Open-Source Property: A Free Casebook

WWW.OPENSOURCEPROPERTY.ORG

BUILD AUTHOR: JEREMY SHEFF
BUILD DATE: JANUARY 1, 2022
Open Source Property is copyright 2015 by Stephen Clowney, James Grimmelmann,
Michael Grynberg, Jeremy Sheff, and Rebecca Tushnet. It may be reused under the
terms of the Creative Commons Attribution NonCommercial 4.0 International license,
https://creativecommons.org/licenses/by-nc/4.0/.

Table of Contents
Part I: Foundations ................................................ 1
Ownership ............................................................ 3
William Blackstone, Commentaries on the Laws of England ....................................... 3

A. The Right to Exclude ................................................................... 4
Jacque v. Steenberg Homes, Inc. .................................................................................. 4
State of New Jersey v. Shack....................................................................................... 9
Civil Rights Act of 1964, Title II, Section 201 ........................................................ 15
Americans with Disabilities Act of 1990, Section 302-03 ........................................ 16

B. The “Bundle of Rights” .............................................................. 17
Wesley Newcomb Hohfeld, Fundamental Legal Conceptions as Applied in Judicial
Reasoning ................................................................................................................. 21
Wesley Newcomb Hohfeld, Some Fundamental Legal Conceptions as Applied in
Judicial Reasoning..................................................................................................... 24
Thomas W. Merrill & Henry E. Smith, What Happened to Property in Law and
Economics? ........................................................................................................... 28
Henry E. Smith, Property as the Law of Things ..................................................... 31

Subject Matter of Property ................................. 38
A. Introduction ................................................................................ 38
Felix Cohen, Transcendental Nonsense and the Functional Approach ....................... 39
Hinman v. Pacific Air Transport ............................................................................. 42

B. Property in Persons ..................................................................... 48
The Amistad ............................................................................................................ 48

1.
2.
3.

Emancipation and Compensation ............................................................ 53
Owning Labor ............................................................................................. 54
Alternatives to Property ............................................................................. 55
Kirksey v. Jernigan.................................................................................................... 55
Wilson v. Wilson ...................................................................................................... 57

4.

Body Parts .................................................................................................... 62
i

Margaret Radin, Market-Inalienability..................................................................... 67

C. Intangible Property ..................................................................... 69
Kremen v. Cohen ...................................................................................................... 69

D. Intellectual Property ................................................................... 80

Allocation............................................................ 85
A. Initial Allocation of Chattels ....................................................... 86
Pierson v. Post .......................................................................................................... 86
Ghen v. Rich ............................................................................................................ 95
Popov v. Hayashi.................................................................................................... 101

B. Allocation of Land..................................................................... 114
William Blackstone, Commentaries on the Laws of England ................................... 114
Thomas Hobbes, Leviathan .................................................................................... 115
William Blackstone, Commentaries on the Laws of England ................................... 116
John Locke, Second Treatise of Civil Government.................................................... 117
Herman Melville, Moby-Dick................................................................................. 119
Johnson v. M’Intosh ................................................................................................ 120
Mabo v. Queensland (No. 2) [“Mabo’s Case”] ...................................................... 127

C. Ratione Soli and Fugitive Resources: Chattels Meet Land ..... 139
1.

Wild Animals on Owned Land ............................................................... 139

Keeble v. Hickeringill .............................................................................................. 139
A Note on Ratione Soli.......................................................................................... 141

2.

Other Fugitive Resources: Water, Oil, and Gas.................................... 144
Tyler v. Wilkinson ................................................................................................. 147
Coffin v. Left Hand Ditch Co. ............................................................................... 151
Briggs v. Southwestern Energy Production Company ................................................ 155

Part II: Possession ............................................. 172
Property Torts and Crimes ................................ 173
A. Real Property............................................................................. 173
B. Personal Property ...................................................................... 176
ii

The Major Common-Law Property Torts: A Summary .......................................... 179

Found and Stolen Property ............................... 181
Armory v. Delamirie .............................................................................................. 181
Other Variations on Armory .................................................................................. 183
McAvoy v. Medina ................................................................................................. 186

Adverse Possession ........................................... 191
A. Adverse Possession Rationales ................................................. 192
Tieu v. Morgan ....................................................................................................... 194

B. “Hostility” and Intent............................................................... 205
Cahill v. Morrow .................................................................................................... 206
Dombkowski v. Ferland ......................................................................................... 213

C. Finer Points of Adverse Possession Law.................................. 217
D. Adverse Possession of Chattels ................................................ 220
O’Keeffe v. Snyder................................................................................................... 220
The New York Mess .............................................................................................. 232

Improvers and Good-Faith Purchasers .............237
Wetherbee v. Green ................................................................................................. 238
Uniform Commercial Code §§ 2-312, 2-403 .......................................................... 244
Kotis v. Nowlin Jewelry, Inc. ................................................................................... 245

Bailments and Liens ..........................................252
A. Bailments .................................................................................. 252
Allen v. Hyatt Regency-Nashville Hotel.................................................................. 252
The Winkfield ........................................................................................................ 264

B. Liens .......................................................................................... 268
Williams v. Ford Motor Credit Co. ........................................................................ 268

Part III: Interests ............................................... 277
iii

Estates and Future Interests .............................278
A. Introduction .............................................................................. 278
B. Concepts, Vocabulary, and Conventions ................................. 282
C. Basic Estates and Future Interests .......................................... 285
1.
2.
3.
4.

The Fee Simple Absolute ......................................................................... 285
The Life Estate .......................................................................................... 286
The Reversion ............................................................................................ 287
The Remainder (Part 1) ............................................................................ 288

D. Construing Ambiguous Grants................................................. 289
In the Estate of Dalton Edward Craigen ................................................................ 289

E. Present vs. Future: The Doctrine of Waste .............................. 294
Jackson v. Brownson ............................................................................................... 295
A Note on Ameliorative Waste .............................................................................. 301

More Complex Estates Problems: Strategy and
Method .....................................................................303
A. The Method............................................................................... 304
Step 1: Building A Chronology ......................................................................... 305
Step 2.a.i: Parsing a Conveyance ....................................................................... 306
Step 2.a.ii: Identifying Legal Interests............................................................... 307
a.
b.
c.
d.

Identifying the Quantum of an Interest ....................................................... 307
Identifying the Nature of an Interest ........................................................... 309
Possessory Estates vs. Future Interests........................................................ 311
Reviewing Familiar Interests.......................................................................... 312

Step 2.a.iii: Identifying Residual Interests ........................................................ 314
Step 2.b: Construing the Effects of Events on Legal Interests .................... 315
Step 3: Building a Chain of Title ....................................................................... 317

B. Other Estates and Future Interests .......................................... 318
1.
2.
3.

Remainders, Part 2: Vested and Contingent Remainders .................... 318
Remainders, Part 3: Alternative Contingent Remainders .................... 322
The Defeasible Fees .................................................................................. 323
iv

Remainders, Part 4: Divestment of Future Interests; Types of Vested
4.
Remainders ........................................................................................................... 330

C. Future Interests Summary and Review .................................... 333

Preserving Marketability ...................................339
Ford v. Allen ......................................................................................................... 340
Wills v. Pierce......................................................................................................... 347
Smedley v. City of Waldron .................................................................................... 349

Easements .........................................................352
A. What Is An Easement? ............................................................. 352
B. Creating Easements .................................................................. 354
1.
2.

Express easements .................................................................................... 354
Implied Easements.................................................................................... 356

a.
b.

3.

Easement implied by existing use ................................................................. 356
Easement by necessity .................................................................................... 359

Prescriptive Easements............................................................................. 361
Felgenhauer v. Soni ................................................................................................. 362

4.

Irrevocable Licenses ................................................................................. 366
Richardson v. Franc................................................................................................ 367

C. Transferring Easements ........................................................... 373
D. Terminating Easements ........................................................... 374
E. Negative Easements/Conservation Easements ...................... 376
F. Public Use Rights ..................................................................... 376
Lawrence v. Clark Cnty. ........................................................................................ 377
Matthews v. Bay Head Imp. Ass’n ......................................................................... 379

Trusts and Corporations ...................................385
A. Trusts ........................................................................................ 385
Note on Trusts ....................................................................................................... 385

v

Rothko v. Reis (In re Estate of Rothko) ................................................................. 387

B. Corporations.............................................................................. 396
Walkovszky v. Carlton .......................................................................................... 396

Co-ownership and Marital Property ..................402
A. Types of Co-Ownership: Introduction ..................................... 403
U.S. v. Craft .......................................................................................................... 403

B. Tenancy in Common ................................................................ 405
1.

Rights and Duties of Tenants in Common ........................................... 405

Martin v. Martin ................................................................................................... 406

2.

Partition ...................................................................................................... 418
Delfino v. Vealencis ................................................................................................ 418

C. Joint Tenancy ............................................................................ 430
1.
2.

Creating a Joint Tenancy .......................................................................... 431
Severance of a Joint Tenancy .................................................................. 434

Harms v. Sprague................................................................................................... 435

D. Marital Interests ........................................................................ 446
1.

Tenancy by the Entirety ........................................................................... 446

U.S. v. Craft .......................................................................................................... 446

2.

Community Property ................................................................................ 459

Leasing Real Property .......................................463
A. The Dual Nature of the Lease .................................................. 463
B. Creating the Leasehold ............................................................. 464
1.
2.

A Lease or Something Else? .................................................................... 464
Types of Leasehold ................................................................................... 465

a.
b.
c.

3.

The Term of Years .......................................................................................... 465
The Periodic Tenancy ..................................................................................... 466
The Tenancy at Will ........................................................................................ 466
Effel v. Rosberg ...................................................................................................... 467
Lease Hypotheticals ................................................................................................ 471

The Problem of Holdovers ...................................................................... 472
vi

a.
b.

4.

The Tenancy at Sufferance ............................................................................ 472
Delivering Possession ..................................................................................... 474
Hannan v. Dusch ................................................................................................... 474

Tenant Selection ........................................................................................ 478
a.
b.
c.
d.
e.

The Civil Rights Act of 1866 ......................................................................... 478
The Fair Housing Act of 1968 ...................................................................... 479
State Anti-Discrimination Efforts................................................................. 482
Proving Discrimination .................................................................................. 484
An Exercise in Advertising ............................................................................ 487
Fair Housing Council of San Fernando Valley v. Roommate.com, LLC................. 488

C. Exiting a Lease ......................................................................... 493
1.
2.
3.

Landlord Exit: Transfer ............................................................................ 493
Tenant Exit: Transfer ............................................................................... 493
Tenant Exit: Limiting the Right to Transfer ......................................... 500

Julian v. Christopher............................................................................................... 500
New York Real Property Law § 226-B ................................................................. 507

4.

Tenant Exit: Abandonment and the Duty to Mitigate......................... 509
Sommer v. Kridel .................................................................................................... 510

5.

Tenant Exit: Eviction ............................................................................... 518
Berg v. Wiley .......................................................................................................... 520

6.

Tenant Exit: Security Deposits ................................................................ 528

D. The Quest for Clean, Safe, and Affordable Premises .............. 529
1.

The Covenant of Quiet Enjoyment ........................................................ 530

Fidelity Mutual Life Insurance Co. v. Kaminsky .................................................... 532

2.

The Implied Warranty of Habitability .................................................... 538
Hilder v. St. Peter .................................................................................................. 538

3.

Retaliatory Eviction .................................................................................. 550
Imperial Colliery Co. v. Fout .................................................................................. 550

4.
5.

Landlord’s Tort Liability .......................................................................... 556
Gentrification & Rent Control ................................................................ 557

E. Wrapping Up ............................................................................. 560
Residential Rental Agreement and Contract ............................................................ 560

Part IV: Transfers ............................................... 566
vii

Gifts ...................................................................567
A. Intent ......................................................................................... 568
B. Delivery ..................................................................................... 568
In re Estate of Evans ............................................................................................. 569
Gruen v. Gruen ...................................................................................................... 577

C. Acceptance ................................................................................ 587
D. Irrevocability of Gifts and Exceptions ..................................... 587
1.
2.

Gifts causa mortis. ........................................................................................ 588
Conditional gifts ........................................................................................ 592

Albinger v. Harris .................................................................................................. 593

E. Review Problems ...................................................................... 607

Wills and Intestacy ............................................609
Lon L. Fuller, Consideration and Form ................................................................. 609
John H. Langbein, Substantial Compliance with the Wills Act ............................... 610
Stevens v. Casdorph ................................................................................................ 610
Maryland Code, Estates and Trusts, §§ 3-101 to 3-104 ........................................ 615

Land Transactions............................................. 617
A. The Deed................................................................................... 617
Indiana Code Title 32, Art. 21.............................................................................. 617
Harding v. Ja Laur ................................................................................................ 618
Walters v. Tucker ................................................................................................... 622

B. Delivery ..................................................................................... 627
Loughran v. Kummer.............................................................................................. 627

C. Warranties of Title .................................................................... 631
New York Real Property Law § 258 ..................................................................... 631
McMurray v. Housworth ........................................................................................ 634

D. Disclosure of Defects ................................................................ 639
Engelhart v. Kramer ............................................................................................... 639

viii

E. Risk of Loss ............................................................................... 648
Brush Grocery Kart, Inc. v. Sure Fine Market, Inc. ................................................ 648

Mortgages and Foreclosures .............................653
A. Introduction: What is a Mortgage? .......................................... 653
B. Crystals and Mud in Property Law........................................... 657
Carol M. Rose, Crystals And Mud In Property Law.............................................. 658

C. The Rise of Mortgage Securitization and the Global Financial
Crisis of 2008 .................................................................................. 662
Adam J. Levitin, The Paper Chase: Securitization, Foreclosure, and the Uncertainty of
Mortgage Title ........................................................................................................ 662

D. Redlining ................................................................................... 664
1.
2.
3.

Redlining’s History .................................................................................... 665
Redlining’s Lasting Impact....................................................................... 675
Overcoming the Legacy of Redlining ..................................................... 683

E. Predatory Lending .................................................................... 688
McGlawn v. Pennsylvania Human Relations Commission....................................... 689

F. The Mortgage Crisis ................................................................. 706
G. Foreclosure Abuses ................................................................... 708
Klem v. Washington Mutual Bank ......................................................................... 709

H.Chain of Title Problems............................................................ 721
U.S. Bank National Association, trustee vs. Antonio Ibanez ................................. 721
Note on Subsequent Purchasers ............................................................................... 741

I. An Additional Puzzle Piece: The Mortgage and the Note ...... 742
J. What Now? ................................................................................ 744
K. Concluding Thoughts ............................................................... 749

Recording Acts .................................................. 751
Carol M. Rose, Crystals And Mud In Property Law.............................................. 753

ix

Argent Mortgage Co. v. Wachovia Bank N.A. ...................................................... 757
FLA. STAT. § 695.01 ........................................................................................... 762
N.C. STAT. § 47-18 ............................................................................................. 762
ALASKA STAT. § 40.17.080 ............................................................................... 762
Hartig v. Stratman ................................................................................................. 762
Board of Education of Minneapolis v. Hughes ......................................................... 766
Adam J. Levitin, The Paper Chase: Securitization, Foreclosure, and the Uncertainty of
Mortgage Title ........................................................................................................ 769
Note on Recording Systems and Informal Title ........................................................ 775

Eminent Domain...............................................780
A. Rationales .................................................................................. 780
B. “Public Use” ............................................................................. 783
Kelo v. City of New London, Conn. ........................................................................ 783

C. Eminent Domain Operations ................................................... 798
D. Just Compensation .................................................................... 799

Part V: Use ......................................................... 802
Nuisance............................................................803
A. The Problem of Nuisance Definition ....................................... 804
Puritan Holding Co. v Holloschitz.......................................................................... 805

B. Adjudicating Nuisance ............................................................. 810
Sans v. Ramsey Golf & Country Club, Inc. ........................................................... 810
Note on the Clarity of Rights and Coase ................................................................. 819

C. Remedies ................................................................................... 823
Boomer v. Atlantic Cement Co. .............................................................................. 823
Note on “Property Rules” and “Liability Rules” .................................................... 832
Spur Industries, Inc. v. Del E. Webb Development Co............................................ 835

Regulatory Takings ...........................................844
x

A. General Principles ..................................................................... 844
Pennsylvania Coal Co. v. Mahon ............................................................................ 844
Penn Cent. Transp. Co. v. City of New York ......................................................... 856

B. Categorical Rules ...................................................................... 883
1.

“Wipeouts”................................................................................................. 884

Lucas v. South Carolina Coastal Council ............................................................... 884

2.

Permanent Physical Occupations............................................................ 907
Cedar Point Nursery v. Hassid ............................................................................... 909
Notes and Questions ............................................................................................... 930

C. Intellectual Property ................................................................. 936
D. Exactions................................................................................... 938
Dolan v. City of Tigard .......................................................................................... 939
Koontz v. St. Johns River Water Management Dist. ............................................... 949

Zoning ...............................................................967
A. Euclidean Zoning ..................................................................... 969
1.

The Euclid Decision and Its History ...................................................... 969

Euclid v. Ambler Realty Co. .................................................................................. 969
Note: Facial v. As-Applied Challenges ................................................................... 977
Richard H. Chused, Euclid’s Historical Imagery..................................................... 977

2.

Euclidean Zoning Theory ........................................................................ 984
a.
b.
c.
d.
e.
f.

3.

The Dominance of the Single-Family Home .............................................. 984
Defining the Family ........................................................................................ 985
Segregation of uses .......................................................................................... 990
Churches ........................................................................................................... 991
Other First Amendment Concerns............................................................... 992
Longstanding critiques of suburbia. ............................................................. 995

How Zoning Works (and Doesn’t)......................................................... 996
Missouri Municipal League, Planning and Zoning Procedures for Missouri
Municipalities (Sept. 2004) .................................................................................... 996

4.

Two examples. ......................................................................................... 1000
a.

Ladue, Missouri .............................................................................................1000
City of Ladue, Missouri, Comprehensive Plan Update (September 27, 2006)........1001

xi

b.

Ladue, Missouri Zoning Ordinance, Ordinance 1175, as amended through Jan. 2015
............................................................................................................................1008
Ferguson, Missouri ........................................................................................1011
Ferguson Master Zoning Map...............................................................................1013

B. Nonconforming Uses, Variances and Exceptions................. 1023
1.

Nonconforming uses .............................................................................. 1023

Hoffmann v. Kinealy.............................................................................................1024

2.

Variances .................................................................................................. 1036
a.
b.

c.

3.

Generally .........................................................................................................1036
Procedure........................................................................................................1037
Matthew v. Smith .................................................................................................1038
William A. Fischel, The Evolution of Zoning since the 1980s:
The Persistence of Localism (Sept. 2010) ..............................................................1046
The Americans with Disabilities Act/Fair Housing Act .........................1049
U.S. Department of Justice, Civil Rights Division, Disability Rights Section, The
ADA and City Governments: Common Problems (n.d.) .......................................1049

Special exceptions and zoning amendments ....................................... 1051
a.
b.
c.
d.

e.
f.
g.

Special exceptions/special uses/conditional uses.....................................1051
Floating zones ................................................................................................1053
Planned Unit Development (PUD). ...........................................................1053
Rezoning .........................................................................................................1054
Missouri Municipal League, Planning and Zoning Procedures for Missouri
Municipalities (Sept. 2004) ..................................................................................1055
Contract zoning .............................................................................................1055
Spot zoning ....................................................................................................1055
Upzoning and downzoning..........................................................................1056

Restrictive Covenants ...................................... 1057
A. Introduction ............................................................................ 1057
Tulk v. Moxhay ...................................................................................................1058

B. Creation of an Enforceable Restrictive Covenant .................. 1065
Neponsit Prop. Owners’ Ass’n v. Emigrant Indus. Sav. Bank..............................1067
Restatement (Third) of Property (Servitudes)..........................................................1074
Shelley v. Kraemer ................................................................................................1076

xii

C. Modification and Termination of Covenants......................... 1086
El Di, Inc. v. Town of Bethany Beach...................................................................1087

Common-Interest Communities ..................... 1094
A. In General................................................................................ 1094
1.
2.
3.

Homeowners Associations .................................................................... 1095
Condominiums ........................................................................................ 1096
Cooperatives ............................................................................................ 1097

B. Rulemaking Authority ............................................................ 1099
Hidden Harbour Estates, Inc. v. Norman ............................................................1100
Nahrstedt v. Lakeside Village Condominium Assoc., Inc. ....................................1104

C. Enforcement of Rules and Covenants ..................................... 1112
40 West 67th Street v. Pullman.............................................................................1113

xiii

xiv

Part I: Foundations

1

2

Ownership
William Blackstone, Commentaries on the Laws of England
vol. 1, pp. 131-136 (1765); vol. 2, p. 2
THE third absolute right, inherent in every
Englishman, is that of property: which consists
in the free use, enjoyment, and disposal of all his
acquisitions, without any control or diminution,
save only by the laws of the land. The original of
private property is probably founded in nature,
as will be more fully explained in the second
book of the ensuing commentaries: but certainly
the modifications under which we at present find
it, the method of conserving it in the present
owner, and of translating it from man to man, are
entirely derived from society; and are some of
William Blackstone. Source: 6 CASSELL’S
ILLUSTRATED HISTORY OF ENGLAND 582 (1865)
those civil advantages, in exchange for which
every individual has resigned a part of his natural
liberty. The laws of England are therefore, in point of honor and justice, extremely
watchful in ascertaining and protecting this right. Upon this principle the great charter
has declared that no freeman shall be disseised, or divested, of his freehold, or of his
liberties, or free customs, but by the judgment of his peers, or by the law of the land….
SO great moreover is the regard of the law for private property, that it will not authorize
the least violation of it; no, not even for the general good of the whole community. If
a new road, for instance, were to be made through the grounds of a private person, it
might perhaps be extensively beneficial to the public; but the law permits no man, or
set of men, to do this without consent of the owner of the land. In vain may it be urged,
that the good of the individual ought to yield to that of the community; for it would be
dangerous to allow any private man, or even any public tribunal, to be the judge of this
common good, and to decide whether it be expedient or no. Besides, the public good
is in nothing more essentially interested, than in the protection of every individual’s
private rights, as modelled by the municipal law. In this, and similar cases the legislature
3

4

Property

alone, can, and indeed frequently does, interpose, and compel the individual to
acquiesce. But how does it interpose and compel? Not by absolutely stripping the
subject of his property in an arbitrary manner; but by giving him a full indemnification
and equivalent for the injury thereby sustained. The public is now considered as an
individual, treating with an individual for an exchange. All that the legislature does is
to oblige the owner to alienate his possessions for a reasonable price; and even this is
an exertion of power, which the legislature indulges with caution, and which nothing
but the legislature can perform.…
There is nothing which so generally strikes the imagination, and engages the affections
of mankind, as the right of property; or that sole and despotic dominion which one
man claims and exercises over the external things of the world, in total exclusion of the
right of any other individual in the universe.

A. The Right to Exclude
Jacque v. Steenberg Homes, Inc.
563 N.W.2d 154 (Wis. 1997)
WILLIAM A. BABLITCH, Justice.
Plaintiffs, Lois and Harvey Jacques, are an elderly couple, now retired from farming,
who own roughly 170 acres near Wilke’s Lake in the town of Schleswig. The defendant,
Steenberg Homes, Inc. (Steenberg), is in the business of selling mobile homes. In the
fall of 1993, a neighbor of the Jacques purchased a mobile home from Steenberg.
Delivery of the mobile home was included in the sales price.
Steenberg determined that the easiest route to deliver the mobile home was across the
Jacques’ land … because the only alternative was a private road which was covered in
up to seven feet of snow and contained a sharp curve which would require sets of
“rollers” to be used when maneuvering the home around the curve. Steenberg asked
the Jacques on several separate occasions whether it could move the home across the
Jacques’ farm field. The Jacques refused. … On the morning of delivery, … the
assistant manager asked Mr. Jacque how much money it would take to get permission.
Mr. Jacque responded that it was not a question of money; the Jacques just did not
want Steenberg to cross their land. …

Ownership

5

At trial, one of Steenberg’s employees testified that, upon coming out of the Jacques’
home, the assistant manager stated: “I don’t give a ---- what [Mr. Jacque] said, just get
the home in there any way you can.” … The employees, after beginning down the
private road, ultimately used a “bobcat” to cut a path through the Jacques’ snowcovered field and hauled the home across the Jacques’ land to the neighbor’s lot. …
Mr. Jacque called the Manitowoc County Sheriff’s Department. After interviewing the
parties and observing the scene, an officer from the sheriff’s department issued a $30
citation to Steenberg’s assistant manager.
The Jacques commenced an intentional tort action in Manitowoc County Circuit Court,
Judge Allan J. Deehr presiding, seeking compensatory and punitive damages from
Steenberg. …[Q]uestions of punitive and compensatory damages were submitted to
the jury. The jury awarded the Jacques $1 nominal damages and $100,000 punitive
damages. Steenberg filed post-verdict motions claiming that the punitive damage award
must be set aside because Wisconsin law did not allow a punitive damage award unless
the jury also awarded compensatory damages. Alternatively, Steenberg asked the circuit
court to remit the punitive damage award. The circuit court granted Steenberg’s motion
to set aside the award. Consequently, it did not reach Steenberg’s motion for
remittitur….
… Steenberg argues that, as a matter of law, punitive damages could not be awarded
by the jury because punitive damages must be supported by an award of compensatory
damages and here the jury awarded only nominal and punitive damages. The Jacques
contend that the rationale supporting the compensatory damage award requirement is
inapposite when the wrongful act is an intentional trespass to land. We agree with the
Jacques.
…The rationale for the compensatory damage requirement is that if the individual
cannot show actual harm, he or she has but a nominal interest, hence, society has little
interest in having the unlawful, but otherwise harmless, conduct deterred, therefore,
punitive damages are inappropriate. … The Jacques argue that both the individual and
society have significant interests in deterring intentional trespass to land, regardless of
the lack of measurable harm that results. We agree with the Jacques….
We turn first to the individual landowner’s interest in protecting his or her land from
trespass. The United States Supreme Court has recognized that the private landowner’s

6

Property

right to exclude others from his or her land is “one of the most essential sticks in the
bundle of rights that are commonly characterized as property.” Dolan v. City of Tigard,
512 U.S. 374, 384, 114 S.Ct. 2309, 2316, 129 L.Ed.2d 304 (1994). This court has long
recognized “[e]very person[‘s] constitutional right to the exclusive enjoyment of his
own property for any purpose which does not invade the rights of another person.”
Diana Shooting Club v. Lamoreux, 114 Wis. 44, 59, 89 N.W. 880 (1902) (holding that the
victim of an intentional trespass should have been allowed to take judgment for
nominal damages and costs). Thus, both this court and the Supreme Court recognize
the individual’s legal right to exclude others from private property.
Yet a right is hollow if the legal system provides insufficient means to protect it. Felix
Cohen offers the following analysis summarizing the relationship between the
individual and the state regarding property rights:
[T]hat is property to which the following label can be attached:
To the world:
Keep off X unless you have my permission, which I may grant or withhold.
Signed: Private Citizen
Endorsed: The state
Felix S. Cohen, Dialogue on Private Property, IX Rutgers Law Review 357, 374 (1954).
Harvey and Lois Jacque have the right to tell Steenberg Homes and any other trespasser,
“No, you cannot cross our land.” But that right has no practical meaning unless
protected by the State….
The nature of the nominal damage award in an intentional trespass to land case further
supports an exception to [the compensatory damage requirement]. Because a legal right
is involved, the law recognizes that actual harm occurs in every trespass. The action for
intentional trespass to land is directed at vindication of the legal right. … Thus, in the
case of intentional trespass to land, the nominal damage award represents the
recognition that, although immeasurable in mere dollars, actual harm has occurred.

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7

The potential for harm resulting from intentional trespass also supports an exception
to [the compensatory damage requirement]. A series of intentional trespasses, as the
Jacques had the misfortune to discover in an unrelated action, can threaten the
individual’s very ownership of the land. The conduct of an intentional trespasser, if
repeated, might ripen into prescription or adverse possession and, as a consequence,
the individual landowner can lose his or her property rights to the trespasser.
In sum, the individual has a strong interest in excluding trespassers from his or her
land. Although only nominal damages were awarded to the Jacques, Steenberg’s
intentional trespass caused actual harm. We turn next to society’s interest in protecting
private property from the intentional trespasser.
Society has an interest in punishing and deterring intentional trespassers beyond that
of protecting the interests of the individual landowner. Society has an interest in
preserving the integrity of the legal system. Private landowners should feel confident
that wrongdoers who trespass upon their land will be appropriately punished. When
landowners have confidence in the legal system, they are less likely to resort to “selfhelp” remedies. … [O]ne can easily imagine a frustrated landowner taking the law into
his or her own hands when faced with a brazen trespasser, like Steenberg, who refuses
to heed no trespass warnings.
People expect wrongdoers to be appropriately punished. Punitive damages have the
effect of bringing to punishment types of conduct that, though oppressive and hurtful
to the individual, almost invariably go unpunished by the public prosecutor. … If
punitive damages are not allowed in a situation like this, what punishment will prohibit
the intentional trespass to land? Moreover, what is to stop Steenberg Homes from
concluding, in the future, that delivering its mobile homes via an intentional trespass
and paying the resulting [$30] forfeiture, is not more profitable than obeying the law?
Steenberg Homes plowed a path across the Jacques’ land and dragged the mobile home
across that path, in the face of the Jacques’ adamant refusal. A $30 forfeiture and a $1
nominal damage award are unlikely to restrain Steenberg Homes from similar conduct
in the future. An appropriate punitive damage award probably will.
In sum, as the court of appeals noted, the [compensatory damage] rule sends the wrong
message to Steenberg Homes and any others who contemplate trespassing on the land
of another. It implicitly tells them that they are free to go where they please, regardless

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Property

of the landowner’s wishes. As long as they cause no compensable harm, the only
deterrent intentional trespassers face is the nominal damage award of $1 … and the
possibility of a Class B forfeiture under Wis. Stat. § 943.13. We conclude that both the
private landowner and society have much more than a nominal interest in excluding
others from private land. Intentional trespass to land causes actual harm to the
individual, regardless of whether that harm can be measured in mere dollars.
Consequently, the [compensatory damage] rationale will not support a refusal to allow
punitive damages when the tort involved is an intentional trespass to land. Accordingly,
assuming that the other requirements for punitive damages have been met, we hold
that nominal damages may support a punitive damage award in an action for intentional
trespass to land. … Accordingly, we reverse and remand to the circuit court for
reinstatement of the punitive damage award.
Reversed and remanded with directions.
Notes and Questions
1. Would (or should) the result in Jacque have been different if, instead of a mobile
home seller making a scheduled delivery to a customer, the defendant had been
an ambulance company responding to a call of a suspected heart attack? Of a
broken leg? What if the snow-covered private road had instead been a recently
collapsed bridge? What if Steenberg had tried to take the road despite the risks,
and the truck had accidentally tipped and fallen onto the Jacques’ land?
2. Would (or should) the result in Jacque have been different if, instead of
steadfastly refusing to permit Steenberg’s delivery truck to cross their land, the
Jacques had demanded a large sum of money as a condition of permitting the
crossing, which Steenberg refused to pay? Would the ultimate monetary award
have been different? If so, what incentive does this case give property owners
facing requests from third parties for the use of their otherwise idle resources?
Would Steenberg have been better off not asking permission in the first place?
3. Blackstone’s description of “that sole and despotic dominion which one man
claims and exercises over the external things of the world, in total exclusion of
the right of any other individual in the universe” is one of the most famous—
and quotable—definitions of property ever written in English. But it is also

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9

widely acknowledged to be hyperbolic to the point of falsity. Can you see why?
What aspects of Blackstone’s own discussion of the “absolute right” of property
are inconsistent with the “total exclusion of the right of any other individual in
the universe”?
4. Would we really want our system of property to give private owners such “sole
and despotic dominion…over the external things of the world”? The kind of
dominion exercised by the Jacques? No matter what? Consider this: what kinds
of problems could a motivated and unscrupulous property owner armed with
such awesome power cause?
State of New Jersey v. Shack
58 N.J. 297, 277 A.2d 369 (1971)
WEINTRAUB, C.J.
Defendants entered upon private property to aid migrant farmworkers employed and
housed there. Having refused to depart upon the demand of the owner, defendants
were charged with violating N.J.S.A. 2A:170—31 which provides that “[a]ny person
who trespasses on any lands * * * after being forbidden so to trespass by the owner *
* * is a disorderly person and shall be punished by a fine of not more than $50.”
Defendants were convicted in the Municipal Court of Deerfield Township and again
on appeal in the County Court of Cumberland County on a trial de novo. We certified
their further appeal before argument in the Appellate Division.
Before us, no one seeks to sustain these convictions. The complaints were prosecuted
in the Municipal Court and in the County Court by counsel engaged by the complaining
landowner, Tedesco. However Tedesco did not respond to this appeal, and the county
prosecutor, while defending abstractly the constitutionality of the trespass statute,
expressly disclaimed any position as to whether the statute reached the activity of these
defendants.
Complainant, Tedesco, a farmer, employs migrant workers for his seasonal needs. As
part of their compensation, these workers are housed at a camp on his property.
Defendant Tejeras is a field worker for the Farm Workers Division of the Southwest
Citizens Organization for Poverty Elimination, known by the acronym SCOPE, a

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Property

nonprofit corporation funded by the Office of Economic Opportunity pursuant to an
act of Congress, 42 U.S.C.A. §§ 2861—2864. The role of SCOPE includes providing
for the “health services of the migrant farm worker.”
Defendant Shack is a staff attorney with the Farm Workers Division of Camden
Regional Legal Services, Inc., known as “CRLS,” also a nonprofit corporation funded
by the Office of Economic Opportunity pursuant to an act of Congress, 42 U.S.C.A. §
2809(a)(3). The mission of CRLS includes legal advice and representation for these
workers.
Differences had developed between Tedesco and these defendants prior to the events
which led to the trespass charges now before us. Hence when defendant Tejeras wanted
to go upon Tedesco’s farm to find a migrant worker who needed medical aid for the
removal of 28 sutures, he called upon defendant Shack for his help with respect to the
legalities involved. Shack, too, had a mission to perform on Tedesco’s farm; he wanted
to discuss a legal problem with another migrant worker there employed and housed.
Defendants arranged to go to the farm together. Shack carried literature to inform the
migrant farmworkers of the assistance available to them under federal statutes, but no
mention seems to have been made of that literature when Shack was later confronted
by Tedesco.
Defendants entered upon Tedesco’s property and as they neared the camp site where
the farmworkers were housed, they were confronted by Tedesco who inquired of their
purpose. Tejeras and Shack stated their missions. In response, Tedesco offered to find
the injured worker, and as to the worker who needed legal advice, Tedesco also offered
to locate the man but insisted that the consultation would have to take place in
Tedesco’s office and in his presence. Defendants declined, saying they had the right to
see the men in the privacy of their living quarters and without Tedesco’s supervsion.
Tedesco thereupon summoned a State Trooper who, however, refused to remove
defendants except upon Tedesco’s written complaint. Tedesco then executed the
formal complaints charging violations of the trespass statute.
I.
The constitutionality of the trespass statute, as applied here, is challenged on several
scores.

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It is urged that the First Amendment rights of the defendants and of the migrant
farmworkers were thereby offended. Reliance is placed on Marsh v. Alabama, 326 U.S.
501, 66 S.Ct. 276, 90 L.Ed. 265 (1946) [and its progeny.] * Those cases rest upon the
fact that the property was in fact opened to the general public. There may be some
migrant camps with the attributes of the company town in Marsh and of course they
would come within its holding. But there is nothing of that character in the case before
us, and hence there would have to be an extension of Marsh to embrace the immediate
situation.
Defendants also maintain that the application of the trespass statute to them is barred
by the Supremacy Clause of the United States Constitution, Art. VI, cl. 2, and this on
the premise that the application of the trespass statute would defeat the purpose of the
federal statutes, under which SCOPE and CRLS are funded, to reach and aid the
migrant farmworker.…
These constitutional claims are not established by any definitive holding. We think it
unnecessary to explore their validity. The reason is that we are satisfied that under our
State law the ownership of real property does not include the right a bar access to
governmental services available to migrant workers and hence there was no trespass
within the meaning of the penal statute. The policy considerations which underlie that
conclusion may be much the same as those which would be weighed with respect to
one or more of the constitutional challenges, but a decision in nonconstitutional terms
is more satisfactory, because the interests of migrant workers are more expansively
served in that way than they would be if they had no more freedom than these
constitutional concepts could be found to mandate if indeed they apply at all.

* In Marsh the Court vacated the conviction of a Jehovah’s Witness who had been convicted of criminal

trespassing for distributing religious literature without permission on the privately-owned streets and sidewalks
of the commercial district of a “company town”—a town built and maintained by a corporation as a place for its
workers and their families to live and shop. Justice Black explained the Court’s reasoning as follows:
“Ownership does not always mean absolute dominion. The more an owner, for his advantage, opens up his
property for use by the public in general, the more do his rights become circumscribed by the statutory and
constitutional rights of those who use it…. Whether a corporation or a municipality owns or possesses the town
the public in either case has an identical interest in the functioning of the community in such manner that the
channels of communication remain free.” 326 U.S. at 506-07.

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II.

Property rights serve human values. They are recognized to that end, and are limited
by it. Title to real property cannot include dominion over the destiny of persons the
owner permits to come upon the premises. Their well-being must remain the
paramount concern of a system of law. Indeed the needs of the occupants may be so
imperative and their strength so weak, that the law will deny the occupants the power
to contract away what is deemed essential to their health, welfare, or dignity.
Here we are concerned with a highly disadvantaged segment of our society. We are told
that every year farmworkers and their families numbering more than one million leave
their home areas to fill the seasonal demand for farm labor in the United States. The
migrant farmworkers come to New Jersey in substantial numbers.… The migrant
farmworkers are a community within but apart from the local scene. They are rootless
and isolated. Although the need for their labors is evident, they are unorganized and
without economic or political power. It is their plight alone that summoned
government to their aid. In response, Congress provided under Title III—B of the
Economic Opportunity Act of 1964 (42 U.S.C.A. § 2701 et seq.) for “assistance for
migrant and other seasonally employed farmworkers and their families.” … As we have
said, SCOPE is engaged in a program funded under this section, and CRLS also pursues
the objectives of this section although, we gather, it is funded under s 2809(a)(3), which
is not limited in its concern to the migrant and other seasonally employed farmworkers
and seeks “to further the cause of justice among persons living in poverty by mobilizing
the assistance of lawyers and legal institutions and by providing legal advice, legal
representation, counseling, education, and other appropriate services.”
These ends would not be gained if the intended beneficiaries could be insulated from
efforts to reach them. It is in this framework that we must decide whether the camp
operator’s rights in his lands may stand between the migrant workers and those who
would aid them.…
A man’s right in his real property of course is not absolute. It was a maxim of the
common law that one should so use his property as not to injure the rights of others.
Broom, Legal Maxims (10th ed. Kersley 1939), p. 238; 39 Words and Phrases, “Sic
Utere Tuo ut Alienum Non Laedas,” p. 335. Although hardly a precise solvent of actual
controversies, the maxim does express the inevitable proposition that rights are relative

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13

and there must be an accommodation when they meet. Hence it has long been true
that necessity, private or public, may justify entry upon the lands of another….
We see no profit in trying to decide upon a conventional category and then forcing the
present subject into it. That approach would be artificial and distorting. The quest is
for a fair adjustment of the competing needs of the parties, in the light of the realities
of the relationship between the migrant worker and the operator of the housing facility.
Thus approaching the case, we find it unthinkable that the farmer-employer can assert
a right to isolate the migrant worker in any respect significant for the worker’s wellbeing. The farmer, of course, is entitled to pursue his farming activities without
interference, and this defendants readily concede. But we see no legitimate need for a
right in the farmer to deny the worker the opportunity for aid available from federal,
State, or local services, or from recognized charitable groups seeking to assist him.
Hence representatives of these agencies and organizations may enter upon the premises
to seek out the worker at his living quarters. So, too, the migrant worker must be
allowed to receive visitors there of his own choice, so long as there is no behavior
hurtful to others, and members of the press may not be denied reasonable access to
workers who do not object to seeing them.
It is not our purpose to open the employer’s premises to the general public if in fact
the employer himself has not done so. We do not say, for example, that solicitors or
peddlers of all kinds may enter on their own; we may assume or the present that the
employer may regulate their entry or bar them, at least if the employer’s purpose is not
to gain a commercial advantage for himself or if the regulation does not deprive the
migrant worker of practical access to things he needs.
And we are mindful of the employer’s interest in his own and in his employees’ security.
Hence he may reasonably require a visitor to identify himself, and also to state his
general purpose if the migrant worker has not already informed him that the visitor is
expected. But the employer may not deny the worker his privacy or interfere with his
opportunity to live with dignity and to enjoy associations customary among our citizens.
These rights are too fundamental to be denied on the basis of an interest in real
property and too fragile to be left to the unequal bargaining strength of the parties.

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Property

It follows that defendants here invaded no possessory right of the farmer-employer.
Their conduct was therefore beyond the reach of the trespass statute. The judgments
are accordingly reversed and the matters remanded to the County Court with directions
to enter judgments of acquittal.
Notes and Questions
1. Why did the property owner win in Jacque but lose in Shack? Isn’t the property
right at issue in each of these cases the same—i.e., isn’t it the right to exclude?
Didn’t Tejeras and Shack commit the acts set forth in the criminal trespassing
statute (“trespass[ing] on any lands … after being forbidden so to trespass by
the owner”)? If they did commit those acts, why aren’t they guilty of the crime
charged? And if they are guilty of the crime charged, why does the New Jersey
Supreme Court order their acquittal?
2. What types of competing principles, policies, or interests will justify a limit on
the right to exclude? Who should decide when such a limit is justified, and how?
Who decided in Jacque? In Shack?
3. The federal statute that funded the organizations that employed Tejeras and
Shack was repealed in 1981. Consider the following hypothetical:
• Angela is an attorney at a non-profit public interest law firm funded entirely
by private charitable donations. Angela’s firm was founded last week. She
is licensed to practice law in New Jersey.
• Yesterday, Angela entered onto a privately-owned farm in New Jersey in
order to consult with a migrant worker temporarily residing there about the
possibility of forming a labor union.
• The migrant worker’s employer (the farm’s owner) confronted Angela and
demanded that she leave the employer’s property. She refused and
remained behind to complete her consultation.
Can Angela be charged with criminal trespass? Why or why not?
4. If we decide an interest is important enough to outweigh an owner’s right to
exclude in one context, does that mean it should do so in all contexts? If we

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15

reached such a conclusion, how should the law implement it? Consider the
following statutes, and their effects on property owners’ right to exclude:
Civil Rights Act of 1964, Title II, Section 201
Codified at 42 U.S.C. § 2000a
Prohibition against discrimination or segregation in places of public
accommodation
(a) Equal access
All persons shall be entitled to the full and equal enjoyment of the goods, services,
facilities, privileges, advantages, and accommodations of any place of public
accommodation, as defined in this section, without discrimination or segregation on
the ground of race, color, religion, or national origin.
(b) Establishments affecting interstate commerce or supported in their
activities by State action as places of public accommodation; lodgings; facilities
principally engaged in selling food for consumption on the premises; gasoline
stations; places of exhibition or entertainment; other covered establishments
Each of the following establishments which serves the public is a place of public
accommodation within the meaning of this subchapter if its operations affect
commerce, or if discrimination or segregation by it is supported by State action:
(1) any inn, hotel, motel, or other establishment which provides lodging to transient
guests, other than an establishment located within a building which contains not more
than five rooms for rent or hire and which is actually occupied by the proprietor of
such establishment as his residence;
(2) any restaurant, cafeteria, lunchroom, lunch counter, soda fountain, or other facility
principally engaged in selling food for consumption on the premises, including, but not
limited to, any such facility located on the premises of any retail establishment; or any
gasoline station;
(3) any motion picture house, theater, concert hall, sports arena, stadium or other place
of exhibition or entertainment.…

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Property

(e) Private establishments
The provisions of this subchapter shall not apply to a private club or other
establishment not in fact open to the public, except to the extent that the facilities of
such establishment are made available to the customers or patrons of an establishment
within the scope of subsection (b) of this section.
Americans with Disabilities Act of 1990, Section 302-03
Codified at 42 U.S.C. § 12182-83
§ 302 — Prohibition of discrimination by public accommodations
(a) General rule
No individual shall be discriminated against on the basis of disability in the full and
equal enjoyment of the goods, services, facilities, privileges, advantages, or
accommodations of any place of public accommodation by any person who owns,
leases (or leases to), or operates a place of public accommodation.
§ 303 — New construction and alterations in public accommodations and
commercial facilities
(a) Application of term
Except as provided in subsection (b) of this section, as applied to public
accommodations and commercial facilities, discrimination for purposes of section
12182(a) of this title includes—
(1) a failure to design and construct facilities for first occupancy later than 30 months
after July 26, 1990, that are readily accessible to and usable by individuals with
disabilities, except where an entity can demonstrate that it is structurally impracticable
to meet the requirements of such subsection . . .; and
(2) . . ., a failure to make alterations in such a manner that, to the maximum extent
feasible, the altered portions of the facility are readily accessible to and usable by
individuals with disabilities, including individuals who use wheelchairs.

