PROPERTY LAW OUTLINE1

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PROPERTY LAW OUTLINE

I.

Rights: In personam (in the person) v. in rem (in the thing) A. Contract right = In personam shift to in rem

1.

Ex.: Passing $1 from A to B to C to… vis a vis K rights that are negotiable / transferable. Right to get someone else’s $1 – what’s the price?

a)
b) c)

Price determined by value of the right to be paid OR how likely is it that promise will be fulfilled AND by cost of getting the promi123 se honored ($1 v. 90c v. 40c) Clear terms, confidence that right will be enforced, and … The more that right can be transferred, the more it is viewed as property. (3d pty. receivers of cash obtained any kind of way has full right to cash)

d) 2.

Jacque v. Steenberg Homes: About: TRESPASS. RIGHT TO EXCLUDE and CT. ENFORCEMENT TO PROTECT PROP. RIGHTS as oppose to preserve value (b/c difficult to show / prove loss in value – elim. this req’m) AND If trespass not volitional, should there be punitive dmg. [Is it about intent or actual dmg.?] Possibly about ppl respecting other’s prop. rights and rt. to preserve prop. rt. no matter what. OR about shunting behavior and encouraging ppl to transact (sometimes it’s a cost, sometimes a benefit) Ct.: encourages autonomy and for parties to transact. Don’t have to show actual harm Damages: ct. award nominal and punitive dmg. b/c intentional trespass; doesn’t award compensatory b/c no actual dmg. a) Ex.: transfer to u something that’s valuable to u but not so much to me.

Ps seeking… $ pmt. for trespass on property and peace of mind (enforcing right to keep prop. free from trespass) and to be made whole for loss, and autonomy (respect to indiv. prop. rt.) to do what they want w/ prop., and have protection by threat for future trespassing and rt. to have domain over own prop. and punitive dmg. (to punish adversary). Damages: Nominal (in name only) dmg. ordered. Ct.: OK to have punitive w/o compensatory b/c … Also, need to be intentional tort to have punitive w/o compensatory dmg. b/c intentional trespass (volitional act) is behavior that can be altered w/ penalization. b) Making it not attractive to violate prop. rt.

3.

Hinman v. Pacific Air Transport: About: Reasoning: in theory, u have prop. rt. that goes all the way but can’t enforce if not using it (not using air space when ‘trespasser’ flies over.) -diff’t ppl have diff’t though simultaneously legitimate values. Epstein’s view: everyone better off by being able to use space (a prop. rt.) but we’re all getting compensated Ct.: No rt. to excl., to notify owner of flight of their airspace is too much of hassle. More broad view than prop. approach. If P had proved subst. harm, might’ve been awarded dmg. Better ability to obtain injunction if can show you’re using airspace.

CALABRESI-MELAMED MODEL -only going to allow dmg. for obj. diminution in value and proof of it

B.

Property rule – enforcing entitlement w/ right to excl. and liab. dmg.

C.

Liability Rule – enforcement entitlement w/ obtaining dmg. for actual harm only

1.

Jacobs-Young: House built. Per K, must use redding pipe. House built w/ ther type of pipe. P complains to ct. Reasoning: Ct. says must tear wall down to replace pipe and re-plaster wall. Ct.: awards diminution in valuable only AND wants proof of loss in value / obj. decrease; NOT specific perf. II. Law of Nuisance - interference w/ use, enjoyment of land v. Invasions of Land – law of trespass

A.

Nuisance: anything that annoys, disturb free use of own prop. or renders its ordinary use uncomfortable. Anything that interferes w/ rights of citizen in person, prop, enojoyment or comfort. Condition = nuisance when enjoyment of prop. clearly materially lessened and phys. comfort of person in homes is materially interfered. -Public Nuisance: Effects gen. public of some ppl. TEST: Determ. by un/reasonableness of it in relation to partic. place (e.g.: septic water might contaminate well water) -Private Nuisance: substantial and material interference w/ priv. use & enjoyment of one’s land. Conduct that’s (1) intentional, (2) unreasonable, (3) neglig., (4) reckless, or (5) results in abnormally dang. condit. in a place. TEST: exmin. Of priv. use, enjoyment seeking protec. and nature of interf. 1. Shifted from harm caused to reasonableness of prop. use 2. Hendricks v. Stalnaker: P sued D for nuisance b/c refused permit for septic tank due to D’s water well. Question: Was D’s act of installing well shortly b4 P sought permit for septic tank, intentional or unreas.? -Trespass doesn’t require interference t be unreas. but nuisance does. -If D had options in placing well, then parties causing pblm for ea other. Reciprocity of nuisances. -D knew P wanted to install septic tank and beat him to punch. a) Unreasonable: when actor knows that conduct causes subst. or unreas. nterf. R. 825 b) Unreas. determ. by balancing owner interest. When harm outweighs social value of activity. Holding: b/c water well not unreasonable use of land, D not responsible for effect on P’s prop. Notes: timing v. commun. standards. Reasonable act in terms of neighborliness. Allocated entitlement: winner is who’s 1st

I.

Coase theorem – if transx costs low enough (or 0 transx cost world), society will get most effic. num. of wells and septic tanks in most effic. spots. But, not always the case.

a. Pay attention to high transx costs in 1st instance, in case u make wrong decision, might get most effic. use
thru bargaining. b. Reciprocity c. Will be fairness impact (picking winners and losers) but no position on fairness In a race to common prize, ppl will be so desperate to win, will make decisions that is helpful to winning, but overall unhelpful. Problem: overinvesting; misinvest (doping) i. Solution: create rules against undesired behavior; or equal distrib. of win Exclusion v. Governance Will enforce rule w/ entitlement and excl. regime i. Exclusion: Gov’t will assign and enforce. To shunt ppl in negotiation w/ 1 another, must use excl. Rule. ii. Governance: To ctrl. actions that gov’t want and don’t want, establ. rules to govern behavior. b. Why negotiation might not be successful: i. A pty may not be willing to negotiate. It’s not always ineffic. for outcome to be no, I won’t negotiate. Not always about more $. 1. Winner / losers: fairness concern 2. Entitlement may not move to most effic. use due to fairness and transx concerns. 3. Enforcement rule: pty. might be using complicated strategy to get to “yes” This makes for ineffic. transx cost. Irrational behavior makes for too costly transx costs = barg. breakdown. Will not result in most effic. trade. 4. Incentive / coordination pblm: everybody on 1 side must agreed w/ other other side. Baker v. Howard Cty. Hunt: landowner is upset b/c hunt club hunts on the land; intrusion, noise, trampling, physical harm to Ps, excrement from dogs. Intentional act. Ds offer to pay for intrusion but Ps seek equitable remedy – injunction. Owner shot dogs for attacking chickens. i. Liability rule treatment – transfer entitlement by allowing invasion and transfer diminution in value when transx costs high. a. a.

II.

III.

IV.

1. Ct.: ct. doesn’t apply Calabresi liab. rule treatment b/c Ps seeking remedy that’s prop. in
nature /equitable remedy = INJUNCTION, not tradit. dmg. remedy (prop. remedy). Gives injunction Open to injunction b/c keep paying for intrusion each time is wasteful for society – same answer but investing multiple times for it; overwhelming to ct. dkt to litigating for trespass over and over. Outrage constraint: rule against shooting dogs will only work to deter most outrageous settings, and enforcement mechanism only work in very xtreme settings. 2. NO INJUNCTION: everyone becomes repeat trespasser, so can’t apply Coasean theory to transfer entitlement (I’ll pay u not to hunt) b/c hunters might not follow K law, unfairness, coordination and transx cost pblm (other ppl might start hunt club just to get $ from owners to keep from hunting) *If parties unlikely to reach agreem. B4 ct, unlikely to reach 1 afterward. B/C

 Emotional reasons for anti-settlement:
o o o o o More we take position, the more we think it’s correct: benefit = focuses thinking, cost = focuses thinking Presence of negative emotion breeds more negative emotion Parties want to be heard and insist on their ‘day in ct.’

 Rational reasons for anti-settlement:
Once decision’s made, ct. = 3d pty that’s entered negotiation Look at how j/m proof deft. is…can you enforce j/m against them? If it’s hard to collect on j/m, Pl will sometimes accept less than j/m o Once rule is announced by ct., issue has already been decided o Verified info xfer system (Coase): Most info x-chng. happens in ct. b/c of enforcem. mechanism behind rules ** Most times, lawyers will look at value of xaction cost (that can be imposed on other pty.) VS. Cosean’s value of asset/s itself BUILDING ENCROACHMENTS a. *If transx costs = high… parties might adhere to prop. rules in encroachment cases even where it’s already happened and injunction won’t be modified Adverse possession: **No one washes a rental car: ppl unlikely to invest in assets if it was assumed that owner doesn’t have title / entitlement to the asset. Ex ante / b4 hand, in real time, incentives for society to be goods custodians of assets chng. dramatically if a person can’t have title to it even it asset would go to higher, better use. Also, real owner will not use. **Residual claimant: knows she will get the asset, so more likely to invest in it. b. Pile v. Pedrick: P is upset b/c D built bldg. and it encroached on P’s prop. line, due to mistaken survey. Builders offered to chisel wall back but would have to trespass to do this. P rejected offer. Leaving 1 option: tear down wall = tear down bldg. i. Ct.: bldg. will have to be torn down. Very expensive. (Ps possibly trying to chrg. $ to drop suit) ii. Notes: even innocent encroachment can be viewed to be intentional, if, once discovered, it is allowed to persist / to be built upon 1. Argument: property is property. Stepping over line. Injunction! 2. Argument: staying once discovered is intentional, so injunction (possib. punitive dmg. like in Steenberg Homes) c. Golden Press v. Rylands: 2” encroachment. No injunction. P knew of encroachment but didn’t object. Intention of brining suit later, not about protecting prop. rights (having prop. respected). Looking for other value, i.e. respect, $. i. Society would incur less waste if P spoke up sooner and make joint decision and determ. what investment to make. BUT, we want encourage a little peace, and respect to one another b4 jumping to sue right away. ii. SHOULD INJUNCTION BE GRANTED? 1. Ct. concerned whether trespass was in good faith. If in bad faith, no balancing of equities. Bad faith enough to trigger prop. rule enforcement. INJUNCTION granted. If D acted in good faith OR w/ intent (to stay after discovering encroachment, then weigh equities. Ask: 1) was trespass small – deny injunc., 2) did it have signif. impact on prop. owner – grant injunc., 3) is it costly to move it (hardship measure), 4) is P actually motivated by recog. - that after fact - to get a lot of value. Is she trying to extract more value than what trespass costs her – deny injunction. I. Restitution V.

1. K common law: barg. For benefits, harms 2. Tort common law: non-barg. For harms 3. Restitution (prop. based body of law): f/ Non-barg. For benefits…
i. Rest. Principles come from equity law (unjust enrichment)

ii. Elements for rest. (must involve 2 parties):
♦ Enrichmt. Of deft. ♦ @ expense of pl. ♦ Under unjust circum. Mistaken Improver (Pile v. Pedrick; Golden Press v. Rylands – concern w/ bldg. encroachments harming encr. upon pty. V. balancing equities) Restit. appr. adopted. 1. When encroacher constr. on land belonging to another – conferring benefit on true owner b/c fixture attaches to 3d pty. land 2. Producers Lumber & Supply v. Olney Bldg.: -Action brought by Prod. Lumber (landowner) against Olney for demolishing bldg. constructed by Olney (bldr) as mistaken improvement (but in g/f) on P’s land. -Posture: Appl. by P b/c j/m for only $600, not $5900. **Bldg. enhanced value of land by $5000 but jury found to restore land to condit. prior to const. would cost = $600 -act of planting trees: someone thought they owned the prop. -Bkgr: Land bought by P mgr. from D w/ intention to build home for mgr. & wife. Orts planned on putting bldg. on Lot 8 and told by D secy-treasurer land hadn’t been sold. After const. of bldg. was almost done, D learned that lot had been sold to P’s mgr. (Montgomery) and P’s mgr. learned constr. had been done on his lot. Const. against mgr’s wishes and plans for land w/ wife. -D tried to reach settlement w/ P to no avail. Then broke off negot. and sent crew to Lot 8 to demolish bldg. -Ct. found he acted maliciously. -Rule: when one erects bldg. on 3d pty. land w/o 3d pty. knowl / consent, bldg. becomes fixture of land and builder has no remedy. -Rule: only where one makes improvements w/ good faith belief he owns land that he has remedy of seeking equitable relief. (Luker v. Luker) -Equity Options When Evid. Shows Act Done in Good Faith (cash things out…): a. 3 sales options and 1 removal action…depends on facts 1. Ct. may order bldg. to be removed if it can be w/o signif. injury to it / land. 2. If improvement cant be removed: ct. can determ. Value b4 and after improvement and allow improver to recover difference. 3. If owner doesn’t pay diff. in value post improvement, improver can pay value of land b4 improvements and become owner of land, improvements. Rzeppa v. Seymour ^If improver cannot pay for land (b4 improvement) and owner cant pay for improvements, it will be sold to highest bidder w/ sale prices divided b/w improve and owner accordingly. OR, ct. can give improver j/m for amt. of improvement and place lien on lot to secure paym. 3. Going onto land and demolishing improvements w/o knowl / consent of landowner is NOT an option and can be made to pay landowner for such waste. -J/M: “No self-help” D must pay P value of dwelling. D cannot make claim in equity for reimb. For amt. of enhanced value of lot. He acted w/ knowl. of whom the lot belonged to and has come into ct. w/ unclean hands. He was not due val$300ue of dwelling from P w/o ct. order showing he constr. it in good faith. P’s failure to settle claim on D’s terms do not render P’s hands as unclean. -J/m amended to allow P recover $5 k and $300 in exemp. Dmg. In addit. To $600. g/f improver to b/f destroyed: due to him exercising self-help, 4 equity options no longer available. -Dissent: self-help = ok; should not recover compens. dmg. for removal of house, only for dmg. suffered to its lot (‘make whole’ theory) Pty. making improvements in good faith can recover in defense of suit for removing improvement. Long v. Cude. And, D in action for trespass to try title can recoup on equitable grounds, independent of the statutes… Agrees to punitive dmg. b/c it still underrewards. Improver does not lost equitable rights by removing the improvements If improver had to tear down dwelling in order to remover, he can do so subj. to paying for any dmg. to lot. Bottom line: he destroyed prop. that owner and P would not be entitled to such prop. until they paid D the value of the improvements, which they did not offer to do at any time. No auth. That disting. moving improvement intact from tearing it down for removal, so long as land isn’t damaged. “No one should be made richer to dmg. and wrong of another.” Notes: Pile approach: ‘u build on my land, I own it’ and if you destr. What I own, you owe me for destroying it’, law of trespass would be applied…injunction issued ordering encroacher to tear it down OR declaring that bldg. belongs to lot owner as fixture of it. Latter = windfall, but better from social welfare view. Either way, encroacher is penalized for destortyeing useful facts and circumventing legal system. Sometimes, irrational behavior such as destroying own things = rational strategy. Isn’t $5 k j/m too punitive? Could cause over-deterrence – no one exercises elf-help but runs to ct. Ex ante punitive deterrence is necessary, but $5 k…? Good faith improver: adopting restit. Princ, ct. can exercise 1 of 3 options: 1. let landowner keep improvement and pay encroacher its value= equitable restit. Award 2. xfer lot to encroacher for paym. of fair market value (motivated by consid. Of unjust enrichment) 3. sell to 3d pty. and apportion proceeds b/w owner and encroacher (restit. Princ. And unjust enrichm.) 4. Contrast w/ Goodpress case where very small encr. and didn’t marginalize owner’s prop. rights; here, intrusion is signif. (bldg.)

A.

B.

Origins of Restitution – unjust enrichm. due to receiving un bargained for benefits. Based on princip. That someone who loses prop. due to mistake, is entitled to value of prop. (b/c transfer is unjust); reflects owner autonomy (Jacques, Baker). Rooted in unjust enrichm. Theory. D. Criticisms of Unjust Enrichment theory: rests solely on principles of morality, not bona fide legal foundation. Does not embody unitary principles, but based on set of circumstances giving rise to a right called ‘restitution’. Gives judges too much discretion in creating remedies. Change game for other side if game for you doesn’t work: 1. impose costs on your opponent 2. signal that you will not engage in rational play Game theory Transx costs Setting up entitlements CH. 2 - Original Acquisition I. What is meant by possession change depending on context. Poss. appears to be based on ctrl. or what’s perceived as ctrl.; diff. b/w effective / productive ctrl. What creates social value? What creates waste? Society must have view on whether having more foxes is better to determ. wat type of possession must be had? II. First Possession

C.

A.

Pierson v. Post – ♦ Litigation cost seems to be more valuable than cash value of fox. Case is valuable le to society b/c it creates rule. Positive externalities almost always result from any act. ♦ Perhaps more important to win that what is won. 1. Bkgr.: spotting, chasing, closing in on fox. 2. Rule: must be certain ctrl. and depriv. Of liberty of animal to take possession w/ intent not to abandon. i. RULE Could be shifted down scale (i.e. killing, not just mortally wounding) – one who goes further has possession b/c it’s larger investment (labor theory – further down scale = more work) ii. What’s easiest to enforce: on whole soil the fox is = who owns it iii. No competing owner doesn’t mean possession yields ownership. If it’s possessor v. no one…should go to possessor. BUT, this doesn’t apply to ocean water. iv. Possession and ctrl. could reflect what commun. expects or signaling to commun. What to expect (capturing / actual ctrl. = owner) 3. Dissent: closing (After mortally wounding & no intent to abandon) in gives one title to possess animal 4. Holding: wounding = enough to get ownership b/c no contest about what occurred after wounding, same person did killing. i. Argument: mortal wounding seems enough b/c other side only got as far as closing in. Ghen v. Rich ( it’s custom SO it’s the rule) – 1. Premise: social value – kill whales. Harpooning whale = kill whale. Harpoon belonging to spec. co. owns whale. 2. Bkgr: instead of sending word to town, finder auctions whale off. Libelant suing for value of whale (its oil). 3. Est. Rule: mortal wounding w/o intent to abandon. So, owner = libellant (harpooned it). 4. Rule: custom becomes the rule, so long as certain conditions met (i.e. custom has to be followed by members of trade, and followed for considerable amt. of time, and must not be contrary to broader maritime law, and ltd. To small # of ppl it impacts. i. Applied by ct. b/c ct. concerned about protecting investment. Ownership should follow investment and labor into acquiring prop. – reward investment (Pierson v. Post) ii. Cost of applic. to 1 grp. of ppl.: protects est. leaders of norm commun. and not competitors, outsiders (those not consid. Part of grp.) iii. Custom only governs until appropriation est. Once appropriated, ordinary rules of prop. apply. iv. What about intent to abandon? Can argue that leaving whale to float around and possible not show up = equivalent to intent to abandon. Keeble v. Hickeringill 1. Action on the case (for interference), not for trespass even though interfering w/ another’s chance to get ducks by gunfire, unlike in Pierson v. Post i. NO TRESPASS- Not on prop. when firing gun and scaring off ducks. ii. NO POSSESSION - No capture or mortal wounding involved. P only set up trap (honeypot) to attract ducks. 2. Rule: interfering w/ neighbor’s livelihood - hold D liable. No one benefited from act of interfering, competition. i. Difference b/w good [fair] competition (generates more goods, services, choice for society) and bad [unfair] [good evid. To make something more productive] competition (yields negative sum game – net decr. overall value [duck meat availability] for all actors involved). ♦ Fewer net ducks can be caught by any hunter. 3. Can also be characterized as bad for society b/c net duck capture = decr. Shoot 1 = scare away money. 4. Litigation cost seems to be more valuable than cash value of fox. Case is valuable le to society b/c it creates rule. Positive externalities

II.

First Possession

B.

C.

9/13/10 innovation.hoover.org > classroom > student support > I. First Possession 1. Keeble (hunting case) - ct. recognizes some interest / right (not prop.) to one’s livelihood / job… a. Take away: types of competitive (good, bad) behavior. Shooing away ducks = bad for society = bad compet. i. Good – make society better off ii. Bad – make society worse off; scaring students away from law school (like scaring away ducks) makes society worse off. VS 2. Pierson v. Post – racing for foxes is good compet. a. Carrington case – via theft, scaring ducks away from neighbor, but purpose: to capture ducks yourself = good compet. B. First Possession has Costs as well as benefits (Eggerson) 1. Open Access: construed as open to all (e.g. air, water). BUT, Growth (greenery) in a community - Not neces. open access to non-communal members but not to any human being that comes along, or open to outsiders for low-intensity use. a. Pblm: w/ regime where there’s 1st poss. Rights w/ some form of open access/ commons. i. Supply side issue: underinvestment, overuse – no one is investing in protecting resource, only in extracting a. e.g. using resource b4 able to maximize it; outlaw elephant hunting in sub-Saharan Africa) ii. Demand side issue: 1. overinvestment, 2. overconsumption (waste resources) a. E.g. fishing cases = overinvestment regime (bigger = faster boats; winner take all / huge investment to being 1st, in items to extract resources). If limit season, exacerbate pblm (racing against 1 another and the season) iii. totally depleting resource iv. hording more than neces. creates barrier to entry 2. Commons: common among grp that owns prop, but not to non-owners a. Medieval Britain has real estate (can be used for crops OR grazing cattle). Can’t excl. cattle from crop grounds, but can benefit from cattle manure. i. Prop. sol’n to cattle pblm: arrange prop. rights to reconcile mixed use: treat land as common when grazing season (don’t fence off)so cattle will randomly distrib. Costs and benefits. BUT, During growing season, treat land as subj. to priv. ownership. Split up pieces of prop. small enough so distrib. of manure is random. -Ltd. Trans. Costs can be helpful. (Smith) imitations to sol’n: dividing prop. results in some parts of land being abused / destroyed while that which is priv. owned will be preserved. 3. Anticommons: transaction costs b/c so many entitlements and must transact w/ so many ppl so much, over everything (Heller) a. Too many ppl able to say ‘no’/ veto a use yields too little use b. Empty kiosks used to sell in post-communist Russia instead of getting C/O to use storefront. B/c so many permissions needed to use storefront, investment not worth benefit. c. IP: purp. is getting more stuff faster but is it prop. or just getting priv. monopoly… i. Are patents really about getting more inventions? Perhaps IP is about putting inventions to use. a. Pblm. Is coordination among stakeholders b/c it is needed by complem. Users of asset to put it to use. Prop. rights and rt. To excl. can help users coord. w/ each other. If that works, it brings new bsns model to markets, which is anti-monopoly. ii. Pblm w/ prop. rights in IP: too many transaction costs if backing IP w/ prop. rights yields holdouts (extract too much, breakdowns) by IP owners and holdups (stop things from getting done). Prop. rights in IP (touchstone of patentability is novelty and genes are nothing new but isol. Versions of certain genes that co. use to make commercial products): kills wheels of commerce RIM settled for 100x what initially offered to them BUT settles for less than 50% of what it’s worth **the more diverse the players, the more the # of players; same with resources. The more diversity, the less transaction cost there are. Question isn’t about patent failures but failure in market for academic x-chng (w/o patents or w/ patents). More patents = more diversity. More patents = more trading partners. Seller of srvc. makes transaction costs for user very affordable. Prop. owners bear enormous cost and radically under enforce prop. rights b/c transaction costs of enforcement are extraordinary. Heller’s anticommonms pblm: dead wrong – not about how many ppl can say ‘no’ to request for permission to use. It is about owner, nature of permission, and nature of underlying asset that matters. Bureaucrat and prosp. user cannot negotiate over use unless prop. asset is involved. If is an asset involved, bribe or pmt. becomes enforceable K! Pblm. Is not of prop, but of something else. Pblm. Of rent dissipation / race toward common prize (depletion / waste of resource) Leverage buyout: buy co. using leverage (their own stock). Ask for loan (to buy stock and secure prop, rt. In asset w/ loan) to buy out co. stock and give stock and time of getting loan. Type of buyout hard to do.

4.

Biotech Ex.: someone invented bacteria that eats oil. Can things related to light, living things be patented (acquire prop. rights). S. Ct. said it’s patentable. Result: massive incr. in small, med. Biotech companies and incr. in new drugs & devices commercialized. WE HAVE PROP. RIGHTS = MASSIVE INCR. IN COMMERCIALIZAITON, COMPET. Software Ex.: 1972 Benson – 1994 Alappat: no new patents. Google became huge compet. To Microsoft after 1994. Patents don’t cause monopolies. Benefits of First Possession– a. able to solve pblm. x due to infuse of investment, resources BUT, What about all the other needs, pblm. That need investments

b. Gives bright line to est. ownership (but see Pierson v. Post (was chasing, catching or in-b/w clear…) c. Easy to ID (once issue of 1st poss. Has been resolved thru litigation)
d. Lockean Labor Theory benefit (I went and I got…)

C.

Eads v. Brazelton: salvage case; sunken boat. Brazelton researches, finds, locates, puts marks and floats buoy on tree, then leaves. Eads comes along and actually begins salvage. 1. Brazelton says it is his prop and asks for dmg. and injunction to restrict Eads from continuing salvage.

2. Issue: is finding, marking and having salvage fitted out enough for Brazelton to have 1st poss. Of prop.? 3. Holding: no, prop. is not Brazelton’s b/c (like Pierson v. Post: looking for foxes, announces he sees one and closing
in) he abandoned the salvage/lead vis a vis wasting resource and not allowing another to take adv. of it, even though he had provided notice and proved effort.

4. Rule: it is not enough to simply find, mark your prop.; actual deployment of resource is needed. Ct. doesn’t
care about type of use employed, so long as resources is not in non-use / abandoned/ waster (rule of exclusion)

5. Rationale: Eads found no one’s property; no one owned it a. Asset short of total abandonment: prop. is in salvage status and salvor can recover it and get minority share
value of asset (whale case – didn’t need permis. to locate harpooned whale and turn in registry for reward)

6. Bottom line: ct. terested in protecting hard work that will go to good end

D.

Home Run Baseballs: who caught the baseball? While catch is occurring, crown is jostling, knocking ball to ground and another snags it (claims possession)

1. Popov v. Hayashi—who caught and claimed poss. Of the baseball? a. Ct.: by taking these steps, you get right to take next step/s which is chance at getting the ball, not prop. rt. to
baseball. Not saying you get ball once you touch it. If after you don’t catch it / have it, you don’t have right to it. i. In this case, Pl’s shot to close glove on ball was not unfettered, interfered and Pl. had pre-possessory interest. BUT

ii. Df. Was not 1 of mob that interfered w/ Pl. pre-possessory interest; he was not part of some 3d pty. that
viol. Pl’s interest.

b. Interests involved: preserving peace (like in Pierson v. Post); promoting investment in attaining asset,
exercising due diligence 9/14/10

I.

Overuse and underinvestment: popular solution = prop. rights

A. B.

Benefits: less use, less race to the finish pblms. Problems: how to allocate tradable IPQs.

1. Advantage of 1st possession – all have shot at being 1st BUT comes into play after someone already was 1st. a. Fairness point: monopoly lock-in, social inequality lock-in, need some sense of legitimacy so no
b. democratic buy in (enforcement pblm) (Liecap) Locking in quotas [in the race] (how many you got is how many you will continue to get) may be easy but maybe not fair (sharp edged) b/c you pick winners and losers easy but maybe not fair [b/c race has already been run]. i. Benefit on effic. side IS cost on fair side ii. Impact on socioeconomic classes: ppl who are socially powerful remain b/c now also economically powerful and vice a versa. iii. Fundamentally anticompetitive: grp w/ most lobsters continues to get most lobsters and now have cartel on the common pooled resource

II.

Benefit of Allocating Prop. Rights: private rents vs. social rents (‘that’s mere rent-seeking (only helps yourself and no one else))

A.

Rent Dissipation: when seeking private rent dissipates social rent / benefit (‘engaged in merely rent seeking behavior’)

1. E.g. race for common price. Each one spends 9 to get 10, so social benefit was dissipated by each indiv’s rentseeking

a. Solution: coordinating w/ one another, all chip in, and share returns ALL to ensure that benefit exceeds
expense

B.

Land Granting Prop. Rights (Anderson, Hill): seemed fair b/c each got same amt. as other and administratively, socially simple. pblm. than in alternative (of staking out land claim and getting it) when gov’t makes things available – results in overspending to get total Providing what each wants will result in diff’t land staking (person who will own asset must do the work to find and gain the asset YIELDS less rent dissipation)

1. Cost of this process: rent dissipation b/c allocating prop. rights in fix bundles – on avg. – more rent dissipation

a. residual claimant – person that has claim on whatever’s left
i. states that allow residual claimant to claim have less rent dissip. pblms. ii. Patent resolves this pblm.

a.

Concern w/ prop. right: impacts others. Big issue = holdup pblm.

C.

DON’T ISSUE PATENTS ON PREEEXISTING ITEMS TO PREVENT ASSET SPECIFICITY PBLM. AND OPPORTUNISM PBLM. a. Federal ct. has excl. j/d over all Native rights.

