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Property Bundle of sticksWhy have property at all?Utilitarian - create borders, create reliance, prevents fights. Can create value.Advance autonomy - We can do things we would not otherwise be able to do.Pierson v. Post - FOXHUNTRule: Must at least mortally wound an animal to own it.Insight: Rules of ownership answer to deeper values that stand behind the rules themselves. Economically dominant skill is set by ruling of the law. Emphasis in this case is put on mortally wounding which decreases the value of spotting.Ghen v. Rich - WHALING (the iron holds the fish)Rule: Custom has a bearing on the law in narrow circumstances. Insight: Here, because of the spotter’s fee, spotting does have value (information costs). Having to look for the whale decreases the opportunity costs for whalers. Also, there may be issues with 3rd parties who aren’t familiar with customs (notice) - doesn’t matter in this case b/c very cabined off, and because the whaling industry is so important. Ghen allows for a market in spottingKeeble v. Hickeringill - SCARING DUCKS Rule: Even though did not own the ducks, the court held that could not scare the ducks away because of tortious interference with business prospects.Insight: The law aims to create competition because that leads to lower prices for consumers. Healthy competition is welcome, but any malicious competition is not allowed. If School A moves in next to School B and steals students, that’s okArmory v. Delarmie - CHIMNEY SWEEP (finders)Rule: 1st finder always gets priority over everyone except the true owner.Insight: Judicial error. This is too broad - what if there is a series of finders? What makes the first finder more entitled to the item than the 2nd finder? The court should have just held 1st finders beat converters. Clark v. Maloney - LOGGING Rule: 1st finder > 2nd finder. Title is greater closer to the true owner.Insight: Neither are the TO, but 1 has current possession. Why give to most recent finder? 1) incentivize chaining down, not logging. 2) could incentivize foul play.Eads v. Brazelton - SUNKEN VESSELS Rule: In order to claim a sunken vessel, you must 1) Notice to the world and, 2) Diligence.Insight: 1) Notice - knowing is not simply enough because it does not raise the value of the sunken treasure. But it is necessary to prevent competition on the water.2) Diligence - Must engage in some activity leading to active domination (endeavoring to raise it to the surface). The common law looks to increase wealth. Want the ships to come to the v. Aves - SLAVERYRule: When a slave owner would voluntarily bring his slave to a free state, the slave was free. Fugitive slave act - if a slave escaped to a free state, he had to be returned to his master.Insight: Perhaps the greatest moral tragedy of slavery is that you don’t own yourself. It reduces the slave’s autonomy to almost 0. Moore case - OWNING YOUR OWN CELLSRule: Esentially, the court punts and doesn’t rule that your cells are your own property (courts don’t like to call body parts property because they fear what may happen down the line in terms of markets etc.). Insight: How can this case be resolved on breach of a fiduciary if the court never determines that it is property? (seems to indicate there may be some ownership in the cells.) If the cells are so good for research, shouldn’t the court just rule that they don’t belong to the patient? Would keep prices down and benefit the publicAnswering who owns the cells could create civil liability way down the line on cell lines that were not properly owned or understood. A couple of theories of ownership (Property is not always market alienable)1) Market alienable - Can sell but not give (bankruptcy) 2) Alienable - Can give but not sell (Kidneys) 3) Market inalienable - can’t sell or give away (Dr. license to write presecriptions) Newman case - CORNEARule: Court rules you must get the parents of the deceased child permission to take the cornea. Insight: Seems to indicate that corneas of the deceased are property. Hecht case - SPERM IS PROPERTYRule: Court held that sperm being left for man’s lover upon his death was property. Insight: Courts had an aversion to do this before this case. They may fear that there will be markets in sperm and body parts next.This is 1st move in the direction of propertizing body parts Is a kidney being just alienable a good thing? There could be a shortage of kidneys then. Could this harm both those who have it and can’t sell them as well as those who need them but can’t buy? But courts don’t want to look like they are advocating for body parts to go to market. Think bundle of sticks, can have property without every stick. Midler v. Ford - RIGHT OF CELEBRITY (persona/image)Rule: Independent of copyright law, property right in your celebrity image in CA & TNInsight: 2 sidesIt is their image, and they have the right to exclude. In a sense, Midler has an ownership right in our minds.But their “celebrity is in all of our heads and without us, there is not much value for them. Would be in the commons.Judge Alex Kosinski believes this will get too broad and undermines the spirit of IP lawEssentially no one will be able to build on ideas that underlie celebrityArtists moral rights - artists right to not have his work altered or changedVARA and MAPA legislation - we follow England Artists moral rights. Do these help or hurt the artist?Lower the value of art? OrProtect