Property Outline

I. Property Law Theory

A. What is property?1. Essentialists: property confers exclusive control over an “external thing” good against world, rights and duties in rem,

exclusion vs. use2. Skeptics: property is a collection, a “bundle of rights;” content varies according to context and policy changes

a. Grey: property is a contingent bundle of rights (right to exclude, use and enjoyment, alienation)

B. Property Rights (right to exclude, right to alienate, right of use and enjoyment)

C. Rent 1. Rent Seeking: Seeking the benefit, may be private or public2. Dissipation: Ruining the benefit – help yourself but hurts society.

a. 2 Types: (1) overinvestment i.e. 10 people in a room, each spend $9 to get a $10 prize; net lossz; racing toward a common prize; net investment exceeds benefit; (2) bad investment i.e. investing in lobbying rather than in building the economy

b. Solution: coordination, property entitlements: owner has power (b/c right to exclude)

D. Property and Economics Goal: efficiency, not morality.1. Externalities/ Transaction Costs

a. Transaction Costs: include cost of finding/dealing w/ each other in a deal; getting info about what something is worth, transmitting info; lock-in problems (once you’ve started investing); failed transactions

i. transaction costs are a bigger problem if the market is thinner (fewer number of trading partners/ moving pieces) in the market and the # of things they are trading)

ii. goal: look for the lowest cost provider, evaluatoriii. Rational actors try to externalize their cost to others (i.e. externalizing pollution)

b. Hardin’s Tragedy of the Commons: Wealth maximizing farmers will continue to add cows to shared land w/ finite amt. of grass, even if doing so will cause the land to stop producing food. Result: everyone starves.

i. Solution: Introduce private property creates incentive to keep resource healthyc. Coase Theorem Applied to incompatible uses of natural resources (i.e. coal factory creating smoke, covering

hanging laundry in black = “externality”). If A inflicts harm on B, and what has to be decided is: How should we restrain A. This is wrong because this is a problem of reciprocal nature. Real question is: Should A be allowed to harm B or should B be allowed to harm A? The answer is not clear unless we know the value of what is obtained as well as the value of what is sacrificed to obtain it. Has to be looked at in a total and at the margin.

i. Core insight: there is not such thing as “an externality,” externalities are reciprocal because only a problem if it bothers someone else.

ii. 2nd core insight Coase Theorem: If it is costless to enter into Ks (is “transaction costs” are 0), then same # of cattle will be raised by rancher, whether or not rancher is liable to farmer for cattle trespass. Basic idea: if contracting is costless, parting will keep contracting to modify the initial assignment of property rights until they have exhausted all possible deals that would be to their mutual advantage. It won’t matter to whom you allocate the resource because they will get to the right value. No such thing as perfect world, so therefore when we decide right (or allocate entitlement) to do

something, we should be mindful of transaction costs that do exists, if allocated in a way that incur massive transaction costs, deal with fall through. But, if allocated with minimal transaction costs, it will flow to the right person.

iii. Objections/Limits: (1) not enough attention to overall distribution problems -fairness (maximizes across group wo/ attention to distributional outcome); and (2) coordination problems not considered

2. Resolving Property Disputes by Ka. Contractual modifications or property rights (“Coasean bargains”) should be explored as an alternative to

litigation. Nothing in law would have prevented parties from bargaining in Henricks. Note role that land-use regulation played in creating dispute (Health Dep. reg. to be 100ft away) – could have considered a waiver or modification.

3. Two Major Issues in Property Lawa. Assembly Problems Arise when someone wants to assemble property rights from a large # of owners in order to

undertake some project. This is an instance of property setting of high transaction costs stemming from large #s of contracting parties. Example: Hinman (airplane “trespass” case)

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b. Bilateral Monopoly Localized monopolies: situation where an owner of property needs something that can be provided by only one other person/entity. Examples: Henricks (water well) and Jacque (snow path)

E. Kieff’s Thoughts1. The more property has predictable enforcement and the ability to be traded/bundled/divided, the more it encourages

private actors to interact economic growth2. Conversely, the more entitlement can be changed at the whim of gov’t actors and is inflexible, creating a system where

actors must negotiate w/the gov’t bad for economic growth3. Inducements/Constraints on Behavior

a. Marketsi. capital (who will invest in you, how much, terms); products; control; exit options; compensation structures

b. Governmenti. legislators, regulators, judges; mandatory vs. default rules; taxes, tax credits; property rights, regulatory

entitlements

II. Original Acquisition Ways in which ownership can be established other than through voluntary conveyance from a previous owner (modes of acquisition): (1) first possession; (2) discovery; (3) creation; (4) accession; (5) adverse possession. *Think of possession through control and mindset, or notice of control or intent to control, effectiveness, or what is “normal”? Normal: generally most efficient for that society, but may only be for that specific society – decisions that focus on standards of community exclude outsiders.

A. First Possession Being first to possess something that is unclaimed by anyone else.

1. Wild Animals Wild animals (ferae naturae) in their natural state are unowned. They become private property upon being reduced to possession.

a. Acquisition of Title i. Possession The first person to exercise dominion and control over such an animal becomes, with

possession, the owner of the animal. Keeble v. Hickeringill P brought action for damages against D for depriving him of a profit when the

Defendant purposefully frightened ducks away from the Plaintiff’s decoy pond by firing a gun. Held: D interfered w/ P’s land use by frightening ducks away. P entitled to damages. Rule: Landowners are considered prior possessors (first possessors) of wild animals on their land.

ii. Constructive Possession Animals caught in a trap or net belong to the one who owns and has set the trap or net. By setting such a trap, one is said to constructively possess those animals snared.

iii. Mere Pursuit Mere pursuit does not constitute the exercise of dominion and control sufficientto give the hunter a property right in the animal. However, where an animal has been mortally wounded so that actual possession is practically inevitable, a vested property right in the animal accrues that cannot be divested by another’s act in intervening and killing the animal. Pierson v. Post (fox case). Ghen v. Rich Whale hunter sues to recover value of whale. Held: Defer to custom when universal wi/

community and when custom is efficient.iv. Trespass While a landowner is not regarded as the owner of all wild animals found on his property, a

trespasser who kills game on another’s land forfeits her title in favor of the landowner. This is to prevent the act of trespassing from benefiting the trespasser.

v. Violation of Statute One who violates a statute (e.g., failure to have a hunting license) forfeits her title in animals caught pursuant thereto.

b. Loss of Title i. Escape If a wild animal, captured and held in private ownership, escapes and resumes its natural liberty, the

former owner loses his property right in it. The animal once again is unowned, and the first person thereafter to capture it becomes the new owner. Habit of Return If a wild animal escapes and, though wandering about without restraint, periodically

returns to its owner’s home, or if, though endeavoring to escape, it is still pursued by the owner or is by other means liable to be recaptured by the owner, title is not lost.

c. Marked Animals When certain animals have been captured and reduced to private ownership, it is common for the owner to mark or brand them for purposes of identification. If the animal escapes and resumes its natural liberty, the question becomes whether title is lost. Normally, modern courts will allow title to be retained in the former possessor as long as the animal is marked and the owner exercises all possible effort to recapture the animal.

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2. Open Access and the Commons First possession is used to establish ownership, when the thing being claimed is regarded as unowned

a. Open access: No one has a right to exclude others - open to all.b. Commons: Community ownership

i. “The Tragedy of Commons” symbolizes the degradation of the environment to be expected whenever many individuals use a scarce resource in common i.e. a pasture “open to all.” The tragedy: exploitation, bad, under, or overinvestment.

c. Semi-commons: A resource is subject to private exclusion rights in some uses, but is open access for other purposes – shares features of commons and private property. Example: Field surrounded by houses. For part of year, was commons - community let cattle graze all over field. Other part of the year, field dividing into plots - house owners could plant and harvest their own plots only. (Efficient)

d. Anti-commons: Too many have the right to exclude, so no one is able to use a resource i.e. kiosks in front of empty stores because store rental process involves too many people and factors to rent.

B. Discovery Similar to First Possession, both rely heavily on being the first to claim something. First Possession requires on be the first actually to possess and unclaimed things. Discovery establishes a unique right to possess a thing.

1. Johnson v. M’Intosh P bought the land from Native Americans. Fed. gov. conveyed the land to D. Held: Native Americans were granted right of occupancy only, no right to transfer/ exclude.

a. Chain of Title: Absolute property rights cannot be shared by 2 different entities.  Therefore, England originally enjoyed the absolute property rights to the lands in question and the Indians only enjoyed the occupancy rights to the land.  After the Revolutionary War, England transferred these absolute rights to the United States.

b. Effects: federalization of Native American law; U.S. gov. wouldn’t recognize property, unless approved; racing problem (people racing west, wasteful).

c. Different ways gov. recognized ownership: (1) “its mine;” (2) gov officer dispersed chicks, which equaled number of acres, (3) mark and record. #3 best was because if you have to mark and record land right, you have strong incentive to get it right, but also incentive to take too much.

2. Lockean Theory: Ownership of property is created by the application of labor.

C. Creation Applies primarily to property in the form of information. First is still important, as in first possession, but in creation, some type of originality is required. Deals primarily w/ intangible goods. Incentive of creating rules: to produce more, not to ensure efficient allocation.

1. Misappropriation and Quasi-Property Right in Hot News Not really a property right bc not good against the world. Some limited form of right to news at newest moment.

a. Costs of Quasi-Property Right: racing leading to overinvestment, inefficient, higher price to consumers, 2. Right of Publicity A celebrity’s right of publicity (i.e., the right to control the commercial value of his name, likeness,

or personality) is tangible personal property. This protects people from losing the benefit of their work in creating a recognizable persona or identity. This right exists both at common law and by statute.

a. Voice: Midler v. Ford Ford’s advertising agency used a “sound alike” to Midler. Held: Ford trespassed on Midler’s right of publicity. Rule: A voice is a part of a person’s identity, thus it is protected against unauthorized use by that person’s right of publicity.

3. Noveltya. Objective Standard for Patentability - Requires:

i. New to the world; and Atlantic Works v. Brady Patent law rewards those who make substantial discovery or invention.

ii. Non-obviousness. Trenton Indus. v. A.E. Peterson Mfg.

o Infringement claim: P claimed patent infringement of improvements P made in high chairs. Improvement made to high chair, that P claims was invention, was known and disclosed in earlier patents. Held: Use of improvement by D was not a patent infringement.

o Unjust enrichment claim: Valid because P only have idea after seeing P’s disclosure. Held: P is entitled to recover reasonable royalty on chairs manufactured by D btw date on which P made disclosure and the date the patent was issued.

D. Accession Accession is the addition of value to property by the expenditure of labor or the addition of new materials. If the addition can be detached from the principal chattel, this will be ordered and each party will be put in status quo ante. If the addition cannot be detached from the principal chattel, the issue is one of ownership: Who is the owner of the chattel in its enhanced state? The answer depends upon whether the trespasser acted in good faith or was a willful trespasser.

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1. Accession by Innocent Trespassera. General Rule—Trespasser Cannot Recover Where a trespasser adds value to the original owner’s chattel, the

original owner retains title, and the trespasser cannot sue for compensation for the value of his labor or materials added to the chattel.

b. Original Owner’s Remedies i. Damages for Conversion The original owner may sue the trespasser and obtain conversion damages—the

value of the original materials plus any consequential damages. ii. Replevin Alternatively, the original owner may seek replevin—return of the chattel.

c. When Original Owner Is Limited to Damages In some cases the original owner is limited to a cause of action for damages; she may not sue in replevin because the act of accession divested her of title.

i. Complete Change When the species of property has been completely changed by the addition of value to the property by the expenditure of labor or new materials, the original owner may not recoup the chattel.

ii. Great Increase in Value A similar exception is made when the increase in value is so great that it would be unfair to permit the original owner to reclaim her property. Examples:

o 1) The owner of clay used by another in making bricks has no title to the bricks because the identity of the clay has been lost in the creation of a new species.

o 2) Where trees originally worth $25 are converted by a person in good faith into barrel hoops worth $700, the original owner cannot recover the hoops. Improver would owe damages of $25 for the tree to original owner.

2. Accession by Willful Trespasser A willful trespasser cannot gain any rights of ownership in the property he has enhanced in value under the rules of accession. The original owner of the chattel is entitled to the property in its improved state regardless of the degree of augmentation in value made by the trespasser.

a. Complete Change The original owner’s title persists even though there has been a complete change in the form of the chattel.

b. Original Owner’s Remedy The owner of the chattel subject to willful trespass may elect to sue the trespasser for damages for conversion (i.e., the full present value of the property in its improved state) or for replevin (i.e., the return of the chattel as now changed or improved).

3. Competing Principles of Original Acquisition (First possessors don’t fair well against landowners)a. Fisher v. Steward Ps found swarm of bees in tree on D’s land, marked and cut down. If Ps discovered tree first, did

property in honey belong to them? No – marking tree was trespass an consequently can avail Ps of nothing. Can’t lessen rights of owner of the soil. If court found P did have right, would interfere w/ rights and property clearly vested in D.

b. Ratione loci or ration soli: principle that captured animals belong to owner of land where they are captured (alluded to in Pierson). Court more sympathetic to idea that ownership of bees and beavers (another animal that builds home in fixed location) goes w/ land, rather than ownership of other types of wild animals killed/captured on private land goes with land.

c. Goddard v. Winchell Goddard, landowner, leased rights to grass to Elickson. Meteorite fell to land. Elickson allowed Hoagland to dig it up (3 ft deep). Hoagland sold to Winchell. Goddard learned of meteorite and sued Winchell to recover it. Held: landowner could recover because meteorite was annexed to the land through a natural process (like accretion), so landowner owned it.

d. Hannah v. Peel P (Hannah) sued to recover brooch that P found on D’s property. Held: Since D never occupied house, and D had no knowledge of the brooch, until after P had found it, the brooch may be considered to have been “lost.” So, Hannah, as the finder, is entitled to possession.

4. Ad Coelum Rule (if own soil, also own to sky and depths)a. Resources under the surface (minerals, oil, caves)

i. Edwards v. Sims Man discovered cave entrance on his land. Cave extended under neighbor's land. Held: that the cave should be split up according to whose land it was under (ad coelum). Dissent: Accession argument: argued that the cave should belong to whoever controlled access, put

work into discovering it. Labor theory makes more sense here.b. This rule is seen as inefficient and unfair. Just as someone is not prevented from flying airplanes over your land

(Hinman case), neither should someone be prevented from giving a tour in a cave below the surface of your land.5. Confusion Confusion is an intermixture of goods owned by different persons such that the property of each can no

longer be distinguished i.e. fungible goods. If the property can be identified and returned, there is no confusion.a. Known Contributions Where goods are of the same kind and quality, the parties are tenants in common of the

mass in proportion to their respective interests, regardless of how the confusion took place, and even regardless of whether the confusion was fraudulent or willful.

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i. Example: Where wheat of the same grade belonging to different persons is wrongfully and fraudulently mingled by one of them and ground into flour, the wrong- doer is entitled to his proportionate share of the mass.

b. Unknown Contributions i. Innocent Confusion If the confusion was innocent (e.g., by an act of God, act of a third party, or consent),

the owners are tenants in common of the mass. If the amount of contribution is unknown, the parties share equally.

ii. Wrongful Confusion If the confusion was caused wrongfully by one of the owners, her agent, bailee, or trustee, the burden is upon such owner to identify her portion. If she cannot do so, the entire mass belongs to the innocent owner. Example: Where the owner of bales of cotton fraudulently mingles them with bales belonging to

another so that they become indistinguishable, the wrong- doer is entitled to no part of the goods unless she identifies it as her property.

c. Negligent Confusion Cases are split as to whether negligent confusion is innocent or wrongful; most say it’s wrongful.

6. Increase/Decrease in Riparian Land Land bordering on any type of water – rivers, streams, lakes ponds, arms of ocean. (Littoral: land bordering ocean or major inland sea.) Rule of Law: Owners of riparian land that is augmented through operation of accretion or reliction automatically gain title to new land; and owners of riparian land that is diminished due to erosion automatically lose title to lost land.

a. Accretion: Gradual deposit by water of solid material (sand, mud, or sediment) producing dry land which was before covered by water (property line moves w/ river). Rule: land that is added to an owner’s land becomes his property.

i. Nebraska v. Iowa Dispute over boundary btw 2 states. Argued avulsion should apply b/c Missouri River is constantly changing. Held: Court continues to treat it through established doctrine of accretion.

b. Avulsion: Sudden change of banks of a stream such as occurs when a river forms a new course by going through a bend, sudden abandonment by a stream of a its old channel and the creation of a new one, or sudden washing away from on of its banks of a considerable quantity of land and its deposit on the opposite bank. Rule: location of the old riverbed constitutes a permanent, fixed boundary.

c. Reliction: The gradual and imperceptible withdrawal of water from land, which it covers “by the lowering of its surface level from any cause.” Rule: If the retreat of the waters is permanent (not merely seasonal), the owner of the contiguous property acquires ownership of the dry land thus created.

a. Erosion: gradual and imperceptible wearing away of land (bordering on water) by the natural action of the elements. Rule: Slow erosion of a stream’s bank results in the owner losing title to the affected area.