III. **Johnson v. M’Intosh— (regulates reg. rights b/w Native Am. tribes and everyone else) A.
2. Facts: Two teams and each have claim to land. D’s chain of title: claims to have bought land from US Gov’t who seized it from tribe. No idea how much investment ea. Side had made or which plans to put land to better use. Key principle (nemo dot princ.) to Decision: ‘you cannot give what you do not have’. Means can’t sell to #2 what you’ve already sold to #1. Sale to #2 is putative and defective sale. Accord to this, Johnson should’ve won b/c he bought it 1st from Indian tribe. except thru gov’t – can’t sell the asset or trade it out, BUT benefit is that it can’t be transferred against occupant’s will, or coerced to transf. entitlement.

1. P’s Chain of title: P claims to have claim form someone who purch. from Ill. tribe sale

B.

1. Nontransferable entitlement (core feature of prop, not always benefit): Right of occupancy can’t be transferred

C.

Ct. Outcome: traces further back than 1773 and 1795 sales. Colonies ceded to US Gov’t these tracts of land granted from Crown. States that what tribes got was right of occupancy, not ownership. Colonies got land (unknown asset) by 1st possession (‘discovering’ it). But, inhabitants lived on same land b4 the ‘discovery’. weren’t using land. Sovereign discovery rule [of European law]: right to be sovereign over it but operated to leave intact relationship on ground. Though King discovered land, occupancy right of occupants remained.

1. Justice claims that natives possession was not proper b/c they didn’t anchor, mark off to show ownership over &
2.

D.

Confirmed that federal bureaucracy determines occupancy rights, not states or individuals. **If awarded formal prop rights by Native Americans, repercussions to all non-native Americans is they would not own their land! CREATION INS v. Assoc. Press—

1. Hx: to beat mainstream AP, be flashy (use sensationalism in aspects of news). A lot of compet. And techniques to
2. beat one another out. Has bad reputational effects. Ct.: INS was wrong and there was no prop. right b/c it is un-copyrightable and publicized in public domain. One put in labor and cost and other misapprop. labor. a. No prop. rule: Can’t excl. Everyone from replicating published materials.

b. Relationship b/w parties: behavior is misapprop. (tort theory (governing relationship b/w the thing), not prop.
based (governing relationship b/w spec. parties). i. Can’t apply prop. law b/c of precedential effect: if a news copies another’s news, it is viol. Of prop. right… BUT still unfairness involved a. If you didn’t sow the oats, shouldn’t be able to reap the crops ii. Isn’t essence of competition doing the same thing better than opponent?

a.

Benefits of competition: It producers into market, yields more choices, drives prices down. But, some forms of competing NOT OK…allowing quick copying is stealing big chunk of value of being 1st to report news (time element is source of unfairness).

c. View Employed by ct.: If B’s productivity is interfering with A achieving something productive, this is a pblm…
Applying to Pierson v. Post: person who locates did most wok but person who shot it claims it (1st possession).

Lockean: Which pty. is deserving of maint. Prop. rights / claiming 1st possession? Must have theory of what’s good and bad.

3. Take away: if not sure what decision to make and decision will have big precedential effect, don’t do it! Let legisl,
exec. Branch make new laws.

II.

Midler v. Ford Motor Co. (right of publicity case)

A. B.

Facts: said ‘no’ to singing in commercial, but co. used sound-alike sounding just like Midler in commercial.

Court Holding: ppl will hear commercial, and think it is Midler. They unlawfully approp. her ID. 1. P’s voice so uniquely tied to P that if confusing her voice will lead to confusing who she is. Building singing talent /celebrity is her own labor.

2. Labor view debate involved in terms of prop.: YOU OWN YOU VS. WE OWN YOU: didn’t sow….don’t get to reap. a. Theory of dessert debate: Who did more work and deserves more (chases fox or catches fox): P maint.
Asset, made unique. Special VS celebrity is chosen by public (and their investment)

3. Prop. v. 1st Am. argument: Rights, violation of rights, and countervailing rights: we’re making you famous so it is
our prop.; 1st. Am. interest – b/c someone has social currency, society has rt. to dicuss / use you. Procedural Posture: P appealed a judgment of US District Court granting summary judgment in favor of D in P’s action for appropriation of her distinctive voice for use in an advertisement. Facts: D advertised cars with a series of tv commercials. Different popular songs of the 70s were used, and the agency tried to get the original singers to sing them. Where it failed to get the original singer, the agency used ‘sound-alikes.’ D requested that P sing the song, and P refused. D hired a sound alike, instructing her to imitate P to the best of her ability. After the commercial aired, P and the sound alike were told by numerous people that it sounded exactly like P. P’s name and likeness were not used in the commercial, and D had obtained permission from the copyright holder to use the song. District Court said there was no legal principle preventing imitation of P’s voice and granted summary judgment in favor of D. P appealed. Appellate court held that P’s unique and recognizable voice was a part of her identity, and thus protected from appropriation. Claims of the Parties: P pursued a common law claim against D for using her distinctive voice in an advertisement, which she had not authorized. Issues and Resolutions: Is a voice a distinctive and personal feature of a person, which a person has the right to control from appropriation without his or her permission? > Yes. Rationale: P did not seek damages for use of the song, which would have been pre-empted by copyright law. A voice is uncopyrightable, yet is a unique feature that distinguishes a person, especially a singer, just as a face or a name. For a person whose voice is widely known, it is unlawful to imitate that person’s voice to sell a product if the person has not authorized it. Rules: A popular singer’s voice is part of her identity and may not be imitated without her consent. Case Integration: A voice is a part of a person’s identity, and thus controllable against unauthorized use by that person’s right of publicity. 2) Disruption and disturbance to the artist if their voice is imitated without permission could be grave, and thus should fall closer to the side of personal property in the spectrum. 4) The recognition of Midler’s voice in connection with her song was the motivation behind the commercial and the merchandise sales. D did not have the right to use P’s voice, since it is the distinctive feature of the artist and is protected against unauthorized use to sell products. 7) A voice cannot be copyrighted. The use of a similar sounding voice, but a different song could be the same thing, because the issue was not the song, but the voice singing it. 9/20/01

I.

NOVELTY (IP Law)

A.

Requires creation of something new have “independent origination

1. In copyright, you must “originate creative expression” (it came from you….not neces. you were the first) and a. If A came up w/ orig. 50000 word poem and B came up w/ identical one – each of A & B would own copyright.
b. VS In patent law, you must be new and non-obvious over prior art. To infringe someone else patent, it doesn’t matter where you get info to infringe; only whether you do what’s claimed VS in copyright law (liability if copying)

B.

Trenton Industries – suit for infringement (prop. like rt.) and quasi-K for unjust enrichment (use of patent w/o compensation) (K like or prop. like rt.) 1. Claim is one, long sentence in order to make subj. matter as clear as possible. a. *Mitigate rent dissipation thru self claiming. In patent system, should be less ; dissipation if allowing patent requester to self claim.* only inner core THEREFORE patent is invalid. (what is the claim (figure out what it means) and inner and outer boundaries)

2. Ct.: didn’t explain what the key inventive element of novelty is. It is isn’t required to identify outer bounds but a. If it captures prior art invalid, if it doesn’t not invalid.

b. Novelty rule: If patent gives clear boundary on what infringe and what doesn’t, it incentives people to
innovate, not just making modifications b/c mods doesn’t add anything new, and would hold ppl up who have investments and keep them from putting prop. to good use.

i.

Courts concerned about ppl creating a monopoly over any little improvement over preexisting property; and prevention of downstream innovation. ii. Don’t want patents prevention what ppl are doing and what ppl are about to do; will foreclose investments and user confidence.

iii. Non-obvious req’m: big factor in whether patent was legitimate in 1st place c. Novelty standard: what is new t deft. isn’t necessarily what’s new to the world. Some circuits require that it
be new info to everyone, some just require to show that it is new to deft. (took it from pl.)

3. Can argue under K theory: express K (black and white K), implied in fact (it was understood that it is how it
worked); implied in law K (it is not fair that B should conger benefit to A and not be compensated for the benefit).

4. Deft claim / info based argument: he came across novelty while in church. Not only how to assemble a high
5. chair BUT ALSO that its advantageous how to assemble high chair that way. -Value of info is not whether someone knows the info, but who knows it and in what way Misapprop. J/d: must be new OR must be new from pl. to def.

a. Suppose it’s in j/d that’s focused on what is ‘new to deft’ From the time of use until time patent was issued
(public issue from PTO), info becomes public to all. Damages will be ltd. to determin. Whether def. misapprop. Someone trade secret remedy should be ltd. only to pt. where I benefited. The extent to which I benefit is extent to where I got from illegit. source or develop it myself. When would this info have been knowable to deft.

i.

Best deft. argument: but for my infringement, I would have made the zillion dollars on prop. anyway.

b. J/d that won’t allow misapprop. COAs (won’t let employer restrict free movement of labor): garden leaf
j/d.: i will pay you (in the garden) but don’t you dare come into the office; in order ot lock down body from competing against you.

II.

ACCESSION

A. B.

CONCEPT OF GIVING PROP. TO OWNER OF MOST PROMINENT ITEM, which is attached to less prom. thing Doctrines: accession doctrins; ad coleum rule; accretion doctrine; corp. opp. doctrine (accession doctrine): if yo find valuable opp. for bsns in course of working for them, you owe it ot bsns, not yourself); a. Ownership of bigger item extends to smaller item. b. Increase reasoning (Accession): own the mother, then you own cat.

i.

Benefits: Protect the asset by keeping them together. Asset will only be worth something if it’s kept around the mom.

Confusion and ACCESSION govern the acquisition of, or loss of title to, personal property by virtue of its being blended with, altered by, improved by, or commingled with the property of others. In confusion, the personal property of several different owners is commingled so that it cannot be separated and returned to its rightful owners, but the property retains its original characteristics. Any fungible (interchangeable) goods can be the subject of confusion. In accession, the personal property of one owner is physically integrated with the property of another so that it becomes a constituent part of it, losing any separate identity. Accession can make the personal property of one owner become a substantially more valuable chattel as a result of the work of another person. This transformation occurs when the personal property becomes an entirely new chattel, such as when grapes are made into wine or timber is made into furniture. Subject to the doctrine of accession, personal property can become real property through its transformation into a fixture. A fixture is a movable item that was originally personalty (personal property) but which has become attached to, and associated with, the land and is, therefore, considered a part of the real property. A. Weatherbee v. Green— 1. Facts: D. is the owner of land upon which stood a tree that P. cut down and fashioned into several expensive wooden hoops. P. cut down the tree in good faith on the mistaken belief that he had received permission from a person authorized to grant it. D., however, did not authorize the taking of the tree and so replevied the hoops, which were hundreds of times more valuable due to the labor than the trees before they were cut. P. sued to get the hoops back, but trial court found for D., and refused testimony that would establish the value of the hoops being much greater than the trees. 2. Issue: If a person, acting in good faith, takes the property of another and transforms it into something immensely more valuable, does he obtain good title to the resultant product even though it was made with the materials belonging to the owner? 3. Holding: Yes. When a person, acting in good faith, takes the property of another and adds substantial value to it, he obtains good title to the improved object, but nevertheless is liable to the original owner for the value of the original materials.

4.

5.

Reasoning: The court reasoned that the policy of the rule is to afford proper compensation for loss to the original owner, without unduly penalizing the possessor, and without conferring a giant windfall on the original owner. Value added / degree of transformation: inflection pt. in the curve. Anything less than 50% of value = bad case for accession. If amt. contrib. exceeds 50, better candidate of accession.5 you are, the

a. Multi factor test: some A some B or A and B or A or B. the more over 50 perce you aree, the better chance
you have to trigger factor C. i. How much do you have to change it to make it something else. Court says: as long as there is some transformation, it would be a cnadiate for accession treatment.

6. Necessity problem: no longer possible to separate theraw material from final product. Hard to pull apart relative
values. Also, it is no logner it but has become soething else. There is now a something else which is not just the it.

a. Bond b/w owner and improver (tree and barrel). So it easy to sepate oenr of tree from barrel. 7. Gf /bf point: how much bf is required to take imprver out of accession analysis. If you have some bf, do you fial to
gf factor so you lose accession

B.

Edwards v. Sims: and above—everthing is figured out unless some conflicting title is found.

1. Majority: send surveyor to determ. whether part of cave is on pl’s prop. b/c if you own land and everything below 2. Dissent: more concerned w/ who is doing what w/ the asset (possession doctrine). Who is making better use of
the asset (like in Eads and airplane overflight case: who is making use of /possessing space and who is interfering w/ possession)

a. If there was diamonds under neighbor’s land, and ct. said whomever digs it up 1st then gets it
(possession theory). Encouraging race to dig under other ppl’s land

b. acts: π owns land that is directly above a sub-terrainian cave. ∆ is a judge who ordered the cave entered to
determine the facts of another case (Edwards v. Lee), as to whether the cave travels under Lee's land as well, and therefore π would be trespassing on Lee's property while exploiting the cave. π seeks a writ of prohibition to prevent ∆ from enforcing his order. Issue(s): Is the ∆ proceeding erroneously within its jurisdiction in entering and enforcing the order directing the survey of the cave under π's land in order to resolve the issues in Edwards v. Lee? Holding(s): A court of equity has the transcendent power to invade the property of a private citizen for the purpose of ascertaining the facts of a separate matter before the court. Reasoning: The right to enjoyment and possession of property is limited in so far as the state has a right to infringe upon those rights when it believes that those rights are being used to the detriment of other private citizens. Court cited a similar decision involving the determination of trespass in a sub-terrainian mine. Dissent(s): You only have rights to underground property which you can exploit, and since the cave opening was on Edward's land, there was no way that Sims could exploit the cave, and so he should have no rights. This is based on the social utility theory. 9/21/10

 Two effects of rational behavior and self-interest monopoly: higher price and lower quantity than what would
perfectly competitive market yield o Fairness concern: Concern is over quantity effect due to ‘gains from trade (when deal is done, each pty. is better off)  Sell side better off: producer surplus  Buy side better off: consumer surplus o Effic. pblm / concerns w/ monopolies: way in which society is better off from trades that take place has effect that each person is better off less than should be in competitive market. It’s not about price pt, but quantity effect.  Efficiency hit is not about transfer. It is about creating of dead weight loss (combo of producer and consumer surpluses)  In monopoly setting, part b (prev. own by consumer) is switched to be own by producer and monopolist gets B from customer. Customer is better off by less than would have been while monopolist is better off more than would have been. • Fairness pblm effect If seller can engage in price discrimination (chrg. diff't ppl diff’t prices based on willingness and ability to pay). ‘C’ and ‘E’ does not get ‘lost’ but converted over to producer. o In perfect price discrim, producer will perfectly recover dead weight loss as producer surplus. o Do price discr. thru power of price and monitoring and K enforcement (e.g. - sale of tickets for leisure passengers v. business passengers (will pay more)  Encouraged if able to provide more quantity to consumers – yields to monopoly In accessions doctrine cases, owner of raw material gets cashed out value of material but not for value they could’ve received for wood (something more than raw value) b/c: o Its hard to figure out how much more value they could’ve gotten had they employed materials for some other purpose.





o

Alternative sol’n: replenish supply of wood (to build it into monumental art) or cash equivalent to buy wood.

III. ACCRETION A. Nebraska v. Iowa—
1. Boundary b/w states is in middle of channel, werver it happens to be.
i. i. Parts of river chng. rapidly and parts chng. slowly Doctrine of increase, accretion and accession are all ‘accession approaches’

2. Rule [to decide who gets property]: common law of prop. disputes--ii. accretion: gradual shift of land from one place to another. ♦ Legal outcome / determin. Of boundary = middle of river. As river slowly shifts, so does boundary.

♦ Benefits of accretion rule: easy to administer to determine boundary; utilitarian effect: as boundary slowly shifts, both sides still have access to river and use the land they own w/o having to cross river; / go further down riverbank. If boundary is same – access to river distrib. To same parties as b4. ♦ Use accretion approach (remain same) but have sudden shift situation: results in giant winner and giant loser b/c large chunks of land becomes part of another’s territory and cause disruption. ♦ BUT, w/ small shifts: shift will not be all in 1 direction. iii. Avulsion: sharp creation of new channel suddenly. ♦ Results in loss of big chunk of land results in outcome that old channel was perm. boundary. ♦ Monitoring is occurring. Benefit is big chunk of land boundary is determin. RATIO of cost over benefit is more profitable in avulsion, than in accretion setting. (worth counting big stuff, not small stuff.) B. FIXTURES (accession doctrine): 1. If one buys house and there’s laptop computer is in it – will be treated as pers. prop. (doesn’t transfer w/ sale), but fixtures stay w/ house. 2. Strain v. Green-i. Issue: whether items sellers removed were fixtures or pers. prop. ii. Ct. determines: whether it was a fixture is determined by: ♦ if item is connected to house and can’t be removed w/ causing dmg. to house ⇒ could K to get result diff’t than what ct. decided. Ct. rule only applies if deal is silent on what is being transf. w/ sale ⇒ default rule (high degree of confidence needed) VS mandatory rule ( ⇒ default rules: if parties are silent..it resolves situation. Good b/c this type of rule gives an answer when parties haven’t given one for themselves. 1. Gap filling default rule: pick one most would pick for themselves as it is structured in a way to give outcome most would want. It’s not mandatory, but utilized when deal is silent on certain issue. a. Reason to use partic. type of default rule: Reduces transx cost 2. Info forcing rule: rule encourage parties to speak up if outcome is not what party wants….can figure out easily what party does / doesn’t want a. E.g. you will only get such and such (Dmg….) unless you speak up (Hadley: if you don’t deliver, I will lose….) ⇒ Mandatory rules (must or you may not): makes sure something does or does not happen. Good if we are confident that what we’re requiring or prohibiting is correct outcome. 3. Law of fixtures: seen as gap filing (b/ it is what most ppl want) OR info forcing (the more you want, the more you have to ask and inspect) i. Application: Ask what reasonable buyer and reasonable seller expect. Use some obj. std: Look at custom, subj. intent of parties and obj. indicia of their intent (look at experts who see ppl like them in lots of settings) C. IS ACCESSION ANOTHER VERSION OF 1ST POSSESSION? 1st to get ctrl of one thing by having ctrl over some other thing. But not 1st possession b/c you weren’t 1st person who had it… Can you defeat the owner of record even though he has a valid deed to that property? III. Adverse Possession  Difficult to resolve when dealing w/ intangible prop. (cks, stock certs, interest) A. Lessee of Ewing v. Burnett—

a. b. c.

Majority Rule for Adverse Possession Facts: Man sells land twice, one owner possesses the land adversely and takes sues other owner to clear title. P had older title; D lived across the street, paid taxes on lot, brought actions against trespassers, gave rights to dig gravel; P stated that someday he wanted to reclaim lot Rules:

i.

Elements of Adverse Possession, must possess for SOL period, possession that is:

1. 2. 3.

Actual: actually possession and asserting dominion over the land Exclusive: excludes the true owner Open and Notorious: giving notice to outside world and obvious you are claiming possession

d.

e.

Adverse: under a claim of right (i.e. no permission from owner) ii. Unnecessary Elements 1. No need for fence, building or other improvement 2. Residence is unnecessary 3. Use it for occupational purposes or cultivation App/Holding: Since D actually, exclusively (TO didn’t visit land), Open and notorious (public acts of ownership suffice: all the people in the area thought it was his), continuous for the whole stat of lims) and adverse under a claim of right since he wasn’t technically the TO, so D now becomes TO. i. Ct. wants to state that df. didn’t know he was APing. If he did know he was APing (intent / mental state eval.), should rule take this factor into acct. ii. AP trumps recording act. If AP can make out her case, she will win, unlike situation w/ recording act (where GF buyer is better off and BF buyer may be worse off) Conclusion: Df. owns land. Knows he owns b/c ct. ordered it. 2nd buyer would want to see not only title doc, but ct. j/m stating he owns it.

4. 5.

Continuous: consistent occupation throughout statute of limitations

Adverse possession is a method of defeating the owner of record when claim of title or recording is not an issue. It resolves competing claims by an old concept of possession rather than notice of title. f. If TO gives permission / license to use it – it is NOT AP If someone is possibly adversely possessing my stuff, give them permission to use it (cuts off AP claim by making it non-adverse), given permission and lmt by adding “revocable” to permission or bring claim for trespass. A. Ct. favors goof gatekeepers / custodians, who will coordinate use of land. i. If person is infirm, like in Lessee of Ewing, he is incapable of regulating land use, person is cut slack in being good gatekeeper. B. Labor Locke theory: whoever slept on rights doesn’t deserve it (even if TO); and who pursues the land gets is.

g.

C. D.
E.

Personhood: if you’re snoozing on it, you are not invested or connected to it and SHOULD NOT get it. Utilitarian argument: when df. gets land, everyone only has to deal w/ df. (Cuts off dealing w/ others) = transx cost saving device Recording acts designed to deal w/ seller selling same thing to more than 1 indiv. If buyer purch. in GF, will have good chance of owning it. But, may be worse off if you know it’s hot… a. Important consideration to 1st possession, and GF purchasers OR BF purchaser (have notice of BF claim) Carpenter v. Ruperto - corn field--  had knowl. land wasn’t hers when expanded her lawn (intent factor matters) a. Maine Rule- BF and knowl. req’d: must adversely possess w/ intention of displacing owner of title. i. - problem is that it awards bad faith ii. blends hostility requirement iii. being there by mistake is not sufficient iv. can’t have good faith b. if you know it’s not yours – you cannot get it

F.

c. d. G. a.

APer invests in it even though she knows it is not hers. If she had engaged in high intensity use, ct. would maybe not have called her out if she had put it to amazing use. i. Motive sways decision b/c there’s no evid. of high value use. Ct. is not clear on what is BF and if she engaged in it.

Howard v. Kunto Facts: Several owners of property in a summer resort destination discovered that the land they occupied did not match their deeds (see diagram). Howard owned the deed to the property occupied by Moyer and Moyer held the deed to the property owned by Kunto. Howard and Moyer traded deeds giving Moyer the correct deed and Howard the deed to the land occupied by Kunto. -Howard brought suit to quiet title and to assert his ownership of the real estate occupied by Kunto. Kunto contended that although he had been in possession of the land less than one year, he and his successors had been living on the property for longer than the 10 year statutory period and he therefore acquired the land through adverse possession by tacking.

The trial court entered judgment for Howard, holding that the actual transfer of possession is insufficient to establish privity when the deed does not describe any of the land occupied. Kunto appealed.

b.

c. d.

Issues i. Is tacking of possession by subsequent occupants permitted if the land is occupied under a mistake of fact? ii. May a party prevail on a claim of adverse possession if physical use of the property was limited to summer occupancy Rule: tacking where (piece together cumulative time) in privity

Holding and Rule i. Yes. Tacking of possession by subsequent occupants is permitted if the land is occupied under a mistake of fact provided the occupants are in privity. ii. Yes. A party may prevail on a claim of adverse possession if physical use of the property was limited to summer occupancy. e. Rationale: A purchaser of land may tack the adverse use of his predecessor in interest when the land was intended to be included in the deed between them but was mistakenly omitted from the description. The requirement of privity is merely judicial recognition of the need for some reasonable connection between successive occupants of real property so as to raise their claim of right above the status of a wrongdoer or trespasser. -In this case, successive purchasers received record title to land under the mistaken belief that they were acquiring the adjacent tract. There is a substantial difference between a squatter or trespasser and a good faith purchaser who, along with several neighbors and as the result of an inaccurate survey, mistakenly occupies the property adjacent to that described in his deed. f. Public Policy: Early certainty as to the location of land ownership is beneficial. The technical requirements of privity should not be used to upset the long period of occupancy of a good faith purchaser who received an erroneous deed description. In this case there is sufficient privity to allow tacking. g. Continuity of Possession: The requisite possession to maintain a claim for adverse possession requires such possession and dominion as ordinarily marks the conduct of owners in general in holding, managing and caring for property of like nature and condition. This property is a summer vacation home and there was continuous possession even though the property was used only in the summer months. Judgment reversed.

h.

Notes on Policy Matter: Disorganize, serial invation of prop. won’t raise AP problems if users aren’t in privity. Only ongoing presence will create pblm. if coordinated privity b/w person A occupying and K’ing w/ B – also occupying. Taking is OK so long as pty. is in privity.

**Is lack of continuity of possession fatal to AP claim? 3d parties [interests] are only going to be there p/t also. Lens thru which we analyze continuity of use is vacation, p/t users. 3d parties are less likely to be connecting to it out of season.

H.

Songbyrd v. Estate of Grossman****

a. b. c.

d.

Timing issue: Adverse poss. begins at pt. of conversion. So, pl. doesn’t know that rights were infringed until later. Getting window open at earlier time incr. chance that it will be shut by time of lawsuit. Outcome = AP. Converter knows but P doesn’t know that AP has started. ‘Open and notorious’ is occurring in non-explicit circumstance. P can’t bring action on copyright but on tapes on which songs were recorded.. i. Statute doesn’t allow….(look this up) ii. Copyright law says no protection. Cannot achieve thru state law where fed. law has preempted protection. Can’t lawsuit like this even be brought? Don’t know what their state of mind was when they sold to someone else. GD (didn’t know he asked for it / made a call) /BF?? i. Jarvis v. Gillespie

Replevin: for personal property Ejectment: for real property. Recording is crucial: an owner needs to record ownerhisp with a county office, otherwise will run into problems. In the deed system, sometimes ownership... Policy: 1. Adverse Possession is a penalty exacted on existing owner for not monitoring land and failing to use it. detrimental reliance of adverse possessor 2. non penalty: designed to reward people who are utilizing land that may not otherwise be developed. The adverse possessor is not an owner of record but can claim possession subject to the following conditions: 1. Has a statute of limitations past? a. if the statute has not run, the owner can evict you and you will not have a claim for adverse possession b. the length of the statute of limitations varies by state c. If within the statute of limitations, remedies of the owner include eviction and ability to sue for rent d. shorter statute of limitations if acting under color of title ( a good faith belief that you have title to the property) PLUS 2. ENCROACH- Exclusive, Notorious, Claim of Right, Actual Possession, Continuous, Hostile a. Exclusive: 1. Use must not be shared with the owner or other adverse possessors b. Notorious and Open 1. Must be clear and unequivocal so the owner is on notice 2. If it’s a minor encroachment, owner must have actual knowledge - Manillo v. Gorski- the concrete steps that went onto another’s property just a little c. Is your possession by claim of right? 1. Iowa Rule- Good faith and without knowledge of infringement: if possessor knows he has no title, can’t adverse possess. 3. New Rule (Connecticut) - Manillo v. Gorski, Peters - Parties intention is irrelevant- avoids mens rea inquiry, focuses on open and notorious - Did possessor act reasonably? d. Do you have actual possession? 1. Land must be used for its typical purpose 2. Usually a jury issue 3. Jarvis v. Gillespie e. Is the use of the land continuous? 1. Usually a jury issue 2. Jarvis v. Gillespie 3. Okay if use is fragmented or occasional so long as that is consistent with the land’s typical use. f. Is the possession of the land hostile? 1. you can’t adversely possess if use of the land was permitted by the owner 2. Jarvis, Peters 3. This excludes tenants from adversely possessing If a person can’t get title through adverse possession, do you have recourse to the innocent improver doctrine? - get cost of the improvements from the owner (equity remedy) - get the owner to sell the land minus the value of the improvements Can someone adversely possess personal property? Guggenheim -Statute of limitations options: 1. at time if theft from original owner 2. at the time of the purchase from the thief to the original owner 3. at the time that the original owner discovers the loss 4. at the time that the old owner demands it back and the new owner refuses - the court in Guggenheim decides this option - didn’t want NY to be a haven for stolen art - places risk of investigating title on the new owner who is the least cost avoider - makes adverse possession difficult

A.

Role of “good faith”: Carpenter v. Ruperto (minority rule of explicit good faith requirement) Marginally improves it, (bad faith, always knew it wasn’t hers and sues to take possession via Quiet title action (declaration by ct. of who owns what)

1. Facts: Adverse possessor knowingly extended yard into neighbor’s cornfield, uses it as her own for 20+yrs. 2. Rules:

a. Minority Rule: few states require GF in Adverse Possessors to gain title. Most states don’t care about good
b. c. faith or bad faith. (some even require bad faith) Objective facts usually much more compelling than subjective intent for adverse possession When knowledge of lack of title is accompanied by knowledge of no basis for claiming an interest in the property, a good faith claim of right cannot be established. However courts sometimes look more favorably on “good faith” actors in close cases.

3. App/Holding: Woman fulfills all elements of adverse possession, but her state (IA) requires Good Faith in adverse
possessors so she is denied. 9/27/10 CONVERSION V. REPLEVIN Conversion – action accrues when thing is taken VS replevin: accrues when action is filed. To get around SOL, brought replevin COAs (stolen art cases) 1. Demand for conversion: dmg. or replevin (give it back) 2. Replevin

SEQUENTIAL POSSESSION

1. Armory v. Delamirie – chimney sweep (action for conversion) a. Facts: chimney sweep (F) find jewel and takes to jeweler for appraisal; apprentice at jewelry stores takes
jewelry (C). Is the 1st guy really a F? Is apprentice really a C or simply following boss’s direction. i. Don’t know relationship of parties

b. Ct Holding: decides to make jewelry store pay high value (don’t want to underprice the thing b/c this
incentivizes theft)

c. F1 v. C1: Rule: 1st F has highest title except for TO. In F v. C, F wins. i. Policy benefit: conversion = (bad – imposing will on others). Acting conversively against F is
unfair.

ii. If interest is protecting interest of TO:
1. obj. should be given to finder b/c this incr. chance TO will get prop. back; look at those who might’ve been in house obj. should be given to C b/c TO likely to find jewelry in jewelry store

2.

iii. Ct. doesn’t ask questions re: TO b/c F (non-coerced 1st possessor) will have rights against all but
TO.