knowledgeable artistsIs this really more about protecting artwork? Or about protecting the artists who don’t know about the legal systemPembroke - SITE SPECIFIC ARTRule: Site specific art is not protected by MAPA Insight: The court effectively rules that land value is more important than moral rights. Moakley - SCULPTURESRule: While there may be times that artwork is protected, the value of real estate is more important than artist’s moral rights. Insight: Because this art often stays with the land, it could potentially give a new owner of the real estate a “dead asset.” Could increase your value if people like it, but it could decrease the value if nobody wants it. Corrow - CULTURAL PATRIMONYRule: Items owned by a cultural group that are so important to that group that they are unable to transfer them even when they want to. NAGPRA protects the cultural patrimony of Native Americans. 2 Prong testOngoing historical, cultural, or traditional importance andBe considered inalienable by the tribe by virtue of the object’s centrality in tribal culture Insight: Are there problems with notice here? The statute is constructing a form of ownership - Government is creating assets that are not transferable.Must balancePrivate demand and a limited supplyPublic value and value to a specific group Arguments against cultural patrimonyFed gov dropping the value of goods Tribe loses the right to choose if they want to increase or decrease economic or cultural valueCould create a black marketArgument for CPIf you left without the law, the value will always go to 0 because of self-dealing and short-sitedness Evans - REASONABLE FLOW THEORY Rule: East of the Mississippi, water use is governed by the reasonable flow theory. Insight: This theory states that the owner upstream can use water for all of their natural rights, even bringing downstream owner’s use to 0. However, the upstream owner can use for artificial needs as long as the downstream owner can cover his natural needs. To disincentivize waste.Natural needs - home uses - drinking water etc.Artificial - economic needs (irrigation becomes artificial after you provide for yourself)Coffin - NATURAL FLOW THEORYRule: West of the Mississippi, Natural Flow Theory (1st in time) governs water use.Insight: If someone buys land upstream of you, they would have to lease water use from person 1. West of the Miss, water is very valuable and gets people to move west and prosper. However, the water use must be for beneficial use. Hammonds v. Central KY - OIL & GAS Old Rule: You own gas when you remove it from the ground. When you put gas back into the ground, you no longer own it.New Rule: You can put gas back into the ground if the cavern is sealed - Confinement w/out leaks Insight: Because gas is a fugitive resource, putting it back in the ground effectively places it back in the commons. The new rule didn’t really overturn the old rule. It just adjusted to the worlds technology that is available now. This rule effectively lowers the price of gas, and takes out the market in storing gas.In the US, if you own the surface you own the mineral estate below - not so for oil and gas Johnson v. M’Intosh - INDIANS DISCOVER - NEMO DATRule: Native Americans had the right to occupancy (can’t transfer), but not the right to dominion (can transfer). Insight: The legal analysis is perfectly sound. The application is the moral outrage. Essentially the court preserves Nemo Dat by saying that the Indians never truly owned the land. Therefore, they could not sell that which they did not have. Illinois RR - PUBLIC TRUST DOCTRINERule: Government can’t relinquish all of its rights in property (can’t give absolute title to a company). Must comply with 2 prongs that are very local and fact intensiveTo the extent that selling small parcels promotes the public interest in land and water remaining The disposal doesn’t substantially impair the public interest in the land and waters remainingInsight: What they can do is not all that clear. The government has a fiduciary duty to keep the land for the benefit of its people. “The government can more abdicate its authority in the public land trust than it can in the police power.” Government can’t let public loss > private gain. Legislatures can’t act in their own interests. Public Trust Doctrine - searching for optimal balanceGovernment - trustee, Land - Corpus (asset), People (beneficiaries)Private ownership gives public land a value of 0.Need some public lands, but too much will decrease valueGovernment retains legal title, People get equitable titleIf trustee acts in their own interest rather than that of the people, beneficiaries can sue Rent seeking - Rent-seeking implies extraction of uncompensated value from others without making any contribution to?productivity.When an asset is held in the public, and private ownership occursAt each level of contracting there is more loss (RR can charge rent for others to use the land)Nobody is a perfect agent RR has been given too much in this case. Keeping 7% for public use was not enough. Lake MI v. Army corps - PUBLIC TRUST DOCTRINERule: Loyola giving a lot of the space back as a public access bike path was not enough to allow the government to completely abdicate its interest. Insight: Courts don’t know how much value is going to come downstream. Northwestern University did do the same thing and get away with it. Not all privatization is rent seeking.J. Sax environmental article - 1970s