7. Real Estate Fixtures A “fixture” is a chattel that has been so affixed to land that it has ceased being personal property and has become part of the realty. For example, S and B contract to sell and buy a house. Before vacating, S removes a “built-in” refrigerator. B claims that the item was “part of the house.” Is the refrigerator a “fixture”? If so, B is entitled to its return or appropriate compensation.

a. Chattels Incorporated Into Structure Always Become Fixtures In both common ownership and divided ownership cases, where the items become incorporated into the realty so that they lose their identity, they become part of the realty. Examples include bricks built into a building or concrete poured into a foundation. Similarly, where identification is possible, but removal would occasion considerable loss or destruction, the items are considered fixtures, e.g., heating pipes embedded in the wall or floor of a house.

b. Strain v. Green Greens sell home to Strains. When Greens move out, they take several items (mirrors, chandelier, water tank). Held: According to three criterion, these were al fixtures. Green admitted as much when he replaced the original fixtures with substitutes, as his doing so suggests a recognition that a house lacking those features would be considered incomplete.

i. Three Criterion of a Fixture: (1) actual annexation to the realty, or something appurtenant thereto; (2) application to the use or purpose to which that part of the realty w/ which it is connected is appropriated; and (3) the intention of the party making the annexation to make a permanent accession to the freehold.

E. Adverse Possession Title to personal property by adverse possession results from the running of a statute of limitations, which requires that the cause of action for recovery of the property be brought within a specified period after it accrues. When the period specified has run, the presumption that the person in possession has the right to possession cannot be overcome by the former owner; the party in possession thereafter has an enforceable right to possession superior to everyone and thus becomes the true owner. In an action for recovery of the property, the defendant must plead the statute of limitations as an affirmative defense.

1. Requirements: The cause of action does not accrue and, therefore, the statute of limitations does not run unless the possession relied on is: (i) actual; (ii) open and notorious; (iii) hostile and adverse, under a claim of right; and (iv) exclusive and continuous.

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a. Actual: The property hasn’t been given to anotherb. Open and notorious: There must be some visible act of dominion or use on the part of the possessor that is

inconsistent with the absolute right of property in the owner, so as to give reasonable notice to the owner. In the case of thieves, a secret holding is presumed. A finder of lost or mislaid property is presumed to hold openly.

c. Hostile and Adverse: Possession must not be by consent and not in subordination to the rights of the true owner.d. Exclusive and Continuous Possession must be exclusive to the adverse possessor (except for tacking—see

below). Since the possession must be continuous for the statutory period, interrupted periods that together total the required time are insufficient.

2. Statute of Limitations Title passes when the statutory limitation period has run. a. Accruing of Claim The accruing of the claim or cause of action is often a crucial question. Demand and refusal

may be required, e.g., when possession passed originally as a gratuitous bailment.b. Tacking Successive possessors of the property may “tack” or combine their respective periods of possession as

long as they are in privity, e.g., the property is sold, given, or bequeathed to the subsequent possessor. i. Howard v. Kunto Descriptions in deeds didn’t fit how land deed holders were occupying. Held: continuity

measured ordinary use for that property (i.e. summer home: every summer counts as continuous); tacking also allowed when there is privity.

c. Tolling the Statute Tolling the statute means that the time during which the following conditions are met is not counted in the time period, or that the period, which has otherwise expired, is extended beyond a certain event.

i. Disability of Plaintiff When a person entitled to maintain an action is a minor, mentally incompetent, or imprisoned on the date the action accrues, she may bring the action after removal of the disability within a period permitted by statute. Disability must have occurred by time of first possession.

ii. Defendant Out of Jurisdiction When the wrongdoer, who is a resident of this jurisdiction, is outside the jx, the statute is tolled until the wrongdoer returns.

iii. Fraudulent Concealment When a potential defendant fraudulently conceals himself after the action accrues, so as to avoid service, the statute is tolled until the concealment has ended.

d. Bona Fide Purchaser of Stolen Goods A bona fide purchaser of stolen goods is not protected against the claim of the owner unless the statute of limitations has run on the owner. Since a secret (rather than open and notorious) holding is presumed in the case of stolen goods, the running of the statute is unlikely. The risk is on the purchaser.

3. Theoretical Approachesa. Lockean Labor = ownershipb. Hegelian Person who values the land the most deserves it (look at relationship btw person and the asset, whether

it’s tight). Use partly defines formation of the person. Not partaking in property = lack of acknowledgement in that tradition.

c. Utilitarian Efficiency-based. AP makes most use of the land; gatekeeper is allowing others to make best use of property while cutting out transaction costs (dealing w/others)

4. Minority - Requirement of Good Faith of Adverse Possessora. Carpenter v. Ruperto P puts land to higher use though aware property is not hers. Held: no claim of right bc she

acted in bad faith (bad faith = knew land wasn’t hers).

F. Sequential Possession Issues (Lost or Mislaid Property)1. Concept The fact that the owner has either lost or mislaid his property does not lead to the divestiture of his title. Title

to such property persists despite the fact that it has been lost or mislaid. The owner relinquishes title when he abandons the property (see Abandonment).

2. Lost or Mislaid?a. Lost Property Property is “lost” when the owner has accidentally and involuntarily parted with his possession and

does not know where to find it. To determine whether property is lost, the key factor is the place where it is found: judging from the place where found, would a reasonable person conclude that the owner had accidentally and involuntarily parted with possession of it and does not know where to find it?

i. Example: A wristwatch found on the floor in a public place will likely be regarded as lost property. Judging from the place where found, it is reasonable to conclude that one would not intentionally place a wristwatch on the floor.

b. Mislaid Property Property is “mislaid” when, judging from the place where found, it can reasonably be determined that it was intentionally placed there and thereafter forgotten.

i. Example: A briefcase found on a desk, table, or counter will likely be regarded as mislaid property. Judging from the place where found, it is reasonable to conclude that the item was intentionally placed there and thereafter forgotten.

3. Finder of Lost Propertya. General Rule—Finder Entitled to Possession Except Against True Owner

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i. If property is categorized as “lost,” the one who reduces it to possession becomes its finder. Possession is physical control coupled with an intention to assume dominion over the object. The intent may be manifested by an effort to keep others away, or may be implied, as in the case of an article discovered on the land of an owner. Generally, the finder of lost property is entitled to possession of it as against all except the true owner. Examples:

o A boy who discovered a sock and threw it among his friends was held not to have the requisite intent to assert control over the sock or the money found in it.

o The act of placing markers over the spot where a wrecked steamboat was located was held not to be a sufficient exercise of dominion and control by the plaintiff to allow him to claim title to the abandoned property.

o Armory v. Delamirie Boy finds jewel and takes it to jewelry shop. Shop’s apprentice took out stones and gave boy back socket only. Held: Finder of a jewel does not acquire absolute property or ownership, yet he has such a property as will enable him to keep it against all but the rightful owner. May obtain damages for price of best jewel, unless returned.

o Clark v. Moloney Action to recover value of 10 white pine logs. Logs originally found by P floating in bay, were taken, moored with ropes. Afterward, D has possession and refused to give them up, alleging he had found them adrift. Held: P has “special property right” that allows him to keep logs against all but the rightful owner. (F1 prevails over F2)

o Anderson v. Gouldberg Two converters of pine logs. Held: One who has acquired possession of property (improperly or not: by finding, bailment, or by mere tort) has right to recover possession against a mere wrongdoer who is a stranger to the property. (C1 prevails over C2)

oii. Exception If property is buried, under ad coelum, right of possession belongs to owner, not finder.

4. Finder of Mislaid Property The finder of mislaid property does not acquire the right to possession. The owner of the locus in quo becomes entitled to possess the mislaid property against all the world except the true owner. Rationale: Since, by definition, mislaid property is that which has been intentionally placed where found and thereafter forgotten, when the true owner realizes where he has mislaid his property he will return to that location to retrieve his property. On this basis, in an effort to return property to its owner, the right of posses- sion is given to the owner of the locus in quo and not the finder.

a. Example: A maid found a valuable brooch in the slats of a hotel bed. The possessor of the room at the time claimed the brooch as finder (the maid having put the brooch on his dresser). Held: The brooch must have been placed in the slats on purpose and not by inadvertence. Therefore, the brooch was mislaid property and possession was awarded to the hotel as owner of the premises.

5. Rights and Duties of Possessor The foregoing rules, applicable under the common law, describe who acquires the right of possession as against the whole world except the true owner. Under these rules, however, neither the finder (as to lost goods) nor the owner of the locus in quo (as to mislaid goods) becomes the title owner of the property; he merely acquires the right of possession, and as possessor has the following rights and duties.

a. Possessor as Quasi‐Bailee The possessor is a quasi-bailee. His title is good as against all the world except the true owner, even to the point of suing for the return of the property if wrongfully taken from him.Example: A lost ring belonging to O was found by X, who then lost it himself. It was then found by Y. X may recover possession from Y or anyone else but O.

b. Duty to Find Owner Should the finder know or have reasonable means of discovering the true owner, he must do so, or he may be guilty of larceny, and he may be held liable in tort for conversion.

i. Example: X finds a wallet containing identification papers, including the telephone number of its owner, Y. X does not attempt to contact Y, but holds the wallet (including contents) with intent to return it to Y should Y ever ask for it. X has converted the wallet and its contents.

c. Duty of Due Care The possessor must keep the goods with due care, considering that he is a gratu- itous bailee and considering the nature of the goods. Failure to adhere to this standard will render him liable in negligence.

d.  Extent of Obligations These obligations persist until sufficient time has passed for the true owner to be deemed to have abandoned her goods (which will depend upon the character of the goods and circumstances of the case) or until the statute of limitations has run.

e. Acquiring Title As a general rule, after a sufficient time has run for the goods to be deemed abandoned, or after the statute of limitations has run, the possessor becomes the new owner of the goods.

III. Values Subject to Ownership

A. Personhood

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1. Human Tissue Regents of California v. Moore (bundle of rights approach – “just doesn’t feel right”) Patient did not have property right to spleen following its removal by doctors who then used it to create a cell line of great commercial value. While a person has a property right to his own tissue, that right evaporates once a sample is voluntarily given to a third party.

a. Different approaches to body parts as property: (1) no conversion, but may present some due process claims; (2) it’s property but only backed up by right to excluded, not transferable; (3) bundle of rights approach.

2. Artist’s Moral Rights (utilitarian vs “just doesn’t feel right”) a. Moakley v. Eastwick P was a sculptor that D hired to do work for a park. Phillips commissioned by D to create 27

sculptures in park. D later decided to redesign the park, which would remove or relocate almost all of P's work. P invokes MAPA (Mass. statute) and VERA (fed statute).

i. When dealing w/ statutory argument, ask: what was the state of the world before that? Before those statutes, if you bought art, what could you do with it? Anything, except violate other statutes.

ii. What are the pieces of property here? Real property. Sculpture treated as personal property, unless affixed, then it becomes real property. Plus, intellectual property that is the arrangement and look of sculptures.

iii. Does MAPA cover designs in sculpture? The arrangement? (two stylistic differences) Covers “fine art” – is “sight specific” art “fine art?” Outcome is state of the world before statute (statute doesn’t change outcome). IP is sculpture not the arrangement, so moving these things doesn’t disrupt “it” because “it” is physical things themselves.

iv. Hold up problem, landowner wants to change his own property and artist “holding him up.”b. Moral Rights Generally come w/ two sides:

i. Right of Integrity (If right extended to arrangement of pieces, then re-arranging would be right of integrity problem.) Violation: taking off part of all.

ii. Paternity/Attribution Artist can decide to put name on it or not.

c. Cultural Patrimony An object qualifies as Native American cultural patrimony when it (1) is not owned by an individual Native American; (2) cannot be alienated, appropriated, or conveyed by an individual; and (3) has an ongoing historical, traditional, or cultural importance central to the Native American group.

i. United States v. Corrow Held: Cultural patrimony and may not be sold (b/c NOT personal property.3. Margaret Radin (Hegelian) pay attn to impact on personhood; 2 levels of property (personal and fungible); the more

connected w/personhood, the stronger the entitlement; buying/selling of things (i.e. body parts) can diminish human dignity and value of human life; some goods should be inalienable, to prevent markets which distort worth of human beings

B. Public Rights Some resources are regarded as “inherently public.”

1. Navigable Servitudes No state gov., corp., or indiv., has power to obstruct or interfere w/ the public’s right to free use of waterways for transportation.

a. Navigable Waters Relatively permanent, standing, or continuously flowing bodies of water (defined in light of pollution control purposes of Clean Water Act).

i. Power to regulate commerce power to regulate navigationb. Navigable Airspace Principle of federal control over navigable waterways extends to navigable airspace. Defined

as: airspace above the min. safe altitudes of flight prescribed by the Civil Aeronautics Authority. Fed law trumps state.

i. When flights are made wi/ navigable airspace wo/ and physical invasion of the property of the landowners, there has been no taking of property

ii. Flights are a taking if they are so low and so frequent as to be a direct and immediate interference w/ enjoyment and use of the land.

c. Purpestures: Encroachments by private persons on navigable waterways or public highways. Public nuisances include and permanent, fixed, or stationary object or impediment (as distinguished from a mere temporary obstruction incidental to lawful use of the way), which is unreasonable and unnecessarily interferes w/ public travel, or which endangers safety of travelers.

2. Public Trust Doctrine State law doctrine that certain resources are preserved for public use, and that the gov. is required to maintain them for the public’s reasonable use.

a. Illinois Central Railroad Co. v. Illinois IL sued to reassert control of submerged lands that had been granted to the ILCentral Railroad Company. Held: State leg. can’t cede control of navigable waterway, therefore grant is void. Navigable waterways are held in trust by the government for public use. Although the government might grant limited portions of such waterways to private parties so that said parties can make improvements that would

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benefit the public, a state legislature cannot cede such vast portions as the one in the current case. State may only transfer trust lands if selling small parcels for public benefit.

3. Doctrine of Custom Should be applied where there has been a use of the land that is: (1) longstanding, (2) continued, (3) peaceful, (4) reasonable, (5) certain, and (6) obligatory.

a. State of Oregon ex rel. Thornton v. Hay OR sued to enjoin Hay from erecting fences and other barriers on coastal land that Hay technically owned but which bordered on public land. Held: Landowner may be enjoined from fencing in land with longstanding public right of access because facts satisfy six conditions. State obtained prescriptive easement over beach land bc of custom.