2. Clark v. Maloney – P find logs in DE bay and ties up. D claims he find them later but P claims it belonged to
him.

a. Both are Finders (F1 and F2). Applying Armory rule: both can make identical Finders argument; would
both win. Need another rule.

b. Rule: F1 tied them up and didn’t abandon logs. F1 had initall possession so has right over anyone else
except TO. First finder has higher title than all subseq. finders.

i. Both are non-coercers. Became 1st F by taking possession 1st, so should get ownership. Fairness
ii. If ct. were to simply split value among all finders, everyone would claim to be a finder…Also, what would you do w/ thing itself. How would you get value of it? Also, TO would be on notice that F1 found it and would claim it.

iii. 1st Possessors – send signal to rest of world as gatekeepers AND manage the resource b/c they
have interest in it.

3. Anderson v. Gouldberg – case of converters (C1 v. C2); P sues for conversion of logs (cut down in ‘my area’)
i. Why is ct. picking a winner out of two bad litigants (c1 and c2)? ‘Racing to be last’. At the end, I come and take the prop. ii. Analogous to illegal Ks: ct. still picks a winner

b. Facts: P claims to have cut logs in area 1 and hails to area 2. Not clear he had right to cut logs from area
1. D claims logs were taken from his area. Neither was TO of land.

c. Holding: C1 gets to keep prop. b/c he had possession and gets relative title. TO’s claim trumps
anyone else’s title.

4. Fisher v. Stewart – P finds swarm of bees in tree o n D’s land. D cuts it down off his own land and takes honey. a. Ct.: b/c trees (and hone in it) are part of property, prop. owner has better title to tree and owns honey –
accession.

b. Notes: P – discoverer – could not get honey w/ trespassing. c. Ad colum is main rule; ratione soli (applied to movable obj. -wild animals) in England. i. Land sizes in US are rather uniform, small. But in England, # of estates which are pretty big. That
is why they applies ratione soli rule - if you own land, you get foxes that run onto it. Better chance that some animals will run onto your land – will allow private hunting b/c it will be on your land for enough time to catch it.

ii. Attachment of obj. of value to specific location: 1. Honey is separate from bees; where it is made
is where it stays. 2. Asset requires investment to be used well. (Diff’t from foxes and deer)

d. Note: Ghen v. Gee: whaling case where local custom was consid. by ct. Here, ct. isn’t concerned w/ local
custom; only w/ who owned land and tree and honey in tree.

5. Goddard v. Winchell: a. Facts: Hoagland see it on Goddard’s land who aren’t there. Tenant lets them enter land and take it.
Goddard claims it is his b/c he owned the land and due to:

i.

accession he owns what’s on it OR

ii. per racione soli (it moves around and ended here) or iii. ad coleum (mineral under the ground) or iv.
b. it’s fixture (affixed to land)

Hoagland gets it if argued as:

i. 1st possession (Pierson v. Post – hunting, narrowing it, shooting, killing, grabbing fox) ii. Discovery (1st poss.)
c. Goddard wins so ct. chooses assession or assession like doctrine.

i. Benefits of this outcome: must dmg. Goddard’s prop. to remove meteorite from ground. Adv. of
rule to give it to Goddard: other pty. won’t likely reimburse value of dmg. done to land in course of removal to landowner. **Protecting value of largest asset to which one is acceding smaller asset. It is important that meteorite is buried in the land. Benefits contingent on facts…

d. Labor theory: Whomever puts effort into real prop. and coverts to pers. prop. to be used should get prop.

Object found in Priv. Home 6. Hannah v. Peel

a. Facts: D family gets house but never take possession / move in. Army sequesters house during war.
While stationed there, P finds broach above window sill. Trusn it into police, who return it to owner of prop. Owner sells anf Peel (F) sues for valur. i. b. c. Either C or F.

Not a fixture… U.S. cases: disting. b/w mislaid and lost prop. (want to tilt law in favor of landowner)

d. South Staffordshire case: found prop. goes for master

e.

Rule: Objects found inside private home are usually awarded to owner of the home.

f. Owner is not in possession: Hannah v. Peel: Exception to “private home rule” b/c owner was not in
possession. If owner of house has not moved into house, it has been held that owner of house is not in constructive possession of articles therein of which he is unaware. (Soldier found brooch in house owned by Π but requisitioned by the military. Δ reports finding, but Π wants the brooch.) g. Policy Considerations: i. Return of Goods to the True Owner ii. How best to do this in Hannah? By giving the brooch to the LIQ, because the T.O. will retrace his steps. iii. Carrying out the expectations of the parties iv. Preventing trespass v. Upholding public order h. Finder is on premises for a limited purpose: i. Rule: If the finder is on the premises for a limited purpose, it may be said that the owner gave permission to enter only for the limited purpose, under the direction of the owner, and the owner is entitled to objects found. 7. South Staffordshire Water Co. v. Sharman: (Δ was employed by the Π to clean out a pool of water on their land and he found two rings embedded in the mud on the land. Π sued Δ for the rings). 8. I. Object Found in Public Place: 9. a. Rule: Lost property goes to the finder rather than the owner of the premises. Bridges v. Hawkesworth (from Hannah, where patron finds purse and gives to owner of premises who advertises for the T.O., who never comes. Patron sues owner for purse and wins.) Public v. Private distinction: here public place, in Hannah private house. 10. b. Rule: Mislaid property goes to the owner of the premises. TAKING BODY PARTS 1. Moore v. Regents of Univ. of Cali a. Parties: PL is patient who is seeking relief; DF's are doctors and to regents of University.

b.
c.

d. e.

f. g. h. i.

j.

COA/remedy sought: P seeks damages for notably conversion of his cells. Doesn’t seem like loppy ‘duty of care’ pblm or ‘I hurt you’ duty of loyalty pblm. i. Informed consent violation: has oblig. to discl. what his cell will be used for incl. any financial benefit Procedural Hx: Court of appeal finding - PL did sustain a proper cause of action. Facts: PL was treated by DF's, who notified him he had life-threatening leukemia, and that he'd need his spleen removed. Upon doing this, DF's did tell PL they would use his tissue for cell research, but they didn't tell him how much the tissue research would reap for Df's, or even that they were commercially interested in it. Hundreds of thousands of dollars had been paid to people under such circumstances in 80s; potential from PL's cell line products is expected to run into the billions of dollars. Issue(s): Under prop. law, does PL state a COA against his physician and other DF's for using his cells in potentially lucrative medical research w/o permission? Holding: "The complaint states a cause of action for breach of physician's discl. obligs, but not for conversion...." Court's Rationale/Reasoning: Breach of physician fiduciary duty are slam dunk. As to conversion, COA under PL's would stretch fabric of tort law under theory of conversion. Ct. believes there is no COA under this theory. For conversion, PL needed to est. there was an actual interference w/ his ownership right or to his right of possession. Since PL did not expect to retain possession of his cells, in order for this COA to fly he would have needed to prove that he had at very least an ownership interest in them. However, CA statutory law limits continuing interest in cell tissue once donated, and the research was University's, not PL's. Personal likeness is one thing, but there is no conversion COA on this basis in property law, as there are not in tort law either (Prosser cited). Additionally, research here is for part of cell structure which is in every

k. l.

human being, and is exact same in all human beings. Further, if every pt. had continuing interest in their cellular property, doors to potential litigation could be opened wide, due to certain level of impracticability to PL's argument. Also, CA Health law says nothing of the continuing interest one may have in their cell tissue. Note: Balancing test of policy outweighs the other side of extending the tort. Human research could be hindered significantly. Rule: To est. a conversion, P must establish actual interference w/ his ownership or rt of possession. Where P neither has title to property alleged to have been converted, nor possession thereof, he cannot maintain COA for conversion.

m. Analysis: The court uses three principles:
1. An adult has right to control his own body. 2. Consent is only effective if it is informed consent. 3. The doctor must tell you ab. everything that is material to your decision to give consent. n. Fundamental pblm in Moore: Transf of ownership but should say you cannot transf ownership, either K, $ or by gift. Perhaps P is a monopolist by restricting downstream use (Say for someone who needs the hairy cells to survive.) Solution: To enf. on’s prop right w/ liability rule. Entitles you to is $ if someone takes it but not to restrict use. -Taking something for public use v. compensation… ** a Dr., in getting your informed consent, must tell you about all of his interests that may affect his j/m, or else he may be liable for performing medical procedures w/o informed consent. **There is a competing interest in withholding information if giving information would make patient make a bad choice. However, ct feels this applies only in cases where doctor is acting solely in patient’s best interests. Ct finds this is not case here. Think about: you get some form of interest / prop. right in body parts – due process - gov’t can’t take it w/o compensation. Property lite: doenst give right to excl. **Adverse possession and accession: ours when connected to us or assoc. w/ us but after it is removed; has pt. abandoned property rt. in body part. What kind of abandonment is it? **Can you transf. it? Do you need to have certain type of procedure and/or legal doc.? LIABILITY RULE – I own the barrel stave and I will pay you for the wood… 9/28/10 United States v. Corrow a. Inquiry notice – oblig. to act some questions to make GF sale b. N/A statute makes it a cost to the owner of cultural paternity and benefit to society at lrg.

i. E.g. – elephant tribe in sub-saharan Africa which allows shooting allows diverse herds and ppl protect
them. Where shooting is prohibited, there’s no protection for them / abuse. In this case, prop. rights helps. B. ANTI-COMMODIFICATION AND INALIENABILITY RULES A. the idea that you could have asset and entitlement (not to be misrepresented) and law doesn’t allow you to separate yourself from the rt. i. Sample Rule you may not sell entitlement but can give away and vice versa. (types of inalienability) ii. market inalienability – cannot sell VS inalienability– cannot sell or give (e.g. something w/ prop. interest (b/c cant take w/o due process) but inalienable = medical license) a. Sell but can’t give away – gives ppl confid. there's reality

a. E.g. in Moore case: fraudulent transf. / sham or fraud trans.: useful to give away stuff to
b. a. others w/ relationships rt. b4 claiming bankruptcy. But if pay for it, the value is in bankruptcy case Yields Recording point, invest and gatekeeper pt, keep track of who has value pt Radin: empirically it is better if ppl are not allowed to market certain pers. items (infected blood argument)

b. Can’t sell (better for society to outlaw certain markets)– don’t want ppl selling their name / organs i. Anti-mercantile argument: Cost of personal transx. (co-modification) extraordinary
B. compared to benefits. …Creation of hierarchy so can avoid negotiating everything. Have prop. to further personhood interest. i. prop. will get things used well (economic utilitarian reason) as well as personhood reason (free choice; protect against doing something we’d usu. find suspect or distasteful) (organ selling, slavery, prostitution) a. fetishism TO things about ID (personhood things theory) IS more important compared TO fungible things (mere value things) TO prop. that’s so important, it is non-marketable prod. ii. if prop Is wrong way to go, need bureaucratic direction **something could be fungible prop. in hands of manufacturer and personhood prop. in hand of consumer

C. Demsetz Paper: see prop. rights emergency in 1st nation tribes when benefits of recognizing prop. rights exceed costs. Overuse (Tragedy of commons) and underuse (underinvestment in genetically diverse flock/herd) of prop. When demand for an item becomes great, benefits will exist to protect them. i. Property rights internalize externalities. Costs of prop. rigts (cost of trade) are not trivial. So, you don’t see prop. right emergence in other N/A tribes b/c it was impossible to fence off buffalo. ii. Paper doesn’t discuss how one acquires prop. – thru poli. Process. And, how it achieves internalization effect – see 2001 piece. a. 2001 piece: don’t pay attention to internalizing externalities (we have positive externalities – free garden – w/o prop. mechanism needed to supp. it.) b. Coordination: can be passive (Everyone shows up at grand ctrl at 12 pm) and active (boss runs co.) a. If you not in that community, you’re not getting coordinated. Wouldn’t exist if everyone was in the norm. b. Property does this: I am custodian of asset and want to know how to best use this asset (you $ have, me $ want…let’s deal). Allows ppl to coord. Conversation about assets. Coordination is less than ctrl. – w/ former you don’t decide what happens to asset, w/ latter – one who decides is one who has most barg. power 10/4 – 2nd half I. Cts. stepping in to stop paying off partic. constituents

i. Govt actors to some extent act in own self interest (trying to make their jobs more effective…
not really corruption) 1. Judges act in own self interest and public pays price for that. If that’s the case, why should courts be check against other branches of gov’t Priv. prop. proponents believe there should be public prop. disagreement over rt. mix

II.

ENFORCEMENT: RIGHT TO EXCLUDE a.

b. Criminalization of prop. usu. tied to person (more protecting prop. owner than prop. itself) i. Pblm: spend too much resources to enforce crim. law where there’s no physical, personal risk (Enron,
Madoff, insider trading, wire fraud) 1. Only weakly protect prop. crimes like trespass b/c we are confident it is already protected thru civil remedies, self help c. Belive that prop. is about notice to everyone: is benefit of in rem rights. In favor of using crim. system. III. Olovo, Gasparik – a. In all cases, person had yet to actually take anything away from store. So, is it a crime? b. Holding: yes, see p. 398, note 6: ct. discusses about movement of actual obj. intent alone is not enough to be chrg. w/ larceny. Also require actor to touch / move obj. i. What about movement of obj. signals that effect? Crim. answer: It involves not only intent but also asserting ctrl. over obj. (mens rea + actus reus). It incr. our confidence in intent evid. b/c given option to chng their mind. Prop. answer: Indiv. carrying obj. = signaling / notice to everyone some possession, ctrl. NECESSITY DOCTRINE IV. State v. Shak: prop. owners, fee simple, strong prop. rt., no complications about title. Involves actual trespass on real prop. a. Ct.: aid worker acting pursuant to fed. statute. i. Allowing non-profit aid workers protections of fed. officers too much. ii. Ct. puts in confl. human and prop. rights. In confl. b/c of position of rt. to excl. against strong distrib. distance in wealth—(disparity in wealth driving opinion). It’s the right to excl. away from things that someone actually needs. 1. Why is the prop. sol’n to pblm. that landowner loses his rights? Effect is destabilizing. b. Holding: rt. to excl. was not enforced in this case. Either Categ. balancing: aid worker (or broader) trying to give aid to migrant worker living on farmer’s land, then worker can’t be excl., OR Ad hoc balancing: in ct. wisdom it is worth it, then no right to excl. i. Benefit of ad hoc balancing: adjusts to changing circumstances, but pblm is it’s at whim of ct., no bright line boundaries as to owner’s prop. rights. ii. Benefits of category balancing: gives notice: the more you force ct. to announce category, the more there’s notice to everyone else the types of times where right to excl. won’t be enforced. c. Penalty one pays isn’t enough to deter trespass. One benefit of defining it as trespass helps set bargaining around it: allows landowner to facilitate self-help (planning, bargaining) d. Ct. could’ve used other legal roots to get to the outcome: PERMISSION. But, ct. wanted to say ‘this is a property exception (categorical or ad hoc balancing). i. rights of other indivs. incl. accepting visitors as long as it doesn’t interf. w/ rights of prop. owners. V. Intel a. No enforcement of rt. to excl. What are the benefits and costs to this approach?

Private landowners often under enforce prop. rights: right to enforce doesn’t = enforcement

b. This is trespass to pers. prop. Is it harmful? Ct. says: ‘no harm’ to Intel. Therefore, no trespass to chattel,
even though they need more bandwidth, etc to handle traffic. i. If Intel lost productivity time b/c employees reading the emails, is it nuisance to chattel? Should a statute be passed prohibiting nuisance to computer chattels? What does ‘rt. to excl.’ mean here? If ct. only gives prop. owner injunction (don’t trespass to chattel) as relief and no huge damages, then concern of exclusion goes away. i. There no trespass chattel here b/c matter of using system is not viol. of co. rules. For it to be person, emails have to be extension of actor. Not enough of phys. invasion, no harm. 1. Enfoce corp. speech privacy strong

c.

10/5/10 SELF HELP

I.

Byrd v. Wiley

a. Facts: DF takes assignment from brother, and on 5-1-71 opened Family Affair Restaurant. b. 6-73 & 7-73: DF claims PL is in violation of lease for making changes to building structure w/o permission, by c. 6-29-73: Dated letter from DF ordering PL to repair 8 items and comply w/ Minnesota Dept. of Health, or DF d. e. f. g.
would retake premises on 7-13-73, as lease provides (eviction). PL continued to operator restaurant w/o making repairs. PL, DF had sev’l petty squabbles 7-13-73: At close of bsns, PL put sign in window "Closed for Remodeling". Earlier that day DF attempted to change locks and was ordered away by PL. 7-16-73: DF enters premises w/o PL's knowledge and change locks at advice of attorney. PL returns and is unable to enter and as result bring lawsuit. 8-1-73: DF re-lets to another tenant - originally party to suit - but dismissed at close of PL's case. Issue: Under MN property law, was the LL entitled to self help, i.e., could he retake premises w/o judicial process, or was LL wrong in locking out PL? i. Society has to finance to administer process of eviction. Arguing in favor of self-help b/c 10 day process doesn’t work, ct. may forbid b/c you have to use resources legisl. has provided for. Holding: Yes, under new rule, DF should’ve sought judicial help in barring PL from premises. Should not be embracing lawlessness rather than self=help when there isn’t alternative process in place. Reasoning: CL rule: LL may rightfully use self-help to retake possession if 2 conditions are met. 1) LL is legally entitled to possession (i.e. tenant holds over or tenant breaches lease containing re-entry clause); 2) LL's means of reentry are peaceable. Lower court held LL reentry wasn’t peaceable - picked a lock, under circumstances likely to provoke breach of peace. LL had statute to provide remedy in 3 - 10 days. Modern trend departs completely from CL rule, stating that self-help is never available to dispossess tenant in possession, and has not abandoned premises. Even under CL rule, j/M would have been affirmed for Berg. Given hat LL's only means to dispossess tenant are via judicial channels, DF would have surely lost. Hence, b/c LL failed to resort to judicial remedies, his lockout of tenant was wrongful as a matter of law. Lower court awarded PL $31,000 in lost profits and $3,540 for loss of chattels resulting from the wrongful lockout. The jury found that PL had neither abandoned nor surrendered the property. DF appealing, seeks outright reversal of the damages award for wrongful eviction, claiming insufficient evidence for jury's conclusion and that court erred in finding wrongful eviction as a matter of law. This court affirms. Issue: Was there intent to abandon by restauranter? No b/c she changed locks and wouldn’t have done this had she intended to abandon space. 63ot and owner locks out rest. Operator. Lockout is not ok b/c P didn’t abandon. 2 weeks is not enough to claim abandonment. Cop came w/ landlord when chng. locs. Landlord making sure breach of peace didn’t happen. the unsanitary conditions of kitchen.

h. i.



Possible effects: Self-help no longer allowed, Tenants rights to possession strengthened and clauses regarding retaking of property for breach now require judicial intervention. • Rule: LL's are no longer allowed to retake the premises without judicial process. Williams v. Ford Motor Credit Co. In transactions, never separate asset from what’s req’d to maint. asset



• •

Why is it ok to allow self-help in this setting than not allow in restaurant case? What is benefit of self-help system vs. no self-help? Cost of repo is going to get passed on to consumer as opposed to using self-help. Under UCC, it will be cheaper to get ppl to get cars than hire lawyers to litigate in order to get car back.

a. Ford repossessed PL car at 4:30am after ex-husband quit making payments on it (he also signed
b.

c. d. e.

repossession agreement). COA: Brought for conversion Ford’s defense: under terms of repossession agreem, car no longer belonged to PL; it belonged to us. Holding: Repossession held peaceable. Though Williams protested, repo-men were polite and no violence threatened. Dissent points out that Williams did everything she could to stop them short of physical violence. Ct seems okay with self help for repossession of personal property.

EXCEPTIONS TO RIGHT TO EXCLUDE NECESSITY • ** Right to use someone else’s stuff that is enforceable: Got right to sue owner if I don’t get access when I have necessity. Ploof v. Putnam

I.



a. b.

What is driving outcome is view that we’re all better off in world in which our prop. rights are all subj. to invasion option BUT only in cases of true emergency (true necessity cases: I need ‘X’ now). o In ER cases, assets are worth more when they’re in peril AND there’s no time to negot. for protection. o LIABILITY RULE: Majority view: Law steps in and forces deal “a yes” in certain circumst. but it cashes it out. Where transx costs are so high compared to destroyed prop. and/or life, it makes sense to force xfer. Fact To escape storm, PL tied his boat to DF dock. DF untied PL it. PL and family were injured and boat destroyed. Rule of Law. Necessity will justify entries upon land and interferences with personal property that would otherwise have been trespass. Facts. Defendant owned a dock. Defendant’s servant was in charge of the dock when Plaintiff and his family were sailing. A storm arose and Plaintiff was forced to tie his boat to Defendant’s dock. Defendant’s servant untied Plaintiff’s boat. Plaintiff and his family were injured and the boat was destroyed. Plaintiff sued in trespass, claiming that it was Defendant’s servant’s duty to allow Plaintiff to tie his boat to Defendant’s dock. The trial court ruled for Plaintiff. Defendant appealed.

Issue. Is Defendant permitted to untie Plaintiff’s boat when Plaintiff tied his boat to Defendant’s dock out of necessity? Held. No. Judgment affirmed and cause remanded. * Necessity will justify entries upon land and interferences with personal property that would otherwise have been trespass. The court gave a few illustrations to illustrate the doctrine of necessity: * A traveler on a highway, who finds it obstructed from a sudden and temporary cause, may pass upon the adjoining land without becoming a trespasser, because of necessity. Entry upon land to save goods, which are in danger of being lost or destroyed, is not a trespass. * Necessity applies with special force to the preservation of human life. One assaulted and in peril of his life may run through the land of another to escape from his assailant. One may sacrifice the personal property of another to save his life or the lives of his fellows. * In this case, Plaintiff entered the land of Defendant in effort to escape the storm and avoid injury. Defendant claims that Plaintiff could have tied his boat to natural objects with equal safety. However, the facts show that Plaintiff tied his boat to Defendant’s dock to save the boat and the people in it. The requirements of the claim for necessity are complete. Yet, the rule of necessity cannot be held applicable irrespective of circumstances. The question of circumstances and natural objects is left for adjudication. Discussion. This case is a commonly cited example of private necessity. Plaintiff has the privilege of private necessity. He tied his boat to Defendant’s dock to avoid injury to himself, his family, and his property. Plaintiff is privileged to enter Defendant’s land under the doctrine of private necessity. Touchstone of liab. rule: property right enforced by liab. rule: entitlement is owned by you, but I can use it as long as I compensate you for it. I will not have to pay more than obj. measure of harm. Therefore, prop. owner does have good chance of getting compens. for economic harm, but not for dignity harm (it bothers me when ppl use my stuff w/o consent). VS Prop. right backed up by prop. rule: would get enhanced damages, self-help allowance, etc.

II.

McConico v. Singleton

• • •

Like Bee hive case – IS EXCEPTION TO US RULE. Can move onto someone’s land to hut. Like Intel – trespass w/o harm, so no COA. Here, same thing. o No doubt that hunter had been told to get off land. RULE: Notice to the world: “don’t trespass"

CUSTOM:: right to hunt on unenclosed land = custom. In modern setting, more like default, bc owners can post no trespass signs. Balancing test, armies need to practice weapons so we want to allow hunting… still true? Change with changing customs? PUBLIC ACCOMMODATION HARMS ASSOC. W/ DISCRIMINATION (Desilets) – how harmful is this ‘discrim.’



• • • o

Access – Can you show grp has trouble getting access Dignitary hit – Social messaging / discrimination hit - can you show that in society effect is this is subordinated class Civil Rights Act exceptions: Doesn’t discuss common carriers b/c already covered.

 What about retail establishments? Stores didn’t mind taking $ from blacks – profit motive! Therefore, not in
statute. Uston v. Resorts Int’l Hotel a. b. Facts: DF excluded PL from blackjack tables in casino b/c PL is expert card counter. Issue: Can DF exclude PL from its casino just b/c he is an expert card counter Holding: No, b/c when property owners open their premises to general public in pursuit of property interests, they have no right to exclude people unreasonably. They do have right and duty to exclude those who disrupt ‘regular and essential’ operations of premises. PL in this case does not fit that category b/c he was not disruptive in casino and no way interfered w/ regular functioning of casino. Therefore, PL possesses ‘usual right of reasonable access to DF’s casino. Notes: it is according to commission’s rules. Some casinos kick out card counters, some don’t. once there is rule against all card counters in all casinos, they’ve won battle but lost war.

c.



Shelley v. Kraemer

a. Facts. Petitioners Shelley, who were black, bought home in neighborhood in which 30/39 parcel owners had signed
restrictive covenant which stated that no home was to be sold to any black persons, which led to suit by neighborhood to undo sale of property to Shelley. Property owners in neighborhood in St. Louis entered into restrictive covenant which stated that for fifty years no property in neighborhood could be sold or rented to any blacks or Asians. Petitioners were not aware of restrictive covenant at time of purchase. Respondents, who were other owners in neighborhood, sued in state ct. on basis of the restrictive covenant w/ intention of having Court divest Petitioners of newly acquired property and revert title. The Circuit Court declined to enforce the agreement on the basis that not all of the property owners had signed the original covenant. The case was then appealed to the Missouri Supreme Court which rev ersed the Circuit Court’s decision and held that the provisions of the covenant were enforceable against Petitioner. Petitioners then appealed to the U.S. Supreme Court. Issue. Does the action of the state court in enforcing the restrictive covenant deprive Petitioner of rights guaranteed by the Fourteenth Amendment and acts of Congress? Held. Yes. First, Court noted prior decisions and found that restrictive agreements, standing alone, could not be regarded as violation of 14th Amendment rights. The Court found that the requirement for state action was not met in a purely private and voluntary covenant. However, the Court found that in this case there was state action by virtue of the Supreme Court of Missouri’s decision to enforce the restrictive covenant. The Court found that state action includes actions by legislative bodies and also courts and judicial officials. The Court held that in granting judicial sanction to an agreement which, by its terms, would deprive the Petitioners of equal protections guaranteed by the Fourteenth Amendment is an action which cannot stand. Therefore, the Court held that the Supreme Court of Missouri had to be reversed. Because the Court decided the case on the question of equal protection it was unnecessary to consider the Petitioner’s arguments regarding due process and whether the Petitioners had been denied privileges and immunities accorded to citizens of the United States. Court's Rationale/Reasoning: These are not the traditional city, state or town councils passing laws to a discriminatory effect, but neighborhood covenants to the same effect. These are private individuals, and the first consideration is whether that fact removes these cases from 14th Amendment concern. Since the Civil Rights Cases, the Court has held the 14th Amendment does not protect people from private actions, as only the states can. But here there is more, as the covenants were upheld by the state courts, and not by voluntary adherence, so there is an actionable cause by petitioners after all. But for the state court actions, petitioners would have been able to live in their homes and occupy their properties w/o restraint. Rule: When an action's effect by the State is to deny rights subject to the protections of the 14th Amendment, it is the obligation of this Court to enforce Constitutional amendments. Did court avoid issues?: did it sidestep any questions that it initially appeared that it would have to answer? NOTES: if you passed zoning law where community decided to vote for itself (Excl. ppl who don’t look like us), that would not stand. Why allow ppl to do in K what not allowed to do in civic law… -Broad nexus of K and prop. rights made it look like state action.