Sax argued using Public Trust Doctrine to protect environment. Transformed using the doctrine of public trust, from access to commercial navigation →protecting the environment. Environmentalists argue only way resource can be in public trust is if it is left untouched. Any citizen has standing to sue.Oregon beach case - ENCLOSING BEACHESRule: Wet sand below the high tide line is public property. Wet sand above the high tide line is private property, but you cannot enclose it. Above the vegetation line, private property can enclose.Insight: Custom - it has been this way since time and memoriam. Does the custom come from the fact that it was so expensive/difficult to build? Or was there a codified rule?Public Easement - split ownership. Right of access by the public.Implied dedication - right to public access at the liberty of the ownerOwner can probably take that back Prescriptive easement - form of adverse possessionCourt decides that in personem would be an inefficient way to settle this disputeWould have to do this with thousands of parties all along the Oregon coast line.Court wants to use an in rem solutionWhen custom can become the lawAncient - Time in memoriam - be skeptical of this oneWithout interruption - to the extent that it can be usedFree of dispute - ReasonableEfficiencyJusticeNoticeCertaintyObligatoryMoral notion - allow citizens to use the beach Legally obligatory - Public Trust doctrineNot repugnant to the conscienceBig Pie/Small Pie - If the profits of the hotel would be greater than the public benefit, you are not acting in the interest of the least well off. Some argue - set all private law rules to maximize wealthThis will increase tax revenue to pay for real important thingsGrow pie as large as you canOther say (egalitarian)Smaller pie and keep open for people getting sun and fishingThis kills the profit of the hotelTribune v. Oak Leaves - OWNERSHIP IN AIRWAVESRule: You can have ownership in airwaves by some combination of 1st in time and amount of investment. Hornbooks will tell you first in time, but there are definite investment values being weighed. Insight: This case is not very clear about which factor is more controlling. Was a bad test case because the company that was 1st in time also invested more. Custom also developed about 50 frequencies away. Was it best for the court to punt/defer to an agency? DBT doesn’t think so.Coase Theorem - essentially the party who can make the most out of it will buy it. If 1st in time governs, WGN would get it. As long as the right is alienable, it didn’t matter which the court picked. The whole problem will reintroduce itself even with a federal agency involved. Intel v. Hamidi - PRIVATE INTRANETRule: Court holds that the intranet was open access. In order to collect damages for trespass to chattels, Intel needed to show that they had physical damage to their server. Insight: Intel is using “impact litigation” to protect their turf. They get more value if they can exclude. Intel dropped their nuisance claim because it’s similar to a smoker by a person with nice clothes. Epstein analysis: Thinks there is an automatic right to excludeIntel should be able to exclude to keep from slowing down their economic valueOnce the rights are given to intel, can always buy them back from Intel.If intel won’t sell, then the $ value for selling to does not outweigh the damage.If intel had tried harder to fence out , court might have actedCourt saying the money to fence out should come from Intel, not the commonsProfessor Lenly: Says this is the same as not giving right of celebrityNet-neutrality - anti-commonsIntel has linked to the internet willingly - cost of fence should be borne by intel?IncentivesIf court does the blocking out, there will be deterrence of “blocking technology”Sometimes the court is the perfect fence builder - spending $4M on a firewall might not be efficientIPPatents - Protect useful inventionsCopyrights - protect specified expressionsThe verbatim expression is protected, but not idea itselfThere are 2 levels of copyright lawApply to get patent from the patent office - super easy to getUtilityNon-obviousnessNoveltySubject matterPatent litigation - much tougher. The court may decide not to enforce patentWe have IP to give the exclusive right to own But does this create a non-rivalrous monopoly? We want to incentivize advancement and exploration not merit for the creatorInternational News v. AP - WHO OWNS THE NEWSRule: Quasi-property right exists in Hot news such that appropriating the published news gathered by another for further commercial purposes constitutes unfair competition in trade.Insight: Court says that what International news is doing would disincentive gathering the news. Balance between commons and anti-commons. Balance the incentives and the public having the right to know. Trenton Industries - HIGHCHAIR CASEInsight: For this industry to work, inventors have to be able to trust manufacturers. This is really theft of trade secrets. Tragedy of Commons - Garrett HardinEvery open access area will end in a tragedy of the commons from “open access”Economic benefit is removed, but costs are left behind (people externalize costs)Used cattle in the field as an exampleCattle graze (derive benefit)Leave behind poop (costs)The real problem is the “right to use” if the open use is unregulatedEx. Central ParkIf Hardin was right, taxes would go up infinitelyIf you could do anything in the park (unregulated) then