#11079 - Judicial Rules - Property

1. Coase

   1. If trading were costless, then assets would always end up in the hands of those who value them most (efficient).

   2. This is based on the idea that parties benefit from trade (a higher value user could buy from a lower value user with both parties benefiting). This would be the most efficient allocation of resources.

   3. Corollaries:

      1. When transactions are costless, entitlements should be allocated on the basis of non-efficiency criteria (e.g., fairness).

      2. Externalities are reciprocal in nature.

      3. Transactional costs in real world:

         1. Negotiation and litigation costs

         2. Free-rider problem.

         3. Hold-out problem.

         4. Opportunism, bilateral monopoly.

      4. When transactions are costly, entitlements should be structured such that the higher value user gets the entitlement and the least cost avoider bears the liability (the cost of the problem)

      5. Therefore, we want to structure the law to reduce transactions costs and promotion of private agreements of parties to bargain for their mutual benefit (define clear entitlements, disseminate information)

2. Calabresi & Melamed, Property Rules, Liability Rules, and Inalienability (p. 281-287) – When there are externality conflicts, the courts can resolve the conflict in one of two ways – either through a property rule solution or a liability rule solution. A property rule gives the right to one of the parties and allows those parties to bargain with those rights. A liability rule imposes a settlement on the two parties at a price determined by the court.

Personhood personal fungible (easy to calculate value)

1. Trespass – A trespass is a physical invasion (i.e., an encroachment) that usually has a strict liability rule (liability is placed on trespasser regard of intent or reasonableness)

2. Remedy usually is monetary

3. For permanent trespass (encroachment)

4. Nuisance is an activity (non-trespassory, i.e., not physical invasion) that substantially interferes with another’s use and enjoyment of his land.

   1. Usually negligence liability (not liable if source’s action was reasonable).

   2. Public nuisance: an unreasonable interference with a right common to the public.

      1. Legal action usually must be brought by public official.

      2. Some nuisances are both public and private nuisances.

   3. Private nuisance: Substantial invasion of another’s use and enjoyment of land that is either (1) “intentional and unreasonable” or (2) “unintentional and otherwise actionable under the rules controlling liability for negligent or reckless conduct, or for abnormally dangerous conditions or activities”

      1. Intentional: purpose or substantial certainty

      2. Unreasonable if:

         1. “gravity of harm” to the P outweighs the “utility of the D’s conduct.”

         2. harm to P is serious and compensation would not make D’s conduct infeasible

      3. substantial: slight inconveniences or petty annoyances are insufficient to establish nuisance liability

      4. use and enjoyment of land

5. Strict liability and negligence

   1. Negligence: Negligence – D is liable if D’s conduct was unreasonable (harm > utility); P bears the residual risk (incentive for P to avoid)

   2. Strict Liability – D is liable regardless of the reasonableness; this means that D bears the residual risk and there is an incentive for D to invest in safer alternatives

1. Social norms can be at least as important as formal legal rules and institutions in understanding the governance of resources, creating the structure in which people live and work, and resolving disputes.

2. Ellickson:

   1. Lumping: resident should put up with minor damage stemming from isolated trespass incidents.

   2. Mental Accounting: keep records to prevent repeated violation

   3. Self-Help (like lobster gangs of Maine)

   4. Cooperation

3. What Makes Social Norms Work?

   1. There were repeat players (so reputations got around & identities formed)

   2. There was a sense of reciprocity

   3. Monitoring costs were low

   4. There were multiplex relationships (issue linkage),

   5. Tiered sanctions

   6. High cost to resort to the legal system (legal sanctions were cost prohibitive)

4. What Makes Social Norms Fail?

   1. The influx of outsiders (less likely to abide by social norms & inability to exercise right to exclude)

   2. Conflicting, non-reciprocal uses (not repeat players)

   3. More extensive & expensive monitoring costs

   4. Inadequate sanctions (think of what happened to the lobster gangs of Maine)

   5. Nearing end of relationship

      1. Cooperation is stable as long as foresee relationship continuing.

      2. Cooperation may unravel when relationship about to end

5. When are Social Norms Efficient

   1. Want to minimize sum of costs of conflict and costs of resolving

   2. cost to outsiders are high

      1. High price for access (e.g., monopoly, cartel)

      2. Discrimination

   3. Slow adaptation to new circumstances

   4. Sanctions too strong: self-help may be violent

6. Should courts defer to social norms?

   1. Advantages: could be more efficient

   2. Disadvantages

      1. Costs to outsiders and dissenters

         1. Higher prices, less access (monopoly)

         2. Unfairness (especially if race-, gender-biased)

      2. Lags (slow adaptation to social change)

      3. Self-help sanctions may lead to violence

1. Easement is a nonpossessory right to use land of another

   1. Owner of servient tenement ay not revoke the easement at will or interfere with easement holder’s use of the property.