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Notes and Questions

1. The passage of the Civil Rights Act of 1964 was an important milestone in
advancing the effort by civil rights advocates to dismantle the Jim Crow regime
that prevailed in much of the United States through much of the 20th Century,
the legacy of which remains with us today. While this regime was enforced in
many ways through direct state power—laws requiring segregation of public
facilities, limiting access to voting, and allocating public funds according to
race—it also depended on the exercise of private power, including private
property rights. Title II particularly addresses the practice of racist business
owners (or business owners who claimed to be catering to racist customers)
exercising their right to exclude against Black customers. This interaction of
private decisions about access to resources and state power enforcing those
decisions is a distinctive feature of property law, which delegates substantial
authority over the allocation and use of resources to private decisionmakers by
conferring rights of ownership upon them.
2. The Americans with Disabilities Act similarly uses government authority to
regulate private property owners, whose decisions collectively had the effect of
denying many people with disabilities the ability to participate in many aspects
of what most would consider a normal life. However, in this case it is not only
the exercise of a legal right to exclude that gives rise to discrimination, but also
the particular uses an owner has made of their property, which have the effect
of denying access to people with particular disabilities—decisions as simple as
installing a step rather than a ramp, or a door a few inches too narrow for a
wheelchair to pass through. The fact that the use of a resource by one person
can have unwelcome effects on others is a problem that the law is constantly
called on to address, and offers our first glimpse into property law beyond the
right to exclude.

B. The “Bundle of Rights”
We began this chapter with Blackstone’s strong statement of the “absolute right” of
property, and have watched it gradually melt away. We have seen courts use a subtle
and diverse array of tools to vindicate interests that conflict with a property owner’s
“absolute” rights. In Marsh v. Alabama—discussed in Shack—the Court opined that

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Property

state-law rights of property must give way to more important principles of expressive
and religious freedom enshrined in the federal Constitution, at least where the property
in question had been opened up to the public to serve as a substitute for a downtown
business district. In Shack itself, however, the court explicitly avoids this kind of
Constitutional trump card by manipulating the scope of the owner’s rights under the
common law of property to avoid conflict with competing statutory policies. And in
various hypotheticals, we’ve considered whether the right to exclude ought to be
outweighed by competing concerns that might lack Constitutional or statutory
authority. Is there any limit to the scope or variety of these types of manipulations?
And if not, how are we ever to say what property is?
We might look to two possible foundations for a more resilient concept of property.
One foundation might be that property is a particular cohesive construct: a package deal.
Thus, when we say that a person owns something, we might be saying that the person
enjoys a predictable set of rights with respect to that thing. And this is one of the most
common ways in which lawyers think about property: as a “bundle of rights”—a
metaphor we encountered in Jacque.
The United States Supreme Court has noted that the right to exclude is “universally
held to be a fundamental element of the property right,” Kaiser Aetna v. United States,
444 U.S. 164, 179-80 (1979), and “one of the most essential sticks in the bundle of
rights that are commonly characterized as property,” Dolan v. City of Tigard, 512 U.S.
374, 384 (1994). But property owners typically enjoy a number of additional rights,
which is one source of the “bundle of rights” metaphor referred to in Dolan. Among
these are:

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19

• The right of possession (sometimes called a “possessory” right);
• The right of use (sometimes called a “usufructary” right);
• The power of alienation—i.e., the right to or transfer ownership to someone
else—which can be further decomposed into
o The power to make a gratuitous transfer, i.e., a gift (sometimes called a
“donative” right)
o The power to transfer in exchange for valuable consideration (sometimes
called the right to “sell” or “vend,” or the right of “market-alienation”)
o The power to dispose of property owned during life after death by will
(sometimes called the “testamentary” right, or the right to “devise”)
As with the right to exclude, each of these rights may be limited, particularly when they
have the potential to conflict with competing rights or interests. Some of those limits
are hinted at in the Shack: consider the New Jersey Supreme Court’s reference to the
latin maxim “sic utere tuo ut alienum non laedas.” This maxim expresses a long-standing
limitation on property owners’ rights of use. Does it make sense for the court to have
invoked this maxim in Shack? Do you think Shack is better understood as a case about
the right to exclude or some other right of property owners?
We will study the law’s protection of possession (and the limits of that protection) in
our units on Allocation, Found and Stolen Property, and Adverse Possession. We will
make an extensive study of the power to alienate in our units on Gifts, Estates and
Future Interests, Co-Ownership, and Land Conveyancing. And we will return to limits
on the right of use, and in particular the sic utere tuo principle, in our chapter on Nuisance.
If the “bundle of rights,” metaphor holds water, it really might help to distinguish
property in a meaningful way from other private law rights—such as those that arise in

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Property

contract or tort *—and allow us to predict how particular disputes over resources are
likely to shake out. Of course, the cases we have already studied—in which courts limit
or deny owners’ rights depending on the circumstances in which they are asserted—
may give us some doubts about our likelihood of success. And we’ve only just begun:
We will be encountering more legal authorities that will challenge our ability to think
about property as a coherent “bundle” of rights, as opposed to an ad hoc and unstable
collection of whatever rights and duties we choose to apply in a particular set of
circumstances:
• In our unit on the Subject Matter of Property, we will see how some things may
be thought of as “property” even though they are not subject to certain of the
traditional rights of ownership—particularly the right to alienate. We will also
see how some things that are subject to certain of the traditional rights of
ownership—such as the rights to possess and to exclude—are nevertheless
excluded from the legal category of “property.”
• In our unit on Estates and Future Interests, we will see how property rights can
be temporally divided—that a property right that exists today may nevertheless
not entitle its owner to possession until some point in the future.
• In our unit on Co-Ownership and Marital Interests, we will see how the division
of ownership rights among multiple people similarly cabins the rights to exclude,
possess, alienate, and use—at least among co-owners.

* In case you have not yet encountered these two bodies of private law, here is a very basic introduction: Contract

claims are legal claims that arise out of promises: if I make you a promise in exchange for something of value
(perhaps even a reciprocal promise), I may become legally obligated to either perform the promise or compensate
you for my nonperformance. Tort claims are legal claims that arise out of wrongdoing: if I intentionally cause injury
to your person, damage to your property, or interference with your rights and privileges; or if I engage in
unreasonable or legally prohibited conduct that causes you such injury, damage, or interference, I may become
legally obligated to compensate you for the harm you suffered. The fact that damage to property gives rise to tort
claims (such as the trespass claim in Jacque) demonstrates that the two fields do overlap; we will discuss the various
common-law property torts in our unit on Property Torts and Crimes. And the fact that property usually has
value and is alienable means that it can be the subject of contractual promises; we will discuss contracts for the
purchase and sale of property in our unit on Land Transactions.

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• In our unit on Regulatory Takings, we will see that in some circumstances the
right to exclude, standing alone, may be a sufficient condition for identifying
“property.”
So perhaps this approach is not very promising. While there is a menu of rights that
appear to be consistent with ownership, it appears that the concept or label of “property”
does not necessarily depend on a particular combination of those rights being present.
A second possible foundation for our conception of property is that property, at the
very least, involves some thing that is the subject of the right (or rights): that it is a right
in rem. In particular, it might be intimately tied up with an individual’s right to control
some thing—principally but not only by excluding others from access to that thing. The
requirement of intermediation by some thing might also help distinguish property from
contract and tort—which may (but need not) involve competing claims to a thing.
We will consider the types of things that might qualify as property in our unit on the
Subject Matter of Property. But before doing so, we ought to consider whether thinking
of property in this way—as a relationship between people and things—is sound, or
even useful. Consider the following scholarly treatments of these ideas.
Wesley Newcomb Hohfeld, Fundamental Legal Conceptions as Applied in

Judicial Reasoning

26 YALE L. J. 710, 713-745 (1917)
The phrases in personam and in rem, in spite of the scope and variety of situations to
which they are commonly applied, are more usually assumed by lawyers, judges, and
authors to be of unvarying meaning and free of ambiguities calculated to mislead the
unwary. The exact opposite is, however, true; and this has occasionally been explicitly
emphasized by able judges whose warnings are worthy of notice….
[A] right in personam … is either a unique right residing in a person (or group of persons)
and availing against a single person (or single group of persons); or else it is one of a
few fundamentally similar, yet separate, rights availing respectively against a few definite
persons. A … right in rem … is always one of a large class of fundamentally similar yet
separate rights, actual and potential, residing in a single person (or single group of

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Property

persons) but availing respectively against persons constituting a very large and
indefinite class of people.
Probably all would agree substantially on the meaning and significance of a right in
personam, as just explained; and it is easy to give a few preliminary examples: If B owes
A a thousand dollars, A has an affirmative right in personam, … that B shall transfer to A
the legal ownership of that amount of money. If, to put a contrasting situation, A
already has title to one thousand dollars, his rights against others in relation thereto are
… rights in rem. In the one case the money is owed to A; in the other case it is owned by
A. If Y has contracted to work for X during the ensuing six months, X has an affirmative
right in personam that Y shall render such service, as agreed. Similarly as regards all other
contractual or quasi-contractual rights of this character….
In contrast to these examples are those relating to rights, or claims, in rem…. If A owns
and occupies Whiteacre, * not only B but also a great many other persons—not
necessarily all persons—are under a duty, e.g., not to enter on A’s land. A’s right against
B is a … right in rem, for it is simply one of A’s class of similar, though separate, rights,
actual and potential, against very many persons. The same points apply as regards A’s
right that B shall not commit a battery on him, A’s right that B shall not alienate the
affections of A’s wife, and A’s right that B shall not manufacture a certain article as to
which A has a so-called patent….
…[I]t seems necessary to show very concretely and definitely how, because of the
unfortunate terminology involved, the expression “right in rem” is all too frequently
misconceived, and meanings attributed to it that could not fail to blur and befog legal
thought and argument. Some of these loose and misleading usages will now be
considered in detail, it being hoped that the more learned reader will remember that
this discussion, being intended for the assistance of law school students more than for
any other class of persons, is made more detailed and elementary than would otherwise
be necessary.

* [The study of property law was, for much of its history, mainly the study of land. As such, many teachers’ and

judges’ hypotheticals required the identification of some fictional parcel of land. By tradition, these parcels take
the name “Whiteacre,” “Blackacre,” “Greenacre,” and so on.—eds.]

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23

(a) A right in rem is not a right “against a thing”: … Any person, be he student or lawyer,
unless he has contemplated the matter analytically and assiduously, or has been put on
notice by books or other means, is likely, first, to translate right in personam as a right
against a person; and then he is almost sure to interpret right in rem, naturally and
symmetrically as he thinks, as a right against a thing. … Such a notion of rights in rem is,
as already intimated, crude and fallacious; and it can but serve as a stumbling-block to
clear thinking and exact expression. A man may indeed sustain close and beneficial
physical relations to a given physical thing: he may physically control and use such thing,
and he may physically exclude others from any similar control or enjoyment. But,
obviously, such purely physical relations could as well exist quite apart from, or
occasionally in spite of, the law of organized society: physical relations are wholly
distinct from jural relations. The latter take significance from the law; and, since the
purpose of the law is to regulate the conduct of human beings, all jural relations must,
in order to be clear and direct in their meaning, be predicated of such human beings.…
What is here insisted on, —i.e., that all rights in rem are against persons, —is not to be
regarded merely as a matter of taste or preference for one out of several equally possible
forms of statement or definition. Logical consistency seems to demand such a
conception, and nothing less than that. Some concrete examples may serve to make
this plain. Suppose that A is the owner of Blackacre and X is the owner of Whiteacre.
Let it be assumed, further, that, in consideration of $100 actually paid by A to B, the
latter agrees with A never to enter on X’s land, Whiteacre. It is clear that A’s right
against B concerning Whiteacre is a right in personam…; for A has no similar and
separate rights concerning Whiteacre availing respectively against other persons in
general. On the other hand, A’s right against B concerning Blackacre is obviously a
right in rem…; for it is but one of a very large number of fundamentally similar (though
separate) rights which A has respectively against B, C, D, E, F, and a great many other
persons. It must now be evident, also, that A’s Blackacre right against B is, intrinsically
considered, of the same general character as A’s Whiteacre right against B. The Blackacre
right differs, so to say, only extrinsically, that is, in having many fundamentally similar,
though distinct, rights as its “companions.” So, in general, we might say that a right in
personam is one having few, if any, “companions”; whereas a right in rem always has
many such “companions.”

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Property

If, then, the Whiteacre right, being a right in personam, is recognized as a right against a
person, must not the Blackacre right also, being, point for point, intrinsically of the same
general nature, be conceded to be a right against a person? If not that, what is it? How
can it be apprehended, or described, or delimited at all? …
(b) A … right in rem is not always one relating to a thing, i.e., a tangible object: …[A] right in rem
is not necessarily one relating to, or concerning, a thing, i.e., a tangible object. … The term
right in rem … is so generic in its denotation as to include: 1. …[R]ights, or claims,
relating to a definite tangible object: e.g., a landowner’s right that any ordinary person shall
not enter on his land, or a chattel owner’s right that any ordinary person shall not
physically harm the object involved, —be it horse, watch, book, etc. 2. …[R]ights (or
claims) relating neither to definite tangible object nor to (tangible) person, e. g., a
patentee’s right, or claim, that any ordinary person shall not manufacture articles
covered by the patent; 3. …[R]ights, or claims, relating to the holder’s own person, e. g.,
his right that any ordinary person shall not strike him, or that any ordinary person shall
not restrain his physical liberty, i.e., “falsely imprison” him; 4. …[R]ights residing in a
given person and relating to another person, e. g., the right of a father that his daughter
shall not be seduced, or the right of a husband that harm shall not be inflicted on his
wife so as to deprive him of her company and assistance; 5. …[R]ights, or claims, not
relating directly to either a (tangible) person or a tangible object, e. g., a person’s right
that another shall not publish a libel of him, or a person’s right that another shall not
publish his picture, the so-called “right of privacy” existing in some states, but not in
all.
It is thus seen that some rights in rem…relate fairly directly to physical objects; some fairly
directly to persons; and some fairly directly neither to tangible objects nor to persons….
Wesley Newcomb Hohfeld, Some Fundamental Legal Conceptions as Applied

in Judicial Reasoning

23 YALE L. J. 16, 28-30, 31-33, 45-46, 55 (1913)
One of the greatest hindrances to the clear understanding, the incisive statement, and
the true solution of legal problems frequently arises from the express or tacit
assumption that all legal relations may be reduced to “rights” and “duties,” and that
these latter categories are therefore adequate for the purpose of analyzing even the
most complex legal interests… The strictly fundamental legal relations are, after all, sui

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25

generis; and thus it is that attempts at formal definition are always unsatisfactory, if not
altogether useless. Accordingly, the most promising line of procedure seems to consist
in exhibiting all of the various relations in a scheme of “opposites” and “correlatives,”
and then proceeding to exemplify their individual scope and application in concrete
cases. An effort will be made to pursue this method:

. . .Recognizing, as we must, the very broad and indiscriminate use of the term, “right,”

what clue do we find, in ordinary legal discourse, toward limiting the word in question
to a definite and appropriate meaning. That clue lies in the correlative “duty,” for it is
certain that even those who use the word and the conception “right” in the broadest
possible way are accustomed to thinking of “duty” as the invariable correlative. . . .
In other words, if X has a right against Y that he shall stay off the former’s land, the
correlative (and equivalent) is that Y is under a duty toward X to stay off the place. If,
as seems desirable, we should seek a synonym for the term “right” in this limited and
proper meaning, perhaps the word “claim” would prove the best. . . .
As indicated in the above scheme of jural relations, a privilege is the opposite of a duty,
and the correlative of a “no-right.” In the example last put, whereas X has a right or
claim that Y, the other man, should stay off the land, he himself has the privilege of
entering on the land; or, in equivalent words, X does not have a duty to stay off. The
privilege of entering is the negation of a duty to stay off. As indicated by this case, some
caution is necessary at this point, for, always, when it is said that a given privilege is the
mere negation of a duty, what is meant, of course, is a duty having a content or tenor
precisely opposite to that of the privilege in question. Thus, if, for some special reason,
X has contracted with Y to go on the former’s own land, it is obvious that X has, as
regards Y, both the privilege of entering and the duty of entering. The privilege is perfectly
consistent with this sort of duty,—for the latter is of the same content or tenor as the
privilege;—but it still holds good that, as regards Y, X’s privilege of entering is the
precise negation of a duty to stay off. . . .

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Property

Passing now to the question of “correlatives,” it will be remembered, of course, that a
duty is the invariable correlative of that legal relation which is most properly called a
right or claim. That being so, if further evidence be needed as to the fundamental and
important difference between a right (or claim) and a privilege, surely it is found in the
fact that the correlative of the latter relation is a “no-right,” there being no single term
available to express the latter conception. Thus, the correlative of X’s right that Y shall
not enter on the land is Y’s duty not to enter; but the correlative of X’s privilege of
entering himself is manifestly Y’s “no-right” that X shall not enter. . . .
The nearest synonym [for power] for any ordinary case seems to be (legal) “ability,”—
the latter being obviously the opposite of “inability,” or “disability.” . . . Many examples
of legal powers may readily be given. Thus, X, the owner of ordinary personal property
“in a tangible object” . . . has the power to transfer his interest to Y,—that is, to
extinguish his own interest and concomitantly create in Y a new and corresponding
interest. . . .
Perhaps it will also be plain, from the preliminary outline and from the discussion down
to this point, that a power bears the same general contrast to an immunity that a right
does to a privilege. A right is one’s affirmative claim against another, and a privilege is
one’s freedom from the right or claim of another. Similarly, a power is one’s affirmative
“control” over a given legal relation as against another; whereas an immunity is one’s
freedom from the legal power or “control” of another as regards some legal relation.
A few examples may serve to make this clear. X, a landowner, has, as we have seen,
power to alienate to Y or to any other ordinary party. On the other hand, X has also
various immunities as against Y, and all other ordinary parties. For Y is under a
disability (i.e., has no power) so far as shifting the legal interest either to himself or to a
third party is concerned . . . .
Notes and Questions
1. Hohfeld’s articles are widely recognized as an important source of the “bundle
of rights” conception of property. His point that we can conceive of any
supposed right to a thing as a collection of rights against an indeterminate number
of people with respect to that thing seems indisputably correct as an analytical matter.
What does such a shift in perspective gain us?

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27

For one thing, it reveals some imprecision in the way we often talk about
property rights. When I say “I have a property right in Blackacre,” or “Blackacre
is my property,” I haven’t really told you exactly what the law allows me to do
with Blackacre, and still less what you are permitted to do with Blackacre. To
understand that set of rights and obligations, you need to know something
about what rights, powers, privileges, and immunities the law affords property
owners with respect to the things they own. And, as we have seen, those
particular rights, powers, privileges, and immunities may differ depending on
context—particularly where other rights and interests are at stake. Hohfeld’s
deconstructive project thus reveals real deficiencies in lay understandings of
property.
2. Note that Hohfeld’s decomposition of in rem rights into a collection of in
personam rights could provide a different interpretation of the “bundle of rights”
metaphor than the one we’ve been working with. Rather than being a collection
of different rights held by one person with respect to a thing (the right to
exclude, possess, alienate, etc.), perhaps the “bundle” really is a reference to the
various rights an owner has against the “large and indefinite class of people”
with whom she might come into conflict with respect to the res. Does this
distinction matter?
Recall the questions in Notes 1 and 2 on page 8 (following Jacque). Consider
this: if I ask you: “Does A have a property right in Whiteacre,” how confident
are you that you will be able to answer the question without knowing the answer
to a different question: “A right against whom?”
3. Can we reframe the holdings of some of the cases we’ve already looked at in
Hohfeldian terms? We might, for example, say that Steenberg has a duty to stay
off Jacque’s land, and that Jacque has a correlative right (or claim) that
Steenberg stay off. Likewise, Jacque has a power to exclude others from his
land, and Steenberg, when his agent entered that land, came under a correlative
liability to be obligated to pay damages for trespassing upon Jacque’s exercise
of that power.
In contrast, we might say that Shack has a privilege of entering onto Tedesco’s
land to provide services to migrant workers living there, and that Tedesco has

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Property
a correlative no-right to prevent Shack from doing so. Likewise, Shack has an
immunity against Tedesco’s revoking Shack’s privilege to enter Tedesco’s
farm, while Tedesco was under a correlative disability to revoke that privilege.
But note that this does not mean that Shack has any power to grant or revoke
any rights to others with respect to Tedesco’s farm—he too is under a disability
in that respect.
While this might all seem rather formal, technical, and perhaps a bit confusing,
here’s the important thing to note: Jacque and Tedesco are, on the in rem view,
the same: they both own land. But their Hohfeldian jural relations to Steenberg
and Shack, respectively, are vastly different. Thinking of the rights of Jacque and
Tedesco as in rem rights—as rights to their land—may make it more difficult to
identify and name these differences with any consistency or precision.
4. Hohfeld’s effort to bring precision to our discussion of property rights by
deconstructing them into various types of relations among people with respect to
things has been tremendously influential, but it also has its critics. When we
stop thinking of property as a coherent and stable construct, and instead think
of it only as any number of combinations of in personam jural relations, the very
idea that there is such a thing as “property” may be hard to maintain. This
deconstructionist mindset may change how we relate to one another with
respect to resources, and may also change the way we think about certain types
of government involvement in those relations. Consider the following critiques:

Thomas W. Merrill & Henry E. Smith, What Happened to Property in Law

and Economics? *

111 YALE L. J. 357, 357-365 (2001)
It is a commonplace of academic discourse that property is simply a “bundle of rights,”
and that any distribution of rights and privileges among persons with respect to things
can be dignified with the (almost meaningless) label “property.” By and large, this view
has become conventional wisdom among legal scholars: Property is a composite of
legal relations that holds between persons and only secondarily or incidentally involves

* Reproduced by permission of Henry E. Smith.

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a “thing.” Someone who believes that property is a right to a thing is assumed to suffer
from a childlike lack of sophistication—or worse.
… In other times and places, a very different conception of property has prevailed. In
this alternative conception, property is a distinctive type of right to a thing, good against
the world. This understanding of the in rem character of the right of property is a
dominant theme of the civil law’s “law of things.” For Anglo-American lawyers and
legal economists, however, such talk of a special category of rights related to things
presumably illustrates the grip of conceptualism on the civilian mind and a slavish
devotion to the gods of Roman law.
Or does it? In related work, we have argued that, far from being a quaint aspect of the
Roman or feudal past, the in rem character of property and its consequences are vital
to an understanding of property as a legal and economic institution. 7 Because core
property rights attach to persons only through the intermediary of some thing, they
have an impersonality and generality that is absent from rights and privileges that attach
to persons directly. When we encounter a thing that is marked in the conventional
manner as being owned, we know that we are subject to certain negative duties of
abstention with respect to that thing—not to enter upon it, not to use it, not to take it,
etc. And we know all this without having any idea who the owner of the thing actually
is. In effect, these universal duties are broadcast to the world from the thing itself….
Property rights historically have been regarded as in rem. In other words, property
rights attach to persons insofar as they have a particular relationship to some thing and
confer on those persons the right to exclude a large and indefinite class of other persons
(“the world”) from the thing. In this sense, property rights are different from in
personam rights, such as those created by contracts or by judicial judgments. In
personam rights attach to persons as persons and obtain against one or a small number
of other identified persons. A number of historically significant property theorists have
recognized the in rem nature of property rights and have perceived that this feature is

7 Thomas W. Merrill & Henry E. Smith, Optimal Standardization in the Law of Property: The Numerus Clausus Principle,

110 YALE L.J. 1 (2000)…; Thomas W. Merrill & Henry E. Smith, The Property/Contract Interface, 101 COLUM. L.
REV. 773 (2001)….

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Property

key because it establishes a base of security against a wide range of interferences by
others….
… Blackstone perceived that property rights are important because they establish a
basis of security of expectation regarding the future use and enjoyment of particular
resources. By establishing a right to resources that holds against all the world, property
provides a guarantee that persons will be able to reap what they have sown…. In other
words, property is important because it gives legal sanction to the efforts of the owner
of a thing to exclude an indefinite and anonymous class of marauders, pilferers, and
thieves, thereby encouraging development of the thing.
… In contrast, the role of property emphasized in modem economic discussions—
providing a baseline for contractual exchange and a mechanism for resolving disputes
over conflicting uses of resources—was at most of secondary importance in these
traditional accounts. … Early in the twentieth century, Wesley Hohfeld provided an
account of legal relations that proved to be especially influential in transforming the
underlying assumptions about property rights in Anglo-American scholarship. …
Hohfeld noted … that in personam rights are unique rights residing in a person and
availing against one or a few definite persons; in rem rights, in contrast, reside in a
person and avail against “persons constituting a very large and indefinite class of
people.”
Significantly, however, Hohfeld failed to perceive that in rem property rights are
qualitatively different in that they attach to persons insofar as they have a certain
relationship to some thing. Rather, Hohfeld suggested that in personam and in rem
rights consist of exactly the same types of rights, privileges, duties, and so forth, and
differ only in the indefiniteness and the number of the persons who are bound by these
relations. To use a modern expression, Hohfeld thought that in rem relations could be
“cashed out” into the same clusters of rights, duties, privileges, liabilities, etc., as are
constitutive of in personam relations.
Hohfeld did not use the metaphor “bundle of rights” to describe property. But his
theory of jural opposites and correlatives, together with his effort to reduce in rem
rights to clusters of in personam rights, provided the intellectual justification for this
metaphor, which became popular among the legal realists in the 1920s and 1930s.
Different writers influenced by realism took the metaphor to different extremes. For

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some, the bundle-of-rights concept simply meant that property could be reduced to
recognizable collections of functional attributes, such as the right to exclude, to use, to
transfer, or to inherit particular resources. For others, property had no inherent
meaning at all. As one pair of writers put it, the concept of property is nothing more
than “a euphonious collocation of letters which serves as a general term for the
miscellany of equities that persons hold in the commonwealth.” 36
Notwithstanding these variations, the motivation behind the realists’ fascination with
the bundle-of-rights conception was mainly political. They sought to undermine the
notion that property is a natural right, and thereby smooth the way for activist state
intervention in regulating and redistributing property. If property has no fixed core of
meaning, but is just a variable collection of interests established by social convention,
then there is no good reason why the state should not freely expand or, better yet,
contract the list of interests in the name of the general welfare. The realist program of
dethroning property was on the whole quite successful. The conception of property as
an infinitely variable collection of rights, powers, and duties has today become a kind
of orthodoxy. Not coincidentally, state intervention in economic matters greatly
increased in the middle decades of the twentieth century, and the constitutional rights
of property owners generally receded.
Henry E. Smith, Property as the Law of Things *
125 HARV. L. REV. 1691, 1696-98, 1700-08 (2012)
As an analytical device, the bundle picture can be very useful. It provides a highly
accurate description of who can do what to whom in a legal (and perhaps nonlegal)
sense. It provides an interesting theoretical baseline: how would one describe the
relation of a property owner to various others if one were writing on a blank slate and
doing the description in a fully bottom-up manner, relation by relation, party by party?
…The problem with the bundle of rights is that it is treated as a theory of how our
world works rather than as an analytical device or as a theoretical baseline. In the realist

36 Walton H. Hamilton & Irene Till, Property, in 12 ENCYCLOPAEDIA OF THE SOCIAL SCIENCES 528, 528 (Edwin

R.A. Seligman ed., 1934).
* Reproduced by permission of Henry E. Smith.

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Property

era, the benefits of tinkering with property were expressed in bundle terms without a
corresponding theory of the costs of that tinkering. Indeed, in the most tendentious
versions of the picture, the traditional baselines of the law were mocked, and the idea
was to dethrone them in order to remove them as barriers to enlightened social
engineering. In this version of the bundle picture, Hohfeldian sticks and potentially
others are posited to describe the relations holding between persons; the fact that the
relations hold with respect to a thing is relatively unimportant or, in some versions, of
no importance. “Property” is simply a conclusory label we might attach to the
collection. In its classic formulation, the bundle picture puts no particular constraints
on the contents of bundles: they are totally malleable and should respond to policy
concerns in a fairly direct fashion. These policy-motivated adjustments usually involve
adding or subtracting sticks and reallocating them among concerned parties or to
society. This version of the bundle explains everything and so explains nothing.
. . . In recent times, various commentators have argued that property is not fully
captured by the bundle picture. Going beyond the bundle usually involves emphasizing
exclusion or some robust notion of the right to use. It can be motivated by analytical
jurisprudence, natural rights, or information cost economics. The bundle theory can
incorporate some of these perspectives. Consider, for example, the recent resurgence
of interest in the numerus clausus; this principle that property forms come in a finite and
closed menu can be added onto the bundle theory as a “menu” of collections of sticks.
Bundle theorists can accommodate this development. But they are being reactive in
this regard. . . .
In this Article, I present a theory that aims higher. At the most basic level, the extreme
bundle picture takes too little account of the costs of delineating rights. . . .
. . . Here, I present an alternative to the bundle picture that I call an architectural or
modular theory of property. This theory responds to information costs—it conceives of
property as a law of modular “things.” . . .
Because it makes sense in modern property systems to delegate to owners a choice
from a range of uses and because protection allows for stability, appropriability,
facilitation of planning and investment, liberty, and autonomy, we typically start with
an exclusion strategy—and that goes not just for private property but for common and
public property as well. “Use” can include nonconsumptive uses relating to

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conservation. The exclusion strategy defines a chunk of the world—a thing—under
the owner’s control, and much of the information about the thing’s uses, their
interactions, and the user is irrelevant to the outside world. Duty bearers know not to
enter Blackacre without permission or not to take cars, without needing to know what
the owner is using the thing for, who the owner is, who else might have rights and
other interests, and so on. But dividing the world into chunks is not enough: spillovers
and scale problems call for more specific rules to deal with problems like odors and
lateral support, and to facilitate coordination (for example, covenants, common interest
communities, and trusts). These governance strategies focus more closely on narrower
classes of use and sometimes make more specific reference to their purposes, and so
they are more contextual.
The exclusion-governance architecture manages complexity in a way totally uncaptured
by the bundle picture, and importantly, the former is modular while the latter is not.
The exclusion strategy defines what a thing is to begin with. A fundamental question is
how to classify “things,” and, hence, which aspects of “things” are the most basic units
of property law. Many important features of property follow from the semitransparent
boundaries between things. Boundaries carve up the world into semiautonomous
components—modules—that permit private law to manage highly complex
interactions among private parties. . . .
The modular theory explains property’s structure, which includes providing some
reason why those structures are not otherwise. In a zero-transaction-cost world, we
could use all governance all the time, whether supplied by government or through super
fine-grained contracting among all the concerned parties. That is not our world, and
the main point of exclusion as a delineation strategy is that it is a shortcut over direct
delineation of this more “complete” set of legal relations. Analytically, it might be
interesting to think of property as a list of use rights availing pairwise between all people
in society, but actually creating such a list would be a potentially intractable problem in
our world. On the other hand, exclusion is not the whole story either. Causes of action
like trespass implement a right to exclude, but the right to exclude is not why we have
property. Rather, the right to exclude is part of how property works. Rights to exclude
are a means to an end, and the ends in property relate to people’s interests in using
things.

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Property

. . . Exclusion is at the core of this architecture because it is a default, a convenient
starting point. Exclusion is not the most important or “core” value because it is not a
value at all. Thinking that exclusion is a value usually reflects the confusion of means
and ends in property law: exclusion is a rough first cut—and only that—at serving the
purposes of property. It is true that exclusion piggybacks on the everyday morality of
“thou shalt not steal,” whereas governance reflects a more refined Golden-Rule, “do
unto others” type of morality in more personal contexts. It may be the case that our
morality itself is shaped to a certain extent by the ease with which it can be
communicated and enforced in more impersonal settings. I leave that question for
another day. But the point here is that the exclusion-governance architecture is
compatible with a wide range of purposes for property. Some societies will move from
exclusion to governance—that is, some systems of laws and norms will focus more on
individuated uses of resources—more readily than others, and will do so for different
reasons than others.
At the base of the architectural approach is a distinction that the bundle theory—along
with other theories—tends to obscure: the distinction between the interests we have in
using things and the devices the law uses to protect those interests. Property serves
purposes related to use by employing a variety of delineation strategies. Because
delineation costs are greater than zero, which strategy one uses and when one uses it
will be dictated in part by the costs of delineation—not just by the benefits that
correspond to the use-based purposes of property. . . .
The traditional definition of property is a right to a thing good against the world—it is
an in rem right. The special in rem character of property forms the basis of an
information-cost explanation of the numerus clausus and standardization in property. In
rem rights are directed at a wide and indefinite audience of duty holders and other
affected parties, who would incur high information costs in dealing with idiosyncratic
property rights and would have to process more types of information than they would
in the absence of the numerus clausus. Crucially, parties who might create such
idiosyncratic property rights are not guaranteed to take such third-party processing
costs into account. There is thus an information-cost externality, and the numerus clausus
is one tool for addressing this externality. Other devices include title records and
technological changes in communication. . . .

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Modularity plays a key role in making the standardization of property possible. First,
modularity makes it possible to keep interconnections between packages of rights
relatively few, thus allowing much of what goes on inside a package of property rights
to be irrelevant to the outside world. Second, property rights “mesh” with neighboring
property rights and show network effects with more far-flung property rights. The
outside interfaces make this possible at reasonable cost. Third, the processes of
property are simple enough that they can feed into themselves. Many modular structures
are hierarchical in that they have modules composed of other modules. . . . In this
respect, property forms are like a basic grammar or “pattern language” of property.
Notes and Questions
1. Are you persuaded by Merrill’s and Smith’s critique of Hohfeld? If Hohfeldian
deconstruction has the effect of removing traditional inhibitions against
government-led “social engineering,” and thereby makes it harder for property
owners to rely on the future use and enjoyment of resources they currently
control, does that necessarily make Hohfeld wrong about the nature of property
rights?
2. The “legal realists” referred to by Merrill and Smith are scholars and judges who
developed the theoretical school now known as “American Legal Realism”—
an influential movement in the legal profession, bench, and academy in the first
half of the 20th century. Legal realists were reacting against what they called
“formalism”: the view that “judges decide cases on the basis of distinctively legal
rules and reasons, which justify a unique result in most cases (perhaps every case).”
Brian Leiter, American Legal Realism, in THE BLACKWELL GUIDE TO THE
PHILOSOPHY OF LAW AND LEGAL THEORY 50, 50 (Martin P. Golding &
William A. Edmundson eds., 2008). The realists argued that the outcome of
legal cases is not (or at least not completely) determined by the content of legal
rules, particularly at the appellate level. Instead, they asserted that judges
deciding such cases primarily do so by intuitively reaching a sense of the “right”
result in light of the totality of the facts of the case, and then backfilling a
justification using convenient legal authorities (and, perhaps, distinguishing
inconvenient ones). The influence of the legal realists on the American legal
profession has been profound, and it is the rare lawyer or judge (and the even
rarer legal academic) who would deny that social factors—including politics,

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Property
economics, morality, psychology, and the like—play a substantial role in
deciding the outcomes of legal disputes, particularly the most difficult and
contentious ones.
In denying that legal rules are the exclusive determinant of legal outcomes, the
realists were not claiming that this is how cases ought to be decided, or even that
judges consciously rely on intuitionistic responses to the facts of cases; only that
such decisionmaking is unavoidable. They thus placed an emphasis on
distinguishing between what courts say they are doing, and what they actually do.
Why might Merrill and Smith draw a connection between American Legal
Realism and Hohfeld? Why might they think that Hohfeld’s analysis would be
useful to a supposedly redistributivist political agenda?
3. What is the difference between—in Smith’s words—“a theory of how our
world works” and “an analytical device”? Which is more useful to legal
professionals? Which category does Smith’s “modular” or “architectural”
exclusion-governance approach fall into? Does his approach convincingly
rescue the idea that property can be thought of as a cohesive construct or
“package deal”? (Or maybe a “standard package” of exclusion with governance
“options” and “extras” on the side?)
Is Smith’s approach compatible with Hohfeld’s analysis, or are the two
necessarily inconsistent with each other? If they are compatible, what is the
difference between them? Do we need both? Is one better than the other? Do
the answers to these questions depend on the use to which either Smith’s or
Hohfeld’s framework might be put, or on the person using them?
4. Consider the following two propositions:
• “Property” is a relationship between a person and a thing.
• “Property” is a set of rights and obligations among people with respect to
things.
Do you think either of these propositions, standing alone, adequately describes
what we mean by the word “property”? Do you think these two propositions
are meaningfully different from one another? If so, what is the difference? Do

Ownership

37

you think the difference might have an effect on the outcome of legal disputes?
If so, what effect? And if not, does the difference matter?
5. Hohfeld observes that, when it comes to property rights, “thing” doesn’t
necessarily mean “tangible thing in the physical world.” Indeed, legal authorities
identify property rights in all sorts of intangible things, as well as in admittedly
physical substances that resist the label of “thing”—like animals, or even human
beings. We will discuss this complication of the notion of property as a legal
right in “things” in our unit on the Subject Matter of Property.

Subject Matter of Property
A. Introduction
In this unit we will consider the various types of things that attract the legal label
“property.” Let us begin with some examples to pump our intuitions. In light of our
discussion of what it means to own something, which of the following things can be
usefully thought of as your “property”?
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•

your home or apartment
your car or bike
your computer
the software on your computer
the emails stored on your computer
the emails stored on your cloud-based email service
your bank account
the money in your bank account
the money you lent to your friend that hasn’t been repaid
the money your friend lent to you that you haven’t paid back
the things you bought with the money your friend lent to you that you haven’t paid
back
your pet dog
the rats in your animal research lab
your dairy cow
the pig you’re raising for meat
your prescription medications
your doctor’s/pharmacist’s/insurance company’s records of your prescription
medications
your medical history

38

Subject Matter of Property
•
•
•
•
•

39

your handwritten diary
your unpublished novel
your published novel
your social media profiles and content
your password-protected blog

Does categorizing any of these items as “property” or “not property” meaningfully
assist in the analysis of any legal problems? Particularly legal disputes that arise over
questions of access to or use of any of these things? Why might we choose to recognize
(or refuse to recognize) these or other items as “property”?
You may notice there is something of a chicken-and-egg problem here. Is the label
“property” a premise or a conclusion? Can we arrive at the label without resorting to
circular reasoning? When we say something is a person’s property, or that someone has
a “property right,” is that because we have examined the qualities and characteristics
of the thing and its relation to the person, and determined that they are all consistent with
some coherent notion of property ownership? Or is calling something “property” a
mere assertion, unconstrained by circumstances, that we make because we want the
consequences of the label “property” to attach to that thing for independent reasons? Is
there a difference? Consider the following classic discussion (by one of the leading
American Legal Realists) of this question:
Felix Cohen, Transcendental Nonsense and the Functional Approach
35 COLUM. L. REV. 809, 814-817 (1935)
There was once a theory that the law of trade marks and trade-names was an attempt
to protect the consumer against the “passing off” of inferior goods under misleading
labels. Increasingly the courts have departed from any such theory and have come to
view this branch of law as a protection of property rights in divers economically
valuable sale devices. In practice, injunctive relief is being extended today to realms
where no actual danger of confusion to the consumer is present, and this extension has
been vigorously supported and encouraged by leading writers in the field. Conceivably
this extension might be justified by a demonstration that privately controlled sales
devices serve as a psychologic base for the power of business monopolies, and that
such monopolies are socially valuable in modern civilization. But no such line of
argument has ever been put forward by courts or scholars advocating increased legal

40

Property

protection of trade names and similar devices. For if they advanced any such argument,
it might seem that they were taking sides upon controversial issues of politics and
economics. Courts and scholars, therefore, have taken refuge in a vicious circle to
which no obviously extra-legal facts can gain admittance. The current legal argument
runs: One who by the ingenuity of his advertising or the quality of his product has
induced consumer responsiveness to a particular name, symbol, form of packaging,
etc., has thereby created a thing of value; a thing of value is property; the creator of
property is entitled to protection against third parties who seek to deprive him of his
property. This argument may be embellished, in particular cases, with animadversions
upon the selfish motives of the infringing defendant, a summary of the plaintiff’s
evidence (naturally uncontradicted) as to the amount of money he has spent in
advertising, and insinuations (seldom factually supported) as to the inferiority of the
infringing defendant’s product.
The vicious circle inherent in this reasoning is plain. It purports to base legal protection
upon economic value, when, as a matter of actual fact, the economic value of a sales
device depends upon the extent to which it will be legally protected. If commercial
exploitation of the word “Palmolive” is not restricted to a single firm, the word will be
of no more economic value to any particular firm than a convenient size, shape, mode
of packing, or manner of advertising, common in the trade. Not being of economic
value to any particular firm, the word would be regarded by courts as “not property,”
and no injunction would be issued. In other words, the fact that courts did not protect
the word would make the word valueless, and the fact that it was valueless would then
be regarded as a reason for not protecting it. Ridiculous as this vicious circle seems, it
is logically as conclusive or inconclusive as the opposite vicious circle, which accepts
the fact that courts do protect private exploitation of a given word as a reason why
private exploitation of that word should be protected.
The circularity of legal reasoning in the whole field of unfair competition is veiled by
the “thingification” of property. Legal language portrays courts as examining commercial
words and finding, somewhere inhering in them, property rights. It is by virtue of the
property right which the plaintiff has acquired in the word that he is entitled to an
injunction or an award of damages. According to the recognized authorities on the law
of unfair competition, courts are not creating property, but are merely recognizing a preexistent Something.

