Day 13 notes: IIIB4, IIIC

III. Property
B. Acquiring property rights (cont'd.)

4. Found property

"Finder's keepers"

Law distinguishes "between lost and mislaid items, 'lost' meaning that the owner doesn't realize the property is missing." and so doesn't search for it.
Finder becomes keeper of lost items. (P82)

Estray statutes
For property above a stipulated value, finder must appear in court and complete a document. The court advertises. After passage of stipulated time (usually a year), title passes.

Benefit: lower information costs
by encouraging the finder inform the courts (CU156)

Ex: Huthmacher v. Harris's Administrators, 38 Pa. 491 (1861): A party purchased at an administrator's sale a drill machine, which had hid away in it by the deceased a quantity of notes, to the amount of about $ 3,000, money to the amount of over $ 500, and two silver watches and a pocket compass of the value of $ 60.25.

Who owns the hidden items?
It was held that nothing but the machine was sold or passed to the purchaser, neither party knowing that the machine contained any such articles.

Law of restitution

"Better to give the finder a reward, the domain of the law of restitution, for finding, rather than ownership of the thing found." (P81)

Benefit: avoids over-investment in search and precaution. (P81-2)
Found treasure escheats to the government, which can choose reward. (P36)

III. Property
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:
    (1) ownership by a single individual
    (2) in perpuity
    (3) of a territory demarcated horizontally by boundaries drawn upon the land, and extending from there vertically downward to the depths of the earth and upward to the heavens
    (4) with absolute rights to exclude would-be entrants,
    (5) with absolute privileges to use and abuse the land, and
    (6) with absolute powers to transfer the whole (or any part carved out by use, space, or time) by sale, gift, descent, or otherwise (LEA186)

Comments:

(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)

(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)

(3) ownership ties 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)

(4) absolute rights to exclude would-be entrants

Ensures integrity of boundaries

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

What are the facts of the case?
What did the Supreme Court of Vermont decide?
At the time of the storm, who likely placed the higher value on exercising rights?
Why does the Coase theorem break down in this situation?
What arguments did the defense offer?
Why did Putnam's worker push Ploof away?
What incentive is created by holding Putnam liable, rather than his worker?
Why didn't the court accept the argument that other moorings were available?

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 v. Lake Erie Transport Co. 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)

What are the facts of the case?
How do the facts here differ from Ploof vs. Putnam?
What did the Supreme Court of Minnesota decide?
Do you agree with the dissent that this was an "inevitable accident"? Why or why not?
Did the Court conclude that the ship owner had been negligent?
How would economists characterize the damage costs?
So why assess damages against the ship owner?
Who was in the best position to assess the risks involved, the ship owner or the dock owner? Why?
How would you respond to the argument that the ship was there at the request of the dock owner?

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