it may end in tragedy.Therefore, restricting the right to use with regulation is the key to keeping open access areas from becoming a tragedy of the commons.Tragedy of the anti-commons - Heller & EisenbergToo much right to exclude makes private owners dictators over the assetEnd up with too much property rule protection which leads to too many holdouts and transaction costsToo much right to exclude leads to inefficiency. If you give out too many patents, there is a patent thicketPatents are needed to incentivize - but how far does this go?During the monopoly, nobody else conducts research - dead weight lossOnce you are past the optimization point, you are creating economic wasteWay too easy to get a patent - barrier is too lowThere can be just as much loss associated with anti-commons as a commonsPeople v. Olivo - SHOPLIFTINGRule: A merchant can have someone arrested for shoplifting if they are acting in a manner inconsistent with the owner’s dominion rights over the item and if the owner believes that the shoplifter has the subjective intent to steal the item. Don’t have to leave the store like many people think. Criminal law keeps the bundle very close.Insight: This rule is criticized for numerous reasons.Pro-prosecutionGives too much power to merchantsMay incentivize crime. If you’ve already crossed a line, may as well finish the crimeIf we punish attempts it incentivizes 2nd attemptsNebraska v. Iowa - ACCRETION V. AVULSIONAccretion: The land abutting the water goes through slow changes all the time. The lots adjust with the waters edge. You are just as likely to be a winner as you are a loser. This way both people can keep their beach front property value.The current midpoint of the water is the dividing lineAvulsion: Fast sudden changes that make the river completely change course. If the river completely changes to a different channel. The midpoint on the ground of where the former bed of water used to beStrain v. Green - FIXTURESRule: Real rule - Secret intent does not count toward what is a fixture. 3 prong test - this does nothingActual annexation to the realty or something appurtenant toApplication to the use or purpose to which that part of the realty with which it is connected is appropriated andThe intention of the party making the annexation to make a permanent accession to the freehold. Insight: The way to solve this problem is to look at comps in the area and determine what the prices are in the area. Determine if the house could be going for the price it is going for if it had all these nice fixtures in it. The mistake on the seller’s part would be to enumerate everything in the deal. You can really use this to your bargaining advantage if you let the buyer inquire. Leave the chandelier out of the deal, get a low price, say you thought the chandelier ws includedJacque - INTENTIONAL TRESSPASS ON PRIVATE LANDRule: Land owners get compensatory and punitive damages. The right to exclude is protected by liability rule and property value protection.Insight: Even though the Jaques had no damages, the court realizes that their right to exclude has been violated. In a sense, the compensatory damages are for the loss of the right to exclude. Hinman Air - FLYOVER RIGHTSRule: Planes can fly over your land as long as they don’t interfere with your use of the land.Insight: Generally, your property rights go all the way up to the heavens and down to the depths of the soil. In some way this is a subsidy to the airlines. Transaction costs would be enormous for the airlines. Essentially a tax on landowners. At all times you have an option of commons, here the court chose the landowners. Airline profitability trumps land profitability.Ploof v. Putnam - WHO OWNS THE DOCKRule: Doctrine of necessity: In time of necessity, those engaged in boating can dock w/out permission. actually owns the dock in times of necessity. Insight: The dock owner is protected by liability rule protection. This goes to the bigger question of “what is the cause of what?”Did the dock damage the boat? Or did the boat damage the dock?Better way to phrase the question is “what is the cost of what?”Here, shipping is required for the world to go around, and docks are not very expensiveWho should pay for the fence - Dogs v. SheepMcConigo - HUNTERS IN HOT PURSUIT Rule: Can’t exclude a hunter in hot pursuit of a buck on your private land in South Carolina.Insight: Court is weighing the cost of the right to exclude and the need for people to hunt and eat. The priority is given to hunters and the need for food. Uston v. Resorts Int’l - PRIVATE BUSINESS RIGHT TO EXCLUDERule: Casino did not have the right to exclude because counting cards would have to be outlawed by regulators first. Insight: This is a real move toward public accommodation. Should they be able to exclude whoever they want? In this case they can’t.State v. Shack - PRIVATE HOME RIGHT TO EXCLUDERule: A private homeowner does not have a right to exclude if it would be deleterious to the public welfare (the losses of the workers).Insight: The landowner was turning away the non-profit workers who wanted to provide medical and legal services to the migrant workers on his land. Here, the landowners gain for his right to exclude would not be much, but loss to high value social norms is always great.Counter argument - right to exclude also creates valueThis converts private land to the care of the public via a private law rule. Pile v. Pendrick - SLIGHT