre vie) specified persons

ii. Not terminable at any fixed or computable period of time, but cannot last longer than the specified life

b. Alienable, but generally not devisable or descendible (unless life estate pur autre vie)

c. It can arise by conveyance or by operation of law (dower and curtesy)

d. Denoted by this language: To A for As life

i. Grantor still possesses the fee simple ( life estate is being carved out of his estate ( now grantor has a future interest (reversion)

e. Who gets the property after the life tenants death?

i. Reversion original grantor receives property upon life tenants death

ii. Remainder third party receives property upon life tenants death

iii. Reversions and remainders are future interests

f. Life estate pur autre vie is an estate measured by the life of a person other than the grantee

i. It can be created directly or indirectly

1. Directly O grants To A for the life of B

2. Indirectly O grants To A for life then A later conveys it to B ( B owns an estate measured by As life

g. Owner has seisin

i. Holder of estate may use the property, collecting all the rents and profits generated from it

ii. Holder may use the property as would its owner, but he must not destroy the value of successive future interests (doctrine of waste)

1. Must keep premises in ordinary repair (not extraordinary repairs from fire, etc), pay taxes, interest on any mortgage

2. BUT not obliged to improve the property (cant seek payment from future interest holders if he does improve it) or pay principal on mortgage (can seek contribution on payment of principal from future interest holder)

iii. Holder of the life estate can exclude others from the property, including any holder of a future interest (reversion/remainder)

h. Tax advantages upon life tenants death, interest expires, so it doesnt go to decedents estate (subject to estate taxes)

i. Estate can be defeasible or indefeasible

6. Fee simple, fee tail, and life estate are the freehold estates

a. Holders have seisin title with right to possession

7. The doctrine of waste

a. The life tenant should not be able to use the property in a manner that unreasonably interferes with the expectations of future interest holders

b. Waste of property by a life tenant is an actionable legal injury for a remainderman or reversioner, with damages or injunction as the remedy

c. Waste occurs when the possessory life tenant permanently impairs the propertys condition or value to the future interest holders detriment

i. Affirmative (voluntary) waste when the life tenant actively changes the propertys use or condition, usually in a way that substantially decreases the propertys value

ii. Permissive waste life tenant fails to prevent some harm to the property

1. Duties: ordinary repairs, interest on debt (mortgage), taxes, insurance in some states, but usually no, etc

iii. Economic waste when the income from property is insufficient to pay the expenses the life tenant has a duty to pay

Baker v. WeedonDecedent, married 3 times, leaves his property to current wife, P. will says To P for life, if P dies without issue, to my grandchildren. P has no issue, remarries, continues living on property, improving it, grandchildren had never even been there. The State wants to buy the property, but P is only life tenant. P needs the money for the property and wants to sell it now to the state (for 168k), but grandchildren, holders of the future interest, dont want to sell b/c they think property will raise in value in several years (to 336k) ( a court may order the sale of property which is held subject to a future interest, but only if a sale is necessary for best interests of both the life tenant and the remainderman. Schmudde thinks under desert theory, property should go to P as a matter of fairness, and that valuation is wrong

iv. The life tenant cannot sell a fee simple unless all other persons having an interest in the property consent or unless a court of equity orders the sale and reinvestment of the proceeds

1. When the property is sold, the property just changes form to cash and the law of property just applies to that

v. Open mines doctrine life tenant may mine and remove minerals (and keep the profits) if the grantor had opened up the mines or began the mining and removal before he granted the life estate

1. BUT unless the future interest holder consents, the life tenant cannot begin or conduct mining operations on the property if no mining took place on the property before the life estate began

8. A trust could have solved the Baker v. Weedon problem

a. Trusts are the way most estate planning is done

b. Trustee hold legal fee simple as manager of trust, he may be directed to pay all the income to the life tenant or let life tenant into possession

i. Trustee makes the decisions for the beneficiaries

ii. If beneficiary is not being treated fairly by the trustee, he can sue

c. Trustee administers the trust for the benefit of the life tenant and remainderman ( trustee has power to sell, leae, mortgage, etc

9. Valuing a life estate and remainder interest

a. Present estate (life estate) + future interest (remainder interest) = 100%

b. Key to analysis future value and present value

i. The value of $1 today is $1

ii. The value of $1 tomorrow is less than $1 today ( you look at future cash flows (interest)

c. Present value reflects future expected cash flow

i. Formula = PV = CF /(1 + i) ^n

1. CF = cash flow ($ youll get in the future)

2. i = interest rate

3. n = years remaining

ii. Assuming interest rate of 3% means that you should pay 97 cents for $1 a year from now

d. If the life tenant is 1-2 years old, the valuation of their interest will be around 98%ish

i. This starts out a little lower then gets higher, then begins to depreciate ( this is because there is a slightly higher rate that an infant will die than a little kid

10. Was it a fee simple or a life estate?

a. A court trying to figure out what type of estate was conveyed will first read the plain language of the document, attempting to ascertain the grantor or testators intent ( cardinal rule of testators intent b. If that doesnt work, the court uses the rules of construction

c. One rule of construction is that the testator intended to give away all his property through his will (partial intestacy is disfavored)

d. Another rule is that a grantor or testator conveys his full interest in the property unless the intent to pass a lesser estate is clearly expressed or necessarily implied by the terms of the deed or will

i. Presumption that fee simple was intended

White v. Brown

Decedent conveys state to P to have my home to live in and not be sold. In reading wills, when its unclear, look to the intentions of the grantor (i.e. testator), when its confusing, the default rule is fee simple ( this tends to clean up title ( when a will is susceptible of 2 constructions, by one the testator disposes of his whole estate and by the other he dispose of only a party of his estate, the construction disposing of the whole estate is preferred if that construction is reasonable and consistent with the general scope and provisions of the will (no partial intestacy unless the intention of that is clear). Court said this was not a life estate and the restraint on alienation was void ( turns it into a fee simple absolute to P. Dissent thinks to live in created a life estate

e. The law construes the words of a grant against finding that an estate is entailed