IV. Owner Sovereignty and Its Limits

A. Right to Exclude Key attribute of owner sovereignty.

1. Nuisance Anything which annoys or disturbs the free use of one’s property, or which renders its ordinary use or physical occupation uncomfortable…anything which interferes w/ rights of a citizen, either in person, property, enjoyment of his property, or comfort…Nuisance when it clearly appears that enjoyment of property is materially lessened, and physical comfort of persons in their homes is materially interfered w/ thereby.

a. Restatement: Nuisance is an interference w/ use and enjoyment of land that causes significant harm and is unreasonable. Unreasonable: gravity of harm outweighs the utility of the actor’s conduct.

b. Henricks v. Stalnacker Stalnaker’s rear well had poor quality water, on Jan 13 he called sanitarian and was told about Hendricks’ proposed septic system. They were meeting county sanitarian on Jan 15. On Jan 14, S contracted for 2nd well. Jan 15 sanitarian informed Hendricks no permit could be issued because wi/ 100 ft of S’s well. Held: Stalnacker’s well was not a nuisance because of similar competing interests, balancing of landowner’s interests is equal. Hendricks didn’t shown balancing of interests favored their system.

c. Other Approaches to Resolving Nuisance Disputes:i. Instead of balancing interests, court asks whether D has committed some kind of “invasion” of P’s land that

causes “significant harm”ii. Decide disputes by enforcing general understanding in relevant community of what constitutes “normal

uses” of land Racing problem, still favors firsts Favors established elite social order, which is not always socially conducive and sometimes damaging

iii. Give weight to temporal priority, first to be established is given presumption of validity, relative to a later incompatible use.

iv. Ask whether D or P has been acting in a way consonant w/ general norms of “neighborliness” – see Law of Neighbors Section

2. Trespass: Any intentional intrusion that deprives another of possession of land, even if only temporarily, is considered a trespass. Strict liability tort.

a. Jacque v. Steenberg Homes, Inc. Steenburg delivering mobile home, easiest route across Jacque’s land; plowed path; Held: actual harm not in damage done to land, but loss of individual’s right to exclude others, large damage award reasonable as deterrent

risk: people will game the system; okay to trespass as long as you pay a fine? issue: channeling: ct. enforces property rule, encourages channeling (negotiating); benefits: forces

communication, exchange of values, safety w/copsii. with Hinman v. Pacific Air Transport Δ airlines operated aircraft thru airspace over Π’s property; Held:

rejects ad coelum doctrine (if own soil, also sky to depths); trespass requires actual, substantial harm; inefficient to force negotiation of flyovers (hold-out issue, markets won’t work), law should step in

b. Repeated Trespass Repeated offenses wills sometimes lead to equitable relief. Law and equity may allow for trespass, but not if it’s repeated.

i. Baker v. Howard County Hunt Bakers owned a farm, repeated trespass by hunt club’s hounds. Held: injunction granted b/c trespass is repeated, intentional, and seriously interferes w/ owner’s peaceful enjoyment of his property. Since trespass repeated there is a distinct problem of having to return to court making equitable remedy best choice (versus legal remedy: $). Illustrates problem of liability rule treatment (sue me, I’ll pay damages each time and continue

trespassing)c. Building Encroachments Are like repeated trespass bc once encroachment, its ongoing trespass. Courts are split.

i. Pile Approach: It’s not okay.

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Pile v. Pedrick Stone factory wall projected into Ps land 1 3/8” below surface. Held: Once you’ve got an encroachment, it’s an ongoing trespass, and repeated is always enjoinable. Wall must be torn down. Pile Approach: I own land and everything on it ad coelum.

ii. Golden Press Approach: It might be okay. Golden Press v. Rylands Bldg foundation/footings extended onto Ps land. Held: Encroachment looks

like repeated trespass, but in good faith (so court open to not enjoining it), innocent encroacher has to also show a gross balance of hardship. (Balance nature of harm and cost of remedy.) Then, court won’t act oppressively and let owner extort encroacher.

d. The Ex Ante/Ex Post Problemi. Ex ante analysis: an analysis of the situation before some critical event like an accident, or a contract, or a

commitment to a particular use of resources takes place. i.e. (encroachment) would consider the circumstances of two adjacent landowners, one contemplating a building to be placed near the boundary line btw their properties, before the building is constructed.

ii. Ex post analysis: an analysis of the situation after such a critical event occurs. i.e. (encroachment) an ex post analysis would consider circumstances of two landowners after the building is constructed.

iii. Joint Welfare Maximizing Result: subtract the values in the Loss to B from the value in the gain to A, and determine which degree of separation produces the largest net positive gain for the two parties.

e. Mistaken Improver i. Mistaken Improver Not Permitted to Demolish Unilaterally – Can’t Self-Help

Producers Lumber v. Olney Olney built building on Lot 8, belonging to Montgomery of Producers Lumber, after checking ownership with Producers Lumber secretary treasurer (who confirmed it had not been sold). Olney found out PL owned land and demolished building mistakenly erected. Can’t come into court with unclean hands and seek equitable remedy. Resorted to self-help and took the law into his own hands. Court seems to want people to bargain or resort to court, instead of taking matters into their own hands.

ii. Bad Faith Improver – No Remedy May be required to remove encroachment if landowner demands. Only good faith improver has a remedy.

iii. Traditional Law Where a person erects a building on the land of another wo/ knowledge and consent, building becomes a fixture and belonged to owner of land and builder is wo/ remedy and may force improver to remove structure

iv. Modern Law – Good Faith Improver Rule Somewhat limited right to go to court for equitable relief, if good faith. Pile-type Remedies – Reaffirmed by 1st Restatement:

o Salazar: If building can be removed wo/ great injury to building/land, court may permit improver to remove it

o Rzeppa: Where building can’t be removed: Court/jury can find market value of land before and after making of the improvement

and allow improver to recover for the amount of this enhanced value of the land; or Improver may be permitted to pay value of land before improvements were placed and

become the owner of the land and the improvements.o 27 Am.Jur.: If landowner unable to pay for improvements, and improver unable to pay for land,

then court may order land and improvements be sold to highest bidder and $ divided btw owner and improver. Or court may give improver judgment for amount the lot has been enhanced in value, together w/ lien against lot to secure payment of judgment

Other Courts Approach: Balance Equities 3rd Restatement adopts a more liberal rule: Granting restitution “as necessary to prevent unjust

enrichments” while avoiding “undue prejudice to the owner”

3. Scarce Resources - Exclusion and Governance Two different strategies for resolving disputes about how scarce resources are used.

a. Exclusion Strategy Decisions about resource use are delegated to owner. Law allows owner resource to repel any and all intrusions that don’t have owner’s consent. (trespass: you’re in, then get out)

b. Governance Gathering information, focuses on particular uses of resources, and prescribes particular rules about permitted and prohibited uses wo/ regard to the other attributes of the resource (derived from: Ks, social norms, regulations). (nuisance: how good of a reason, how accidental?)

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B. Protecting Right to Exclude

1. Criminal Laws (Mens rea (intent) plus exercise control over property inconsistent w/ continued rights of owner (act).a. People v. Olivo Issue: ability to charge someone w/ shoplifting if they haven’t left store w/ item? Held: Yes. Goal

is protection of private property. Customer must exercise control inconsistent w/ rights of owner, and larcenists treat the owner’s property in a manner inconsistent with the continued rights of the owner without leaving the store. 

2. Civil Actionsa. Maintaining and Action for Trespass of Electronic Communication – Impossible if Statute Doesn’t Cover

Damage or Impairment to System Remember: trespass to chattel requires injury/interference to personal property.

Hamidi v. Intel Former employee, Hamidi, sends emails to Intel’s employees over its comp. system. Held: No injury, so, no remedy other than self-help.

3. Self-Help: A privilege that entitles property owners to take variety of steps to protect or enforce their property rights wo/ direct involvement of legal system (self-help measures). Permitted, but not required (can still leave doors unlocked and demand no one steals car.

a. Nature of Self-Help as a Privilegei. “Right:” a claim that one person has against one or more, which corresponds to a duty that these others have

toward the one with the right. i.e. duty to keep off wo/ permission ii. “Privilege:” is a freedom to act in certain ways wo/ interference from others, which corresponds to a “no-

right” in the others to interfere w/ the one exercising the privilege.b. Rule: Must be accomplished wo/ breach of peace

i. Berg v. Wiley Landlord leased building w/ term no improvements wo/ approval, kept making improvements and didn’t make needed improvements. Tenant put up sign, Closed for Renovations, and landlord locked tenant out. Held: Tenant awarded damages because landlord means were not “peaceable” bc landlord failed to resort to judicial remedies - his lockout was wrongful because speedy judicial process available. Not unanimous view today. Self-help still permitted, but must be accomplished wo/ a breach of the

peace.ii. Williams v. Ford P gets to keep car, while, ex-husband pays. Ex-husband stops paying. While being

repossessed. P’s claim is based on risk of invoking violence (tows car at 4:30am), but court finds no risk of invoking violence because P admitted men were polite and complied w/ her requests. Held: This form of self-help was okay b/c no threat of violence. Dissent: high risk of violence. Note: creditors tend to rely on UCC self-help remedy rather than statutory remedies that might trigger due process requirements.

C. Exceptions to Right to Exclude

1. Necessity Defense to ejection, affirmative property right, and exception to self-help rule (cannot protect your property right above necessity of another’s and will be compensated if damge).a. Ploof v. Putnam Family (P) sailing when storm comes in. Family moors to D’s dock. D unmoors P’s boat. Held:

Court holds family had right not to be kicked off – Doctrine of Necessity applies w/ special for to human life. If you are kicked off, you can be compensated for harms caused from having been kicked off.

i. Affirmative obligation to every landowner to make port available in storm to every boat owner – entitlement of boat owner backed up by injunction and damages (property right of boat owner).

ii. Suspicious of monopoly – efficient problem w/ price discrimination.

2. Custom Customary norms and practices can give rise to an exception to property rule.a. McConico v. Singleton Rule: no right to exclude others who are hunting on your land, based on custom right – right

to hunt on unenclosed and uncultivated land has never been disputed.

3. Public Accommodations Laws Common carriers and innkeepers are subject to a general duty of nondiscrimination among customers. a. Requirements: (1) if they refuse service, they must have some good reason; and (2) must charge reasonable rates.a. Civil Rights Act of 1964 Increased scope of “public accommodation” to: h/motels providing lodging,

restaurants/places selling food, entertainment theaters/arenas.

2. Public Policy

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a. State v. Shack 3rd party enters land to administer legal and medical assistance to migrant workers living there (but not owners). Held: Even though owner has right to exclude, this right is not absolute. Necessity (private or public) may justify entry upon lands of another.

b. Uston v. Resorts Int. Hotel, Inc. Casino excluded card-counters. Held (NJ): When property owners open their premises to the general public in the pursuit of their own property interests, they have no right to exclude people unreasonably. Sometimes, proprietors have a duty to remove disorderly or dangerous people from the premises. Casinos may bar the disorderly, the intoxicated, and the repetitive petty offender. If someone is not causing any of these types of distractions, then they have the right of reasonable access to the blackjack tables.

c. Brooks v. Chicago Held: Horse racing park could exclude group of “self-proclaimed expert handicappers” as long as not based on race, color, creed, national origin, or sex.

d. Pruneyard v. Robinson Req to permit students to exercise protected rights of free expression to petition shopping center does not amount to unconstitutional infringement of property rights under taking clause. The shopping center may restrict expressive activity by adopting time, place, and manner regs that will minimize interference w/ its commercial functions.

3. Antidiscrimination Laws *Most important exception to general right of property owner to exclude (when selling house). However, no principle that prohibits homeowner or tenant from announcing person can be excluded from their home. Only discriminatory state involvement is barred by 14th Amend.

a. Discriminatory Court Enforcement of Racial Covenant Prohibitedi. Shelley v. Kraemer A black family (the Shelleys) purchased home. Neighbors sued to restrain Shelleys from

taking possession, claiming racial covenant was enforceable. Enforced by MO Sup Court. Held: Judicial enforcement of a racial covenant to block the sale of a home from a willing seller to a willing black buyer is “state action” and hence violates the Equal protection Clause of the 14th Amend. State action includes: Actions by legislative bodies and also courts and judicial officials.This looks like

state action because so many people involved and big effects in the future.ii. Judicial Judgments Awarding Damages for breach of a racial covenant are also state action forbidden

under the Equal Protection Clause.b. Civil Rights Act of 1866 and Fair Housing Act

i. The Civil Rights Act of 1866 bars racial or ethnic discrimination in the sale or rental of all property. The Fair Housing Act bars discrimination based on race, ethnicity, religion, national origin, gender, and disability in the sale or rental of a dwelling. Discrimination against families with children is also barred except in senior citizen housing. The Act does not apply to religious organizations, private clubs, and owners who have no more than three single-family dwellings or who have an owner-occupied apartment with no more than four units.

ii. Discrimination of Basis of Marital Status Seems to be of lower order than discrim. on race, etc. Atty Gen. v. Desilets Couple not allowed to rent apt. bc landlords didn’t want unmarried couple there

(religious belief) – this type of disiminiation was prohibited under MA statute. Held: MA didn’t demonstrated a sufficiently clear interest that would justify enforcement of the statute despite burden to landowner.

o Concerns Landowner: Enforcing the anti-discrimination statute would burden Desilets by forcing

him to agree to contracts inconsistent with his religious views. Tenant: Refusing to uphold the statute may decrease the availability of housing to

unmarried couples.c. Three Objective Purposes:

i. To increase housing opps for person in protected classii. To eliminate personal harm or indignity suffered by members or protected class when they are rejected on

ground of status as a member of groupiii. To eliminate social message or inferiority/subordination that’s communicated to community when

landlords/sellers are permitted to discriminate against persons

D. Other Powers of Sovereign Owner

1. Licenses A license is not a property interest in land. It is a merely a privilege – a privilege of licensee to go upon the land of licensor. (ProCD Inc. mere license, not property rights to software. These rights are in personam not in rem.) A license is a waiver of owner’s rights to exclude that is temporary and recoverable. Statute of frauds doesn’t apply.

a. Not alienable. License is personal to licensee.b. Revocation and Termination Can be revoked at any time by licensor and similarly surrendered by licensee.

i. Public Amusement Tickets sold by theatre, etc. create a license, revocable by nature.

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ii. Breach of K The termination of the licensee’s privilege may constitute a breach of contract. Revoking license is not wrongful in property terms, but ticket holder may have damages remedy if license revoked before event

c. Failure to Create Easement An easement longer than one year must be in writing. So, an oral attempt to create easement = license. If later executed, (to extent that it would be inequitable to revoke e.g. reliance) licensor may be estopped to revoke the license.

d. Irrevocable Licenses: i. License coupled with interest

Hunting: A grants B right to hunt on A’s land, B acting in reliance, hunts and kills deer. Unjust to allow A to revoke license, depriving B of deer.

Vendee of Chattel: The purchaser of a chattel located upon the seller’s land is (in the absence of an express stipulation to the contrary) given the privilege to enter upon the seller’s land for the purpose of removing the chattel. The purchaser’s right is irrevocable. He must, however, enter at reasonable times and in a reasonable manner.

Termination of Tenancy If a tenant’s right to possess land has been lawfully terminated, the tenant may still reenter the land at reasonable times and in a reasonable manner for the purpose of removing his chattels. This is an irrevocable privilege.

Inspection for Waste The owner of a future interest in land (e.g., a landlord, holder of a reversionary interest, or remainderman) is privileged to enter upon the land, at reasonable times and in a reasonable manner, for the purpose of determining whether waste is being committed by the holder of the present possessory estate.

ii. Estoppel Theory Where A grants license to B, and B, acting in reliance on license w/ knowledge of A, materially changes his position in such a way that it would be inequitable to allow A to revoke license. Example: A gives oral permission to B to change course of street that flows through A and B’s land. B, in reliance builds expensive water mill. A changes his mind and demands stream restored. Revocation would impose great hardship on B, court issued injunctions barring revocation until abandoned or power by other source.

