Study Notes on Original Acquisition of Property Rights

Overview of Property Rights

  • Focus on laws governing original acquisition of property rights.

Example of Property Ownership

  • Apple as an Example

    • Individual asserts ownership over an apple.

    • Rights associated with ownership:

    • Exclusion: Ability to prevent others from eating or touching the apple.

    • Consumption: Right to consume the apple.

    • Pledge as Collateral: Option to use the apple as collateral for a loan if a willing party is found.

  • Acquisition of Ownership

    • Owner acquired the apple by purchasing it from a grocery store (previous owner).

    • Ownership rights once belonged to the grocery store.

    • Emphasizes the transition of property rights from one party to another.

Original Acquisition Principles

  • Focus on original acquisition of property rights without transactions such as buying or gifting.

  • First in Time Rule

    • Basic principle in property law declaring that the first party to possess an asset has rightful ownership.

    • Recognizable in everyday situations, e.g., Major League Baseball (MLB) foul balls being abandoned if they leave the playing field.

    • First person to take possession of an abandoned item typically becomes its legal owner.

Case Study of Home Run Ball

  • Barry Bonds' Record Home Run Ball (2001)

    • Controversy arose when the first caught home run ball was claimed by Alex Popov but ended up with Patrick Hayashi after a crowd caused it to come loose.

    • Court's Decision:

    • Ball was ordered to be auctioned, with proceeds split between Popov and Hayashi.

    • Raised ethical concerns about the judgment potentially encouraging violence for high-value possessions.

    • Argument for recognizing first possession as hitting the glove to assign rightful ownership.

Broader Implications of First in Time Rule

  • Economic Impact in Natural Resources

    • Application to the extraction of subsurface minerals (oil and gas).

  • Minerals Estate

    • Defined as the rights to extract minerals beneath the land,e.g., oil and gas.

    • In the U.S., private landowners hold the mineral rights down to the depths beneath their land, based on the Abandonment Doctrine.

    • Contrasts with other countries where the government retains mineral ownership.

    • Issues arise from the movement of oil and gas beneath the land leading to disputes over extraction rights.

The Rule of Capture

  • Historical rule governing oil extraction:

    • First party to extract oil below their land claims ownership of the extracted resources.

    • Problems resulting from this include:

    • Over-extraction leading to reduced yields.

    • Example: Only 5% of oil from Spindletop, Texas was extracted due to poor extraction practices.

Addressing Over-Extraction

  • Compulsory Unitization

    • Proposed solution in some states to manage conflicts and over-extraction issues by allowing a majority of landowners to consolidate efforts.

    • Potential for increased efficiency in resource management through cooperative agreements among landowners.

Historical Context and Public Land Survey System

  • Application of first in time principles on unsettled lands.

    • Colonists claimed lands based on discovery, often ignoring indigenous claims.

  • Principle of Discovery

    • Governed the taking of title to lands, often resulting in moral and ethical issues recognizing indigenous inhabitants.

  • Public Domain

    • Land deemed public once discovered by colonists, leading to federal management.

    • Still considerable land under public domain.

Land Ordinance of 1785

  • Established surveying methods for public lands:

    • Divided land into 36 square mile townships.

    • Each township further divided into one square mile sections (36 sections per township).

    • Current usage for land identification in real estate practices.

Surveying Land: Usage Example

  • Description of Townships and Sections

  • Example with Township 3 North, Range 2 East, and sectioning practices.

    • Method of locating property involves dividing sections into quarters and sub quarters to pinpoint exact locations.

Settler Incentives and Squatting Laws

  • Encouraging settlers on public domain lands:

    • Preemption Act of 1841: Gave squatters the first option to purchase land they occupied at a reduced price.

    • Homestead Act of 1862: Allowed squatters to claim land free after 5 years of occupancy.

    • Reflection of first in time rule by rewarding individuals who claimed uninhabited lands first.

  • Reasoning behind Squatter Laws

    • Addressing issues of land ownership rights in favor of those who actively settled and utilized the land.

Conclusion

  • Importance of understanding principles of original acquisition of property rights.

  • Ongoing impacts on modern ownership laws and practices in the United States.