-owner autonomy: autonomy seems to be attenuated if we don’t enforce right to excl. in this case, even though there’s high degree of evid. it’s non-existent. -If enforcing right to excl, this would be an ouster. It’s abridgement of autonomy of new owner / current resident. 1968 FHA has exceptions— o Leaves room for one-on-one discrimination…b/c we want to protect property rights and transx costs of enforcement are too high. Can’t police ppl bad actions toward others b/c cost of state involvement in every deal, cumulatively, is too high. o Mrs. Murphy exception: inherited house and family died. Only way to maint. house is to rent out some rooms. Bldg. w/ up to 4 units and owner lives in one of units – excl. is OK.  To prevent white flight, Starrett City has strict quotas. Is it discrimination to maint. integration legal? Ct. says yes, under FHA, even though purpose is to maintain diverse, non-tip neighborhood. Attorney General v. Desilets: P’s, non-married couple, sued D’s who refused to rent property to P’s as non-married couple b/c it would, according to D’s, violate their religious beliefs; P’s filed suit for housing discrimination based on marital status. 1. Holding: Court found that to discriminate based on marital status is violation of FHA a. D’s claim, however, that to prevent them from discriminating based on marital status “substantially burdens” their free exercise of religion. b. When addressing questions regarding free exercise of religion, court recognizes that “conduct motivated by sincerely held religious beliefs will be recognized as exercise of religion.” i. Even if conduct in dispute is not “commonly viewed” as religious ritual/exercise, court will accept it as such if the claimants truly regard conduct as exercise of religion. 2. If application of statute substantially burdens claimant’s free exercise of religion, it is unconstitutional to apply it to them. c. If statute affirmatively obliges claimant to enter into K that goes against what he/she claims is his/her religious beliefs, statute as applied to the claimants denies them their constitutionally mandated right to the free exercise of religion. 3. Even if Constitutional rights of claimants would be violated by application of the statute to them, claimants may still be forced to conform if state has compelling reason for doing so. d. Namely, state must show that it has compelling interest in eliminating marital status discrimination. e. The Desilets court says this is not a compelling interest; the right of the claimant’s to freely practice their religion as they see fit outweighs state interest in preventing discrimination based on marital status. i. If practice of discriminating against unmarried couples was more widespread in housing market, state’s interest in preventing this type of discrimination would probably be great enough to justify curtailing of claimant’s right to freely exercise religion. ii. Or, if D’s in Desilets refused to rent to P’s b/c P’s were black and D’s religion specifically taught that African-Americans and whites should not intermingle, state’s interest in preventing discrimination based on race would surely outweigh D’s interest in being allowed to freely exercise their religion. **Ct. is subliminally sending message that discrim. based on marriage is not as bad as discrim. based on other subjective factors such as race, gender, etc. 10/11/10 •Society makes sacrifices in getting things right for getting things done. •Society benefits in getting things who are not owned by possessor to one who does b/c it’s better looked after b/c one who owns something on loan doesn’t have resources to look after item. • Self-help analysis: Williams v. Ford: o If reas. exp. Of viol. – then no rt. to repo  o Seems to create perverse incentive to incite viol. in order to cease repo •

Good thing About getting mortgage homes back in hands of owner who will invest will allow to create market liquidity and stimulate investment.



Intel case (trespass to chattel): isn’t case more like trespass to land – est. doctrine - than trespass to chattels. o Can cyberspace be considered ‘the land’



subj. to public ownership, not private….commons prop.

Other Powers of Sovereign Owner I. Power to act as gatekeeper and powers of incl. and excl. A. Power to give permission to someone to access property – license (will be treated like K, NOT prop. interest) a) Waiver of rt. to excl. and promise not to excl.; arise from K . 2. Revocability means that revoc. will give COA for breach only (license as K view). a) Some licenses enf. w/ SP – but have to make argument for it. Still can’t make argument for in rem rights against 3d parties. 3. Permission slip from owner to another allowing latter to gain access to asset on certain terms 4. Licenses don’t convey in rem prop. rights/good against the world; rather, provided in personam pers. rights. 5. License is Revocable, temp.; e.g. – allow plumber to enter apartment to fix leaky faucet a) More secure perm. Waivers = “prop. rights” 6. Being Ks, licenses may be oral OR written and are revocable. a) As w/ all Ks, parties can attach condit. To it (make it irrevoc. for pd. of time) 7. money flows in 1 direction; permission to enter for partic. pd. of time 8. Marrone v. wash. Jockey Club Facts: P bought ticket to horse races at D’s track. But, D forcibly prevented P from entering gate. Next day, P was thrown out after he already put tkt into box. Claims SP for assault. Procedural Posture: P suing for trespass for preventing entry into track. [Implies that P had property right upon buying ticket.] Issue: Does buying ticket for event est. right of property in event? Holding: No. Ticket binds seller in K, but does not create property interest in the holder. Bottom line: Ticket ≠ right in rem / to partic. good against the world. Rather, K / license from owner of a thing. Reasoning: [Holmes] reasoned that ticket was simply K of license, which was subject to revoc. Thus, P did not have action in trespass, only K action for breach. Tickets to horse races are not conveyance of property interest in land. To est. irrevocable right of entry, P must have had interest in property / some goods on it. [License + an interest might be irrevocable.] Notes: 1. In Hurst v. Picture Theaters, Ltd., english court found for P who was ejected from theater after paying for ticket. Held that ticket was K to view whole show, so license = irrevocable b/c it was coupled w/ contractual interest to view whole show. General rule is that licensee does not have rights to protection against interference by 3d party. 9. Analogy: License to hunt deer (temp. revocable license to prop.) VS license to hunt and take away deer (license w/ prop. interest in deer). a) Viol. of K right is supp. by consideration. If no consid, then license may be revocable.

(1) If there is pmt. For theater tkt (consid. given or some other
interet [to hunt deer = rt. to trespass on land]), then not neces. revocable. Breach is in personam. If can get ct. to issue SP order, still prob. not in rem.

10. Hurst v. Picture Theatres
Approach to answer issue… -What’s right in K? -What’s remedy? -What are implic. which flow from remedy? Facts: P paid for seat in cinema and sat down; others who didn’t pay sat around him. Cinema ejected him w/o reason. License K: Was it for a specific seat or any seat? What are remedies if license K is breached? Bottom Line: P had a license w/ a grant. P had contractual license w/ cinema to enter premises. He also had a grant to see the picture. Possible dmg.: expectation dmg. & SP if it’ available / practical by tkt date / other showing. Issue: whether K made w/ P for value of tkt is implicitly irrevocable b4 concl. of picture. --If owner breaching license / tkt K VS violating injunction issued by ct. OR ejecting buyer by own rt. (buyer has in rem rt. against owner) VS by ct. order/ allowance. --Buyer’s rt. to exercise self-help remedy. Likely same if have opp. for SP.

Holding: P wins b/c his seat to see whole movie was grant coupled w/ license. Overturned Leadbitter. a. License w/ agreem. not to revoke (K in which one pays to see show until termin.) yields enforceable right / grant Dissent: ticket was K separate from license. P only entitled to damages b/c once asked to leave, if he doesn’t - he’s a trespasser subj. to forceful ejectment. Any license is revocable. Does P get refund or rt. to SP? If SP is available, self-help by theater owner NOT approp. / like assault / viol. of ct. order if injunction was entered. i. first have rt. for breach. if order id entered and owner disobeys, then its contempt issue. But, not necessarily viol. in rem rt. as against the world b/c there’s breach of K case against theater owner. Notes: way to make viol. of tkt license be viol. of prop. rt. rather than just breach: the more connected to actual R.E., the better the argument that it’s more than K to see show, i.e. tkt. #s. License agreements 1. K for Dig. Rights Mgmt.: degree of ctrl providers can achieve thru K restrict. & technologies termin. use after partic. pd. of time / # of uses a.

2. Software license treated as K (Easterbrook)
3. ProCd v. Zeidenberg a) Accepts license terms of software seller upon learning them and proceeding w/ use; NOT upon mere purch. of prod.

Facts: ProCD sold tel. directories on CD (compiled 3k directories), which had shrinkwrap license on non-commercial version of software that made buyer agree not to resell info. D bought cheaper, consumer version that had license saying sw cannot be used for any other purp. other than personal ones – making K argument. Dignored this and resold info. D argument: making prop. interest argument. Only text written on outside of pkg counts as K offered by seller in placing prod. on shelf & buyer when purchasing it. [wants not only no K formation but also irrevocable license (continuing uing s/w for commercial purpose). Response to no K formation argument: there was acceptance thru deed if not thru word; behavior [of buying and opening pkg.. and utilizing software] conveys acceptance Posture: trial ct. agreed w/ D / infringer. P appealed. Issue: are shrinkwrap licenses enforceable upon software buyers? Rule: shrinkwrap licenses just as enforceable as other Ks. Analysis: ct. says licenses are covered by UCC and CL – same as ordin. Ks. And finds that consumer assents to license when buying software, of which some terms made be inside pkg. K b/w P and D wasn’t formed when D paid for CD, but when he read, accepted enclosed license terms. [He had opp. to reject terms upon reading but did not – meaning he accepted the terms. Conclusion: appl. ct. reverses. Prosp. Dmg: expectation dmg. To get around receiving just tkt price: look at what is value of K and what’s good measure of what u expected [what you paid or market price…]. Can possibly get Spec. Perf. for sale of land but not use of land. E.g. K to stay at hotel and they overbooked. Not likely P can get SP b/c 3d pty. would have to relinquish K rt. for P to get SP.

B.

Power to xfer temp. custody of pers. prop. from owner (bailor) to another (bailee)– bailment

1. Usu. by express / implied K & where there’s special purpose in mind, after which is
accompl., it’s reverted to bailor. a) Blending in rem (prop.) and in personam (K) princ. b) Most aspects of relationship governed by K but in xfer, some of bailor’s prop. rights go to bailee, i.e. right to excl. others from prop 2. E.g. clothes to dry cleaners; car to valet. 3. Voluntary bailment – contractual relationship b/w bailor and bailee. if there was bailment then presumption of neglig. if bailee loses / damages / lets be stolen the item.

BUT, if converted / misdelivered, issue is S/L (tort). a) P might not be able to prove neglig. BUT this is a loss, not a misdelivery. Allen v. Hyatt Regency Facts: involves voluntary bailment b/c there’s K in form of ticket. P’s husband parked her car in parking garage of D’s hotel. [Wasn’t staying at hotel. Issue: Is operator of commercial garage liable for theft of car during absence of owner based onbailee-bailor relationship? Possible Prop. argument: leaving car w/ garage operator created bailment. If you’re bailee, duty is created AND there’s presumption of neglig. How to tell whether there’s bailment or mere licene Holding: Affirmed in favor of P. Rationale: the realities of park-and-lock operators are to provide attendants w/ protection. In practicality, operator becomes gatekeeper and assumes control and custody over vehicles parked by limiting access and requiring ticket upon exit. Area was enclosed, there were guards, and one exit where ticket needed to be presented to attendant. a. How to tell whether there’s bailment or mere license: Is there: possession and/or intent? Situation presents tradit. concept of bailment for hire. More than mere license [hiring of space to park unaccompanied by expectation of protection or other obligations upon operator (burden of proof on D)]. Involved custody / poss. / ctrl. of keys therefore poss. / ctrl. of car. Dissent: In order for bailment relationship to exit, there must be full transfer, either actual or constructive, of property to bailee so as to exclude it from possession of owner and all others, AND to give bailee, for partic. time, sole custody and control of prop. b. Here P retained possession of keys, he parked the car himself. Bailment would’ve been created where operator knowingly and voluntarily assumed control, possession, or custody of car. Ticket clearly stated that hotel had no intentions of taking full custody of cars of those who use garage. Ticket states ‘park’ at owner’s own risk’ Dissent main pt. if it was valet – D provides bailment; if open lot – no bailment.

4. Bailee’s Duties: duty varies case by case. Borrower will be expected for take higher
degree of care than depositary. Similarly, bailee for reward (bailee hopes to derive benefit in some form even if no tangible current benefit), expected to take higher degree of care than gratuitous bailee.

a) Where bailment for sole enefit of bailor: law requires only slight diligence
from bailee; answerable only for gross neglect.

b) When bailment for sole benefit of bailee: law requires great diligence and
hold him responsible for slight neglect.

c) When bailment is for joint benefit: law requires ordinary diliegnec and hold
bailee answerable for ordinary neglect.

5. Modern Approach to Bailee duties: exercise of reasonable care accord. to
circumstances

a) Even gratuitous bailee that keeps goods w/o reward and must return on
demand still owes duty to take reas. care of goods. If goods are lost / damaged, and bailee failed to take sufficient care, onus of proof lies on bailee to establish that he took appropriate degree of care, or that his failure did not contribute to loss. b) Diff’t duty of care attach to true / volun. bailees VS constructive / involun. bailees

6. Involuntary Bailee: what’s duty of care A person who has been put, through no act
or fault of his own, in situation as that in which Ds (in Cowen v. Pressprich) were put upon delivery to them of wrong bond. Bailment created within context of involuntary bailment is called constructive bailment.

a) As long as lack of volition (act of willingness, decision, choice) continues,

involun. bailee is not under duty of care for or to guard subj. of bailment. AND, cannot be held for what would be gross neglig. in case of involun. bailment, but if involun. bailee exercise dominion over subj. – he becomes liable as if he were voluntary bailee

7. Cowen v. Presswich –railroad bond delivery to wrong person
P argues: As bailee owed duty (SL) to ensure that bond tkt isn’t misdelivered. If he misdelivered…viol. duty regardless of neglig. Bailment:created thru K. Issue: can bailment be created where there is no K (meeting of minds) b/w bailor and bailee? What duty of care attaches to one that acquires temp custody of obj. by mistake? Holding: ct. held that though initially an involuntary bailee, D took decisive action in attempting to return bond to messenger – thus assumed level of responsibility of voluntary bailee. D’s attempt to divest self of wrong bond to wrong messenger amt. to conversion, at minimum breach of implied agreem. to return bond only to Ps. *Not a bailment b/c no K b/w P and D to rec’v specific certificates slipped thru door – formalistic. Counter: both companies regularly x-chng. certs. w/ another. Have implicit agreem. to hold on to items recv’d for other and to retain it. D held onto certs. But, this doesn’t constitute possession b/c D immed. returned items to runner. If you don’t possess, your duty is same as stranger’s.

a) Total stranger – no duty VS Bailee and midelivery – SL. Only bailee has
ctrl. of 2d delivery, so should have burden to delivery correctly. If no SL, incentive to not be careful. Bailee could conspire to misdeliver to friend o moral pblm. Dissenting Opinion (becomes controlling opinion) – Bailment only arises through express or implied K, and D never consented to accept the bond as a deposit, they didn’t claim title to it, and not subj. to trust / oblig. as bailees. Although involun. bailees come into poss. of another’s prop. w/o consent, they don’t incur respon. to TO to exercise reas. care. Only where they commit “overt act” of interf. w/ prop. and implied K of bailment = created. 8. The winkfield --rejects jus tertii defense in context of bailment Facts: There was a fog, the Winkfield collided w/ Mexican. One ship liable. Postmaster as bailee making claim against 3d pty. for destroying prop. Posture: Winkfield found negligent, and now the Mexican trying to get damages. Amount of damages is already fixed. Postmasters whose mail was lost on Mexican claim damages also. Post office sues for lost letters that no one claimed Rationale: P.O. = bailee and is liable for goods, so entitled to damages. They were bailees and had possession and wrongdoer (Winkfield) is liable to whomever had poss. of prop. Same appr. as applied in chimneysweep trover finder’s case—as b/w finder v. converter b/c don’t know who TO is. --Bailee’s possession treated as surrogate for ownership. Rule: If you take (in this case, destroy) someone else property, you are wrong-doer. Just showing that property was owned by 3d party doesn't absolve from liability. B/w bailee [caretaker] and stranger, possession (by post office) gives title. Caretaker can sue for dmg. as if prop. is own, b/c mailers (bailers) will sue postmaster. Ds have no standing to inquire about nature / limitations of rights of people whose property destroyed Note: should bailee get to keep the windfall b/c no showing that they have to pay out to any bailor at time of j/m. All bailers would get most likely is refund for stamp, lol.

C.

Power to abandon (throw away / relinquish all claim /title) / destroy prop. (demolish, burn or otherwise elim. most of value) a) Limits placed on abandonment causes interference w/ owner autonomy

2. Personhood concerns arise when it comes to abandonment (i.e. cant imagine
destroying valuable art). Science / best state of knowl. motivates destr. for greater improvement but this knowl. may be wrong. a) Similar to bailment – part w/ possession but have intent of getting ‘it’ back;

here, part w/ poss. to no partic. person and don’t want back

3. RULE: Real prop. cannot be abandoned. Unusual b/c if trespasser comes onto
land, asserts poss. ctrl and exercise ownership rights over it—he can get land thru adverse possession. BUT, abandonment (even thru adverse possession) involves another taking owner’s place; not just abandonment prop. to no one. a) Anything that owner decided to throw away as far as pers. prop. is b/c it’s negative value asset—cost of maint. exceeds possible income to be made. 4. Pocono Spring Civic Assoc. v. MacKenzie

Facts: Ds tried to abandon their lot to P and get out of payig assoc. fees as per covenant when discov. land wasn’t suitable for purpose they purch. (sewage system) and sought to sell. Tried to sell vacant lot, but discovered soil made it quite useless. Df then sought to abandon property, as evidenced by offers to sell it to civic association-P, give it for free to them by refusing to pay taxes on it, etc. Ps claim pmt of association fees. . Tried to abandon by not paying prop. tax but no one bought it at tax sale. D sent signed, notarized stmt mailed to all interested parties expressing wish to buy it. D also refused to accept mail re: it. D argument: Abandonment defense means they don’t have to pay even though p declined it when owners tried to abandon to them. Issue: does defense of abandonment render covenant w/ orig. owner void? Rule and Application: Abandonment requires volun. relinquishment of all right, title, claim, and poss. w/ intent to terminate ownership but w/o vesting in any person w/o intention ofreclaiming. Owner w/ perfect title (deed hasn’t been xfer) is assumed to be in ownership. -what if value you can get from another for it exceeds your costs of maint. possession. P argument: P thinks it’s worth less than its actual assessed value -Bring action against assoc, housing auth. and get assessment reduced. Then sell to another who values empty space. Here, want to abandon due to trans. costs Rationale: ct. looked at various acts taken by D to rid themselves of land after buying. Looked at argument that their actions coupled w/ fact they’ve never visited it suggest inent manifesting abandonment. State law dictates Ds never relin. Title, rights claim and poession of lot, and remain TO in fee simple. Perfect title – in PA, cannot be abandoned. Holding: No, upon abandonment still had perfect title to land. Absent proof to contrary, possession presumed to be in arty who has record title. Dfs fail abandonment test despite intention to abandon; intent is but 1 req’m. Must pay taxes on lot b/c of environmental issues and b/c not paying becomes liab. on society. Note: Unlike pers. prop., land doesn’t just go away; needs a gatekeeper – in favor of preventing abandonment. Only option is to find j/m proff person / bankrupt corp to give it to 5. Eyerman V. Mercantile Trust

Facts: Ps seek injunction to prevent demolition of house. Decedent expressed wish to have house razed upon her death and sell propx. w/ proceeds going into estate. Prop. is in ubdiv. Created by trust indenture for high class priv. residence. Ds are executor of her will. -Decedent’s wish under question b/c she made req. pre-death and wasn’t informed or she had alternate intent behind wish to destr. house. Ps argument: razing it is viol. of their prop. rights, viol .of priv. agreem. and priv. nuisance. Issue: whether provision in decedent will directing it to be razed w/ profits xfer to estate violates public policy Rule: Taking of property by inheritance /will = not an absolute right; state may foreclose right and may say what becomes of property, when death forecloses deceased’s right to control it. A testator may not impose conditions that are uncertain, unlawful, or opposed to public policy. Holding: provision is void based on pub. policy and as w/o benefit. Cts can stop destruction of prop. if contrary to pub. policy. Intent of owners can be outweighed, especially if not around to protest. Dead owners’ wishes likely won’t be enforced if they’re capricious. Rationale: where razing it would reduce value of prop. from 40 k to under 1 k, depreciate adjoining prop. values by 10 k and b/c house was city landmark, its absence would likely be detrimental to health, safety, beauty of neighborhood. Destruction of house harms neighbors, detrimentally affects community, causes monetary loss in excess of $39K to

estate, is w/o benefit to deceased. There are no benefits to balance against injury. To allow condition of Will would be in viol. of pub. policy. Diseent: ct. cannot know deceased intent and shouldn’t declare her condition capricious. The city [and its interest] are not party to suit. Further, leading case dealining w/ issue say that cts must give effect to intentino of testator as expressed in weill so long as it doesn’t contravene est. rule of law. 6. Abandonment of personal property

a) Mineral rights ubj. To abandonment when owners haven’t dones anything
to exploit them for pd. of time; easements subj. to abandonment also 7. Lauderbaugh v. Williams

a) Bkgr.: Sellers have to get buyers appr. by HOA but HOA doesn’t approve, so
seller doesn’t have permission to sell. (1) There was condit. Precedent in sale of land and couldn’t be sold to anyone not in HOA.

b) Issue: what is / about unreas. restraint on alienation? Ps believe restraint
on alienation is problematic b/c lacks articulated standards (such as .

(1)

Discrimination or restrain on alienation w/o standards would be illegitimate. Income level, past pay hx are legit. standards that HOA can make determin. By.wh

(a) Zone of standards needed; here, no std. by which
HOA can fairly decide whether to admit prosp. member: allows for some degree of scrutiny. Needed as policy matter b/c prov. high degree of confid. that there’s equivalent competition in market.

c) Holding: deemed unreas. b/c too restrictive, too discretionary (no gdln to
determ. who should be in assn); not reviewable, no sunset prov.

D. Power to xfer prop. by sale / gift
1. Irons v. Smallpiece

a) Issue: whether it was a valid gift b) Holding: No, not gift b/c no title / deed given or chng. of poss. (1) Requirement for valid gift: intentional xfer of possession w/
degree of specificity and to whom + delivery (evid. benefit and notice to 3d parties donor and donee)

c) Notes: b/c father still caring for horses instead of son – don’t have evid. of
possession. In sale setting, there’s consid. which proves xfer of prop. accepting benefit is proof of acceptance. 2. Foster v. Reiss

a) Facts: D is husband of deceased woman who's estate and will are being
settled by P. Right before submitting to operation, woman wrote ltr to husband stating location of several stashes of money and passbooks, and desire for him to have them in event of death. Note was contrary to her will. D read note, found money, and took possession. Woman fell into coma, and never recovered B4 death. Ct. found for P., Court of Appeals reversed. Ltr. is very removed from time and place that she wrote it out—this is state

statute’s reas. for formalities. Issue: Were circumstances sufficient to create valid gift, even though there was no proper delivery (D had to find $ himself)? Holding: No. Delivery of gift causa mortis must be actual, unequivocal, and complete and made while donor is alive for it to be a valid gift. Reasoning: Majority reasoned that woman did not actually deliver money to D, but rather had to find it based on Instructions in ltr. Also, strict req’m for ceremonial, formal delivery is only thing that separates a gift causa mortis from testamentary will. To elim. delivery req’m would be to negate essence of will statutes. Dissent: Dissent reasoned that gift causa mortis was, by nature, emergency measure b/c normal routes of testament were not available under circumstances. Although req’m for delivery in gift causa mortis can’t be dispensed with totally, it would be silly to require D to gather up monies and bring them to her, solely so she could ceremoniously give them back to D. Notes: 3. If donee previously acquired possession of prop. w/ donor's consent, donor oral manifestation of donative intent, without more, is suffic. 4. Failure to revoke gift causa mortis w/in reasonable time post-recovery of donor elim. right of revoc.

b) Bkgr.: Formal will leaving $1 to husband. Gives ltr. discussing formal pots of
money to husband. (1) When looking after estate, have duty to make decisions in best interest of decedent. Must put back evs. Into estate and proceed w/ distrib. accord to decedent intent.

c) D argument: don’t have to put it back into estate b/c it was gifted to me. d) What rule govern money disbursement after spouse death? Spousal forced
share allows spouse to get share regardless of decedent intent. in some estates, disbursement governed only by decedent’s will ($1 given in will VS decedent ltr to spouse)

II.
A.

Estates / Future Interests W/ land, usu. deal w/ fee simple absolute AND lease.

B.

To develop family wealth xfer (trans. ctrl. and preserve wealth) scheme – est. trust w/ trustee and decision-making criteria.

C.

To ctrl. asset use (rather than ppl) – est. easement or covenant or HOA [to allow very detailed ctrl./use]; rule against perpetuities plays role

D. To manage many parties around complic. asset – create mgmt. and ctrl. doc. (lease,
condo/partnership agreem., article of incorp.) in addit. to grant clauses E. Trust – for family wealth mgmt. - instruments use same vocab as wills.

**Look on portal for answers to questions following reading; REALLY UNDERSTAND QUESTIONS (p. 561) AND ANSWERS FOR EXAM** -Label to put on partic. construct -Skim reading, look at questions and flip back to reading, attempt to answer, then ck answers 10/18/10 MY NOTES—  Divisions built into title of property o Multiple owners can divide burdens and benefits of ownership diff’t ways

o

Ownership can be split across time

 Whenever an asset is shared among mult. owners collection action problem pblm. of commons on smaller scale  Started out in medieval England, feudalistic society. Aim was to secure services, partic. military, in x-chng.
for freehold interest. W/ time, money replaced services, allowing for new aim: land made more alienable o Rights x-chng. b/w gramtor and grantee less formal than today. FREEHOLD INTERSTS IN LAND (excl. leases)

I.

Divisions by Time

A.

resulting pieces must conform to possibilities classified as estates in land

1.
B.

estate – type of prop. rt. that measures one’s interest in land by duration

a)
Fee Simple

can be present possessory or future interest

C.
II.

statute quia emptores (“because purchasers”) – made “fee simple” fully alienable by permitting substit. of grantor for grantee as lord’s new tenant Estates in Land

FREEHOLD INTERESTS 1. fee simple absolute Lesser rights w/ possib. Future interest: 2. life estate 3. defeasible fees

NONFREEHOLD INTERESTS 1. lease

*owners of freehold interest and leaseholders sometimes called “tenants”

A.

Which future interests can follow present possessory ones—

III.

PRESENT POSSESSORY INTERESTS (fee tail and leasehold excl.)

**Who has right to possession now? ** Note: grantor can only grant what they have or less 1. fee simple (FS) a. Generally: i. DURATION – potentially infinite duration; resembles absolute ownership ii. LANGUAGE – “to A and his heirs” iii. TRANSFER – can transfer by deed or will iv. Add’l.: Cannot specify which descendants land will go to, e.g. cannot say “to A and her heirs on her father’s side” b. Fee simple absolute i. DURATION – potentially infinite duration ii. LANGUAGE – “ to A and his heirs” (But heirs don’t have any present interest; A can sell FS / give it away, or devise by will) iii. TRANSFER – freely transferable and inheritable 1. If intestate  heirs (not until death of owner) a. Issue – children, grandchildren, and all further descendants b. Typically, spouse  ½ and children  equal shares of other ½ c. If no children  parents get 1 share d. If no children, spouse, or parents  collateral – aunts, cousins, nephews e. ESCHEAT – if no heirs  state 2. If testate (will)  land is devised to devisees iv. Add’l:

1. NO limitations on inheritability 2. CANNOT be divested c. Defeasible fee i. Fee simple determinable (NOT presumptively favored) 1. DURATION – automatically ends when some specified event occurs and reverts back to O 2. LANGUAGE – words of limitation a. “to A so long as land is used for school purposes” b. “to A until . . .” c. “to A while . . .” d. “to A unless . . .” e. “to A during . . .” f. cf. “to A solely for purpose of . . .”  this is FSA! 3. TRANSFER – can be transferred, inherited as long as stated event has not occur; limiting condition follows FSD 4. FUTURE INTEREST – grantor has possibility of reverter (automatically becomes possessory when condition occurs) 5. SoL starts running as soon as condition occurs ii. Fee simple subj. to condition subsequent (presumptively favored) 1. DURATION – does not end automatically but may be divested by grantor when stated condition occurs 2. LANGUAGE – words of condition – a COMMA setting off the condition! a. “to A, but if . . . , the grantor has a right to reenter” b. “to A, upon the condition that if . . . the grantor has a right to reenter” c. “to A provided, however, that if . . . grantor retains right of entry” d. Add’l: if lang. is ambiguous, FSSCS is preferred b/c forfeiture does not occur automatically i. E.g. “to A so long as liquor is not sold, and if it is, O has right to reenter”  FSSCS 3. TRANSFER – may be transferred, inherited until grantor exercises right of entry 4. FUTURE INTEREST – grantor has right of reentry 5. SoL begins when grantor attempts to exercise rt and is rebuffed (although most states consider it starts running when conditions occurs) iii. Fee simple subject to executory limitation 1. DURATION – automatically divested by a 3rd person when stated condition occurs 2. LANGUAGE a. “to A, but if . . ., then to X” (X has executory future interest) b. “to A, so long as . . ., and if it is not, then to X” 3. FUTURE INTEREST a. Grantor has possibility of reverter or right of entry 2. Term of years a. “to A for 99 years” b. FUTURE INTEREST – O has reversion 3. Trusts a. Trustee holds legal fee simple; legal title b. Acts as manager of property c. Has power to sell, lease, mortgage, remove minerals, etc. d. Duty: Fiduciary; duty of loyalty e. Purpose: Maximize flexibility AND transfer wealth to future generations ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ IV. FUTURE INTERESTS **Remember: any future interest thats transferable is reachable by creditors** **Future interests are presently existing rights, BUT do not entitle owner to present possession Policy – dead hand hold of property; want to promote alienation and avoid encumbrances from generation to generation; avoid concentrated land ownership and tying-up of productive land 1. Reversion (life estate) a. FOLLOWS: from conveyance of vested estate of lesser quantum than grantor has b. CREATED IN: grantor; AUTOMATICALLY at death of tenant c. TRANSFER: fully transferable inter vivos, to devisees and to heirs d. E.g. O has fee simple. Grants “to A for life”  A has life estate, O has reversion - will become possessory when A dies e. *E.g. O “to A for life, remainder to B if B survives A”  O has reversion b/c B may die before A. If A dies before B, O’s reversion is divested* 2. Possibility of reverter (FSD)

a. FOLLOWS: fee simple determinable (when grantor has fee simple  = quantum) b. CREATED IN: grantor; AUTOMATICALLY when condition occurs
c.

d. E.g. O “to A so long as land is used for . . .”  O has fee simple and conveys fee simple, but retains possibility of 3. Right of entry (FSSubj.CS)
a. reverter if condition comes to pass; A has FSD FOLLOWS: fee simple subject to condition subsequent CREATED IN: grantor; MUST exercise right TRANSFER: inheritable and devisable; inter vivos transfer depends on j/d E.g. O “to A, but if . . . O retains right to reenter”  O has right of entry E.g. O “to A on condition that if . . . O shall have right to reenter” 4. Remainder a. FOLLOWS: life estate and term of years b. CREATED IN: 3rd party grantee (waits patiently for preceding estate to expire) i. Remainder in fee simple, life estate, or term of years c. WHEN: at natural termination of preceding estate d. E.g. O “to A for life, and on A’s death, to B and her heirs”  B has remainder in FS. Becomes possessory upon nat’l end of previous estate (B CANNOT divest previous estate) e. E.g. O “to A for 10 years, then to B and his heirs” f. E.g. O “to A for life, then to B for ten years, then to C for life, then to D”  B has remainder for terms of years, C has remainder in life estate, D has remainder in FS g. TYPES i. Vested (O does NOT have reversion) (favored by law) 1. ascertained person AND 2. not subject to EXPRESS condition precedent a. e.g. “to B if B reaches age 30” b. e.g. “to B if B survives c. **expiration of preceding estate is NOT a condition precedent** 3. TRANSFER – alienable inter vivos, devisable by will, inheritable by heirs 4. E.g. “to A for life, then to B in fee simple” 5. TYPES a. Indefeasibly vested remainder – holder is CERTAIN to acquire possessory estate and entitled to retain it PERMANENTLY i. E.g. “to A for life, then to B and her heirs”  B/B’s heirs have indefeasibly vested remainder ii. TRANSFER: fully transferable b. Vested remainder subj. to open: vested in class of persons one of is qualify. to take possession; more may subseq. become part of class i. E.g. “to A for life, then to A’s children.” If A has no children  contingent remainder. If A does have a child, B, B has vested remainder subj. to open ii. Add’l: class may be closed / open. I.e. if class is “A’s children” and A is dead, class is closed iii. TRANSFER: fully transferable c. Vested remainder subj. to divestment – either vested subj. to being divested by condition subseq. OR subj. to divestment by inherent limitation of estate in remainder i. Condit. subseq. – “to A for life, then to B, but if B doesn’t survive A, to C”  condition subseq. is B dying, leaving A  B has vested remainder subj. to divestment; C has shifting exec. interest that will divest B interest if condit. occurs ii. Inherent limitation – “to A for life, then to B for life, then to C and his heirs”  inherent limitation =remainder for life fails if B dies b/f A dies  B has vested remainder for life subj. to divestment; C has indefeasibly vested remainder in FS b/c C/C’s heirs certain to acq. estate & hold indefinitely ii. Contingent (O has a reversion until contingency occurs) 1. unascertained person at time of conveyance OR a. e.g. “to A for life, then to B’s heirs”  if B is alive, the takers are unascertained and remainder is contingent 2. subj. to EXPRESS condition precedent set forth in conveyance instrum. (other than natural termination of preceding estate) a. e.g. “to A for life, then to B if B marries C” b. e.g. “to A for life, then to B if Hilary becomes president” 3. TRANSFER – majority of j/d’s hold that it is alienable inter vivos; is devisable by will when survivorship is not condition precedent 4. RAP

TRANSFER: fully transferable inter vivos, to devisees and to heirs

b. c. d. e.