2. Bailments Arise when the owner of property (bailor) temporarily transfers custody of the property to another (bailee) for the accomplishment of a certain purpose.

a. No Transfer of Title The bailee acquires the right to possess in accordance with the terms of the bailment. A bailment obligates the bailee to return the item of personal property to the bailor or otherwise dispose of it according to the terms of the bailment.

b. K Aspect The bailment arises where one possesses the property of another. This relationship may be part of an express contractual arrangement between the parties; however. An express contract is not necessary (e.g Constructive Bailment (implied): If one finds a lost article and takes it into her possession, she is a bailee for the unknown owner; or landlord repossesses).

c. Elements of Bailmenti. Possession There is no bailment unless the bailee obtains physical custody over the property coupled with

intent to exercise control.ii. Bailee’s Consent Required Possession cannot be thrust upon the bailee without her consent. Therefore, a

delivery without acceptance by the bailee will not create a bailment and the mere custody of a chattel is not sufficient in law to constitute possession.

iii. Knowledge of Presence Must have knowledge of being in possessor or able to be charged w/ knowledge. (Clothing store liable when coat taken off and left on counter bc store impliedly invited such behavior – regular store not liable.)

iv. Property Concealed in Bailed Property Must know of the existence of hidden property in bailed property to be liable. (Valet not liable for musical instrument left in truck; coat check not liable for fur piece inside coat.)

v. Constructive Bailment See above.d. Bailments Distinguished

i. Parking Lots Examine Surrender of Control Over Car Parking a car in a parking lot may be a renting of parking

space or it may be a bailment. Whether a particular transaction amounts to a bailment or to a mere renting of parking space depends on whether the owner surrenders control over the car to the operator of the lot.

o Keys Thus, the turning over of the keys by the owner to the operator or use by the operator of a checking system would indicate a bailment. Where the owner parks her own car, selecting her

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own space, locking the car, and taking the keys, she leases the space, and the operator of the parking lot or garage is not a bailee.

o Attended Lot with One Exit Allen v. Hyatt Regency Allen parked car, took keys, car stolen while in parking garage. Single exit/entrace – car must have left there, leaving Hyatt responsible for negligence. Further, ticket from machine may be equivalent to keys -

Possible Arguments Against Bailment (by Hyatt):□ License: In which case its revocable, if someone else took your car, that’s btw you

and them – license to use property, now revoked. □ K Law: cause of action about terms of license, breach and damages ($10 for ticket,

unless like in Hadley, notice for consequential damages).□ Tort Cause of Action: but then have to show negligence, which is harder

e. Bailee’s Duty of Care Since relationships is contractual and can be modified by agreement before bailment. i. Bailee is Not Insurer When items damaged through not fault of her own (e.g. earthquake), bailor is liable.

ii. Type of Bailment May Determine Degree of Case - Justice Story’s Simplified Set of Rules: When bailment for sole benefit of bailor, law reqs only slight diligence on part of bailee, and makes

him answerable only for gross neg. When bailment for sole benefit of bailee, law reqs great diligence on part of bailee, and makes him

responsible for slight neg. When bailment is reciprocally beneficial to both parties, law reqs only ordinary diligence on part of

bailee and makes him responsible for ordinary neglect.iii. Absolute Liability The bailee is absolutely liable for loss or damage without regard to her care under the

following circumstances: Departure from Terms of Bailment – Using Goods for Different Purpose Breach of Agreement to Insure Duty to Redeliver Upon the termination of the bailment, the bailee owes a duty to redeliver or account

for the thing bailed in its original or agreed-upon, altered form. Delivery must be made to the bailor or someone claiming under him. She is absolutely liable for improperly delivering the bailed chattel to someone other than the bailor. Such misdelivery is a breach of the bailment and a conversion of the bailed chattel. Liability is absolute and not based upon negligence.

o Exception—Indispensable Instrument An exception to the rule of absolute liability for misdelivery has been made by some courts when the bailee delivers the chattel to one holding an indispensable instrument (e.g., claim check) as long as the bailee had no notice or knowledge that the one presenting the instrument was not the original bailor.

Example: A bails his car to a parking garage and receives a numbered claim check, which he then loses. B finds the claim check and presents it to the bailee garage. The garage delivers the car to B in reliance upon the indispensable instrument (i.e., the claim check). As long as the garage had no knowledge or notice that B was not the original bailor, it will not be held to a standard of strict liability for delivering the car to B.

o Exception—Involuntary Bailee An involuntary bailee is liable only if the bailee was negligent in delivering the goods to the wrong person. Courts impose strict liability on an ordinary bailee because he is in breach of contract when he misdelivers. An involuntary bailee has no contract. Example: A hotel guest leaves her purse in the hotel restaurant. The hotel is liable for delivering the purse to the wrong person only if it was negligent in doing so.

o Adverse Claimants When a bailee has notice of, or reason to know of, an adverse claim to the bailed property, the bailee will be absolutely liable for delivery to the original bailor if the original bailor is not the true owner. The appropriate action to be taken by the bailee is to interplead all claimants of the property.

o Excuses for Nondelivery However, the bailee is excused from making delivery to the bailor in the following cases:

Where, during the life of the bailment, the bailor has sold the property to the bailee or to a third party with notice given to the bailee;

Where there is title paramount in a third party and such party claims the article; or Where the property is taken from the bailee by judicial process.

The Winkfield (Eng.) P, Postmaster. Gen. files suit on behalf of mail-owners when Winkfield ship collides w/ Mexican ship. Held: Postmaster recovers, holds $ subject to claims by customers (possible windfall to Postmaster if not all file claims)

o Rule: in voluntary bailment, cts usually bar action by true owner against present possessor if bailee has already recovered from the present possessor.

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3. Abandonment and Destruction Owner sovereignty includes right to abandon (throw it away or relinquish all claim to title) and destroy property (demolish, burn, otherwise eliminate).

a. Personal Propertyi. Abandoned property is property that the owner has voluntarily relinquished all owner- ship of without

reference to any particular person or purpose. It is necessary to show an intent to give up both title and possession (voluntary). If involuntary lost or mislaid. Examples:

o Allowing refrigerators to remain in a building that the owner of the refrigerators knew was to be destroyed was held to be an act of abandonment.

o A tenant’s act of leaving her apartment for one week and being in arrears for one week’s rent was held to be not enough to constitute abandonment of the property in the apartment. The landlord padlocked the tenant’s door and attempted to charge an extra fee before allowing the tenant to enter again. It was held that the tenant had not abandoned her property and so the landlord had converted the property.

ii. Acquisition of Title If a chattel can be categorized as abandoned, it becomes unowned. As with wild animals, ownership of an abandoned chattel is acquired by reducing it to possession. Title to abandoned chattel is acquired by: (i) actual or constructive dominion and control over the thing, and (ii) an intent to assert ownership over it.

b. Real Property i. Fee Simple One who owns real property in fee simple who holds perfect title cannot abandon it. Non-use

and failure to pay taxes do not amount to abandonment. Pocono Springs v. MacKenzie Rule: To abandon a property you must relinquish all right title and claim to possession with intention to terminate ownership. Other actions to disassociate from the land will not be enough.

ii. Deceased Persons Right While living person can dispose of property, doesn’t extend to deceased person. Restraint on Waste The natural tendency to care for one’s property and to increase its value restrains

a living person from wasting, this restraint does not exist in the case of a deceased person. Detrimental not only to the estate but to the surrounding property. Public policy: this is a case in which the proposed disposition should be enjoined as beneficial to no one. Eyerman v. Mercantile Trust Co. Note: A testator may not impose conditions that are uncertain, unlawful, or opposed to public policy.

4. Right to Transfer – Any Restriction on the Transferability of a Legal Interest in Property is Void a. Restraints on Alienation Almost any attempt to directly restrain alienation will be held void as contrary to public

policy. i. Example: O grants Blackacre, which is otherwise generally alienable, “to A in fee simple, on the

understanding that A has no power to alienate.” This will be struck down. So are efforts to use defeasible fees or executory limitations to effectuate complete restraints on alienation. Example: O grants Blackacre to “A in fee simple so long as A does not alienate, then to O. Struck down.

ii. Morse v. Blood Testator dies, leaves asset to widow. She gets everything on condition that she gives nothing to the family = something close to fee simple. But, contingency, if she gives even one penny to a relative, then violated gift (her interest ends). Restriction is void? Would go back to estate anyway, if she died intestate, then heirs (family) would get everything.

iii. Courts will typically uphold restraints on alienation for a limited period of time if they appear to be reasonably related to some family estate-planning objective. Example: restraint on alienation by a minor until he or she reaches age of majority; or restraint on life

estate given to surviving spouse when property in question intended to pass to someone else like surviving children.

iv. Fee Simple Subject to Condition Subsequent or Restriction on Alienation? Mountain Brow Lodge v. Toscono 2 restraints in deed: (1) use and (2) sale did this create fee simple

subject to condition subsequent or restraint on alienation? Held: Restriction on the use of the land is NOT a restraint on alienation even if that is its effect. Lodge 82 could sell their land, but only they can use it (treated as fee simple condition subsequent - will revert if used for wrong purpose)

o Many jxs pay attention to the skepticism towards restraints on alienation in formal wayso Even if they do restrain, but aren’t structured as an alienation on own terms, cts won’t strike

themo Majority: formalistic approach: legal positivism (law is, and you follow it)o Dissent: legal realist, post-modern theory of interpretation (substance over form) “This use

restriction prevents grantee from conveying property just as effectively as the condition against ‘sale or transfer’”

v. Fee Simple Determinable or Fee Simple Subject to Condition Subsequent?

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Where instrument’s language is ambiguous, courts will favor latter bc avoid automatic forfeiture. If interest is a possibility of reverter, and grantor fails to sue to recover possession in an action in

trespass or ejectment before the statute of lim. runs, then owner of fee simple determinable gets a fee simple absolute by adverse possession.

vi. Policy Reasons Against Restraints on Alienation Increases transaction costs for 3rd parties (who will have to figure out the associated legal rules). Powerful efficiency justifications: free alienability permits things to be reallocated from one person to another so people who place higher value on asset end up in control of it.

b. Rule Against Perpetuities Stated as: “No interest in property is valid unlessit must vest, if at all, not later than 21 years after one or more lives in being at the creation of the interest.” More easily understood: “An interest is void if there is any possibility, however remote, that the interest may vest more than 21 years after some life in being at the creation of the interest.” This paraphrase of the Rule properly places the emphasis on the possibility of remote vesting, the test by which the invalidity of an interest is shown.

i. If a situation can be imagined in which the interest might not vest within the perpetuities period, the interest is void. This is the result even though the circum stances that might bring about the remote vesting are unlikely to occur or are unrealistic. (All kinds of unlikely things are considered capable of happening under the Rule.) The Rule applies to the following legal and equitable future interests in personal or real property: Contingent remainders; Executory interests; Class gifts (even if vested remainders); Options and rights of first refusal; and Powers of appointment.

ii. Analysis of Rule: When the Perpetuities Period Begins to Run The validity of interests under the Rule is determined at

the time the interests are created, taking into account the facts then existing. The “lives in being plus 21 years” period begins to run, and the measuring lives used to show the validity of an interest must be in existence, at that time.

o Wills—Date of Testator’s Death The perpetuities period in the case of a will begins to run on the date of the testator’s death.

o Revocable Trusts—Date Trust Becomes Irrevocable In the case of revocable trusts, the perpetuities period begins to run on the date the trust becomes irrevocable. This will be at the settlor’s death unless the settlor amends the trust, making it irrevocable, during his lifetime.

o Irrevocable Trusts—Date Trust Is Created The perpetuities period for irrevocable trusts begins to run on the date the trust is created.

o Deeds—Date Deed Is Delivered with Intent to Pass Title In the case of a deed, the perpetuities period begins to run on the date the deed is delivered with the intent to pass title.

“Must Vest” To be valid under the Rule, it must be shown that the interest created in the transferee must vest, regardless of what might happen, within lives in being plus 21 years. An interest becomes “vested” for purposes of the Rule when: (i) it becomes a present posses sory estate, or (ii) it becomes an indefeasibly vested remainder or a vested remainder subject to total divestment. Remember that the Rule is applicable only to future interests created in third persons; consequently, the Rule generally applies only to contingent remainders, executory interests, and vested remainders subject to open.

o “Wait and See” Rule A majority of states have modified the “must vest, if at all” rule above. Under the modified approach, these states suspend judgment as to whether the interest in question is good or void. Potentially, they wait until the end of the perpetuities period. If the interest in question actually vests during the period, it is good; if it does not vest or fail during that period, it is void. Until the end of the perpetuities period, it is impossible to know for sure whether the interest is good or not.

“If at All” Means the interest doesn’t have to vest wi/ the perpetuities period in order to be valid (after all, many contingent remainders never vest bc condition precedent isn’t satisfied)

“Lives in Being” The law allows any lives to be used to show the validity or invalidity of an interest,but no lives are of any help unless they are somehow connected with the vesting of an interest. The measuring lives need not be given a beneficial interest in the property, and they need not even be expressly referred to in the instrument, but there must be some connection that insures vesting or failure of the interest within the perpetuities period.

o Who can be used as measuring lives In all the examples in this chapter, the measuring lives used to show the validity or invalidity of interests are referred to or are indirectly involved in the disposition itself. It is a common drafting practice to use a “perpetuities saving clause” (i) to make sure that the Rule has not been accidentally violated, for the Rule is diffi cult to master; and (ii) sometimes to extend the duration of trusts to the maximum extent permitted under the

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Rule. The clause reads something like this: “Notwith standing anything herein to the contrary, any trust created hereunder shall termi nate, if it has not previously terminated, 21 years after the death of the survivorof the following named persons: ; and the remaining principal and undistributed income of such trusts shall be distributed to . . . .”

o Reasonable number of human lives can be used Animals and organizations can’t be used as measuring lives – only humans.

iii. Interests Exempt from Rule Gift Over to Second Charity A charitable trust may last forever (i.e., neither the Rule Against

Perpetuities nor any analogous rule applies). However, like any other gift, a gift for charitable purposes is void for remoteness if it is contingent upon the happening of an event that may not occur within the perpetuity period. The only exception to this rule is that if there is a gift to Charity A, followed by a gift over to Charity B upon a possibly remote event, the gift over is valid. Remember, this is the charity-to- charity exception. The Rule Against Perpetuities applies to dispositions over from a charity to an individual on a remote condition, and to dispositions over from an individual to a charity on a remote condition.

Vested Interests A vested remainder in an individual is not subject to the Rule. Thus, a devise “to A for life, then to A’s children for life, then to B in fee simple” is wholly valid. B has a presently vested remainder. It may vest in possession long after lives in being if A leaves some surviving children born after the testator’s death, but the remainder to B is presently vested in interest, and that is what counts.

o Compare – Class Gifts Are Subject to Rule so long as they remain open Reversionary Interests Reversions, possibilities of reverter, and rights of entry are all vested in interest

and hence are not subject to the Rule Against Perpetuities. (Even so, in many states, there are statutes expressly limiting the duration of possibilities of reverter or rights of entry.)

o Compare—Executory Interests Are Subject to Rule Possibilities of reverter and rights of entry, which are exempt from the Rule, must be carefully distinguished from executory interests, which are subject to the Rule. Remember that executory interests are created in transferees; possibilities of reverter and rights of entry are created only in the grantor (or the testator’s heirs if a will is involved).

iv. Consequence of Violating Rule – Interest is Stricken An interest that violates the Rule is void and is stricken (subject to the possible application of a perpetuities reform statute). However, all other interests created in the instrument of transfer that are valid under the Rule are given effect.

c. GIFT CAUSA MORTA Rule: transfer of a gift requires some physical transferi. Irons v. Smallpiece- father promises to transfer 2 colts to son, dies before giving them over; Held: in order

to transfer property by gift, there must be deliveryii. Foster v. Rice- wife on deathbed, writes letter seeking to transfer items to husband; Held: no delivery (even

tho husband went home and picked items up); note failed as authorization Requirements of a will: generally must be in writing, witnessed by 1 or 2 disinterested witnesses, who

must sign before a notary; goal: 1. provide evidence/confidence and 2. create solemnity so executor gets it right

holographic wills handwritten; generally might meet both goals; problem w/solemnity- person changing their mind as they write; benefit: more likely to be used by the poor, want to enable them to transfer

V. Forms of Ownership: Freehold Interests An estate is a type of property right and measures a person’s interests in the land in terms of duration. Interest is either: present possessory estate or one that doesn’t take possession until happening of future event: future interest. Estate in Land The so-call freehold interests, include undivided fee simple and two types of lesser property rights (that leave room for future interests): life estate and defeasible fees. Freehold interests: originally involved feudal military service obligations, whereas a lease (a nonfreehold) estate did not, tend to be recorded in land registries (leases don’t)A. Present Possessory Estates

1. Freeholda. Fee Simple Absoluteb. Life Estatec. Defeasible fees

2. Nonfreeholda. Lease

3. Present Possessory Interestsa. Fee Simple Absolute Largest package of ownership rights, from which others are carved. Indefinite. Owner can

transfer by: designating successor owner, gift, sale, or will. If dies intestate (wo/ will), state intestacy statute will

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designate others (relatives) as heirs, who will take property in fee simple. If no heirs, property will escheat to the state. Fee simple (transfer) fee simple.

i. Example: O grants “to Marge and her heirs” or “to Marge in fee simple” or “to Marge” Heirs: person doesn’t have heirs until their death. Heirs apparents while alive.

b. “And his heirs” phrase creates a “mere expectancy,” which is not an interest. Rather, they are words of limitation as apposed to “to Marge” which are words of purchase. Only words of purchase designate someone that is to receive an interest.

4. Life Estate Unlike fee simple, which is of unlimited duration, life estate comes to an end with the death of a names person.

a. Example: O grants Blackacre “to Marge for life, and then to Lisa”i. Here, Marge has life estate, followed by remainder in fee simple in Lisa.

ii. Life estate is alienable by gift or sale (but not by will). If Marge sells, purchaser will receive a life estate pur autre vie – an life estate according to Marge’s life not the new owner’s lifespan.

b. Waste Waste Doctrine restricts what an owner of an asset, less than a fee simple estate, can do w/ respect to co-tenancy or time-divided ownership. Potential for conflict when 2+ ppl hold interests in a single piece of property especially when a fee simple is divided into a life estate w/ one or more remainders. Holder of life estate will want quick return investments, while holders of remainders want long-term investments

i. Three Categories of Waste Affirmative Waste Type of misfeasance. Occurs when the life tenant undertakes some affirmative act

on the property that is unreasonable and causes “excess” damage to reversionary/remainder interest. Actions often defined by terms of what is “normal” use.