ENCROACHMENTS - TEARDOWNRule: Court ordered an injunction and made them tear down the building over 1 ? inches.Insight: Generally courts ask 2 questionsWhat’s the damage done?Would it be wasteful to make them tear down?Allowing teardowns puts such an emphasis on surveying correctly. Teardowns effectively raise the cost of surveying. This raises the cost of construction. Here, the court is actually looking at the remedy before the rightCompare with - Golden Press - SLIGHT ENCROACHMENTS - DAMAGESRule: Court ordered damages rather than a teardown.Insight: There is a big connection with intent and injunctions. Court may have viewed that is a de minimis (too trivial)No obvious answer if this is about intent or if it is about who bears the costCourts do need to take into account surveying technology and the cost of constructionIn a world where surveying is very difficult, you may allow some slight encroachments Eyerman v. Mercantile Trust - RIGHT TO DESTROY IN DEATHRule: You cannot tear down your house after death because the court follows the common law doctrine of waste. Insight: The court aims to prevent waste, but were they wasteful here? DBT thinks this could have been resolved by contracting and private ordering. Essentially, if lady had given notice to her neighbors they she was going to tear down the house, the neighbors would have had the opportunity to buy the home from her (wealth maximization). If there is no price at which she would sell, the house was with the right owner. This is a giveaway to her neighbors. Allen v. Hyatt - BAILMENTS - PARKING GARAGERule: Self-parking areas are bailment relationships. Insight: A bailment is when you deliver possession to someone else for a time period - it is under their control. Who bears the cost of loss in a bailor/bailee relationship? - insurance issueYou rent the space, buy their care, and buy their insurance Essentially self-parking garages are now insuring something that is already insured. This is a very expensive way to do things, and will increase the price of self-parking.This blurs the distinction between valet and self-parkUsed to be difference in price showed a different presumption of careADVERSE POSSESSION - Doctrine of the thief winsThis doctrine curtails people’s right to excludeEvery legal system on earth has thisIt comes down to putting the land to good useElementsActual Exclusive - fill in the shoes of the owner (gatekeeper)Open & Notorious - plain sightContinuous - replacement conceptStatute - how long you need to occupyHostile - claim of right (good/bad faith)Tacking - can establish continuity if there is “privity” between you and the preceding adverse possessor. Good/Bad faithSome states rule that if you occupy in bad faith, No APWhy Good faith requirement?Who is the least cost avoider now that this problem has arisen?Why would you want the bad faith requirement?Incentivizes putting property to good use - if your land is so big that you have no idea that someone is on the corner, it could be used more efficiently (keeps people from taking too much).Makes citizens police their own land - keep people off if you don’t want them there - kicks out bad gatekeepersEssentially serves as a system of checks and balances - you get rights in land, but you also have duties. Howard v. Kunto - ADVERSE POSSESSION (TACKING) (CONTINUOUS)Rule: Tacking:When one adverse possessor goes out and another one comes in, the statute continues to run if there is privity between the first and second adverse possessors. Continuous: Continuity is measured by reasonable use in the context of the case (summer homes).War of the remaindermenO grants Blackacre to A, then to B. (A is your wife, B is your son).Create a crossing of economic and property interestsA does not care about the long term value after she diesShe will suck the land dry (cut all the tress for lumber)Profiteering v. wealth maximizationB will start to monitor ACommon Law Doctrine of WasteAffirmative Waste - removing items from property in a less than efficient wayOverlogging, overuseDifferent from how you would act if you had Fee Simple AbsolutePermissive Waste - Allow things to deteriorateBaseline - where the property was in value when A took possessionAmeliorative Waste - Technically not waste (knocking down a crappy old barn)But B might want the “rustic eye-sore”Even if the value of the land increases, this is wasteGiveaway to BLife estates really only work well if the parties get alongOtherwise it is best to use a trust systemSymphony Space - RULE AGAINST PERPETUITIES IN NEW YORKRule: In New York, options are invalid if you are unable to show that the option would be completed within 21 years of a measuring life. Also, corporations can’t be measuring life. Insight: The rule against perpetuities is valid law in New York and applies to options.CONCURRENT OWNERSHIPTENANCY IN COMMON - each owner owns a share of the property.Ownership is divided but both have equal right to possessTenants share costsEither tenant can transfer their interest via a will or a KRights are descendible If A transferred to a 3rd party, B’s piece of the land is still hisYou don’t need the consent of the other tenant to KJOINT TENANCY - each owner has an undivided interest in the property (co-owners but joint unities)A.K.A. “will substitute” - essentially you can pass on property without a will or having to go to probate court 1) Property was acquired at the same time2) Equal interests in3) Title by same will