Subject Matter of Property

41

The theory that judicial decisions in the field of unfair competition law are merely
recognitions of a supernatural Something that is immanent in certain trade names and
symbols is, of course, one of the numerous progeny of the theory that judges have
nothing to do with making the law, but merely recognize pre-existent truths not made
by mortal men. The effect of this theory, in the law of unfair competition as elsewhere,
is to dull lay understanding and criticism of what courts do in fact.
What courts are actually doing, of course, in unfair competition cases, is to create and
distribute a new source of economic wealth or power. Language is socially useful apart
from law, as air is socially useful, but neither language nor air is a source of economic
wealth unless some people are prevented from using these resources in ways that are
permitted to other people. That is to say, property is a function of inequality. If courts,
for instance, should prevent a man from breathing any air which had been breathed by
another (within, say, a reasonable statute of limitations), those individuals who breathed
most vigorously and were quickest and wisest in selecting desirable locations in which
to breathe (or made the most advantageous contracts with such individuals) would, by
virtue of their property right in certain volumes of air, come to exercise and enjoy a
peculiar economic advantage, which might, through various modes of economic
exchange, be turned into other forms of economic advantage, e.g. the ownership of
newspapers or fine clothing. So, if courts prevent a man from exploiting certain forms
of language which another has already begun to exploit, the second user will be at the
economic disadvantage of having to pay the first user for the privilege of using similar
language or else of having to use less appealing language (generally) in presenting his
commodities to the public.
Courts, then, in establishing inequality in the commercial exploitation of language are
creating economic wealth and property, creating property not, of course, ex nihilo, but
out of the materials of social fact, commercial custom, and popular moral faiths or
prejudices. It does not follow, except by the fallacy of composition, that in creating
new private property courts are benefiting society. Whether they are benefiting society
depends upon a series of questions which courts and scholars dealing with this field of
law have not seriously considered. Is there, for practical purposes, an unlimited supply
of equally attractive words under which any commodity can be sold, so that the second
seller of the commodity is at no commercial disadvantage if he is forced to avoid the
word or words chosen by the first seller? If this is not the case, i.e. if peculiar emotional

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Property

contexts give one word more sales appeal than any other word suitable for the same
product, should the peculiar appeal of that word be granted by the state, without
payment, to the first occupier? Is this homestead law for the English language necessary
in order to induce the first occupier to use the most attractive word in selling his
product? If, on the other hand, all words are originally alike in commercial potentiality,
but become differentiated by advertising and other forms of commercial exploitation,
is this type of business pressure a good thing, and should it be encouraged by offering
legal rewards for the private exploitation of popular linguistic habits and prejudices?
To what extent is differentiation of commodities by trade names a help to the consumer
in buying wisely? To what extent is the exclusive power to exploit an attractive word,
and to alter the quality of the things to which the word is attached, a means of deceiving
consumers into purchasing inferior goods?
Without a frank facing of these and similar questions, legal reasoning on the subject of
trade names is simply economic prejudice masquerading in the cloak of legal logic. The
prejudice that identifies the interests of the plaintiff in unfair competition cases with
the interests of business and identifies the interests of business with the interests of
society, will not be critically examined by courts and legal scholars until it is recognized
and formulated. It will not be recognized or formulated so long as the hypostatization
of “property rights” conceals the circularity of legal reasoning.
Hinman v. Pacific Air Transport
84 F.2d 755 (9th Cir. 1936)
HANEY, Circuit Judge.
Appellants allege… that they are the owners and in possession of 72 1/2 acres of real
property in the city of Burbank, Los Angeles county, Cal., “together with a stratum of
air-space superjacent to and overlying said tract * * * and extending upwards * * * to
such an altitude as plaintiffs * * * may reasonably expect now or hereafter to utilize,
use or occupy said airspace. Without limiting said altitude or defining the upward extent
of said stratum of airspace or of plaintiff’s ownership, utilization and possession
thereof, plaintiffs allege that they * * * may reasonably expect now and hereafter to
utilize, use and occupy said airspace and each and every portion thereof to an altitude
of not less than 150 feet above the surface of the land * * * ” ….

Subject Matter of Property

43

It is then alleged that defendants are engaged in the business of operating a commercial
air line, and that at all times “after the month of May, 1929, defendants daily, repeatedly
and upon numerous occasions have disturbed, invaded and trespassed upon the
ownership and possession of plaintiffs’ tract”; that at said times defendants have
operated aircraft in, across, and through said airspace at altitudes less than 100 feet
above the surface; that plaintiffs notified defendants to desist from trespassing on said
airspace; and that defendants have disregarded said notice, unlawfully and against the
will of plaintiffs, and continue and threaten to continue such trespasses…. The prayer
asks an injunction restraining the operation of the aircraft through the airspace over
plaintiffs’ property and for [damages].
Appellees contend that it is settled law in California that the owner of land has no
property rights in superjacent airspace, either by code enactments or by judicial decrees
and that the ad coelum doctrine does not apply in California. We have examined the
statutes of California, …but we find nothing therein to negative the ad coelum
formula….If we could accept and literally construe the ad coelum doctrine, it would
simplify the solution of this case; however, we reject that doctrine. We think it is not
the law, and that it never was the law.
This formula “from the center of the earth to the sky” was invented at some remote
time in the past when the use of space above land actual or conceivable was confined
to narrow limits, and simply meant that the owner of the land could use the overlying
space to such an extent as he was able, and that no one could ever interfere with that
use.
This formula was never taken literally, but was a figurative phrase to express the full
and complete ownership of land and the right to whatever superjacent airspace was
necessary or convenient to the enjoyment of the land.
In applying a rule of law, or construing a statute or constitutional provision, we cannot
shut our eyes to common knowledge, the progress of civilization, or the experience of
mankind. A literal construction of this formula will bring about an absurdity. The sky
has no definite location. It is that which presents itself to the eye when looking upward;
as we approach it, it recedes. There can be no ownership of infinity, nor can equity
prevent a supposed violation of an abstract conception.

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Property

The appellants’ case, then, rests upon the assumption that as owners of the soil they
have an absolute and present title to all the space above the earth’s surface, owned by
them, to such a height as is, or may become, useful to the enjoyment of their land. This
height, the appellants assert in the bill, is of indefinite distance, but not less than 150
feet.
If the appellants are correct in this premise, it would seem that they would have such a
title to the airspace claimed, as an incident to their ownership of the land, that they
could protect such a title as if it were an ordinary interest in real property. Let us then
examine the appellants’ premise. They do not seek to maintain that the ownership of
the land actually extends by absolute and exclusive title upward to the sky and
downward to the center of the earth. They recognize that the space claimed must have
some use, either present or contemplated, and connected with the enjoyment of the
land itself.
Title to the airspace unconnected with the use of land is inconceivable. Such a right has
never been asserted. It is a thing not known to the law.
Since, therefore, appellants must confine their claim to 150 feet of the airspace above
the land, to the use of the space as related to the enjoyment of their land, to what extent,
then, is this use necessary to perfect their title to the airspace? Must the use be actual,
as when the owner claims the space above the earth occupied by a building constructed
thereon; or does it suffice if appellants establish merely that they may reasonably expect
to use the airspace now or at some indefinite future time?
This, then, is appellants’ premise, and upon this proposition they rest their case. Such
an inquiry was never pursued in the history of jurisprudence until the occasion is
furnished by the common use of vehicles of the air.
We believe, and hold, that appellants’ premise is unsound. The question presented is
applied to a new status and little aid can be found in actual precedent. The solution is
found in the application of elementary legal principles. The first and foremost of these
principles is that the very essence and origin of the legal right of property is dominion
over it. Property must have been reclaimed from the general mass of the earth, and it
must be capable by its nature of exclusive possession. Without possession, no right in
it can be maintained.

Subject Matter of Property

45

The air, like the sea, is by its nature incapable of private ownership, except in so far as
one may actually use it. This principle was announced long ago by Justinian. It is in fact
the basis upon which practically all of our so-called water codes are based.
We own so much of the space above the ground as we can occupy or make use of, in
connection with the enjoyment of our land. This right is not fixed. It varies with our
varying needs and is coextensive with them. The owner of land owns as much of the
space above him as he uses, but only so long as he uses it. All that lies beyond belongs
to the world. … Any use of such air or space by others which is injurious to his land,
or which constitutes an actual interference with his possession or his beneficial use
thereof, would be a trespass for which he would have remedy. But any claim of the
landowner beyond this cannot find a precedent in law, nor support in reason.
…We cannot shut our eyes to the practical result of legal recognition of the asserted
claims of appellants herein, for it leads to a legal implication to the effect that any use
of airspace above the surface owner of land, without his consent would be a trespass
either by the operator of an airplane or a radio operator. We will not foist any such
chimerical concept of property rights upon the jurisprudence of this country….
Appellants are not entitled to injunctive relief upon the bill filed here, because no facts
are alleged with respect to circumstances of appellants’ use of the premises which will
enable this court to infer that any actual or substantial damage will accrue from the acts
of the appellees complained of.
The case differs from the usual case of enjoining a trespass. Ordinarily, if a trespass is
committed upon land, the plaintiff is entitled to at least nominal damages without
proving or alleging any actual damage. In the instant case, traversing the airspace above
appellants’ land is not, of itself, a trespass at all, but it is a lawful act unless it is done
under circumstances which will cause injury to appellants’ possession.
Appellants do not, therefore, in their bill state a case of trespass, unless they allege a
case of actual and substantial damage. The bill fails to do this. It merely draws a naked
conclusion as to damages without facts or circumstances to support it. It follows that
the complaint does not state a case for injunctive relief….

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Property
Notes and Questions
1. Did the court in Hinman “find” the law of property as it applies to the airspace
above land? Did it “change” the law in this regard? Or did it—as Felix Cohen
argued—“create and distribute a new source of economic wealth or power”?
2. Does the court say that Hinman will never be able to obtain the relief sought?
Are there any circumstances in which an injunction to restrict overflights to an
altitude of over 150 feet (or any altitude) could be awarded under the court’s
analysis? Cf. United States v. Causby, 328 U.S. 256 (1946).
3. The court justified its ruling in Hinman, at least in part, by reference to the
“practical result” that would follow a finding in the landowner’s favor. What
would that “practical result” be, and why did the court feel the need to avoid it?
Is avoiding such undesirable “practical results” an acceptable basis for making
a determination as to whether something is a person’s “property”?
4. Drones. The increasing availability of personal aerial robots (“drones”) is
threatening to bring Hinman back into the spotlight. In November of 2014, a
hobbyist was flying a custom-built “hexacopter” over his parents’ farm in
California, when a neighbor’s son shot it out of the sky with a shotgun. The
neighbor claimed the drone had been flying over his land, though the drone
owner disputed this. In any event, the drone owner demanded compensation
for damage to the drone, and the neighbor refused. They ended up in small
claims court where the neighbor was held liable for $850 in damages and court
costs, on grounds that he “acted unreasonably in having his son shoot the drone
down regardless of whether it was over his property or not.” Jason Koebler, The
Sky’s Not Your Lawn: Man Wins Lawsuit After Neighbor Shotgunned His Drone,
MOTHERBOARD (June 28, 2015), http://motherboard.vice.com/read/the-skysnot-your-lawn-man-wins-lawsuit-after-neighbor-shotgunned-his-drone.
Imagine that instead of (or in addition to) having his son use the drone for target
practice, the farmer had called the police to make a complaint of criminal
trespass, or sued the drone owner for trespass. What result? Would it matter
how high the drone was flying? Would it matter whether the drone was
equipped with a camera? (Recall that the right to exclude is not the only right of

Subject Matter of Property

47

owners; trespass may not be our farmer’s only recourse. We will consider some
analogous factual scenarios in our unit on Nuisance.)
5. Would the “practical result” of a finding for the landowner in Hinman
necessarily be the same as the “practical result” of a finding in favor of a
landowner suing the operator of a drone in the airspace over her land? Again,
would it matter how high the drone was flying, or whether it was equipped with
a camera?

48

Property

B. Property in Persons

The Illustrated London News, Sept. 27, Sept. 27, 1856, p. 315. “Slave auction at Richmond, Virginia,” 1856. Prints and
Photographs Division, Library of Congress. Reproduction Number LC-USZ62-15398

The Amistad
40 U.S. 518 (1841)
STORY, Justice, delivered the opinion of the Court.
[The Amistad was a ship bound from one part of Cuba to another. On board were
three Spanish subjects: Captain Ransom Ferrer, Jose Ruiz, and Pedro Montez. Also on
board were 53 Africans, recently kidnapped from their home country and transported
to Cuba, a Spanish territory, where Ruiz and Montez had purchased them as slaves.
Slavery was legal in Cuba at the time, though Spanish law banned the importation of
slaves from Africa to the Americas. At sea, the Africans rose up, killed Ferrer, and took
control of the Amistad, attempting to sail it back to Africa. Instead, they ended up off
the coast of Long Island, where they and the ship were taken into custody by the U.S.
Navy and brought to port in Connecticut. Ruiz and Montez filed libels—a type of
property claim in admiralty law—seeking to recover the Africans and cargo they had
on board. Their claim was backed by both the Spanish crown and the Federal
government, both of which cited a treaty between the two countries (discussed by the
Court below). The district court denied the Spaniards’ claim for the Africans, but
granted their claim for the cargo, and the Circuit Court summarily affirmed.]
… [T]he only parties now before the Court on one side, are the United States,
intervening for the sole purpose of procuring restitution of the property as Spanish

Subject Matter of Property

49

property, pursuant to the treaty, upon the grounds stated by the other parties claiming
the property in their respective libels. The United States do not assert any property in
themselves…. They simply confine themselves to the right of the Spanish claimants to
the restitution of their property, upon the facts asserted in their respective allegations.
In the next place, the parties before the Court on the
other side as appellees, are … the negroes, (Cinque,
and others,) asserting themselves in their answer, not
to be slaves, but free native Africans, kidnapped in
their own country, and illegally transported by force
from that country; and now entitled to maintain their
freedom.
No question has been here made, as to the
proprietary interests in the vessel and cargo. It is
admitted that they belong to Spanish subjects, and
that they ought to be restored. … The main
controversy is, whether these negroes are the
property of Ruiz and Montez, and ought to be
delivered up; and to this, accordingly, we shall first
direct our attention.

SING-GBE (CINQUÉ)
Source: John Sartain, (Engraver), and
Nathaniel Jocelyn, (Painter), Cinque The Chief of
the Amistad Captives (1840)

It has been argued on behalf of the United States, that the Court are bound to deliver
them up, according to the treaty of 1795, with Spain…. The ninth article provides, ‘that
all ships and merchandise, of what nature soever, which shall be rescued out of the
hands of any pirates or robbers, on the high seas, shall be brought into some port of
either state, and shall be delivered to the custody of the officers of that port, in order
to be taken care of and restored entire to the true proprietor, as soon as due and
sufficient proof shall be made concerning the property thereof.’ This is the article on
which the main reliance is placed on behalf of the United States, for the restitution of
these negroes. To bring the case within the article, it is essential to establish, First, That
these negroes, under all the circumstances, fall within the description of merchandise,
in the sense of the treaty. Secondly, That there has been a rescue of them on the high
seas, out of the hands of the pirates and robbers; which, in the present case, can only
be, by showing that they themselves are pirates and robbers, and Third, That Ruiz and

50

Property

Montez, the asserted proprietors, are the true proprietors, and have established their
title by competent proof.
If these negroes were, at the time, lawfully held as slaves under the laws of Spain, and
recognized by those laws as property capable of being lawfully bought and sold; we see
no reason why they may not justly be deemed within the intent of the treaty, to be
included under the denomination of merchandise, and, as such ought to be restored to
the claimants: for, upon that point, the laws of Spain would seem to furnish the proper
rule of interpretation. But, admitting this, it is clear, in our opinion, that … these
negroes never were the lawful slaves of Ruiz or Montez, or of any other Spanish
subjects. They are natives of Africa, and were kidnapped there, and were unlawfully
transported to Cuba, in violation of the laws and treaties of Spain, and the most solemn
edicts and declarations of that government. By those laws, and treaties, and edicts, the
African slave trade is utterly abolished; the dealing in that trade is deemed a heinous
crime; and the negroes thereby introduced into the dominions of Spain, are declared
to be free. Ruiz and Montez are proved to have made the pretended purchase of these
negroes, with a full knowledge of all the circumstances….
If then, these negroes are not slaves, but are kidnapped Africans, who, by the laws of
Spain itself, are entitled to their freedom, and were kidnapped and illegally carried to
Cuba, and illegally detained and restrained on board the Amistad; there is no pretence
to say, that they are pirates or robbers. We may lament the dreadful acts, by which they
asserted their liberty, and took possession of the Amistad, and endeavored to regain
their native country; but they cannot be deemed pirates or robbers in the sense of the
law of nations, or the treaty with Spain, or the laws of Spain itself; at least so far as
those laws have been brought to our knowledge. Nor do the libels of Ruiz or Montez
assert them to be such.
…It is also a most important consideration in the present case, which ought not to be
lost sight of, that, supposing these African negroes not to be slaves, but kidnapped,
and free negroes, the treaty with Spain cannot be obligatory upon them; and the United
States are bound to respect their rights as much as those of Spanish subjects. The
conflict of rights between the parties under such circumstances, becomes positive and
inevitable, and must be decided upon the eternal principles of justice and international
law. If the contest were about any goods on board of this ship, to which American

Subject Matter of Property

51

citizens asserted a title, which was denied by the Spanish claimants, there could be no
doubt of the right to such American citizens to litigate their claims before any
competent American tribunal, notwithstanding the treaty with Spain. A fortiori, the
doctrine must apply where human life and human liberty are in issue; and constitute
the very essence of the controversy. The treaty with Spain never could have intended
to take away the equal rights of all foreigners, who should contest their claims before
any of our Courts, to equal justice; or to deprive such foreigners of the protection given
them by other treaties, or by the general law of nations. Upon the merits of the case,
then, there does not seem to us to be any ground for doubt, that these negroes ought
to be deemed free; and that the Spanish treaty interposes no obstacle to the just
assertion of their rights.
…Upon the whole, our opinion is, that the decree of the Circuit Court, affirming that
of the District Court, ought to be affirmed, … and that the said negroes be declared to
be free, and be dismissed from the custody of the Court, and go without day.
BALDWIN, Justice, dissented.
Notes and Questions
1. James Somerset was an enslaved African man who had been transported from
colonial Massachusetts to England. Once in England he escaped, but was
recaptured and imprisoned on a ship docked in the Thames, soon to depart for
Jamaica. Somerset petitioned the King’s Bench for a writ of habeas corpus
challenging his confinement against his will by the ship’s captain. In Somerset v.
Stewart, 98 Eng. Rep. 499 (1772), Lord Chief Justice Mansfield, noting that
slavery was legal in both the North American colonies and Jamaica but had
never been formally recognized as legal by the English Parliament, granted the
writ, saying:
“[T]he slave departed and refused to serve; whereupon he was
kept, to be sold abroad. So high an act of dominion must be
recognized by the law of the country where it is used. The power
of a master over his slave is of such a nature, that it is incapable
of being introduced on any reasons, moral or political; but only
positive law, which preserves its force long after the reasons,

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occasion, and time itself from whence it was created, is erased
from memory: it’s so odious, that nothing can be suffered to
support it, but positive law. Whatever inconveniences, therefore,
may follow from a decision, I cannot say this case is allowed or
approved by the law of England; and therefore the black must be
discharged.”
The result in Somerset is, on some level, the same as in Amistad—both courts
order captured and enslaved human beings to be set free. But the facts that put
the question and the justifications for the result are subtly different in each case.
Can you articulate the distinction(s) between Lord Mansfield’s reasoning and
Justice Story’s? What are the implications of these distinctions for the law of
property in England and America, respectively, as it applies to property rights
in human beings?
2. Do either the Amistad or Somerset courts say that human beings can never be
property? Lord Mansfield explicitly refers to positive law in justifying the result
in Somerset, while in contrast Justice Story invokes “eternal principles of justice”
in Amistad. What is “positive law,” and how does it differ from “eternal
principles of justice” (or, as some theorists might call it, “natural law”)? What
are these two judges saying about the possibility of, and possible justifications
for, allowing one human being to treat another human being as property? Do
either deny that such treatment could be lawful?
3. Is your body your “property”? The English philosopher John Locke, who
heavily influenced Blackstone and the Anglo-American legal tradition generally,
seemed to think so. In his Second Treatise on Government, Chapter V, Section 27,
Locke wrote:
“Though the earth, and all inferior creatures, be common to all men, yet
every man has a property in his own person: this no body has any right
to but himself. The labour of his body, and the work of his hands, we
may say, are properly his.”
(It is not accidental that Locke said that every “man” has a property in his own
person; he didn’t include women.) What are the implications of the view of the

Subject Matter of Property

53

human body as “property”? If you can own your own body, why can’t someone
else own it? At the very least, could you sell yourself into slavery? Why don’t
biological mothers own their children, who are produced from their bodies?
Currently, the law insists that people are not property, even if the relation
between a person and her own body, or her own labor, can be described in
property terms. But as we will see, this does not mean courts do not still face
difficult questions regarding property claims that involve human beings.

1. Emancipation and Compensation
Generally, if the government “takes” “property” for its own use, the government has
to pay the former owner the fair market value of that property, as we will discuss in the
section on takings.
The Constitution, as amended, provides: “Neither slavery nor involuntary servitude,
except as a punishment for crime whereof the party shall have been duly convicted,
shall exist within the United States, or any place subject to their jurisdiction.” U.S.
Const., amend. XIII. The Thirteenth Amendment, along with its cousins the
Fourteenth and Fifteenth Amendments, were designed to embed the results of the Civil
War into the Constitution.
Before the Civil War, slavery’s defenders considered enslaved people to be property,
and many of slavery’s opponents conceded that enslaved people were property
according to the law of the land. Henry Clay, speaking against abolition, contended:
“The total value … of the slave property in the United States, is twelve hundred
millions of dollars. … It is the subject of mortgages, deeds of trust, and family
settlements. It … is the sole reliance, in many instances, of creditors within and without
the slave States …. That is property which the law declares to be property.” Was he right? If
he was wrong, how are we to determine what is property?
The U.S. did not compensate enslavers upon emancipation; nor did it compensate
enslaved people. But see Roy E. Finkenbine, Belinda’s Petition: Reparations for Slavery in
Revolutionary Massachusetts, 64 WM. & MARY Q. 95 (2007) (discussing a rare example of
a pension being granted to an aged ex-slave by the Massachusetts legislature, in
consideration of her long enslavement). By contrast, in 1833, Britain abolished slavery

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Property

but also provided for the compensation of enslavers for their lost “property,”
representing roughly 800,000 enslaved people. The £20 million the government set
aside to pay enslavers off represented 40% of the total government expenditure for
1834, and is the equivalent of between £16 and £17 billion, or $26 billion, in 2015
terms. Until the bank bailouts of 2009, this payout—to 46,000 enslavers—was the
largest in British history. Moreover, enslaved people were compelled to provide 45
hours of unpaid labor each week for their former masters for a further four years.
Many well-known Britons can trace their ancestors—and some fraction of their family
wealth—to
enslavers.
See
Legacies
of
British
Slave-Ownership,
https://www.ucl.ac.uk/lbs/.
Likewise, in 1825, France, warships at the ready, demanded that its former colony Haiti
compensate France for its loss of plantations and enslaved people. Enslavers
submitted detailed claims, which were later reduced to 90 billion francs (roughly $14
billion in modern terms) to be paid over thirty years. Haiti took until 1947 to pay off
both the original claim to France and the additional interest accrued from borrowing
from French banks to meet France’s deadlines. Haiti is currently the poorest country
in the Americas.

2. Owning Labor
The Thirteenth Amendment is notable, among other things, for its lack of any state
action requirement. While the other provisions of the Constitution control what the
government may do and how it may do it, the Thirteenth Amendment is a command
to everyone: there shall be no slavery in the United States. Why write it this way, rather
than as a constraint on government action?
Consider employment contracts that bar employees from competing if they leave, or
bar them from working in the same area or the same industry, or bar them from using
any information they learned while working for the employer. These restrictive
covenants may mean that a person may be unable to work in the only field for which
she is trained if she leaves her current employer, which is likely to give her employer
substantial leverage in negotiating salary and other terms of employment. Do these
attempted contractual restrictions raise any Thirteenth Amendment issues? See Orly
Lobel, The New Cognitive Property: Human Capital Law and the Reach of Intellectual Property,
93 TEXAS L. REV. 789 (2015) (discussing multiple restrictions employers have used to

Subject Matter of Property

55

restrict former employees’ use of their own knowledge); Dave Jamieson, Jimmy John’s
‘Oppressive’ Noncompete Agreement Survives Court Challenge, Huffington Post, Apr.
10, 2015 (discussing fast food restaurant’s noncompete agreement that precludes lowwage employees from working for any competitor).
Separately, consider the Thirteenth Amendment’s exception for “involuntary servitude”
as punishment for crime. Prison takes away prisoners’ liberty and their ability to use
their own property, and also coerces their labor. Does this mean that prisoners are
property? In 1871, the Virginia Supreme Court declared prisoners to be “slaves of the
state.” Ruffin v. Commonwealth, 62 Va. 1024 (1871). After the Civil War, AfricanAmericans in the South were routinely arrested for almost any reason, and local
governments then sold their labor to white landowners for agricultural work. Prison
labor currently produces over $2 billion worth of goods every year, though most
production now takes place within prison walls. All able-bodied federal prisoners are
required to work, at a pay scale ranging from $0.25 to $1.15 per hour. Texas and
Georgia require prisoners to work without any pay.

3. Alternatives to Property
If the relationship between a prisoner and the state, or between a child and a parent,
isn’t a property relationship, what kind of relationship is it? What other types of things
might be subject to such a relationship? Can cats be property? What about
chimpanzees? When there is a dispute between two people over the physical control
of something that we are reluctant to label as “property,” is arguing over the label
helpful? Is it necessary to resolve the underlying dispute? If not, how else might such
a dispute be resolved?
These types of questions arise in emotionally charged disputes concerning human
remains. Consider the following cases:
Kirksey v. Jernigan
45 So.2d 188 (Fla. 1950)
ROBERTS, Justice.
On October 20, 1948, the plaintiff’s five-year-old child was accidentally shot and killed
at her home while she was temporarily absent. She was immediately notified and arrived

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Property

at the scene soon after the accident occurred. Prior to her arrival, the defendant, an
undertaker, had taken the body of the child to his undertaking establishment ‘without
the authority of plaintiff, or of anyone authorized to act in her behalf’, it is alleged.
Upon learning this, the plaintiff went to the establishment of defendant, advised him
that she was the mother of the child, and made demand for the body, directing that it
be turned over immediately to the undertaker of her choice. It is alleged that she made
this demand within two hours after the accident. Defendant refused to surrender the
body at that time, or upon repeated requests for the body made thereafter by plaintiff,
or others acting on her behalf, and held the body for two or three days. The defendant
also embalmed the body, it is alleged, ‘wrongfully and without authority from plaintiff,
or anyone authorized to act in her behalf, and thereby mutilated said body in deliberate
and wanton disregard of the known rights of plaintiff and arbitrarily set his charge or
fee in the sum of $50.00.’ It was also alleged that he refused to deliver the body to
plaintiff or anyone else until plaintiff had paid the $50.00 fee, and ‘wrongfully held said
body as security for said charge or fee or $50.00.’
The declaration was in three counts, the first of which was based on the wrongful
withholding of the body, and the second on this same ground and, in addition, the
unauthorized embalming and the holding of the body as security for the payment of
the $50.00 fee. The third count contained the allegations of the first two counts and
alleged further that the charge of $50.00 for embalming was excessive, the usual fee
being $25.00; that the defendant, knowing the plaintiff to be a poor and impecunious
colored woman, refused to accept the usual charge of $25.00 or $30.00 to release the
body, held the body as security for the fee, and forced her to borrow money to pay the
excessive amount demanded. [The defendant’s demurrer was sustained “on the ground
that neither compensatory damages for mental pain and anguish nor punitive damages
were recoverable,” and the plaintiff appealed.]
This court is committed to the rule, and we re-affirm it herein, that there can be no
recovery for mental pain and anguish unconnected with physical injury in an action
arising out of the negligent breach of a contract whereby simple negligence is involved.
But we do not feel constrained to extend this rule to cases founded purely in tort, where
the wrongful act is such as to reasonably imply malice, or where, from the entire want
of care of attention to duty, or great indifference to the persons, property, or rights of

Subject Matter of Property

57

others, such malice will be imputed as would justify the assessment of exemplary or
punitive damages. The right to recover, in such cases, is especially appropriate to
tortious interference with rights involving dead human bodies, where mental anguish
to the surviving relatives is not only the natural and probable consequence of the
character of wrong committed, but indeed is frequently the only injurious consequence
to follow from it.
It is well settled that, in the absence of testamentary disposition to the contrary, a
surviving spouse or next of kin has the right to the possession of the body of a deceased
person for the purpose of burial, sepulture or other lawful disposition which they may
see fit. And the invasion of such right by unlawfully withholding the body from the
relative entitled thereto is an actionable wrong, for which substantial damages may be
recovered.
We hold that the declaration in the instant case stated a cause of action against the
defendant and alleged facts which, if established upon the trial, could justify a recovery
of punitive damages as well as damages for mental suffering and anguish to the plaintiff.
The judgment is, accordingly, reversed and the cause remanded for trial.
Wilson v. Wilson
138 So.3d 1176 (Fla. Dist. Ct. App. 2014)
MAY, J.
A father appeals a probate order determining that the son’s ashes were not “property”
as defined by section 731.201(32), Fla. Stat. (2012), and therefore not subject to
partition. We affirm.

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Property

The twenty-three year old son, single and without children, died in a tragic automobile
accident. * He left no will and no written or verbal instructions for disposition of his
body. His parents are co-personal representatives of their son’s estate, and the sole
beneficiaries. 1
After their son’s death, the parents agreed to have his body cremated. They were unable,
however, to agree on the final disposition of his ashes. The mother wanted to bury the
son’s ashes in West Palm Beach, Florida. The father wanted to bury the son’s ashes in
a family burial plot in Blue Ridge, Georgia.
The father petitioned the court to declare the ashes “property” to be partitioned under
the probate code. This would allow each parent to dispose of half of the ashes as they
desired. For religious reasons, the mother opposed having the ashes divided…. After
an evidentiary hearing, the trial court found that the ashes were not “property” subject
to partition, and denied the father’s petition.
The court gave the co-personal representatives 30 days “to carry out their duties and
responsibilities to finally dispose of [their son’s] remains ....” If they were unable to
reach agreement, the court indicated that it might appoint a curator or other suitable
person to carry out the task. From this order, the father has now appealed.
… We are presented with an issue of first impression, for no Florida court has
answered the precise issue posed. And so, we start by traveling back in history to reflect
on how deceased bodies and ashes have been viewed over time. In 1753, Sir William
Blackstone commented:

* [Eds.—Scott Wilson was driving home for his sister’s birthday when millionaire polo club founder John

Goodman—heir to a major air conditioning manufacturing company—slammed into Scott’s Subaru with his
Bentley, pushing the Subaru into a canal, where Scott drowned. Goodman fled the scene, and a blood test three
hours later showed he had a blood-alcohol level more than twice the legal limit for driving in Florida. After
lengthy legal proceedings, Goodman was convicted of several counts and sentenced to 16 years in prison. Marc
Freeman, Wellington polo club founder John Goodman loses appeal of DUI manslaughter conviction, SUN SENTINEL (July 26,
2017), http://www.sun-sentinel.com/local/palm-beach/fl-pn-john-goodman-loses-dui-manslaughter-appeal20170726-story.html.]
1 The parents were divorced prior to their son’s death.

Subject Matter of Property

59

Pews in the church are somewhat of the same nature, which may
descend by custom immemorial (without any ecclesiastical concurrence)
from the ancestor to the heir. But though the heir has a property in the
monuments and escutcheons of his ancestors, yet he has none in their
bodies or ashes; nor can he bring any civil action against such as
indecently at least, if not impiously, violate and disturb their remains,
when dead and buried.
1 Sir William Blackstone, Commentaries on the Laws of England in Four Books 429
(Philadelphia,
J.B.
Lippencott
Co.
1893),
available
at
http://oll.libertyfund.org/title/2140 (emphasis added). … The historical basis for this
thinking was derived in part from the English view that “the secular tribunals would
protect the monument, the winding-sheet, the grave-clothes, even down to the ribbon
(now extant) which tied the queue; but the Church would guard the skull and bones.”
In re Widening of Beekman Street, 4 Bradf. 503, 522 app. (1856) (historical note on the law
of burial by the Honorable Samuel B. Ruggles, Referee)
Fast forward to today. Our probate code defines “property” as “both real and personal
property or any interest in it and anything that may be the subject of ownership.”
§ 731.201(32), Fla. Stat. (2012). That definition has existed since 1975. Yet, as our
supreme court has articulated, “[a]ll authorities generally agree that the next of kin have
no property right in the remains of a decedent.” State v. Powell, 497 So.2d 1188, 1191
(Fla. 1986) (emphasis added). The supreme court clarified its position in Kirksey v.
Jernigan “to be consistent with the majority view that the right [to the remains] is limited
to ‘possession of the body ... for the purpose of burial, sepulture or other lawful
disposition ....’ ” Id. at 1191–92 (citing Kirksey v. Jernigan, 45 So.2d 188, 189 (Fla.1950)).
It reiterated its position again in 2001 in Crocker v. Pleasant, 778 So.2d 978, 988 (Fla.
2001), acknowledging that “there is a legitimate claim of entitlement by the next of kin
to possession of the remains of a decedent for burial or other lawful disposition.” But
a claim of entitlement is not a property right, nor does it make the remains “property.”
Ashes are the decedent’s remains. Common law, our supreme court, and this Court
have always held that a decedent’s remains are not property. See id.; see also Cohen v.
Guardianship of Cohen, 896 So.2d 950, 954 (Fla. 4th DCA 2005) (“a dead body is not
properly viewable as property or assets”).

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Property

The father relied on In re Estate of K.A., 807 N.E.2d 748 (Ind.Ct.App. 2004), to support
his request to partition the ashes. There, the child of a divorced couple was killed in an
automobile accident. The mother and father agreed to cremate the child’s remains, but
disagreed on the disposition of the ashes. Id. Like here, the father petitioned for an
order equally dividing the ashes. Id. After an evidentiary hearing, the trial court ordered
that the ashes be divided, and the mother appealed. Id. The Indiana Court of Appeals
affirmed, recognizing that “the practice of dividing the remains of a decedent among
the survivors is common and acceptable in the funeral service industry” and “memento
urns or keepsakes have been marketed to preserve divided ashes for surviving family
members.” Id. at 751.
We, however, find K.A. easily distinguishable both legally and factually. First, the court
specifically stated that the “trial court did not find that the cremated remains of K.A.
were subject to division between her heirs as inherited property.” Id. at 751 n. 1. And
second, applying the “clearly erroneous” standard of review, the appellate court held
the evidence supported the trial court’s finding that K.A. wanted her ashes divided and
spread at different locations. Id. at 750–51.
The mother and trial court relied instead on Kulp v. Kulp, 920 A.2d 867 (Pa.Super.Ct.
2007). There, a couple disagreed over who should keep their child’s cremated remains
in a divorce proceeding. Id. at 869. The trial court ordered that the ashes be divided
evenly between the two parents, and the father appealed. Id. The appellate court
reversed. Id. at 868.
[T]he issue is an extremely sensitive one. While the division of cremated
remains may be common in the funeral industry and may be acceptable
in many instances to the next of kin, in other cases, as in the case of
Husband herein, the next of kin may believe that the division of
cremated remains is offensive. The question thus presented is whether
the trial court in the instant case abused its discretion in ordering the
division of Son’s remains.
Id. at 872–73. The appellate court held the trial court had “abused its discretion in using
its equitable powers to override the desires of one of the next of kin as to the division
of Son’s remains.” Id. at 873.

Subject Matter of Property

61

We need not rely on either out-of-state case, but need only adhere to our own Florida
precedent in declaring that the decedent’s remains are not “property.” In doing so, we
adopt the words of Judge Warner in Cohen:
It is a sorrowful matter to have relatives disputing in court over the
remains of the deceased. In this case in particular, there is no solution
that will bring peace to all parties. We express our sympathies to both
sides in their loss, which must be magnified by these proceedings. Cases
such as this require the most sensitive exercise of the equitable powers
of the trial courts. We are confident that the experienced trial judge
exercised his power with due regard for the serious and emotional issues
presented.
Cohen, 896 So.2d at 955.
Given the sensitive nature of the subject matter, and the fact that, historically, cremated
remains have been treated the same as a body, neither constituting “property,” we
decline to craft a policy at odds with our history and precedent. This is a matter best
left to our legislature should it decide to address this sensitive policy issue.
Affirmed.
Notes and Questions
1. According to Amy Bello—Lili Wilson’s attorney—after the Florida Supreme
Court’s ruling the circuit court held a hearing at which Judge Colin indicated he
was prepared to enter an order to dispose of Scott’s remains, and implored the
parties to try once more to reach agreement. They did so. While the terms of
the agreement are confidential, they did result in the disposition of Scott’s ashes.
In 2016, the Florida Legislature—at the behest of the funeral services
industry—codified Wilson’s rule that cremated remains “are not property…and
are not subject to partition for purposes of distibution.” 2016 Fla. Sess. Law.
Serv. Ch. 2016-172 § 30, codified at FLA. STAT. § 497.607(2).
2. When the Kirksey court says that a dead person’s next of kin has “the right to
the possession of the body of a deceased person for the purpose of burial,
sepulture or other lawful disposition which they may see fit,” and to recover

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Property
damages for the invasion of that right, how (if at all) is that different from saying
that the remains are the next of kin’s property? How, for example, is Ms.
Kirksey’s legal relationship to her daughter’s body different from the Jacques’
legal relationship to their land? Is the difference sufficient to say that the latter
is property but the former is not? Why?
3. Would the outcome for Ms. Kirksey or for the Wilsons have been any different
if the Florida Supreme Court had ruled that their children’s remains were
“property”? If so, how? If not, does it matter whether or not we call something
“property”?
Could we, for example, say that human remains (or animals, or what-have-you)
are subject to all the rights of ownership you might exercise over a plot of land
or a car or a pair of shoes, and at the same time maintain that they are not
“property”? How? Why might anybody want to do that?

4. Body Parts
State and federal statutes implicitly recognize some kind of property rights in body
parts, permitting gifts from both living persons and dead donors and even permitting
sales, except for sales for the purpose of transplantation. Thus, Section 301 of the
National Organ Transplant Act of 1984, Pub. L. 98-507, 98 Stat. 2339, codified at 42
U.S.C. § 274e, makes it a crime “for any person to knowingly acquire, receive, or
otherwise transfer any human organ for valuable consideration for use in human
transplantation if the transfer affects interstate commerce,” while the Uniform
Anatomical Gift Act, which as of this writing has been adopted in 46 states and the
District of Columbia, permits individuals to make “a donation of all or part of a human
body to take effect after the donor’s death for the purpose of transplantation, therapy,
research, or education.” Body parts are therefore alienable—the right to possess and
use them for certain purposes can be transferred—even though they can’t be sold in
some contexts.
This middle position can lead to some hard line-drawing problems—particularly where
other consequences of the “property” label come into play:

Subject Matter of Property

63

1. Property or Tort? In Moore v. Regents of University of California, 793 P.2d 479 (Cal.
1990), a leukemia patient sued his doctors who had used cells and tissues
gathered during his treatment to create a cell line for research purposes and to
obtain a potentially lucrative patent for the production of therapeutic proteins
from that cell line. Moore’s theory was that the doctors had taken and used his
property—i.e., parts of his body that had been removed during his cancer
treatment—without his consent. Over multiple dissents, the court held that
Moore’s property claim must fail because he had no property right in cells
excised from his body—but that he could recover in tort against his doctors if
they had failed to inform him of their intent to use his cells for research and
obtain his consent to such use prior to treating him. Does this distinction in the
causes of action available to Moore make a difference? (Hint: consider Moore’s
potential claims against other researchers who use the cell line derived from his
cells.)
2. An Inadequate Remedy? The unavailability of a conversion claim for the
unauthorized taking of body parts may remove an obstacle to important medical
research, but it can lead to problematic consequences for patients and their
families. In January 1951, a 31-year-old African-American woman named
Henrietta Lacks was diagnosed with cervical cancer. She died, painfully, in
October 1951, leaving five children. Without her knowledge or consent, or that
of her family, doctors gave a sample of her tumor to Dr. George Gey, a Johns
Hopkins researcher who was trying to find cells that would live indefinitely in
culture so researchers could more easily experiment on them. Her cells were
his first success, and the cell line developed from her body was known as HeLa
(for Henrietta Lacks). Dr. Jonas Salk used HeLa cells to develop the first polio
vaccine, and they also helped in the development of numerous other drugs,
treating diseases as diverse as Parkinson’s, leukemia and the flu. More than
60,000 articles have been written about research based on HeLa cells. Though
Dr. Gey didn’t make money from them, other researchers did. Selling HeLa
cells has generated millions in profits, but none for the Lacks family, the
members of which suffered from poverty and lack of education.
In fact, some Lacks family members suffered serious health problems, but they
only found out about HeLa cells by accident, more than two decades later. Mrs.

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Property
Lacks’s daughter-in-law met someone who recognized her surname and said he
was working with cells from “a woman named Henrietta Lacks.” She then told
Mrs. Lacks’s son: “Part of your mother, it’s alive!” The family was proud their
mother’s cells had saved lives, but also felt exploited. Some members of the
family had given blood to Johns Hopkins researchers, believing they were being
tested for cancer, but in fact the researchers wanted to use their blood to
determine whether HeLa cells were contaminating other cultures. (For more,
see REBECCA SKLOOT, THE IMMORTAL LIFE OF HENRIETTA LACKS (2010).)
Ultimately, the National Institutes of Health agreed with the Lacks family that
her full genome data would only be available to researchers, in order to preserve
the family’s privacy; that two representatives of the Lacks family would serve
on the NIH group responsible for reviewing biomedical researchers’
applications for controlled access to HeLa cells; and that any researcher who
uses that data would be asked to include an acknowledgement to the Lacks
family in their publications. However, no one would provide any compensation
to the Lacks family. Art Caplan, NIH finally makes good with Henrietta Lacks’
family, Sept. 3, 2014, NBC News.com. Is this a good solution? Can you
distinguish “property” interests from “privacy” or “dignity” interests in this
story?
3. Markets for Body Parts. Should we allow organs to be fully market-alienable,
so that willing sellers could, say, offer up a kidney for compensation? See, e.g.,
Richard A. Epstein, The Human and Economic Dimensions of Altruism: The Case of
Organ Transplantation, 37 J. LEGAL STUD. 459, 485-497 (2008); Radhika Rao,
Property, Privacy, and the Human Body, 80 B.U. L. REV. 359 (2000); Julia D.
Mahoney, The Market for Human Tissue, 86 VA. L. REV. 163 (2000).
Consider the following arguments for market-alienability: There is currently a
great shortage of transplantable organs such as hearts, lungs, livers, and kidneys,
leading to tens of thousands of deaths a year. Each day, 79 people receive
transplants, but 22 people die while waiting for a transplant.
http://www.organdonor.gov/about/data.html. The U.S. has an opt-in system
for organ donation at death, resulting in the fourth-highest organ donor rate (26
donors per million people in the population). Spain has the highest rate, with

Subject Matter of Property

65

35.3 donors per million people. Spain, like several other European countries,
in theory has an opt-out regime in which organs will be donated at death in the
absence of an opt-out, but in practice doctors will ask relatives for consent
regardless, and that consent is often denied.
What if we allowed people to be paid during life for their agreement to be
donors at death? What objections or obstacles do you foresee to such a scheme?
What about sales by living donors? People can already sell semen, skin tissue,
and blood. Poor people would likely be most of the sellers, but proponents
note that using the market to obtain a supply of organs doesn’t mean that they
need to be distributed only to those who can pay; Medicaid pays for dialysis,
which is quite expensive, and could also pay for a kidney for poor patients. In
Iran, which does allow payments for kidney donations to Iranian recipients,
84% of donors are poor, but 50% of recipients are also poor, and Iran
eliminated its transplant list of people awaiting kidneys. Ahad J. Ghods &
Shekoufeh Savaj, Iranian Model of Paid and Regulated Living-Unrelated Kidney
Donation, 1 CLINICAL J. AM. SOC. NEPHROLOGY 1136 (2006).
To those who say that such a system would coerce the poor to sell their organs,
proponents respond that those sellers would be better off than they are in the
present system, where they’re still poor and have fewer options for earning
money, many of which are equally or more dangerous and unpleasant. Sellers
who later suffered kidney failure could get transplants.
Opponents note that there’s evidence that donated blood is higher quality than
paid-for blood, though the significance of those studies is contested. Donating
bodily products, opponents argue, is an altruistic act that improves the human
condition and provides a better guarantee of quality. Selling, by contrast, leads
to attempts to sell shoddy products—here, unhealthy organs—for gain.
Proponents of organ sales respond that poor-quality organs can be screened out.
To this, opponents rejoin that there’s evidence of “crowding out” of altruistic
motives by commercial motives: when money enters a system, people who
previously participated out of the goodness of their hearts may withdraw. They
don’t want to feel like suckers when they aren’t getting paid and other people

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are. Payment, then, might even lead to a reduced supply of organs compared
to the present system.
Opponents also argue that organ sales are degrading, reducing a person to the
commodified sum of her parts. Proponents respond that dying of a curable
illness is also degrading, and that Western societies used to consider surgery,
artificial insemination, and autopsies degrading. Life insurance used to be
rejected on the ground that it wrongly commodified the value of a human life.
It’s widely accepted now—did it degrade our humanity? Likewise, people can
sell their time and the intellectual products of their minds.
But on this argument, we should be open to selling everything—why not let a
living donor sell her heart to provide for her family? Why not let her sell her
child? Not reassuringly, some proponents of organ sales believe that these
options should at least be considered, with appropriate safeguards. They
contend that proper boundaries between market and non-market activity can
be maintained even if new aspects of life enter the market. The same society
that came to accept life insurance and artificial insemination also eventually
outlawed slavery and child labor. In fact, it can be harder to get people to accept
markets than it perhaps should be.
Conversely, even limiting alienability of one’s body to gratuitous donation
doesn’t necessarily hold market forces at bay. Many people leave directives for
their bodies to be donated for scientific uses after their deaths, supplying a
resource that is desperately needed in medical education and research. But
unlike live tissues, traffic in dead bodies and body parts after donation is largely
unregulated. This has led to the growth of a substantial industry around the
collection, preservation, and dissection of donated human cadavers, and their
distribution (for hefty fees) to the research and educational institutions that
require them. An extensive investigation by Reuters journalists into this industry
found a number of macabre abuses and shady operators seemingly attracted by
an easy profit. As one “body broker” told Reuters: “If you can’t make a business
when you’re getting raw materials for free, … you’re dumb as a box of rocks.”
Brian Grow & John Shiffman, The Body Trade, Part 1: Body Brokers, REUTERS
(Oct. 24, 2017), https://www.reuters.com/investigates/special-report/usa-

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bodies-brokers/. Interestingly, these body brokers—or “non-transplant tissue
banks” as they prefer to be called—seem to go to great lengths not to label their
transactions as sales of body parts. Instead, they bill their customers “service
fees,” “preparation fees,” and “processing fees.” Why do you think that is? Does
it change your view to learn that some of these same brokers later listed their
inventory of human tissues as assets in bankruptcy filings?
In light of all this complexity, is the language of property helpful in crafting rules and
drawing lines regarding permissible uses of the human body? Consider the following
anti-propertization argument, applied to rape:
Margaret Radin, Market-Inalienability
100 HARV. L. REV. 1849 (1987):
… In some cases market discourse itself might be antagonistic to interests of
personhood. [Judge Richard] Posner conceives of rape in terms of a marriage and sex
market. Posner concludes that “the prevention of rape is essential to protect the
marriage market . . . and more generally to secure property rights in women’s persons.”
Calabresi and Melamed also use market rhetoric to discuss rape. In keeping with their
view that “property rules” are prima facie more efficient than “liability rules” for all
entitlements, they argue that people should hold a “property rule” entitlement in their
own bodily integrity. Further, they explain criminal punishment by the need for an
“indefinable kicker,” an extra cost to the rapist “which represents society’s need to
keep all property rules from being changed at will into liability rules.” … [L]ike Posner’s,
their view conceives of rape in market rhetoric. Bodily integrity is an owned object with
a price.
What is wrong with this rhetoric? The risk-of-error argument . . . is one answer.
Unsophisticated practitioners of cost-benefit analysis might tend to undervalue the
“costs” of rape to the victims. But this answer does not exhaust the problem. Rather,
for all but the deepest enthusiast, market rhetoric seems intuitively out of place here,
so inappropriate that it is either silly or somehow insulting to the value being discussed.
One basis for this intuition is that market rhetoric conceives of bodily integrity as a
fungible object. A fungible object is replaceable with money or other objects; in fact,
possessing a fungible object is the same as possessing money. A fungible object can

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pass in and out of the person’s possession without effect on the person as long as its
market equivalent is given in exchange. To speak of personal attributes as fungible
objects — alienable “goods” — is intuitively wrong. Thinking of rape in market
rhetoric implicitly conceives of as fungible something that we know to be personal, in
fact conceives of as fungible property something we know to be too personal even to
be personal property. Bodily integrity is an attribute and not an object. …
Systematically conceiving of personal attributes as fungible objects is threatening to
personhood, because it detaches from the person that which is integral to the person.
Such a conception makes actual loss of the attribute easier to countenance. For
someone who conceives bodily integrity as “detached,” the same person will remain
even if bodily integrity is lost; but if bodily integrity cannot be detached, the person
cannot remain the same after loss. Moreover, if my bodily integrity is an integral
personal attribute, not a detachable object, then hypothetically valuing my bodily
integrity in money is not far removed from valuing me in money. For all but the
universal commodifier, that is inappropriate treatment of a person. . . .