Permissive Waste Type of nonfeasance. Occurs when the life tenant dails to take some action w/ regard to the property and the failure to act is unreasonable and causes excess damage to the reversion/remainder.

Ameliorative Waste Affirmative act by life tenant that significantly changes property, but results in increase in value.

o Brokaw v. Fairchild Upon his death, left P life tenancy in the mansion. Will used the term "my residence." P argued that the mansion was making him lose money each year; and if he were allowed to convert building to apartments, he could make a profit. Ds are the remaindermen who hold a future interest in the property and don’t wish the property to be changed in such a way - argue that the proposed demolition is waste. Held: A life tenant may not demolish his inherited building against the wishes of the remaindermen even if the property would be more valuable if demolished. Such action would constitute waste.

ii. Court intervenes for future user: future user not here/unable to participate; future user might attach high value to mansion, not want to deal w/hassle of apt. bldg.

iii. Rule: Question is, whether the tenant, at the time the wrongful act was done, caused an injury which then affect the P as to his reversion. (doesn’t matter if will be put back to same in future)

iv. Opposing view (Memls, distinguishes Brooklaw) Permits ameliorative waste, when it can be justified by changed circumstances. Brooklaw repealed in NY in favor of standard that looks to multiple variables, including changed circumstances in the neighborhood and whether modification increases the value of the property.

v. Determining Value of Life Estate: A owns life expectancy of three years (according to actuarial tables). Thus, can assume A would get to use of the $100K asset for the next 3 years and B would get use of the asset thereafter. What is the remainder to B worth today? Once the value of the remainder, subtract from $100K to determine the value of the life estate.

5. Defeasible Fees Comes in 3 closely related but distinct varieties. Interest are like fee simple absolute, except that they may end on the happening of a named contingency. Likely will deal with zoning, covenants etc., not defeasible fees

a. Fee Simple Determinable Ends automatically upon occurrence of a named event.i. Example: O grants Blackacre “to Springfield Law School as long as it is used for instruction in the law, then

to O” Fee Simple Determinable create using language suach as: “as long as,” “so long as,” “while,” “during,”

and “until.” Here, O has a possibility of reverter.b. Fee Simple Subject to Condition Subsequent This defeasible fee continues indefinitely except that, upon

happening of the named event – the condition – the interest does not automatically end but can be ended by action (self held or law suit) by the grantor or the grantor’s successor.

Example: O grants Blackacre “to Springfield Law School, but if it is not used for instruction in the law, then O has right to reenter and take the premises.”

o Here, SLS has a fee simple subject to condition subsequent and O has right of entry (also called “power of termination”).

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o If condo built instead, SLS only loses Blackacre if O (or his successor in interest) takes action to recover the property.

o End of interest and transfer to next interest is not automatic (as it was w/ fee simple determinable)

o Usually employs language such as: “but if,” “on condition that,” “provided that,” provided however,” and “if” (as opposed to language of duration as in fee simple determinable)

c. Fee Simple Subject to Executory Limitation If defeasible fee is followed b an interest not reserved to the grantor i.e. granted to some third party at the time of conveyance of the present possessory estate the defeasible fee is called a fee simple subject to executor limitation (the following future interest is called an executor interest)

i. Example A: O grants Blackacre “to SLS as long as it is used for instruction in the law, then to Springfield Animal Hospital.”

ii. Example B: O grants Blackacre “to SLS, but if it is not used for instruction in the law, then to Springfield Animal Hospital” Notice, here future interest is in a 3rd party, rather than grantor (as in cases w/ future interests in O – fee

simple determinable and fee simple subj. to cond. subsequent) The interest is automatically cut short by the following executor interest upon the happening of the

named event, regardless of whether durational or conditional language is used.B. Future Interests

1. Interest Retained by Grantor Not all interests give their owner a present right to possession. Some interests don’t become possessory until sometime in the future, and the circumstances under which this may happen help to define which interest a person has. If a person has a future interest, one also has to ask what present possessory interest one would have if the interest becomes possessory, or in other words “what estate is in waiting.” Example: O grants “to A for life, and then to B” A has present possessory interest in life estate and B has remainder in fee simple. When A dies, B will have fee simple, B has something now, but it is a remainder in fee simple, a future interest.

a. Reversion Follow the natural end of a life estate and in other contexts where owner hasn’t disposed of entire fee (such as lease holds).

i. Example: O grants Blackacre “to Marge for life, then to O” O here retained a reversion. O would also implicitly retain a reversion if the grant had been simply “to

Marge for life” O had a fee simple and carved out a life estate, retaining the rest of the original fee simple. The “rest”

retained is a reversion. In landlord tenant relationship: landlord retains a reversion, but the landlord also has a present interest

(the fee simple subject to he lease in addition to this reversion)b. Possibility of Reverter This interest is reserved to grantor that follows a fee simple determinable. O will

automatically get the property back if the limitation built into the fee simple determinable occurs.i. Example (same as fee simple determinable example): O grants Blackacre “to SLS as long as it is used for

instruction in the law, then to O. If O has died, then O’s successor (by will, intestacy, or sale, etc) will take. The possibility of reverter

can also be implicit: O grants Blackacre “to SLS as along as it is used for instruction on the law”

o Here, O is not mentioned, but bc O owned the entire fee simple absolute and granted a fee simple determinable, O must retain a possibility of reverter, here implicitly.

In either case, O need not do anything to regain ownership. If the limitation event occurs, then O (or O’s successor as holder of future interest) becomes the fee simple owner again.

Notice: if holder of fee simple does not quit possession, it can start a period of adverse possession.c. Right of Entry/Power of Termination Like possibility of reverter, this interests is retained by grantor that follows

a defeasible fee, but the preceding defeasible fee must be a fee simple subject to condition subsequent.i. Example (same as fees simple subj. to cond. subsequent): O grants Blackacre “to SLS, but if it is not used

for instruction in the law, then O has the right to reenter and take the premises.” O has right of entry (also called power of termination). Condition is condition subsequent for preceding

interest and a condition precedent of the future interest – the right of entry. If it occurs, nothing happens automatically, but it does give O the right (power) to change legal relations

by ousting the holder of the fee simple subject to condition subsequent. O can either attempt a physical entry (subject to self-help limits)or bring an action to recover possession

of the land. If O does nothing, then holder of fee simple subject to condition subsequent continues on as owner as

before. If enough time passes, right of entry may not longer be exercisable, through doctrine of laches (under this doctrine, right of entry must be exercised wi/ a reasonable time, which come courts take to be the period in the statute of limitations of bringing an action in ejectment).

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2. Interests Created in Grantee Present possessory interest don’t have to be followed by interest in grantor. Instead, grantor can simultaneously create an interest in a third party, which have different features from otherwise similar set of future interests created in the grantor herself.

a. Remainder Like reversion, the remainder follows a life estate, never a fee simple, but unlike the reversion the remained is in a party other than the grantor. Remainders can be vested or contingent and come in a number of varieties:

i. Indefeasibly vested The example of remainder below is indefeasible bested, meaning that the identify of the takers (Bart, Lisa, Maggie) and because no condition subsequent can cut the remainder short. Example: Marge grants Blackacre “to Homer for life, then to Bart, Lisa, and Maggie heirs.

o Terminology can be confusing, bc instead of granting the “rest” of the fee to a 3rd party, the owner retains it. This “rest” is not a remainder but a reversion.

ii. Contingent (remainder w/ condition precedent) Example A: marge grants Blackacre “to Homer for life, then to his children and their heirs” Example B: Marge grants Blackacre “to Homer for life, then to Bart if he graduates from high school by

age 19” o In each example, uncertainty remains as to the identity of the class of takers (A) or to the

occurrence of the condition (B). When uncertainty is resolved, the remainders are said to vest an interest. Vesting an interest can occur wo/ person actually coming into possession, vesting in possession.

o In situations like B, the grantor could also use alternative contingent remainders, such that one bests if the other does not and vice versa:

Example C: Marge grants Blackacre “to Homer for life, then to Bart if he graduates from high school by age 19, otherwise to Lisa and her heirs.”

o Alternative contingent remainders do not ad up to a vested remained because there is an implied reversion in Marge in these circumstances even though the chances of the revision vesting in possession are remote.

iii. Vested “subject to complete divestment” If the occurrence of a condition can cause the interests to shift to someone else, then the remainder is vested subject to complete divestment. Example D: Marge grants Blackacre “to Homer for life, then to Bart; but if Bart fails to graduate from

high school by age 19, then to Lisa.o Unlike indefeasibly vested remainder in the 3 named children (in the remainder example), a

remainder subject to complete divestment, can be cut short. o But unlike contingent remainder, the condition here is a condition subsequent not a condition

precedent. Bart’s remainder vests upon the natural termination of the preceding estate, but then it can be cut short for reasons other than the natural termination of his own interest. Lisa here has a shifting executory interest.

iv. Vested subject to partial divestment (or subject to open) Example E: Marge grants Blackacre “to Homer for life, then to his children and their heirs.” At the time

of the grant, Homer is the Father of Bart and Lisa (but not yet Maggie).o What do Bart and Lisa have? They are part of a class “subject to open” bc more member could

enter the class by being born as Homer’s children. Thus, Bart and Lisa have vested remainders subject to partial divestment. The remainder is vested bc there is no uncertainty as to their status as children of Homer and no condition precedent on their remainder. But remainders in Bart and Lisa are subject to partial divestment because if more children are born to Homer they would diminish the interest of Bart and Lisa.

b. Executory Interest Is a future interest in a transferee (not retained by the grantor), that divests or cuts short a previous interest. Unlike the remainder following a life estate which becomes possessory upon the natural end of the preceding interest (death). Executory interest does not become possessory upon the natural end of the preceding interest (as in case of remainder following death of the holder of life estate)

i. Example (shifting): Marge grants Blackacre “to Bart, but if alcohol is ever consumed on the premise, then to Ned Flanders.” Here, the defeasible fee (fee simple subject to an executory limitation) is cut off early by the happening

of the condition subsequent, and the following interest in Ned Flanders is an executory interest. Because executory interest divests the interest of a third party, it is a “shifting” executory interest. If executory interest divests an interest in the grantor, it’s a “springing” executory interest.

ii. Example (springing): Marge grants Blackacre “to Bart for life, remainder to Lisa 5 years after his death.” Recall there is revision in Large here that would become possessory in 5-years period after Bart’s death.

Lisa has a springing exec. interest bc it divests the reversion in the grantor.

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iii. Example (cut short – bring it to an unnaturally early end): Homer grants Blackacre “to marge for life, but if she remarries, then to Lisa.” Incidentally, interests like this were allowed if they could be taken to be motivated by concern to

support widowed spouse, but not if they seemed motivated out of desire to prevent someone’s marriage (Example: “to Marge for life but if she ever marries Ned Flanders, then to Lisa”)

C. Vesting An interest vests in possession when the interest becomes a present possessory one. But an interest can vest in interest before it vests in possession. Vesting in interests: various types of uncertainty about the interest have been resolved. As in remainders: when created remainder is clearly not vested in possession, it’s a future interest that won’t become possessory until the interests preceding it have terminated. However, remainder may or may not be vested in interest. In the latter sense “vested” means that a certain type of uncertainty about whether interest ill ever come to individual has been resolved. Uncertainty can stem from two main sources: (1) may be unclear who will take interest when it does become possessory (Example: To A for life, then to A’s children); and (2) uncertainty that prevents vesting in interest relates to contingencies (Example: To any of my now living children who pass the bar – here no uncertainty as to who children are, but uncertainty as to whether they will pass the bar. Once children pass bar, their interest becomes vested as to that child)

D. Conservation of Estates Where someone is granting a fee simple, all of the pieces have to add up to a fee simple.1. Principle of conservation of Estates Grantors may break up their interests and transfer some or all of the pieces, but the

pieces, but the pieces have to add up to what the grantor started out with. Ensures that all the pieces of the estate are accounted for. Applies whenever a grantor might convey something less than her full interest. Usually happens when grantor starts w/ fee simples and conveys some of that interest. Somewhere in the end must be a fee simple ownership.

2. Williams v. Estate of Williams Holographic will (handwritten – interpreted w/ blend of formalism and search for intent) transfers life estate to decedent’s 3 daughters; if 1 daughter dies/marries, her interest goes to the other daughters. Last living daughter’s kids want to take all. Since 3 daughters had life estate, only had power to use, not dispose. Heirs still gets interest through different route: implied reversion in the class of heirs at law (father’s heirs): when daughters fail condition(s) property goes to the testator’s heirs through the legal system.

3. City of Klamath Falls v. Bell Corporation gift deeded land to the City of Klamath Falls “as long as” the city used the land for a library, and to Fred Schallock and Floyd Daggett, their heirs and assigns. The city closed the library, when the books were moved to another library. Held: possibility of reverter remained in the grantor corporation under the deed, which by law in OR can’t be alienated. Fee simple determinable (“as long as”), so breach of condition causes fee simple to terminate. Therefore land would remain in the corp. or its successors and heirs of successors prop. interest passes back to corp., which is dissolved, so transfers up to shareholders, who, at death, transfer down to heirs.

a. Three possibilities for filling the gap:i. Interest originally given to City – a fee simple subject to executor limitation – could be expanded into fee

simple absolute (as argued by City); ii. Court invalidating executor interest can imply a possibility of reverter in the grantor – the Co. – and given

that the corp. has dissolved, award possibility of reverter to shareholders of corp., successors of Daggett and Shallock (argued by heir of Daggett and Shallock); or

iii. Court could have held that possibility of reverter escheated to the State of Oregon.4. Disclaimer One of powers of owner to make gift, but valid gift requires acceptance by donee. Takes two to transfer, and

potential transferee has to veto over the transfer, no one is obligated to accept a property interest. Disclaimer is provided for by statute, which typically requires a clear and unequivocal expression, and accepting any benefit of the asset in question defeats any attempt at disclaimer. (some require certain formalities such as writing describing property in order to disclaim interests in real property).

a. Successful disclaimer: results in the one disclaiming being treated as never having owned the disclaimed interest.b. Why a disclaimer? to avoid tax consequences of double transfer; may help avoid probate; may prevent

disclaimant’s creditors from reaching the property; for purposes of abandonment if property has negative value5. The Numerous Clausus The principle that the catalog of estates is finite and closed. Closed number of property allowed

to be and won’t create it unless it needs to be. Generally deferred to pathways of gov. to deliberate and promulgate through that form a new form of property (condos, co ops, etc) Exhibits a strong and explicit principle that property, unlike contract, is not freely customizable by parties, bur rather is standardized into a closed set of approved forms. It’s a mandatory rule that conflicts w the principle of freedom of contract.

a. Purpose: allows ppl to do less investigation b/c the boundaries are set and finite when deciding whether to buy/sell (lessens information cost); cost few pigeonholes means fewer variations, may frustrate parties’ intent

b. Merrill & Smith Optimal Standardization in Law of Propertyi. Keppel v. Baily Involved conveyance of iron works, in which purchasers covenant on behalf of themselves

and their successors and assigns to acquire all limestone required by works from particular quarry and to ship limestone to the works on particular railroad. Court held: this type of agreement, although enforceable as a K btw original parties, didn’t fall wi/ recognized types of servitudes enforceable against subsequent purchases as a property right running w/ the land.