5. E.g. “to A for life, then to B and heirs if B survives A, and if B doesn’t survive A, to B’s children
and their heirs” a.  A has life estate b.  B has conting. remainder in FS b/c become possessory at na’l termin. of prior estate and subj. to express condit. preced. (if B survive A) c.  B’s children have conting. remainder in FS b/c it is subj. to express condition preced. (and if B does not survive A) 6. E.g. “to A for life, remainder to those of B’s children who survive A”  B’s children have conting. remainder b/c remainder contingent on surviving A iii. **Distinguishing b/w vested remainder subj. to divestment by condition subsequent and a contingent remainder subj. to a condition precedent 1. If condit. incorporated into the description of remainder  remainder = CONTINGENT (condition preced.) a. E.g. “to A for life, then to B if B survives A, but if B doesn’t, to C”  “if B survives A” = express condit. preced. 2. If condit. comes after lang. giving vested interest  remainder is VESTED (condit. subseq.) a. E.g. “to A for life, then to B, but if B doesn’t survive A, to C”  “then to B” gives B vested remainder; clause after he ‘,’ is divesting clause 5. Executory Interest a. FOLLOWS: FSSEL – must divest or cut short prior estate i. In order to become possessory, person must: 1. divest / cut short interest of another transferee (shift exec. interest) OR 2. divest transferor in future (springing executory interest) b. CREATED IN: 3rd party grantee AUTOMATICALLY upon happening of stated event c. RAP d. E.g. O “to A and heirs, but if B goes to law school, to B and heirs”  A has FSSEL and B has exec. interest e. E.g. O “to A and heirs, but if A dies w/o issue surviving him, to B” i. This is b/c B -NOT grantor but some other pty and b/c A has FS, not life estate f. E.g. O “to my daughter A when she graduates”  O retains FS and A has executory interest g. E.g. “to A and heirs if A quits smoking”  A’s exec. interest will divest O of FS if she quits h. E.g. “to A for life, and on A death, to B and heirs, but if B does not survive A, to C and heirs.  A has life estate; B has vested remainder in fee subj. to divestment by exec. limitation; C has divesting exec. interest i. E.g. “to A so long as . . ., then to B”  B has exec. interest Questions – 561 As to #2: adverse possessor thinks he’s getting title but only gets title for current possessor and eventually gets dispossessed b/c he only has remainder. Possible that adverse possessor will only get temp. estate. III. Maintaining the system

a. Williams v. Estate of Williams – conservation of estates in holographic (longhand) will; does not
need all formalities:

i. Bkgr.: Created will for 3 daughters to retain interest in home; under supp. of decedent and wife b4
his death.

ii. Grant clause: ‘have and hold during life’ interest in prop., limitation: as long as remain single. iii. Issue: what interest does trust create in 3 daughters? Grantor has implied reversion in grantor
and his heir– when condit. on daughters are met, remainder of estate reverts to grantor; conversation pblm. = who gets rest of FS.

iv. Argument: text of will provides for reversion back to estate but daughter has interest in farm and I
should be divisible amongst all parties.

v. Does it take something out of estate or does it lv it to go thru trust and estate to heirs at law?
1. Take conservation out of estate – not full FS. Giving defeasile FS to daughters would get reverted once daughters get married. FS reverts to grantor and would go to his heirs (all 9).

b. Language: Phrases used does; n’t mean user knows how to use it. i. Numerous clauses in actions: even w/ high degree of confidence, if there’s no match to est. forms,
vocab, menu search for intent 1. Pick nearest, existing problem on estate ownership menu

c. B. City of Klamath Falls

i. Facts: In 1925, a corporation, now dissolved, granted a parcel of land to Klamath Falls "so long as" it
was used for a library, and to vest in the lawful heirs of the two shareholders of the corporation if the city ever stopped using the land for library purposes. In 1969, the city stopped using the land as a library, and brought this action to quiet title to the land. Issue: Is the attempt to create an executory interest after the fee simple determinable valid? If not, then do the ∆s take under inheritance of the possibility of reverter? Holding: No. "No interest is good unless it must vest, if at all, not later than 21 years after some life in being at the creation of the interest." Gray, The Rule Against Perpetuities. Yes. An attempt by a grantor to transfer his possibility of reverter does not destroy it. Reasoning: The court reasoned that the grant of land for the library could have extended indefinitely, thus the executory interest was in violation of the rule against perpetuities because it didn't have to vest within 21 years because the condition that would defease the grant could have not ever happened. By operation of the rule against perpetuities, the city received a fee simple determinable, and the corporation retained the possibility of reverter, which was granted over to the heirs of the shareholders because it was neither subject to the rule against perpetuities (although it may be subject to some statutory limitations), nor was it destroyable because the language of the grant was such that it was clear that the determinable fee was to end regardless of whether the executory interest would be enforced

ii. Less than FS w/ end: “so long as” = future interest
iii. iv. v.

FS subj. to executory limitation

Defeaisble transfer of making into city Remainder / gap 0f filled w/ possibly. Reverter (goes to corp.) If heir is not done, must go to Kkart. Whcch one?




Standardization: numerous clauses: separate bins. Interest must go into one. Good against whole; decreases info costs o # of bins can chng – shouldn’t to oramtion cossontinue conersat, Divisible by: o per capita (% each) or divisible by root (per scirpes) Johnson v. Whiton



o

IV.

a. Facts: granddad conveyed prop. to granddaughter, but in a way that didn’t fall in a tradit. estate. b. Rule: person cannot create new type of inheritance by will c. Issue: when testator puts words of limitation that restrict descent of prop. will limitations be valid? i. Wants to stop wealth from pouring out into granddaughter’s husband’s family—could be read one of
two ways:

1.

Royal possibly created new type of fee tail (outside of existing set of forms) – abolished

by state runs afoul of numerous clauses invalid 2. At CL, intestate succession goes down but not up – it would go to heirs on father’s side. But by Mass. law of intestate succession, inheritance could go up as well (going over to mom’s side). Inheritance wouldn’t follow Mass. law (possible numerus clauses pblm.) Hypo: Could create life estate in Sara w/ remainder in heirs (on father’s side). In this case, Sara couldn’t sell title. Wouldn’t work b/c Sara can’t sell it. Hypo: F/S determinable: “To Sara, so long as she does not die intestate.” Would revert to Royal – too broad of grp than what royal wants. Hypo: F/S subj. to exec. limitation: “to Sara, but if she dies intestate, then to heirs on father’s side.” Whomever buys from her will be concerned that if she dies intestate, will shift to heirs on father’s side. “To Sara, in D/S, but if she owns prop. upon death, dies intestate and has no heirs, then to heirs on father’s side” – clause only triggered if she doesn’t sell it; doesn’t apply if she does sell. Can sell, give (inter vivos), thru will.

d. Holding: no, clause in will conveys legal title. Words limiting conveyance to heirs on father’s side are words
of limitation; restricts intestate descent of prop.

i. One cannot create new kind of inheritance, such as testator attempts to do. Words of limitation will be
stricken, and granddaughter deemed to have FS absolute

e. Discussion. When one tries to convey prop. in way that doesn’t conform to 1 of tradit. estates, limitations in
conveyance will be invalid. To prevent restraints on alienation .

i. Don’t allow this b/c they make prop. unmarketable; perpetuate concentration of wealth (cant consume
proceeds and put back into economy); discourage improvements/investment; prevent creditors from reaching prop.

V.

Garner v. Gerrish

a. Bkgr.: written doc exists creating lease w/ rent of $100/month (below market price – benefits tenant) and
termin. Provision allowing tenant to termin. whenever. Exec. of estate v. tenant.

b. Facts: landlord dies; exec. of estate steps in and wants to termin. lease so can redeploy asset at higher
value for benefit of estate. i. Claims it’s silent as to term. Argues that it’s at will b/c no definite term.

ii. Tenant argues he always paid rent

tenancy for life. Numerus clauses pblm: no life tenancy in leases; lease can only be at will, periodic, or term of yrs. so, is it really a lease?

iii. Both parties want this to be lease relationship as oppose to estate. iv. Landlord wants it to be at will on lessor side if it’s at will on lessee side. v. periodic tenancy can argue that implied pd. of tenancy = pd. of pmt. Pblm w/ argument: works
against tenant, which isn’t aligned w/ intent.

vi. life estate

then why is there monthly rent (design feature of lease)? Person w/ life est. would be responsible for taxes, prop. upkeep. Doesn’t seem like life estate

c. Holding: it’s a life tenancy lease terminable at tenant will; doesn’t fit into numerus clauses d. Rationale: at CL, rt. for landlord to termin. lease would have been implied. Livery of seisin still req’d for life
tenancy b/c creates fee interest. If no livery, then it’s tenancy at will landlord could also termin. at will. Rejected CL rule - life tenancy terminable at till of tenant created – what’s written in lease.

e. Note: this is outlier opinion; ct. would determ. that it’s periodic lease OR lease terminable at both parties’
will

PERSONAL PROPERTY

I. II.

Estate system applies to equitable interests of P/P held in trust

A. A. B. C.

Trust should be used divide ownership of P/P Has perishable nature – future interests usu. not at issue 1. Rule -“future interest cannot be created in consumable chattel” 2. Solution: make specific grants of P/P Easements and “run w/” restriction not available Notice pblm: how do dutyholders know contents of right – no registries like w/ R/P

Limitations:

III. Mediation Conflits over Time
**the more something it’s pushed off into future – the less it’s worth today and vice versa** - High discount rate - rate so big that value of future $ is viewed as almost worthless A. Waste (change, not neces. decrease) – f-o-r-m-a-l-i-s-t-i-c a-p-p-r-o-a-c-h a. Important in co-ownership and time divided ownership situations 2. Brokaw v. Fairchield – holders in remainder (siblings kids) obj. to razing of mansions - favoring conservation as opposed to life estate holder (testator’s son) b/c what owner wishes to do isn’t what remaindermen wish to do – completely defeats pt. of inheriting estate. a. Facts: Brokaw built huge mansion w/ 1 residence for ea. of 4 kids. Since death, apartments – huge demand for - built around it w/ only 8 / 51 blocks kept for FS homes. P (efficiency argument) claim was losing $70k / yr in bills on home instead of $30k profit by bldg. apartments. Remaindermen (waste argument) argue tearing home down = waste; don’t want apt. bldg. obstructing their light and privacy. i. House can still be used as house; neighborhood hasn’t changed much b. Issue: Can present interest holder in prop. demolish and rebuild apt. bldg –a gainst future interest holder’s interests when it’s more efficient to do so? c. Holding: No, owner cannot demolish it and rebuild as this is against will’s wishes, as such constitutes waste. i. Look to testator’s purp. and determ. if circumst. chng. so much that his purp. cannot be achieved. If not, cannot argue chng. cirumst. argument so waste d. Rules: any act of life tenant causing perm. Inj. = waste. Life tenant may act for purp. of gen’l use and enjoyment of estate as he received it. The enjoyment must be in reas. manner that will pass to remaindermen unimpaired in its nature, character and improvements. e. Reasoning: ct. employs textually strict reading of will, wherein decedent left whole “residence” to P. An apt. complex could not be called “residence” upon transferrance to remaindermen. i. P is tenant, not O. Tenant cannot make owenership decisions i.e. bldg. apt. bldg = exercise of dominion and would chng. nature of estate. Also, receipt of home as is is more beneficial to their interests (weighs them)

B.

C.

This constitutes act of waste b/c “residence” is NOT isolated and alone, and undesirable as residence. Valuatoin of Interests 1. To determ. value of respective interests (present and future) in prop.: take worth of $100k divided b/w life estate and remainder turns on life expectancy of person w/ life estate. Then subtract remainder for value divided by yrs. Of life expectancy Restraints on Alienation 1. one of powers of sovereignty = owner rt. to transf. a. Cts. don’t like to restrain owner’s power to alienate. b. Any attempt to restrain alienation held void as pub. Policy 2. Mountain brow lodge v. Toscano i. Unreas. restraint on alienation: like Poconos case – unreas. restraint on alienation b/c had to apprv buyer but had no decision-making benchmarks – too unrestrained; protected class discrim. is unreasonable restraint on alienation b. Outright ban on alienation exists / non-issue. c. ‘Use’ clause at issue: if lodge “fails to be used” but only stmt of who can use not what’s permitted isn’t used for Oddfellow purposes (clause triggered) rights revert. F/S subj. CS Focuses on user as opposed to type of use = restraint on alienation. Restraint on use is permitted b/c NOT rest. on alienation. i. Positive take: be more specific about use ii. Realist take: look at overall impact – about the same, so where’s the dmg. iii. Grantee: Clause unenforceable b/c if they wish to sell purp. not being fulfilled = ban on alienation. iv. Grantor: it’s enforceable as FS subj. to CS. d. Holding: clause is enforceable even tho functional ban, b/c donors allowed to restrict use e.g. donations to organizations, churches. i. If could be subj. to CS or FSD ct. makes FS subj. to CS – to avoid involuntary forfeiture, a. Both can be exting. if person doesn’t claim it. If FSD and don’t claim reverter, then possessor could A/P. If F/S subj. to CS and don’t claim right of entry, possessor can sue in equity on laches doctrine Issue(s): Under property law (of equity), does the language of a deed describe the creation of a fee simple when it reads, "Said property is restricted for the use & benefit of the second party, only; and in the event the same fails to be used by the second party or in the event of a sale or transfer by the second party of all or any part of said lot, the same is to revert to the first parties herein, their successors, heirs or assigns."? Holding: Yes. The grantor cannot place a restraint on alienation because it is an essential stick in the bundle, however a restriction on the use of the land is NOT a restraint on alienation even if that is its effect; Lodge 82 may sell their land to whomever they like, but only they can use it; distinction by the way, is restriction on land use and alienation. Court's Rationale/Reasoning: A clause which prohibits appellant from selling or transferring the land under penalty of forfeiture is an absolute restraint against alienation and is void (common law). So, court first looks to the language of the deed to ascertain if there is a void clause. They determine the language of the common law does not permit alienation, but as long as there is language in a deed which exercises the power to demand how the land is used, that part of the deed is okay. So, did the use condition create a defeasible fee as respondents maintain or is it also a restraint against alienation, which is what appellant alleges. This is a fraternal lodge, of which the decedent was an active member until his death. The term "use" as to applied to real property could mean a "right which a person has to use or enjoy the property of another according to his necessities." The court puts these thoughts together and decides the deed says it is to be used for fraternal purposes only, that the land was conveyed upon this condition. Thus, the Habendum clause portion which referred to the land use, when construed as a whole and in light of the surrounding circumstances, created a fee subject to a condition subsequent with title to revert back to the grantors, their successors or assigns if the land ceases to be used for lodge purposes. So, in order to avoid even more confusion, the court rewrote part of the clause to read "subject to the condition that said property is restricted for the use and benefit of the second party only;..." the penalty is the land reverts back to Toscano heirs. Rule: The object in construing a deed is to ascertain the intention of the grantor from the words which have been employed and from surrounding circumstances. Dicta: Appellant does argue the restriction could be merely upon who uses it, and not how. But CA courts have upheld the validity of restrictions on land use in deeds, even though they hamper alienability. However, if carried out to its conclusion, the restrictions on how the land is used may indeed become a restriction on who uses the land. Dissents: The entire Habendum clause which purports to restrict the fee simple conveyed is invalid as a restraint upon alienation (transferring title). If we are to have realism in the law, the effect of language must be judged accordingly to what it does. I would hold the property free from restrictions.

10/19/10 One can sell life estate, but practically tricky – buyers would be worried value would be much less than F/S and there is uncertainty RULE AGAINST PERPITUITIES ** KNOW RULES EXISTS AND HOW TO WORK IT / DETERM. WHAT’S VALID. ** KNOW WHAT HAPPENS IF RULE IS INVALID. – MUST HAVE SOME F/S AT CONCL. ** STATES HAVE ADOPTED SAVING EXCEPTIONS – have sense of what this is



I.

“no interest will be good until it must vest, if at all, not later after 21 yrs. after some life in being at creation of the interest.

i. Many states have gotten rid of; states that maintain RAP have reforms against it: ‘wait and
see’ appr. (21 yr. pd.) whether it did vest; ‘wait and see’ but not life in being + 21, but for 90 yrs.; others invalidate if interest in dispute / impact restrain alienation for too long

II.

See portal for answers and notes to pblm. – p. 617 – LOOK AT THESE AGAIN!!

a. 1. FSD and son A has exec. interest but vio. RAP b/c college can stop using for instr. That’s longer than life in
b. being pd. SO clause is struck out solution: leave O w/ possib. of reverter O has F/SSCS and his rt. in reentry is interest in grantor – life in being. No RAP. restriction use is in clause that survives RAP so restriction survives. Leaves grantor w/ reverted. If one has no d. restr. has F/S. Issue b/w 1. And 3. = , VS ; A has life estate. B’s grandkids have conting. remainders and reversion in O. Measuring lives = children. OK. children, then they could graduate from h.s. more than 21 yrs. after interest created. Whole interest could fail. Transferring thru will, so interest not created until death. At that time, when O’s dead, can’t have any more kids. Still have pblm of grandkid not graduating h.s. past 21 yrs. So, still violates RAP.

c. A has FSS exec. lmtation. B has exec. interest b/c viol. RAP. So, leavs F/S in A. Diff’t from 1. b/c in 1. Clause

e. Violates RAP - search for measuring lives. What if O has another child who’s yet unborn. Child could have
f.

g. For conting. remainder, it means ID of taker & satisfaction of all conditions precedent. h. For executory interest, it means taking of possession (i.e. did contingent event occur) i. For remainder subj. to open/partial divestment (like class gift), it means closing of class

j. Future interest in grantor always satisfies rule b/c grantor is alive in being. k. **measuring lives - can be someone outside; don’t have to have specific connection to prop.** l. If child born (alive) after testator dies deemed as ‘in being’ @ conception I. Symphony Space v. Pergola Prop.

a. Facts: P is NFP which enter into K w/ bldg. owner. D is assignee’s transferee (to who he convey all rights from
1st trans) D has option to buy back bldg. in more than 21 yrs. after option created. Problem: option could vest more than 21 yrs. later potential RAP pblm.

i. P seeking decl. j/m against D for exercising option that viol. RAP. ii. Option stated: (a) at any time after July 1, 1979, so long as… closing is to occur during any of
calendar years 1987, 1993, 1998, & 2003.

b. Rule: he statutory RAP measures exclusively by passage of time, while CL rule evaluates reasonableness of
restraint based on duration, purpose… NY statute (and CL) suspends alienation rule and deems void any estate in which conveying instrum. suspends absolute power for longer than lives in being at creation of estate + 21 yrs.

c. Application: last yr. of option = 2004, which is 24 yrs after option created. d. D argues - statutory prohib. against remote vesting doesn’t apply to comm. options; option here cannot be
exercised beyond statutory pd; and ct. should adopt “wait and see” appr. to RAP.

e. Are options to purch. comm. prop. exempt form prohib. against remote vesting in NY’s RAP? f. Holding: Violates RAP, b/c statute covers options but uniform rule does not. No measuring lives unless
referring to live ppl. Here, no life in being, only 21 yrs. It could have vested outside rule so not neces. “must have vested” violates RAP.

i. Distinguishes rt. of 1st refusal from comm. options: these rights don’t interfere w/ alienability b/c if
they don’t call it, transfer isn’t prevented. Lease w/ opt. to buy yields lessee to have access and incentive to invest in prop. = social benefit so outside of RAP.

g. Court's Rationale/Reasoning: Subj. option Ks to RAP is not good idea. Businesses do not know 21 year pd for
which to wait for prop. to vest in another.

No saving statute," b/c unless there is contrary info, if there is no intent to shorten option, then option is viewed law to be for duration mentioned in agreement," which is for 24 years, and over the limit in the rule. So, saving statute is inapplicable. CO-OWNERSHIP AND MEDIATING CONFLICTS B/W CO-OWNERS

I.

Conflict among co-owners: need governance schemes…

A. B. II.

K or set of norms of proper use to regulate use and care of prop.

Off the rack sol’n protect co-owners in exit situations: 1) afford co-owners exist from relationship thru action by partition; 2) more detailed governance rules Concurrent and Marital Estates 1. Biggest diff. b/w TinC and JT: survivorship – none in TinC, unlike in JT (all of us have an interest, when one dies our interst goes away and remaining interest is distrib. among co-tenants. Last co-tenant makes decisions about prop.) a. Questions concerning partitioning or accounting doesn’t matter if JT or TinC; only questions concerning survivorship matter 2. JT or TinC: we have a commons (disagreements will arise but cts. will usu. not get involved must work it out thru Ks, etc OR get out); we don’t have indiv. prop. rights w/ respect to each other BUT a. we can ea. excl. strangers or choose not, make profit on prop. and sell i. cts. might allowed COA for waste from one co-tenant against another but less likely if parties are in the tenancy relationship than if allowing COA for waste to protect future tenants b. JT can’t leave interest in rorp. As part of inheritance 3. Prop. can be divided / shared among multiple, simultaneous owners— a. Horizontal division over timeo b. Vertical division at any given moment 4. estates in land defined in temporal duration (FS, LE, remainder / exec. interests) can be divided among concurrent owners 5. Entity theory: partnerships and corp. (as 1 owner) as entities hold title to prop. a. E.g. If A, B and C want to share ownership to dwelling could be concurrent b. owners OR form partnership / corp. which would hold title c. have greater customizability than concurrent ownership 6. Main forms of co-ownership: tenancy in common, joint tenancy a. Tenancy in common: i. each tenant has separate interest (indep. descendible, conveyable, devisable); interest can be attached by creditors of each tenant a. Since indep. descendible no right of survivorship (share of each tenant passes in death as part of his/her estate) ii. Each tenant has undivided interest ea. hs right to possess whole prop. a. No req’m that each co-tenant hold equal share (could be A= 60, B=30, C=10) 1. respective share of rents or profits determ. by respective ownership % iii. to ‘A’ and ‘B’ b. Joint tenancy (more restrictive than TinC; 4 Unities) (only approp. for committed relationship or family bsns): i. Same as tenancy in common except for treatment of survivorship surviving joint tenant autom. Acquires interest when other tenant dies. ii. Requires for “unities” at time of creation: a. Time: each interest must be acquired / vest at same time b. Title: each must get title thru same intstrum (deed, will) or via joint A/P 1. Not by intestate succession or oper. of law c. Interest: each must have same interest in prop. e.g. FS, LE, lease d. Possession: each must have right to possess the whole e. IF ANY OF 1ST 3 UNITIES IS DESTROYED JOINT TENANCY SEVERED tenancy in common created f. Can be transf. out to strawman (and severing a unity) and have the other transf. it back No notice req’m to do this! iii. Each joint tenant has unilateral power to transf. may have effect of severing iv. Be eplicit: Must call each other JT; explicit about rt. of survivorship and fact we’re not TinC a. To A and B jointly failure to flag will shunt toward TinC c. Tenancy by entirety i. in minority of states; only for married couples ii. same as joint tenancy: right of survivorship; undivided and separate interest; right of poss. of the whole BUT cannot transf. share w/o consent of other iii. 5th “unity”: neither can sever tenancy on his own w/o getting divorce d. At transfer (‘O conveys to A and B’) of devisement in will tenancy in common is presumed e. **survivorship feature in joint tenancy / tenancy by entirety allows remaining owner to avoid probate and can sell prop. immediately**

7.

8.

f. **joint tenancy and tenancy in common allows protection of jointly owned assets** g. Some cts. presume joint tenancy when ambiguous transf. to married couple Community Property a. Some states have “comm. prop.” for married couple all prop. acquired during marriage autom. becomes comm. prop. i. Prop. acquired before marriage can become part of comm. prop. thru commingling w/ it b. Partition – most important legal remedy for concurrent owners any cotenant has rt. to terminate cotenancy at any time i. Strong for co-tenant, not so much w/ future interest; opposite when it’s COA for waste a. any cotenant can sue for partition for any reason / none ii. limitation: tenancy by entirety must convert prop. into tenancy in common or joint tenancy by mutual agreme. OR sever unity of marriage to get partition Delfino v. Vealencis a. Law favors partitions in kind, esp when 1 person living on land, but prefer sale in emergency i. Test for Ordering Partition by Sale: (1) attrib. of land make partition in kind impractical / inequitablae AND (2) interests of owners better promoted thru partition by sale b. Bkgr: These are TinC. P wants to partition by sale (split up profits by %) and turn whole thing into res. developm. D wants PIK (by %) b/c lives on land and earns living (garbage hauling biz—wants to remain on prop. and oper. bsns, NOT sell it. D prevails c. Rule / 2 Part Test: i. Is it practical to partition in kind (do eval.): even tho there are some road issues here, it’s not impractical. Usu. if too many competing ownership interests; here just 2 OR

ii. interest of owners better served by sale (default) (tale sa;es [r: even tho P’s developm. Wont be

d.

as successful as garbage biz (and will have appr. and economic/price impact on developm.), ct. considers BOTH parties’ interests a. But D ordered to pay “owelty” – if there’s imbalance in value after partition in kind – to compensate for other prop. by running trash biz on her 1 acre Holding: prop. may practicably be phys. divided and interests of all better promoted if PIK ordered

B.