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C. Intangible Property
This section considers forms of property that cannot be seen with the eye or held in
the hand. Such property raises significant conceptual issues, but, simply put, it is too
significant for the legal system to ignore. As you read the cases in this section, consider
not just whether the things they describe are “property,” but also whether they are
“things” in the first place. To create a system of property rights, a legal system needs
to be able to identify the things that are the subject of those rights, to decide who owns
those things, and to be able to say when an owner’s rights have been violated. Are these
tasks systematically harder for intangibles, and if so, why?
Kremen v. Cohen
337 F. 3d 1024 (9th Cir. 2003)
KOZINSKI, Circuit Judge. *
We decide whether Network Solutions may be liable for giving away a registrant’s
domain name on the basis of a forged letter.
BACKGROUND
“Sex on the Internet?,” they all said. “That’ll never make any money.” But computergeek-turned-entrepreneur Gary Kremen knew an opportunity when he saw it. The year
was 1994; domain names were free for the asking, and it would be several years yet
before Henry Blodget and hordes of eager NASDAQ day traders would turn the
Internet into the Dutch tulip craze of our times. With a quick e-mail to the domain
name registrar Network Solutions, Kremen became the proud owner of sex.com. He
registered the name to his business, Online Classifieds, and listed himself as the contact.
Con man Stephen Cohen, meanwhile, was doing time for impersonating a bankruptcy
lawyer. He, too, saw the potential of the domain name. Kremen had gotten it first, but
that was only a minor impediment for a man of Cohen’s boundless resource and
bounded integrity. Once out of prison, he sent Network Solutions what purported to
* [In 2009, Judge Kozinski was admonished by a judicial disciplinary panel for maintaining a publicly accessible

web server that included sexually explicit material. In 2017, he abruptly resigned after being accused of sexual
misconduct by numerous women, including former law clerks. –Eds.]

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be a letter he had received from Online Classifieds. It claimed the company had been
“forced to dismiss Mr. Kremen,” but “never got around to changing our administrative
contact with the internet registration [sic] and now our Board of directors has decided
to abandon the domain name sex.com.” Why was this unusual letter being sent via
Cohen rather than to Network Solutions directly? It explained:
Because we do not have a direct connection to the internet, we request that you
notify the internet registration on our behalf, to delete our domain name
sex.com. Further, we have no objections to your use of the domain name
sex.com and this letter shall serve as our authorization to the internet
registration to transfer sex.com to your corporation. 2
Despite the letter’s transparent claim that a company called “Online Classifieds” had
no Internet connection, Network Solutions made no effort to contact Kremen. Instead,
it accepted the letter at face value and transferred the domain name to Cohen. When
Kremen contacted Network Solutions some time later, he was told it was too late to
undo the transfer. Cohen went on to turn sex.com into a lucrative online porn empire.
And so began Kremen’s quest to recover the domain name that was rightfully his. He
sued Cohen and several affiliated companies in federal court, seeking return of the
domain name and disgorgement of Cohen’s profits. The district court found that the
letter was indeed a forgery and ordered the domain name returned to Kremen. It also
told Cohen to hand over his profits, invoking the constructive trust doctrine and
California’s “unfair competition” statute, Cal. Bus. & Prof.Code § 17200 et seq. It
awarded $40 million in compensatory damages and another $25 million in punitive
damages.
Kremen, unfortunately, has not had much luck collecting his judgment. The district
court froze Cohen’s assets, but Cohen ignored the order and wired large sums of
money to offshore accounts. His real estate property, under the protection of a federal
receiver, was stripped of all its fixtures—even cabinet doors and toilets—in violation

2 The letter was signed “Sharon Dimmick,” purported president of Online Classifieds. Dimmick was actually

Kremen’s housemate at the time; Cohen later claimed she sold him the domain name for $1000. This story might
have worked a little better if Cohen hadn’t misspelled her signature.

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of another order. The court commanded Cohen to appear and show cause why he
shouldn’t be held in contempt, but he ignored that order, too. The district judge finally
took off the gloves —he declared Cohen a fugitive from justice, signed an arrest
warrant and sent the U.S. Marshals after him.
Then things started getting really bizarre. Kremen put up a “wanted” poster on the
sex.com site with a mug shot of Cohen, offering a $50,000 reward to anyone who
brought him to justice. Cohen’s lawyers responded with a motion to vacate the arrest
warrant. They reported that Cohen was under house arrest in Mexico and that gunfights
between Mexican authorities and would-be bounty hunters seeking Kremen’s reward
money posed a threat to human life. The district court rejected this story as
“implausible” and denied the motion. Cohen, so far as the record shows, remains at
large.
Given his limited success with the bounty hunter approach, it should come as no
surprise that Kremen seeks to hold someone else responsible for his losses. That
someone is Network Solutions, the exclusive domain name registrar at the time of
Cohen’s antics. Kremen sued it for mishandling his domain name, invoking four
theories at issue here. He argues that he had an implied contract with Network
Solutions, which it breached by giving the domain name to Cohen. He also claims the
transfer violated Network Solutions’s cooperative agreement with the National Science
Foundation —the government contract that made Network Solutions the .com
registrar. His third theory is that he has a property right in the domain name sex.com,
and Network Solutions committed the tort of conversion by giving it away to Cohen.
Finally, he argues that Network Solutions was a “bailee” of his domain name and seeks
to hold it liable for “conversion by bailee.”
The district court granted summary judgment in favor of Network Solutions on all
claims. [Kremen appealed. His contract claim failed on appeal because he was not a
paying customer and Network Solutions made no promises to him. He was not an
intended third-party beneficiary of Network Solutions’ contract with the NSF. And
“conversion by bailee” was not an independent tort from conversion under California
law. That left his conversion claim.]

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CONVERSION

Kremen’s conversion claim is another matter. To establish that tort, a plaintiff must
show “ownership or right to possession of property, wrongful disposition of the
property right and damages.” G.S. Rasmussen & Assocs., Inc. v. Kalitta Flying Serv., Inc.,
958 F.2d 896, 906 (9th Cir. 1992). The preliminary question, then, is whether registrants
have property rights in their domain names. Network Solutions all but concedes that
they do. This is no surprise, given its positions in prior litigation. See Network Solutions,
Inc. v. Umbro Int’l, Inc., 529 S.E.2d 80, 86 (2000) (“[Network Solutions] acknowledged
during oral argument before this Court that the right to use a domain name is a form
of intangible personal property.”). 5 The district court agreed with the parties on this
issue, as do we.
Property is a broad concept that includes “every intangible benefit and prerogative
susceptible of possession or disposition.” Downing v. Mun. Court, 198 P.2d 923 (1948).
We apply a three-part test to determine whether a property right exists: “First, there
must be an interest capable of precise definition; second, it must be capable of exclusive
possession or control; and third, the putative owner must have established a legitimate
claim to exclusivity.” G.S. Rasmussen, 958 F.2d at 903. Domain names satisfy each
criterion. Like a share of corporate stock or a plot of land, a domain name is a welldefined interest. Someone who registers a domain name decides where on the Internet
those who invoke that particular name—whether by typing it into their web browsers,
by following a hyperlink, or by other means—are sent. Ownership is exclusive in that
the registrant alone makes that decision. Moreover, like other forms of property,
domain names are valued, bought and sold, often for millions of dollars, and they are
now even subject to in rem jurisdiction, see 15 U.S.C. § 1125(d)(2).
Finally, registrants have a legitimate claim to exclusivity. Registering a domain name is
like staking a claim to a plot of land at the title office. It informs others that the domain
name is the registrant’s and no one else’s. Many registrants also invest substantial time
and money to develop and promote websites that depend on their domain names.

5 Network Solutions … stresses that Kremen didn’t develop the sex.com site before Cohen stole it. But this focus

on the particular domain name at issue is misguided. The question is not whether Kremen’s domain name in
isolation is property, but whether domain names as a class are a species of property.

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73

Ensuring that they reap the benefits of their investments reduces uncertainty and thus
encourages investment in the first place, promoting the growth of the Internet overall.
Kremen therefore had an intangible property right in his domain name, and a jury could
find that Network Solutions wrongfully disposed of that right to his detriment by
handing the domain name over to Cohen. The district court nevertheless rejected
Kremen’s conversion claim. It held that domain names, although a form of property,
are intangibles not subject to conversion. This rationale derives from a distinction tort
law once drew between tangible and intangible property: Conversion was originally a
remedy for the wrongful taking of another’s lost goods, so it applied only to tangible
property. SEE PROSSER AND KEETON ON THE LAW OF TORTS § 15, at 89, 91 (W. Page
Keeton ed., 5th ed. 1984). Virtually every jurisdiction, however, has discarded this rigid
limitation to some degree. Many courts ignore or expressly reject it. See Kremen, 325
F.3d at 1045-46 n. 5 (Kozinski, J., dissenting) (citing cases); Astroworks, Inc. v.
Astroexhibit, Inc., 257 F.Supp.2d 609, 618 (S.D.N.Y.2003) (holding that the plaintiff
could maintain a claim for conversion of his website); Val D. Ricks, The Conversion of
Intangible Property: Bursting the Ancient Trover Bottle with New Wine, 1991 B.Y.U. L. REV.
1681, 1682. Others reject it for some intangibles but not others. The Restatement, for
example, recommends the following test:
(1) Where there is conversion of a document in which intangible rights are
merged, the damages include the value of such rights.
(2) One who effectively prevents the exercise of intangible rights of the kind
customarily merged in a document is subject to a liability similar to that for
conversion, even though the document is not itself converted.
RESTATEMENT (SECOND) OF TORTS § 242 (1965) (emphasis added). An intangible is
“merged” in a document when, “by the appropriate rule of law, the right to the
immediate possession of a chattel and the power to acquire such possession is represented
by [the] document,” or when “an intangible obligation [is] represented by [the]
document, which is regarded as equivalent to the obligation.” Id. cmt. a (emphasis

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added). 6 The district court applied this test and found no evidence that Kremen’s
domain name was merged in a document. …
We conclude that California does not follow the Restatement’s strict merger
requirement. Indeed, the leading California Supreme Court case rejects the tangibility
requirement altogether. In Payne v. Elliot, 54 Cal. 339, 1880 WL 1907 (1880), the Court
considered whether shares in a corporation (as opposed to the share certificates
themselves) could be converted. It held that they could, reasoning: “[T]he action no
longer exists as it did at common law, but has been developed into a remedy for the
conversion of every species of personal property.” Id. at 341 (emphasis added). While
Payne’s outcome might be reconcilable with the Restatement, its rationale certainly is
not: It recognized conversion of shares, not because they are customarily represented
by share certificates, but because they are a species of personal property and, perforce,
protected. 7
Notwithstanding Payne’s seemingly clear holding, the California Court of Appeal held
in Olschewski v. Hudson, 87 Cal.App. 282, 262 P. 43 (1927), that a laundry route was not
subject to conversion. It explained that Payne’s rationale was “too broad a statement
as to the application of the doctrine of conversion.” Id. at 288, 262 P. 43. Rather than
follow binding California Supreme Court precedent, the court retheorized Payne and
held that corporate stock could be converted only because it was “represented by” a
tangible document. Id.; see also Adkins v. Model Laundry Co., 268 P. 939 (1928) (relying
on Olschewski and holding that no property right inhered in “the intangible interest of
an exclusive privilege to collect laundry”).
Were Olschewski the only relevant case on the books, there might be a plausible
argument that California follows the Restatement. But in Palm Springs-La Quinta
Development Co. v. Kieberk Corp., 115 P.2d 548 (1941), the court of appeal allowed a
6 The Restatement does note that conversion “has been applied by some courts in cases where the converted

document is not in itself a symbol of the rights in question, but is merely essential to their protection and
enforcement, as in the case of account books and receipts.” Id. cmt. b.
7 Intangible interests in real property, on the other hand, remain unprotected by conversion, presumably because

trespass is an adequate remedy. See Goldschmidt v. Maier, 73 P. 984, 985 (Cal.1903) (per curiam) (“[A] leasehold of
real estate is not the subject of an action of trover.”); Vuich v. Smith, 35 P.2d 365 (1934) (same). Some California
cases also preserve the traditional exception for indefinite sums of money. See 5 Witkin Torts § 614.

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75

conversion claim for intangible information in a customer list when some of the index
cards on which the information was recorded were destroyed. The court allowed
damages not just for the value of the cards, but for the value of the intangible
information lost. Section 242(1) of the Restatement, however, allows recovery for
intangibles only if they are merged in the converted document. Customer information
is not merged in a document in any meaningful sense. A Rolodex is not like a stock
certificate that actually represents a property interest; it is only a means of recording
information.
Palm Springs and Olschewski are reconcilable on their facts—the former involved
conversion of the document itself while the latter did not. But this distinction can’t be
squared with the Restatement. The plaintiff in Palm Springs recovered damages for the
value of his intangibles. But if those intangibles were merged in the index cards for
purposes of section 242(1), the plaintiffs in Olschewski and Adkins should have
recovered under section 242(2)—laundry routes surely are customarily written down
somewhere. “Merged” can’t mean one thing in one section and something else in the
other.
California courts ignored the Restatement again in A & M Records, Inc. v. Heilman, 75
Cal.App.3d 554 (1977), which applied the tort to a defendant who sold bootlegged
copies of musical recordings. The court held broadly that “such misappropriation and
sale of the intangible property of another without authority from the owner is
conversion.” Id. at 570. It gave no hint that its holding depended on whether the
owner’s intellectual property rights were merged in some document. One might
imagine physical things with which the intangible was associated –for example, the
medium on which the song was recorded. But an intangible intellectual property right
in a song is not merged in a phonograph record in the sense that the record represents
the composer’s intellectual property right. The record is not like a certificate of
ownership; it is only a medium for one instantiation of the artistic work.
Federal cases applying California law take an equally broad view. We have applied A
& M Records to intellectual property rights in an audio broadcast, see Lone Ranger
Television, Inc. v. Program Radio Corp., 740 F.2d 718, 725 (9th Cir. 1984), and to a
regulatory filing, see G.S. Rasmussen, 958 F.2d at 906-07. Like A & M Records, both
decisions defy the Restatement’s “merged in a document” test. An audio broadcast may

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be recorded on a tape and a regulatory submission may be typed on a piece of paper,
but neither document represents the owner’s intangible interest.
The Seventh Circuit interpreted California law in FMC Corp. v. Capital Cities/ABC, Inc.,
915 F.2d 300 (7th Cir. 1990). Observing that “`[t]here is perhaps no very valid and
essential reason why there might not be conversion’ of intangible property,” id. at 305
(quoting PROSSER & KEETON, supra, § 15, at 92), it held that a defendant could be
liable merely for depriving the plaintiff of the use of his confidential information. In
rejecting the tangibility requirement, FMC echoes Payne’s holding that personal
property of any species may be converted. And it flouts the Restatement because the
intangible property right in confidential information is not represented by the
documents on which the information happens to be recorded. …
In short, California does not follow the Restatement’s strict requirement that some
document must actually represent the owner’s intangible property right. On the
contrary, courts routinely apply the tort to intangibles without inquiring whether they
are merged in a document and, while it’s often possible to dream up some document
the intangible is connected to in some fashion, it’s seldom one that represents the
owner’s property interest. To the extent Olschewski endorses the strict merger rule, it is
against the weight of authority. That rule cannot be squared with a jurisprudence that
recognizes conversion of music recordings, radio shows, customer lists, regulatory
filings, confidential information and even domain names.
Were it necessary to settle the issue once and for all, we would toe the line of Payne and
hold that conversion is “a remedy for the conversion of every species of personal
property.” 54 Cal. at 341. But we need not do so to resolve this case. Assuming
arguendo that California retains some vestigial merger requirement, it is clearly minimal,
and at most requires only some connection to a document or tangible object—not
representation of the owner’s intangible interest in the strict Restatement sense.
Kremen’s domain name falls easily within this class of property. He argues that the
relevant document is the Domain Name System, or “DNS”—the distributed electronic
database that associates domain names like sex.com with particular computers
connected to the Internet. We agree that the DNS is a document (or perhaps more
accurately a collection of documents). That it is stored in electronic form rather than
on ink and paper is immaterial. It would be a curious jurisprudence that turned on the

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77

existence of a paper document rather than an electronic one. Torching a company’s
file room would then be conversion while hacking into its mainframe and deleting its
data would not. That is not the law, at least not in California. 11
The DNS also bears some relation to Kremen’s domain name. We need not delve too
far into the mechanics of the Internet to resolve this case. It is sufficient to observe
that information correlating Kremen’s domain name with a particular computer on the
Internet must exist somewhere in some form in the DNS; if it did not, the database
would not serve its intended purpose. Change the information in the DNS, and you
change the website people see when they type “www.sex.com.”
Network Solutions quibbles about the mechanics of the DNS. It points out that the
data corresponding to Kremen’s domain name is not stored in a single record, but is
found in several different places: The components of the domain name (“sex” and
“com”) are stored in two different places, and each is copied and stored on several
machines to create redundancy and speed up response times. Network Solutions’s
theory seems to be that intangibles are not subject to conversion unless they are
associated only with a single document.
Even if Network Solutions were correct that there is no single record in the DNS
architecture with which Kremen’s intangible property right is associated, that is no
impediment under California law. A share of stock, for example, may be evidenced by
more than one document. See Payne, 54 Cal. at 342 (“[T]he certificate is only evidence
of the property; and it is not the only evidence, for a transfer on the books of the
corporation, without the issuance of a certificate, vests title in the shareholder: the
certificate is, therefore, but additional evidence of title....”). A customer list is protected,
even if it’s recorded on index cards rather than a single piece of paper. Audio recordings

The Restatement requires intangibles to be merged only in a “document,” not a tangible document.
RESTATEMENT (SECOND) OF TORTS § 242. Our holding therefore does not depend on whether electronic records
are tangible. Compare eBay, Inc. v. Bidder’s Edge, Inc., 100 F. Supp. 2d 1058, 1069 (N.D. Cal. 2000) (“[I]t appears
likely that the electronic signals sent by [Bidder’s Edge] to retrieve information from eBay’s computer system
are ... sufficiently tangible to support a trespass cause of action.”), with Intel Corp. v. Hamidi, 71 P.3d 296, (2003)
(implying that electronic signals are intangible).

11

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may be duplicated, and confidential information and regulatory filings may be
photocopied. Network Solutions’s “single document” theory is unsupported.
Network Solutions also argues that the DNS is not a document because it is refreshed
every twelve hours when updated domain name information is broadcast across the
Internet. This theory is even less persuasive. A document doesn’t cease being a
document merely because it is often updated. If that were the case, a share registry
would fail whenever shareholders were periodically added or dropped, as would an
address file whenever business cards were added or removed. Whether a document is
updated by inserting and deleting particular records or by replacing an old file with an
entirely new one is a technical detail with no legal significance.
Kremen’s domain name is protected by California conversion law, even on the
grudging reading we have given it. Exposing Network Solutions to liability when it
gives away a registrant’s domain name on the basis of a forged letter is no different
from holding a corporation liable when it gives away someone’s shares under the same
circumstances. We have not “creat[ed] new tort duties” in reaching this result. Cf. Moore
v. Regents of the Univ. of Cal., 793 P.2d 479 (1990). We have only applied settled principles
of conversion law to what the parties and the district court all agree is a species of
property.
The district court supported its contrary holding with several policy rationales, but
none is sufficient grounds to depart from the common law rule. The court was reluctant
to apply the tort of conversion because of its strict liability nature. This concern rings
somewhat hollow in this case because the district court effectively exempted Network
Solutions from liability to Kremen altogether, whether or not it was negligent. Network
Solutions made no effort to contact Kremen before giving away his domain name,
despite receiving a facially suspect letter from a third party. A jury would be justified in
finding it was unreasonably careless.
We must, of course, take the broader view, but there is nothing unfair about holding a
company responsible for giving away someone else’s property even if it was not at fault.
Cohen is obviously the guilty party here, and the one who should in all fairness pay for
his theft. But he’s skipped the country, and his money is stashed in some offshore bank
account. Unless Kremen’s luck with his bounty hunters improves, Cohen is out of the
picture. The question becomes whether Network Solutions should be open to liability

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for its decision to hand over Kremen’s domain name. Negligent or not, it was Network
Solutions that gave away Kremen’s property. Kremen never did anything. It would not
be unfair to hold Network Solutions responsible and force it to try to recoup its losses
by chasing down Cohen. This, at any rate, is the logic of the common law, and we do
not lightly discard it.
The district court was worried that “the threat of litigation threatens to stifle the
registration system by requiring further regulations by [Network Solutions] and
potential increases in fees.” Given that Network Solutions’s “regulations” evidently
allowed it to hand over a registrant’s domain name on the basis of a facially suspect
letter without even contacting him, “further regulations” don’t seem like such a bad
idea. And the prospect of higher fees presents no issue here that it doesn’t in any other
context. A bank could lower its ATM fees if it didn’t have to pay security guards, but
we doubt most depositors would think that was a good idea.
The district court thought there were “methods better suited to regulate the vagaries
of domain names” and left it “to the legislature to fashion an appropriate statutory
scheme.” Id. The legislature, of course, is always free (within constitutional bounds) to
refashion the system that courts come up with. But that doesn’t mean we should throw
up our hands and let private relations degenerate into a free-for-all in the meantime.
We apply the common law until the legislature tells us otherwise. And the common law
does not stand idle while people give away the property of others.
The evidence supported a claim for conversion, and the district court should not have
rejected it.
Notes and Questions
1. Is your name your property? What is it about a domain name that makes it
“work” as property?
2. Does Kremen’s three-part test for the existence of “property” work on the variety
of property forms you have encountered so far, or others you might imagine?
Under it, is a car property? A dog? A house? Human remains? A medical record?
Proper alignment of one’s psychic aura?

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3. There are thriving markets for domain names. People buy and sell them all the
time, companies use them as collateral for loans, and Stephen Cohen considered
sex.com valuable enough to steal. But do these economic considerations make
them “property?” Recall Felix Cohen’s argument against basing property rights
on economic value. Does Kremen commit precisely the fallacy the other Cohen
warned about?
4. Is tangibility the key to the case or a giant red herring? Does the court’s
argument in footnote 11 that under the Restatement an intangible must be
merged in a document but the document need not itself be tangible suggest that
there is something wrong with the Restatement’s test or with the court’s reading
of the Restatement?
5. The Internet Corporation for Assigned Names and Numbers (ICANN) has
promulgated a system of mandatory arbitration for domain-name registrants,
the Uniform Domain Name Dispute Resolution Policy (UDRP). Under the
UDRP, a trademark owner can bring an expedited proceeding against anyone
who has registered a domain name that is “identical or confusingly similar” to
their trademark if the domain name “has been registered and is being used in
bad faith.” If the arbitrator finds a violation, the remedy is transfer of the
domain name to the trademark owner. What does this system of protection for
trademark owners’ property in their trademarks do to the security of domainname registrants’ property in their domain names? Both are systems of property
in names, but can they coexist?

D. Intellectual Property
Intellectual property laws purport to confer ownership rights in information. There is
no one distinctive set of doctrines governing all intellectual property. Instead, the name
“intellectual property” is a catch-all used to group several related sets of legal rights,
each of which gives the rightsholder an exclusive right to use certain information in
certain ways, or to prevent others from using certain information in certain ways. A
defendant who uses that information in that way without the rightsholder permission
is said to be an infringer.

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81

It is common, and in some respects accurate, to describe the rightsholder as the “owner”
of the information, but keep in mind that only certain specified uses count as
infringement. There is no body of intellectual property law that prohibits possessing or
thinking about information, for example. Instead, different bodies of intellectual
property law restrict different kinds of uses. In each case, the scope of the owner’s
rights is closely tied to what kinds of information that body of law protects and to the
rules governing when someone becomes a rightsholder. We have taken it largely for
granted that land is a proper subject matter for real property and other tangible things
are proper subject matter for personal property. Intellectual property is different,
because not every kind of information qualifies. In copyright, for example, processes
are not proper subject matter: as a consequence, the list of ingredients in a recipe and
the steps for combining them are not copyrightable—even if they meet all of copyright
law’s other requirements.
Learning a body of intellectual property law, therefore, requires learning its subject
matter, its rules of initial ownership, and its rules of infringement. At the federal level,
this traditionally includes the distinct bodies of law corresponding to copyrights,
patents, and trademarks.
• Federal copyright law protects “original works of authorship,” like novels,
biographies, songs, screenplays, paintings, blueprints, and sculptures. Copyright law
has a very low threshold for protection: a work must merely display a “modicum of
creativity” and have been written down (“fixed in a tangible medium of
expression”). The copyright so obtained is valid during its author’s lifetime, and
for the next seventy years after that. It gives copyright owners the exclusive right
to reproduce their works, to make adaptations of them, to distribute them to the
public, and to perform or display them publicly—but this right only applies against
people who copy from the owner. Someone who independently and coincidentally
comes up with similar expression is an author in her own right, not an infringer.
Below, for example, are two photographs of the same icerberg, taken by different
photographers from nearby locations at almost exactly the same time. Neither
infringes on the other.

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Left: Sarah Scurr. Right: Marisol Ortiz Elfeldt

• Federal patent law protects “any new and useful process, machine, manufacture,
or composition of matter.” Examples include mechanical devices like tractor plows
and can openers, chemical processes used to refine oil, pharmaceutical products
like anti-HIV drugs, and, a little infamously, a “Method and apparatus for
automatically exercising a curious animal” by encouraging it to chase a laser pointer.
See U.S. Pat. No. 6,701,872. To obtain a patent, an inventor must go through a
detailed and expensive application process, which involves convincing the U.S.
Patent and Trademark Office (USPTO) that her invention is genuinely new
(“novel”), that it represents a sufficient advance on previous inventions (that it be
“nonobvious”), and that it has some practical use in the world, however slight
(“utility”). She must also disclose to the public, in detail, how her invention works
and how best to use it. Once the USPTO issues a patent, it gives the owner the
exclusive right for twenty years (from the date she filed her application with the
USPTO) to make, use, offer to sell, or sell the invention. (This means that anyone
is free to copy or to study the patent on a new kind of steering wheel, but they cannot
make, use, or sell steering wheels as described in the patent.)
• Trade secret law was once almost entirely a matter of state common law (i.e.,
judge-made law), but now almost all states have adopted a version of the Uniform
Trade Secrets Act (UTSA), and the federal Defend Trade Secrets Act of 2016
substantially incorporates the UTSA’s definitions. To be protected as a trade secret,
information must be valuable because it is secret. Canonical examples of trade
secrets include chain restaurants’ secret sauces, customer lists, business plans,
manufacturing designs, information on the location of valuable resources like
shipwrecks and oil fields, and inventions in the development stage before they are
ready to be patented. (Because obtaining a patent involves extensive disclosure, it

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83

is impossible to have a patent and a trade secret on exactly the same information;
one of the major strategic decisions inventors must make when they apply for a
patent is how much to include in the application to obtain a stronger or broader
patent, and how much to try to hold back as a trade secret.) In general, a defendant
is liable only for obtaining a trade secret through “improper means.” Breach of a
duty of confidentiality is far and away the most common such means – such as
when employees take company documents stamped “CONFIDENTIAL” with
them to their new jobs at a competitor. More colorfully, industrial espionage, such
as breaking into labs or hacking into computers, is also improper means. Note that
trade secret law, like copyright law, protects only against infringers who obtain the
secret information, directly or indirectly, from the owner: independent rediscovery
of the same information is a complete defense. So is reverse engineering, in which
a defendant takes publicly available information (including legally obtained copies
of the owner’s goods containing or made using with the trade secret) and studies it
to understand how the secret works.
• Trademark law is a hybrid of state and federal
rights. Its basis for protection is a little different.
A trademark is a word or symbol, like NIKE or
the “swoosh” logo that distinguishes goods or
services in the marketplace. One gains trademark rights by using a mark on goods
so that consumers associate the mark with a particular source—i.e., they know that
NIKE shoes come from one company (Nike) and not another (Adidas or Reebok).
These associations are called “goodwill” and it is common to say that what a
trademark owner owns is the goodwill (even though it exists only in consumers’
minds). These rights exist under state common law as soon as the goodwill exists;
trademark owners can also register their marks with the USPTO, which gives
nationwide and not just local rights. Trademark law gives a trademark owner the
right to prevent uses of the mark that cause “consumer confusion” about the source
of goods: a consumer who sees non-Nike shoes falsely labeled NIKE and who
mistakenly believes they come from Nike has been confused about the origin of
the goods, and Nike can sue the company slapping its trademark on ersatz shoes.
Despite the name, it is highly controversial whether intellectual property should be
considered a species of “property” at all. Consider why advocates might want to
embrace or deny that label, and what if anything is at stake. Does the relevance, or the

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meaning, of the label “property” change depending on whether it is used to refer to
the intangible ideas embodied in an object or to the object itself? (In copyright terms,
this is the distinction between a “work” and a “copy” of the work.) These types of
“property” rights can overlap or conflict, and some of the most important doctrines of
intellectual property law are devoted to sorting out these issues. Finally, consider the
extent to which the fact that intellectual property rights deal with information raises
distinctive free expression concerns. Are they different in kinds from the concerns in
a case like State v. Shack?

Allocation
We may well conclude that certain types of resources should be subject to private
ownership, and we may further conclude that such ownership ought to entail particular
rights of owners. But this would not be sufficient to establish a system of property
rights. We would still need to decide which things are owned by whom. Certainly, if
one of the rights of owners is the power to alienate, then once something is legitimately
owned by someone, that person can transfer rightful ownership to someone else. (We
will study how such transfers can come about later in this book—indeed we will find
that some transfers can confer the rights of ownership on a transferee even where the
transferor’s rights are not so clear-cut. We will also see that there are ways for things
owned by one person to become owned by another person other than by voluntary
transfer.)
But even assuming a current owner could trace their rights of ownership back through
a series of successive voluntary transfers from rightful owners—a chain of title, as we
will come to call it—the first link in that chain must be something other than a transfer
from a prior rightful owner. What could this something be? How do things go from
being unowned to being owned? Why might we recognize some rules for such initial
allocations of resources over the available alternatives?
In this chapter, we will examine the most common justification for protecting
someone’s rights of ownership: possession. The common law holds that initial ownership
of a heretofore unowned thing goes to the first to possess that thing—that first in time is
first in right. But as we will see, this rule is not as straightforward as it may seem. To
begin with, reasonable people may differ as to what constitutes “possession,” or what
it means to be “first.” Our first few cases illustrating this problem deal with first
possession of chattels (sometimes called “personal property” or “personalty”—basically
any ownable thing that isn’t land or attached to land).

85

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A. Initial Allocation of Chattels

Source: R.S. SURTEES, HAWBUCK GRANGE 197 (1885), British Library, https://flic.kr/p/i38jT2

Pierson v. Post
3 Cai. R. 175 (N.Y. Sup. Ct. 1805)
THIS was an action of trespass on the case commenced in a justice’s court, by the
present defendant against the now plaintiff.
The declaration stated that Post, being in possession of certain dogs and hounds under
his command, did, “upon a certain wild and uninhabited, unpossessed and waste land,
called the beach, find and start one of those noxious beasts called a fox,” and whilst
there hunting, chasing and pursuing the same with his dogs and hounds, and when in
view thereof, Pierson, well knowing the fox was so hunted and pursued, did, in the sight
of Post, to prevent his catching the same, kill and carry it off. A verdict having been
rendered for the plaintiff below, the defendant there sued out a certiorari, and now
assigned for error, that the declaration and the matters therein contained were not
sufficient in law to maintain an action….
TOMPKINS, J. delivered the opinion of the court.

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This cause comes before us on a return to a certiorari directed to one of the justices of
Queens county.
The question submitted by the counsel in this cause for our determination is, whether
Lodowick Post, by the pursuit with his hounds in the manner alleged in his declaration,
acquired such a right to, or property in, the fox, as will sustain an action against Pierson
for killing and taking him away?
The cause was argued with much ability by the counsel on both sides, and presents for
our decision a novel and nice question. It is admitted that a fox is an animal feræ naturæ,
and that property in such animals is acquired by occupancy only. These admissions
narrow the discussion to the simple question of what acts amount to occupancy,
applied to acquiring right to wild animals?
If we have recourse to the ancient writers upon general principles of law, the judgment
below is obviously erroneous. Justinian’s Institutes, lib. 2. tit. 1. s. 13. and Fleta, lib. 3. c.
2. p. 175. adopt the principle, that pursuit alone vests no property or right in the
huntsman; and that even pursuit, accompanied with wounding, is equally ineffectual
for that purpose, unless the animal be actually taken. The same principle is recognised
by Bracton, lib. 2. c. 1. p. 8.
Puffendorf, lib. 4. c. 6. s. 2. and 10. defines occupancy of beasts feræ naturæ, to be the
actual corporal possession of them, and Bynkershoek is cited as coinciding in this
definition. It is indeed with hesitation that Puffendorf affirms that a wild beast mortally
wounded, or greatly maimed, cannot be fairly intercepted by another, whilst the pursuit
of the person inflicting the wound continues. The foregoing authorities are decisive to
show that mere pursuit gave Post no legal right to the fox, but that he became the
property of Pierson, who intercepted and killed him.
It therefore only remains to inquire whether there are any contrary principles, or
authorities, to be found in other books, which ought to induce a different decision.
Most of the cases which have occurred in England, relating to property in wild animals,
have either been discussed and decided upon the principles of their positive statute
regulations, or have arisen between the huntsman and the owner of the land upon
which beasts feræ naturæ have been apprehended; the former claiming them by title of

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occupancy, and the latter ratione soli. Little satisfactory aid can, therefore, be derived
from the English reporters.
Barbeyrac, in his notes on Puffendorf, does not accede to the definition of occupancy by
the latter, but, on the contrary, affirms, that actual bodily seizure is not, in all cases,
necessary to constitute possession of wild animals. He does not, however, describe the
acts which, according to his ideas, will amount to an appropriation of such animals to
private use, so as to exclude the claims of all other persons, by title of occupancy, to
the same animals; and he is far from averring that pursuit alone is sufficient for that
purpose. To a certain extent, and as far as Barbeyrac appears to me to go, his objections
to Puffendorf’s definition of occupancy are reasonable and correct. That is to say, that
actual bodily seizure is not indispensable to acquire right to, or possession of, wild
beasts; but that, on the contrary, the mortal wounding of such beasts, by one not
abandoning his pursuit, may, with the utmost propriety, be deemed possession of him;
since, thereby, the pursuer manifests an unequivocal intention of appropriating the
animal to his individual use, has deprived him of his natural liberty, and brought him
within his certain control. So also, encompassing and securing such animals with nets
and toils, or otherwise intercepting them in such a manner as to deprive them of their
natural liberty, and render escape impossible, may justly be deemed to give possession
of them to those persons who, by their industry and labour, have used such means of
apprehending them. Barbeyrac seems to have adopted, and had in view in his notes, the
more accurate opinion of Grotius, with respect to occupancy. That celebrated author,
lib. 2. c. 8. s. 3. p. 309. speaking of occupancy, proceeds thus: “Requiritur autem corporalis
quædam possessio ad dominium adipiscendum; atque ideo, vulnerasse non sufficit.” * But in the
following section he explains and qualifies this definition of occupancy: “Sed possessio
illa potest non solis manibus, sed instrumentis, ut decipulis, retibus, laqueis dum duo adsint: primum
ut ipsa instrumenta sint in nostra potestate, deinde ut fera, ita inclusa sit, ut exire inde nequeat.”†
This qualification embraces the full extent of Barbeyrac’s objection to Puffendorf’s
definition, and allows as great a latitude to acquiring property by occupancy, as can
* [Translation: “Some bodily possession is required for acquiring ownership; for that reason, wounding is not

enough.” — eds.]
† [Translation: “But that possession can be not only by hand, but by instruments, such as traps, nets, and snares,

where two things are present: first that this instrument itself be in our control, and then that the wild thing, being
enclosed, cannot exit therefrom.”—eds.]

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reasonably be inferred from the words or ideas expressed by Barbeyrac in his notes. The
case now under consideration is one of mere pursuit, and presents no circumstances
or acts which can bring it within the definition of occupancy by Puffendorf, or Grotius,
or the ideas of Barbeyrac upon that subject.
The case cited from 11 Mod. 74--130. * I think clearly distinguishable from the present;
inasmuch as there the action was for maliciously hindering and disturbing the plaintiff
in the exercise and enjoyment of a private franchise; and in the report of the same case,
3 Salk. 9. Holt, Ch. J. states, that the ducks were in the plaintiff’s decoy pond, and so in
his possession, from which it is obvious the court laid much stress in their opinion upon
the plaintiff’s possession of the ducks, ratione soli. †
We are the more readily inclined to confine possession or occupancy of beasts feræ
naturæ, within the limits prescribed by the learned authors above cited, for the sake of
certainty, and preserving peace and order in society. If the first seeing, starting, or
pursuing such animals, without having so wounded, circumvented or ensnared them,
so as to deprive them of their natural liberty, and subject them to the control of their
pursuer, should afford the basis of actions against others for intercepting and killing
them, it would prove a fertile source of quarrels and litigation.
However uncourteous or unkind the conduct of Pierson towards Post, in this instance,
may have been, yet his act was productive of no injury or damage for which a legal
remedy can be applied. We are of opinion the judgment below was erroneous, and
ought to be reversed.
LIVINGSTON, J.
My opinion differs from that of the court.
Of six exceptions, taken to the proceedings below, all are abandoned except the third,
which reduces the controversy to a single question.

* [This citation, and the following citation to Salk., both refer to the case of Keeble v. Hickeringill, which we will

come to later in this Chapter.—eds.]
† [Translation: “by reason of the soil”—eds.]

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Whether a person who, with his own hounds, starts and hunts a fox on waste and
uninhabited ground, and is on the point of seizing his prey, acquires such an interest in
the animal, as to have a right of action against another, who in view of the huntsman
and his dogs in full pursuit, and with knowledge of the chase, shall kill and carry him
away?
This is a knotty point, and should have been submitted to the arbitration of sportsmen,
without poring over Justinian, Fleta, Bracton, Puffendorf, Locke, Barbeyrac, or Blackstone, all
of whom have been cited; they would have had no difficulty in coming to a prompt
and correct conclusion. In a court thus constituted, the skin and carcass of poor reynard *
would have been properly disposed of, and a precedent set, interfering with no usage
or custom which the experience of ages has sanctioned, and which must be so well
known to every votary of Diana. But the parties have referred the question to our
judgment, and we must dispose of it as well as we can, from the partial lights we possess,
leaving to a higher tribunal, the correction of any mistake which we may be so
unfortunate as to make. By the pleadings it is admitted that a fox is a “wild and noxious
beast.” Both parties have regarded him, as the law of nations does a pirate, “hostem
humani generis,” † and although “de mortuis nil nisi bonum,” ‡ be a maxim of our profession,
the memory of the deceased has not been spared. His depredations on farmers and on
barn yards, have not been forgotten; and to put him to death wherever found, is
allowed to be meritorious, and of public benefit. Hence it follows, that our decision
should have in view the greatest possible encouragement to the destruction of an
animal, so cunning and ruthless in his career. But who would keep a pack of hounds;
or what gentleman, at the sound of the horn, and at peep of day, would mount his
steed, and for hours together, “sub jove frigido,” § or a vertical sun, pursue the windings
of this wily quadruped, if, just as night came on, and his stratagems and strength were
nearly exhausted, a saucy intruder, who had not shared in the honours or labours of

* [Reynard was a clever (and often duplicitous) fox character who featured in several well-known medieval

European folk tales and literary works. The character’s popularity gave rise to the modern French word for “fox”:
renard. — eds.]
† [Translation: “enemy of the human race.” — eds.]
‡ [Translation: “Of the dead say nothing but good.” — eds.]
§ [Translation: “Under frigid Jove” (i.e., under a cold sky). — eds.]