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ii. Lease for so long as in war. Court ultimately standardize bc of in rem nature of property. Not always appropriate or efficient. Questions over whether standardization is right.

c. Johnson v. Whiton A grandfather conveyed property to his granddaughter, but in a way that did not fall in one of the traditional estates (a fee tail: typically created by the words “to A and the heirs of his body,” limited inheri tance to lineal descendants of the grantee. If no lineal descendants survived at the grantee’s death, the property either reverted to the grantor or her successors or passed to a designated remainderman. Today, most US jxs have abolished fee tail and have enacted statutes under which any attempt to create a fee tail results in the creation of a fee simple.) Rule: A person can’t create a new type of inheritance by will (with words of limitation).

i. When a person tries to convey property in a way that does not conform to one of the traditional estates, the limitations in that conveyance will be invalid. This is to prevent restraints on alienation. When need to talk to a lot of people to get ownership alienation problem. per capita: define group/class and divide total by the number of people in the group per stirpes: divide by the roots (lineage) i.e. three children 1/3 each

d. Garner v. Gerrish Executor of landlord’s will filed suit to evict a tenant who was in possession of a lease that gave him the right to end the tenancy on a date of his choice. Does the grant of right to terminate create a determinable life tenancy or a merely a tenancy at will? Held: The lease creates a life tenancy, which can be terminated by the lessee or at the latest, upon his death. The lease grants a personal right to the named lessee, the Defendant, to terminate at a date of his choice. This creates a life tenancy terminable at the will of the lessee or at the latest upon his death. To make this lease create a tenancy at will, violates the terms of the agreement and frustrates its purpose.

i. 3 Form of Leases At will (argue at my will vs your will) Periodic

o Two ways to look at it payments and lease term (lasts only until end of month) past relationship i.e. once a year emptied and fumigated, or every 10 years change tiles

(go for this if want longer term) Term of years

ii. Focus on method of picking bucket and advantages and disadvantages of each.

E. Co-Ownership and Mediating Conflicts btw Co-Owners Set of norms of proper use to regulate use and care of property. In addition to norms, law itself sometimes provides solutions to problems. Two forms of problems facing co-owners: (1) to afford co-owners exit from the relationship (achieved by action for partition); and (2) more detailed governance rules that protect co-owners mainly in exit. Courts view is generally “you work it out.” unless future interest involved.

1. Concurrent Estates Most states provide by statute that partnership as entity holds title to property, like corporations, under entity theory and there is only one owner of the property – resolved by corporate law. Alternatives to co-ownership arrangements, considers here, under property law. Because of so many issues, law created “artificial legal person:” trust, LLP, LLC, etc.

a. Tenancy in Common Each tenant has separate but undivided interest (separate: independently descendible, conveyable, and devisable; undivided; each tenet has right to possess the whole of the property although they don’t need to exercise that right).

i. Each interest can be attached by creditors of each tenant. ii. No right of survivorship. No req that each tenant hold and equal share.

iii. Presumed when multiple people acquire title to property, unless there is some other manifestation of intent. i.e. “to A and B” or “to A B and C”

iv. Only unity required: possessionb. Joint Tenancy Exactly like tenancy in common except right of survivorship. Surviving joint tenant

automatically acquires the interest of another joint tenant when the other tenant ties. Technically, nothing passes, the deceased joint tenant’s interest is simply extinguished – no tax.

i. Requires 4 Unities (at time of creation) Time Each interest must be acquired or vest at the same time. Title Each must acquire title by the same instrument or by joint adverse possession, never by intestate

succession or other act of law. Interest Each must have the same legal interest (present and future) in the property, such as a fee

simple, life estate, lease, etc., although not necessarily identical fractional shares. Possession Each must have the right to possess the whole.

ii. If any of the unities is destroyed in a joint tenancy, then joint tenancy is severed and tenancy in common is create.

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iii. Each joint tenant while alive has power unilaterally to transfer his/her interest. When transfer or attachment (by creditors) occurs, this may have effect of severing unities and may convert joint tenancy into tenancy in common. So, joint tenancy has partial exit right (through possibility of severance) to supplement more radical break up by partition.

Similarities btw tenancy in common and joint tenancy: partition rights, contributions cotenants for repairs, accounting, dividing profits, can exclude or not exclude strangers, equal use for enjoyment/profit, can sell interest to stranger

c. Marital Interestsi. Tenancy by Entirety (Minority) Only available for married couples (created by marriage). Similar to

tenancy in common and joint tenancy BUT neither spouse can unilaterally transfer or encumber their share of the property wo/ consent of the other. If its not tenancy by entirety: fee simple, joint tenant, or tenant in common.

ii. Community Property For married couples – all property acquired during the marriage (except in some states for gifts to spouse), automatically becomes community property. Each spouse has right to possess, but typically any alienation or encumbrance must have the consent of both spouses. Can transmute property from separate to community and vice versa. Property acquired before marriage is separate but may become community property through commingling w/ community property. On divorce, spouse arguing property is separate has burden of proof and must be able to trace property. Both spouses have right to manage and control. Problems (if you can trace it all, it’s not a problem):

o Property before marriageo Property gifted during marriage

iii. Divorce Many common law states follow an equitable division approach - all things considered analysis Alimony/maintenance provides support for the dependent spouse (may consider hardship, dependence,

as well as comparative fault) O’Brien v. O’Brien couple divorces, ex-wife sues for earning potential of med. license received during

marriage; Court assumes ex will be surgeon. Held: medical license is property, and its value (enhanced earning capacity) is subject to equitable distribution. Ct. treats value of the license as having both certainty and upside

Marvin v. Marvin P and D lived in a nonmarital relationship, with an oral agreement to share equally all property accumulated. Upon dissolution of their relationship, plaintiff brought suit to enforce the oral agreement.

o Holding K regarding disposition of property entered into by unmarried/cohabitating couple may

be enforced by the courts. In absence of express agreement, courts may look to a variety of other remedies to

divide property equitably.□ Courts may look for an implied K or constructive trust.□ A non-marital partner may also recover in quantum meruit for the reasonable

value of household services rendered less the reasonable value of support received (if it can be shown that the rendered services were done in consideration for a monetary reward).

2. Partition Most important legal remedy available to concurrent owners. Any cotenant can sue for partition for any reason or no reason and court will grant request wo/ further inquiry into justness or reasonableness of request. This gives each cotenant automatic right to terminate cotenancy at any time. Available to tenants in common and cotenants. Tenants by entirety: must either convert property into a tenancy in common or joint tenancy by mutual agreement, or sever unity of marriage to obtain partition. Strong w/ concurrent interest not future (unlike waste).

a. Partition By Sale vs Partition in Kindi. “By sale,” split money by percentage of interest

ii. “In kind,” split propertyiii. Two Part Test to Determine Which Promotes Best Interests of Parties

Practicality/Physicality Promote interest of all owners

b. Delfino v. Vealencis Ps and the D owned as tenants in common 20.5 acres of land. On a portion of the land, was the defendant’s house as well as a business she operated. Ps brought suit to partition the property by sale. D moved for an in kind partition. Held: To determine whether a partition in kind or partition by sale is in the best interests of the parties, the court must look to the interests of all the parties, not just the economic gain to one tenant. Trial

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court failed to account for fact that D had been in exclusive possession of the property, resided on the property and derived her livelihood from use of the property. These factors must be given due weight.

i. Note: Not all courts as seemingly protective of subjective value of one co-owner 3. Contribution and Accounting

a. Outser and Remediesi. Gilmor v. Gilmor P and D owned equal shares (tenants in common) of some 33,000 acres of land, which was

used for cattle grazing. Edward was using the property exclusively. P demanded to be given access to the land to graze her livestock and that Edward alter his use to allow her to do so. D didn’t respond, continued his use of land at its maximum capacity. D asserted that he had invited P to use the land, but never made any accommodation. D admitted that if P tried to use the land, he would’ve sought injunction. D built fence on land. Rules - Ouster:

o Cotenant who ousts another cotenant or acts in such a fashion as to necessarily exclude a fellow cotenant, violates the rights of that cotenant.

o Mere exclusive use not enough to establish ouster.o “Exclusive use”” more than one cotenant using the entire property; it requires either an act of

exclusion or use of such a nature that it necessarily prevents another cotenant from exercising his rights in the property.

Rules - Repairs:o Where cotenant in sole possession makes repairs or improvements to common property wo/

consent of his fellow cotenants, he generally has no right of contribution.o May, however, be required to contribute pro rata share of expenses if the cotenant in possession

acted in good faith w/ bona fide belief that he was sole owner of property, or when repairs were essential to preserve or protect the common estate.

Holding: Ousted and repairs should be subtracted from damages.ii. Courts don’t get involved UNLESS the extreme case of ouster (extreme: full exclusion), and once court

open to case, then court now has to pick a remedy (order to let other person in, calculate value). Once an ouster, clock might start ticking on adverse possession.

4. Severance Either joint tenant can unilaterally “sever” the joint tenancy, which destroys the right of survivorships and converts tenancy into a tenancy in common. These days one can prob. convey to oneself and effect a severance of the joint tenancy. If you didn’t sever joint tenancy, surviving joint tenant responsible for mortgage. But if severed at time created mortgage, property could be encumbered and heirs would have interest in paying off debt.

a. Conditional Transfer of Interest (mortgage) Harms v. Sprague Surviving joint tenant brought action to determine title and ownership of survivorship

property against mortgage holder and executor of decedent’s estate. Held: A mortgage on the joint tenancy property was not a lien after the death of the joint tenant and did not sever the four unities of joint tenancy, thus the surviving tenant became the sole owner of the property. Mortg. more like a loan and less like property interest, so surviving tenant must pay. Sup ct. affirms.

o Though of as penalty default rule (information forcing) - rule that punishes banks for not doing biz w/ both parties.

VI. Entity Property Exclusion strategy too crude to serve as an effective basis for managing resources, unused by complex entities like high-rise apts, biz firms, and pension plans. Key attributes of entity property devises is that they permit management of resources to be separated from their use and enjoyment. Separation allows managerial governance functions to be concentrated in hands of specialists.

A. Separating Management and Possessory Rights

1. Leases (leaseholds, tenancies, term of year, or land-lord tenant interests) An arrangement where owner of property lends possession to another, in return for periodic payment of money (rent). Type of financial device, risk-spreading device, (tenant: money; landlord: easier to retake possession if default); mechanism for integrating and managing complexes of assets, and in that sense functions as entity.

2. Lease Types (numerous clausus)a. Term of years Fixed time, specific date. Neither landlord or tenant req to give notice before termination.b. Periodic tenancy Automatically rolls over for a stated period of time. Requires each party gives notice to other if

they desire to terminate.c. Tenancy at will Lasts as long as both parties wish it to continue – either can terminate at any time for any reason.

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d. Tenancy at sufferance Refers to situation where individual, who was once in rightful possession, holds over after this right has ended.

3. Independent Covenants Model All covenants must be performed w/o regard to whether other covenants have/ can be performed i.e. If landlord fails to perform a covenant like repair premises, tenant must still pay rent. Remedy: sue for breach of covenant.

a. Paradine v. Jane Paradine (P) sued Jane (D) for a failure to pay rent for three years on leased lands. Jane asserted as a defense that the lands had been seized and occupied by Prince Rupert of Germany, and that Jane had been put out of possession and frustrated in the performance of his duties under the lease and was not bound to perform under the contract. Held: if the law creates a duty and the party is unable to perform due to frustration of purpose, that duty will be excused. However if the party creates the duty and becomes unable to perform due to frustration of purpose, the law will not protect the party in his own agreement and performance will not be excused. In this case, the lessee would have gained the advantage of the profits and therefore he must bear the risk of the losses.

i. To be actionable under Paradine: It has to be landlord excluding (evicting) tenant.b. Constructive Eviction – Expansion of Independent Covenants Model Theory: landlord misfeasance sufficiently

serious to cause a reasonable tenant to vacate was a constructive eviction, and excused tenant from further payment of rent.

i. Three Part Test: (1) landlord has power, (2) conflict was foreseeable, (3) failure by landlord to control problem. Covenant of Quiet Enjoyment Most important covenant by landlord - promise not to interfere w/

tenant’s possession of land during term of lease (implied in law). Promise to pay rent by lessee also implied in law.

o Blackett v. Olanoff A landlord rented property to a tenant lounge. The lease required the noise not disturb others, but when it did, the landlord did not correct the situation. Ds moved out and assert constructive eviction and Ps sued for nonpayment of rent. Rule: A tenant’s implied covenant of quiet enjoyment is violated when the landlord leases property to another tenant, and the lease gives the landlord the right to control the level of noise, but the landlord does not prevent the undesirable conduct.

ii. Must Vacate: Majority of jurisdictions continue to require that tenant vacate in order to claim constructive eviction. General standard: tenants must more out in a reasonable time. Burden on tenant to show the reasonableness and speed of her abandonment.

iii. Partial constructive eviction: tenant has been constructively evicted from one part of the premises but not from other parts (law here is unsettled).

c. Surrender Landlord and tenant create mutual release of further lease obligations by implied contract i.e. tenant leaves permanently, and landlord accepts offer of surrender. Rule: requires overt act of surrender (offer); and overt act of acceptance (can’t be silence). When tenant leaves early, she is, in effect, making an offer to the landlord to surrender.

i. Doctrine of Surrender When ct finds landlord has accepted a surrender, tenant is liable for full amount of rent owned up to the moment of acceptance, but is on the hook after.

4. Dependent Covenants Contractual aspect of landlord tenant law moved away from independent covenants toward the dependent covenant model – repudiation of “property” conception of leases and favor of “contract” model.

a. Promise to Pay Rent Dependent on Essence of the Bargaini. Medico-Dental Bldg. v. Horton tenant pharmacist leaves bldg. after new doctor starts drugstore, K was that

he’d have exclusive right to sell meds; Held: K obligations were dependent because intentions of drug store and landlord. Court will treat some obligations as more important than others, if they are “the essence of the bargain.”

b. Implied Warranty of Habitability (IWH)i. Javins v. First Nat. Realty Corp. Tenants refuse to pay rent b/c of 1,500 housing code violations in bldg.,

assert violations were not pre-existing to moving in. Held: the housing code violations are a breach of the implied warranty of habitability, entitling the tenants to withhold rent. Court treats housing code as mandatory standard.

ii. Remedies: Rescission of lease by tenant; Order of spec. perf.; Damages for breach of IWH; Set-off against rent liability; Withholding rent until corrected. Method for determining damages: value of premises of compliant w/ IWH, minus value in non-

compliant condition (awards windfall to tenant).

5. Landlord’s Duty to Mitigate If tenant defaults

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a. Sommer v. Kridel Tenant changes his mind about moving in, writes letter, landlord ignores letter, waits 16 mos. and attempts collection; Held: landlord has a duty to mitigate (and burden of proof mitigation occurred) if tenant defaults.

i. Consequences of surrender are dif. than duty to mitigate approach. Consider surrender as an option i.e. changing locks amounts to acceptance of surrender (at which point tenant’s responsibility to pay rent ends)

6. Transfer of Interests During the term of the lease, the lesee acts as the gatekeepers of the property, and can exercise the in rem rights of exclusion associated w/ possession. General rule: when landlord transfers reversion, transferee takes - subject to the tenant’s leasehold interest, just as someone acquiring property in which another has a life estate.

a. When landlord transfers reversion and property is burdened by a lease still in effect, rule: new owner of reversion takes subject to ongoing leasehold interest.

b. When reversion sold to new landlord, new landlord and original tenant are not bound by all provisions of original lease, only by those that “run with the land.”

i. Two Prong Test - Covenant “Runs w/ Land:” If parties intended the covenant to run; and If the covenant “touches and concerns the land”

o Mullendore Theatres, Inc. v. Growth Realty Does landlord’s covenant to refund tenant’s security deposit run w/ the land? No, unless it touches or concerns the land and to do so it must be related to the land as to enhance its value and confer a benefit upon it. This rule puts downstream landlords and tenants on notice and may be a proxy for what upstream landlords and tenants really intended.

c. Assignment and Sublease Two types of transfers of tenant interest recognized by law.i. Sublease (operates like subinfeudation): landlord starts w/ fee simple, landlord carves out lease for prime

tenant from fee simple, then prime tenant carves out sublease for subtenant from the prime lease, then subtenant carves out a sub-sublease for the sub-tenant rom sublease, etc. Each carving out creates interest of lesser extent than inters from it was taken. Each deals w/ tenant immediately below and above, only.

ii. Assignment (operates like alienation): landlord starts w/ fee simple, landlord carves out lease for print tenant from fee simple, then prime tenant alienates the prime lease to a first assignee, then first assignee alienates the prime lease to a second assignee, etc. After initial creating of prime lease, there is no carving out, rather prime lease as a whole is transferred. Assignee, however, steps into shoes of prime tenant, and enters into direct relations w/ landlord. Only

ever two parties to the deal.iii. Which is better?