Contribution and Accounting

1. Law allows ltd. Reg. of inputs and outputs b/w co-owners.. likelihood of ct. involvem. Low if continuing
2.

C.

relationship but incr. when 1 pty. seeks partition or has ousted the other from poss. Gillmor v. Gillmor a. If con-tenant ousts another cotenant they have to pay rent ousted 1 b/c D use of prop. equals excl. of co-tenant b. Bkgr: involves grazing land and TinC. P had 50% interest and D had 25%. D ousted P b/c used whole prop (resulting in overgrazed land), excl. P use of land from grazing - completely obstructed P usability. c. Ouster = open demand for use and co-tenant refusal of said use d. Rule: cotenant may sue for share of rents and progits from common prop. if ousted from /prevented poss. i. Excl. use of commonly held prop. does not const. ouster BUT cotenant who ousts or neces. excl. fellow cotenant viol. cotenant’s rights or he’s phys. excl. a. Very express rebuttal b. If co-tenant uses land, ouster cannot stand ii. Even if ouster damages are too high a. Excl. use: requires act of excl. or use that neces. prevents another cotenant from exercising rights iii. No acct. for both uses UNLESS there’s an outstear a. Rent can be offset by repairs/ damages, like owelty. b. Mangement w/in co-tenancy buti 1. Cotenant can sue for contrib. for neces. expenditures to preserve prop (paym. of prop tax / mortgage):Not likely awarded for repairs / maint. and almost never for improvements, if relationship ongoing, but not so much if ouster already occurred. 2. D claimed offset for repairs done on common prop – claims P will benefit from it, BUT when cotenant makes repair/improves w/o consent of cotenant not entitled to contrib UNLESS cotenant permitted it OR D acted in GF belief he was sole owner OR repairs were essential to preserve/ protect common prop. e. Holding: when cotenant out of poss. Makes clear deamd to use land that’s in excl. poss. of other cotenant and other refuses to accom. tenant can claim relief. Severance a. JOINT either JT. Sever joint tenancy, destroying rt. of survivorship and converting it into tenancy in common. After conversion interest can pass thru wills. TJ interests b. Can convey to oneself to sever joint tenancy. c. Harms v. Sprague i. Title unity IS NOT severed if one JT mortgages his interest in prop. (“lien theory of mortgages”) AND lien doesn’t survive death of JT

ii. Bkgr: P and D are in joint tenancy. Bro died and exec. (Sprague) refuse to give title to land to P since
dead bro mortgaged prop. And lender claimed title to bro’s interest in land as coll. for mortgage. P sues for quiet title. iii. Rule: In JT, if cotnant dies, prop. interest dissolves and automatically split up b/w remaining cotenants (Harms). a. Sprgaue was to get everything in bro’s will and had received loan on mortg land iv. Trial holding: found when brother took out mortgage, JT severed. Mortg. survived death of bro. v. Rule: A JT is automatically severed under certain conditions. All partners must have these in common: time, title, interest and possession. If one is broken, prop. converts to tenancy in common a. tenancy in common can be given away in a will, a JT cannot. vi. Final: Ill. Sup. Ct looked to prev. case law and found that mortgage does not sever JT, unless loan goes into default and property is seized by b4 death. A JT must maint. unity of title. Here, brother never lost title to his interest in prop. a. If he had defaulted prior to dying, then Simmons wouldve acquired interest in title. b. Mortgage did not survive b/c in JT, upon death that person's interest dissolves. Nothing is transferred to other partners. That interest was not transferred to Harms, it just disappeared. SO collateral mortgage was based on doesn't exist. 1. Sol’n would’ve been to make all JT sign off on mortgage docs 2. Disadv: Hurts lenders who don’t ck; Adv. to lenders to ck which protects lenders and other tenants c. Don’t take property held in JT as collateral on loan b/c collateral only exists while person is alive and if they die, you can't recover! Make them file a paper conveying their interest from JT to tenancy in common. Then interest survives their death and you can recover. Why parties will request baseball side arbitration is that it will make them more reasonable to adv. arguments on value - In typical adversarial proceeding, ct. faced w/ parties making evid. about valuation rather extreme. Outrage constraint – worried about being perceived as outrageous; so wants to be toward the middle. Says to judge that cant reach own decision on value and that must pick value offered by one side or other. If you know judge has to pick your # or opponent’s #, judge will pick one that’s less extreme. Therefore, each counsel will have incentive to get it right, as opposed to getting it right in normal litigation.

III. More on Marital Interests
1.

2.

3.

4.

Some marital prop. held in FS in add. To above options a. Like co-tenancy, will be hands off w/ martial prop. leave it to spouses, not prop. law Common prop. appr. J/D, like partnership… a. Everything that acquired during marriage is owned by the marriage and consent of both spouses is req’d in any prop. trasnf. b. Upon death, each gets 50%; same thing for divorce + equitable consideration c. Tracing Problem: assets exist b4 marriage and things can be willed / gifted b4 marriage and acquired during marriage can be commingled w/ marriage comm. prop. CL J/d separate title (whoever owns prop. manages it) a. Death: intestate (surviving spouse takes most/all of deceased prop.) VS testate (can distrib. prop. thru will BUT there’s mechanism to protect surviving spouse i. Spousal forced share – other partner in marriage can force share due to status as spouse – regardless of will ii. Divorce: followed title rule in division of prop. (If H went to H, etc) a. JT, tenancy in entirety – 50 / 50%; shift in alimony paym. b. After 70s states adopted ‘no fault divorce appr’ ct. have a lot of discr. in division of prop. 1. Alimony paym. called maint. paym. O’Brien v. O’Brien a. Facts: P and D married. Moved to Mexico so P could go to med school f-t. D taught school and contributed her earnings to joint expenses. They moved back to US so P could finish school. Two months after P received license, he filed for divorce. Spouse sought to have prof. license declared as marital prop., thus subj. to equitable distrib. b. Rule: interest in prof. or prof. career potential is marital prop. may be represented by direct / indirect contrib. of non-life holding spouse c. Issue. Is professional license of 1 party subj. to equitable distrib. in a divorce? d. Held. Marital property subj. to equitable distrib; its prop. acquired by either spouse during marriage regardless of form in which title is held. i. NY recognizes that spouses have equitable claim to things of value arising out of marital relationship and classifies them as subj. to distrib. by focusing on marital statue of parties at time of acquisition. Interest in professional or professional career potential is marital property, which may be represented by direct or indirect contributions of non-title holding spouse.

ii. Few undertakings during marriage better qualify as joint effort than contrib. toward spouse’s acquisitions iii. Contributions represent investments in partnership & license is product of parties’ joint efforts, so should
be considered marital property. Concurrence. A professional in trng who is not committed to career choice when distributive award is made may be locked into partic. kind of practice simply b/c monetary obligs imposed by distrib. award made by ct. iv. The equitable distributions of the law were intended to provide flexibility so that equity could be done. e. Rationale: if a spouse didn’t believe he would succeed in profession, she should expect he would pay her back loan for funding med. school – like bond / lottery – typical debt arrangement w/ payback oblig (upside is capped but so is downside). If she thought he would score big, she would score equivalent win as well –equity relationship (shares – if one rides up so does the other; if one loses out so does the other. i. This is like equity relationship (has to give her piece of action). ii. Real asset here is human prop. – not in rem Marvin v. Marvin – K case; nothing prop. about this a. Facts: P an D lived together for 7 yrs w/o marriage, w/ all prop. acquired during time taken in D’s name. P avers she and D entered into oral K where parties would combine efforts and earnings and share equally all prop. accum. as result of efforts. P agreed to give up lucrative career as singer / entertainer and assume role of homemake, w/ D agreeing to prov. for all of P financial supp. D compelled P to lv his house in 1970 and continued to prov. supp. until 1971. Then, refused to prov. further support. P brought suit to enforce oral K, claiming she entitle to half prop. and supp. paym. i. Like Garner v. Garrish: leasehold interest but didn’t match leasehold status; didn’t fit into prop. buckets b. Brief Fact Summary. Plaintiff and defendant 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. c. Rule of Law. California ct found that partners in nonmarital relationships may bring claims for prop. division based on both express and implied Ks. d. Bottom line: ct. erred in granting D’s j/m on pleadings b/c P’s complaint states COA for breach of express K, and can be amended to state COA independent of allegations of express K. i. D first and foremost claims that alleged K should not be enforced b/c it violates pub policy due to its close relationship to immoral character of relationship b/w P and D. However, k b/w nonmarital partners is unenforceable only to extent it explicitly rests on consideration of meretricious sexual services. Cts should look to consideration underlying such agreements to determine their enforcement. Also claims that K viol. pub. policy b/c impaird community prop. rights of his lawful wife. a. No reason that enf. of K b/w P and D against prop. awarded to D by divorce will impair any rt. of lawful wife – SO, not against pub. policy ii. D also contends enf. is banned by civil coe requiring all Ks for marriage settlements to be in writing. But, marriage settlement = agreem. in contempl. of marriage and present K doesn’t fall w/ in this definition (like Garner v. Garrish) e. Rationale: Precedent has held that Family Law Act suggests that property accum. by nonmarital partners in actual family relationship should be divided equally. Although courts have generally not recognized the fact, CL principles hold that implied contacts can arise from conduct of parties. Cts have allowed partners to retain proportionate share of funds / property contributed to relationship, but have disallowed such interest based on contribution of services. Because the Family Law Act is intended to eliminate fault as a basis for dividing marital property, implied contractual claims should be allowed in nonmarital relationships. f. Discussion. The Court examined how the distribution of property acquired in a non-marital relationship should be governed. The court allowed not only plaintiff’s claim that an express contract existed and should be enforced, but also found that implied contracts may be found in such situations. of prof. license. Here, most of marriage was devoted to P getting license. D played major role in that.

5.

IV. TRANSFER OF INTERESTS A. Under lease (like bailment that inv. Transf of prop but w/o full ownership) B. C.

poss. of prop. shifts from lessor to lessee acts as gatekeeper during lease and can exercise in rem right of excl. 1. Like bailee, lessee can bring COA like trespass or conversion against 3d pty that interf w/ prop during lease term Transfers of landlord’s reversion of tenant’s leasehold interest to some 3d pty during lease term Rule: when landlord transf reversion, transferee takes tenant’s interest Mullendore Theatres v. Growth Realty –LL's promise to return sec. deposit does not run w/ the land (majority view) UNLESS restricted to benefit of prop. Here it didn’t, so successor LL not obliged to refund it… 1. Distinction b/w relationships that are prop. like & K like (one can be enforced against world while other can be enforced against pty who signed K): on one hand there’s things 3d parties don’t have interest and on other hand there’s things 3d parties have interest in (i.e. sec. deposit) a. WHY WE HAVE RUN W/ LAND DISTINCTION: Ppl do draw distinctions; once we notice difference b/w docs that are enforce against world (prop. rights) and against only pty who signed (K like) want to make prop. like

2.

doc. as compreh. as possible… even if you pour it all in, we’re not going to enforce it all b/c has personal promises implied and clog up prop. markets b. Promise to pay for land: Touches and Concerns TEST c. if you want to to enf. K have to go back to person who was privity to K HOW CT/DETERM. IF THERE’S DISTINCTION: a. “Touch and Concern” [the land] TEST – Does it enhance value or confer benefit on land. Otherwise - it’s collateral and personal oblig. of orig lessor? In order to be running covenant, promise to pay $ must restrict use of funds to benefit of prop i. No such restriction in covenant – LL not obliged to spend $ on prop or to transf it to successors city has no oblig. to return sec. deposit. Here, doesn’t benefit prop b/c concerns return of $ to tenant not as investment in prop. b. To determine whether lease runs w/ land: ask 1) whether parties intended covenant to run, and 2) whether covenant touches and concerns it (enhances its value and confers benefit upon it) c. Purp of sec. deposit here: to protect LL against damages that occur that he had not ctrl over; to secure monthly pmt.; to secure tenant promise to pay monthly pmt.; secures prop. d. Ct. treats it as very Kual, not prop. like

D. E.

Parties to these Ks treat sec. deposit as ASSIGNMENT AND SUBLEASE

1. Transfers of Tenant Interests: Two Types— a. Sublease – landlord starts w/ FS and carves out lease for prime tenant; then prime tenant carves out
sublease for subtenant from prime lease, and so on; each time interest carved is reduced from the whole i. If problems arise, each tenant deal w/ landlord directly above who deal only w/ tenant below b. Assignment “no carving out” - operates like alienation; landlord starts w/ FS and carves lease for prime tenant, then prime tenant alienates thru transf lease to 1st assigned; 1st to 2nd and so on. i. If problems arise: only 2 parties deal w/ prop: the orig. landlord and latest assignee; assignee steps into shoes of prime tenant and enters into direct relations w/ landlord 2. Two sources of landlord-tenant obligation— –As to sublease-a. Privity of estate – To apply 1) parties to be bound must have interests where one is directly carved out of interest of the other; 2) one of parties must be in actual poss. of prop. If present, parties bound by priv. of estate IN ADDITION TO privity of K. b. Privity of K – oblig. From binding bilat. K i.e. written lease. Can ID parties bound by privity of K comes from signees to lease K. i. One pty in privity w/ either landlord or tenant directly above or below them. –As to assignment-a. When prime tenant assigns to 2nd assignee privity of K b/w landlord and prime tenant remains but no privity of K b/w landlord and assignee BUT assignee, having stepped into shoes of prime tenant, holds prime leasehold interest carved out of landlord’s interest and b/c assignee is in poss. assignee and orig. landlord are in priv. of estate b. To determ. what each party’s obligations are: must determ. who’s in privity of easte and/or K. To do this, look to lease that definres orig. leasehold interest and impose on those parties covenants that run w/ land OR touch and concern it. Mullendore c. **Under an assignment prime tenant acts as surety for perf. of obligations by assignee. If they don’t meet them, prime tenant is on the hook per privity of K. d. **Under sublease prime tenant on the hook per privity of K AND privity of estate –As to assignment-a. Assumption – occurs if 1st assignee expressly agrees as part of assignment to be bound by terms of orig. lease agrees to be bound by privaty of K and estate AND prime tenant still bound by privity of K. b. Novation – where parties agree to erase privity of K liab. from prime tenant. In case of an assignment from prime tenant to assignee, former is off the hook for everything. Besides that, prime tenant no longer in priv. of estate upon assignment… 2. Jaber v. Miller – intent of parties should guide determ. if esate or assignment Intent of parties should guide determination of whether it’s a sublease or assignment, not CL rule, which says it’s only a sublease if tenant retains rt. of reversion. Application: Lease had clause that it would terminate if building was destroyed by fire. Fire happened. [Is there still lease?] Issue is whether there is privity of K, which only exists if it was an assignment. The covenant (that it terminates if fire) does NOT run w/ the land, so only valid if there’s privity of estate. Here it is an assignment, b/c it’s called that, and it was clearly intent of the parties: key variable = payments going straight from subtenant to LL, not from subtentant to tenant: ongoing pmt dsde; in ledrd it sllf a. Facts: Miller brought suit to obtain cancellation of promissory note made by Miller to Jaber ; Jaber claimed he sublet prop, that it burned down and that Miller no longer liable for rent Sublease-by tenant or lessee to 3d pty of part or all of leased premises for shorter b. Assignment - assignment of all of tenant’s remaining rights in prop under lease. c. Issue: was it a sublease or an assignment

d. Rule (majority): if instrument transfers lessee’s estate for remainder of lease term

3.

it is an baz making 3d pty directly liable to landlord; if the instrument transfers lessee’s estate for anything less than remainder of term it is sublease. i. By assigning prop to 3rd party, original tenant loses all interest in property. So, has no reversionary interest, cannot enforce right of re-entry, and cannot be held liable for new tenant’s failure to pay rent. ii. BUT, sublease = new tenancy, where original lessee is both tenant (owing liability to original landlord), and landlord (to 3rd party lessee). e. **what are period paym. deferred consid. for assignment If ye, you would have to pay them. If something else, then u don’t. Criticisms of Rule: i. Original lessee could be subj. to double liab. if sublessee fails to pay rent, etc. ii. B executes what is intended to be profitable sublease to C (leaving B w/ profit), yet if transfer is for entire remainder of B’s term, C will become directly liable to A, and anything B collects from C during term will have to be repaid to C. f. Massachusetts Rule: if original lessee retains right of re-entry for non-payment of g. rent this can create a reversionary interest, thereby creating sublease instead of an assignment. i. MA rule presumes right of re-entry shows intention of parties to create sublease! Kendall v. Ernest – holding that commercial LL may only w/hold consent under silent consent clause if he had commercially reas. obj. to transferee or proposed use. Ct. viewed lease as conveyance, and relied on prop. law rule restricting restrains on alienation. Ct. also viewed lease as K and read in implied covenant of GF and fair dealing which compelled commercially reas. basis of denying consent.

4.

a. In commercial leases: if there’s clause that requires LL’s approval before alienation, there’s implied duty that b. Issue: where lease has approval clause, can LL refuse tenant’s request to assign for no reason?
c. consent is only withheld for commercially reas. reasons. Apply balancing test for reasonableness

Ct. doesn’t accept arg that LL should be able to excl. whomever they want – rt. diluted by preexisting duty to mitigate. d. Holding: either LL or T can “capture the bonus” Otherwise too much of restraint on alienation e. LL wants to have RS ctrl. over lease. Where is direct, common interest prop. f. Explanation: just b/c LL could’ve made bigger profit IS NOT commercially reas. reason b/c it undermines what LL and orig. T contracted for. i. Executory K: where a pty’s oblig. is still owed. ii. Automatic stay stops anything from elavinta estete; what remains can be ivided by pal iii. You want to know who tenant is. – ctrl clause: LL who gets to helee iv. By giving Kual relationship implies GF and fair delsing. If arbitrary and no conderation, iit oulr by loseral errer. Implies GF and fair dealing g. Generally, approval clauses are valid b/c they are meant to protect lessor. i. B/c of preservation of landlord’s right to select a tenant. a. Counter: minority rule preserves LL’ sandlord’s right to personal selection; only limits LL from rejecting tenant based on unreasonable grounds. b. Ct. is ok that apprv. Clause would’ve prevented him from charging more for rent. ii. Clause was bargained for and courts should not interfere w/ parties bargained for agreements. a. Counter: approval clause only says LL/lessor must give written consent to proposed assignment; does not say LL may refuse for any reason iii. Stare decisis: courts should not depart from the majority rule. a. Counter: maj. rule NOT universally accepted. h. Any incr. in property value, i.e. reason sublessor in Kendall wants to assign his interest to 3rd party, “belongs” to original lessor. i. Counter: allows lessor to obtain more than bargained for in original lease K. i. RST (2D) of Prop. follows min. rule: LL cannot w/hold consent unreasonably, unless such provision is present in lease agreement and was freely bargained for. j. If Lessor is also, by way of K law, under duty a GF duty to only refuse approval for reasonable reason. k. Lessor can consider fitness of proposed assignee based on: financial resp, suitability of prop for assignee’s prop. use, and legality of proposed lease. Denying proposed assigned on basis of subj. factors is not ‘commercially reas’ SAMPLE QUESTIONS: stuff we’ve not covered; apply 1st poss, accession, other approaches, etc (riparian system: whose land touches water gets it) See Lease pblm. notations on p. 764

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Effective Notice turns on how notice provision is drafted – notice is important Clause 5: force majeur clause; LL relinquishes respon. For not providing utilities

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Clause 6: If he sells it to another LL, want new LL to return security deposit AND comply w/ LL’s respon. Mullendore Clause 8: whether lessor can deny assignment / subletting on reas. basis or not... Clause 9: why lessor is not req’d to give notice to lessee Clause 10: LL trying to avoid being responsible for constructive eviction Kendall Clause 12: recreational facilities: LL can build and chrg for them. Any limit on this? Clause 14: atty. fees: dissuades lessee from going to ct. would perhaps request symmetry. Clause 19: holdover rent charge AND atty. fees is too expensive; prob. unenforceable and in viol. of state law Clause 22: renewal is by time presc. By lessor. Need to know when to give notice… GO THRU THE LEASE, FIND ISSUES, ASK HOW CAN I FIX THEM / ADD CLAUSE; IF I CAN ONLY GET 1 CHNG, IT WOULD BE….WHAT’S THE LL’S REP ADD: AN ARBITRATION CLAUSE IF U CAN; MUTUAL REASONABLE CLAUSE; WILL EACH ACT IN GOOD FAITH AND IN COMMERCIAL REAS. MANNER; LL WILL HAVE DUTY TO MITIGATE; SOME RESTRAINT ON LL’S ABILITY TO RESTRAIN YOUR ABILITY ON ASSIGNMENT / SUBLEASE’

o
o o o o o

o

11/2/10

A.

COOPERATIVES, CONDOS, AND COMMON-INTEREST COMMUNITIES

mult. persons enjoy possessory rights a. differ from leases b/c those who obtain indiv. possessory rights have ownership interests like in FS, but w/ leases, LL is manager w/ only market constraints but w/ common-interest cprop. unit owners manage common areas collectively b. PPl engage in grp ownership opposed to rent b/c of: tax incentives (Hansmann); emot. attachment; more comfortable investing COOP. CONDO MORTGAGE: Blanket mortgage for entire bldg. Each indiv. Unit owner has own mortgage; less effic. transaction cost ea. Time unit changes hands LEASE: Proprietary lease entitling owner to perpertual occupancy. STOCK: Has shares that can be sold at market price so has excl. freely transferable prop. rt. 3. Inefficient decisions – b/c interest of all members aren’t the same, outcomes don’t always maximize aggregate surplus for occupants. a. LL has interest in making efficient decisions in order to maximize aggregate rents charged. 4. transaction costs – subst. transaction costs assoc. w/ collective decision making such as time a. occupants of common-interest prop. have advantage over non-occupant investor-owners b/c they can provide effective oversight and make collective decisions more easily. 5. “Organationzal innovation theory” – condos minimized common prop. element of ownership and allow each occupant to get sep. financing, reduced occupants from having to serve as sep. sureties for one another. However, in a coop, one lrg mortgage elim. Transaction cost of renegotiating fnianciang each time unit is acquired by another owner. B. GOVERNANCE QUESTIONS 1. In multi-unit facilities LL rules AND can make decisions unilaterally BUT is constrained by lease clauses and market forces 2. Two Principles Mechanisms to Solve Ongoing Governance Problems in Common-Inter. Prop.: a. Contractual – rules and regs run w/ ownership interst. b. Est. of Governing Body – est. rules and regs. and enforce them 3. Nahrstedt v. Lakeside Village – cts. will usu. uphold restrictions in decl. of common interest communities that designed to benefit commun. as whole, to preserve stability unless unreasonable. -(But, if you’re a condo, it’s unreasonable to have to defend all your rules…) a. Issue: Pet restriction and statute (implied as valid) stating preserving peace is important. b. P has burden of showing statute is unreasonable; can show if i. Arbitrary

1. leases - Oldest most common form of entity prop. 2. common interest communities - coops, condos, and common-interest communities are ALL entity prop.:

ii. Burden on use of land outweighing benefit c. Facts: Nahrstedt bought condo in Lakeside Village. It clearly stated in HO agreement (aka declaration) there d. Law: reasonableness TEST: Use restrictions will be enforced unless unreasonable e. Ct.: under Cali law, cts req’d to enforce "covenants, condit and restrictions" (CC&Rs) in declaration
unless unreasonable. i. burdens on use of land that outweighs benefit." What’s reeas. To entire condo assoc, not neces. an indiv. Owner ii. Social good in enforcing CC&Rs iii. CC&Rs can be modified by vote of HO assoc. – no need to involve ct. Courts have found that rules created by managing boards after people move into community should be held to higher std of "reasonableness" than rules in orig. covenant. Here “no pets” rules was in orig. covenant. Cts. say: all rules passed after 1st person moved in are held to same std for all. i. Otherwise, diff. residents would be held to diff. standards based on when they moved in! NO common interest community. Hypo: if Nahrstedt had been living there, and managing bd changed rules – could argue non-conforming use BUT, Nahrstedt knew that joining common interest community could result in new rules being created, so no reason to assume there'd never be a no-pets rule. Notes: walking away from owned condo is more expensive than walking away from rental where max loss is remainder pmts. For lease term----changing of diff. rtypes ules correspond w/ diff. req’m for changing them e.g. simple majority, etc. was pre-existing restriction against pets. She is told she can’t keep her act. P sued to enjoin restriction. iii. Violates PP

f.

g. h. i.

Trusts: Goal: Splitting equitable interests from title interests. • Highly flexible instrum.: originally used to transfer and preserve family wealth. Now used for all kinds of goals: bsns, pensions, etc. Comes from Common Law. 3 Actors (not necessarily separate people)

• •

the rack fiduciary duties. Can you contract around. *Cestui que Trust: person for whom trust was set up.

1. Settler (Person who has property and creates trust) a. Transfers the corpus/res to Trustee 2. Trustee: Manager of trust. Has full legal ownership except beneficial ownership; duties to Benefic 3. Beneficiary: equitable title goes to beneficiary. Can go to ct and force trustee to perform certain duties. Off

• •


To outside world trustee appears to be owner (for purposes of trespass etc). Property in a trust = the trust or trust res. Trusts involves three people [don’t actually have to be distinct people]: o Settlor: creates the trust. o Trustee: receives property, responsible for its management; subject to range of fiduciary duties which constrain it to manage in the best interests of the fiduciary. o Beneficiary: person for whose benefit the trustee manages the property. CL forms of ownership still play a role: legal title to trust is usually an undivided fee simple or absolute ownership. Beneficial interests can be carved over generations and beneficiaries.



Spendthrift Trusts • Are trusts distinctive form of property or type of third party beneficiary contract? • Spendthrift trusts – in certain jurisdictions, the assets of the trust cannot be reached by the individual creditors of the beneficiaries. i. Trickles $ out making it hard for creditors to get. Creates enough of hassle to decr. chance of $ getting collected by creditor b/c would have to come around every 6 mos. to claim it Broadway National Bank v. Adams a. Issue: Can founder of trust secure its income to beneficiary by providing that it can’t be alienated / taken by creditors? Held: Yes. In this case, income of trust fund created for benefit of D cannot be attached in law /equity b4 its paid to him. Facts: SEPARATE MGR. FROM BENEF. OF TRUST. D Adams is in debt to P; P is trying to obtain pmt. from income of trust fund that Adams received through brother’s will. Trust was $75k, to be managed by executors and survivors w/ semi-annual

income pmts. to Adams. Will specified these trust payments were not to be collected by creditors. After death, $75k was to go to his wife so long as she remain single, and then to be split among Charles’ children, his wives, etc Reasoning: Testator’s intent is clear – did not wish this amt to be reached by D’s creditors; only wanted small amt. to be in his hands at any one time b/c he will handle it badly Therefore, will not compel this to be paid to P unless unlawful. • Alienability: not effic. to put restraint to inalienation but trustee can ensure that trust asset gets employed to highest and best use. • English rule [not accepted]: When income of trust estate is given to anyone [except married woman] for life, equitable estate for life is alienable by and liable in equity to debts of beneficiary. • We have recognized principl b4: Where intent of grantor is to give equitable life tenant only qualified estate in the income – not absolute. • Here, where tenant [Adams/D] did not receive absolute right to income which would accrue upon trust fund; but only receives semiannual income of fund, which becomes absolute prop upon pmt. • This does not viol. any PP principle – argument that this appearance of wealth will mislead creditors into giving him credit, and then they cannot reach it is not compelling. Creditors have access to records re: form of wealth and can figure it out. • The rule of PP that subjects debtor’s prop to the payment of debts does not carry over to subj the property of grantor to debts of his benef. • Therefore, founder of trust can directly provide that prop shall go beneficiary w/ restriction that it shall not be alienable by anticipation and creditors should not have right to attach it in advance. b. Fiduciary duties: duty of care (do good job); duty of loyalty (help the mission, not yourself) Rothko v. Reis – Painting get sold to gallery, which in turn sells to public. rothko’s kids ultimately get it. Where there is self-dealing, “no further inquiry” rule applies and don’t have to show conseq. of it. Presumption is fiduciary duty was breached. Procedural Posture: Executors are appealing decision, which affirmed order of Surrogate that they be removed as executors. Orig. petition to remove them brought by Kate Rothko, daughter of deceased, and guardian of her brother; also joined by NYS AG, representative of beneficiaries of Rothko Foundation. Facts: Rothko, famous painter, died leaving 798 paintings. His 3 execs were Reis, Stamos, Levine. Within weeks, the execs had disposed of all paintings in suspicious manners: sold 100 to Marlborough AG [MAG], consigned rest to be sold by Marlborough Gallery [MNY] for 40-50% commission [although testator had earlier inter vivos contract w/MNY to sell work at 10% commission]. • Surrogate found Reis in his director position had clear confl w/ exec. position; that Stamos also had conflict as he would gain favor from MNY that was useful to him as artist; and Levine did not exercise ordinary prudence since he was aware of conflicts and did nothing. Surrogate removed all 3 as execs and instated complicated fines systems.  Enough of duty of care pblm and duty of loyalty pblm that it’s a problem. Usu. one has to squarely find either duty of loyalty pgrm OR strictly find duty of care pblm. Reasoning:





• • •



Execs insist wrong legal std [“no further inquiry” where there is conflict] was applied, this std is not applicable where exec just has indiv interest. Court did not rely on “no further inquiry” std alone; they considered fairness and facts and found [with good basis] that agreem. b/w MAG and MVY and estate were not in best interests of estate. Definite conflicts of interest for Reis even beyond his position at MNY – status, financial advantage; and for Stamos – for ex., Marlborough purchased one of paintings for high price while these negotiations were pending. Levine is legally accountable as exec who knows coexec is breaching trust and doing nothing about it. He cannot ignore and absolve himself of liability. Fines/liability: o Authorizing appreciation damages [when trustee has duty to retain] v. date of sale damages [when trustee has authorization to sell] creates correct incentives for trustees. o Execs claim that execs auth to sell are not liable for incr in value if their breach was simply selling at too low price. However if there is misfeasance beyond selling at too low price, this does not apply – and here serious conflict of interest was further misfeasance. o Appreciation damages correct here: paintings cannot be returned so estate should receive value at time of decree=appreciation damages. Aren’t punitive, just “make whole” damages. Changed circumstances Circumstances surrounding a trust may change in ways that were not foreseeable at the time trust was formed. This is a particularly frequent problem in charitable trusts context.

c. •

Doctrine of cy pres – settlor has expressed a specific charitable intent that due to changed circumstances is impossible to fulfill; but settlor has expressed related intent that could be fulfilled with a judicial modification of interests created. Wilber v. Owens [Sup. Ct. of NJ, 1949] Bkgr: very elaborate will; some $ but goes in many diff. places. Princeton named as benef. (higher up the chain) and for clause to kick in – will says they can use $ for 1 spec. purp.  Judge wants to fund one part all the way as opposed to funding diff. parts b/c not enough $



Issue: If specific request of testator is irrational and devoid of scientific value, can ct use doctrine of cy pres to find that testator had general charitable intent and interest should be distributed accordingly. Procedural Posture: Appeal by Wilber [acting executor of will] from finding that testator had gen. charitable intent, and order that exec pay trust to Princeton to use income for scientific, philos. research. Facts: Will created trust at Princeton to be known as “Exten-Bamford Research Fund, income of which was to be used to “continue and carry forward to completion and to publish for popular understanding results of researches contained in “ Bamford’s specific manuscript, “Random Scientific Notes seeking the Essentials in Place and Space.” Ct found notes to be irrational, unintelligible, and devoid of scientific value and express purpose of provision was impossible to reach for this reason. Throughout Bamford’s will [and in the introduction to his “Notes”] are constant reminders of importance he placed on giving his property to charitable uses; he was more concerned with this than specific recipient [he had a list of recipients and if one rejected, the next would get, etc.] Reasoning: 1. General intent 2. Specific purpose targeted $ for: 1) impossible to fulfill goal, 2) void as against PP, or 3) changed circumst. that my render it imposs. to fulfill a. Here, couldn’t achieve most of goals, no close relatives, and so poorly funded, that ct. decided best is to give t charity. • Testator clearly had general charitable intent, not something specific: he devoted his prop to charitable causes. Much language re: gen. good of mankind, showing this was his intent/goal. • Design of trust created in Exten-Bamford Research Fund is aimed at advancement of educ. and learning – therefore seen as charitable trust. o Here it is not testator’s intent for this to go only to publication of his “Random Scientific Notes” as he believed these notes provided the core of further research that he valued.  Part of cy pres does not constrain it all • Distinc. b/w charitable trust and priv. trusts: charitable trusts are those for advancement of research or knowl; also charitable if subj prop is devoted to purpose beneficial to community. • Also pointing towards this interpretation: Bamford’s wealth was inherited and he stated in notes he felt those with inherited wealth have duty to commit it to good use. o It’s relevant that he believed this was for ultimate good of mankind.