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the chase, were permitted to come in at the death, and bear away in triumph the object
of pursuit? Whatever Justinian may have thought of the matter, it must be recollected
that his code was compiled many hundred years ago, and it would be very hard indeed,
at the distance of so many centuries, not to have a right to establish a rule for ourselves.
In his day, we read of no order of men who made it a business, in the language of the
declaration in this cause, “with hounds and dogs to find, start, pursue, hunt, and chase,”
these animals, and that, too, without any other motive than the preservation of Roman
poultry; if this diversion had been then in fashion, the lawyers who composed his
institutes, would have taken care not to pass it by, without suitable encouragement. If
any thing, therefore, in the digests or pandects shall appear to militate against the
defendant in error, who, on this occasion, was the foxhunter, we have only to say
tempora mutantur; * and if men themselves change with the times, why should not laws
also undergo an alteration?
It may be expected, however, by the learned counsel, that more particular notice be
taken of their authorities. I have examined them all, and feel great difficulty in
determining, whether to acquire dominion over a thing, before in common, it be
sufficient that we barely see it, or know where it is, or wish for it, or make a declaration
of our will respecting it; or whether, in the case of wild beasts, setting a trap, or lying
in wait, or starting, or pursuing, be enough; or if an actual wounding, or killing, or
bodily tact and occupation be necessary. Writers on general law, who have favoured us
with their speculations on these points, differ on them all; but, great as is the diversity
of sentiment among them, some conclusion must be adopted on the question
immediately before us. After mature deliberation, I embrace that of Barbeyrac, as the
most rational, and least liable to objection. If at liberty, we might imitate the courtesy
of a certain emperor, who, to avoid giving offence to the advocates of any of these
different doctrines, adopted a middle course, and by ingenious distinctions, rendered it
difficult to say (as often happens after a fierce and angry contest) to whom the palm of
victory belonged. He ordained, that if a beast be followed with large dogs and hounds, he
shall belong to the hunter, not to the chance occupant; and in like manner, if he be
killed or wounded with a lance or sword; but if chased with beagles only, then he passed

* [Translation: “times change.” Part of a well-known Latin aphorism, tempora mutantur, nos et mutamur in illis: “times

change, and we change with them.” — eds.]

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to the captor, not to the first pursuer. If slain with a dart, a sling, or a bow, he fell to
the hunter, if still in chase, and not to him who might afterwards find and seize him.
Now, as we are without any municipal regulations of our own, and the pursuit here,
for aught that appears on the case, being with dogs and hounds of imperial stature, we
are at liberty to adopt one of the provisions just cited, which comports also with the
learned conclusion of Barbeyrac, that property in animals feræ naturæ may be acquired
without bodily touch or manucaption, provided the pursuer be within reach, or have a
reasonable prospect (which certainly existed here) of taking, what he has thus discovered
an intention of converting to his own use.
When we reflect also that the interest of our husbandmen, the most useful of men in
any community, will be advanced by the destruction of a beast so pernicious and
incorrigible, we cannot greatly err, in saying, that a pursuit like the present, through
waste and unoccupied lands, and which must inevitably and speedily have terminated
in corporal possession, or bodily seisin, confers such a right to the object of it, as to
make any one a wrongdoer, who shall interfere and shoulder the spoil. The justice’s
judgment ought, therefore, in my opinion, to be affirmed.
Judgment of reversal.
Notes and Questions
1. Justifying Allocations. Does awarding ownership of a previously unowned
chattel to the first possessor of that chattel strike you as a good rule? Consider
some arguments that might be raised for or against it:
• Administrability: Is the rule easy to apply? Does it give clear and ready
answers? Does it make judges’ and litigants’ jobs easier or harder? Does it
minimize the cost and time involved in resolving disputes? Can it be applied
without resort to ambiguous or hard-to-obtain evidence?
• Fairness: Does the rule comport with well-considered notions of fairness?
Does it treat similarly situated people similarly? Does it favor some claimants
over others based on criteria that seem irrelevant, arbitrary, or beyond the
claimants’ control?

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• Morality: Does the rule reward moral behavior and punish—or at least
refrain from rewarding—immoral behavior? Does it give people what they
deserve?
• Reliance: Does the rule respect the reasonable expectations of those with an
interest in contested resources? Does it result in a forfeiture of their
investment of time, money, or effort premised on such expectations? Does
it comport with tradition?
• Pragmatism: Does the rule roughly comport with the moral intuitions of
those who are subject to it? Do we expect the rule to be obeyed?
• Ecology: Is the rule consistent with responsible stewardship of resources?
Does it ensure that an exhaustible resource will remain available for the
benefit of future generations?
• Incentives: Does the rule encourage or discourage the conversion of idle
resources to productive use? Does it encourage excessive, duplicative, or
wasteful efforts to exploit resources? Does it encourage or discourage
disputes or violence among rival claimants? Does it encourage would-be
claimants to expend resources on protecting themselves against other wouldbe claimants, instead of on more productive pursuits? When weighing these
incentives in the aggregate, is the rule efficient? That is, does it extract the
greatest possible value from available resources at the lowest possible cost?
Which of these arguments strikes you as more or less important to the
justification of a legal rule—particularly a rule of property law? Which of them
were invoked by Justices Tompkins and Livingston in Pierson?
Even if we agree as to which of these arguments matter in disposing of a
particular dispute, are we sure to agree whether a particular type of argument
favors a particular party? For example, is Justice Livingston correct in claiming
that the decision in Pierson’s favor will provide insufficient incentive for
hunters to capture foxes? Is Justice Tompkins correct in claiming that a decision
in Post’s favor would lead to increased disputes over the trophies of the chase?

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Property
Does either opinion clearly establish which outcome would be the most fair?
How could we know the answer to these questions?
2. Alternatives to First Possession. Is the rule of first possession the best
available rule for allocating unowned resources? Consider some possible
alternative allocation principles:
• Perhaps initial allocation should go to the first claimant—the first to explicitly
assert a right of ownership (or manifest the intent to assert such a right, as
by pursuit).
• Perhaps initial allocation should go to the last possessor—the person who
gains and maintains possession against the efforts of all competitors.
• Perhaps possession is irrelevant: perhaps initial allocation should go to all
interested claimants in equal shares.
• Perhaps the resource should be owned as a commons: it belongs to everybody
jointly; everybody has an equal right to it and nobody has a superior right to
anyone else.
• Perhaps the government ought to own everything and simply provide rights
of possession and use by means of bureaucratic and political mechanisms.
(Then again, perhaps this is exactly what the common law of real property
does. See Section B, infra.)
• Perhaps ownership should be determined by lot, at random.
How would each of these rules compare to the rule of first possession in terms
of each of the justifications we have just reviewed for and against that rule?
What do you think would be the practical result of choosing one of these
alternative allocation regimes—i.e., how would people likely shape their
behavior in response to these allocation rules?
3. Recall the first type of justification we discussed in Note 1 above:
administrability. Do you think it will always be obvious that one claimant of a

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chattel has achieved possession and another has not? Consider the following
case.

Source: “Fast to a whale, shooting the bomb lance.” New Bedford Free Public Library. Digital Commonwealth,
http://ark.digitalcommonwealth.org/ark:/50959/sb398z14j

Ghen v. Rich
8 F. 159 (D. Mass. 1881)
NELSON, D.J.
This is a libel to recover the value of a fin-back whale. The libellant lives in
Provincetown and the respondent in Wellfleet. The facts, as they appeared at the
hearing, are as follows:
In the early spring months the easterly part of Massachusetts Bay is frequented by the
species of whale known as the fin-back whale. Fishermen from Provincetown pursue
them in open boats from the shore, and shoot them with bomb-lances fired from guns
made expressly for the purpose. When killed they sink at once to the bottom, but in
the course of from one to three days they rise and float on the surface. Some of them
are picked up by vessels and towed into Provincetown. Some float ashore at high water
and are left stranded on the beach as the tide recedes. Others float out to sea and are

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never recovered. The person who happens to find them on the beach usually sends
word to Provincetown, and the owner comes to the spot and removes the blubber.
The finder usually receives a small salvage for his services. Try-works are established
in Provincetown for trying out the oil. The business is of considerable extent, but, since
it requires skill and experience, as well as some outlay of capital, and is attended with
great exposure and hardship, few persons engage in it. The average yield of oil is about
20 barrels to a whale. It swims with great swiftness, and for that reason cannot be taken
by the harpoon and line. Each boat’s crew engaged in the business has its peculiar mark
or device on its lances, and in this way it is known by whom a whale is killed.
The usage on Cape Cod, for many years, has been that the person who kills a whale in
the manner and under the circumstances described, owns it, and this right has never
been disputed until this case. The libellant has been engaged in this business for ten
years past. On the morning of April 9, 1880, in Massachusetts Bay, near the end of
Cape Cod, he shot and instantly killed with a bomb-lance the whale in question. It sunk
immediately, and on the morning of the 12th was found stranded on the beach in
Brewster, within the ebb and flow of the tide, by one Ellis, 17 miles from the spot
where it was killed. Instead of sending word to Provincetown, as is customary, Ellis
advertised the whale for sale at auction, and sold it to the respondent, who shipped off
the blubber and tried out the oil. The libellant heard of the finding of the whale on the
morning of the 15th, and immediately sent one of his boat’s crew to the place and
claimed it. Neither the respondent nor Ellis knew the whale had been killed by the
libellant, but they knew or might have known, if they had wished, that it had been shot
and killed with a bomb-lance, by some person engaged in this species of business.
The libellant claims title to the whale under this usage. The respondent insists that this
usage is invalid. It was decided by Judge Sprague, in Taber v. Jenny, 1 Sprague, 315,
that when a whale has been killed, and is anchored and left with marks of appropriation,
it is the property of the captors; and if it is afterwards found, still anchored, by another
ship, there is no usage or principle of law by which the property of the original captors
is diverted, even though the whale may have dragged from its anchorage. The learned
judge says:
‘When the whale had been killed and taken possession of by the boat of
the Hillman, (the first taker,) it became the property of the owners of

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that ship, and all was done which was then practicable in order to secure
it. They left it anchored, with unequivocal marks of appropriation.’
In Bartlett v. Budd, 1 Low. 223, the facts were these: The first officer of the libellant’s
ship killed a whale in the Okhotsk sea, anchored it, attached a waif* to the body, and
then left it and went ashore at some distance for the night. The next morning the boats
of the respondent’s ship found the whale adrift, the anchor not holding, the cable coiled
round the body, and no waif or irons attached to it. Judge Lowell held that, as the
libellants had killed and taken actual possession of the whale, the ownership vested in
them. In his opinion the learned judge says:
‘A whale, being ferae naturae, does not become property until a firm
possession has been established by the taker. But when such possession
has become firm and complete, the right of property is clear, and has all
the characteristics of property.’
He doubted whether a usage set up but not proved by the respondents, that a whale
found adrift in the ocean is the property of the finder, unless the first taker should
appear and claim it before it is cut in, would be valid, and remarked that ‘there would
be great difficulty in upholding a custom that should take the property of A. and give
it to B., under so very short and uncertain a substitute for the statute of limitations, and
one so open to fraud and deceit.’ Both the cases cited were decided without reference
to usage, upon the ground that the property had been acquired by the first taker by
actual possession and appropriation.
In Swift v. Gifford, 2 Low, 110, Judge Lowell decided that a custom among whalemen
in the Arctic seas, that the iron holds the whale was reasonable and valid. In that case
a boat’s crew from the respondent’s ship pursued and struck a whale in the Arctic
Ocean, and the harpoon and the line attached to it remained in the whale, but did not
remain fast to the boat. A boat’s crew from the libellant’s ship continued the pursuit
and captured the whale, and the master of the respondent’s ship claimed it on the spot.

* [Eds.—“The waif is a pennoned pole, two or three of which are carried by every boat; and which, when

additional game is at hand, are inserted upright into the floating body of a dead whale, both to mark its place on
the sea, and also as token of prior possession, should the boats of any other ship draw near.” HERMAN MELVILLE,
MOBY-DICK 368 (1922) [1892].]

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It was held by the learned judge that the whale belonged to the respondents. It was said
by Judge Sprague, in Bourne v. Ashley, an unprinted case referred to by Judge Lowell
in Swift v. Gifford, that the usage for the first iron, whether attached to the boat or
not, to hold the whale was fully established; and he added that, although local usages
of a particular port ought not to be allowed to set aside the general maritime law, this
objection did not apply to a custom which embraced an entire business, and had been
concurred in for a long time by every one engaged in the trade.
In Swift v. Gifford, Judge Lowell also said:
‘The rule of law invoked in this case is one of very limited application.
The whale fishery is the only branch of industry of any importance in
which it is likely to be much used, and if a usage is found to prevail
generally in that business, it will not be open to the objection that it is
likely to disturb the general understanding of mankind by the
interposition of an arbitrary exception.’
I see no reason why the usage proved in this case is not as reasonable as that sustained
in the cases cited. Its application must necessarily be extremely limited, and can affect
but a few persons. It has been recognized and acquiesced in for many years. It requires
in the first taker the only act of appropriation that is possible in the nature of the case.
Unless it is sustained, this branch of industry must necessarily cease, for no person
would engage in it if the fruits of his labor could be appropriated by any chance finder.
It gives reasonable salvage for securing or reporting the property. That the rule works
well in practice is shown by the extent of the industry which has grown up under it,
and the general acquiescence of a whole community interested to dispute it. It is by no
means clear that without regard to usage the common law would not reach the same
result. That seems to be the effect of the decisions in Taber v. Jenny and Bartlett v.
Budd. If the fisherman does all that is possible to do to make the animal his own, that
would seem to be sufficient. Such a rule might well be applied in the interest of trade,
there being no usage or custom to the contrary. Holmes, Com. Law, 217. But be that
as it may, I hold the usage to be valid, and that the property in the whale was in the
libelant.
The rule of damages is the market value of the oil obtained from the whale, less the
cost of trying it out and preparing it for the market, with interest on the amount so

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ascertained from the date of conversion. As the question is new and important, and
the suit is contested on both sides, more for the purpose of having it settled than for
the amount involved, I shall give no costs.
Decree for libellant for $71.05, without costs.
Notes and Questions
1. Primary and Secondary Rules. Is the rule of Ghen v. Rich different from the
rule of Pierson v. Post? If so, how? Are the justifications for the rule, or for the
outcome, the same in each case? If not, how do they differ?
To answer this question, it may be helpful to distinguish between what leading
legal philosopher H.L.A. Hart called primary rules and secondary rules. In Hart’s
account, primary rules are those that prescribe standards of conduct, and set forth
consequences for failure to act accordingly. Statutes defining and setting forth
punishments for crimes provide a straightforward example. Secondary rules are
basically everything else, but in particular they include rules that give actors
within the legal system the power to create, alter, or abolish their own primary
rules. For example, contract law is largely a body of secondary rules: parties to
a contract acting within those rules have the power to create legal rights and
obligations that will bind them; the contract itself embodies the applicable
primary rules. (For more on this distinction—and more of Hart’s monumental
contributions to jurisprudence—see H.L.A. HART, THE CONCEPT OF LAW.)
Based on this admittedly limited introduction to the concept, was the
determinative legal rule in Ghen v. Rich a primary or a secondary rule? What
about in Pierson v. Post?
2. Whose Custom? In Aberdeen Arctic Co. v. Sutter, 4 McQ. H.L. 355 (1862), the
House of Lords heard the appeal of a case involving a hired Eskimo harpooner
aboard an English whaling vessel in Cumberland Inlet, a traditional native
fishing ground in what is now Canada. The harpooner, one Bullygar, struck a
whale with a harpoon and line, at the end of which was attached an inflated
sealskin, or “drog,” which the native fishermen had a custom of using to tire
the harpooned animal and to make it easier to track while it swims below the
surface. The whale dove immediately, so deep that Bullygar was forced to

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release his line, and it did not surface again until it had traveled several miles.
Before Bullygar and his ship could retrieve it, another ship—the Alibi—came
upon the wounded whale, killed it, and took it. Bullygar’s captain (Sutter) sued
the owners of the Alibi for “compensation and damages” in the amount of
£1,200.
The Law Lords found for the owners of the Alibi, recognizing a custom of
English whalers in the shallower waters around Greenland. This custom was
known as “fast and loose” (which does not—or did not—mean what you think
it means). According to the “fast and loose” rule, the first ship to harpoon a
whale has a right to the animal so long as the ship holds “fast” to its line, even
if other ships participate in the ultimate killing and capture of the whale. But if
the whale should break free—even if mortally wounded—or if the line should
be intentionally cut or released—even for reasons of safety or necessity—the
whale becomes “loose” and will become the property of the first ship to actually
secure it. (See HERMAN MELVILLE, MOBY-DICK 372-75 (1922) [1892] (“FastFish and Loose-Fish”).)
Sutter argued that Cumberland Inlet had long been governed by the custom of
the Eskimo—which conferred ownership on the first person whose harpoon
struck and remained in the animal with the drog attached—and that the English
“fast and loose” rule should not apply. Lord Chancellor Westbury rejected the
argument. He opined that Sutter had the burden of proving that English
whaling ships entering this new fishing ground had agreed not to bring the “fast
and loose” custom with them. Indeed, he openly doubted whether the drog
fishing methods of the Eskimo—which they used primarily in seal hunting—
were even capable of capturing a whale. Moreover, he suggested that even if the
case were to be decided by the law of “occupancy” rather than the custom of
English whalers, the result would be the same.
Is the rule of Ghen v. Rich the same as the rule of Aberdeen Arctic Co. v. Sutter? If
different, which rule is better and why?
3. Imagine you are counsel to either Pierson or Rich, and your adversary makes
you an offer of settlement: to sell the contested chattel and split the proceeds
evenly. What would you advise your client to do? Consider the following case.

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Source: Up For Grabs (Crooked Hook Productions 2004)

Popov v. Hayashi
2002 WL 31833731 (Cal. Sup. Ct. San Francisco Cty. Dec. 18, 2002)
MCCARTHY, J.
FACTS
In 1927, Babe Ruth hit sixty home runs. That record stood for thirty four years until
Roger Maris broke it in 1961 with sixty one home runs. Mark McGwire hit seventy in
1998. On October 7, 2001, at PacBell Park in San Francisco, Barry Bonds hit number
seventy three. That accomplishment set a record which, in all probability, will remain
unbroken for years into the future.
The event was widely anticipated and received a great deal of attention.
The ball that found itself at the receiving end of Mr. Bond’s bat garnered some of that
attention. Baseball fans in general, and especially people at the game, understood the
importance of the ball. It was worth a great deal of money * and whoever caught it
would bask, for a brief period of time, in the reflected fame of Mr. Bonds.

* It has been suggested that the ball might sell for something in excess of $1,000,000.

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With that in mind, many people who attended the game came prepared for the
possibility that a record setting ball would be hit in their direction. Among this group
were plaintiff Alex Popov and defendant Patrick Hayashi. They were unacquainted at
the time. Both men brought baseball gloves, which they anticipated using if the ball
came within their reach.
… When the seventy-third home run ball went into the arcade, it landed in the upper
portion of the webbing of a softball glove worn by Alex Popov. While the glove
stopped the trajectory of the ball, it is not at all clear that the ball was secure. Popov
had to reach for the ball and in doing so, may have lost his balance.
Even as the ball was going into his glove, a crowd of people began to engulf Mr. Popov.
He was tackled and thrown to the ground while still in the process of attempting to
complete the catch. Some people intentionally descended on him for the purpose of
taking the ball away, while others were involuntarily forced to the ground by the
momentum of the crowd.
Eventually, Mr. Popov was buried face down on the ground under several layers of
people. At one point he had trouble breathing. Mr. Popov was grabbed, hit and kicked.
People reached underneath him in the area of his glove. [The evidence is insufficient]
to establish which individual members of the crowd were responsible for the assaults
on Mr. Popov.
Mr. Popov intended at all times to establish and maintain possession of the ball. At
some point the ball left his glove and ended up on the ground. It is impossible to
establish the exact point in time that this occurred or what caused it to occur.
Mr. Hayashi was standing near Mr. Popov when the ball came into the stands. He, like
Mr. Popov, was involuntarily forced to the ground. He committed no wrongful act.
While on the ground he saw the loose ball. He picked it up, rose to his feet and put it
in his pocket.
... It is important to point out what the evidence did not and could not show. Neither
the camera [of a local news team fortuitously recording the incident] nor the percipient
witnesses were able to establish whether Mr. Popov retained control of the ball as he
descended into the crowd. Mr. Popov’s testimony on this question is inconsistent on

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several important points, ambiguous on others and, on the whole, unconvincing. We
do not know when or how Mr. Popov lost the ball.
Perhaps the most critical factual finding of all is one that cannot be made. We will never
know if Mr. Popov would have been able to retain control of the ball had the crowd
not interfered with his efforts to do so. Resolution of that question is the work of a
psychic, not a judge.
LEGAL ANALYSIS
Plaintiff has pled causes of actions for conversion, trespass to chattel, injunctive relief
and constructive trust.
Conversion is the wrongful exercise of dominion over the personal property of another.
… If a person entitled to possession of personal property demands its return, the
unjustified refusal to give the property back is conversion.
… Conversion does not exist, however, unless the baseball rightfully belongs to Mr.
Popov. One who has neither title nor possession, nor any right to possession, cannot
sue for conversion. The deciding question in this case then, is whether Mr. Popov
achieved possession or the right to possession as he attempted to catch and hold on to
the ball.
The parties have agreed to a starting point for the legal analysis. Prior to the time the
ball was hit, it was possessed and owned by Major League Baseball. At the time it was
hit it became intentionally abandoned property. The first person who came in
possession of the ball became its new owner.
… Although the term possession appears repeatedly throughout the law, its definition
varies depending on the context in which it is used. Various courts have condemned
the term as vague and meaningless.
This level of criticism is probably unwarranted.
While there is a degree of ambiguity built into the term possession, that ambiguity exists
for a purpose. Courts are often called upon to resolve conflicting claims of possession
in the context of commercial disputes. A stable economic environment requires rules

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of conduct which are understandable and consistent with the fundamental customs and
practices of the industry they regulate. Without that, rules will be difficult to enforce
and economic instability will result. Because each industry has different customs and
practices, a single definition of possession cannot be applied to different industries
without creating havoc.
This does not mean that there are no central principles governing the law of possession.
It is possible to identify certain fundamental concepts that are common to every
definition of possession.
…We start with the observation that possession is a process which culminates in an
event. The event is the moment in time that possession is achieved. The process
includes the acts and thoughts of the would be possessor which lead up to the moment
of possession.
The focus of the analysis in this case is not on the thoughts or intent of the actor. Mr.
Popov has clearly evidenced an intent to possess the baseball and has communicated
that intent to the world. 23 The question is whether he did enough to reduce the the
ball to his exclusive dominion and control. Were his acts sufficient to create a legally
cognizable interest in the ball?
Mr. Hayashi argues that possession does not occur until the fan has complete control
of the ball. Professor Brian Gray, suggests the following definition[:] “A person who
catches a baseball that enters the stands is its owner. A ball is caught if the person has
achieved complete control of the ball at the point in time that the momentum of the
ball and the momentum of the fan while attempting to catch the ball ceases. A baseball,
which is dislodged by incidental contact with an inanimate object or another person,
before momentum has ceased, is not possessed. Incidental contact with another person
is contact that is not intended by the other person. The first person to pick up a loose
ball and secure it becomes its possessor.” 24

23 Literally.
24 This definition is hereinafter referred to as Gray’s Rule.

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Mr. Popov argues that this definition requires that a person seeking to establish
possession must show unequivocal dominion and control, a standard rejected by
several leading cases. 25 Instead, he offers the perspectives of Professor Bernhardt and
Professor Paul Finkelman who suggest that possession occurs when an individual
intends to take control of a ball and manifests that intent by stopping the forward
momentum of the ball whether or not complete control is achieved.
Professors Finkelman and Bernhardt have correctly pointed out that some cases
recognize possession even before absolute dominion and control is achieved. Those
cases require the actor to be actively and ably engaged in efforts to establish complete
control. 27 Moreover, such efforts must be significant and they must be reasonably
calculated to result in unequivocal dominion and control at some point in the near
future.
This rule is applied in cases involving the hunting or fishing of wild animals 29 or the
salvage of sunken vessels. The hunting and fishing cases recognize that a mortally
wounded animal may run for a distance before falling. The hunter acquires possession
upon the act of wounding the animal not the eventual capture. Similarly, whalers
acquire possession by landing a harpoon, not by subduing the animal.
In the salvage cases, an individual may take possession of a wreck by exerting as much
control “as its nature and situation permit”. Inadequate efforts, however, will not
support a claim of possession. Thus, a “sailor cannot assert a claim merely by boarding
a vessel and publishing a notice, unless such acts are coupled with a then present

25 Pierson v. Post, 3 Caines R. (N.Y.1805).
27 The degree of control necessary to establish possession varies from circumstance to circumstance. “The law ...

does not always require that one who discovers lost or abandoned property must actually have it in hand before
he is vested with a legally protected interest. The law protects not only the title acquired by one who finds lost
or abandoned property but also the right of the person who discovers such property, and is actively and ably
engaged in reducing it to possession, to complete this process without interference from another. The courts
have recognized that in order to acquire a legally cognizable interest in lost or abandoned property a finder need
not always have manual possession of the thing. Rather, a finder may be protected by taking such constructive
possession of the property as its nature and situation permit.” Treasure Salvors Inc. v. The Unidentified Wrecked and
Abandoned Sailing Vessel 640 F.2d 560, 571 (1981).
29 …Ghen v. Rich 8 F. 159 (D.Mass.1881); Pierson v. Post 3 Caines R. (N.Y.1805)….

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intention of conducting salvage operations, and he immediately thereafter proceeds
with activity in the form of constructive steps to aid the distressed party.”
These rules are contextual in nature. They are crafted in response to the unique nature
of the conduct they seek to regulate. Moreover, they are influenced by the custom and
practice of each industry. The reason that absolute dominion and control is not
required to establish possession in the cases cited by Mr. Popov is that such a rule
would be unworkable and unreasonable. The “nature and situation” of the property at
issue does not immediately lend itself to unequivocal dominion and control. It is
impossible to wrap one’s arms around a whale, a fleeing fox or a sunken ship.
The opposite is true of a baseball hit into the stands of a stadium. Not only is it
physically possible for a person to acquire unequivocal dominion and control of an
abandoned baseball, but fans generally expect a claimant to have accomplished as much.
The custom and practice of the stands creates a reasonable expectation that a person
will achieve full control of a ball before claiming possession. There is no reason for the
legal rule to be inconsistent with that expectation. Therefore Gray’s Rule is adopted as
the definition of possession in this case.
The central [tenet] of Gray’s Rule is that the actor must retain control of the ball after
incidental contact with people and things. Mr. Popov has not established by a
preponderance of the evidence that he would have retained control of the ball after all
momentum ceased and after any incidental contact with people or objects.
Consequently, he did not achieve full possession.
That finding, however, does not resolve the case. The reason we do not know whether
Mr. Popov would have retained control of the ball is not because of incidental contact.

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It is because he was attacked. His efforts to establish possession were interrupted by
the collective assault of a band of wrongdoers. 34
A decision which ignored that fact would endorse the actions of the crowd by not
repudiating them. Judicial rulings, particularly in cases that receive media attention,
affect the way people conduct themselves. This case demands vindication of an
important principle. We are a nation governed by law, not by brute force.
As a matter of fundamental fairness, Mr. Popov should have had the opportunity to
try to complete his catch unimpeded by unlawful activity. To hold otherwise would be
to allow the result in this case to be dictated by violence. That will not happen.
…The legal question presented at this point is whether an action for conversion can
proceed where the plaintiff has failed to establish possession or title. It can[.] An action
for conversion may be brought where the plaintiff has title, possession or the right to
possession.
… Consistent with this principle, the court adopts the following rule. Where an actor
undertakes significant but incomplete steps to achieve possession of a piece of
abandoned personal property and the effort is interrupted by the unlawful acts of
others, the actor has a legally cognizable pre-possessory interest in the property. That
pre-possessory interest constitutes a qualified right to possession which can support a
cause of action for conversion.
… Recognition of a legally protected pre-possessory interest, vests Mr. Popov with a
qualified right to possession and enables him to advance a legitimate claim to the
baseball based on a conversion theory. Moreover it addresses the harm done by the
unlawful actions of the crowd.

34 Professor Gray has suggested that the way to deal with this problem is to demand that Mr. Popov sue the

people who assaulted him. This suggestion is unworkable for a number of reasons. First, it was an attack by a
large group of people. It is impossible to separate out the people who were acting unlawfully from the people
who were involuntarily pulled into the mix. Second, in order to prove damages related to the loss of the ball, Mr.
Popov would have to prove that but for the actions of the crowd he would have achieved possession of the ball.
As noted earlier, this is impossible.

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It does not, however, address the interests of Mr. Hayashi. The court is required to
balance the interests of all parties.
Mr. Hayashi was not a wrongdoer. He was a victim of the same bandits that attacked
Mr. Popov. … Mr. Hayashi appears on the surface to have done everything necessary
to claim full possession of the ball, [but] the ball itself is encumbered by the qualified
pre-possessory interest of Mr. Popov. At the time Mr. Hayashi came into possession
of the ball, it had, in effect, a cloud on its title.
An award of the ball to Mr. Popov would be unfair to Mr. Hayashi. It would be
premised on the assumption that Mr. Popov would have caught the ball. That
assumption is not supported by the facts. An award of the ball to Mr. Hayashi would
unfairly penalize Mr. Popov. It would be based on the assumption that Mr. Popov
would have dropped the ball. That conclusion is also unsupported by the facts.
Both men have a superior claim to the ball as against all the world. Each man has a
claim of equal dignity as to the other. We are, therefore, left with something of a
dilemma.
Thankfully, there is a middle ground.
…The concept of equitable division has its roots in ancient Roman law. As Helmholz
points out, it is useful in that it “provides an equitable way to resolve competing claims
which are equally strong.” Moreover, “[i]t comports with what one instinctively feels
to be fair”.
…The principle at work here is that where more than one party has a valid claim to a
single piece of property, the court will recognize an undivided interest in the property
in proportion to the strength of the claim.
…Mr. Hayashi’s claim is compromised by Mr. Popov’s pre-possessory interest. Mr.
Popov cannot demonstrate full control. … Their legal claims are of equal quality and
they are equally entitled to the ball.
…The court therefore declares that both plaintiff and defendant have an equal and
undivided interest in the ball. Plaintiff’s cause of action for conversion is sustained only

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as to his equal and undivided interest. In order to effectuate this ruling, the ball must
be sold and the proceeds divided equally between the parties….
Notes and Questions

Source: Raphael, Judgment of Solomon. Vatican Museums.

1. Splitting the Baby. The cynical lawyer would call Judge McCarthy’s ruling in
Popov v. Hayashi a classic example of “splitting the baby.” The implication is that
ordering the division of the disputed chattel is wishy-washy, or a cop-out. This
assumes that there is a “right” answer that will make one party perfectly happy
and utterly disappoint the other, but for whatever reason the judge has decided
to ignore that answer and instead issue a ruling that tries to give something to
everybody and therefore satisfies nobody. *
Is that a fair critique? Come to think of it, why don’t we resolve all disputes over
initial ownership of chattels this way? Should Pierson and Post have split the
value of the fox pelt? Should Ghen and Rich (or perhaps Ellis) have shared the
value of the whale oil? (Wouldn’t they have done so under the custom
supposedly enforced by the court in that case?) Are there good reasons not to
* In the Old Testament parable from which the idiom is derived, King Solomon supposedly used this device to

suss out the true facts of the case he was called on to decide—that is, to identify the true mother of a disputed
child. (He did not, in the event, actually split the baby.) (1 KINGS 3:16-28.) Why might a judge in a modern court
of law issue a ruling that makes nobody happy? Why do you think Judge McCarthy did so in Popov?

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compel competing claimants of a resource to share? What would your
kindergarten teacher say?
Your casebook authors would never dare contradict your kindergarten teacher,
but we might venture a few questions: How would you expect competing
claimants to a single, indivisible resource to behave under a rule that requires
them to share that resource? How do adults who share a household usually
share the resources of that household? Does it matter if the people sharing like
or respect each other? How would you expect courts to resolve their disputes
under a rule requiring sharing? What do you expect the reactions to such
resolutions would be? What would be the effect on the value and productive
use of such resources?
Finally, which of the justifications for allocation rules discussed in Note 1 on
page 92 are implicated by these questions?
2. Precedent. In common-law systems, courts rely on precedent—earlier decided
cases presenting similar facts and legal issues—to guide their decisions.
Precedent may be either binding authority—if it issues from a court with direct
appellate jurisdiction over the court deciding an identical issue—or persuasive
authority—if it issues from a different court in an opinion the deciding court
finds well-reasoned and analogous.
In Popov Judge McCarthy cited and relied on our two earlier chattels cases, Pierson
v. Post and Ghen v. Rich, to justify his ruling. Do you agree with Judge McCarthy’s
interpretation of these precedents? Do you think he applied them correctly to
the facts of the case before him? Do you think he should have relied on these
two decisions as persuasive authority in the Popov case?
3. Escape and Return. The common law developed particular rules to deal with
a captured wild animal that later escaped. In general, once such an animal is free
of the control of its captor, that captor loses their property right in the animal—
in becomes once again ferae naturae, and a new captor can become its owner by
killing or capturing it, free of any claim by the original captor. If, however, the
animal in question has animus revertendi—a natural tendency to return to its place
of captivity (like, say, homing pigeons, hived bees, or trained hawks)—its

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temporary departure from the possession of the original owner does not
diminish that owner’s property right. See 2 WILLIAM BLACKSTONE,
COMMENTARIES *392-93.
Might the rule of escape have any application to Popov v. Hayashi? Or are there
other factors at work in the case that make the rule unhelpful?
4. Postscript. Recall Question 3 on page 100, above. Patrick Hayashi claims that
before this case went to trial, he made a settlement offer to Alex Popov whereby
the two men would essentially do what the court ended up ordering them to
do—selling the ball and dividing the proceeds. Popov, confident in his right to
sole ownership, allegedly countered with a lowball offer of $5,000 in exchange
for return of the ball. * This turned out to be…ill advised.
Despite speculation that Barry Bonds’s record-setting home-run ball might sell
for a million dollars or more, the controversy over its ownership appears to
have negatively affected its market value. At auction, the ball sold for $450,000.†
Split according to the court’s order, that came out to $225,000 for each party—
not a bad haul. But don’t forget: this case was bitterly litigated for over a year—
including a trial that proceeded over several weeks—and that ain’t cheap.
Patrick Hayashi’s attorneys ultimately agreed to waive most of their fee
following the resolution of the case, leaving him enough from the proceeds of
the sale to cover the cost of his graduate education. He left San Francisco and
began a happy new life and career in San Diego. ‡
Alex Popov was not so lucky. The day after the ball went under the auction
hammer, Popov’s attorney, Martin Triano, obtained a temporary restraining

* Jay Posner, Possessing 73rd HR ball first made his life a hassle, then movie, SAN DIEGO UNION-TRIBUNE (June 14,

2005), available at http://www.utsandiego.com/uniontrib/20050614/news_1s14bondball.html.
Ira Berkow, 73rd Home Run Ball Sells for $450,000, N.Y. TIMES (June 26, 2003), available at
http://www.nytimes.com/2003/06/26/sports/baseball-73rd-home-run-ball-sells-for-450000.html
†

‡ Gwen Knapp, Finally, in Bonds ball case, someone shows some class, S.F. CHRON. (Dec. 30, 2003) at A1, available at

http://www.sfgate.com/sports/article/Finally-in-Bonds-ball-case-someone-shows-some-2507738.php.

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order freezing Popov’s share of the proceeds. * Mr. Triano claimed that Popov
still owed him attorney’s fees in the amount of $473,500. † Alex Popov
eventually filed for bankruptcy, ‡ but not before suing his attorney for
malpractice and fraud. § The litigation between Messrs. Popov and Triano was
last before a judge in September 2011, nearly 10 years after Popov had his fateful
brush with a piece of sports (and legal) history. At that appearance, Mr. Popov
was ordered to pay Mr. Triano an additional $22,241 in legal fees arising from
their decade of litigation against one another ** —though one suspects Mr.
Triano may have some difficulty collecting the award. (There is a lesson here
for lawyers, not just litigants.)
To learn more about the saga of Popov v. Hayashi, and to see video of the
infamous home run itself, we highly recommend the 2004 feature-length
documentary Up for Grabs.
5. Review and Application. On September 21, 2008, José Molina hit what would
be the last home run at the old Yankee Stadium (which was demolished
following the end of the season to make way for a new, glitzier facility). The ball
sailed into the left-field stands, and was stopped by a net hung over the seating
area specifically for the purpose of protecting fans from incoming fly balls.
Several fans attempted to reach through the net to grab the ball, and one—Steve
Harshman—managed to get his hand around it. But the net was still between
him and the ball. Harshman told reporters he had intended to rip the ball
through the net, but was interrupted by staff at the stadium, who instructed him
to release it while giving assurances that they would return it to him. Harshman

* In re Martin Triano, Case No. CPF 03 503194, Temporary Restraining Order, June 26, 2003 (Cal. Super. Ct.

San. Francisco Cty.).
† Id., Petition filed by Martin F. Triano (June 20, 2003); see also David Kravets, Attorney sues fan over Bonds ball

case, USA Today (July 8, 2003), available at http://usatoday30.usatoday.com/sports/baseball/nl/giants/2003-0708-bonds-ball-legal-fees_x.htm.
‡ Bankruptcy Petition #: 05-32929 (N.D. Cal. Sept. 6, 2005).
§ Popov v. Triano, Case No. CGC 04 427956, Complaint, Jan. 12, 2004 (Cal. Super. Ct. San. Francisco Cty.).
** In re Martin Triano, Case No. CPF 03 503194, Minute Entry, Sept. 16, 2011 (Cal. Super. Ct. San. Francisco

Cty.) (granting in part Triano’s motion for attorney’s fees, in the amount of $22,241).

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followed the staff’s instructions, and the ball rolled down the net and into an
adjacent seating area, where Bronx schoolteacher Paul Russo caught it. Yankee
Stadium staff immediately confronted Russo and instructed him to turn over
the ball. Russo complied, he claimed, because he thought the staff was offering
to secure the ball on his behalf. Instead, to Mr. Russo’s surprise and chagrin,
they delivered the ball to Mr. Harshman. *
Imagine Mr. Russo sues Mr. Harshman for return of the last home-run ball hit
at the House that Ruth Built. What result? Would it matter if Yankee Stadium
had a long-established policy of having its staff deliver game-play balls to fans
who grasp them through protective netting on condition that the fan release the
ball when instructed? Would it matter why the organization implemented such a
policy?
6. First Possession? Really? We have now examined three different cases that
purport to resolve a property dispute between an earlier pursuer and a later
captor by reference to the rule of first possession. But each of them appears to
come out a different way. Pierson awards the chattel (or its value) to the captor;
Ghen to the pursuer; Popov to both in equal shares. Are these three cases really
applying the same rule? If so, what nuances should we add to the maxims “first
in time is first in right” or “title goes to the first possessor” in order to explain
the outcomes of these three cases and help us to resolve factually similar cases
we may encounter in the future? And if not, what are the multiple rules or
considerations that govern the initial allocation of rights in chattels? Either way,
how should we justify our rule(s)?

* James Barron, At the Stadium, Possession Is Some Tenths of the Law, N.Y. TIMES (Sept. 24, 2008) at B3, available at

http://www.nytimes.com/2008/09/24/nyregion/24ball.html.

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Property

Allocation of Land
William Blackstone, Commentaries on the Laws of England
Vol. 2, p. 59 (1765).

[A]ll the land in the kingdom is supposed to be holden, mediately or immediately, of
the king; who is stiled the lord paramount, or above all.

Source: Bayeux Tapestry. Left: Harold the King Is Slain. Right: William the Conqueror seated, center.

Unlike foxes, whales, and baseballs, real property—that is, land and structures and other
improvements attached to land—isn’t subject to the physical control of an individual
in the same way chattels are. So what might be the legal basis for allocating private
rights in real property?
Claims to ownership of land in England trace back as much as a thousand years. In
1066, William the Bastard, Duke of Normandy, invaded England and defeated the
Anglo-Saxon King Harold at the battle of Hastings—as immortalized in the Bayeux
Tapestry. William—now William the Conqueror—promptly set about parceling out
rights to possess land in his new kingdom. William allocated these rights according to
his political and military needs: affirming the rights of Anglo-Saxon landholders who
supported him, while expropriating the land of his opponents and reallocating it to his
loyal Norman nobles. These nobles received their rights of tenure (from the Latin word
tenere and Norman French word tenir, “to hold”) under obligations of fealty (from the
Norman French fedelité or fealté, meaning fidelity or loyalty); the land each nobleman
held was referred to as his fé, (variations: fief, fee, feud). Hence the name historians have
applied to the resulting social system: feudalism. Feudal obligations typically included
payment of taxes in cash or kind and rendering of services (primarily military services)

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to the tenant’s (holder’s) lord and king. This system of feudal grants of possessory and
usufructary rights from the crown evolved over the centuries into the modern system
of land ownership—a historical process we will revisit later in our chapter on Estates
in Land.
Can there be any justification for the allocation of rights in land beyond the whims of
a long-dead warlord and his cronies? In early modern England this was not merely an
academic question. Huge changes in the legal regime governing rights to land were
underway: lands in England long held as “commons” were being progressively
“enclosed” (i.e., appropriated) by noble families for their private use, the personal
loyalty relationships underlying feudal land tenure were being supplanted by a more
self-consciously economic approach to land rights, and the colonization of the
Americas brought European settlers into contact—and often conflict—with native
Americans. In this period of rapid change, Britain’s leading thinkers turned to the
problem of justifying private property rights in land.
Thomas Hobbes, Leviathan
pp. 188-190 (Oxford 1909) [1651]
The NUTRITION of a Common-wealth consisteth, in the Plenty, and Distribution of
Materials conducing to Life: In Concoction, or Preparation; and (when concocted) in the
Conveyance of it, by convenient conduits, to the Publique use.
…The Distribution of the Materials of this Nourishment, is the constitution of Mine,
and Thine, and His, that is to say, in one word Propriety; and belongeth in all kinds of
Common-wealth to the Soveraign Power. For where there is no Common-wealth, there
is, (as hath been already shewn) a perpetuall warre of every man against his neighbour;
And therefore every thing is his that getteth it, and keepeth it by force; which is neither
Propriety nor Community; but Uncertainty. … Seeing therefore the Introduction of Propriety
is an effect of Common-wealth; which can do nothing but by the Person that
Represents it, it is the act onely of the Soveraign; and consisteth in the Lawes, which
none can make that have not the Soveraign Power. And this they well knew of old,
who called that Νóμoς, (that is to say, Distribution,) which we call Law; and defined
Justice, by distributing to every man his own.

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… In this Distribution, the First Law, is for Division of the Land it selfe: wherein the
Soveraign assigneth to every man a portion, according as he, and not according as any
Subject, or any number of them, shall judge agreeable to Equity, and the Common
Good. … And though a People comming into possession of a land by warre, do not
alwaies exterminate the antient Inhabitants … but leave to many, or most, or all of
them their Estates; yet it is manifest they hold them afterwards, as of the Victors
distribution; as the people of England held all theirs of William the Conquerour.
William Blackstone, Commentaries on the Laws of England
vol. 2, p. 2 (1765)
There is nothing which so generally strikes the imagination, and engages the affections
of mankind, as the right of property; or that sole and despotic dominion which one
man claims and exercises over the external things of the world, in total exclusion of the
right of any other individual in the universe. And yet there are very few, that will give
themselves the trouble to consider the original and foundation of this right. Pleased as
we are with the possession, we seem afraid to look back to the means by which it was
acquired, as if fearful of some defect in our title; or at best we rest satisfied with the
decision of the laws in our favour, without examining the reason or authority upon
which those laws have been built. We think it enough that our title is derived by the
grant of the former proprietor, by descent from our ancestors, or by the last will and
testament of the dying owner; not caring to reflect that (accurately and strictly speaking)
there is no foundation in nature or in natural law, why a set of words upon parchment
should convey the dominion of land; why the son should have a right to exclude his
fellow creatures from a determinate spot of ground, because his father had done so
before him; or why the occupier of a particular field or of a jewel, when lying on his
death-bed and no longer able to maintain possession, should be entitled to tell the rest
of the world which of them should enjoy it after him. These enquiries, it must be owned,
would be useless and even troublesome in common life. It is well if the mass of
mankind will obey the laws when made, without scrutinizing too nicely into the reasons
of making them.