If inactive landlord. sublease bc now prime tenant will serve as landlord. If active landlord, assignment bc tenant in possession owes duty to pay rent and perform other

obligations that run w/ the land directly to you under privity of estate, and if for some reason new tenant defaults, prime tenant still on hook to you under privity of K.

iv. Determining Assignment vs Sublease English Rule (majority): Distinction btw assignment and sublease is only one thing: is there any kind

of reversion held (even for a day)? Minority: Follows intention - whether you have a new tenancy created or whether subtenant is

stepping entirely into the shoes of the old tenant? v. Landlord Approval

Landlords can withhold approval for any reason But in CA and some others they can’t withhold approval, except for commercially reasonable

reasons. Court says relationships btw landlords and tenants are shifting from more personal relationships to more commercial (sharing a home to sharing a giant apartment building) so the court is less willing to defer to personal prerogative of landlord.

d. Privity of K and Privity of Estate Two Sources of tenant/landlord obligation.i. Privity of K (sublease) Obligation derive from privity of K are those that come from being party to binding

bilateral K. If original landlord and prime tenant enter into lease, they are bound by privity of K. If prime tenant and

subtenant enter into sublease, they are bound by privity of K. But, if landlord and subtenant haven’t entered into any K w/ each other, they are not bound by privity of K. (Can who has privity of k tell by looking at leases and who has signed which lease).

ii. Privity of Estate (sublease) Two conditions must be met (if satisfied, then bound by privity of estate):

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o parties to be bound must have interests such that one is directly carved out of the interest of the other. (directly “nested” interests); and

o One of the parties must be in actual possession of the property or have a reversion. Example: In sublease, orig. landlord is in privity of estate w/ prime tenant as long as the prime tenant is

in possession, and the prime tenant is in privity of estate w/ landlord. If prime tenant subleases to a subtenant, but the original landlord is not in privity of estate w/ the subtenant, nor is subtenant in privity of estate w/ the orig. landlord.

iii. Different when dealing w/ assignments: assignment does not destroy contractual relationship btw orig. landlord and prime tenant, they are still in privity of K. But, no K relationship btw origin landlord and first assignee. Original landlord and first assignee are in privity of estate.

e. Assumption and Novation Two other concepts relevant in assignment. Assume landlord enters into lease w/ prime tenant who then assigns lease to first assignee:

i. An assumption would occur if 1 assignee expressly agrees as part of an assignment agreement to be bound by terms of orig lease (assignee bound by privity of K and privity of estate).

ii. A novation occurs when parties agree to erase any privity of K liability on part of prime tenant, and prime tenant off hook.

iii. Kendall v. Ernest provision in lease that lessee may not assign/sublet w/o lessor’s consent; Held: default for approval clauses now presumptively not okay (changed) (rel’ship btw landlords/tenants is now more impersonal, need to protect esoteric preferences less impt) Rule: where a commercial lease provides for assignment only w/prior consent of lessor, such

consent may be w/held only where lessor has a commercially reasonable objection to the assignee/ proposed lease

7. Form Leasesa. Immutable Rule: cannot be changed/ contracted aroundb. Default Rule: may be contracted aroundc. What do you do? Sign, not sign? Ask around, find other landlords and see if they have better prices (that’s where

your power comes from), and then sign.

8. Rent Controla. Public Law vs Private Law – rent control like implied warranty of habitability asks: do we want these arrangements

to be private law (property, btw parties), or do we feel like need for textured public involvement in relationship btw landlord/tenant

b. Pennell v. City of San Jose If you think this is about helping tenants, then question is: whether fair and appropriate way is to have the landlords pay as opposed to the general public paying?

i. Majority view is: hard to win argument that gov. doesn’t have some legit interest in regulating price (rent control). As long as there is real interest and tailoring, hard to make argument rent control has fundamental const. infirmity. Rent control isn’t unconst.

ii. Might be “takings” issue w/ rent control. Idea that targeting one specific group (landlords specified to mitigate tenant interest), not general and reciprocal.

B. Common-Interest Communitie1. Types

a. Coops Are cooperations, corp. holds fee simple title to entire complex (individual units and common facilities). Indivs must purchase stock in corp, and then corp leases designated space to them (typically long term renewable lease 99 yrs). Borrow $ for contstruction and improvements w/ loan secured my mtg on entire building, indiv share holders responsible for paying off debt.

b. Condos Differ from coops bc owned wi/ walls by indivs in fee simple, rather than leased in coop. Commons areas owned by unit owners as tenants in common.

c. Association Subdivision Stand alone units, typically single family homes, which enjoy certain facilities in common with other stand alone units (usually near golf course, lakes, marinas)

2. Tribulations of Shared Governance a. Hansmann Article Why would you like in condo or coop rather than rent? Common interest community is

fundamentally not your first choice, bogged down w/ transaction costs and collective action problems. Without tax subsidy, coops and condos might complete poorly w/ rental in market for rez apartments. Rent controls distort market. Only choose to coops if you’re nuts.

i. Inconsistencies w/ this view: favorable tax treatment not really valued because phased out by high incomes leading to low deductions, so incentive is not distorting.

b. Condos vs Coops Both created by statute, so they get around numerous clausas issue. Great appeal for condos for two reasons

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i. Financing – coops blanket mtg everyone is responsible for pymt, condos each individual mortgages only their unit

ii. Financial Restrictions on who can buy coop Limits number of potential purchasers which drive down price.

c. Judicial Review of Governance Disputes Remember: coops and condos subject to Fair Housing Act. i. Nahrstedt v. Lakeside Vill. Condo Assoc. Woman buys condo, clause in assoc. agreement prohibits her

keeping cats, but she does anyway because she think’s it’s unreasonable and courts won’t enforce it. Held: Agreed-to use restrictions will be enforced, unless it is shown they are not reasonable (not arbitrary, burden doesn’t outweigh benefits, and not against pub. pol.) More externalities created by cats and fewer alternatives open to women, more likely that the rule is

unreasonableii. 40 W. 67th St. v. Pullman Unfavored coop tenant, board voted tenant (75% vote), pursuant to lease

agreement. Burden of proof on tenant to show acted unreasonably. “Tenant” under statute? Substantive: relationship is pretty close to tenant under rule. Formal answer:

own a coop – own shares, and rents in building, so formally a tenant. Business Judgment Rule: A common-law doctrine by which courts exercise restraint and defer to good

faith decisions made by boards of directors in business setting – that when a board w/ delegated authority to act on behalf of the group, when board acts, decision is warranted as long as:

o wi/ scope;o furthers interests in entity;o made in good faith

Why? Transaction costs – solve by delegation on behalf of group to board and delegation is only effected if made hard to review. If easy to review, then ineffective to review.

o What disciplines board abuse? Private sector: hostile takeovers, where you buy shares and fire board. Bigger waste by board, bigger pot of money corporate raider can make by buying shares, which solves corp. problem because it’s not a single entity. In this setting, don’t have that because it’s owned by tenants, tenant protection statute.

Rule: This case extends the reach of the business judgment rule to give deference to board members decisions. 

C. Non-Possessory Interests in Property: Trusts and Corporations

1. Trusts Ownership is held in undivided fee simple, beneficial interest (life estates, vested remainders, contingent remainders, executory interests)

a. Every trust involves 3 legal persons: i. Settlor: creator, owns property in fee simple or absulte title and grants/conveys property to a trust

ii. Trustee: takes legal title and is responsible for managing, manages beneficiary’s benefit, subject to fiduciary duty

iii. Beneficiary: person who gets the benefit of trustb. Interpreted on assumption that dominant purpose of the settle was to benefit the beneficiariesc. Power of appointment: arises when a donor of property by will or trust creates or reserves a power in some other

person to designate the recipient(s) of particular property or beneficial interests in propertyd. Spendthrift Trusts Limited ability to assign. Assets of some trusts can’t be reached by individual creditors of the

beneficiaries. Purpose: Provide $ support for people regarded as less than capable of managing $ affairs.i. Alienation Issue?

Broadway Nat’l Bank v. Adams Creditor tries to obtain debt from trust created for D by brother. Held: Under the provisions of a valid will the income of a trust fund created for the benefit of another cannot be reached by attachment, either at law or in equity, before it is paid to the beneficiary.

o Rule: The public policy rule that subjects a debtor’s property to the payment of his debts does not subject the property of a donor to the debts of his beneficiary, and does not give the creditor a right to complain that it is out of reach.

o Criticism: creditors don’t know his assets; restraint on alienation allows stuff to sit around wo/ being efficiently used (by dead hand control); never learn to handle their $ (moral view); poor people can have wages garnished (distributional objection)

2. Trust Fiduciary Dutiesa. Rothko v. Reis Rothko, famous artist dies, agreement, family (trustee) tries to undo agreement. They sue for forced

share and court decides family is entitled to having differences in pay, liable for difference btw what should have been received and what was received.

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i. How do you invade decision of trustee? Executors held it as trustee. Why didn’t court defer to decision makers? No 100% deference.

ii. One way to turn their decision over: they didn’t act in furtherance of the corp. interest in any careful way (court overcomes biz judgment rule).

iii. Court treats trustees as fiduciaries. Two key duties: duty of care (highly deferential biz jugdment review); and duty of loyalty (more skeptical). Duty of loyalty: act not only in your interest but in the interest you’re

trying to serve. Problems w/ this duty: acting with mixed motive.b. Court sets measure of damages high, is that the right measure of damages? If fair value was lower, shouldn’t you

only set damages at fair value, not max attainable value? Why so high? Policy: punishment, trustees needed to go buy paintings back in order to pay for damages. Court gambles: if sharp enough incentive, maybe harm can be undone.

3. Cy prés Near enough to the donors intent.a. Wilber v. Owens Princeton gets itself into case to analyze effectiveness of one of the clauses (to protect notes and

explore scientific merit), expert says no merit – purpose can’t be furthered, unobtainable. But general charitable purpose is discernable and how do we further? And other specific intents, won’t due much – so real intent Is general charity and we’re a charity, give it to us. Divide pot of money to give to Princeton. Held: Testator had general charitable intent; apply cy prés to change terms/purpose bbc fulfillment of specific intention would frustrate testator’s general charitable intent

4. Corporationsa. Corps allow an artificial entity to own property in its name as if it were a personb. Shareholders own corp., which owns title to various assetsc. Shareholders elect Board of Directors, who appoint managers to manage/controld. Corps and partnerships shield individual shareholders/partners from claims of creditorse. Officers of a corp. are subject to fiduciary duties (loyalty)

VII. Title Records and the Transfer of Property

A. Transfer and Alienability Two basic types: (1) exchanges (quid pro quo) and (2) gifts1. Rules Designed to Enhance Transferability

a. Statute of Frauds Any conveyance of property right in land (other than short terms lease) and any K for assignment, surrender or sale of property right in land must be in writing and signed by at least one of the parties.

i. MY LEGS (only these have to be in writing)2. Gift vs Sale No consideration (gifts), transfer of possession can substitute consideration when it’s a gift as the “doing

part” – expressing some solemnity or seriousness and having evidentiary value. Sales are not formalized3. Delivery Requirement Law reqs that a transfer to take place only if thing being transferred or some evidence of title is

delivered to transferee. Deed must be signed, sealed, and delivered. Ex: transfer deemed to have taken place only if the deed is delivered to transferee.

a. Iron v. Smallpiece Grandfather “gives” horses to grandson before death. GS buys hay for horses. How does this indicate desire to give colts? A person who cares and feeds for asset looks like owner. So this is indicative of ownership – also evidence of possession. But, while it was Gpa’s intent property should pass, there was no “delivery,” so not a valid gift.

i. What might have been enough to constitute “delivery?” Nudge, setting them out and walking away, announcement.

b. Society interest: Maintenance of assets, accessibility of who to target if you’re a third party and have a high better use for the asset.

c. Foster v. Reiss Ip. 865 The decedent wrote a note prior to death, which directed her husband to certain money, a savings account and shares in a building and loan association. Husband wouldn’t have received the property under the decedent’s will and the Plaintiffs, those responsible for carrying out the will, sued the husband to recover the property. Rule: The doctrine of gift causa mortis is subject to strict requirements, including delivery, which are necessary to limit the application of the doctrine due to the fact that it intrudes on the statute of wills.

i. Best facts would have been if she tucked note in husband’s pocket as she was going to surgery. Since she told someone else about the note, instead of him – this looks like maybe she didn’t want him to have it.

4. Wills: transfer of property through legal system (dif from gift). a. Formal types of wills:

i. wills themselves (very formal); ii. holographic will (handwritten by testator, doesn’t satisfy most formalities);

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iii. gifts causa mortis (gifts in expectation of death, possession comes into play and must occur and moment of death – ex.: about to die and push donuts toward you) Consider: coercion, sound mind

B. Nemo Dat You can’t give what you don’t have. Derivation Principle: the transferee’s rights derive from those of the transferor Also related to: “prior in time is prior in right.” Analysis requires finding everyone in the chain i.e. tracing back ownership through a series of legitimate transfers to an act of legitimate original acquisition

1. Rule: One cannot acquire good title from a thief.2. Kunstsammlungen Zu Weimar v. Elicofon 2 paintings stolen from German museum during WWII, bought by Elicofon

from service-member; Held: transfer of possession but not of property right service-member was unable to convey title b/c paintings acquired by theft. Should German gov. get paintings? No – they don’t have title either (nemo dat doesn’t help them).

3. Nemo dat buts up against rejection of jus tertii defense (rights of 3rd parties), so we shift to Good Faith Purchaser Doctrine.

C. The Good Faith Purchaser Doctrine - Exception to Nemo Dat Before GFP, nemo dat only, involved very detailed purchase history (reason why reject jus tertii, and need to know who to talk to in order to buy/rent, need to track). Good faith – honesty in fact. Also referred to as GFPV (to help remember must give value in good faith).

1. Example: A sells goods to B, but transaction is flawed (check bounces). B sells goods to C. As long as C purchases goods in good faith (wo/ knowledge of flaw), and as long as C gives value (that is, transaction is not a gift), then law will generally give title to C. Note: UCC recognizes nemo dat and good father purchaser doctrine.

2. Void Title vs Voidable Titlea. Void title: gives no power to create rights in anotherb. Voidable title: gives power to transfer to a good faith purchaser for value

3. If D purchases good(s) in good faith, law will generally give D title to goods as a good faith purchaser. Rule: voidable title gives a power to transfer to a good faith purchaser.

a. Kotis v. Nowlin Jewlery, Inc. Kotis buys Rolex from Sitton, who bought it w/ a forged check at Nowlin’s. Held: Sitton had voidable title, but Kotis did not act in good faith because evidence of lack of good faith such as: unreasonably low price (evidence that it might have been stolen), inquiry notice (duty to ask more Qs if seems too good to be true).

b. Hauck v. Crawford Hauck (farmer) thought he was signing a lease, but it was actually a deed to mineral rights. Held: if Hauck was negligent in signing (wo/ knowing contents), he should be held responsible – duty to protect yourself better. If misrepresentation (fraud in the factum), then void.

D. Proving Ownership – Title Searches and Recording Acts

1. Recording vs Registrationa. Registration: Involves more admin. examination - gov. official examines what’s being recording for substance

(more than form), then if some degree of approval, recorded. Generally don’t have to register to own (default rule) – not a req but a way to help yourself in contest from other private parties. Resolves potential disputes about title ex ante (at the time of transfer).

b. Recordation: Everything recorded if it meets form. Disputes about title resolved ex post (once they arise). Protects GPVs. Incentive to file deeds.

i. Baird Article Innovation – don’t have to carry (possess) to own, just call dibs by recording it and you and everyone else can relate to asset knowing whose it is.

ii. Benito Article If you have recording system, tend to have stronger numerous clausas bc if you’re going to record you need to know what you’re recording so much be a standard.

c. Landd. Airplanese. Shipsf. Automobilesg. Arth. IP Patent office and make filing, and they examine application, and only if satisfies certain criteria is it recorded.