• • • •

Ultimate aim of testator was not irrational/absurd – it does not fail on this account. Although court/people think it unwise, does not affect charitability of the trust. Cy pres can be invoked here to effectuate more general use of property for charitable use. Cy pres= as near/so near, “the doctrine of nearness or approximation.” Where charitable intent cannot be fulfilled, equity can be used to apply to similar charitable purp in the more gen. charitable intent, on theory that testator would have done so. Cts have been willing to use cy pres to alter old trusts that discriminate.

2. Facts. H. Tenhet (Pl) & R. Johnson owned land as JTs. Johnson leased prop. to Boswell (Def) w/o Pl’s knowledge or
consent, and up and died 3months after execution of lease.

3. Seeking: right of survivorship, demand Def vacate prop, and brought COA to have lease declared invalid 4. Law. JT NOT severed by lease to 3D pty, and sole ownership of prop will vest in co-tenant upon death of other
tenant – Johnson - unencumbered by lease. a.

5. Bottom Line. A lease made to 3d party CANNOT sever a JT b.

4 unities needed to create JT: unity of interest, unity of time, unity of title, and unity of possession. If one of these is destroyed, JT turns into TinC AND right of survivorship terminated. One of the tenants may destroy JT by conveying his interest to 3D pty BUT lease does not necessarily severance of JT. In order to sever it, it must be clearly and unambiguously est. that either JT wanted to terminate it.

6.

Applic: To terminate JT, Pl and Johnson could have converted it to TinC by written mutual k or jointly conveyed property to 3d person and divided proceeds. One of them could have conveyed entire interest, which would have clearly indicatedintent to terminate. Rationale: B/c there are alternative unambiguous means of altering estate, lease here did not sever JT. Thus, sole ownership of property vests in Pl b/C of her right of survivorship. In a joint tenancy, ALL interest of deceased ends at death, so lease of JT prop ends when he dies. a. During JT’s life, he may grant rights in property w/o severing tenancy, but when he dies, his interest dies with him, so any encumbrances he placed on property becomes unenforceable against surviving JT. The lease in this case in no longer valid. b. A lease conveys only partial interest in prop, so it does not destroy unity of interest in JT. When he dies, his ability to convey interest dies w/ him, so even if time remains on lease, its deemed invalid.

i.

11/15/10 I. CREATION OF EASEMENTS 1. Regard as prop rights – created only by grant via delivery of deed 2. b/c easement = interst in land, it must be in writing per SOF a. Implied Exception to SOF: i. b/c Writing req’m often ignored, cts have doctrines for easements / easement rts when there’s NO writing 3. Transf of Easement: 2 types: Can be from A to B OR by reserve. by grantor A in grant to B. 4. of lower value than poss interests

B.
1.

Easement by implication – like K implied in fact Ex.: Trasnf 1 of 2 parcels to another O and appears there was easement on a parcel; b4 transf = quasi easement (b/c only 1 O and can’t hold easement against self)

Easement by necessity occurs when easement over 1 parcel is “strictly neces.” for enjoym of the other; requires: 1. At some pt both parcels had same O 2. No prior use of easement b4 split req’d

C.

a. i. a.

Ex.: landlocked parcels: Schwab v. Timmons – NO easement if fail to est entitlement by implic or neces.

Bkgr: P bring COA, argue implied easement b/c of neces. since land otherwise landlocked. P owns landlocked land and wants easement to use road going thru Ds prop and rt to extend road to reach P prop. P themselves created landlocked parcels when they conveyed away their hwy access 1. Not good case for easement by implic. (where 1 parcel benef. other) b/c no priv. road and no known other access to house b. P argues they had easement by implic. (like custom, intent of parties, policy against prop disuse), then argue easement by neces (like priv emin domain) 1. Ct. rejects easement by neces argum b/c P sold part of their parcel causing them to be landlocked (No former unity of ownersh) AND b/c there’s a public hwy, there’s no neces. (technically NOT landlocked) a. Must be real necessity; not enough to be convenient c. Ct.: NO easement b/c petitioners failed to estab entitlement to easement by implic or necessity either due to actions by federal govt or by geo barriers. d. Rationale: No easement b/c elem (former unity of ownership; visibility at time of severance (no), and reas. neces. at time of severance) for easement by neces. not present: 1. Grantor in better position b4 deal to determ. use of ea. parcel. Effic. argum. argues for penalty default rule: one doesn’t get info unless ask grantor b. Necessity. by eimplic. and neces, doctrines (use to avoid landlock) only used when there’s common grantor b/c need this to make common transaction Easement by Prescription similar to adv poss – req’r SoL to expire, w/ actual use that’s open and hostile, continuous and uninterrupted 1. Ex.: Warsaw v. Chicago Metallic once easement estab, O of servient tract can’t encroach

D.
a.

Bkgr: roads adunct for yrs, P used some of Ds land as commercial driveway. Then D wanted to build on Rule: poss. by actionable, exclusive, open and notorious and claim of right Issue: whether there can be encr. on easements by prescription

that land.

Outcome: P got prescriptive easement (due to adverse). D didn’t get rt. to build and ct. order removal of bldg encr. 2. Self-helo cheapest altern: give renter permission to accesa area SO he wont be adversely possessing. a. Give other pty permission so don’t have to give full prop rt. via easement by prescip

b. c. d.

E.

Easement by Estoppel: arise when person spends subst. $ or labor in reas. reliance ability to use another’s land - est. irrevocable license.

1. 2.

TEST: Did claimant act in GF? Should servient O bear conseq. of misunderstanding? Creation: a license (usu for access purp); licensee expenditure of $ / labor in GF reliance; licensor’s knowl or reas expectation reliance would occur 3. Lost grant – easement by esoppel (give permission, user relies in detrim, and O can evoked it. 4. Policy: would be unfair to allow licensor to revoke license after licensee subst. relied to his detriment; facilitates productive land use BUT a. easement by estoppel undermine policies served by SoF Change of Easement: as long as nces. And to extent neces. to vindicate means of reas. reliance. If no longer relying = no need for easement. 5. Ex: Holbrook v. Taylor – b/c P’s use of access road across D’s prop was by permission (revocable license), P had not acquired prescriptive easement. But, b/c spent 25k bldg house on prop and improving access road, D’s permission became irrevocable license. Thus, it was easement by estoppel, NOT prescriptive easement. a. Facts: D gave permission for bldg of roadway, relied on by P to invest time & $, then closed of P’s use. Estoppel prevents this conduct. b. Req’r”: permission to use (not prescriptive); reliance (evid. By P’s investment); inequity (if land sold, easement would run w/ land to prevent inequity to P)

b.

II.

COVENANTS

A.

Covenant – k by which owner agrees to certain restrictions on use of own land for benef of one/more others; thought og as promise respecting use of land 1. Prescr. Affirmative behavior on part of owner 2. Must be in writing AND unlike easements, cannot be acquired by prescr., implic, necessity, estoppels 3. May run w/ land if certain cond. Met In personam: don’t give rise to rts against 3d parties other than successors to parcels Types: Equitable servitude: promise concerning use of land that 1) benef /burdens orig. parties and successors AND 2) is enf. In equity a. Ex.: Tulk v. Moxhay – if K b/w 2 Os as to use of land will run w/ land (bind subseq purch) who had notice of covenant when purch. prop i. Bkgr: P has land in Leicester Sq. and sold to Elms w/ affirmative covenant – promise remain a garden; promise not to bld on garden (neg. covenant), and tenants will have rt. to use garden for reas. rent (affirmative covenant). Elms sold to D w/o covenant but D knew of it. Moshay takes deed which is silent ab. covenant but he knew about it anyway. Still bound b/c of notice of burdened land regardless of price discount, if any. a. 3d pty who has benef of covenant can sue conveyor of land to enf. benef b. Prop/ in rem / numerus clausis appr: apply bucket rules to asset, BUT here something signif ab. these parties…ct. willing to impose equity (acting in personam (avoid buckets), NOT in rem – prop.) i. Ex.: have to buy licensed for when chip on motherboard; in CPU, in …. b/c restrictions don’t run ii. Ct.: chng circumst excuse rejected. Otherwise, too easy to elim. covenant by selling to someone w/o it and buying it back w/o It iii. Adverse poss/ or requires to pay things unfraont. 2. Real Covenants -- promise concerning use of land that (1) benefits and burdens original parties to promise and also their successors, and (2) is enforceable in action for damages. a. Touch and concern TEST: Railways, sewer lines, lighting, golf club membership and other common elements located further away pass “touch and concern” test b/c benefit use of lot. But, covenants to pay for items NOT signif to use of lot don’t pass test. Goes to function (important to partic asset), not form. b. Nepnosit Prop Owner Assoc v. Emigrant Indus. Savings Bank a. Liberalizes ‘touch and concern’ test ii. Bottom line: have to pay for common roads, sewer lines, etc. Assoc. sues to foreclose on purch prop. b/c buyer not paying h.o. dues. a. Com. int. community. enf. via covenant that runs w/ land; here covenant is to pay for facility, etc. b. Ct.: Using test, court determine covenant was intended to run w/ land, that it touched or concerned land with which it ran (because it was an affirmative grant of access to common areas b/c there was functionality privity of estate b/w parties. c. INTENT: For covenant to run w/ land, orig parties must have intended covenant benef and/or burden subseq  purchasers, rather than just be personal agreement b/2 orig parties. i. Eagle Enterprises v. Gross -- using Neponsit 3-part test (whether there's intent, whether there's priv. of estate, and whether it touches and concerns), ct held disputed covenant: to accept water supplied by appellee did not run w/ land b/c failed prong requiring covenant to "touch and concern" land. a. Interpreting this to mean that it must substantially affect ownership of landowners, ct decided that covenant to accept water did not substantially affect ownersh interests. Thus, covenant did not run w/ land. Ct also expressed reservation w/ affirmative covenants which imposed undue restrictions on alienation or onerous burdens in perpetuity (like this one). d. POLICY Rationale: $ obligs don’t touch and concern burdened prop b/c:

B. C.

1.

3. 4.

5. 6.

7. 8. 9.

Gen’l dislike for affirmative covenants that might burden title so much that no one would want to purch Gen’l dislike for open-ended covenants (cts look for limits on affirmative covenants req’r subseq owners to pay) iii. Orig O may not appreciation long-term conseq of promise Notice one of req’m for covenants to run at equity is notice Reciprocal Negative Easements / Servitude: a. Sanborn v. McLean: common plan: finding that D has notice when purch lot in subdiv—that reciprocal negative easement preventing use that wasn’t residential (incl. bldg proposed gas station). i. To ensure that covenants run to successors [in order to make common plan consistent], can record declaration; ref. declaration on official city map, and put in deed to 1st buyer. of each parcel a. Here, Ds didn’t do 1) or 2). b. Bkgr: Subdivision consists of resid properties. A lot is sold w/ restrictions and lot O attempts to build gas station on it. c. Common plan doctrine: gap-filler in case like this, where pty hasn’t incl covenants in deeds d. Issue: Should ct. imply common plan covenants? Look to: existing plan of use in n’hood (no gas station – implied negative easement) e. Rule: Reciprocal negative easement is attached to all lands sold in common development scheme, and even tho restric is outside specific chain of title, subseq buyers deem to have constructive notice due to duty to ck title of neighboring lots i. Usu. applied when purch in subdiv. ii. Constructive notice: D didn’t ACTUALLY know, but should’ve been on notice when he saw purely resid. nature of other lots in sub-div a. Inquiry notice v. spontaneous order: notice to make inquiry b/c no one else has gas station on their lot, so obvious you should’ve inquired ab. restr. f. Holding: n’hood is residential, and deeds sold by developer contained resid. Restrictions = developer had common development plan. B/c there was common plan, remaining land became subj to recip. negative easement, so O cannot do anything that is forbidden to O of lot sold. Thus, easement runs w/ land sold and is enf. on any O w/ actual or constructive notice. g. Applic: D had constructive notice of negative easement b/c nature of residential n’hood should have put him on notice that reciprocal negative easement may have existed. He had duty to inquire about restrictions on n’hood. Conservation Easements – servitudes that restrict future development of land; exist b/c of legisl. authorizing them Termination of Covenants a. Bolotin: common use restr. on prop and chng. circ. Doctrine i. At end of subdiv.; wants to use as comm. not resid. ii. If orig. purp can still be realized THEN enf. even if loss in profit. Lack of incr. in MV ALONE = not enough to deem covenant unenf. iii. Issue: whether economic conseq suffice for ct. to find deed restriction unenf. iv. Rule: If changed condit. render enf. Of covenant inequitable or oppressive THEN burden outweighs benef. = NO ENF. Or, if obsolete THEN NO ENF. v. Here, covenant allowing only SFH and P wants to build office bldg. D sues to have covenant enf. vi. Changed circ. Doctrine (trans cost savings device on front end; for inability to predict; can bias screen against chng temporarily): TEST: see whether there’s any benef that’s at least subst for any Os that would come from enf. covenant…so long as there’s some benef, covenant remains. If chng ciruc. Lv no benef to other Os, then covenant not enf. **Only zoning chng that would render covenant illegal would trump covenant** a. Ability to make more $ ≠ make covenant obsolete; use and enjoym also count b. Look at detrim. to surr. plots and benefit to P Agreement to Terminate Abandonment – total neglect of use, requires proof that prior viol. have eroded gen’l plan making enf. impossible Pecham v. Milroy: enf. covernant - restricting Os from oper. bsns out of home, and enjoining Ds from operating day care. a. Bkgr: covenant not to have home bsns but D runs daycare; others also viol. covenant b. Holding: covenant upheld b/c: i. Not abandoned: b/c not enough of demonstrative act b/c not enough substantial and reg. disregard of covenant by many others w/o complaint. ii. Not void for PP: childcare is favored iii. No equitable estoppel (some stmt or act that’s inconsistent w/ position now taken, some reliance by 3d pty on stmt or act and inj. if permitted to repudiate orig. stmt / act): P never said daycare was permitted; his silence doesn’t constitute appr, so no reliance… iv. No latches bc it req’r unreas. delay in filing by P—not the case here a. Argument for latches: one has reason to know one has COA against someone; unreas. delay in brining it and dmg caused df by delay..

i. ii.

D.

III.

ZONING AND OTHER LAND USE REGS. Zoning: reg. of land uses thru gen’l regime permitting and forbidding partic. uses of land in certain locations a. Relatively new govt reg.: America was agricultural nation—land use restr. Ltd. to priv. action i. Govt role in land use was ltd. a. Auth. To engage in zoning is state power b. Due to Indus. developm. And urbanization, living condit declined and zoning implemented i. than easements ii. Can be cumulative OR excl. (each zone has enum. perm. Uses) iii. Deals well w/ externalities i.e. transaction costs BUT can be exclusionary c. Village of Euclid v. Amber Realty i. City setting up ordinance w/ complex zoning a. Hierarchy of / cumulative zoning – can have uses assoc. w/ that lvl and higher uses “Euclidean zoning”) VS b. noncumulative zoning - only enum. uses in given zone) c. P argum: by rezoning, city is cutting value of our land by rezoning it to noncom. zoning – this viol. due process and equal protec. Clauses d. P further argued - even if concept of zoning was legal, it still constituted a taking, and Euclid would have to compensate P for the loss. e. D argum: Euclid argued that zoning is form of nuisance control and therefore reasonable police power measure. f. Holding: US Sup. Ct overturned j/m, and found zoning law constitutional b/c was not unreasonable extension of local govt’s police power and did not have character of arbitrary fiat, and thus not unconstitutional. Found O failed to prove that land would lose value, only speculation - not valid basis for claim of takings. 1. Anti-zoning: one size fits all pblm; administering pblm; corruption involved; discrim. exclusivity; diffic. to bargain around – must barg. w/ political process to obtain diff. use 2. Pro-zoning: predictability; help incr MV of your home by having similarly-used land around yours; keep pollution away by having industrial-zoned land further away from residential land. g. TEST: in order for j/d to take land in line w/ due process, taking must meet 2 tests: 1. must be legit end goal, such as incr of general welfare / public health a. pollution ctrl, firefighting, pop density ctrl, and ensure that resid. n’hoods will not disappear bc land more valuable as indust space b. must also use means that are NOT capricious or irrational ii. Mount Laurel a. Each municipality has affirmative duty to use land use regs. to achive fair share of low and mid income housing. 1. Here, in Mt. Laurel, it has to prov. some low and middle income space. Otherwise, viol. state constit. due process clause b. Municipality has to show valid basis for creating zoning which excl. certain classes of ppl from ownersh. or maintaining this type of zoning. 1. Existence of Suspicious and favored land use regs. c. Ct: doesn’t strike down zoning system but does zoning review and determ. that partic types of things will not be permitted and partic things will be req’d GOVERNMENT FORBEARANCE

1.

A. B.

IS IT A GOOD IDEA (too much, too little)?? Trade off b/w need for reliance on govt promise they won’t seize priv prop - neces. for econ. developmt and permitted by const. and existence of need for goct to have rt. to take prop in ltd circumstances. 1. Con. Law governs: takings clause of 5th Am. (allows taking of priv. prop for public use w/ just compensation) How much should govt forbear from interf. w/ indiv. prop. rights? 1. Taney: Importance of accommodating chng to promote compet, encour developm of technologies Overprotecting partic interests = stifling compet and can stunt economic growth 2. Storey: importance of protecting reliance interests to encour investors to invest/risk capital in new proj. a. Charles River Bridge v. Warren – state grant charter to corp to build free ferry near where already given someone charter for toll bridge. Toll bridge wants charter to be read as impliedly excl. and that legisl. viol. their charter. Ct ruled that charter of Charles River Br. Co. did not exclude state of Mass. from chartering another bridge i. Basic legal pt.: this was funded by govt grant, so construe narrowly. If you want ppl to make heavy investm (price above 0) or grant has to be return—should NOT be construe narrowly and will be allowed to chrg. price above 0. ii. Legisl. charters 2nd bridge (w/ intent to chrg. toll temporarily, then given to state to operate as free bridge; 1st bridge invstors sued for viol. of implied exclusivity) a. BUT at time they made decision to invest, agreed to chrg. for use for 40 yrs. only, so investors claim they need to collect more $ to cover cost of investment isn’t true

C.

iii. State wants bridge crossing to be FREE BUT if you want ppl to build other bridges in future, b. Ct.: Strict construction appr: No excl. should be read into a K b/c it benefits public to have free
bridge and ambiguity should be resolved in public’s favor – cheaper crossing. Allowing excl. would impede progress i. Tawney: anti-monopolist - charter is K that should be interp. most narrowly (cant measure exclusivity), meaning Ch. River Br. Doesn’t have excl. rights under theory that public grants should be interp. narrowly; if K ambig.—decision should be to better the public. But, here there’s no no MONOPOLY ii. Dissent: Pro-protection of priv prop rights. Exclusivity SHOULD be read into pub. grants b/c unlike priv. charter (bank) which is not excl (can measure excl!), w/ bridge, taking xtra precautions to protect users should be rewarded. If no exclusivity, progress impeded b/c investors will not be able to rely that investments are safe (anti reliance). EMINENT DOMAIN / TAKINGS – govt allowed to compel transf of prop for public use, in x-chng for just compensation; exception to rules of prop ownership 1. Takings positive b/c of holdout, shakedown problems, but concerns over: cronyism, invidious cronyism against protect classes, and where deal is mere pretext a. Issue: how broadly/ narrowly should grant be construed? b. Exercise of EMD must confirm to: i. statutory reqs such as poss. delegated auth. From legisl. to use it; delegated power broad enough to encompass proj.; that EMD is neces. to complete proj; and that proper proc. Followed for making determination ii. const. reqs: proj must be public use AND condemning auth has offer O just compens. a. Public use req: cts. have held this means “actual use by public” BUT S. Ct. has read req as in 5th Am. – to mean public advantage or benefit (S. Ct view: can use EMD for any proj that has public interest aspect, so EMD rarely invalidated on this basis) b. Quick-take statutes: no “public use” req; lets govt just take land if deposit $ in O bank iii. Kelo v. City of New London – P was HO on waterfront; city tries to use EMD to take land for new dev. b/c Pfizer opening research ctr next door and city want to capitalize on investment. Even tho prop NOT “blighted” - condemned b/c located in dev. area that viewed as distressed (distressed areas incl. in city econ dev. plan) Subj. value of prop at issue. a. P argues: should be brightline that econ developmt isn’t suffic to deem it public use; also rule that there has to be “reas. certainty” that public welfare will result b/c city plan not for benef. of specific persons/grps. b. Ct: No to “public use” req is satisfied just by econ developmt. Purpose must be for public benefit and Ok if benefit some more than others. No to “Reas. certainty” rule b/c impossible to predict. c. Stevens - If deal is pure pretext for benefiting pty. B – then prob. not pretext; racism isn’t public use. If taking from A and give to B to get public use – then ok. 1. legisl. should determ. public use and justific. of takings. 2. “Public use” should be very liberally construed as held in Berman (getting rid of blight), Midkiff (dividing up)—No restraint here. d. Kennedy concurrence: stricter view. This taking passes “rational basis” TEST for public benef; not simply 1 favoring priv. pty (Pfizer) w/ pretextual / incid pub benef. 1. TEST: heightened rational basis to determ. if pretextual e. O’Conner dissent: impossible to administer “purpose TEST” b/c any taking can be couched as for public benef. Recognizes 3 excl. categories of public use: 1. Govt takes and use by public: park 2. Govt take and make open to public: military base 3. **Take and have broader interp. of pub. use i.e. Direct prevention of harm to public: blight; like nuisance but broader. f. Thomas dissent: agrees w/ Oconnor’s 3 catagories; but skeptical that there should be categ. 3; argues that majority’s appl. of public use erases actual definition of it. 1. Takings clause restrict govt ability to take in 2 ways: 1. Public use and 2. Just compens. Is a must g. CASE CAUSED PUBLIC OUTCRY, so states passed laws stating EMD cant be used just for econ dev. Kelo talked about pretext in pub. benef case (new part of test) where Midkiff, Berman did not. c. PATENTS AND TAKINGS: no takings pblm b/c patents NOT prop. this is arguable. GM doesn’t have to pay for IP licenses b/c being run by govt, therefore able to make cars for less and sell for less. Unfair competition? 2. Just Compensation a. Rule: Just compensation defined as FMV of prop when taking occurs. b. How to calculate just compensation. getting no $ for use of bridge = NOT so hot

D.

i.

U.S. v. Miller: US took D’s land (dry bush) – adj. to reservoir - by EMD to build R.R. Just FMV on day of taking offered; no subj. value calc. allowed. Value to govt cant be built in, BUT O can get added value of prev. takings on adj. lands. a. Can buy when dry bush land and sell it as waterfront: ppl buy up land around reservoir. D Argum: taking what would be waterfront land that we bought, to put R.R. thru it 1. Govt used quick-take auth.: rush in and take your stuff and deposit 1/3 of what we appraise it w/ ct. (cashing u out right away). b. View #1 – avoid undue risk, overcompens.: gen. rule that valued at time of transf. probable that taking would’ve occurred. Ct. concerned w/ partic. speculation. Ct. concern w/ choice to take undue risk that’s likely to be taken: further developing land that will be taken that really isn’t serving society at all – putting in $ that will be wasted only to get paid at future, spec. value. Developed gets all profit; society gets nothing. c. View #2 – undercompens.: BUT, undercompensating bad b/c will forestall investors from developing b/c can’t rely that land will be safe from taking; and will wait for govt to do planning. d. Ex.: Depends on whether govt decide to take land to build reservoir (pause) and then decide separately to take Ds land to build R.R., in which case D entitle to value added by reservoir (“assembly gain”) OR whether decided to do both at once, so D only gets value of land pre-reservoir. 1. Here, decided in 1 go, so D not entitled to valued added by reservoir. e. Why ct. decides that investor must return $ when Default rule is that investor keeps $: recovery of $ by govt isn’t creating new adminis. process w/ costs b/c already in front of ct. (COA already brought) 1. Who gets assembly gain? Condemnor b/c they’re creating the value. Except if there’s LL – get all compensation for bldg, and share out lesser values to Ts. f. Consider what’s highest value use (not just current use) in deciding what compens to pay: 1. B/c want govt to consider whether use its proposing is worth it for society – should have effic. incentive to take 2. Don’t want govt to have incentive to structure proj to favor certain land over other; cherry-pick based on current use 3. LO knows govt will pay only for curr. value so I will shut down farm and build 80-story condo to get paid more (now I’ve got high value use…give me more $)

11/29/10 REGULATORY TAKINGS I. Pennsylvania Coal v. Mahon: should there be compens. for govt regulatory taking or is it simply exercise of police power not req’r compens? A. PA CL: O can expressly K away subsurface mining rights.

B.

II.

Facts: LO transf. rt. to dig underneath house / prop. in sep. deed. Later, PA passes new statute making it unlawful to mine coal if it will threaten dwelling 1. Coal co’s rt. to mine for coal worth is null = Taking a. What’s the “it” that’s being taken? If it’s a taking, govt act is a “taking.” If not a taking, govt act is “exercise of police power [to promote taking] 2. Ct.: If we let govt do things and call it ‘police power’ and NOT a ‘taking’ – makes it easy for govt to argue it’s takings as police power. BUT, when does it go too far? 3. Issue: what is the ‘it’ and how much of the ‘it’ is being decr. [in value]? a. P says: it’s complete taking. b. Dissent agrees w/ state and says: restricts only causes small percentage of unusable subsurface land (small amt. of coal compared to remainder of coal mined by P). c. Majority: total wipeout; focus on initial deed to subsurface rights—there was explicit, purposeful transf. of rights and no unconscionability, duress. So, the “it” is not coal that can’t be mined but 100% of explicit transf. of rt. not to be supported that P is being prevented from exercising. i. Effect of legisl. (regul. taking) would undo the deal that was done ii. Good evid of contractual waiver. What gov’t does is 100% denom. of numerator d. Dissent: not really a taking 4. Is this a public nuisance that regulatable by police power? This involves personal K b/w 2 parties and support rights of partic. LO. a. Dissent: Argue you can’t remove something from govt police power by choosing K rights over govt regul. power Pennsylvania Coal Company was going to mine some coal out from under Mahon’s house, which would cause the house to sink into the ground. Mahon sought an injunction against the Coal Company to keep them from mining the coal under his house. Mahon cited a Pennsylvania statute, the Kohler Act, which forbids mining of coal if it would could a house to sink. The trial court ruled against an injunction, saying that the Act was unconstitutional. The state supreme court, however, found that the Act was an appropriate use of police power and gave the plaintiffs the injunction they wanted. The Coal Company appealed to the United States Supreme Court. Issue: Does the state police power stretch so far as to allow the destruction of “previously existing rights of property and contract”? Rule: In general, “if regulation goes too far”, it will be considered a taking.