or deed4) Equal right to possession (meaning equal access not equal share)If one of the tenants dies, their interest ceases to exist. IT DOES NOT PASS TO B.Rights are not descendibleIf a joint tenancy is ever broken, it becomes a tenancy in commonHarms v. Sprague - JOINT TENANCY MORTGAGESRule: In a joint tenancy, mortgage liens do not transfer if the tenant who got the mortgage dies Insight: Because all of A’s interests vanish upon his death, the lien vanishes as well. This is a risky move for banks.Title theory of mortgages - Bank owns the title during the financing periodLien theory - Title remains with the buyerREMEDIES FOR WHEN CONCURRENT OWNERS DON’T GET ALONGPartition by saleAsk the court to order the estate to be sold and to divvy the proceedsMost efficient way to partitionPartition in kindEssentially drawing boundaries on the propertyTell clients not to do this - but do it delicatelyOuster One co-owner is completely excluding the otherWhen you have been ousted, you can ask for an AccountingAccounting - Asking the court to tell you what value you have been precluded fromDelfino v. Vealencis - PRESUMPTION AGAINST PARTITION BY SALE Rule: 2 part test before the court will order a partition by sale - courts favor partition in kindPhysical attributes of the land or such that a partition in kind is impracticable or inequitableThe interests of the owners would be better served by a partition by saleGillmor v. Gillmor - OUSTER DEFINITIONRule: To qualify as an ouster, the must be in 1) exclusive use & 2) excludes a fellow cotenant from exercising his rights.Insight: A co-tenant has every right to practice exclusive possession. However, the problem comes when he excludes the other co-tenant’s right to occupy, use and enjoy.Economic loss can constitute as an ouster without complete lockoutRECORDING SYSTEMS - A SELLS TO B 1ST, C 2NDNemo Dat: If there is no recording act in place for a particular jurisdiction, this controls.“Cannot transfer that which you do not own.”Race recording: Winner of the race to record title wins. Even if C records first, he wins.Incentivizes B to record his rights.Weakness: If C purchases in bad faith, he can still get titleNotice Recording: Subsequent good faith purchaser wins unless they have notice of the 1st sale (C wins unless he knew about B).Weakness: What counts as notice?Actual notice (subjective)Constructive notice (should have known)Inquiry notice (need to inquire)Race-Notice recording: Subsequent good faith purchaser only wins if she has no notice and records before the prior investment is recorded.MARITAL PROPERTY - When you move to a new state, the regime changes to where you moveCommon Law property: What you bring to a marriage is separate propertyIncomes are separate until you have a divorce Equitable division in the case of a divorceCommunity property: Everything that comes into the marriage during marriage is 50/50 Comingling of propertySpecial rules for separate propertyCA, TXO’Brien v. O’Brien - PARTNERSHIP THEORY OF MARRIAGERule: In a common law state, Licenses/Personal capital is equitable property in a divorceInsight: This can be viewed as an investment relationship. In this case she won, but she could have just as easily lost. Wife not only paid for more things while husband was getting the medical license, she also missed out on her own financial gain (Outlay and Opp. Costs.). LANDLORD/TENANTIndependent covenant model of leasing: Even if the goods delivered are inadequate, the tenant still has to pay.The tenants payment is not contingent on quality of the goodsDependent covenant model: There is now an implied warranty of habitability that landlords will maintain for tenants.The tenants payment is contingent on quality of goods. Javins v. First National Realty Corp. - DEPENDANT COVENENT MODELRules: Landlords have a duty for the premises to meet housing codes.Their property must also meet the standards of landlord/tenant acts If the house is not up to code, the tenant does not need to pay rent.Must give notice to the landlord and give them a reasonable amount of timeInsight: These rules incentivize landlords keeping their properties up to code, and landlords getting stuff done.Can also put the rent in escrow which initiates a local suit - incentivizes the landlord to cure the breachCan be punitive damages for significant violations that go uncured for a long timeWorks in the agrarian model we have today where people’s living spaces aren’t just farmland and tenants don’t know how to repair things.There are arguments that this hurts the poor in an attempt to help themRent could steeply increase to get in compliance with codeFAIR HOUSING ACTNo discrimination in housing RacialConnectivity to educationTraits are expanding to people with disabilitiesTo decline someone, you must show there are business purposes involved (e.g. bad credit)For these suits, if the tenant wins, the landlord almost always has to pay the tenants attorney feesExceptionAG v. Desilets - MRS. MURPHY’S RULERule: If you aren’t in the commercial renting business, you can discriminate for religious purposes. Insight: Sometimes the case will come up where there are competing values. In this case, religious rights outweigh those of people looking to cohabitate before marriage.Smith v. McEnany - CONSTRUCTIVE EVICTIONRule: Partial ouster by LL completely absolves the T from performing the covenant to pay rentInsight: Partial ouster serves as a constructive eviction. Because