C. Exercising property rights

    William Blackstone, English jurist, Commentaries on the laws of england, 1765-1769--the best known description of the doctrines of English law and the basis for university legal education in England and the U.S.

    do the first, then...
    What rights would you want specified in your title?

    Benchmark: "Blackstonian" bundle of land rights handout

    Comments:

    Right #1: ownership by a single individual

    "When many people use the same piece of land, tragedies of shirking and grabbing lurk." (LEA184)
    "After hundreds of years of socialization, Hutterites have not been able to dispense with their intrusive methods of social control." (LEA185)

    Right #2: in perpuity

    perpuity: fee simple
    lifetime: usufruct
    "entitles its owner to continue his current land use as long as he can." (LEA187)

    Which is more efficient? Why?

    usufruct, empirically, lead to under-investment and over-exploitation by failing to identify successor (LEA187)
    "Consistent with the efficiency thesis, as land becomes scarcer, technology advances, and literacy improves, a group tends to move away from the classic usufruct and toward the fee." (LEA188)
    "[T]he preeminent advantage of an infinite land interest is that it is a low-transaction cost device for inducing a mortal landowner to conserve natural resources for future generations." (LEA188)

    infinite land titles were granted in: ancient Egypt, Greece, Japan, the Ibo of Nigeria, and the Navajo. (LEA189)

    Right #3: ownership includes above and below surface

    Facilitates clear, comprehensive ownership; accommodates erecting and excavating activities

    "Under English common law, a landowner has a right to lateral support, meaning that his neighbor has a duty to continue to provide the support that the adjacent land would receive under natural conditions." So neighbor's pit cannot cause slippage of owner's property. (F114)

        Difficulty of bundling rights: PA cases, "a state constructed largely out of coal," separates surface, support and mineral rights. (F113)

    Right #4: absolute rights to exclude would-be entrants

    Ensures integrity of boundaries

    Ploof (p) v. Putnam (d) 81 Vt. 471 (1908) -- Ploof, wife and 2 children sailing on Lake Champlain. (CU161)

1. What are the facts of the case?
2. What did the Supreme Court of Vermont decide? (affirmed judgment against defendant and remanded [for damages])
3. At the time of the storm, who likely placed the higher value on exercising rights?
4. Why does the Coase theorem break down in this situation?
5. Why did Putnam's worker push Ploof away?
6. Why hold Putnam liable, rather than his worker?
7. Suppose there was a fallen tree that Ploof could have used, would you rule against Ploof in that case?

    Lesson: The "doctrine of necessity" =>   trespass is a "qualified right" not an absolute right

    "The intruder can defeat it by showing that his land use, which is incompatible with the injured landowner's, is more valuable." (P54) 
    = the private-necessity exception to the general rule against trespass. (CU161)

    Highest-cost user or lowest-cost avoider of damages depends on circumstances.

    Vincent (p) v. Lake Erie Transport Co. (d) 109 Minn. 456 (1910) -- Case: Vincent v. Lake Erie Transport Col, 109 Minn., 456, 124 N.W. 221 (Supreme Court of Minnesota, 1910). Steamship Reynolds of Lake Erie Transport did $500 damage to a pier in 11/1905 in Duluth because it could not get a tug to pull it out. Defendant claimed no fault from effort to find a tug. Court ruled for plaintiff. (CU162)

1. What are the facts of the case?
2. How do the facts here differ from Ploof vs. Putnam?
3. What did the Supreme Court of Minnesota decide? (affirmed liability for damages)
4. Did the Court conclude that the ship owner had been negligent? Why or why not?
5. So why assess damages against the ship owner?
6. Who was in the best position to assess the risks involved, the ship owner or the dock owner? Why?
7. A child runs into the street in front of your car. You have extraordinarily quick reactions, and you swerve to miss the child and hit a parked car. Should you be liable for damages to the parked car? Why or why not?

Lesson: Liability does not = "blame."
    The purpose of assigning liability is to provide incentives for optimal decision making
    Guideline: Assign liability to the lowest-cost avoider of damages

    Right #5: absolute privileges to use and abuse the land

    relatively few restrictions in use under common law aside from noninterference (externalities) (F110)
    "children are difficult to pen" so landowners must fence dangerous property (P53)

    limitations on land use:
    Restrictive covenants (F125)
    Zoning regulations

    Restrictions are inefficient unless they make aggregate property values rise.
    (an externality)

    Right #6: absolute powers to transfer in whole or in part (any part carved out by use, space, or time) by sale, gift, descent, or otherwise

    transferable => "alienable" (LEA190)
    alienability may not extend to outsiders, to preserve close-knittedness   (LEA190)
    Ex: CA invading NZ
    Ex: bequest: feudal/tribal world, law typically specifies heirs--primogenitre. (CU157)
    Ex: mortgage: "The power to mortgage, which is essentially a conditional promise to transfer, may enable an individual with little capital to acquire land and help a current landowner to obtain credit." (LEA190) (collateral)

    transfer in part = unbundling
    "as long as parties understand what they are purchasing, the law should generally enforce agreements to unbundled property rights and sell them." (CU164)

    land has more rebundling options because "Ownership of land is controlled by an elaborate recording system, involving title deeds, land registries, and the like." (F125)

    Sanborn (p) v. McLean (d) 233 Mich. 227 (1925) -- Defendant's deed contained no restrictions nor did the subdivision map. Defendant still could not open a commercial business on his plot. The original owner of the subdivision sold the first set of plots with restrictions against commercial development. Although other plots were later sold without the commercial development restriction, the owners of these plots were held to the restriction because there was an implied negative easement at the time those lots were sold. The defendant had constructive notice of the negative easement because the recorded deeds to other lots in the subdivision contained the restriction. (F126)

1. What are the facts of the case?
2. What did the Supreme Court of Michigan decide? (affirmed  judgment in favor of plaintiff to enforce the negative easement subject to modification that the structure can remain if converted to a use consistent with the negative easement)
3. Did the McLean's deed specify any relevant use restrictions?
4. Then how can the court justify its finding of a binding 'negative easement'?
5. What search methods were available to them in this case?
6. What if the defendant had examined local deeds of properties on nearby streets but not on the same street as the property. Would that have been sufficient search?
7. How can a use restriction of this sort promote efficiency?

    Lesson: use rights may be implicitly restricted subject to reasonable search costs.

    Rebundling is limited by ability of 3d parties to find out via inspection or record search. (F125)

    Covenants "run with the land" if they are reasonable See cases (F126)
    replaces the old "touch and concern" rule which may have been too vague to be a useful "bright line" rule. (F126)
    (Example: a firewood delivery promise would not carry forward) (P67) 
    Ex: easement stays with the property. (F124)
    Ex: restrictive covenant: (1) generally apply only to the "initial single ownership of a large area" and (2) are inflexible.
    requirements about how obvious covenants must be "in order for it to be binding on a new owner are stricter for passing burdens than for passing benefits." Since benefits are more likely to be disclosed voluntarily. See cases (F126)

    English common law has "rules against perpetuities"
    Typical limit on perpetuities: "lives-in-being plus 21 years" (CU158)
    It's a generation-skipping rule. Helps curb abuses by foolish heirs. (CU159)
    Example: Eddie Park

D. Conflicting property rights
    --Incompatible uses (externalities)

    External cost = "nuisance" in law

    The market solution: assign property rights & allow bargaining
    The market problem: transaction costs
      Coase applies as long as TC < value of transaction (P51)