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John Locke, Second Treatise of Civil Government
Ch. 5 (1690)

Though the earth, and all inferior creatures, be common to all men, yet every man has
a property in his own person: this no body has any right to but himself. The labour of
his body, and the work of his hands, we may say, are properly his. Whatsoever then he
removes out of the state that nature hath provided, and left it in, he hath mixed his
labour with, and joined to it something that is his own, and thereby makes it his
property. It being by him removed from the common state nature hath placed it in, it
hath by this labour something annexed to it, that excludes the common right of other
men: for this labour being the unquestionable property of the labourer, no man but he
can have a right to what that is once joined to, at least where there is enough, and as
good, left in common for others.
He that is nourished by the acorns he picked up under an oak, or the apples he gathered
from the trees in the wood, has certainly appropriated them to himself. No body can
deny but the nourishment is his. I ask then, when did they begin to be his? when he
digested? or when he eat? or when he boiled? or when he brought them home? or when
he picked them up? and it is plain, if the first gathering made them not his, nothing else
could. That labour put a distinction between them and common: that added something
to them more than nature, the common mother of all, had done; and so they became
his private right. And will any one say, he had no right to those acorns or apples, he
thus appropriated, because he had not the consent of all mankind to make them his?
Was it a robbery thus to assume to himself what belonged to all in common? If such a
consent as that was necessary, man had starved, notwithstanding the plenty God had
given him….
But the chief matter of property being now not the fruits of the earth, and the beasts
that subsist on it, but the earth itself; as that which takes in and carries with it all the
rest; I think it is plain, that property in that too is acquired as the former. As much land
as a man tills, plants, improves, cultivates, and can use the product of, so much is his
property. He by his labour does, as it were, inclose it from the common. Nor will it
invalidate his right, to say every body else has an equal title to it; and therefore he
cannot appropriate, he cannot inclose, without the consent of all his fellow-commoners,
all mankind. God, when he gave the world in common to all mankind, commanded
man also to labour, and the penury of his condition required it of him. God and his

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reason commanded him to subdue the earth, i.e. improve it for the benefit of life, and
therein lay out something upon it that was his own, his labour. He that in obedience to
this command of God, subdued, tilled and sowed any part of it, thereby annexed to it
something that was his property, which another had no title to, nor could without injury
take from him.
Nor was this appropriation of any parcel of land, by improving it, any prejudice to any
other man, since there was still enough, and as good left; and more than the yet
unprovided could use….
God gave the world to men in common; but since he gave it them for their benefit,
and the greatest conveniencies of life they were capable to draw from it, it cannot be
supposed he meant it should always remain common and uncultivated. He gave it to
the use of the industrious and rational, (and labour was to be his title to it;) not to the
fancy or covetousness of the quarrelsome and contentious. He that had as good left
for his improvement, as was already taken up, needed not complain, ought not to
meddle with what was already improved by another’s labour: if he did, it is plain he
desired the benefit of another’s pains, which he had no right to, and not the ground
which God had given him in common with others to labour on, and whereof there was
as good left, as that already possessed, and more than he knew what to do with, or his
industry could reach to.
… To which let me add, that he who appropriates land to himself by his labour, does
not lessen, but increase the common stock of mankind: for the provisions serving to
the support of human life, produced by one acre of inclosed and cultivated land, are
(to speak much within compass) ten times more than those which are yielded by an
acre of land of an equal richness lying waste in common. And therefore he that incloses
land, and has a greater plenty of the conveniencies of life from ten acres, than he could
have from an hundred left to nature, may truly be said to give ninety acres to mankind:
for his labour now supplies him with provisions out of ten acres, which were but the
product of an hundred lying in common. I have here rated the improved land very low,
in making its product but as ten to one, when it is much nearer an hundred to one: for
I ask, whether in the wild woods and uncultivated waste of America, left to nature,
without any improvement, tillage or husbandry, a thousand acres yield the needy and

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wretched inhabitants as many conveniencies of life, as ten acres of equally fertile land
do in Devonshire, where they are well cultivated?
…Thus labour, in the beginning, gave a right of property, wherever any one was
pleased to employ it upon what was common, which remained a long while the far
greater part, and is yet more than mankind makes use of. Men, at first, for the most
part, contented themselves with what unassisted nature offered to their necessities: and
though afterwards, in some parts of the world, (where the increase of people and stock,
with the use of money, had made land scarce, and so of some value) the several
communities settled the bounds of their distinct territories, and by laws within
themselves regulated the properties of the private men of their society, and so, by
compact and agreement, settled the property which labour and industry began; and the
leagues that have been made between several states and kingdoms, either expresly or
tacitly disowning all claim and right to the land in the others possession, have, by
common consent, given up their pretences to their natural common right, which
originally they had to those countries, and so have, by positive agreement, settled a
property amongst themselves, in distinct parts and parcels of the earth…
… Thus in the beginning all the world was America….
Herman Melville, Moby-Dick
p. 375 (1922) [1892]
What was America in 1492 but a Loose-Fish, in which Columbus struck the Spanish
standard by way of waifing it for his royal master and mistress? What was Poland to
the Czar? What Greece to the Turk? What India to England? What at last will Mexico
be to the United States? All Loose-Fish.

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Federal Land Patent to William McIntosh

Johnson v. M’Intosh
21 U.S. 543 (1823)
ERROR to the District Court of Illinois. This was an action of ejectment for lands in
the State and District of Illinois, claimed by the plaintiffs under a purchase and
conveyance from the Piankeshaw Indians, and by the defendant, under a grant from
the United States [dated July 20, 1818]. It came up on a case stated, upon which there
was a judgment below for the defendant. …
Mr. Chief Justice MARSHALL delivered the opinion of the Court.
The plaintiffs in this cause claim the land, in their declaration mentioned, under two
grants, purporting to be made, the first in 1773, and the last in 1775, by the chiefs of

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certain Indian tribes, constituting the Illinois and the Piankeshaw nations; and the
question is, whether this title can be recognised in the Courts of the United States?
The facts, as stated in the case agreed, show the authority of the chiefs who executed
this conveyance, so far as it could be given by their own people; and likewise show,
that the particular tribes for whom these chiefs acted were in rightful possession of the
land they sold. The inquiry, therefore, is, in a great measure, confined to the power of
Indians to give, and of private individuals to receive, a title which can be sustained in
the Courts of this country.
As the right of society, to prescribe those rules by which property may be acquired and
preserved is not, and cannot be drawn into question; as the title to lands, especially, is
and must be admitted to depend entirely on the law of the nation in which they lie; it
will be necessary, in pursuing this inquiry, to examine, not singly those principles of
abstract justice, which the Creator of all things has impressed on the mind of his
creature man, and which are admitted to regulate, in a great degree, the rights of
civilized nations, whose perfect independence is acknowledged; but those principles
also which our own government has adopted in the particular case, and given us as the
rule for our decision.
On the discovery of this immense continent, the great nations of Europe were eager
to appropriate to themselves so much of it as they could respectively acquire. Its vast
extent offered an ample field to the ambition and enterprise of all; and the character
and religion of its inhabitants afforded an apology for considering them as a people
over whom the superior genius of Europe might claim an ascendency. The potentates
of the old world found no difficulty in convincing themselves that they made ample
compensation to the inhabitants of the new, by bestowing on them civilization and
Christianity, in exchange for unlimited independence. But, as they were all in pursuit
of nearly the same object, it was necessary, in order to avoid conflicting settlements,
and consequent war with each other, to establish a principle, which all should
acknowledge as the law by which the right of acquisition, which they all asserted, should
be regulated as between themselves. This principle was, that discovery gave title to the
government by whose subjects, or by whose authority, it was made, against all other
European governments, which title might be consummated by possession.

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The exclusion of all other Europeans, necessarily gave to the nation making the
discovery the sole right of acquiring the soil from the natives, and establishing
settlements upon it. It was a right with which no Europeans could interfere. It was a
right which all asserted for themselves, and to the assertion of which, by others, all
assented.
Those relations which were to exist between the discoverer and the natives, were to be
regulated by themselves. The rights thus acquired being exclusive, no other power
could interpose between them.
In the establishment of these relations, the rights of the original inhabitants were, in no
instance, entirely disregarded; but were necessarily, to a considerable extent, impaired.
They were admitted to be the rightful occupants of the soil, with a legal as well as just
claim to retain possession of it, and to use it according to their own discretion; but their
rights to complete sovereignty, as independent nations, were necessarily diminished,
and their power to dispose of the soil at their own will, to whomsoever they pleased,
was denied by the original fundamental principle, that discovery gave exclusive title to
those who made it.
While the different nations of Europe respected the right of the natives, as occupants,
they asserted the ultimate dominion to be in themselves; and claimed and exercised, as
a consequence of this ultimate dominion, a power to grant the soil, while yet in
possession of the natives. These grants have been understood by all, to convey a title
to the grantees, subject only to the Indian right of occupancy.
… No one of the powers of Europe gave its full assent to this principle, more
unequivocally than England. The documents upon this subject are ample and complete.
… Thus has our whole country been granted by the crown while in the occupation of
the Indians. These [royal] grants purport to convey the soil as well as the right of
dominion to the grantees. … In all of them, the soil, at the time the grants were made,
was occupied by the Indians. Yet almost every title within those governments is
dependent on these grants. … It has never been objected to this, or to any other similar
grant, that the title as well as possession was in the Indians when it was made, and that
it passed nothing on that account.

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These various patents cannot be considered as nullities; nor can they be limited to a
mere grant of the powers of government. A charter intended to convey political power
only, would never contain words expressly granting the land, the soil, and the waters.
Some of them purport to convey the soil alone; and in those cases in which the powers
of government, as well as the soil, are conveyed to individuals, the crown has always
acknowledged itself to be bound by the grant. Though the power to dismember regal
governments was asserted and exercised, the power to dismember proprietary
governments was not claimed; and, in some instances, even after the powers of
government were revested in the crown, the title of the proprietors to the soil was
respected.
…Thus, all the nations of Europe, who have acquired territory on this continent, have
asserted in themselves, and have recognised in others, the exclusive right of the
discoverer to appropriate the lands occupied by the Indians. Have the American States
rejected or adopted this principle?
By the treaty which concluded the war of our revolution, Great Britain relinquished all
claim, not only to the government, but to the ‘propriety and territorial rights of the
United States,’ whose boundaries were fixed in the second article. By this treaty, the
powers of government, and the right to soil, which had previously been in Great Britain,
passed definitively to these States. We had before taken possession of them, by
declaring independence; but neither the declaration of independence, nor the treaty
confirming it, could give us more than that which we before possessed, or to which
Great Britain was before entitled. It has never been doubted, that either the United
States, or the several States, had a clear title to all the lands within the boundary lines
described in the treaty, subject only to the Indian right of occupancy, and that the
exclusive power to extinguish that right, was vested in that government which might
constitutionally exercise it.
Virginia, particularly, within whose chartered limits the land in controversy lay, passed
an act, in the year 1779, declaring her ‘exclusive right of pre-emption from the Indians,
of all the lands within the limits of her own chartered territory, and that no person or
persons whatsoever, have, or ever had, a right to purchase any lands within the same,
from any Indian nation, except only persons duly authorized to make such purchase;
formerly for the use and benefit of the colony, and lately for the Commonwealth.’ The

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act then proceeds to annul all deeds made by Indians to individuals, for the private use
of the purchasers.
…In pursuance of the same idea, Virginia proceeded, at the same session, to open her
land office, for the sale of that country which now constitutes Kentucky, a country,
every acre of which was then claimed and possessed by Indians, who maintained their
title with as much persevering courage as was ever manifested by any people.
The States, having within their chartered limits different portions of territory covered
by Indians, ceded that territory, generally, to the United States, on conditions expressed
in their deeds of cession, which demonstrate the opinion, that they ceded the soil as
well as jurisdiction, and that in doing so, they granted a productive fund to the
government of the Union. The lands in controversy lay within the chartered limits of
Virginia, and were ceded with the whole country northwest of the river Ohio. This
grant contained reservations and stipulations, which could only be made by the owners
of the soil; and concluded with a stipulation, that ‘all the lands in the ceded territory,
not reserved, should be considered as a common fund, for the use and benefit of such
of the United States as have become, or shall become, members of the confederation,’
&c. ‘according to their usual respective proportions in the general charge and
expenditure, and shall be faithfully and bona fide disposed of for that purpose, and for
no other use or purpose whatsoever.’
The ceded territory was occupied by numerous and warlike tribes of Indians; but the
exclusive right of the United States to extinguish their title, and to grant the soil, has
never, we believe, been doubted.
…The United States, then, have unequivocally acceded to that great and broad rule by
which its civilized inhabitants now hold this country. They hold, and assert in
themselves, the title by which it was acquired. They maintain, as all others have
maintained, that discovery gave an exclusive right to extinguish the Indian title of
occupancy, either by purchase or by conquest; and gave also a right to such a degree of
sovereignty, as the circumstances of the people would allow them to exercise.
The power now possessed by the government of the United States to grant lands,
resided, while we were colonies, in the crown, or its grantees. The validity of the titles
given by either has never been questioned in our Courts. It has been exercised

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uniformly over territory in possession of the Indians. The existence of this power must
negative the existence of any right which may conflict with, and control it. An absolute
title to lands cannot exist, at the same time, in different persons, or in different
governments. An absolute, must be an exclusive title, or at least a title which excludes
all others not compatible with it. All our institutions recognise the absolute title of the
crown, subject only to the Indian right of occupancy, and recognise the absolute title
of the crown to extinguish that right. This is incompatible with an absolute and
complete title in the Indians.
… Conquest gives a title which the Courts of the conqueror cannot deny, whatever the
private and speculative opinions of individuals may be, respecting the original justice
of the claim which has been successfully asserted. The British government, which was
then our government, and whose rights have passed to the United States, asserted a
title to all the lands occupied by Indians, within the chartered limits of the British
colonies. It asserted also a limited sovereignty over them, and the exclusive right of
extinguishing the title which occupancy gave to them. These claims have been
maintained and established as far west as the river Mississippi, by the sword. The title
to a vast portion of the lands we now hold, originates in them. It is not for the Courts
of this country to question the validity of this title, or to sustain one which is
incompatible with it.
…Although we do not mean to engage in the defence of those principles which
Europeans have applied to Indian title, they may, we think, find some excuse, if not
justification, in the character and habits of the people whose rights have been wrested
from them.
The title by conquest is acquired and maintained by force. The conqueror prescribes
its limits. Humanity, however, acting on public opinion, has established, as a general
rule, that the conquered shall not be wantonly oppressed, and that their condition shall
remain as eligible as is compatible with the objects of the conquest. Most usually, they
are incorporated with the victorious nation, and become subjects or citizens of the
government with which they are connected. The new and old members of the society
mingle with each other; the distinction between them is gradually lost, and they make
one people. Where this incorporation is practicable, humanity demands, and a wise
policy requires, that the rights of the conquered to property should remain unimpaired;

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that the new subjects should be governed as equitably as the old, and that confidence
in their security should gradually banish the painful sense of being separated from their
ancient connexions, and united by force to strangers.
When the conquest is complete, and the conquered inhabitants can be blended with
the conquerors, or safely governed as a distinct people, public opinion, which not even
the conqueror can disregard, imposes these restraints upon him; and he cannot neglect
them without injury to his fame, and hazard to his power.
But the tribes of Indians inhabiting this country were fierce savages, whose occupation
was war, and whose subsistence was drawn chiefly from the forest. To leave them in
possession of their country, was to leave the country a wilderness; to govern them as a
distinct people, was impossible, because they were as brave and as high spirited as they
were fierce, and were ready to repel by arms every attempt on their independence.
What was the inevitable consequence of this state of things? The Europeans were under
the necessity either of abandoning the country, and relinquishing their pompous claims
to it, or of enforcing those claims by the sword, and by the adoption of principles
adapted to the condition of a people with whom it was impossible to mix, and who
could not be governed as a distinct society, or of remaining in their neighbourhood,
and exposing themselves and their families to the perpetual hazard of being massacred.
Frequent and bloody wars, in which the whites were not always the aggressors,
unavoidably ensued. European policy, numbers, and skill, prevailed. As the white
population advanced, that of the Indians necessarily receded. The country in the
immediate neighbourhood of agriculturists became unfit for them. The game fled into
thicker and more unbroken forests, and the Indians followed. The soil, to which the
crown originally claimed title, being no longer occupied by its ancient inhabitants, was
parcelled out according to the will of the sovereign power, and taken possession of by
persons who claimed immediately from the crown, or mediately, through its grantees
or deputies.
That law which regulates, and ought to regulate in general, the relations between the
conqueror and conquered, was incapable of application to a people under such
circumstances. The resort to some new and different rule, better adapted to the actual

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state of things, was unavoidable. Every rule which can be suggested will be found to
be attended with great difficulty.
However extravagant the pretension of converting the discovery of an inhabited
country into conquest may appear; if the principle has been asserted in the first instance,
and afterwards sustained; if a country has been acquired and held under it; if the
property of the great mass of the community originates in it, it becomes the law of the
land, and cannot be questioned. So, too, with respect to the concomitant principle, that
the Indian inhabitants are to be considered merely as occupants, to be protected, indeed,
while in peace, in the possession of their lands, but to be deemed incapable of
transferring the absolute title to others. However this restriction may be opposed to
natural right, and to the usages of civilized nations, yet, if it be indispensable to that
system under which the country has been settled, and be adapted to the actual condition
of the two people, it may, perhaps, be supported by reason, and certainly cannot be
rejected by Courts of justice.
... After bestowing on this subject a degree of attention which was more required by
the magnitude of the interest in litigation, and the able and elaborate arguments of the
bar, than by its intrinsic difficulty, the Court is decidedly of opinion, that the plaintiffs
do not exhibit a title which can be sustained in the Courts of the United States; and
that there is no error in the judgment which was rendered against them in the District
Court of Illinois.
Judgment affirmed, with costs.
Mabo v. Queensland (No. 2) [“Mabo’s Case”]
High Court of Australia, (1992) 175 C.L.R. 1
BRENNAN J.
The Murray Islands lie in the Torres Strait, at about 10 degrees S. Latitude and 144
degrees E. Longitude. They are the easternmost of the Eastern Islands of the Strait.
Their total land area is of the order of 9 square kilometres. The biggest is Mer (known
also as Murray Island), oval in shape about 2.79 kms long and about 1.65 kms across.
… The people who were in occupation of these Islands before first European contact
and who have continued to occupy those Islands to the present day are known as the
Meriam people. … The Meriam people of today retain a strong sense of affiliation with

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their forbears and with the society and culture of earlier times. They have a strong sense
of identity with their Islands. The plaintiffs are members of the Meriam people. In this
case, the legal rights of the members of the Meriam people to the land of the Murray
Islands are in question.
… It may be assumed that on 1 August 1879 the Meriam people knew nothing of the
events in Westminster and in Brisbane that effected the annexation of the Murray
Islands and their incorporation into Queensland and that, had the Meriam people been
told of the Proclamation [of annexation] made in Brisbane on 21 July 1879, they would
not have appreciated its significance. The legal consequences of these events are in
issue in this case. Oversimplified, the chief question in this case is whether these
transactions had the effect on 1 August 1879 of vesting in the Crown absolute
ownership of, legal possession of and exclusive power to confer title to, all land in the
Murray Islands. The defendant submits that that was the legal consequence of the
Letters Patent and of the events which brought them into effect. If that submission be
right, the Queen took the land occupied by Meriam people on 1 August 1879 without
their knowing of the expropriation; they were no longer entitled without the consent
of the Crown to continue to occupy the land they had occupied for centuries past.
…In discharging its duty to declare the common law of Australia, this Court is not free
to adopt rules that accord with contemporary notions of justice and human rights if
their adoption would fracture the skeleton of principle which gives the body of our law
its shape and internal consistency. Australian law is not only the historical successor of,
but is an organic development from, the law of England. Although our law is the
prisoner of its history, it is not now bound by decisions of courts in the hierarchy of
an Empire then concerned with the development of its colonies…. It is not possible,
a priori, to distinguish between cases that express a skeletal principle and those which
do not, but no case can command unquestioning adherence if the rule it expresses
seriously offends the values of justice and human rights (especially equality before the
law) which are aspirations of the contemporary Australian legal system. If a postulated
rule of the common law expressed in earlier cases seriously offends those
contemporary values, the question arises whether the rule should be maintained and
applied. Whenever such a question arises, it is necessary to assess whether the particular
rule is an essential doctrine of our legal system and whether, if the rule were to be

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overturned, the disturbance to be apprehended would be disproportionate to the
benefit flowing from the overturning.
… International law [at the time of colonization of Australia by Britain] recognized
conquest, cession, and occupation of territory that was terra nullius as three of the
effective ways of acquiring sovereignty…. Various justifications for the acquisition of
sovereignty over the territory of “backward peoples” were advanced. The benefits of
Christianity and European civilization had been seen as a sufficient justification from
mediaeval times. Another justification for the application of the theory of terra nullius
to inhabited territory—a justification first advanced by Vattel at the end of the 18th
century—was that new territories could be claimed by occupation if the land were
uncultivated, for Europeans had a right to bring lands into production if they were left
uncultivated by the indigenous inhabitants.
… The fiction by which the rights and interests of indigenous inhabitants in land were
treated as non-existent was justified by a policy which has no place in the contemporary
law of this country…. Whatever the justification advanced in earlier days for refusing
to recognize the rights and interests in land of the indigenous inhabitants of settled
colonies, an unjust and discriminatory doctrine of that kind can no longer be
accepted.… It is contrary both to international standards and to the fundamental values
of our common law to entrench a discriminatory rule which, because of the supposed
position on the scale of social organization of the indigenous inhabitants of a settled
colony, denies them a right to occupy their traditional lands. It was such a rule which
evoked from Deane J.[, in] Gerhardy v. Brown (1985) 159 CLR 70, at p. 149[,] the
criticism that—
“the common law of this land has still not reached the stage of retreat from
injustice which the law of Illinois and Virginia had reached in 1823 when
Marshall C.J., in Johnson v. McIntosh, accepted that, subject to the assertion of
ultimate dominion (including the power to convey title by grant) by the State,
the ‘original inhabitants’ should be recognized as having ‘a legal as well as just
claim’ to retain the occupancy of their traditional lands”.
However, recognition by our common law of the rights and interests in land of the
indigenous inhabitants of a settled colony would be precluded if the recognition were
to fracture a skeletal principle of our legal system.…

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The land law of England is based on the doctrine of tenure. In English legal theory,
every parcel of land in England is held either mediately or immediately of the King who
is the Lord Paramount; the term “tenure” is used to signify the relationship between
tenant and lord, not the relationship between tenant and land…. When the Crown
acquired territory outside England which was to be subject to the common law, there
was a natural assumption that the doctrine of tenure should be the basis of the land
law. Perhaps the assumption did not have to be made….
By attributing to the Crown a radical title * to all land within a territory over which the
Crown has assumed sovereignty, the common law enabled the Crown, in exercise of
its sovereign power, to grant an interest in land to be held of the Crown or to acquire
land for the Crown’s demesne. … But it is not a corollary of the Crown’s acquisition
of a radical title to land in an occupied territory that the Crown acquired absolute
beneficial ownership of that land to the exclusion of the indigenous inhabitants.… Nor
is it necessary to the structure of our legal system to refuse recognition to the rights
and interests in land of the indigenous inhabitants….
Recognition of the radical title of the Crown is quite consistent with recognition of
native title to land, for the radical title, without more, is merely a logical postulate
required to support the doctrine of tenure (when the Crown has exercised its sovereign
power to grant an interest in land) and to support the plenary title of the Crown (when
the Crown has exercised its sovereign power to appropriate to itself ownership of
parcels of land within the Crown’s territory). Unless the sovereign power is exercised
in one or other of those ways, there is no reason why land within the Crown’s territory
should not continue to be subject to native title. It is only the fallacy of equating
sovereignty and beneficial ownership of land that gives rise to the notion that native
title is extinguished by the acquisition of sovereignty.
…. The ownership of land within a territory in the exclusive occupation of a people
must be vested in that people: land is susceptible of ownership, and there are no other
owners.… Of course, since European settlement of Australia, many clans or groups of

* [Eds.—“Radical title” is a subtle and unsettled concept; it may refer here to the common-law principle that the

government—i.e., the crown—is the ultimate source of property rights in land within the territory subject to its
jurisdiction.]

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indigenous people have been physically separated from their traditional land and have
lost their connexion with it. But that is not the universal position. It is clearly not the
position of the Meriam people. Where a clan or group has continued to acknowledge
the laws and (so far as practicable) to observe the customs based on the traditions of
that clan or group, whereby their traditional connexion with the land has been
substantially maintained, the traditional community title of that clan or group can be
said to remain in existence. The common law can, by reference to the traditional laws
and customs of an indigenous people, identify and protect the native rights and
interests to which they give rise. However, when the tide of history has washed away
any real acknowledgment of traditional law and any real observance of traditional
customs, the foundation of native title has disappeared. A native title which has ceased
with the abandoning of laws and customs based on tradition cannot be revived for
contemporary recognition. … Once traditional native title expires, the Crown’s radical
title expands to a full beneficial title, for then there is no other proprietor than the
Crown.
It follows that a right or interest possessed as a native title cannot be acquired from an
indigenous people by one who, not being a member of the indigenous people, does
not acknowledge their laws and observe their customs; nor can such a right or interest
be acquired by a clan, group or member of the indigenous people unless the acquisition
is consistent with the laws and customs of that people. Such a right or interest can be
acquired outside those laws and customs only by the Crown.
… Sovereignty carries the power to create and to extinguish private rights and interests
in land within the Sovereign’s territory. It follows that, on a change of sovereignty,
rights and interests in land that may have been indefeasible under the old regime
become liable to extinction by exercise of the new sovereign power. The sovereign
power may or may not be exercised with solicitude for the welfare of indigenous
inhabitants but, in the case of common law countries, the courts cannot review the
merits, as distinct from the legality, of the exercise of sovereign power. … However,
the exercise of a power to extinguish native title must reveal a clear and plain intention
to do so, whether the action be taken by the Legislature or by the Executive…. A
Crown grant which vests in the grantee an interest in land which is inconsistent with
the continued right to enjoy a native title in respect of the same land necessarily
extinguishes the native title…. Where the Crown grants land in trust or reserves and

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dedicates land for a public purpose, the question whether the Crown has revealed a
clear and plain intention to extinguish native title will sometimes be a question of fact,
sometimes a question of law and sometimes a mixed question of fact and law. Thus, if
a reservation is made for a public purpose other than for the benefit of the indigenous
inhabitants, a right to continued enjoyment of native title may be consistent with the
specified purpose - at least for a time - and native title will not be extinguished. But if
the land is used and occupied for the public purpose and the manner of occupation is
inconsistent with the continued enjoyment of native title, native title will be
extinguished. … [W]here the Crown has not granted interests in land or reserved and
dedicated land inconsistently with the right to continued enjoyment of native title by
the indigenous inhabitants, native title survives and is legally enforceable.
[The Court declared that the Murray Islands are not crown lands, that the Meriam
people were entitled to “possession, occupation, use and enjoyment” of the island of
Mer (excluding certain parcels leased or physically used by the Australian, provincial,
or local governments), and that the Meriam people’s right to Mer is subject to the
power of the Queensland government to extinguish it by law.]
MASON C.J. and McHUGH J.
We agree with the reasons for judgment of Brennan J. and with the declaration which
he proposes.
In the result, six [out of seven] members of the Court (Dawson J. dissenting) are in
agreement that the common law of this country recognizes a form of native title which,
in the cases where it has not been extinguished, reflects the entitlement of the
indigenous inhabitants, in accordance with their laws or customs, to their traditional
lands and that, subject to the effect of some particular Crown leases, the land
entitlement of the Murray Islanders in accordance with their laws or customs is
preserved, as native title, under the law of Queensland. The main difference between
those members of the Court who constitute the majority is that, … neither of us nor
Brennan J. agrees with the conclusion to be drawn from the judgments of Deane,
Toohey and Gaudron JJ. that, at least in the absence of clear and unambiguous statutory
provision to the contrary, extinguishment of native title by the Crown by inconsistent
grant is wrongful and gives rise to a claim for compensatory damages. We note that the
judgment of Dawson J. supports the conclusion of Brennan J. and ourselves on that

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aspect of the case since his Honour considers that native title, where it exists, is a form
of permissive occupancy at the will of the Crown.
We are authorized to say that the other members of the Court agree with what is said
in the preceding paragraph about the outcome of the case.
[Opinions of Toohey and Gaudron JJ. and Dawson J. omitted.]
Notes and Questions
1. A system of land ownership founded on violent conquest strikes us as arbitrary
and unjustifiable today. Both cases you read seem to reflect this view in their
rhetoric. But do they implement such a view in their dispositions of the claims
before them? Or do they follow Blackstone’s advice to “obey the laws when
made, without scrutinizing too nicely into the reasons of making them”?
Chief Justice Marshall seems almost embarrassed to confirm the
“extravagant…pretension” that European discovery and conquest is not only a
legitimate source of land titles in the United States, but the only legitimate source
of such titles. But he does so anyway. Why?
Justice Brennan is even more forceful, finding the European rule of discovery
to be “an unjust and discriminatory doctrine of that kind can no longer be
accepted.” But is the rule he announces any different than the rule of Johnson v.
M’Intosh? If so, how?
Can we think of a better justification for allocating ownership of land? What
allocation rule would result from such a better justification? If we could come
up with a better justified principle for allocating initial ownership of land than
violent conquest, could we simply implement a system based on that principle
tomorrow? If not, what has become of Judge McCarthy’s defiant assertion in
Popov v. Hayashi that “[w]e are a nation governed by law, not by brute force”? Is
there something different about land that makes allocation by “brute force”
more acceptable?
2. Wrong + Time = Right? Perhaps the distinction between Popov v. Hayashi and
Johnson v. M’Intosh has to do with how much time has passed since the violent

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dispossession of the aggrieved plaintiff. Does the fact that a thousand years have
passed since William the Conqueror make his expropriation of land from the
Anglo-Saxons any less unjust? What about the five hundred years since
European discovery of the Americas? The two hundred years since the British
colonization of Australia? If the United States invaded a foreign country—say,
somewhere in the Middle East—tomorrow, and purported to sell to an
American corporation legal title to land in that country that was in possession
of natives claiming ownership under the laws of the conquered nation, would
you expect the dispossessed natives to have a legal remedy? In what court?
3. Note that the major split between the Justices in Mabo was not over the existence
of native title, but on its scope. Three (of seven) Justices would have held that
“If common law native title is wrongfully extinguished by the Crown, …
compensatory damages can be recovered provided the proceedings for recovery
are instituted within the period allowed by applicable limitations provisions,”
and that extinguishment by inconsistent grant in the absence of an Act of
Parliament is wrongful. Opinion of Toohey and Gaudron JJ., ¶ 64-65. We will
consider how the passage of time can affect an owner’s ability to assert their
rights in our units on Found and Stolen Property and on Adverse Possession.
4. Historical Injustices and Reparations. Should injuries to persons long dead,
inflicted by persons long dead, be remediable? Are the descendants of the
wronged individuals the proper recipients of such a remedy? Should the
descendants of the inflicters of the injury be held liable?
In the United States, these are recurring issues that arise in discussions of the
dispossession and genocide of Native Americans and the enslavement of
kidnapped Africans and their descendants. See, e.g., Ta-Nehisi Coates, The Case
ATLANTIC
(June
2014),
available
at
for
Reparations,
THE
http://www.theatlantic.com/features/archive/2014/05/the-case-forreparations/361631/ (citing early American examples of reparations of former
slaves, cataloguing the continued injuries inflicted on African-Americans by the
discrimination they face in American society, and laying out the case for a more
comprehensive reparations program). Reparations are also the subject of serious
philosophical, political, and legal discussion. Consider the following excerpt

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from Carol Rose, The Moral Subject of Property, 48 WM. & MARY L. REV. 1897,
1906-07 (2006) (footnotes omitted):
Property, as an institution, requires stability in people’s
expectations about their own and other people’s claims. This is
why property law has several claims-clearing devices that
substitute Owner #2 for Owner #1 when the claims of Owner
#1 have not been sufficiently publicized, and when most people
think that Owner #2 is the true owner even though she is not.
Adverse possession is a classic example of this sort of claimsclearing device.* Unfortunately, Owner #2’s claims may have
arisen in dubious circumstances or even through force or fraud,
and that fact can undermine confidence in the entire institution.
Contemporary Russia is a case in point, where major capitalist
figures are widely regarded as the beneficiaries of insider
favoritism and horrifically shady practices. Should their great
wealth be recognized, simply for the sake of getting on with
things and letting a modern economy unroll? Or would some
kind of redistribution actually lead to greater stability?
Historic injustices create another source of unease: Palestinians
vis-à-vis Israelis, former East European landowners vis-à-vis the
newcomers under Soviet rule, numerous indigenous groups visà-vis the settler societies that displaced them, descendants of
slaves vis-à-vis the descendants of slave-owners. Settling all those
scores could be hugely disruptive, and the passage of time itself
makes proposed settlements morally ambiguous, because the
original victims and perpetrators often are no longer on the scene.
Why charge A in favor of B, when neither A nor B were
personally involved in the past injustice? Moreover, settlements
could leave open the origins of the displaced persons’ own prior
claims, as in the case of former aristocrats’ plantations in East

* [Eds.—We will discuss adverse possession in a subsequent chapter.]

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Germany. Just whom did their ancestors displace, far back in the
Middle Ages? And so on back in time.
The age-old acquisition problem is not very salient to most
property regimes, however, even though it bubbles hotly at the
center in some locales. Issues of this kind usually become
peripheral because we basically follow Blackstone’s advice: we
forget about the questionable origins of title. … By forgetting
about origins we can keep on acquiring, investing, trading, and
generally making ourselves wealthier. The larger public good of
stable claims normally outweighs the private lapses that were
entailed in some of those claims. But not surprisingly, on
occasion the situation is reversed: unjust acquisitions may seem
so gross as to eat away even the middle ground morality that
makes property regimes possible. If you think that all those who
succeed are thieves, why not be a thief yourself? That rhetorical
question turns tit-for-tat practitioners into larcenists. Under such
circumstances, public morality—even in quest of stability for
property—could require some kind of restitutionary gesture, or
at least some acknowledgment of past injustice.
For further philosophical treatments of reparations and responsibility for
ancient wrongs, see George Sher, Transgenerational Compensation, 33 PHILOS. &
PUB. AFF. 181 (2005) (attempting to justify reparations); Christopher W. Morris,
Existential Limits to the Rectification of Past Wrongs, 21 AM. PHILOS. Q. 175 (1984)
(casting doubt on the moral argument for reparations); Eric A. Posner & Adrian
Vermeule, Reparations for Slavery and Other Historical Injustices, 103 COLUM. L. REV.
689 (2003) (addressing both philosophical and legal issues in reparations
programs).
5. Is the United States’ dispossession of Native Americans really a “historical”
injustice? Professor Joseph Singer has long faulted the American legal system
for its continued mistreatment of Native Americans:
[T]itle to land in the United States rests on the forced taking of
land from first possessors—the very opposite of respect for first

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possession. Conquest is a mode of original acquisition that we
cannot sweep under the rug by pretending that it accords with
any recognizable principle of justice. And conquest,
unfortunately, is where American history starts—as does the title
to almost every parcel of land in the United States. This is a highly
inconvenient (not to say stunningly demoralizing) fact, not least
of all to the Indian nations that continue to inhabit the North
American continent….
Many of us protect ourselves from having to think too deeply
about conquest by distancing ourselves from it. … If we can
relegate conquest to the distant past, we can concentrate instead
on the fact that the United States was founded on respect for
property rights. We do not acquire property by conquest today.
This comforting story is misleading at best and false at worst. We
cannot comfort ourselves with the idea that conquest became a
thing of the past with the American Revolution, independence
from Great Britain, and the adoption of the U.S. Constitution.

Joseph William Singer, Original Acquisition of Property: From Conquest & Possession
to Democracy & Equal Opportunity, 86 IND. L.J. 763, 766-67 (2011). As Professor
Singer explains, id. at 767-68, most of the federal government’s dispossession
of Native American land occurred during the 19th century. During the early 20th
century—while the Supreme Court was gaining a reputation for striking down
state economic legislation in the name of protecting freedom of contract and
private property (the so-called “Lochner era” *)—the United States forcibly took
two-thirds of the remaining lands of the Indian nations. The Supreme Court
held in 1955 that Alaska natives possessed merely a license to live on the land—
revocable permission from whites to occupy Alaskan territory. As recently as
2009, the Supreme Court held that the Navajo Nation had no right to sue the
federal government for damages where the Secretary of the Interior was alleged
to have colluded with a mining company to undercompensate the tribe for
* Lochner v. New York, 198 U.S. 45 (1905).

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mining rights on lands held under “joint title” between the Navajo and the
United States (by law, the Secretary must approve any leases of tribal land for
mining purposes). United States v. Navajo Nation, 556 U.S. 287 (2009). As
Professor Singer reminds us, the conquest is not over.

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C. Ratione Soli and Fugitive Resources: Chattels Meet Land
1. Wild Animals on Owned Land

Source: RALPH PAYNE-GALLWEY, THE BOOK OF DUCK DECOYS 34, 36, 166 (1886), available at
https://archive.org/details/bookofduckdecoysx00payn

Keeble v. Hickeringill
(1707) 103 Eng. Rep. 1127, 11 East 574 (Q.B.)
Action upon the case. Plaintiff declares that he was, 8th November in the second year
of the Queen, lawfully possessed of a close of land called Minott’s Meadow, [where he
maintained] a decoy pond, to which divers wildfowl used to resort and come: and the
plaintiff had at his own costs and charges prepared and procured divers decoy ducks,
nets, machines and other engines for the decoying and taking of the wildfowl, and
enjoyed the benefit in taking them: the defendant, knowing which, and intending to
damnify the plaintiff in his vivary, and to fright and drive away the wildfowl used to
resort thither, and deprive him of his profit, did, on the 8th of November, resort to the
head of the said pond and vivary, and did discharge six guns laden with gunpowder,
and with the noise and stink of the gunpowder did drive away the wildfowl then being
in the pond: and on the 11th and 12th days of November the defendant, with design
to damnify the plaintiff, and fright away the wildfowl, did place himself with a gun near
the vivary, and there did discharge the said gun several times that was then charged
with the gunpowder against the said decoy pond, whereby the wildfowl were frighted
away, and did forsake the said pond. Upon not guilty pleaded, a verdict was found for
the plaintiff and 20l. damages.

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HOLT C.J.
I am of opinion that this action doth lie. It seems to be new in its instance, but is not
new in the reason or principle of it. For, 1st, this using or making a decoy is lawful.
2dly, this employment of his ground to that use is profitable to the plaintiff, as is the
skill and management of that employment. As to the first, every man that hath a
property may employ it for his pleasure and profit, as for alluring and procuring decoy
ducks to come to his pond. … Then when a man useth his art or his skill to take them,
to sell and dispose of for his profit; this is his trade; and he that hinders another in his
trade or livelihood is liable to an action for so hindering him.…
[W]here a violent or malicious act is done to a man’s occupation, profession, or way of
getting a livelihood; there an action lies in all cases. But if a man doth him damage by
using the same employment; as if Mr. Hickeringill had set up another decoy on his own
ground near the plaintiff’s, and that had spoiled the custom of the plaintiff, no action
would lie, because he had as much liberty to make and use a decoy as the plaintiff. This
is like the case of 11 H. 4, 47. One schoolmaster sets up a new school to the damage
of an antient school, and thereby the scholars are allured from the old school to come
to his new. (The action was held there not to lie.) But suppose Mr. Hickeringill should
lie in the way with his guns, and fright the boys from going to school, and their parents
would not let them go thither; sure that schoolmaster might have an action for the loss
of his scholars. ...
There was an objection that did occur to me, though I do not remember it to be made
at the Bar; which is, that it is not mentioned in the declaration what number or nature
of wildfowl were frighted away by the defendant’s shooting. … Where a man brings
trespass for taking his goods, he must declare of the quantity, because he, by having
had the possession, may know what he had, and therefore must know what he lost. …
The plaintiff in this case brings his action for the apparent injury done him in the use
of that employment of his freehold, his art, and skill, that he uses thereby. … And when
we do know that of long time in the kingdom these artificial contrivances of decoy
ponds and decoy ducks have been used for enticing into those ponds wildfowl, in order
to be taken for the profit of the owner of the pond, who is at the expence of servants,
engines, and other management, whereby the markets of the nation may be furnished;
there is great reason to give encouragement thereunto; that the people who are so
instrumental by their skill and industry so to furnish the markets should reap the benefit

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and have their action. But, in short, that which is the true reason is that this action is
not brought to recover damage for the loss of the fowl, but for the disturbance.
Notes and Questions
1. What was Keeble suing Hickeringill for, and why did he prevail? Was his
claim a property claim? (A related question: what is an “[a]ction on the
case”? Have we seen it before? Did you look it up?) If a property claim,
what was the res—the thing that Keeble claimed as his property? If not
a property claim, what might this case be doing in your Property
casebook?
2. Whether Keeble is a property case or not, where did the 20£ damages
measure come from?
3. You may recall that Keeble was discussed by Justice Tompkins in Pierson
v. Post, though not by name. (See page 89 note ***, supra.) Justice
Tompkins referred to different reports of the case than the one you
read. The existence of multiple, sometimes conflicting, reports is fairly
common for earlier English cases and even for some early American
cases. In earlier days, judges would announce their opinions from the
bench, and reporters—usually entrepreneurial lawyers—would take
notes of these opinions (often along with the arguments of counsel),
collect them, and publish them as a reference for the bar. These days
judges issue written opinions, which are collected and published in
“official” reporters as written. But for earlier cases, the content of a
precedential authority depended on the transcription of the reporter, and
reporters could be unreliable. The Modern King’s Bench (“Mod.”) and
Salkeld (“Salk.”) reports cited by Justice Tompkins are today believed to
be less reliable than the East report you just read, which the reporter
claimed to have based on a copy of Lord Chief Justice Holt’s own
manuscript. Unfortunately for Justice Tompkins, the East report of
Keeble was not published until 1815 (ten years after Pierson). Had this
report been available to the New York Supreme Court in 1805, do you
think Pierson would have come out differently?
A Note on Ratione Soli
Lord Holt, who decided Keeble, is also a key—if perhaps slightly confusing—expositor
of the related and peculiarly English doctrine of ratione soli (Latin for “by reason of the

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soil”), also referred to in Pierson. Ratione soli is the principle that the right to take
possession of wild animals belongs to the owner of the land where the animal may be
found; thus title to any animals captured or killed on owned land automatically vests in
the landowner. The English rule is in stark opposition to the civil (i.e., Roman) law rule,
reflected in the Institutes of Justinian, * which is that the captor of a wild animal acquires
property rights in the animal wherever captured, though he may be liable in trespass to
the owner of the real property on which the animal was pursued or taken. This
distinction affects not only the right to possession of the animal itself, but also the
measure of damages, because the damages from the trespass may be less than the value
of the animal.
A strong principle of ratione soli was consolidated in mid-19th century England as part
of the class wars between the landed gentry—who passionately defended game hunting
as an exclusive sport for the aristocracy—and the upwardly-mobile merchant classes
and more desperate farmers and poachers—who saw game as a token of luxury and a
means of sustenance, respectively. See generally Chester Kirby, The English Game Law
System, 38 AM. HIST. REV. 240 (1933). The aristocrats won a decisive victory in a suit
by a game merchant against certain servants of the Marquis of Exeter, who had forcibly
seized several dozen rabbits purchased by the merchant for resale, on grounds that they
had been poached from the Marquis’s lands. Blades v. Higgs, (1865) 11 Eng. Rep. 1474,
11 H.L.Cas. 621. The Law Lords ruled that wild animals are the property of the owner
of the land on which they are taken, and that the Marquis’s servants were therefore
within their rights in repossessing the rabbits.
Ratione soli was initially rejected by the newly independent American states, in favor of
a rule of “free taking.” This made some sense in the America of John Locke’s
imagination: a vast, naturally bountiful, largely undeveloped, and sparsely populated
continent. Moreover, “[i]n the New World, game was no sporting matter, but rather a

J. INST. 2.1.12. The Institutes are a portion of the massive codification of Roman law under Byzantine (Roman)
Emperor Justinian I: the Corpus Iuris Civilis. The Corpus, in turn, is an important predecessor of most modern civil
law systems, which prevail in Continental European nations and many of their former colonies. Unlike commonlaw systems, which prevail in England and most of its former colonies (including the United States, with the
exception of Louisiana), legal authority in civil law systems derives not from caselaw, but from comprehensive
statutory codes. A primary distinction between common law and civil law systems is the sharply diminished role
of precedent in civil law adjudication. (Recall note 2 on page 110, supra.)
*

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source of food and clothing.” Thomas A. Lund, Early American Wildlife Law, 51 N.Y.U.
L. REV. 703 (1976). Thus, for the first century of the new Republic’s life, landowners
for the most part enjoyed no special privileges to wild animals on their otherwise idle
land; hunters were presumed to be free to enter or cross unenclosed and undeveloped
land in pursuit of game, even where that land was privately owned. Landowners could
defeat this presumption by posting notices of their intent to exclude hunters at the
boundaries of their property, but in practice posting was uncommon and generally
ineffective for large holdings in the wilds of the frontier. Id. at 712-14.
Over time, even the vast North American continent saw its natural resources
threatened with depletion by overexploitation, and its lands subject to increased
development that conflicted with the free taking regime. Nevertheless, while a small
number of American cases adopted ratione soli (see, e.g., Rexroth v. Coon, 23 A. 37 (R.I.
1885) (bees); Schulte v. Warren, 75 N.E. 783 (Ill. 1905) (fish)), the rule never took hold
here as it did in England. Today, wild animals are subject to a variety of state and federal
regulations that fairly comprehensively govern whether, when, and under what
circumstances they may be hunted or captured, on the theory that wildlife is a common
resource to be managed by the government for the benefit of the people. See generally
Michael C. Blumm & Lucus Ritchie, The Pioneer Spirit and the Public Trust: The American
Rule of Capture and State Ownership of Wildlife, 35 ENVIRON. L. 673 (2005). But a majority
of states still allow licensed hunters to take or pursue game on unenclosed private land
unless the landowner has posted against hunting or trespassing. Mark R. Sigman, Note,
Hunting and Posting on Private Land in America, 54 DUKE L. J. 549, 558-68 (2004).
One possible virtue of the doctrine of ratione soli is the same as the virtue of the punitive
damages award in Jacque v. Steenberg Homes: it may marginally discourage trespasses on
land by those who would trespass for the purpose of capturing wild animals. But at
what cost? And do we really need ratione soli when, as Jacque makes clear, punitive
damages are already available against trespassers? Or when, as Keeble makes clear, there
are other legal remedies available against those who interfere with landowners’ efforts
to exploit wild animals on their land? Is there any other principled justification for
either ratione soli or free taking, or are the rules merely sops to particular political
interests? In light of all this history, what do you think ought to be the legal rights of
landowners with respect to wild animals that happen to be on their land? Why? Is there
any reason landowners should have a superior claim to anyone else?