III.

Analysis: Holmes basically argues that taking away the right to mine the coal by statute is more or less like taking away the coal, period. He argues that if you didn’t want to have your house sink, Mahon either shouldn’t have built his house over a coal mine or should have purchased the land underneath the coal along with the surface land. Generally, Holmes argues that the public good created by an eminent domain taking must be paid for, and so a regulatory taking must be paid for too. In his dissent, Brandeis says that any government regulation, no matter how minimal, will deprive a property owner of a right, but that doesn’t mean we’re always going to compensate the owner. Brandeis says the government has the power to regulate the use of private property in the interest of “public health, safety, or morals” without compensating the owner. Conclusion: The decree of the state supreme court is reversed. Penn central: P is owner of Grand Centrla station – landmark – wants to build big ofc bldg over it BUT landmark law prevents. Issue: taking? NO Factors: diminishment in value; investment backed expectations (does it interfere)? No, bc privileges present use over potential use; nature of govt action (is is phys intrusion or just use restriction? Just use restriction, less of a taking. ion 1. Diminution in value? Ct: No, b/c can continue current use (as R.R. terminal) 2. Public nuisance (Mahon factor 2)? Potential use is against public benefit. Statute doesn’t seem to be about preventing overall social harm. 3. For Reciprocal Advantage? If this is for everyone and everyone burderned and everyone benefited – lass like a taking. BUT, if it burdens minority (small amt. of bldg. have this status) – IT IS a taking. Yet, majority says ‘not a taking’. Not even taking the primary benefit: use as train station. Facts: The owners of Grand Central Terminal wanted to build a high-rise office tower on top of the station. New York City’s Landmarks Preservation Commission refused to allow them to do so. The owners sued in New York Supreme Court, Trial Term, claiming that the application of the Landmarks Preservation Law was an unconstitutional uncompensated taking. The trial court granted an injunction. The city appealed and the intermediate appellate court reversed. The Court of Appeals of New York affirmed. The owners of Grand Central appealed to the United States Supreme Court. Issue: Did the Commission’s application of the Landmarks Preservation Law constitute an unconstitutional “taking” that violated the station owners’ Fifth and Fourteenth Amendment rights? Rule: Regulation authorized by statute that sufficiently frustrates the rational expectations of investors in land capital can amount to a “taking” even if it serves an important public purpose. Analysis: The majority rejects several contentions of the station owners: 1. The Court won’t consider different parts of a property and look at the taking of one part as the taking of 100% of a property interest. The Court will look at the effect on the parcel of property as a whole. (C.f. Brandeis’s dissent in Pennsylvania Coal) 2. The Court says that it won’t entertain the idea that the only way to make the application of landmark laws fair is to make all landmark regulations compensable takings. One reason they won’t consider this is that this would invalidate all landmark preservation laws all around the country. 3. The Court finds that the regulation of the Terminal is not an appropriation of property for a purely governmental purpose. The Court thus distinguishes United States v. Causby. Next, the majority considers whether Pennsylvania Coal applies. If the government’s interference with the station owners’ use of the property is sufficiently severe, it may be classified as a compensable taking. The Court notes that the regulation does not interfere with the owners’ present and long-time past use of the property, and that the owners can still make a profit on the terminal as just a plain old terminal and not an office building. The majority concludes that there was no “taking”. Rehnquist’s dissent argues that the government took away a substantial property right that the owners previously had, and thus decreased the value of their property. It is argued that this would be okay if the government was preventing a nuisance by restricting the use of the property, but no such nuisance exists. Alternatively, the dissent says that regulations in the nature of “zoning” are acceptable because they produce a net gain for society over a broad swath of affected properties and property owners. Instead, the dissent argues in this case that there is a big net transfer from the station owners to the people of the city who are meant to benefit. The dissent says it’s not fair to have the entire burden of preserving Grand Central fall on its owners. That cost is the opportunity cost of not developing the airspace over the terminal. The dissent basically says that it wouldn’t be expensive for the people who will benefit from the regulation to pay the burdened property owner such that the whole thing is at least a wash. Conclusion: The Court upheld the ruling of the Court of Appeals of New York. B. Loretto v. Teleprompter Manhattan: phys. occup. = a “taking” 1. facts: NY req’d LO’s to allow installation of cable on their prop. State comm.. on cable TV decided LO’s only needed to be compens. $1 for allowing cable to run in their bldg. LO’s sue to have cable installation declared “taking” that MUST be compensated. 2. Issue: is “minor but permanent phys occupation” of prop. auth. by govt. a “taking”? 3. Phys. occup. denies LO complete use of prop. rt. as to that fraction of prop. Also, causes loss in autonomy to LO. Easy to administer bright-line rule b/c it is either phys. occup. or not. Also, easy to prove; no need for careful balancing. 4. Rule: perm. Phys. occup. Of another’s prop. – auth. by govt – is a “Taking” = phys. occup. Of priv. prop. 5. How much $ would LO get? Presumably 5% of total paid for cable, which was case under old regime. 6. Test: no 3-factor TEST; but categ. Of activities (‘phys. occup. Categ) that are consid. per-se “takings”

7.

C.

Analysis: majority argues for bright-line rule that strongly protects prop. rights. Dissent: such inflexible, per-se rules are unneces. and a multifactor balance TEST is more approp; fears “slippery slope” of litigation on this issue. 8. Result: anything like this is a “taking” – doesn’t matter that it’s small a. Very consistent w/ longstanding hx practice of treating other utilities: utility easements – which are similar - could not be trasnf. By regulatory police power w/o compensation! Were treated as takings. Lucas v. South Carolina 1. Facts: developed buys undev. prop. at the time, local law doesn’t req’r a permit to develop. bout prop. hoping to develop. Now, can’t develop b/c legisl. passes statute: no new development in this area 2. Issue: did law’s effect on econ. value of P’s prop constitute “taking” requiring just compensation b/c he now can’t develop land. a. Timing appear to be an issue. b. Tr. Ct. finding: If prop used for orig. intent—due to state regul. it's valueless! Settled issue that swings case in P’s favor b/c falls in c. BUT, if regul. is justified to prevent “serious public harm” then it’s not a “taking” but proper exercise of police power. What is “serious public harm” and who determ. it: state legisl? i. So it won’t be so subj., there are est. categs. of things that are “serious public harm” i.e. nuisance. a. TEST: what would’ve been foreseeable at time of purch? Is this a categ. of beneficial use? Govt must be able to show indiv nuisance that must be abated; otherwise too easy for govt to simply claim ‘state law nuisance’! 3. Rule: if state deprives LO of 100% of econ. value of land for public purp, then it’s a compensable taking unless use being taken away was never part of title to land. a. E.g.: it’s not a taking to deprive O of rt to create nuisance on their land b/c that wasn’t pat of their prop rt. anyway 4. Analysis: there are 2 distince cases of regul. Takings: a. Phys. occup. of priv. prop (Loretto) b. NEW RULE! Total econ. wipeout - denial of all economically productive use of prop (Lucas) This case falls into ‘denial of all econ. productive use of priv. prop.’ due to ct. “valueless / wipeout” finding Note: ct. states there are occasions when it will allow such regul. to not constitute compensable taking—when state takes away something LO never had rt. to exercise in 1st place c. It’s reas. for LO’s to expect their prop will be restricted in some ways b/c certain implied limits inhere to title in the land, where govt need not compensate for making explicit limits that were there before but were implicit. 5. Even Penn Coal is departure b/c that was a regul. taking where 95% had essentially been deemed having no viable econ. use. Ct. discusses the factors in this and Penn central signif. Also discuss categs.: Loretto = full occupation and Lucas = full wipeout. Notice: state failed to appeal ct. finding that regul. made P’s prop valueless; won’t happen again. Ct. discusses: how to define that categ. of expected return. What uses can P expect not to have: if it causes nuisances; if it runs afoul of longstanding law…

TEST NOTES: 1. HOW to write response: issue by issue, pty by pty, etc. Doesn’t matter. Whatever shows you’re spotting issues and connecting them to facts in case. 2. There will be a theoretical/ broad policy question like Q. 3 on exam. 2. you can come up w/ set of rules dictating the way ppl can use prop. rule-makers have confidence that we can govern asset well. To do this: we need info about what uses and non-uses are good and confid. In our ability to police and administer those rules. Governance strategy: one that has law making a lot of those decisions. But, excl. strategy: very diff.; rt. to excl. Is one we can enforce. Almost all other arrangements we leave to indiv. w/ asset to work out amongst themselves. Having a pressure release valve when you think those involved in prop. won’t be able to negot. sol’n. e.g. if I tie up my ship on your dock and it rips up your dock on its mooring—I can be phys. present on your prop and do phys. damage thereon but your rt. to excl. is very ltd. b/c have high degree of confid. this will be right answer. E.g. regulatory taking: it’s good reciprocal adv. to have cops, firefighters around no matter the designation of home: historic or non. Someone will have to give up land for the fire station. This is a force transfer = governance model. 3. prop. rules and liab. rules: latter is one type of governance mechanism and former is chief synonym for excl. prop. rule means excl. liab. rule = not excl. opposites of each other. There are lots of shades of liab. rule: take and pay, or could be take and don’t pay. E.g. fair use exception in opyright: taking but don’t hve to pay. Not only is it enforce by wraker liab. rule. Amt. of compens. Due under rule: null.

4. Penn central and Penn coal case: 3 main criteria and cases take diff’t approaches to those. You should still talk about both cases and summarize the general shift that happened from 1 to another; don’t just discuss one. 5. Case that talked about fencing off beach b/c it was public b/c it was custom to treat it as public. don’t need to know criteria used to determ. if something’s a ‘custom’. You should have some idea how you’re going to prove custom or what is meant by custom. [Don’t need to know ex. Discussed in case.] discuss what might be evid. of custom and hows that’s likely to play out in given case. When looking at issue of custom – ct. looks to majority; not so good for minority. Plus and minuses: Communities that tend to have custom are fairly homogenous but has a lot of problems for minority: e.g. racism. Relationship w/in custom communities usu. stable b/c enforcing deals in norm community is both effective AND cheap. Can usu. determ. what went wrong and who’s to blame. If you don’t follow the custom, bing: you’re out of commun. ppl fear of being ostracized. This means you’re locked in if you’re in a norm commun. 6. mortgage esvers b/c it seems to viol. several of unities in ‘tenancy’. Review Harms v. Sprague: will ct. really treat mortgage as severing a ‘joint tenancy’ and why do we care about this? 7. Does shelter rule protect purchasers who purch from GF purchaser even if later purchaser has knowl of earlier pblm in transaction? YES! This is the purp of the shelter rule. Mission of shelter rule is protecting downstream buyers. If I get clear title under recording act, shelter rule allows me to transfer to almost anyone else a clean title. Person behind me sheltered. If the buyer has knowl. of prev. pblm, that buyer can still get clear title. Exception to shelter rule: if person trying to get shelter from me was original transferor b/c worried about collusion. 8. In Loretto, we have categ. of taking (essentially per se) b/c there’s phys. occup. but case notes some phys. occup. are temporary. Is that an approp. issue to spot? YES! This would be analyzed like this: look at facts in Mahon, Penn Coal, Penn Central, and Lucas.

PROPERTY LAW OUTLINE (cont’d)
10/4/10

Illinois Central R.R. Co. v. Illinois
• Facts: Ill. gave ICR land grant that incl. some Chicago waterfront (incl. submerged land in the harbor). IRC proceeded to build wharf. Few years later, another Illinois legislature came to power, realized that is was bad deal, and voted to revoke land grant. IRC objected. o IRC argued they had K and reliance o interest in keeping land grant. • Bkgr.: reasons fot opposing revoc. of grant: 1) IRC aspired to keep in effect a monopoly / reduce vulnerability of investments. 2) priv. interests of state to collect receipt tax if ctrl. by IRC. 3) IRC gave bribes to procure enactment of other legisl. • Holding: Sup.Ct. found that Ill. had right to revoke land grant, and that submerged waters are held in trust by states, BUT that legisl. can’t permanently sell lands held in trust—can only temp. lease stand land to priv., as long as land used for ‘public good’. State had final responsibility to ensure land used correctly, so State had auth. to revoke land grant any time (public trust doctrine) o Ct. held Ill. req’d to pay IRC for expenses incurred for improvements made to land. • Pub. Trust Doct. - State cannot completely abdicate ctrl over lands they’re holding in public trust. o “…the State for the public, and which can only be discharged by the mgmt and ctrl of prop. in which public has interest, cannot be relinquished by a xfer of property." o Two justifications given for Public Trust Doctrine:  State always has rt. to take priv. prop. via Emin. Domain.  State has right to act in public's interest pursuant to States Police Power. o Public Trust Doctrine is only applicable to States, as not been used in cases involving land owned by feds. •Dissent (Reactive appr.): public rights aren’t at issue here. We’ll have time to declare public rights inviolable if r.r. disregards them. Tidal Flow – ocean V. nontidal flow – rivers / lakes •USG weighs in thru Commerce clause power o Imposes navigation servitude on all waters of US that are navigable and states nor indivs. can restrict use o Trumps state law and priv. rights o Not simply public right, but can be reg’d by feds o Right to use,inbuu o Thipubliv – br is an neffective transf.b/c aall nimals of this court o public truse dosctinr cuolse incl. use of commerce- incl. uture orientedstf. Of potential ues. And negative uses. • By dedicateing pstyiv. Og podrddoin yhowongbout public were, • What auth. is ct. relying on? Prescriptive easement – my use of prop. permits continued of use my prop. Custom – no use



Direct monitoring costs of enforcement-

Low enf. and monitoring cost.. benefit of enorcing outweighing cost of enforcing. Society then recog. Prop. where they didn’t b4. Dynamic / fwd looking – how are we going to enf. prop. and what do we get from it See p. 342, C. Rose: pro priv. prop. oriented; still has theory of public prop. Is it true that some things will be better if all have access to it? One pblm = congestion.

State of Oregon ex rel. Thornton v. Hay

Fact Summary. Oregon sought to enjoin Defs, owners of beachfront tourist facility, from bldg. fences on beach areas, which were “dry sand” areas. Rule of Law. Rule of custom, which arises by common consent & uniform practice that it becomes law of the place, or of subj. matter to which it relates. The Defs should be enjoined from constructing fences on beaches, which are customarily used by public. Facts. State in this action has sought to enjoin Defs from constructing fences or barriers on “dry sands” areas of beachfront, which is adjacent to Defs’ prop. Defs concede that all areas of beach that lie seaward of mean high tide line (”wet sands” area) are state recreational area as defined by statute. Dispute centers on sandy area b/w edge of the vegetation line (falling generally on the sixteen foot elevation line) and the high tide line. This area is called the “dry sands” area of the beachfront. The Defendants assert a right to build fences or barriers from the edge of the vegetation line to the edge of the mean high tide line, which would effectively keep the public from entering those fenced areas. The lower court found for the state on the basis of a prescriptive easement, and permanently enjoined the Defendants from building any structures on the dry sands area of the beachfront. The Defendants appealed. Issue. May state limit Defs’ use of dry sands area beachfront, which adjacent to their

property?

Held. Yes. Decree of trial court affirmed. The court cited ample evidence of the historical public usage of the beachfront in Oregon, going back many years. The court recognized that in 1967, the legislature had enacted a statute which stated the public policy of Oregon to be that the public should have the free and uninterrupted use of the beaches and that the statute provided that the public had potentially created easements for access to the state recreation areas and that the public policy would be to preserve such easements. The court did find, however, that the legislature had no power to create easements, and that the question of whether the state had any power over the usage of dry sands areas to be a question of first impression. The court considers the arguments of the parties for and against an easement by prescription and decides against such a theory. The court noted that the rights of trespass and ejection were not commonly available to property owners against the public. The court found the best basis for upholding the injunction against Defendants to be that the public had acquired the use of the dry sands areas of the beachfront through the English common law doctrine of custom. The Court cited 1 Bouv.Law Dict., Rawle’s Third Revision, p. 742, as defining custom as “such a usage as by common consent and uniform practice has become the law of the place, or of the subject matter to which it relates.” The Court cited seven elements of custom: 1) that the usage be ancient; 2) that the usage be without interruption; 3) that the usage be peaceful and free from dispute; 4) that the usage by reasonable; 5) that the usage be subject to visible boundaries; 6. that the usage be obligatory (that the individual landowners cannot decide whether to allow the public to use the dry sands area adjacent to his property); and 7) that the usage not be contrary to other laws or customs. In support of the doctrine of custom, the court found that, although custom had not been previously recognized as a legal theory in Oregon, the rule is sufficiently applicable in this case. The justice system of Oregon is not considered “ancient,” but the court cited the usage of the beachfront areas by the Native Americans at the time the settlers first arrived, and that the traditions of keeping the beaches open to the public had not changed. Concurrence. The concurring opinion agreed with the result, but would not have applied the doctrine of custom. Discussion. Custom is a doctrine that has not been adopted by all jurisdictions. The doctrine of custom provides the court a way around the elements of prescriptive easements, which may not have easily been proven in this case.
1.People v. Goetz 1.Goetz is riding on a subway in NY, known to be fairly dangerous, bunch of black kids surrounded him and one asked for $5, and Goetz pulled out his gat and went to town on their asses. He made damn sure he got all of them, even the last one who was fleeing, saying “you seem to be alright, here's another” and shoots him paralyzing him. His defense is that he perceived a threat under the circumstances. He had the gun on him because he had been mugged before. 2.Law in NY says person may use force to the extent that he reasonably believes to be necessary to defend himself from a reasonably perceived threat of harm, kidnapping or rape. 3.Grand Jury was instructed that reasonability is an objective determination of what a reasonable person would perceive and do, rather than what the actual person there would perceive and do. 4.Goetz wants the subjective approach instead 5.MPC approach merely requires the actor to believe that force is immediately necessary for protecting himself against the use of unlawful force (subjective approach) – defendant's belief must be sincere, need not be reasonable 6.Insertion of the word “reasonably” into NY statute that adopted the MPC indicates that legislature had the intent to depart from the subjective approach of the MPC and wanted an objective test. 2.Common Law Approach is the objective approach – defendant's belief must be both sincere and reasonable 1.objective approach still can take into account defendant's history to determine if, given his circumstances, his belief was reasonable

I.Entity Property – Separating management of resources from their enjoyment 1.Possessory Rights 1.Leases 1.Used to manage complex groups of assets like condos, malls, etc. 2.Specialization of functions – tenant specializes in paying rent, landlord specializes in maintaining

3.Many aspects of both property and contract law involved 1.contract elements like promises 2.property elements like right to exclude third parties 4.Only 4 types of leases 1.Term of Years – Certain length of lease (doesn't have to be a minimum length, but some states have maximums), then can either do a new lease or either party can walk away 2.Periodic Tenancy – Auto-renewing lease unless one party gives certain amount of notice to not renew after the current period 3.Tenancy at Will – Either party can end the lease at any time (usually need some amount of notice) 4.Tenancy at Sufferance – weren't trespassing to get on the property, but now you no longer have the right to stay and can be evicted at will (note you are still not trespassing) 5.The Independent Covenants Model 1.the obligations of the lessor and lessee are separate and failure of one does not excuse the other 2.Paradine v. Jane 1.Guy leased land for farming. English Civil War started, and the land was occupied and the guy couldn't farm. Claimed he didn't have to pay the rent for that period cause he couldn't use it. 2.Just as Lessee is entitled to the profits from the use of the land, Lessee is subject to losses from the land. Would be the same if there was a bad year for weather and no crops grew – landlord still gets his rent, even if the land wasn't useful to the tenant 3.Covenant to pay rent is independent of the covenant to provide possession. Under Independent Covenants Model, the remedy for a tenant whose landlord fails to meet his obligations is to sue, not to withhold rent. Likewise, the landlord's remedy for a tenant failing to pay rent is to sue, not to immediately kick him out. 3.Blackett v. Olanoff 1.Landlord rented several residential units out to tenants, but also rented a unit out to be used as a bar/lounge. The bar's noise constantly disturbed all the residents, and the residents eventually left and stopped paying rent, claiming “constructive eviction” by the landlord's failure to provide quiet enjoyment of the property. Landlord claims he is not responsible for the bar's actions. 2.Court holds for the residents. Although interference by a third party does not relieve the tenants of their obligations per Paradine, interference by the landlord by either action or omission does (constructive eviction). 3.Landlord rented a unit in the middle of residential units to a bar, that would certainly produce noise at night, and then failed to address the residents' complaints. Thus it's landlord's fault. 6.Dependent Covenants – failure of one party's obligation relieves the other of theirs 1.Medico-Dental Building Co. of Los Angeles v. Horton and Converse 1.P rented commercial space to D, the lease contained provisions that D would be the only pharmacy given a lease in the building. P later rented another unit to a doctor, who was in the habit of providing drugs directly to patients, thus effectively being another pharmacy. 2.Those covenants which run to the entire consideration of a contract are mutual and dependent. 3.D's entire reason for renting from P was the restrictive covenant stipulating that they would be the only pharmacy in the building. 4.P thus broke a dependent covenant that thus breached the entire lease 2.Javins v. First National Realty Corp. 1.Bank in DC owned apartments that were rented to low-income tenants. Over 1500 housing code violations were reported, and the tenants stopped paying rent. 2.Warranty of Habitability is implied in a residential lease, and is a dependent covenant. If landlord does not maintain the property to be suitable for human habitation, tenants may break lease. From: Ruey Ju [mailto:[email protected]] Sent: Wed 11/10/2010 7:45 AM To: Milgram, Marlene E. Subject: Property

11/9/2010 Class notes: 1) Page 920 – title search a) Start with the Grantee Index and go backward – from whom did the Grantee receive the title? (Up the chain) b) Then go forward with the Grantor Index – who were the various Grantors granting to? (Back the Chain) i) Make sure there weren’t any other conveyances ii) Make sure that each time the grantee receives the deed from the grantor that the grantee also records it

(1) Worried about conveyance of multiple deeds and which one was recorded first and whether that is part of your title chain c) In the present day, key word searches can be done to verify a clear title d) How far does the title chain go? i) Usually go back a fix number of years according to the jurisdiction e) Adverse possession and wild deed are problems in title searches 2) Recording Acts a) Before Recording acts, there was nemo act, first in time and first in right, good faith purchaser for value b) Recording acts basically protect good faith purchaser for value against interests that are prior and unrecorded c) Types of recording acts: i) Race – the winner of the race to record prevails (1) Unfair so small number of states use it ii) Notice – a subsequent bona fide purchaser wins unless he has notice (actual, constructive, or inquiry), and a recorded interest gives constructive or “record” notice (1) A recording of a interest gives constructive notice (2) Someone with actual notice cannot win even though he/she recorded first d) Race- notice – a subsequent good faith purchaser wins only if he has no notice and records before the prior instrument e) Problems – posted on student portal f) Circularity is a problem with recording acts 3) Hood v. Webster a) Facts: i) Hood transfers the asset to dead husband’s brother and then later transfers to her side of the family b) Court’s analysis: i) Were Hood’s nephew and brother good faith purchasers for value? (1) Husband’s brother defaulted on his committed to make annual payments (2) Nephew lived and helped with the farm c) Kieff’s analysis: i) Was there benefit flowing from the nephew to Hood? (1) The nephew might have provided a material benefit sufficing consideration 4) Mugaas v. Smith – Adverse Possession a) Facts: i) Mugaas (Plaintiff) brought an action to quiet title to a strip of land he claimed by adverse possession and to compel Smith (Defendant) to remove any buildings constructed thereupon. The Plaintiff relied on a fence built in1910 and maintained until 1928 which clearly enclosed the disputed land in favor of Plaintiff’s parcel. The fence disintegrated over time and the Defendant took title in 1941 under a deed, which recited that his parcel included the disputed strip of land. b) Court’s analysis i) The adverse possessor wins in this case (1) A conveyance of record title to a bona fide purchaser will not extinguish a title acquired by adverse possession. (2) The adverse possessor does not have to keep showing his/her possession of the property once SoL has ran (a) However, this causes a challenge to notice c) Kieff’s Analysis i) AP is not recorded and found in title searches

ii) AP starts a new full chain of title, which becomes an issue in nemo dat analysis (AP can be seen as an exception to the nemo dat principle, in that it allows shifts in title other than by a chain of voluntary transfers) (1) AP – the adverse possessor may only receive as much as what the property owner has (a) I.e. If someone is adverse against a life tenant, then the adverse possessor gets the life estate but not the remainder iii) Policy for AP: AP puts the asset to good use or the true landowner is not doing anything useful on the asset iv) Does AP affect information-saving cost? (1) This might a problem for buyers because AP is not recorded in title records – high informational cost (2) Since the AP gets title, the buyer does not do conduct a title search – informational cost saving 5) Zimmer v. Sundell – Wild deed case a) Facts: i) McCanns transfers to Rabb and Rabb transfers to his heirs. Later McCanns transfers to Gage. Rabb records the deed first and Gage records subsequently. Neither party is aware of the other. b) Court’s analysis: i) There were two issues: (1) Under nemo dat, the property was already conveyed and there was nothing to convey subsequently (2) Even though P recorded first, it was a wild deed c) Kieff’s analysis: i) If there were multiple wild deeds, then one would go through a relative strength of title analysis (good faith purchaser for value? Who recorded first?)\ ii) The majority of courts agree that one cannot benefit from the recording act’s exception to nemo dat if one traces one’s ownership to a wild deed d) This is what I think this case means i) Usually nemo dat applies, in which you cannot convey what you don’t have. However under the recording acts, if you record first, then you receive the title. Essentially the recording acts defeats nemo dat, except when the recording is a wild deed. ii) When there is a wild deed involved there is no good faith purchaser, nemo dat applies 6) Nuisance a) Adams v. Cleveland-Cliffs Iron Company i) Facts: (1) Ps brought suit seeking damages in both trespass and nuisance for dust, noise, and vibrations coming from D’s iron ore plant. D’s mine is in operation continuously, never ceasing. Jury instructions in trial court instructed them on both trespass and nuisance, and jury found damages in trespass. It did not reach a conclusion as to nuisance. ii) Court’s analysis (1) iii) Kieff’s analysis (1) Trespass – right to exclude others (a) The injury is visible; personal injury; direct injury (b) Reserved for harm that is substantial enough that it has the effect of depriving the owner’s possession of the land (c) Strict liability (d) Remedy - injunction (2) Nuisance – right to quiet enjoyment of the land (a) Injury is invisible to the naked eye (i.e. smoke, odor); indirect injury

(b) A lot more balancing of interests (c) The remedy is more likelihood damages 7) Easements a) Baseball Publishing Co. v. Bruton i) Facts: (1) The Plaintiff ran a business, which placed billboards on the sides of buildings. The Defendant agreed to let Plaintiff place a billboard, but then took the billboard down. ii) Court’s analysis: (1) Issue: was the contract for a lease, license, or easement? (a) License – simply use (b) Lease – amounting to possession from extensive use (occupancy) (2) Depending on whether the contract was for the use of the wall or possession of the wall (a) According to the court, the wall was still in possession of the owner (i) Therefore, the contract was for a license (3) Usually a license is revocable, but in this case the contract doesn’t seem to be revocable (a) Is there an easement? (i) There seems to be an interest in land conveyed 1. Conveyance of interest in land has to comply with statute of frauds – is there a basic writing? (b) License v. Easement (i) License doesn’t convey property; exclusive rights (4) Court provides specific performance as the remedy (a) Argument against specific performance in this case: (i) Billboard space is to allow advertising (ii) There are plenty of such spaces to allow advertising (iii) The D could have simply paid the damages to allow advertising on another billboard except this one (b) However, the more property-like  easement (i) Less property-like  license iii) Kieff’s analysis: b) Fontainbleau Hotel Corp. v. Forty-five Twenty-Five Inc i) Facts: (1) The construction of a new addition to a hotel will block sunlight from another hotel’s pool. ii) Court’s analysis: (1) A landowner does not have a legal right to the free flow of light and air across the adjoining land of his neighbor. (2) Could this case about nuisance? (a) The Court states US jurisdictions has not be willing to deem blocking sunlight as nuisance unless there is a focused use of sunlight (i.e. solar panels) (i) This might cause people to race to build solar panels and attempt to sell the easement to builders iii) Kieff’s analysis: (1) Negative easement by contract or prescription (a) We are more worried about negative easement by prescription (i) There is barely notice of the true owner (b) We are less worried about positive easement by prescription (i) It is like AP – demonstrative (ii) There is more notice of the true owner (2) What are solutions to easement conflicts?

(a) $$$- buy the easement

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