the T has the right to use and enjoy the whole property, if the LL acts in a way that takes away some of that right to use and enjoy (constructive eviction) T does not have to pay rent.Blackett v. Olanoff - RIGHT TO QUIET ENJOYMENTRule: Excessive noise by 3rd parties be a constructive eviction. Insight: Essentially this becomes a question of whose right to peaceful enjoyment trumps? For the LL, the rule becomes that you can’t sell the same thing twice for completely different uses (apartment next to a rowdy nightclub). Doctrine of Constructive Eviction applies when: T were “very substantially deprived” of quiet enjoyment of their leased premises “for a substantial time.”In re Kerr - LL DUTY TO MITIGATERule: In states that follow the independent covenant model, LL don’t have a duty to mitigate. In states that follow the dependent covenant model, LL do have a duty to mitigate.Somer v. Kriedel - LL DUTY TO MITIGATE NJRule: A landlord seeking damages from a defaulting tenant is under a duty to mitigate damages by making reasonable efforts to re-let an apartment wrongfully vacated by the tenant.Insight: Determined by assessing if LL used “reasonable diligence” to re-let (showing to prospective tenants, advertising – determined on a case by case basis). LL required to carry burden of proof that he used reasonable diligence / in a better position to show evidence (showings, ads).LL arguments: LL relied on this tenant to pay after they provided everythingWhat if the landlord finds a credit worthy tenant and wants this oneIf tenants are in short supply, good tenants could be hard to findTenant arguments:Why are leases any different than contracts?Landlords are not lost volume sellers Overall:Defaults create economic lossWant a rule that minimizes lossIf you are in a “no-duty” state, add a “good faith commercial clause” Essentially makes it like a contract where there is a duty to mitigateSUBLEASE/ASSIGNMENTPrivity of Contract: Who is bound by what lease. Basically just look at who signed what leases.Privity of Estate: 2 conditions must be metThe parties must have interests that are directly “nested” with each other (Lease carved out of a fee simple).1 of the parties must be in actual possession or have a reversion.Subleases: LL PT T2 (PT carves T2’s interest out of the Prime lease)PT deals with LLT2 deals w/ PTLL does not deal with T2Privity of KLL in privity of K with PTT2 in privity of K with PTNo privity of K between LL and T2Privity of estate will be the same as K for subleasesLL in privity of estate with PTT2 in privity of estate with PTNo privity of estate between LL and T2This is because T2’s interest in not carved out of LL’s. T2’s interest is actually carved out of PT’s interest.Assignment: LL PT 1st Assignee (PT transfers entire prime lease, no carving out)1st Assignee now deals directly with the landlord LL PT Privity of KNO privity of estateLL 1st AssigneeNO privity of KPrivity of estate - because rather than carving 1st assignee’s interest out of the PT’s interest, 1st assignee’s interest is the entirety of the Prime Lease which is a portion of LL’s interest.If 1st Assignee defaults, LL can still go after PT because of Privity of K (insurance policy of original deal)Assumption: 1st Assignee expressly agrees to be bound by the terms of the original leaseLL 1st AsigneePrivity of KPrivity of estateLL PT - still bound by privity of KNovation: Parties agree to erase PT’s privity of KLets PT completely off the hook. No longer bound by privity of K or EstateLandlord can charge for this, because it is getting rid of his insurance policyKendall v. Ernest Pestana, Inc. - WITHOLDING SUBLETS OR ASSIGNMENTSRule: LL must have a financially relevant reason to withhold an assignment or subleaseInsight: Often, landlords will put provisions in leases that say they have the right to decline sublets and assignments. This really limits the rights of the PT, because the LL could always just say no. SERVITUDES - Contracts that bind successors in ownership Easements (intrusion and exclusion)Covenants (about land use)Typically affirmative actionOwnerWaives rights to certain intrusionsAgrees to “use restrictions”Runs?Generally yesSometimes (Tests)RightsIn rem, like propertyIn personem - like KEasements: irrevocable conveyance of the right to engage in a particular use of land Dominant - land being benefited or enhanced by the easementServient - burdened landCreated by writing in a deedEasements are irrevocableRun with the landAffirmative/Positive easement - the easement holder has the right to do something that would normally be considered a trespass.Negative Easement - easement holder has a right not to do something Easement by Necessity - If there is land between your land and a road Limited by context. If another road becomes available, easement is goneEasement by implication - Since time in memoriam Sort of the law enforcing customEasement by EstoppelIf A gave B the right for a long time, but then A tries to take away the rightElementsPermissionDetrimental relianceInequitable to revokePrescriptive EasementsEssentailly Adverse possession without the exclusive and continuous elementsCovenants: Contract in which an owner agrees to abide by certain restrictions on the use of his or her land for the benefit of others.Shelley v. Kramer - RACIALLY RESTRICTIVE COVENENTSRule: Racially restrictive covenants are unconstitutional.Insight: Because of the way covenants are enforced, in this action the state