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2. Other Fugitive Resources: Water, Oil, and Gas
We have studied a fair number of cases about property rights in wild animals. By now
you may be asking yourself: who cares? This is, after all, an area of legal doctrine that
you will almost certainly never encounter in your future career as a lawyer. Are we
wasting your time?
Obviously we don’t think so. We would offer two related reasons for studying this area
of law:
First: The study of these cases has introduced you to some accessible illustrations of
how we might justify rules for allocating control over scarce resources among competing
claimants. We have already seen several justifications for the rules we have studied—
moral reasons, economic reasons, reasons grounded in administrability and in other
pragmatic concerns. (See note 1 on page 92, supra.) These are the types of justifications
that move courts and policymakers, and they are the kinds of justifications that lawyers
must invoke in crafting legal arguments and explaining legal rules to their clients.
Second: It is sometimes said that “the law is a seamless web.” One influential
interpretation of this principle, offered by legal philosopher Ronald Dworkin, is that
common-law judges must attempt to decide cases by reference to “a scheme of abstract
and concrete principles that provides a coherent justification for all common law
precedent.” Ronald Dworkin, Hard Cases, 88 HARV. L. REV. 1057, 1094 (1975). That is
to say that a legal system’s rules should not only be justified according to discernable
principles, they should be coherent: the principles that justify an outcome in one area of
law should apply consistently to other areas of law to the extent possible. Thus, when
deciding novel cases, common-law judges will have to infer what principles are
consistent with—or fit—the entire corpus of cases that have been decided before,
decide which among those principles best justifies the cases, and use that principle as a
guide in deciding the novel case.
At a more practical level, lawyers typically reason about novel cases by analogy to past
cases in the same general doctrinal field. The common-law treatment of precedent,
discussed above on page 110, note 2, is a special case of this more general principle.
Thus, even though we don’t see many cases involving disputes over wild animals
anymore, past judicial resolutions of those disputes will inform how we decide disputes

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over other resources that are similar in some way. We have seen this type of reasoning
by analogy already, in Popov v. Hayashi: a baseball is not a wild animal, but Judge
McCarthy thought cases about wild animals provided instruction for the dispute before
him. (Query: Why might he have thought so?) With respect to the intersection of land
and chattels, we can similarly see Keeble and the doctrines of ratione soli and free taking
as reflecting principles applicable to fugitive resources: chattels that can move of their own
accord from place to place, sometimes taking them onto owned land. There are plenty
of valuable resources that share this quality, and many of them are the subject of heated
legal disputes even today. We will focus here on two: water and oil.
Water is essential to life, but it can also be put to a variety of other practical uses:
irrigating farmland, extracting minerals from mines and oil or gas from wells, powering
dams and mills, cooling industrial equipment, and as an input to manufacturing, for
example. Fresh water from rainfall and snowmelt may flow over the surface of land,
either free-flowing (particularly during heavy rains or spring thaws) or in defined
channels as streams and lakes. Rain and snowmelt can also seep down and be absorbed
by the earth as subsurface groundwater or deep aquifers. In either case, water has a
fundamental physical connection to land, but it also moves freely over, under, and
across land. (Sound familiar?)
Both surface and subsurface waters are renewable; they are replenished by precipitation.
But they’re still scarce. This scarcity comes in two basic forms, which map to the
economic categories of stocks and flows. Depletion of a groundwater source at a rate
exceeding its natural replenishment will eventually exhaust the stock—or finite total
amount—of water at that source. A stream flows at a particular (though perhaps
variable) rate, but that rate is primarily determined by ecological rather than human
processes, so adding more users or more intense uses may not threaten future flows but
does reduce the share of the flow available to each at any given time. Given these forms
of scarcity, competition over water resources is inevitable, and property law may be
called on to regulate that competition.
Complicating the matter, the rate of renewal of water stocks and the magnitude of
water flows vary from time to time and place to place: Hawaii gets a lot more rain than
Nevada, and California got a lot more rain in 1983 than it did in 2013. Reflecting this
natural diversity, the American states have devised two broad categories of common-

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law responses to the challenge of managing conflicts over access to water, epitomized
by the two cases below. The first response, riparian rights, dominates in the wetter,
eastern states, and was firmly established by our first case, Tyler v. Wilkinson. The
second response, prior appropriation, prevails in the more arid western states, and is
sometimes referred to as the “Colorado Rule” given its historic association with our
second case, Coffin v. Left Hand Ditch Co. Both cases deal with rights to flows, in
particular the flow of a river. As you read these cases, try to understand how the two
systems differ, and what might explain or justify the difference.

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Source: Betty Buckley & Scott W. Nixon, An Historical Assessment of Anadromous Fish in the Blackstone River (2001),
https://perma.cc/4CTX-M6SE

Tyler v. Wilkinson
24 F.Cas. 472, 4 Mason 397 (D. R.I. 1827)
STORY, Circuit Justice
[The Blackstone River forms part of the boundary between Rhode Island and
Massachusetts. Plaintiffs owned several mills on the Massachusetts side of the river
across from the town of Pawtucket, Rhode Island. For over a century, mills on both
sides of the river had been powered by the flow of the Blackstone as directed by a dam
(the “lower dam”). Defendants owned several mills upstream of the plaintiffs on the
Rhode Island side of the river and on a man-made canal called Sergeant’s Trench,
which bypassed the lower dam on the western bank. Defendants erected a new dam
(the “upper dam”) to direct the flow of water toward their mills, interfering with the
ability of plaintiffs to rely on the flow of the falls to the lower dam to power the
plaintiffs’ mills. Plaintiffs sued for a declaration that by “ancient usage” they had a

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superior claim to the waters of the river over the defendants, whom the plaintiffs
alleged were entitled only to “wastewater,” or so much of the flow as was not needed
by the plaintiffs. Supreme Court Justice Joseph Story, riding circuit, heard the dispute
and rendered the following opinon.]
Before proceeding to an examination of these points, it may be proper to ascertain the
nature and extent of the right, which riparian proprietors generally possess, to the
waters of rivers flowing through their lands….
Prima facie every proprietor upon each bank of a river is entitled to the land, covered
with water, in front of his bank, to the middle thread of the stream, or, as it is commonly
expressed, usque ad filum acquae. In virtue of this ownership he has a right to the use of
the water flowing over it in its natural current, without diminution or obstruction. But,
strictly speaking, he has no property in the water itself; but a simple use of it, while it
passes along. The consequence of this principle is, that no proprietor has a right to use
the water to the prejudice of another. It is wholly immaterial, whether the party be a
proprietor above or below, in the course of the river; the right being common to all
the proprietors on the river, no one has a right to diminish the quantity which will,
according to the natural current, flow to a proprietor below, or to throw it back upon
a proprietor above. This is the necessary result of the perfect equality of right among
all the proprietors of that, which is common to all. The natural stream, existing by the
bounty of Providence for the benefit of the land through which it flows, is an incident
annexed, by operation of law, to the land itself. When I speak of this common right, I
do not mean to be understood, as holding the doctrine, that there can be no diminution
whatsoever, and no obstruction or impediment whatsoever, by a riparian proprietor, in
the use of the water as it flows; for that would be to deny any valuable use of it. There
may be, and there must be allowed of that, which is common to all, a reasonable use.
The true test of the principle and extent of the use is, whether it is to the injury of the
other proprietors or not.… The maxim is applied, ‘Sic utere tuo, ut non alienum laedas.’
But of a thing, common by nature, there may be an appropriation by general consent
or grant. Mere priority of appropriation of running water, without such consent or
grant, confers no exclusive right. It is not like the case of mere occupancy, where the
first occupant takes by force of his priority of occupancy. That supposes no ownership
already existing, and no right to the use already acquired. But our law annexes to the

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riparian proprietors the right to the use in common, as an incident to the land; and
whoever seeks to found an exclusive use, must establish a rightful appropriation in
some manner known and admitted by the law. Now, this may be, either by a grant from
all the proprietors, whose interest is affected by the particular appropriation, or by a
long exclusive enjoyment, without interruption, which affords a just presumption of
right. By our law, upon principles of public convenience, the term of twenty years of
exclusive uninterrupted enjoyment has been held a conclusive presumption of a grant
or right….
With these principles in view, the general rights of the plaintiffs cannot admit of much
controversy. They are riparian proprietors, and, as such, are entitled to the natural flow
of the river without diminution to their injury. As owners of the lower dam, and the
mills connected therewith, they have no rights beyond those of any other persons, who
might have appropriated that portion of the stream to the use of their mills. That is,
their rights are to be measured by the extent of their actual appropriation and use of
the water for a period, which the law deems a conclusive presumption in favor of rights
of this nature. In their character as mill-owners, they have no title to the flow of the
stream beyond the water actually and legally appropriated to the mills; but in their
character as riparian proprietors, they have annexed to their lands the general flow of
the river, so far as it has not been already acquired by some prior and legally operative
appropriation. No doubt, then, can exist as to the right of the plaintiffs to the surplus
of the natural flow of the stream not yet appropriated. Their rights, as riparian
proprietors, are general; and it is incumbent on the parties, who seek to narrow these
rights, to establish by competent proofs their own title to divert and use the stream.
And this leads me to the consideration of the nature and extent of the rights of the
trench owners. There is no doubt, that in point of law or fact, there may be a right to
water of a very limited nature, and subservient to the more general right of the riparian
proprietors.… But the presumption of an absolute and controlling power over the
whole flow, a continuing power of exclusive appropriation from time to time, in the
riparian proprietor, as his wants or will may influence his choice, would require the
most irresistible facts to support it. Men who build mills, and invest valuable capital in
them, cannot be presumed, without the most conclusive evidence, to give their
deliberate assent to the acceptance of such ruinous conditions. The general
presumption appears to me to be that which is laid down by Mr. Justice Abbott in

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Saunders v. Newman, 1 Barn. & Ald. 258: ‘When a mill has been erected upon a stream
for a long period of time, it gives to the owner a right, that the water shall continue to
flow to and from the mill in the manner in which it has been accustomed to flow during
all that time. The owner is not bound to use the water in the same precise manner, or
to apply it to the same mill; if he were, that would stop all improvements in machinery.
If, indeed, the alterations made from time to time prejudice the right of the lower mill
(i.e. by requiring more water), the case would be different.’
In this view of the matter, the proprietors of Sergeant’s trench are entitled to the use
of so much of the water of the river as has been accustomed to flow through that
trench to and from their mills (whether actually used or necessary for the same mills or
not), during the twenty years last before the institution of this suit, subject only to such
qualifications and limitations, as have been acknowledged or rightfully exercised by the
plaintiffs as riparian proprietors, or as owners of the lower mill-dam, during that period.
But here their right stops; they have no right farther to appropriate any surplus water
not already used by the riparian proprietors, upon the notion, that such water is open
to the first occupiers. That surplus is the inheritance of the riparian proprietors, and
not open to occupancy.
…My opinion accordingly is, that the trench owners have an absolute right to the
quantity of water which has usually flowed therein, without any adverse right on the
plaintiffs to interrupt that flow in dry seasons, when there is a deficiency of water. But
the trench owners have no right to increase that flow; and whatever may be the mills
or uses, to which they may apply it, they are limited to the accustomed quantity, and
may not exceed it…. [I]f there be a deficiency, it must be borne by all parties, as a
common loss, wherever it may fall, according to existing rights … and that the plaintiffs
to this extent are entitled to have their general right established, and an injunction
granted.
It is impracticable for the court to do more, in this posture of the case, than to refer it
to a master to ascertain, as near as may be, and in conformity with the suggestions in
the opinion of the court, the quantity to which the trench owners are entitled, and to
report a suitable mode and arrangement permanently to regulate and adjust the flow of
the water, so as to preserve the rights of all parties.

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… The decree of the court is to be drawn up accordingly; and all further directions are
reserved to the further hearing upon the master’s report, &c. Decree accordingly.
Coffin v. Left Hand Ditch Co.
6 Colo. 443 (1882)
HELM, J.
Appellee, who was plaintiff below, claimed to be the owner of certain water by virtue
of an appropriation thereof from the south fork of the St. Vrain creek. It appears that
such water, after its diversion, is carried by means of a ditch to the James creek, and
thence along the bed of the same to Left Hand creek, where it is again diverted by
lateral ditches and used to irrigate lands adjacent to the last named stream. Appellants
are the owners of lands lying on the margin and in the neighborhood of the St. Vrain
below the mouth of said south fork thereof, and naturally irrigated therefrom.
In 1879 there was not a sufficient quantity of water in the St. Vrain to supply the ditch
of appellee and also irrigate the said lands of appellant. A portion of appellee’s dam
was torn out, and its diversion of water thereby seriously interfered with by appellants.
The action is brought for damages arising from the trespass, and for injunctive relief
to prevent repetitions thereof in the future. … [T]rial was had before a jury…, and
verdict and judgment given for appellee. Such recovery was confined, however, to
damages for injury to the dam alone, and did not extend to those, if any there were,
resulting from the loss of water.
... It is contended by counsel for appellants that the common law principles of riparian
proprietorship prevailed in Colorado until 1876, and that the doctrine of priority of
right to water by priority of appropriation thereof was first recognized and adopted in
the constitution. But we think the latter doctrine has existed from the date of the
earliest appropriations of water within the boundaries of the state. The climate is dry,
and the soil, when moistened only by the usual rainfall, is arid and unproductive; except
in a few favored sections, artificial irrigation for agriculture is an absolute necessity.
Water in the various streams thus acquires a value unknown in moister climates. Instead
of being a mere incident to the soil, it rises, when appropriated, to the dignity of a
distinct usufructuary estate, or right of property. It has always been the policy of the
national, as well as the territorial and state governments, to encourage the diversion

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and use of water in this country for agriculture; and vast expenditures of time and
money have been made in reclaiming and fertilizing by irrigation portions of our
unproductive territory. Houses have been built, and permanent improvements made;
the soil has been cultivated, and thousands of acres have been rendered immensely
valuable, with the understanding that appropriations of water would be protected.
Deny the doctrine of priority or superiority of right by priority of appropriation, and a
great part of the value of all this property is at once destroyed.
… We conclude, then, that the common law doctrine giving the riparian owner a right
to the flow of water in its natural channel upon and over his lands, even though he
makes no beneficial use thereof, is inapplicable to Colorado. Imperative necessity,
unknown to the countries which gave it birth, compels the recognition of another
doctrine in conflict therewith. And we hold that, in the absence of express statutes to
the contrary, the first appropriator of water from a natural stream for a beneficial
purpose has, with the qualifications contained in the constitution, a prior right thereto,
to the extent of such appropriation.
… It is urged, however, that even if the doctrine of priority or superiority of right by
priority of appropriation be conceded, appellee in this case is not benefited thereby.
Appellants claim that they have a better right to the water because their lands lie along
the margin and in the neighborhood of the St. Vrain. They assert that, as against them,
appellee’s diversion of said water to irrigate lands adjacent to Left Hand creek, though
prior in time, is unlawful.
In the absence of legislation to the contrary, we think that the right to water acquired
by priority of appropriation thereof is not in any way dependent upon the locus of its
application to the beneficial use designed. And the disastrous consequences of our
adoption of the rule contended for, forbid our giving such a construction to the statutes
as will concede the same, if they will properly bear a more reasonable and equitable
one.
The doctrine of priority of right by priority of appropriation for agriculture is evoked,
as we have seen, by the imperative necessity for artificial irrigation of the soil. And it
would be an ungenerous and inequitable rule that would deprive one of its benefit
simply because he has, by large expenditure of time and money, carried the water from
one stream over an intervening watershed and cultivated land in the valley of another.

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It might be utterly impossible, owing to the topography of the country, to get water
upon his farm from the adjacent stream; or if possible, it might be impracticable on
account of the distance from the point where the diversion must take place and the
attendant expense; or the quantity of water in such stream might be entirely insufficient
to supply his wants. It sometimes happens that the most fertile soil is found along the
margin or in the neighborhood of the small rivulet, and sandy and barren land beside
the larger stream. To apply the rule contended for would prevent the useful and
profitable cultivation of the productive soil, and sanction the waste of water upon the
more sterile lands. It would have enabled a party to locate upon a stream in 1875, and
destroy the value of thousands of acres, and the improvements thereon, in adjoining
valleys, possessed and cultivated for the preceding decade. Under the principle
contended for, a party owning land ten miles from the stream, but in the valley thereof,
might deprive a prior appropriator of the water diverted therefrom whose lands are
within a thousand yards, but just beyond an intervening divide.
…The judgment of the court below will be affirmed.
Notes and Questions
1. Different Strokes for Different Folks. Why is the rule for control and use of
surface waters different in the Eastern United States than it is in the West? Why
is it different for water in New England than it is for wild animals in (old)
England? Is the “priority of appropriation” rule in Colorado the same as the
“free taking” rule for game in the early American frontier? If not, how and why
does it differ?
One of the important skills of lawyers (and legal scholars) is to identify distinctions
among seemingly analogous fact patterns that could account for courts’
selection of the rules they apply to those facts. So: can we identify some
distinctions in the facts of these two cases that might account for the difference
between, say, the eastern (riparian) rule and the western (priority of
appropriation) rule for water? (Did Justice Helm identify any such distinctions
in Coffin?)
We might examine at least three different grounds for distinguishing these types
of cases from one another. First, the characteristics of the resource itself may be

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different. That may be a relevant basis for distinguishing wild animals from
water; as we will see it may also be a basis for distinguishing both of those
resources from oil and gas. Second, the characteristics of the society in which the
resource is being exploited may be different. As we have already noted, the
interior of the American continent in the 18th century was a very different place
than the English countryside—in terms of its population density and in terms
of the level of development and exploitation of existing natural resources. And
as the Coffin court noted, the quality and distribution of arable soil in the
mountain west makes irrigation an “imperative necessity” to agriculture in a way
“unknown to” the riparian east. Third, the particular uses of the resource may
differ from one social context to another. For example, in New England, where
surface water is plentiful, streams were mainly used non-consumptively to power
industrial plants in the 19th century; in Colorado, where water is scarce, streams
were used primarily for consumptive purposes—mining, farming, and drinking.
See Carol M. Rose, Energy And Efficiency in the Realignment of Common-Law Water
Rights, 19 J. LEG. STUD. 261, 290-93 (1990). Any of these types of distinctions
could justify a change in legal rules from one case to another. Which—if any—
do you think best explain the difference between Tyler and Coffin?
2. Stock Resources. Tyler and Coffin deal with allocation of the right to a share of
the flow of a natural watercourse. But much water use depends not on surface
waters, but on groundwater, extracted by means of wells and pumps. Such
groundwater can behave more like a stock resource than a flow resource;
excessive extraction by any one claimant today threatens the availability of the
resource for all claimants in the future. Indeed, extraction of groundwater—and
even collection of precipitation—can alter the flows of surface channels,
threatening the rights of remote riparians or prior appropriators. For this reason,
some states—particularly in the more arid Western United States—have
enacted comprehensive statutory codes and administrative regulations
allocating water rights. California’s system is among the most complex, layering
early common-law riparian rights with later common-law prior appropriation
rights and a subsequent statutory code administered by a powerful
administrative agency with significant discretion to alter and limit water uses to
respond to changing conditions. The state’s regulatory reach is profound; in
May of 2015 the Water Board responded to serious drought conditions by

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adopting emergency regulations requiring residents to refrain from most
outdoor uses of water and requiring businesses to reduce their potable water
usage by 25%, all on pain of a fine of $500 per day. State Water Resources
Control Bd. Res. No. 2015-0032: To Adopt an Emergency Regulation for
Statewide Water Conservation (May 5, 2015), available at
http://www.waterboards.ca.gov/waterrights/water_issues/programs/drought
/docs/emergency_regulations/rs2015_0032_with_adopted_regs.pdf.
3. Non-Renewable Fugitive Resources. For our next category of fugitive
resource—oil and gas—stock depletion is the standard state of affairs,
exacerbated by the fact that oil stocks do not replenish themselves the way water
stocks do. Should the legal rules we’ve developed in the contexts of wild animals
and water apply to such non-renewable resources?
Briggs v. Southwestern Energy Production Company
224 A.3d 334 (Pa. 2020)
CHIEF JUSTICE SAYLOR
In this appeal by allowance, we consider whether the rule of capture immunizes an
energy developer from liability in trespass, where the developer uses hydraulic
fracturing on the property it owns or leases, and such activities allow it to obtain oil or
gas that migrates from beneath the surface of another person’s land.
I. BACKGROUND
A. The rule of capture
Oil and gas are minerals, and while in place they are considered part of the land. They
differ from coal and other substances with a fixed situs in that they are fugacious in
nature – meaning they tend to seep or flow across property lines beneath the surface
of the earth. Such underground movement is known as “drainage.” Drainage stems
from a physical property of fluids in that they naturally move across a pressure gradient
from high to low pressure. Indeed, the extraction of oil or gas by drilling is based, at
least in part, on creating a low-pressure pathway from the mineral’s subterranean
location to the earth’s surface.

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Oil and gas have thus been described as having a “fugitive and wandering existence,”
Brown v. Vandergrift, 80 Pa. 142, 147 (Pa. 1875), and have been compared to wild animals
which move about from one property to another. See Westmoreland & Cambria Nat. Gas
Co. v. DeWitt, 130 Pa. 235, 249, 18 A. 724, 725 (1889) (“In common with animals, and
unlike other minerals, [oil, gas, and water] have the power and the tendency to escape
without the volition of the owner.”). Accordingly, such minerals are subject to the rule
of capture, which is
[a] fundamental principle of oil-and-gas law holding that there is no
liability for drainage of oil and gas from under the lands of another so
long as there has been no trespass ....
BLACK’S LAW DICTIONARY 1358 (8th ed. 2004)); accord Brown v. Spilman, 155 U.S. 665,
669-70, 15 S. Ct. 245, 247, 39 L.Ed. 304 (1895). 1 A corollary to this rule is that an
aggrieved property owner’s remedy for the loss, through drainage, of subsurface oil or
gas has traditionally been to offset the effects of the developer’s well by drilling his or
her own well, often termed an “offset well.” See Barnard v. Monongahela Gas Co., 216 Pa.
362, 365, 65 A. 801, 803 (1907) (“What then can the neighbor do? Nothing; only go
and do likewise.”).
The reference to “the lands of another” in the above quote does not suggest a
developer may invade the subsurface area of a neighboring property by drilling at an
angle rather than vertically (referred to as slant drilling or slant wells), or by drilling
horizontally beneath the surface. This is because the title holder of a parcel of land
generally owns everything directly beneath the surface. Rather, and as suggested by the
“no trespass” predicate, it refers to the potential for oil and gas to migrate from the
plaintiff’s property to the developer’s land when extracted from a common pool or
reservoir spanning both parcels.
B. Hydraulic fracturing
One of the central questions in this matter involves how these principles apply where
hydraulic fracturing is used to extract oil or gas from subsurface geological formations.

1 The term “capture” is also drawn from an analogy to wild animals. At common law, a person could acquire title

to such an animal by reducing it to possession.

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According to the federal government, hydraulic fracturing is used in “unconventional”
gas production. “Unconventional” reservoirs can cost-effectively produce gas only by
using a special stimulation technique, like hydraulic fracturing .... This is often because
the gas is highly dispersed in the rock, rather than occurring in a concentrated
underground location. United States Environmental Protection Agency (the “EPA”),
The Process of Unconventional Natural Gas Production, https://www.epa.gov/uog/processunconventional-natural-gas-production (viewed Oct. 22, 2019). In terms of how the
technique works, the EPA continues:
Fractures are created by pumping large quantities of fluids at high
pressure down a wellbore and into the target rock formation. Hydraulic
fracturing fluid commonly consists of water, proppant and chemical
additives that open and enlarge fractures within the rock formation.
These fractures can extend several hundred feet away from the wellbore.
The proppants – sand, ceramic pellets or other small incompressible
particles – hold open the newly created fractures.
Id.
After injection, fluid is withdrawn from the well while leaving the proppants in place
to hold the fissures open. This enhances the drainage of oil or gas into the wellbore
where it can be captured.
C. Factual and procedural history of this case
(i) Introduction
The parties presently favor essentially the same rule of law: they both, in substance,
argue that the traditional rule of capture should apply, subject to the common-law
standard for trespass of real property based on physical intrusion onto another’s land.
Each party, moreover, depicts the other as erroneously suggesting that an exception to
this framework should pertain where hydraulic fracturing is used to obtain oil or natural
gas. In particular, the plaintiffs suggest that Southwestern wishes to convert the rule of
capture into a precept whereby energy developers may physically invade the property
of others to capture natural gas so long as they are using hydraulic fracturing. For its
part, Southwestern portrays the plaintiffs and the Superior Court decision from which

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it appeals as positing that the rule of capture simply does not apply when hydraulic
fracturing is used for energy development on one’s own land.
(ii) Undisputed facts
Adam, Paula, Joshua, and Sarah Briggs (“Plaintiffs”) own a parcel of real estate
consisting of approximately eleven acres in Harford Township, Susquehanna County.
During all relevant times, Plaintiffs have not leased their property to any entity for
natural gas production. Plaintiffs’ property is adjacent to a tract of land leased by
Appellant Southwestern Energy Production Company for natural gas extraction (the
“Production Parcel”). Southwestern maintains wellbores on the Production Parcel and
has used hydraulic fracturing to boost natural gas extraction from the Marcellus Shale
formation through those wellbores.
(iii) Proceedings before the Court of Common Pleas
In November 2015, Plaintiffs commenced an action against Southwestern in which
they stated two causes of action, trespass and conversion. In Count I (the trespass
claim), Plaintiffs averred that Southwestern’s actions constituted a trespass which
deprived Plaintiffs of the value of the “natural gas extracted from under their land[.]”In
Count II (the conversion claim), Plaintiffs alleged that, through its drilling activities,
Southwestern had deprived Plaintiffs of their possession and use of the natural gas and
converted it to Southwestern’s use. Notably, Plaintiffs did not expressly allege that
Southwestern’s activities had caused a physical intrusion into Plaintiffs’ property.
Southwestern filed a responsive pleading denying it had extracted gas from Plaintiffs’
land and denying it had trespassed upon Plaintiffs’ property or converted their natural
gas. Southwestern specifically denied it had drilled underneath Plaintiffs’ property and
stated, further, that it had “only drilled for oil, gas or minerals from under properties
for which [Southwestern] has leases.”
After the parties engaged in discovery, Southwestern filed a motion for summary
judgment and a supporting brief in which it argued that it did not physically invade
Plaintiffs’ property and, to the extent that it had recovered any gas through drainage
from that property to the Production Parcel, again, it was entitled to judgment as a
matter of law under the rule of capture. Plaintiffs … filed their own motion for partial
summary judgment as to liability, asserting that courts should not apply the rule of

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capture in circumstances where gas has been captured through the use of hydraulic
fracturing.
By order and opinion, the common pleas court granted Southwestern’s motion for
summary judgment, and denied Plaintiffs’ motion for partial summary judgment….
Plaintiffs filed a notice of appeal, … in which they raised a single issue: whether the
trial court erred in determining that the rule of capture precluded liability under theories
of trespass and conversion, where Southwestern had used hydraulic fracturing to
obtain natural gas which originated under Plaintiffs’ land.
(iv) Proceedings before the Superior Court
A two-judge panel of the Superior Court reversed in a published decision.…The court
noted, however, that the record did not indicate whether Southwestern’s operations
had resulted in a subsurface intrusion into Plaintiffs’ property, going so far as to express
that “[t]here does not appear to be any evidence, or even an estimate, as to how far the
subsurface fractures extend from each of the wellbore [sic] on Southwestern’s lease.” ...
Accordingly, the panel reversed the trial court’s order and remanded for additional
factual development.
…[T]he Superior Court panel’s analysis can reasonably be viewed as embodying two
distinct, but interrelated, holdings: first, that whenever “artificial means,” such as
hydraulic fracturing, are used to stimulate the flow of underground resources, the rule
of capture does not apply because drainage does not occur through the operation of
“natural agencies,” and second, that in this particular case summary judgment was
premature in light of certain unspecified allegations relating to cross-boundary
intrusions into Plaintiffs’ land.
II. PRELIMINARY DISCUSSION
A. Trespass
In Pennsylvania, a trespass occurs when a person who is not privileged to do so
intrudes upon land in possession of another, whether willfully or by mistake. This
conception of trespass is not disputed by the parties. Nevertheless, meaningful
appellate review at this stage is not straightforward for multiple reasons.

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B. Pleading deficiencies, decisional irregularities, and issue limitation

… Plaintiffs did not assert … in their pleadings … that Southwestern had effectuated
a physical intrusion onto (or into) their property. The Superior Court panel recognized
this aspect of Plaintiffs’ litigation position, but raised and resolved, sua sponte, an issue
based on the opposite premise, that Plaintiffs had alleged a physical intrusion. Then,
stating that there was no record evidence that such an intrusion had taken place, and
without referencing any specific aspect of the pleadings, the panel indicated that the
Complaint’s allegations were alone sufficient to raise a genuine issue of fact so as to
preclude summary judgment.
This is in some tension with the governing summary-judgment standard which
generally centers on whether the adverse party has produced enough evidence to raise
a question of material fact as to each element of the claim.
… [M]oreover, Southwestern articulated the issue for this Court’s consideration in
terms of whether the rule of capture should be applied in the same manner it has always
been applied: to allow for the capture of oil and gas which merely drains from an
adjacent property after the completion of a well using hydraulic fracturing solely within
the developer’s property. This is an issue, again, on which the parties do not presently
diverge: they both answer in the affirmative. Their disagreement is limited to whether
any physical intrusion has taken place – a question that is not fairly subsumed within
the issue framed for our review.
III. ANALYSIS
The issue as stated by Southwestern should nonetheless be resolved for purposes of
this dispute – and to provide guidance to the bench and bar – because at least part of
the Superior Court’s opinion can reasonably be construed as setting forth a per se rule
foreclosing application of the rule of capture in hydraulic fracturing scenarios, and that
rule rests on faulty assumptions. In particular, and most saliently, the panel appears to
have indicated that one litmus for whether the rule of capture applies is whether the
defendant’s gas extraction methodology relies only on the natural drainage of oil or gas
within a conventional pool or reservoir, or whether instead those methods utilize some
means of artificial stimulation to induce drainage.

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The Superior Court’s position in this respect logically rests on one of two grounds: (a)
the act of artificially stimulating the cross-boundary flow through the use of hydraulic
fracturing solely on the developer’s property in and of itself renders the rule of capture
inapplicable; or (b) as Plaintiffs argue, any time natural gas migrates across property
lines resulting, directly or indirectly, from hydraulic fracturing, a physical intrusion into
the plaintiff’s property must necessarily have taken place.
As to the first proposition, all drilling for subsurface fugacious minerals involves the
artificial stimulation of the flow of that substance. The mere act of drilling interferes
with nature and stimulates the flow of the minerals toward artificially-created low
pressure areas, most notably, the wellbore. This Court has held that the rule of capture
applies although the driller uses further artificial means, such as a pump, to enhance
production from a source common to it and the plaintiff – so long as no physical
invasion of the plaintiff’s land occurs. See Jones, 194 Pa. at 384, 44 A. at 1075 (indicating
that, absent physical intrusion, a developer may use “all the skill and invention of which
a man is capable” to appropriate resources from under his own property). There is no
reason why this precept should apply any differently to hydraulic fracturing conducted
solely within the driller’s property.
… Accordingly, we reject as a matter of law the concept that the rule of capture is
inapplicable to drilling and hydraulic fracturing that occurs entirely within the
developer’s property solely because drainage of natural resources takes place as the
direct or indirect result of hydraulic fracturing, or that such drainage stems from less
“natural” means than conventional drainage.
The second predicate – that drainage from under a plaintiff’s parcel can only occur if
the driller first physically invades that property – does not lend itself to a purely legal
resolution.… By design, hydraulic fracturing creates fissures in rock strata which store
hydrocarbons within their porous structure. On the state of the present record, this
alone does not establish that a physical intrusion into a neighboring property is
necessary for such action to result in drainage from that property. We cannot rule out,
for example, that a fissure created through the injection of hydraulic fluid entirely
within the developer’s property may create a sufficient pressure gradient to induce the
drainage of hydrocarbons from the relevant stratum of rock underneath an adjacent
parcel even absent physical intrusion. Nor can we discount the possibility that a fissure

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created within the developer’s property may communicate with other, pre-existing
fissures that reach across property lines. Whether these, or any other non-invasive
means of drainage occasioned by hydraulic fracturing, are physically possible in a given
case is a factual question to be established through expert evidence.
The Superior Court panel appears to have assumed, if implicitly, that such occurrences
were impossible – but, again, there is no basis in the record for such an assumption. In
all events, a plaintiff asserting a cause of action “must be able to prove all the elements
of his case by proper evidentiary standards.” Papieves v. Lawrence, 437 Pa. 373, 379, 263
A.2d 118, 121 (1970). Thus, to the extent this lawsuit goes forward on Plaintiffs’ new,
physical-intrusion theory, Plaintiffs will bear the burden of demonstrating that such an
intrusion took place.
We have not overlooked Southwestern’s argument that trespass should not be viewed
as occurring miles beneath the surface of the earth. As Southwestern observes, in some
jurisdictions traditional concepts of physical trespass have been relaxed where activities
take place miles below the surface and the plaintiff is not deprived of the use and
enjoyment of the land. Southwestern posits that this is analogous to the principle that
trespass does not arise high above the surface. See Causby, 328 U.S. at 260-61, 66 S. Ct.
at 1065. It emphasizes that other socially useful endeavors – such as carbon
sequestration projects, energy storage wells, and waste disposal sites – could be
jeopardized if the rule against trespass were to be enforced in an unduly stringent
manner where deep subsurface activities are concerned.
Without speaking to the merit of such a claim, we note that this Court is limited to the
issue as it was framed in the petition for allowance of appeal, and Southwestern has
not articulated any reason an exception should be made in the present dispute. Thus,
to the extent Southwestern argues it should be permitted to escape liability even if it is
ultimately found to have effectuated a physical intrusion into Plaintiff’s subsurface
property, its claim in this regard has not been preserved for review by this Court.
This brings us to the question of whether the lawsuit can, indeed, progress on a theory
of trespass by physical intrusion, and by extension, to the question of the appropriate
mandate from this Court. Ordinarily, and for the reasons explained, we would deem
any such contention to be absent from the litigation, as it does not appear to have been
mentioned in Plaintiffs’ pleadings or argued as a basis to deny Southwestern’s motion

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for summary judgment. The Superior Court, however, evidently believed there was
some legitimate basis to dispose of the appeal on the presupposition that Southwestern
was alleged to have physically invaded Plaintiffs’ subsurface property with hydraulic
fracturing liquid and proppants; and, as noted, Southwestern has not challenged the
intermediate court’s action in this respect.
That being the case, … we find that the appropriate action at this juncture is to vacate
the Superior Court’s order and remand for reconsideration in light of the guidance
provided in this opinion, and the certified record on appeal….
JUSTICE DOUGHERTY[, concurring in part and dissenting in part:]
I join the majority’s holding that the rule of capture remains effective in Pennsylvania
to protect a developer from trespass liability where there has been no physical invasion
of another’s property. In so holding, the majority correctly recognizes that if there is
such a physical invasion the rule of capture will not insulate a developer engaged in
hydraulic fracturing from trespass liability. As I agree with both propositions, I also
agree the matter should be remanded for further proceedings involving a specific
inquiry into a physical invasion. I respectfully dissent, however, from the notion that
this question must be determined by the Superior Court on the present record….
Given the state of the record, which was apparently not complete at the time the trial
court erroneously entered summary judgment, I would remand the matter to that court
for further proceedings, including the completion of discovery on the factual question
of physical invasion, and trial thereon as necessary.
Notes and Questions
1. Questions of Fact; Questions of Law. Do Chief Justice Saylor and Justice
Dougherty disagree on the content of the legal rules in Pennsylvania regarding
the ownership of oil and gas? Do they disagree on the law of trespass as it
applies to mineral extraction? If the answer to both these questions is no, what
is their disagreement about?
In considering these questions, ask yourself what actually happened to the Briggses
and their land in this case. Are you confident you can answer that question? If
not, it may be difficult to say whether they should prevail on their trespass or
conversion claims. This is not because the legal rule is unclear; rather it is

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because it may be unclear whether the rule is satisfied given the facts in the record.
This distinction between legal issues and factual issues is central to the practice
of law, and you will surely learn more about it in your civil procedure class. How
does the court’s resolution of the legal issues in the case affect the factual questions
that the parties must answer in litigation? How should they go about answering
those questions? What is likely to happen to the Briggses’ claim on remand, and
what would have happened if Justice Dougherty’s opinion had instead carried a
majority of the court? (Hint: The answer to this last question has less to do with
the law of property and more to do with the law of civil procedure.)
2. I Drink Your Milkshake. * Briggs reaffirms a principle of long standing in oil
and gas law. Imagine Alice and Bob are neighboring landowners in an oil-rich
region. Alice drills an oil well at an angle, such that the wellhead is on Alice’s
land, but the bottom of the wellbore, from which the pipe draws oil, is under
Bob’s land. Bob sues Alice to enjoin the continued operation of the well and to
recover the value of the oil already extracted. Under the rule of capture and the
definition of trespass as discussed in Briggs, what result and why? See 1 SUMMERS
OIL AND GAS § 2:3 (3d ed.) (“[I]f a well deviates from the vertical and produces
oil or gas from under the surface of another landowner, that is a trespass for
which the adjacent owner is entitled to damages, an accounting and
injunction.”). Why might it be acceptable to use a well on your land to draw the
oil from under your neighbor’s land, but not to drill the bottom of your well
under the surface owned by your neighbor to extract the very same oil? Does
the distinction have any practical effect? Does the advent of fracking technology
change your answer?
3. Incentives Again. Given that any landowner can lawfully extract all the oil and
gas under not only her land, but potentially under the land of any neighboring
landowners who occupy the surface over the same geologic formation, what
incentive does each landowner over a large formation have with respect to that
underlying oil and gas? In early-20th-century California, we found out:

* THERE WILL BE BLOOD (Paramount Vantage/Miramax Films 2007).

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Signal Hill, California, c. 1923. Source: U.S. Library of Congress PPOC,
http://www.loc.gov/pictures/resource/pan.6a17401/

This is an image of Signal Hill, California, one of the richest oil fields ever
discovered, around the peak of its productivity in 1923. Why do you think there
are so many oil derricks in such close proximity to each other? Do you think
this quantity and density of wells are necessary to extract the oil underground?
If not, isn’t this duplication of investment and effort wasteful? Couldn’t the oil
be just as easily extracted with one (or at least far fewer) wells? If so, why did
the people of Signal Hill build so many? Could property law be playing a role?
4. The Tragedy of the Commons. The race to drill in Signal Hill evokes one of
the key set-pieces invoked by economists to justify private property rights: the
tragedy of the commons, famously described in an essay of the same name:
“Picture a pasture open to all. It is to be expected that each
herdsman will try to keep as many cattle as possible on the
commons. … As a rational being, each herdsman seeks to
maximize his gain. Explicitly or implicitly, more or less
consciously, he asks, "What is the utility to me of adding one
more animal to my herd?" …[T]he herdsman receives all the
proceeds from the sale of the additional animal…. Since,
however, the effects of overgrazing are shared by all the
herdsmen, … any particular decision-making herdsman [bears]
only a fraction of [the negative effects of his additional animal].…
[T]he rational herdsman concludes that the only sensible course

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for him to pursue is to add another animal to his herd. And
another; and another.... But this is the conclusion reached by each
and every rational herdsman sharing a commons. Therein is the
tragedy. Each man is locked into a system that compels him to
increase his herd without limit—in a world that is limited.”
Garrett Hardin, The Tragedy of the Commons, 162 SCIENCE 1243 (1968).
The negative effects of each additional animal, which are suffered by all the
common owners collectively, are what economists refer to as an externality.
Some of the things we do with the resources we control can make others better
or worse off. If I divert a stream to my mine, your crops may wither; if I plant
a rosebush in my garden, you may enjoy the smell of my flowers on your way
to work each day. The key point to keep in mind about these externalities caused
by my conduct is that I care about them less than you do. I am better off if the stream
I diverted makes my mine more productive; the fact that the diversion causes
your crops to die doesn’t affect me directly, or perhaps at all.
Externalities can lead to the kind of misallocation of investment and effort we
see in Signal Hill or the overcrowded pasture: in deciding whether to engage in
an activity, I am unlikely to take sufficient account of the effects of my activity
on others. This, in turn, can lead to bad aggregate outcomes: I may impose large
costs on all my neighbors by engaging in an activity that is of only moderate
benefit to me, or I may refrain from an activity that would confer large benefits
on many people at only moderate cost to myself. The trouble is that I have no
incentive to weigh the cost of your dying crops, your starving animals, or your
dried-up well.
The economist’s solution to this problem is to internalize the externalities that result
from resource use. That is, to find some way to make the effects of a person’s
actions hit that person in the pocketbook, for good or for ill. One way to
internalize the externalities that generate the tragedy of the commons is to
convert the commons to private ownership. Knowing that pasturing too many
animals today would leave nothing for his animals to eat tomorrow, a rational
owner of the pasture would calibrate the number of animals he keeps to maximize
their number today while ensuring a stable supply of fodder into the future.