SEC allows corp. to reg particular set of stock (which is more like recording, just want record). New acts encourage SEC to do more searching analysis b4 they record.

i. Cash and Negotiability

2. Recording Acts

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a. Title Search and “Chain of Title” Generally involves going through chain of titles, back in time, through grantee (who received) index first. Legally req search is the search your particular recording requires. Forward in time from that person (grantor) until person gives deed and is recorded – make sure that person hasn’t granted another interest that gets priority by getting recorded first. Go back to when interest created (not when recorded) – what was created? Did that person record before transferring?

i. What do these searches tell you and what don’t they tell you? Wills filed elsewhere Some liens filed elsewhere – some liens priority even if not filed (i.e. mechanics liens) Adverse possession

b. Type of Recording Acts Can operate at same time as adverse possession and mechanics liens (remember baseline: nemo dat + first in time first in right). Way to regulate relationship btw nemo dat and GFP bc protect GFP from prior recordings and may req GFP to record herself.

i. Race Statutes – “first in time first in right” *timing First to record wins. Now out of fashion (only tw states use it) Once interest record all sub transferees

according to recording act are not GFPs – everyone else on constructive notice. Notice or absence of notice is irrelevant. Notice doesn’t matter bc essentially everyone should have notice.

ii. Notice Statutes – GFP (Exception to Nemo Dat) (states split notice vs. race notice – some have grace periods) *notice Subsequent GFP wins unless he has notice (actual – knowledge or constructive recorded). Differences from race: (i) someone w/ actual notice can’t take advantage of act even if that person

records first and (ii) that the GFP need not record in order to take advantage of rule GFP still advised to record immediately, always possibilities of another GFP. Can still win if doesn’t

record, will win against prior owners, but record for future claimant issues.c. Race-Notice Statutes *notice and timing

i. Subsequent GFP wins only if no notice and records before the prior instrument is recording Like race, but solves problem of unscrupulous subsequent buyer under the race approach Remember: GFP must satisfy two tests to prevail: (1) winning and (2) not having notice. If either test

not satisfied nemo dat title holder wins. Supposed to give more incentive to record, but that may already exist in a notice system.

ii. Hood v. Webster Woman’s husband devised her farmland. He wanted the estate to go to his bro upon her death, but she granted it to her brother and nephew for $1 – they recorded and she died. Held: Those who received second deed must produce evidence of actual consideration given and must been burden of proof (preponderance of evidence the affirmative assertion of status as purchasers in good faith and for valuable consideration). If there’s a conveyance that’s not recorded, then any subsequent conveyance that is recorded, made in

good faith, with consideration is valid. Previous conveyance is VOID!d. Shelter Rule Allows a person protected by statute to transfer, and that person will have claim of right e.g. O

conveys to A, who fails to record. O then conveys to B, a BFP, who records. B then conveys to C, who has actual knowledge (or not) of the O to A deed. C prevails over A. (And this is true whether C is a donee or purchaser). Rational: If the rule were otherwise, a BFP might not be able to convey an interest in the land. The transferee is not protected for her own sake, but rather for the sake of the BFP from whom she received title.

e. Recording Docs Based on Chain of Titlei. “Wild Deed” A recorded deed that is not connected to the chain of title. It does not give constructive notice

because the subsequent bona fide purchaser cannot feasibly find it. If grantee records b4 grantor, the grantee’s deed is a “wild deed” bc it is not connected up to the common grantor by a continuous chain of recording. While going down grantee index Example: O owns Blackacre, which she contracts to sell to A. The contract is not recorded, and O

remains in possession. A thereupon conveys Blackacre by deed to B, and B records. O then conveys Blackacre by deed to C. Did B’s recordation charge C with constructive notice of B’s claim to equitable title to Blackacre derived through A? No. C is not charged with notice because there was no way for him to find the A-B deed. Nothing related it to O. It was not in O’s chain of title; it was a “wild deed.”

ii. “Mother Hubbard” Clauses In intangible assets: Common for co A and co B to do big deal – give all copy right deals to X. Would prob. involve “deal document” (30 pg detailed doc. of treat secrets, pay, book keeping, etc., except the patent # and trademark # bc cos don’t talk to each other in that way). So, what do you record? If record big doc – under accomplish bc not listing asset being transferred, and over accomplish bc putting confidential info in public trade system. But, if don’t file, run risk of not having win in chain of title setting against someone else. What do you do? Create separate doc. “doc of title” or look to relevant statute to rules re special docs of title, and file that doc.

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iii. Restrictions on Adjacent Tracts Suppose that O owns lot #1 and lot #2. She grants lot #2 to A with an easement of way over lot #1. The deed to A is indexed as a deed to lot #2; no mention is made of lot #1. Subsequently, O conveys lot #1 to B without mentioning the easement. As with subdivision restrictions, the courts are split as to whether B is required to read O’s deeds of adjoining lots.

E. Limits of Title Searches1. Adverse Possession (exception to recording statutes and nemo dat) Must be possession that’s long enough w/ respect to

the property and adverse in a way that is adverse to class of prior owners – no need to know from who she is adversely possessing. Allows shift in title other than by claim or voluntary transfers. Recording doesn’t protect against interest arising by operation of law (adverse possession, easements).

a. Mugaas v. Smith P brought action to quiet title to strip of land claimed by adverse possession and to compel D to remove any buildings constructed thereupon. P relied on fence built in 1910 and maintained until 1928 which clearly enclosed the disputed land in favor of P’s parcel. The fence disintegrated over time and the D took title in 1941 under a deed, which recited that his parcel included the disputed strip of land. Rule: A conveyance of recorded title to a bona fide purchaser will not extinguish a title acquired by adverse possession.

i. Statute: “in good faith and for valuable consideration…first duly recorded” (notice same as race-notice) “in good faith and for valuable consid., whose conveyance is first duly recorded. In order for transaction to count under this property law statute, you to need to be a “purchaser.”

Question is, what $1 actually transferred? If it was a gift, then not purchaser who gets protection under the statute. To ensure title, need

something to record to put everyone on notice, and make sure you have your own status that is good enough to beat other claimers before me – for that need to make sure someone before didn’t think they were a done and recorded. In this setting, neither looks like purchaser.

Anytime you see setting where amount of value is inconsistent, ask yourself if good case for bad faith? Court: The legislature intended the protection under the recording statute to be accorded to bona fide

purchasers of community real property, and did not intend that the mechanics of the recording statute could circumvent the doctrine of adverse possession.

VIII. Easements, Covenant, and Sertvitudes – SEE BARBRI OUTLINE

IX. Zoning and Other Land-Use Regulation Three types: rez, commercial, unrestricted. Challenges to zoning based on: due process (substantive and procedural), taking clause (state/federal), equal protection, free speech, free association, and freedom of religion

A. Zoning Regulation of land uses through a general regime permitting and forbiddaing particular uses of land in certain locations; state and local law; number of varieties (1 is Euclidean)

1. Euclid v. Ambler Appellee challenged the enforcement of a zoning ordinance on the ground that the enforcement would constitute an unconstitutional taking by devaluing his land. Rule: The ordinance must find its justification in some aspect of the police power, which is asserted for the public welfare. The court used the doctrine of nuisance to determine whether the zoning exclusions were proper.

a. Nuisance: state gov. interest in promoting health and safety. How does zoning do the same? Protect kids, protect the environment, safety. Furthers police power to protect people.

2. How tailored must law be to furthering interest to be const? Rational basis test – as long as gov. has some rational basis for law of zoning (furthers gov. interest), then law is const.

a. Broad vs Specific: On a broad ground that mere existence and threatened enforcement of ordinance by adversely affecting values is not enough, however, provisions can be scrutinized if considered in connected w/ specific complaints.

3. Problems: requires faith in gov’t actors; sticky, slow to change; fixed set of rules so no Coasian bargaining

B. Zoning Policy May increase prices because (1) it prevents neg. externalities and thereby makes housing more valuable to its current and future owners or (2) bc it causes local monopolies in the market for housing and therefore decreases welfare.

1. Exclusionary Zoninga. Southern Burlington v. Mt. Laurel A developing municipality had zoning regulations, which prevented low and

moderate income housing to be built. Mt. Laurel argued zoning ordinance excluded low/moderate income persons from obtaining housing. Held: Zoning ordinance contrary to general welfare and outside of zoning power. Every municipality must, by its land use regs, presumptively make realistically possible an appropriate variety and choice of housing. These obligations must be met, unless the particular municipality can sustain the heavy burden of demonstrating peculiar circumstances, which dictate that it shouldn’t be required to do so.

i. Ps must show lack of housing; and ii. Municipality must show substantive valid reason for it.

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b. Rule: Zoning must promote the general welfare and can’t be motivated by other considerations e.g. taxing reasons

X. Government Forbearance The extent that gov’t should forbear (act of delaying enforcement of a legal right, like a debtor given extension to pay) from interfering w/ or frustrating previously recognized property rightsA. Principle of Strict Construction

1. Charles River Bridge v. Warren Bridge In 1785, the MA leg. incorporated the CRB to construct a bridge and collect tolls. In 1828, the leg. allowed the WB to build a free bridge nearby. Unsurprisingly, the new bridge deprived the old one of traffic and tolls. The Charles River Bridge Company filed suit, claiming the leg. had defaulted on its initial K. Held: K didn’t grant exclusive rights (doesn’t say no other bridge anywhere). Encourages competition – always benefits public.

a. Two Views:i. Majority emphasizes: importance of accommodating change, to promote competition, encourage

development of new technologies like railroads, and free present generation from the dead hand of old monopolies.

ii. Dissent view: emphasizes importance of protecting reliance interests in order to encourage investors to put capital at risk in new projects. Income that builder could expect when signed K, reliance for building bridge in first place – but

problem is only could have expected 40 years. Effects of expectation backed investments. If the gov goes back on commitments, future bridge holders won’t sign up to manufacture expensive things.

o Prof: BUT depends what they’re promised on front end – shouldn’t reasonably expect more than X.

b. How reconcile CRB’s reliance w/ desire for democratic change? State could take over bridge and compensate.B. Land Grants – Rule: land grants are construed favorably to the gov. (land grants for land and “other minerals” determined to

not include gravel – so gov. still owned gravel.)C. Bridge v. Proprietors Year charter that barred “any other bridge” from being built near P’s bridge. Court held: charter was not

impaired when state permitted a railroad bridge to be construed nearby, bc word “bridge” did not clearly encompass railroad bridge.

XI. Takings Under the 5th Amend: “No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offense to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.”

A. Eminent Domain Applies directly to fed gov and held to apply to state gov through Due Process Clause of 14th Amend. To fix problem of bilateral monopolies which result in holdout problems (houses in a line where RR to be built). Two requirements: (1) public use; and (2) just compensation.

1. Public Use Requirement Under Const, public use means: “public advantage or benefit.” Fed Ct almost never invalidates taking of property. State courts generally don’t hold private access road or parking lot for commercial purpose as not public use.

a. Economic Use (common)i. Kelo v. New London 1223 New London approved a development plan “projected to create in excess of 1,000

jobs, to increase tax and other revenues, and to revitalize an economically distressed city, including its downtown and waterfront areas.”  The city purchased property and seeks to enforce eminent domain to acquire the remaining parcels from unwilling owners. Rule: The court had previously held in the Midkiff case that such economic development qualified as a valid public use under both the Federal and State Constitutions.  The court has to meet two burdens for eminent domain: (1) that the takings of the particular properties at issue were “reasonably necessary” to achieve the City’s intended public use and (2) that the takings were for “reasonably foreseeable needs.”  Gov can take when not pretextual, doesn’t matter if public use or not.

ii. Burman Opens door to urban renewable strategies – taking could be used to stop blight (unsafe buildings), but can’t be overtly racist. Endorsed purpose of transforming blighted area into “well-balanced” community through redevelopment.

iii. Problems: looks like direct transfer – city takes and gives to developer; too broad – could always claim economic use

iv. Three Categories for Good Evidence of Public Use (Kelo Dissent): If gov. takes title uses it for itself: bestshowing of public use If gov. takes and opens free for all: good showing of public use

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If gov. not going to take it and only worried about eliminating harm: not a good showing of public use (worried gov. will always be able to find harm)

b. Redistributive Use (not common)i. Midkiff more overtly re-distributive. Single landowner w/ single reversionary interest in large swath of HI

property. HI broke it up, want mult. land owners not one. This hasn’t been followed as much as.2. Just Compensation Requirement – add notes from BARBI

a. At what point do you measure fair market value?i. United States v. Miller Gov originally took land for reservoir. Later, took to build highway around reservoir.

General Rule: evaluate value at time of taking; exception: where it’s probable (followed by this court); Held: court shouldn’t have to pay for added value of the dam; earlier value counts b/c this taking was probable Question is: Whether the respondents’ lands were probably within the scope of the project from the time

the government was committed to it? o If they were not, but merely adjacent lands, the subsequent enlargement of the project to include

them should not to deprive respondents of the value added in the meantime by the proximity of the improvement.

o If they were, then the gov. shouldn’t have to pay any increase in value arising from the known fact that the lands probably would be condemned.

ii. Miller Rule holds that when determining the value of the property taken, a condemnee may not receive an enhanced value for its property where the enhancement is solely due to the property's inclusion within the very public improvement for which it was condemned.

B. Regulatory Takings Regulatory Takings Doctrine: if the gov. regulates property in an especially severe way, the reg will be deemed to be a “taking” of pricate property, just as if the gov. had exercised the power of eminent domain. (Sometimes called inverse condemnation doctrine.”)

a. Ad Hoc Tests - The Three Factors:i. Diminution in Valueo Penn Coal v. Mahon Property owner brought suit to prevent PA Coal from mining under their property

so as to remove supports and cause a subsidence of the surface and their houses. The deeds conveyed only surface rights to the homeowners and expressly reserved the right to remove the coal underneath as a separate estate. The Kohler Act prohibited companies in Pennsylvania from mining of coal in such a way as to cause the subsidence of homes and surfaces near improved properties.

Held: Private owner had only acquired surface rights and not the right to supporting property underneath the land. The Kohler Act went beyond a regulation and became a taking from Penn Coal.

Rule: Limitations on the use of land through the police power have limits and will be considered a taking under the eminent domain power when the diminution in value of the property reaches a certain magnitude, which depends upon the particular facts. Cases are ad hoc – many variables.

o The Denominator Problem Does it look like an entire taking or just a fraction?o Penn Central v. City of NY (Air rights – ad coelum) Under NYC Landmarks and Preservations Law

Penn Central declared a landmark, and commission denied Penn’s request to add 50-story building on top of station. Gives ability to K w/ neighbor to build. Penn argued this was a “taking” and should be “justly compensated.”

Held: Not a taking (this law okay), no compensation. Restrictions didn’t interfere w/ present use - being denied the opportunity to further develop the property for economic gain is not a sufficient intrusion upon the property.

Rule: If the restriction is reasonably related to a legitimate public interest, then it does not result in a taking. Diminution in property value alone does not establish a taking.

□ Moves away from some ad hoc variables (see two relevant factors below).- Social harm (controlling nuisance)? Not really discussed – maybe bc hard to

say if treated under common law as nuisance, whereas Penn Coal case is good evidence of nuisance. (Reemerges in Lucas)

- Reciprocity? Only applies to 400 buildings, so dif. to measure. Looks more like singling out.

ii. Economic Impact: What is extent of law’s interference w/ specific or defined investment-backed expectation worried about hold up problem

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gov. frustrating private actor that has invested in asset (investement trashed by new law)iii. Two Other Relevant Factors Not in Restatement but still considered by judges

Need to Protect Public Against Nuisance-Like Harm (Regulate Nuisance) Reciprocity of Advantage Among Property Owners

b. Categorical Tests Critique of ad hoc tests increased bc unpredictable, but still want restaining on government leads to categorical tests.

i. Per Se Liability Permanent Physical Occupation

o Lorretto v. Teleprompter p. 1302 NY law authorized a cable television company to install its components on the property of a landlord, who may not interfere with the installation and may not demand payment from any tenant for permitting CATV, or demand payment from any CATV company in excess of an amount found to be reasonable by the state, which is set at $1. The landlord may require the CATV company or the tenant to bear the cost of the installation and to indemnify for any damage caused. Rule: A permanent physical occupation authorized by government is a taking without regard to the public interests it may serve. It is a serious invasion of the property owner’s interest.

Total deprivation of beneficial use is the equivalent of a physical appropriation.o Lucas v. SC Coastal Council p. 1314 P purchased residential lots on the coast of SC in 1986. In

1988, the enactment of the Beachfront Management Act barred the Petitioner from building any permanent habitable structures on the land. Rule: Regulation that destroys all economically viable use will be considered a taking unless rooted in background principles of common law nuisance and state property law

o “Total Taking” Inquiry degree of harm to public lands and resources, or adjacent private property, posed by

claimant’s proposed activities social value of claimant’s activities and their suitability to locality in question relative ease w/ which alleged harm can be avoided through measure taken by claimant

and the gov. (or adjacent private landowners)o Serious Public Harm Argument

State burden: SC must identify background principles for nuisance and property law that prohibit the uses he now intendeds in circumstances in which property is presently found.

Court wants to know if these are issues landowners could have reasonably foreseen at time landowners bought land. Compensation denied to landowner if reg tracks a result that the landowner would have expected under common law of nuisance.

Dissent in Lucas: What about environmental issues?ii. Candidates for Rule of Per Se Nonliability:

forfeitures of property used in commission of ac rime regs that implement navigation servitude government destruction of property in order to stop spread of fire

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