Property Law - Original Title and Theories of Property Rights

Week 1: Original Title & Derivative Title

• Legal title to property can be obtained through original title or derivative title.

Original Title (First Possession)

• Methods:
  • Discovery and capture (first occupancy).
  • Creation (usually intellectual property).

Johnson v. M’Intosh

• Deals with Indian land titles.
• Issue: Whether indigenous people had the right to convey land.
• The court relied on the law of conquest and the law of discovery which usually applies to sovereign nations, in deciding the case.
• Law of Conquest:
  • Developed by European civil law lawyers.
  • Applied to negotiated surrenders (capitulations) of fortified cities.
  • Private property and civic rights remain intact unless changed by the new sovereign.
• Law of Discovery:
  • Explorers could acquire territory for their government over unoccupied territory or territory occupied by "heathens and infidels."
  • Required establishing permanent control.
  • Title and sovereignty resided in the discoverer, not the inhabitants who only had a right to peaceful occupancy.
  • Right to occupy land could be lost by conquest or abandonment.

Theories of Property Rights

• Normative (based on moral grounds) and descriptive.
  • First Occupancy: "First in time, first in right."
    • Moral support for discovery and rule of capture but tends to favor those with resources to discover and exploit natural resources.
  • Labor-Desert: People should have the benefits of their labor.
    • Basis for intellectual property law.
  • Utilitarianism: Property rights should allocate resources efficiently ($shift resources easily and cheaply from less to more productive uses$).
    • Supports individual ownership over common ownership.
  • Property as Empowerment: Direct more resources to marginalized members of society.
    • Example: marital property.
  • Critical Legal Studies: Legal doctrines reflect the struggle between dominant and less powerful segments of society.
    • Example: adverse possession favors the underdogs.

Pierson v. Post

• Deals with rule of capture or first occupancy.
• Issue: Whether Pierson or Post acquired title to the fox.
• Wild animal in natural state is ferae naturae (wild by nature) and owned by no one.
• Title acquired by capturing or killing; example of title by first occupancy.
• Majority Opinion: capture means taking physical possession by killing or seizing and provides certainty, discouraging litigation.
• Dissenting Opinion: Hunter in "hot pursuit" should have exclusive right to capture, and labor-desert theory.

Ghen v. Rich

• Custom in whaling industry.
• Whalers harpooned whale and attached flag, whale would sink, and finder would notify whaler.
• Court recognized custom: custom of the whalers was reasonable, only affected a small group of people and did no harm to the general public.
• Rejected the requirement of capture because the custom of the whalers was reasonable.

Utilitarian Theory of Property

• Property rules should promote economic efficiency by encouraging an optimal allocation of resources.
• Allocative Efficiency: Concerned with the efficient distribution of resources.
  • Pareto Optimality: A transaction is Pareto optimal when it makes at least one person better off and makes no one worse off.
  • Kaldor-Hicks Efficiency: A reallocation of resources occurs when the increase in utility is sufficient to compensate those who are worse off even though they are not actually compensated.
• Externalities: Occur when a person can affect others without having to take that possible harm into account.
  • Can be positive or negative.
  • Tend to create a suboptimal allocation of resources.
• Coase Theorem: If transaction costs are near zero, an efficient allocation of resources will occur regardless of where the initial entitlement is placed.
• Types of Entitlements:
  • Protected by a property rule: Can only be taken with consent.
  • Protected by a liability rule: Can be taken with compensation.
  • Protected by an inalienability rule: Cannot be transferred at all.

Keeble v. Hickeringill

• Issue: Competition vs. Interference.
• Fair competition (better product/service) is lawful; unfair competition (frightening away customers) is not.
• No property right in ducks before capture, but right to try to catch them w/o interference.

Ratione Soli

• Ownership of land gives constructive possession of wild animals on it.
• Superior to claim based on first occupancy in case of trespasser to discourage trespassing.
• Title is relative.

Animus Revertendi

• Domesticated animals have habit of return.
• Promotes domestication of wild animals.

Ferae Naturae

• Wild animals outside natural habitat are not ferae naturae.
• Migrating animals: Government regulation based on police power or commerce clause, not proprietary rights.

Popov v. Hayashi

• Rule of capture applied to baseball.
• Baseball not ferae naturae.
• MLB abandoned ownership when ball left field.
• Court invoked "equitable division" and both parties had equal claim to the baseball.