11. Absolute restraints on alienation are void

a. Why?

i. Makes property unmarketable (eliminates marketability)

ii. Discourages improvements on the land

iii. Perpetuates concentration of wealth by making it impossible for the owner to sell the property

iv. Prevents owners creditors from reaching the property (hardship on creditors who rely on the owners enjoyment of property when extending credit) especially for unsecured debt

v. Ties up property well into the future (see rule against perpetuities)

b. Basic economic tenet of property law is that property should be freely alienable ( if we take this away it leads to inefficient economic use

c. The only real argument to allow restraints on alienation is that they encourage charitable giving

12. Types of restraints

a. Disabling restraint holds from the grantee the power to transfer his interest

b. Forfeiture restraint if the grantee attempts to transfer his interest, it is forfeited to another person

i. Could be valid in life estates

c. Promissory restraint grantee promises not to transfer his interest

i. Enforceable by contract remedies (damage or injunction)

13. Restraints on marriage are often struck down as violations of public policy

a. If the purpose of the restraint is to penalize marriage, the restraint may be struck down

b. If the purpose is to give support until marriage, when the new spouses obligation of support arises, the restraint is valid

14. Partial restraints may be permitted if reasonable in purpose, effect, and duration

15. Intestate succession Inheritance/descendabilty

a. If a person dies testate, his estate is distributed according to his wishes

b. If a person dies intestate, the decedents real property descends to his heirs

i. The intestates estate is distributed pursuant to state law

ii. You go to surrogate court, make administrators name, contract all heirs, etc ( lengthy and messy process

c. Heirs are persons who:

i. Survive the decedent and

ii. Are designated as intestate successors under the state intestate succession laws

d. We dont know who the heirs are until the person dies ( the statute only applies at death

e. An heir has no interest in the real property until the death of the decedent

f. The order of inheritance via intestate succession is this:

i. Issue

1. Descendants (not just children)

2. 2 methods of distributing property to issue

a. Per capita each generation shares equally (lockstep)

i. A is decedent

ii. B, C, D are issue

iii. B is dead but has 2 issue B1 and B2

iv. D is dead but has 1 issue D1

v. C gets 1/3, you split the remaining 2/3s 3 ways to go to B1, B2, and D1 (each of them now gets 2/9)

b. Per stirpes (by representation in NY) the right of representation within a generation (trickle down)

i. Only has impact when a child predeceases the decedent

1. A is decedent

2. B, C, D are issue

3. B is dead but has 2 issue B1 and B2

4. B, C, and D would each get 1/3 of As estate, but now C and D get their 1/3 AND B1 and B2 each get 1/6 (i.e. Bs share)

5. If D was dead and had 1 child, that child would get Ds 1/3 share

ii. If no issue, then ancestors1. Parents, grandparents, great-grandparents

iii. If no ancestors, then collaterals1. All persons related by blood who are not descendants nor ancestors

a. Brothers, sisters, nephews, nieces, uncles, aunts, etc

iv. If no collaterals, then it escheats tot the state

1. If a person dies intestate, without any heirs, the estate is said to escheat to the state

g. Inheritance hypo

i. O conveys Greenacre to A and his heirs

ii. As only child, B, runs up a lot of debt

iii. Can Bs creditors attach Bs property to satisfy his debt

iv. Does B have an interest in Greenacre reachable by Bs creditors?

1. No, B has no interest in Greenacre which the creditors could reach. A hope of inheritance is a mere expectancy. The status of being an heir is not determined until the death of A

a. Future interest = property interest that will become possessory (i.e. remainder or reversion)

b. Creditors could still not touch a future interest

2. Remember that the word heir means the interest at the death of that person ( the heirs are not determined until A dies

EstateDuration

Fee Simple (freehold)Forever (infinity)

Fee Tail (freehold)Until original grantees lineage dies out

Life Estate (freehold)For the life of the grantee (or 3rd person)

Term of Years (nonfreehold)Fixed period measured in years, months, or days

5. DEFEASIBLE FREEHOLD ESTATES

1. Defeasible = subject to a special provision that may end the estate prematurely, if a particular event occurs

a. Opposite of absolute

2. All these estates are potentially infinite in duration, devisable, descenable, alienable

3. Generally used to restrict the use of the property (common for charitable stuff)

4. 3 types of defeasible fee simple estates

a. Fee simple determinable

i. Automatically ends when a stated event happens

ii. Fee simple reverts back to the grantor

1. Future interest created: possibility of reverter

iii. Created by language connoting that the transferor is conveying a fee simple only until an event happens

1. so long as the premises are used for school purposes

2. while used for school purposes

3. during the continuance of said school

4. until it is no longer used for a school

iv. Present interest: fee simple determinable

v. Future interest: possibility of reverter

1. Held by grantor

b. Fee simple subject to condition subsequent

i. Does not automatically terminate but may be cut short at the grantors election when a stated condition happens

ii. Grantor has a right to re-enter and retake the premises

iii. Created by language connoting that the fee simple may be divested by the grantor if the event happens

1. but if

2. provided, however, that when the premises

3. on condition that if the premises

4. Extremely subtle differences between this and language used to create the fee simple determinable

iv. Fee simple may go back to grantor if he exercises his rights to take it

v. Present interest: fee simple subject to c