I. General Property Theory A. Values that Property Doctrine Serves



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E.Elements of Property Rights

1.Right to exclusive possession

2.Right to exclusive use – exclusion of others

3.Right to dispose or transfer

II.RIGHTS OF POSSESSORS, Rule of First Possession

A.Acquisition by Capture

1.Wild animals: Once a person has gained possession of a wild animal, he has rights in that animal superior to those of the rest of the world.

a)When animals escape, they resume status as common property

b)Provides notice to world through clear act (wounding)

c)Serves as a reward for useful labor

2.Oil and gas

a)Treated like wild animals – they are only possessed when captured

b)Only applies to pre-served or native oil and gas – does not apply to oil and gas that has been extracted and put back in ground for storage

c)Compulsory Unitization

(1)Vote of landowners is taken and if proportion supports it, then unit of all owners formed.
(2)Allmembers share in production no matter whose well extracts resource
(3)Field is managed as though it had only single owner trying to maximize value

3.Water

a)English law – each landowner over an aquifer could withdraw freely without regard to effects on neighbors – some states follow this

b)Most states – reasonable use, but wasteful uses of are were unlawful, but now governed by legislative programs

c)Western states – surface water and groundwater governed by first in time – prior appropriation.

(1)Encourages premature development and excessive diversion
(2)Rations poorly when supplies dwindle

d)Eastern states – riparian – each landlowner along source has right to use, subject to rights of other riparious

(1)Takes no account of productivity of land the water serves
(2)Encourages development of bowling alley parcels of land perpendicular to banks of stream

4.Consequences of Rule of Capture

a)Common property

(1)Mineral resources, natural resources, animals, water, radio frequencies.

b)Advantages:

(1)Certainty
(2)Notice

c)Disadvantages:

(1)Person who was using resource “best” got right to resource – created waste of resources, unneeded dams (in case of water), overuse of resources.
(2)Can’t bargain with other people for use – have to grab up certain amount before bargaining.
(3)Doesn’t allow for expansion – if more people move into area.
(4)Doesn’t create incentive to invest in technology for better use – use fastest, easiest way. Prevents future investment since right is already allocated.
(5)Cost will be unusually high – will be overinvestment in capture technology, where people could bind together to capture rather than each going his own.
(6)Premature exhaustion of resources – will not take into account finite nature of resource – over-consumption means overinvestment, overinvestment encourages over-consumption. Difficult to set limits once investment has been made in capture technology.
(7)No incentive to leave resource in the ground, since someone else can claim it. This means that natural storage devices (underground aqueducts, oil reservoirs) are not used since it is not claimed until captured.
(8)Automatically favors big business b/c of distributional consequences.

5.Case Law

a)Acquisition by Capture

(1)Actual possession: Pierson v. Post, p. 19: Post starts chasing the fox and then Pierson knows that fox is hunted, but shoots fox, kills it, and carries it off.
(a)Occupancy of Beasts ferae naturae is corporal possession
(b)Wounding of maiming of beast is possession
(c)First in time is necessary for sake of certainty and preserving peace and order in society
(d)Ratione soli - constructive possession – wild animals are in possession until they leave the land
(e)Livingston’s dissent

(i)Better to adopt customs of sportsmen to determine ownership of the fox

(ii)Recognition of a property right in wild animals when there is a reasonable likelihood of capture would conduce to more rapid extermination of foxes (noxious beasts and best way to encourage destruction).


(2)Custom: Ghen v. Rich, p. 26: Whale was shot by whaler and then was beached farther up the coast. Someone retrieved whale and sold at auction, instead of salvaging and getting paid salvage fee.
(a)Possession of whale is conferred by marks made by harpooning
(b)First taker, first finder should be given reasonable salvage
(c)One usage – person owned whale, dead or alive, so long as whale was fastened by line to ship
(d)Usage – exclusive right of capture upon whaler who had first affixed harpoon to whale
(e)Usage was adapted to particular context – circumstances of whales and waters – maximized whalers aggregate wealth
(3)Importance of Policy in determining property rights: Keeble v. Hickering, p. 31: P created decoy pond and had prepared decoys and nets. D discharged gunpowder to drive away fowl and then fired his gun to kill the ducks.
(a)Every man has a right to use his property for productive uses
(b)Cannot obstruct some3one from capture, but can lawfully compete with them
(c)Use theory of malicious interference with trade rather than constructive possession
(4)Tragedy of the Commons: Alliance Against IFQs v. Brown (new regulation that passed that would only allow certain people to acquire licenses – had to have caught a certain amount in 3 year period)
(a)To get title to fish, fisherman has to catch it before someone else does – leads to overinvestment in fishing boats and overconsumption of fish
(b)Regulation effectively transfers economic power over fishery from those who fished to those who owned or leased boats
(c)Limited access to fishery based on participation in three year window
(d)Regulation should be on those who invested in boats, since overinvestment in capital was one of the problems
(e)Created transferable quotas of fish that could be bought and sold.

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