would have been enforcing discrimination. That violates the 14th amendment of the constitution. However, this is only a half victory for civil rights. People can still use emotive force and put up racially restrictive signs. Tests to see if the covenant runs with the landOld rule: Moxhay Case - Notice was enough for the covenant to run with the land. However this doesn’t answer the question of whether it runs with the land, it just answers whether he knew about it.Real covenant test - damagesBurden to run:WritingIntentNoticeHorizontal privity (a special relationship between the original promisor and the promisee (can vary from state to state, typically involves a complete "carve-out," i.e., privity of estate))Vertical privityTouch and concern the land (directly about the use of the land)Benefit to run:Writing IntentVertical privity (but, reduced verticality: only requires that the person enforcing the benefit own some piece of the land owned by the promisee under the original covenantTouch and concern the landEquitable service test - injunctionsWritingIntent to runTouch and concern the landBurdened party had actual noticeALI Restatement test: wants to modernizeAll contracts can run if the parties wish - gets rid of “touches and concerns the land”Writing to satisfy SOFDoes not violate public policy (Shelley)ZONINGEuclidian Zoning: policy of using different areas of the city for different thingsThe closer you get to manufacturing, the more valuable the land gets. In theory residential land should be least valuable/expensiveThe idea is there won’t be as many nuisances if all the factories are in same sectionCumulative - If people want, they can build a residential home in the factory section. Can only add to a “higher-impact” sectionLand in the higher impact sections is so expensive that no one will really want to do it anywayThis does not violate the equal protection clause of the constitutionThe police power is being used to promote the general welfare“single family home”Non-cumulative - restrictiveCriticismCreates artificial prices of real estateCould be seen as discriminatoryCan cause housing prices to go up and housing stock supply to go downAlways a question of whether this should be done through private law or through legislationOrthodox Church - RELIGIOUS ZONING DISCRIMINATIONRule: You can’t hold out a zoning variance because of religious purposes.Dolan - ROUGH PROPORTIONALITY EXACTIONSRule: Rough proportionalityEssential Nexus between legitimate state interests and the conditions (bike path)Rough proportionality between the impact of the project and the dedication cost“[t]he city must make some sort of individualized determination that the required dedication is related both in nature and extent to the impact of the proposed development.”Insight: An exaction is an agreement by the developer to donate a certain amount of property or money to the local community as a condition of obtaining approval from authorities to proceed with the es down to who bears the cost of developmentThese offset the burdens imposed on the community by the developmentHave to do an impact study to see how much you have to give backBusiness will say they are low impactCommunity will say highCity is just trying to tax the dealMany of these deals take place in shady back roomsEMINENT DOMAINUltimately the Government has sovereignty over landTakings must be used for public useThere must be just compensationThis doesn’t account for subjective idiosyncratic valueThe market fluctuates greatly - could be unjustGovernment surplus - all of the land plots the government is taking are worth more together than they were as individual piecesThere is value added in EDCitizens don’t get that upsideThere would be holdouts and transaction costsWhy have just compensation at all?Just compensation (people would price at their subjective value)Cost internalization (Check on the Government)Investor confidence (Fear of the Gov could prevent people from investing)Fairness - “demoralization costs” (land without much objective market value can lead to the under compensation of people)Prevents exploitation of the powerless (Gov would abuse their power and put the roads through the cheapest land)Poor would end up comping the public for a lot without much in returnKelo v. City of New London - ED TO ALLEVIATE BLIGHTRule: Economic development constitutes a public purpose, even if the land itself if not entirely used by the public.Insight: The court decided that “public purpose” meant in the “public interest” rather than “public access”The court said that public interest would be furthered by job growth, increased tax revenue, and economic developmentThe interesting part of this case is why didn’t Pfizer just buy the land?The land is cheaper for Pfizer if they buy from the governmentBecause the government can take at a lower price, it shifts the transaction costs to the owners of the land being takenRegulatory Takings: The land you own becomes so encumbered with regulations that it decreases the valueRegulatory taking decision treeIs the taking due to a physical occupation, or a regulatory restriction?PhysicalPermanent taking = compensationTemporary taking = very unclearRegulatoryIs it nuisance preventing?Nuisance preventing = not a takingIf not nuisance preventing, has there been a total diminution in value?Total diminution = TakingPartial diminution = Unclear ................
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