   2. Easement does not necessarily create an exclusive right (both easement holder and landowner may use same land).

   3. Dominant tenement: The property/parcel/owner who benefits from the easement.

   4. Servient tenement: The property that is burdened by an easement

2. Types of easement:

   1. Affirmative – give the holder of the right to go onto the servient estate for a specific purpose (e.g., right of way).

   2. Negative – gives the holder the right to prevent the possessor of the servient estate from doing some otherwise lawful act on the servient estate (e.g., restriction).

      1. Historically were limited to: Air, light, lateral support, flow of an artificial stream, conservation

   3. Appurtenant – benefits the owner or possessor of a particular parcel of land (the benefit runs with the land)

   4. In gross – benefiting a person whether or not the person owns any specific property (i.e., does not transfer with the land)

3. Creation of easement:

   1. Express Instruments:

      1. Grant: A conveys right-of-way across A’s land to B

      2. Reservation: A conveyed a fee simple to B, but expressly reserved for herself a right-of-way across the land.

   2. Implied:

      1. Easement implied from prior use:

         1. Common Owner - The two parcels were under single ownership that was severed, one of the parcel must be transferred to a new owner and at least one must be retained by the original owner.

         2. Prior Use - There was a “permanent” or “continuous” use across the allegedly servient tenement prior to parcel being severed.

         3. Visible and Apparent - The use was apparent upon reasonable inspection at time of severance.

         4. Necessity - The easement is “reasonably necessary” for enjoyment of dominant estate.

      2. Easement by Necessity:

         1. Severance of title

         2. Necessity for the easement at the time of severance

            1. Majority view: strict necessity: the parcel must be entirely surrounded by privately-owned land, and the owner must not hold an easement or other legal right of access to cross the adjoining land to reach a public road.

            2. Minority view: the easement must be convenient or beneficial to the normal use and enjoyment of the dominant land.

         3. E.g. a landlocked land

      3. Easement by Prescription

         1. Similar to adverse possession. Same elements required.

      4. Easement by estoppel

         1. A license, typically for access purposes.

         2. The licensee’s expenditure of substantial money or labor in good faith reliance.

         3. The licensor’s knowledge or reasonable expectation that the reliance will occur.

   3. Scope of easement:

      1. Express Easements

         1. Clear Terms

         2. “Primary purpose” of easement

         3. Reasonable burden imposed on servient tenement

      2. Prior Use Easements

         1. Scope of prior use

         2. Reasonably foreseeable future uses

      3. Easement by Necessity

         1. Reasonable needs (benefit of use) vs. Reasonable burden (cost of finding an alternative)

      4. Easement by prescription: scope of adverse use

      5. Easements generally not subject to doctrine of changed circumstances

4. Implied Easements Between Neighbors

   1. Why enforce?

      1. Henry v. Dalton – better rule is that it is a revocable license…prevents burdening of lands with restrictions upon easily misunderstood oral agreements. No hardship for one to secure easement by deed.

      2. Shepard v. Purvine – close friends and neighbors – for Ps to have insisted upon a deed for easement would have been embarrassing and expressing doubt as to friend’s integrity

   2. Remedy?

      1. Liability rule, because they have trouble negotiating, and the transaction costs are high.

5. Termination of Easements

   1. By Expiration

      1. End of estate (if created for the life of the holder or for a term of years)

      2. Violation of condition in defeasible easement

      3. Easements by necessity expire when necessity ends (other easements can also end if purpose for easement ends).

      4. An easement that relies on a structure on the servient tenement (e.g., stairway on or passageway through building) expires if structure is destroyed.

   2. By Easement Holder

      1. Release (grant or devise back to servient owner)

      2. Abandonment (or non-use for statutory period, not re-recorded)

      3. Estoppel

      4. Excessive use (rare)

   3. By Servient Tenement Owner

      1. Merger (servient and dominant tenement recombined)

      2. Sale to bona fide purchaser (if express easement not recorded first)

      3. Prescription (retake by adverse use – block dominant owner)

   4. By 3rd...