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Indeed, Professor Harold Demsetz famously argued that property rights arise
precisely when the benefits of exploiting a scarce resource have increased in
value (due to increasing demand or decreasing supply) to the point where the
right to control that value would be a sufficient incentive to undertake the costs
of responsibly managing the resource (i.e., where an owner would be willing to
internalize the externalities of using the resource). See Harold Demsetz, Toward
a Theory of Property Rights, 57 AM. ECON. REV. 347 (1967).
So goes the theory, at any rate. But this theory leaves open a host of practical
questions, primarily about allocation of these theoretically attractive private
property rights. Does it make the most sense to have one owner of the whole
pasture? Should the pasture be divided into parcels, and if so, how many and
how should they be assigned? What if dividing the pasture into smaller parcels
leaves each owner with insufficient space to pasture animals? If there is just
one owner, how are we supposed to choose the lucky winner? And once the
winner is chosen, what is everyone else supposed to do? Finally, who has the
authority to decide all these questions?
We can apply these questions to our oil and gas example. If you were trying to
avoid overexploitation of the oil field at Signal Hill in 1923, would you assign
private property rights over the entire oil field? How? To whom? Is there an
alternative to private property rights that can avoid inefficient overexploitation?
Might the experience of other societies whose territory includes valuable fossil
fuel reserves be instructive? See Helge Ryggvik, A Short History of the Norwegian
Oil Industry: From Protected National Champions to Internationally Competitive
Multinationals, 89 BUSINESS HISTORY REVIEW 3 (2015).
5. Hardin’s Problematic Legacy. Garrett Hardin’s metaphor of the
overburdened pasture was one piece of a broader worldview expressed in his
writings that strikes many today as deeply problematic. Like many mid-20thcentury residents of rich countries, Hardin was concerned about a supposed
“population bomb”: a postwar trend of higher population growth in poorer
countries relative to richer countries. Some predicted that this population
growth would generate levels of consumption that would overburden the

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earth’s resources (particularly its capacity to produce food), leading to
exhaustion of those resources and widespread pollution, famine, and poverty.
Hardin’s reaction to those predictions was to see developing nations as
adversaries in a global competition for resources, and to urge national and even
ethnic solidarity within rich countries to resist the developing world’s demands
for access to those resources. Though few read the full essay today, The Tragedy
of the Commons is ultimately an argument in favor of compulsory restraints on
procreation. Its final sections equate “breeding” with bank robbery, and
conclude: “The only way we can preserve and nurture other and more precious
freedoms is by relinquishing the freedom to breed, and that very soon.” Hardin,
supra, at 1248. Hardin thought rich countries should refuse to grant foreign aid,
limit immigration from poor countries, impose compulsory measures to reduce
fertility rates, and harden their hearts against any moral pangs arising from the
resulting suffering of the world’s poor—policies that went hand-in-hand with
his view of resource competition as the struggle of rich societies against poor
societies for survival. In his own words:
“Metaphorically each rich nation can be seen as a lifeboat full of
comparatively rich people. In the ocean outside each lifeboat
swim the poor of the world, who would like to get in, or at least
to share some of the wealth. What should the lifeboat passengers
do?... Suppose we decide to preserve our small safety factor and
admit no more to the lifeboat. Our survival is then possible
although we shall have to be constantly on guard against boarding
parties.”
Garrett Hardin, Lifeboat Ethics, PSYCHOLOGY TODAY (Sept. 1974).
Today, many critics note that Hardin’s arguments smack of eugenics and
imperialism. In his non-academic writings, Hardin was outspoken in his
opposition to ethnic diversity and his support of restricting non-European
immigration to the United States, and the Southern Poverty Law Center
identifies him as a white nationalist extremist. Southern Poverty Law Center,
Extremist Files: Garrett Hardin, https://www.splcenter.org/fightinghate/extremist-files/individual/garrett-hardin. One critic rejects Hardin’s

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argument about the tragedy of the commons as a product of his chauvinist
politics: “[R]acist, eugenicist, nativist and Islamophobe... [h]is writings and
political activism helped inspire the anti-immigrant hatred spilling across
America today…. Hardin wasn’t making an informed scientific case. Instead, he
was using concerns about environmental scarcity to justify racial discrimination.”
Matto Mildenberger, The Tragedy of The Tragedy of the Commons, SCIENTIFIC
AMERICAN: VOICES (April 23, 2019).
Does the fact that Hardin held deplorable social and political views detract from
the force of his arguments about resource management? Your answer may
depend on whether you believe the two are related—whether his solutions to
the problem of stewarding the Earth’s scarce resources were really just a means
to the particular (and contestable) ends contemplated by his political views.
There is a plausible argument that they were: that his theoretical model of
overconsumption in a commons is an abstraction of his concern that growing
resource consumption by developing Latin American, Asian, and African
societies posed a threat to the ability of rich European and North American
societies to maintain the far higher per capita levels of consumption they enjoy.
In this view, Hardin’s proposed solution—giving some privileged consumers
the power to exclude others—seems conveniently designed to justify rich
countries’ privileged consumption levels. The very term “population bomb,”
popularized in a bestselling book published in the same year as The Tragedy of the
Commons (PAUL R. EHRLICH, THE POPULATION BOMB (1968)), reflects a view
of the developing world as a deadly threat, and implies that the solution lies, not
in reduced consumption by rich countries, or in reallocation of resources more
generally, but in limiting the number of competitors for scarce resources.
This view has had serious world-historical consequences. Over the second half
of the 20th century, population control was enthusiastically promoted by
Western countries, by philanthropic organizations such as the Rockefeller
Foundation and the Ford Foundation, and by the United Nations. The
governments of developing countries such as India and China—often with the
support and financial encouragement of Western-led institutions such as the
World Bank—implemented decades-long programs of incentivized or
compulsory sterilization and abortion—with mixed results for population

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growth, and at great cost. See generally MATTHEW CONNELLY, FATAL
MISCONCEPTION: THE STRUGGLE TO CONTROL WORLD POPULATION (2008).
But as it turned out, Hardin and the other doomsayers were wrong in their
predictions of global famine and resource collapse. Technological advances in
food production and pollution control, as well as social and political changes
such as conservation programs, democratization, and reductions in armed
conflict, ultimately put the lie to many of their direst predictions. Food
insecurity and extreme poverty have steadily declined worldwide since the 1960s.
Population growth rates have also steadily declined worldwide, notably in
inverse correlation with increases in income and in women’s educational
attainment. But even today, similar fears and analogous political concerns
pervade debates over problems of great importance—particularly climate
change—in which resource allocation and stewardship play a crucial role.
6. The Comedy of the Commons. Whether or not one finds Hardin’s arguments
morally repugnant, his analyses have also been criticized as bad social science.
It turns out that the free-for-all common pasture of Hardin’s essay lacks a
historical antecedent: medieval English commons were actually a form of
community resource management based on ancient rules and customs that
served to preserve the commons for future generations. See Susan Jane Buck
Cox, No Tragedy on the Commons, 7 ENVIRONMENTAL ETHICS 49 (1985). And
such community management arrangements are not unusual.
Some of the most groundbreaking work in economics in the past half-century—
such as the Nobel Prize-winning work of Dr. Elinor Ostrom—has
demonstrated how community resource management actually works
surprisingly well in contexts as diverse as Swiss mountain farms, Filipino
irrigation canals, and Turkish fisheries. See generally ELINOR OSTROM,
GOVERNING THE COMMONS (1990). Indeed, some resources—infrastructure
such as roads and waterways, recreational facilities such as parks and beaches,
and social spaces such as public squares—may have characteristics of a “comic”
commons in that the more people use them, the more valuable they become (at
least within a finite community). See generally, e.g., Carol Rose, The Comedy of the
Commons: Commerce, Custom, and Inherently Public Property, 53 U. CHI. L. REV. 711

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(1986). We will revisit these ideas when we encounter the public trust doctrine
in our unit on Easements.
Given the practical problems of allocation raised by efforts to privatize
resources, and the availability of alternative management schemes for at least
some such resources, we might well question whether the absence of property
rights over scarce resources necessarily results in tragedy. In any case, we ought
to be skeptical of the argument that the tragedy of the commons must affect all
resources, in all societies, at all times.
7. Are the doctrines we have studied regarding allocation of fugitive resources
property-based or commons-based? Take, for example, the riparian doctrine of
reasonable use: can riparian owners take as much of the waters flowing past
their land as they want, whenever they wish? Is there any middle ground
between the “sole and despotic dominion” of Blackstone’s private property and
the tragic spiraling waste of Hardin’s unregulated pasture? If so, how does the
law decide who gets what?
What about the prior appropriation rule governing water rights in western
states? Is it an instance of law stepping in to prevent a tragedy of the commons?
That is certainly one conventional interpretation of the rule. But Professor
David Schorr recently argued that early settlers in Colorado had informally
worked out relatively egalitarian water allocation arrangements, which the Coffin
court was merely protecting against destabilizing intrusions by new arrivals and
powerful corporate interests. See generally DAVID SCHORR, THE COLORADO
DOCTRINE (2012). Which makes more sense to you: that the Coffin court was
setting economic policy to avoid overuse of scarce water, or that it was
protecting the past investments and future expectations of the state’s most
established citizens? If you were a newly arrived farmer in Colorado when Coffin
was announced, how would you react to the opinion?

Part II: Possession
We now embark on our investigation of the ways in which the law protects owners in
their possession of property. We begin with an overview of the historical system of
claims and remedies that common-law courts have devised to enforce this protection:
the property torts (and analogous crimes). We then turn to the most basic factual
scenario in which such claims are brought: where the property of one person finds
itself in the possession of another either by being lost and found, or by being stolen (or
both). We will next see how even wrongful possession can become lawful ownership
(or “title”) through the doctrine of adverse possession. Finally, we will note two types
of factual scenarios that complicate the rules governing the possessory right: first,
where owners intentionally part with either possession or the right to possession (as in
bailments and liens); and second, where a third party comes into possession by
purchasing property from a seller who, unbeknownst to the buyer, lacked legal
authority to sell it (the good-faith purchaser).

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A. Real Property
The name of the most familiar tort protecting real property, trespass, was originally
the name of an entire family of actions that first emerged in the 12th and 13th centuries.
A plaintiff would commence his case by going to the royal Chancery and purchasing a
writ commanding the defendant to come before the courts and explain why he had
done such-and-such a thing against the plaintiff’s rights. The Latin phrases used by the
Chancery clerks who filled out the writs—and which the royal courts insisted on when
hearing a case—came to define individual forms of action.
One of the earliest such formulaic phrases, and one with one of the longest careers in
the common law, was trespass quare clausum fregit (literally, “why he broke the close,”
and often abbreviated to “trespass q.c.f.”). The gist of the action was that the defendant,
wrongfully, with force and arms (in Latin, vi et armis) and against the King’s peace, had
broken into the plaintiff’s enclosed lands and caused injury. As in a trespass action for
intentional battery, a plaintiff bringing an action for trespass q.c.f. could obtain money
damages to the extent of his injuries. Trespass q.c.f. was the natural cause of action for
damaging the plaintiff’s crops or destroying his buildings.
Another early formula, trespass de ejectione firmae (literally, “of ejection from his term,”
and often simply “ejectment”), protected a lessee against being wrongfully evicted
from his lands by an intruder. To the extent that the medieval legal mind made such a
distinction, ejectment protected not against injury as such but against disposession; by
the sixteenth century, the common-law courts would put a victorious plaintiff back in
possession. This development made ejectment a potentially attractive way to litigate
competing claims to land—in modern terms, to “try title.” Among other things,
ejectment (like the other trespass writs) led to a trial before a jury; a defendant sued
under an older “writ of right” could elect trial by battle. There was only one problem:
ejectment was only available to lessees. The result was one of the great legal fictions of
the common law: the fictitious lessee.
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When two parties wished to try the title to a piece of land, one of them
leased it to an imaginary person (John Doe) and the other similarly leased
to another (William Styles). One lessee ejects the other (this will be all
fiction), and in order to try the rights of the lessees the court has to enter
into the question of the rights of the lessors.

THEODORE F.T. PLUCKNETT, A CONCISE HISTORY OF THE COMMON LAW 374 (5th
ed. 1956). This fictional use of ejectment crossed the Atlantic and survived in the
captions of famous cases like Johnson & Graham’s Lessee v. M’Intosh, 21 U.S. 543 (1823)
and Martin v. Hunter’s Lessee, 14 U.S. 304 (1816). There were no actual lessees in these
cases; they were simply fictitious parties required by the formula of ejectment.
Today, the distinctions between trespass (q.c.f.) and ejectment are far less significant
but not gone entirely. Courts can generally reach any legal issues necessary to resolve a
case, regardless of the plaintiff’s initial choice of cause of action, and they have far more
freedom to select appropriate legal and equitable remedies, such as money damages for
injuries to land or lost income from being out of possession, injunctions to order a
defendant to cease trespassing or execute a conveyance to the plaintiff, or declaratory
judgments about the state of title.
One remaining hole in the common-law system was that both trespass and
ejectment required some interference with possession, but there are many cases of
disputed title in which the parties are civilized enough not to be constantly elbowing
each other off the land. The action to quiet title provides a remedy here; it is brought
by a plaintiff objecting that another’s claims amount to a “cloud” on her title. Other
claimants must either defend and prove their competing title or be estopped from
asserting them. Quiet title, for example, is typically the appropriate cause of action to
establish that one has acquired title to land through adverse possession, or that an
easement has been abandoned through non-use, or that a deed sitting in the land
records is void as a forgery. Although frequently quiet title actions are brought in
personam against specific claimants, state statutes can authorize in rem quiet title actions
that extinguish the rights of all parties, known and unknown, unless they appear to
defend their claims. See Arndt v. Griggs, 134 U.S. 316, 327 (1890) (“[A] State has power
by statute to provide for the adjudication of titles to real estate within its limits as
against non-residents who are brought into court only by publication … .”). Particularly
in view of the long-standing “situs rule” giving state courts’ exclusive jurisdiction over

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land located within their states, the in rem quiet title action probably survives the
Supreme Court’s 20th-century Due Process revolution.
Originally, the assize of nuisance protected plaintiffs’ rights to use land they did not
themselves own (such as a right to pasture cows on another’s land, much like a modern
easement) or to be free from some specific harms caused by a neighbor (such as
straying cows). In the fourteenth century, plaintiffs began to be able to use writs of
trespass to allege a nuisance without needing to plead that the defendant had acted vi
et armis, and this new formula developed into a general action for what we would today
recognize as nuisances: unreasonable interferences with the use and enjoyment of land.
(Nuisance was thus an “action on the case”; it belonged to the same branch of nonforcible trespasses as the one from which the modern tort of negligence developed.)
In keeping with its origins in actions “on the case,” nuisance has become an extremely
versatile cause of action, encompassing a variety of injuries to interests in real property
and a variety of potential remedies for those injuries.
Trespass is also a crime, but it is a surprisingly mild one. Vermont’s basic trespass
offense is typical:
A person shall be imprisoned for not more than three months or fined
not more than $500.00, or both, if, without legal authority or the consent
of the person in lawful possession, he or she enters or remains on any
land or in any place as to which notice against trespass is given by:
(A) actual communication by the person in lawful possession or
his or her agent or by a law enforcement officer acting on behalf
of such person or his or her agent;
(B) signs or placards so designed and situated as to give
reasonable notice …
VT. STAT. tit. 13, § 3705. Many states’ laws contain exceptions relaxing the notice
requirement in specified cases where the lack of permission ought to be obvious in
context. See, e.g., MD. CODE ANN., CRIM. LAW § 6-408 (making trespass a crime even
without specific notice not to enter if the trespass is committed “for the purpose of
invading the privacy of an occupant of a building or enclosure located on the property
by looking into a window, door, or other opening.”).

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Given the harshness of civil trespass remedies, as in Jacque, what explains the leniency
of criminal trespass law? In many states, this mild baseline is supplemented with more
severe penalties for certain sorts of trespasses. New York, for example, treats criminal
trespass (ordinarily a violation) as a class B misdemeanor when it involves entry onto
fenced land, a school or children’s overnight camp, a public housing project, or a
railroad yard. N.Y. PENAL L. § 140.10. Are these principled attempts to distinguish
among trespasses, or special favors for particular landowners?

B. Personal Property
One of the early variants of writs for forcible trespasses, trespass de bonis asportatis
(literally, “of taking away goods,” and often abbreviated to “trespass d.b.a”) was
available when the defendant carried away the plaintiff’s property, and its remedy was
damages. But beyond this simple core, the personal property actions were a confused
mess that defies easy description and took many centuries to clean up. The hard part
was to determine just what kinds of facts ought to entitle a plaintiff to recover when
he could not allege a taking from his possession, perhaps because he had voluntarily
parted with possession (e.g. in a bailment, which is a temporary, voluntary transfer of
possession of personal property) or perhaps because the defendant had not taken them
(e.g. for found property).
One approach was the older writ of detinue, which was available against a bailee (the
party who receives possession in a bailment) who “detained” the goods from the
plaintiff bailor. The courts extended detinue so that it ran against other parties (at first
the executor of the estate of a deceased bailee, and then anyone) as long as there had
been an initial bailment. But since a defendant could defeat detinue by disproving the
allegations in the writ, detinue was really only safe when the plaintiff could trace with
confidence the chain from his hands to the defendant’s. As a result, detinue “on a
bailment” was gradually supplanted by detinue “sur trover” (literally, “upon finding”):
the plaintiff alleged that he had lost the property and the defendant had found it but
refused to return it. The defendant could show that he had the property rightfully (e.g.
through a sale tracing back to the plaintiff), but otherwise “lost and found” was a
conveniently broad formula that could cover actual cases of missing property,
bailments gone wrong, and even cases of suspected theft. All the plaintiff needed to

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show was that the property was his and that the defendant now had it. Even so, detinue
in its trover variation still was frequently unsatisfactory:
A praecipe action [the general name of a category of writs including
detinue] was barred by performance, even imperfect performance, and
so in detinue damages could not be awarded if the goods were restored.
The bailee who starved a horse to death, or who rode it further than
agreed, or who returned other goods in a damaged state, was not liable
in detinue. The plaintiff in detinue could not count on a bailment or loss
of the thing demanded if it was no longer the same thing as he had bailed
or lost, as where it had been made part of something else or fashioned
into something new. And on the same principle, it was arguable that he
could not allege a detaining of something which no longer existed at all.
J.H. BAKER, AN INTRODUCTION TO ENGLISH LEGAL HISTORY 394 (4th ed. 2007).
The solution lay, yet again, in trespass. The road to reform is paved with legal fictions.
The royal courts had no difficulty treating outright theft as satisfying the requirement
of trespass d.b.a that the taking be forcible. But plaintiffs soon started pleading claims
of trespass d.b.a for injuries to horses against defendants named Smith, and claims for
the forcible chopping up of lumber against defendants described as carpenters. These
were garden-variety contract actions (for defectively shoeing a horse or for botching a
construction job)—or would have been, if the common law had had an effective form
of action for breach of contract. It didn’t, and so plaintiffs who could stretched the
facts to fit within trespass d.b.a. The royal courts solved this particular problem around
1350 by abandoning the need to plead vi et armis in trespass, as long as the plaintiff
could set forth in more detail the special facts entitling him to recover. This was the
origin of actions on the case, mentioned above; it had the effect of kickstarting a burst
of creative experimentation with new variation of trespass.
One approach, reflecting bailments’ place on the border between property and contract,
was to plead that the defendant had negligently or deceitfully violated a promise to
keep the goods safe. Another was to plead that a bailee had intentionally converted
goods to his own use—as with a bailee who drinks a bottle of wine or spends the silver
coins in a strongbox. This latter idea had staying power; by the 16th century, trespass
on the case for conversion was regularly used against bailees. Then history repeated

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itself: just as detinue was extended from bailees to third parties by alleging the fictitious
finding called trover, so was conversion. A plaintiff could even plead that he had “lost”
his ship and that the defendant had “found” it in London. The final stage in
conversion’s triumph was to treat a wrongful withholding itself—the old “detinue”—
as a form of conversion to the defendant’s own use. And with that, the modern tort of
conversion or trover took shape: the plaintiff claimed that the property was his and
that the defendant had treated it as his own. The defendant might still have the property,
or might not; the property might still exist, or it might have been destroyed; what
mattered was the defendant’s use in a manner inconsistent with the plaintiff’s
ownership resulting in the plaintiff’s dispossession. As the Restatement puts it,
“Conversion is an intentional exercise of dominion or control over a chattel which so
seriously interferes with the right of another to control it that the actor may justly be
required to pay the other the full value of the chattel.” RESTATEMENT (SECOND) OF
TORTS § 222A (1965).
What if the defendant merely damages the plaintiff’s property, or interferes with its use,
but stops short of converting it—as by breaking the headlights on the plaintiff’s car, or
taking it for a forty-eight-hour joyride? Conversion traditionally did not quite work
here; instead the plaintiff’s remedy lay in trespass to chattels, which evolved from the
original action for trespass d.b.a. Its use in a case of forcible misuse (like smashing
headlights or temporary taking) was straightforward enough. Over time, courts
extended its use to other cases involving indirect or non-forcible harms. But unlike
with trespass to land—which as Jacque shows is actionable even without harm to the
property—the Restatement says that trespass to chattels requires that the defendant
deprive the plaintiff of possession, impair the value of the property, or deprive the
plaintiff of its use. RESTATEMENT (SECOND) OF TORTS § 218. See also Intel v. Hamidi,
71 P.3d 296 (Cal. 2003) (no trespass to chattels for sending emails addressed to Intel
employees to Intel computers over Intel’s objections).
A final member of the property torts family is replevin. Initially, it was a purely feudal
form of action. If a tenant failed to perform the feudal services due to his lord, the lord
could “distrain” the tenant’s personal property by taking possession of it. The tenant’s
remedy for a wrongful distraint was replevin: by posting a bond of twice the value of
the property, the tenant was entitled to possession immediately while the suit over the
underlying dispute proceeded. As the feudal character dropped out of the landlord-

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tenant relationship, replevin became a general-purpose action to recover possession of
property wrongfully withheld. Its immediate-recovery remedy made it attractive to
plaintiffs who just wanted their stuff back, particularly in the United States. (“Mattie
Ross: The saddle is not for sale. I will keep it. Lawyer Dagget will prove ownership of
the gray horse. He will come after you with a writ of replevin.” TRUE GRIT (Paramount
Pictures 2010)). Today in some states it remains at least the name of the action to
recover possession, although it has often been superseded by procedures to recover
possession in state civil procedure codes.
The Major Common-Law Property Torts: A Summary

Preferred Remedy

Type

Damages

Possession

Real Property

Trespass

Ejectment

Chattels

Conversion
(or Trover);
Trespass to
Chattels

of
Property

Replevin

Declaration of
Rights

Quiet Title

Criminal law also protects personal property ownership and possession. The menu of
common-law personal property crimes bore the same confused stamp of history as the
menu of personal property torts. Larceny required a felonious carrying away from
possession; over time, both the carrying away and the possession became thin shadows
of their former selves, but not quite fictional. Larceny by trick, at least in theory,
plugged the gap for owners who parted with possession voluntarily under the influence
of fraudsters’ lies; embezzlement covered faithless bailees and employees who abused
their positions of trust to steal from the cash register, literally or metaphorically.
Robbery was theft achieved by a threat of violence. Looking back on the fine

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distinctions courts contrived to distinguish these various crimes (e.g., in Bazely’s Case,
(1799) 168 Eng. Rep. 517 (Cent. Cr. Ct.), the court held it was embezzlement for a
teller to put money in a bank drawer and then put it in his pocket, but not
embezzlement for the teller to put the money in his pocket directly), it is hard not to
concur with historian S.F.C. Milsom’s assessment: “The miserable history of crime in
England can shortly be told. Nothing worth-while was created.” S.F.C. MILSOM,
HISTORICAL FOUNDATIONS OF THE COMMON LAW 353 (1969). Many states,
influenced by the Model Penal Code, have tried to reform their theft statutes to create
a single, integrated law of theft. See generally STUART P. GREEN, 13 WAYS TO STEAL A
BICYCLE: THEFT LAW IN THE INFORMATION AGE 4 (2012) (arguing that “theft law
reformers threw out the baby with the bathwater”). But hard problems remain, such as
defining the kinds of property that can be “stolen” at all—e.g., is it theft to sneak into
a movie without paying or to download that movie on BitTorrent, or is “theft” simply
the wrong word to describe conduct that deprives no one else of their possession and
enjoyment?

Found and Stolen Property
Finders keepers, losers weepers?
Armory v. Delamirie
(1722) 1 Strange 505, 93 Eng. Rep. 664 (K.B.)
The plaintiff being a chimney sweeper’s boy found a jewel and carried it to the
defendant’s shop (who was a goldsmith) to know what it was, and delivered it into the
hands of the apprentice, who under pretence of weighing it, took out the stones, and
calling to the master to let him know it came to three halfpence, the master offered the
boy the money, who refused to take it, and insisted to have the thing again; whereupon
the apprentice delivered him back the socket without the stones. And now in trover
against the master these points were ruled:
1. That the finder of a jewel, though he does not by such finding acquire an absolute
property or ownership, yet he has such a property as will enable him to keep it against
all but the rightful owner, and consequently may maintain trover.
2. That the action well lay against the master, who gives a credit to his apprentice, and
is answerable for his neglect.
3. As to the value of the jewel several of the trade were examined to prove what a jewel
of the finest water that would fit the socket would be worth; and the Chief Justice
directed the jury, that unless the defendant did produce the jewel, and shew it not to
be of the finest water, they should presume the strongest against him, and make the
value of the best jewels the measure of their damages: which they accordingly did.
Notes and Questions
1. One way of describing the holding of Armory is that it sets out the rights of
finders. Suppose that the “rightful owner” of the jewel, Lord Hobnob, had
shown up in the shop while the chimney-sweep and the apprentice were arguing
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over the jewel. Who would have been entitled to the jewel? If the chimneysweep is not the “rightful owner,” why does he still win the case? What kind of
interest does he have in the jewel?
2. A second way of describing of describing the holding of Armory is that it
illustrates “relativity of title.” As between the plaintiff and the defendant, the
party with the relatively better claim to title wins, even if their title is in some
sense defective in an absolute sense. Relativity of title is intimately connected to
the idea of “chains of title”: competing claimants to a piece of property each do
their best to trace their claims back to a rightful source. What is the source of
the chimney-sweep’s claim to the jewel? And the jeweler’s? Does this explain
the outcome of the case? What result if the jeweler had proven that he had
signed a contract to purchase the jewel from Lord Hobnob but that Lord
Hobnob had lost the jewel before delivering it?
3. A third way of describing the holding of Armory is that it rejects the jeweler’s
attempt to assert a jus tertii (Latin for “right of a third party”) defense. The
defendant cannot defeat the plaintiff’s otherwise-valid claim to the jewel by
arguing that a third party—Lord Hobnob—has an even better claim. Put
differently, we might say that “as against a wrongdoer, possession is title.”
Jeffries v. Great W. Ry. Co., (1856) 119 Eng. Rep. 680, 681 (Q.B.). Does this
narrowing of focus to the parties before the court make sense?
Here is one way to think about it. Suppose that Lord Hobnob shows up in court
while Armory is being argued and explains that the jewel slipped from his finger
while he was strolling in Lincoln’s Inn Fields. Who is entitled to the jewel? What
if Lord Hobnob shows up and explains that he tossed the jewel aside in the
mud, saying “I have become tired of this bauble; it bores me and I no longer
wish to have it.” What if he explains that he handed it to the chimney-sweep,
saying “I wish you to have this jewel; may it serve you better than it has me.”
But recall that in the actual case, Lord Hobnob was nowhere to be found; no
one even knew his identity. Does it matter to the outcome of Armory v. Delamirie
how the jewel passed from Lord Hobnob’s hands to the chimney-sweep’s?
If you are still not convinced, consider this. If the jeweler could set up Lord
Hobnob’s title to show that the chimney-sweep’s title was defective, would the

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chimney-sweep be entitled to present evidence that Lord Hobnob’s title was
defective, say because Lord Hobnob stole the jewel from a visiting Frenchman
in 1693? Cutting off inquiry into third parties’ claims also helps cut off inquiry
into old claims. Can you see why this might be an appealing choice for a system
of property law?
4. We are not quite done with Lord Hobnob. Consider the remedy the plaintiff
obtains: an award of the value of the jewel, rather than the jewel itself. This is
in effect a forced sale of the jewel, which the defendant can keep after paying
the plaintiff’s damage award. Now who owns the jewel? What if Lord Hobnob
shows up now? Can he also bring trover, and if so, will the jeweler be forced to
pay out a second time? In fact, why is Paul de Lamerie, the goldsmith whose
name the court mangles, on the hook for his apprentice’s wrongdoing? What if
the apprentice pocketed the jewel and never turned it over to the master?
5. About that damage award. Why is the jury instructed to presume that the jewel
was “of the finest water?” (i.e. highest quality)?
Other Variations on Armory
Just how far does the holding of Armory v. Delamirie (“That the finder of [property],
though he does not by such finding acquire an absolute property or ownership, yet he
has such a property as will enable him to keep it against all but the rightful owner”) go?
Consider three nineteenth-century cases about lost lumber. Are they required by
Armory? Consistent with Armory? Consistent with each other? Which is most
persuasive?
In Clark v. Maloney, 3 Del. 68 (1840), the plaintiff found ten logs floating in a bay after
a storm. He tied them up in the mouth of a creek, but they (apparently) got free again
and the defendants (apparently) found them floating up the creek. Held, the plaintiff
was entitled to the logs:
Possession is certainly prima facie evidence of property. It is called prima facie
evidence because it may be rebutted by evidence of better title, but in the
absence of better title it is as effective a support of title as the most conclusive
evidence could be. It is for this reason, that the finder of a chattel, though he does not
acquire an absolute property in it, yet has such a property, as will enable him to keep it against

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all but the rightful owner. The defence consists, not in showing that the defendants
are the rightful owners, or claim under the rightful owner; but that the logs were
found by them adrift in Mispillion creek, having been loosened from their
fastening either by accident or design, and they insist that their title is as good
as that of the plaintiff. But it is a well settled rule of law that the loss of a chattel
does not change the right of property; and for the same reason that the original
loss of these logs by the rightful owner, did not change his absolute property in
them, but he might have maintained trover against the plaintiff upon refusal to
deliver them, so the subsequent loss did not divest the special property of the
plaintiff. It follows, therefore, that as the plaintiff has shown a special property
in these logs, which he never abandoned, and which enabled him to keep them
against all the world but the rightful owner, he is entitled to a verdict.

In Anderson v. Gouldberg, 53 N.W. 636 (Minn. 1892), the defendants took ninety-three
logs from the plaintiff’s mill. The defendants claimed that the plaintiff had cut the logs
on their land, but the plaintiff replied (and a jury agreed) that he had actually cut the
logs by trespassing on the land of a third party. Held: the plaintiff was entitled to the
logs:
Therefore the only question is whether bare possession of property, though
wrongfully obtained, is sufficient title to enable the party enjoying it to maintain
replevin against a mere stranger, who takes it from him. We had supposed that
this was settled in the affirmative as long ago, at least, as the early case of Armory
v. Delamirie, so often cited on that point. When it is said that to maintain replevin
the plaintiff’s possession must have been lawful, it means merely that it must
have been lawful as against the person who deprived him of it; and possession
is good title against all the world except those having a better title. Counsel says
that possession only raises a presumption of title, which, however, may be
rebutted. Rightly understood, this is correct; but counsel misapplies it. One who
takes property from the possession of another can only rebut this presumption
by showing a superior title in himself, or in some way connecting himself with
one who has. One who has acquired the possession of property, whether by
finding, bailment, or by mere tort, has a right to retain that possession as against
a mere wrongdoer who is a stranger to the property. Any other rule would lead

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to an endless series of unlawful seizures and reprisals in every case where
property had once passed out of the possession of the rightful owner.
Anderson states what is overwhelmingly the majority rule. Seven years after Anderson,
North Carolina took the opposite course. In Russell v. Hill, 34 S.E. 640 (N.C. 1899),
two different people held what appeared to be state grants to the same tract of land,
and the plaintiff cut timber on the land with the wrong one’s permission. While the
logs were floating in a river, the defendants—unconnected with either of the purported
landowners—took them away and sold them. Held: the defendants were entitled to the
logs (internal quotation marks omitted):
In some of the English books, and in some of the Reports of our sister states,
cases might be found to the contrary, but that those cases were all founded upon
a misapprehension of the principle laid down in the case of Armory v. Delamirie.
There a chimney sweep found a lost jewel. He took it into his possession, as he
had a right to do, and was the owner, because of having it in possession, unless
the true owner should become known. That owner was not known, and it was
properly decided that trover would lie in favor of the finder against the
defendant, to whom he had handed it for inspection, and who refused to restore
it. But the court said the case would have been very different if the owner had
been known.
Is this an accurate reading of Armory? The court also expressed concern about the
defendant’s potential liability to the true owner:
It is true that, as possession is the strongest evidence of the ownership, property
may be presumed from possession. … But if it appears on the trial that the
plaintiff, although in possession, is not in fact the owner, the presumption of
title inferred from the possession is rebutted, and it would be manifestly wrong
to allow the plaintiff to recover the value of the property; for the real owner
may forthwith bring trover against the defendant, and force him to pay the value
the second time, and the fact that he paid it in a former suit would be no defense.
Consequently trover can never be maintained unless a satisfaction of the
judgment will have the effect of vesting a good title in the defendant.

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Is the fear of double liability sufficient reason to allow the defendant to escape liability
entirely? Based on a review of the court records in the case, John V. Orth writes that
the true owner in Russell v. Hill was “no bodiless abstraction but had in fact a name and
identity: [Fabius Haywood] Busbee, one of the state’s leading lawyers, a man well
known to every member of the supreme court that decided the case.” John V. Orth,
Russell v. Hill (N.C. 1899): Misunderstood Lessons, 73 N.C. L. REV. 2031, 2034 (1995).
Does this help explain Russell?
Professor Orth, arguing for a middle ground between Anderson and Russell, argues that
Armory should protect only prior possessors who took the property in good faith: “A
technical wrongdoing, such as an innocent trespass, as the source of possession should
not disable the possessor from securing judicial protection against an unauthorized
taking, but a willful trespass at the root of title should. Plaintiff in Russell, in other words,
deserved a new trial at which to show, not his title, but his bona fides.” Id. at 2060. Is this
a better rule?
McAvoy v. Medina
93 Mass. (11 Allen) 548 (1866)
TORT to recover a sum of money found by the plaintiff in the shop of the defendant.
[I]t appeared that the defendant was a barber, and the plaintiff, being a customer in the
defendant’s shop, saw and took up a pocket-book which was lying upon a table there,
and said, “See what I have found.” The defendant came to the table and asked where
he found it. The plaintiff laid it back in the same place and said, “I found it right there.”
The defendant then took it and counted the money, and the plaintiff told him to keep
it, and if the owner should come to give it to him; and otherwise to advertise it; which
the defendant promised to do. Subsequently the plaintiff made three demands for the
money, and the defendant never claimed to hold the same till the last demand. It was
agreed that the pocket-book was placed upon the table by a transient customer of the
defendant and accidentally left there, and was first seen and taken up by the plaintiff,
and that the owner had not been found. …

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DEWEY, J.
It seems to be the settled law that the finder of lost property has a valid claim to the
same against all the world except the true owner, and generally that the place in which
it is found creates no exception to this rule.
But this property is not, under the circumstances, to be treated as lost property in that
sense in which a finder has a valid claim to hold the same until called for by the true
owner. This property was voluntarily placed upon a table in the defendant’s shop by a
customer of his who accidentally left the same there and has never called for it. The
plaintiff also came there as a customer, and first saw the same and took it up from the
table. The plaintiff did not by this acquire the right to take the property from the shop,
but it was rather the duty of the defendant, when the fact became thus known to him,
to use reasonable care for the safe keeping of the same until the owner should call for
it. In the case of Bridges v. Hawkesworth, 7 Eng. Law & Eq. R. 424, the property, although
found in a shop, was found on the floor of the same, and had not been placed there
voluntarily by the owner, and the court held that the finder was entitled to the
possession of the same, except as to the owner. But the present case more resembles
that of Lawrence v. The State, 1 Humph. (Tenn.) 228, and is indeed very similar in its
facts. The court there take a distinction between the case of property thus placed by
the owner and neglected to be removed, and property lost. It was there held that “to
place a pocket-book upon a table and to forget to take it away is not to lose it, in the
sense in which the authorities referred to speak of lost property.”
We accept this as the better rule, and especially as one better adapted to secure the
rights of the true owner.
In view of the facts of this case, the plaintiff acquired no original right to the property,
and the defendant’s subsequent acts in receiving and holding the property in the
manner he did does not create any.
Notes and Questions
1. In Lawrence v. State, on which McAvoy relies, the customer did come back for his
lost pocketbook containing $480 in bank notes, which he had left on a table
while the barber went out to make change. To quote the court: “The barber left
the shop to get the bill changed, and, a fight occurring in the streets, the

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Property
[customer’s] attention was arrested thereat and he left the shop, his pocket-book
lying on the table.” When he returned, the barber “denied all knowledge of the
pocket-book” but then “expended [the bank notes] in the purchase of
confections, etc.” A criminal prosecution for grand larceny followed, and the
barber argued that the pocketbook had been lost because larceny only applies
when the defendant takes property from the possession of the victim. The court
held that because the pocketbook on a table was merely mislaid, rather than
“lost,” it was still within the customer’s “constructive possession.” First of all,
is this plausible? And second, is this a good fit for the facts of McAvoy?
By way of contrast, in Bridges v. Hawkesworth, which McAvoy distinguishes, the
plaintiff found a small parcel on the floor of the defendant’s shop and
immediately showed it to the defendant’s employee. The parcel contained bank
notes; the plaintiff “requested the defendant to deliver them to the owner.”
Three years later, with no owner having returned, the court held the plaintiff as
finder was entitled to the notes. “If the notes had been accidentally kicked into
the street, and then found by someone passing by, could it be contended that
the defendant was entitled to them, from the mere fact of their having been
dropped in his shop? … Certainly not. The notes were never in the custody of
the defendant, nor within the protection of his house before they were found,
as they would have had they been intentionally deposited there, and the
defendant has come under no responsibility.” First, what do you make of the
Bridges court’s argument that the shopkeeper’s entitlement to the notes should
turn on whether he would have been held responsible to the true owner for
losing them? And second, is this any better a fit for the facts of McAvoy?
What do you make of the argument that awarding the pocket-book to the
shopkeeper is “one better adapted to secure the rights of the true owner?”
2. In addition to lost and mislaid property, there is also abandoned property:
property which the owner has voluntarily relinquished with no intent to reclaim.
Since abandoned property is again unowned, the usual rules of first possession
apply. (As you have seen, these rules themselves are not as simple as “first
possessor wins.”). How easy is it to tell the three apart? Why?

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3. In Benjamin v. Lindner Aviation, 534 N.W.2d 400 (Iowa 1995) in which an airplane
inspector found $18,000 in cash inside the wing of an airplane in 1992 while the
plane was parked in his employer’s hangar for maintenance. The money, which
consisted primarily of $20 bills dating to the 1950s and 1960s, was in two fourinch packets wrapped in handkerchiefs and tied with string and then wrapped
again in aluminum foil. The packets were inserted behind a panel on the
underside of the plane’s wing; the panel was secured with rusty screws that had
not been removed in several years. The inspector, the employer, and the bank
that owned the plane (after repossessing it from a prior owner who had
defaulted on a loan) all made claims to the money. Was it lost, mislaid, or
abandoned, and who was entitled to it?
4. Another category sometimes mentioned in the found-property caselaw is
treasure trove: money, gold, or silver intentionally placed underground, which
is found long enough later that it is likely the owner is dead or will never return
for it. At common law in England, treasure trove belonged to the King. Most
American states now treat treasure trove like any other found property. Is this
a sensible rejection of an archaic and pointless quirk of the common-law, or was
there something to the doctrine?
5. In Hannah v. Peel, [1945] K.B. 509, the British government requisitioned
Gwernhaylod House in 1940 for use during World War II and paid the owner,
Major Hugh Edward Ethelston Peel £250 per year. The house had been
conveyed to Major Peel in 1938 but it was unoccupied from then until when it
was requisitioned. Duncan Hannah, a lance-corporal with the Royal Artillery,
was stationed in the house and was adjusting a blackout curtain in August 1940
when he found something loose in a crevice on top of the window-frame. It
turned out to be a brooch covered in cobwebs and dirt; he informed his
commanding officer and then turned it over to the police. Two years later, the
police gave it to Major Peel, who sold it for £66. Lance-Corporal Hannah sued
and was awarded the value of the brooch. The court discussed numerous cases,
including Bridges v. Hawkesworth and South Staffordshire Water Co. v. Sharman, [1896]
2 Q.B. 44, which awarded two rings found by a workman embedded in the mud
at the bottom of a pool to the company that owned the land. From them, it
extracted a rule that “a man possesses everything which is attached to or under

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Property
his land.” Since Major Peel “was never physically in possession of these
premises” and hence had no “prior possession” of the brooch, Lance-Corporal
Hannah was entitled to it as a finder. Is this possession-based approach a better
way of analyzing found-property cases than the categorical lost-vs-mislaid
American approach exemplified by McAvoy? Or is Hannah an oddball outlier
driven by the court’s desire to do right by a wartime serviceman “whose conduct
was commendable and meritorious,” especially as against an absentee landlord
from the local gentry?
6. Many states have done away with the lost-mislaid distinction—and the common
law rules of lost and found property—by statute. For example, Article 7-B of
New York’s Personal Property Law obligates finders of lost personal property
to deliver their finds to the police or to the possessor of the premises where the
property was found (who then comes under the obligation to deliver the
property to the police); willfully neglecting to do so is a misdemeanor. (NY PERS.
PROP. L. § 252) “Lost property” is defined in the statute as including both lost
and mislaid property. (Id. § 251) The statute requires the police to give the finder
a receipt, to contact any apparent likely owners, and to keep custody of the
property for a period of between three months and three years, depending on
its value (Id. § 253). If the true owner appears to claim the lost property during
this custodial period, the police must turn the property over to him or her; if no
owner makes a claim, at the end of the custodial period the police must deliver
the property to the finder, whose title to the property (good even against the
original owner) is thereupon confirmed. (Id. §§ 254, 257) Other states’ lost
property statutes are similar. See, e.g., CAL. CIV. CODE §§ 2080 et seq.; FLA. STAT.
§ 705.101 et seq.; MASS. GEN. LAWS ch. 134, §§ 1 et seq.; WIS. STAT. §§ 170.07
et seq. Is this statutory scheme preferable to the common-law rules governing
lost and found property? Does it have any disadvantages compared to the
common-law rules?

Adverse Possession
Few doctrines taught in the first year of law school make a worse first impression than
adverse possession. Adverse possession enables a non-owner to gain title to land (or
personal property, but we will focus here on land) after the expiration of the statute of
limitations for the owner to recover possession. That sounds bad, and the thought of
“squatters” becoming owners gets its share of bad press. But historically the doctrine
has performed, and continues to serve, important functions.
The basic requirements, if not their wording and application, are common from state
to state. As one treatise summarizes, an adverse possessor must prove possession that
is:
(1) hostile (perhaps under a claim of right);
(2) exclusive;
(3) open and notorious;
(4) actual; and
(5) continuous for the requisite statutory period.
16 POWELL ON REAL PROPERTY § 91.01. States routinely add to the list. California law,
for example, requires that
the claimant must prove: (1) possession under claim of right or color of
title; (2) actual, open, and notorious occupation of the premises
constituting reasonable notice to the true owner; (3) possession which is
adverse and hostile to the true owner; (4) continuous possession for at
least five years; and (5) payment of all taxes assessed against the property
during the five-year period.
Main St. Plaza v. Cartwright & Main, LLC, 124 Cal. Rptr. 3d 170, 178 (Cal. App. 2011)
(citations and quotations omitted).
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Property

A. Adverse Possession Rationales
But why allow adverse possession? One court summarized the doctrine’s history and
purposes as follows:
… a brief history of adverse possession may be of assistance. After first
using an amalgamation of Roman and Germanic doctrine, our English
predecessors in common law later settled upon statutes of limitation to
effect adverse possession. See Axel Teisen, Contributions of the Comparative
Law Bureau, 3 A.B.A. J. 97, 126, 127, 134 (1917). In practice, the statutes
eliminated a rightful owner’s ability to regain possession after the passing
of a certain number of years, thereby vesting de facto title in the adverse
possessor. For example, a 1623 statute of King James I restricted the
right of entry to recover possession of land to a period of twenty years.
Essentially, in England, the “[o]riginal policy supporting the
development of adverse possession reflected society’s unwillingness to
take away a ‘right’ which an adverse possessor thought he had. Similarly,
society felt the loss of an unknown right by the title owner was minimal.”
William G. Ackerman & Shane T. Johnson, Comment, Outlaws of the Past:
A Western Perspective on Prescription and Adverse Possession, 31 Land & Water
L. Rev. 79, 83 (1996).…
In the United States, although the 1623 statute of King James I “came
some years after the settling of Jamestown (the usual date fixed as the
crystalizing of the common law in America), its fiat is generally accepted
as [our] common law. Hence ‘adverse possession’ for 20 years under the
common law in this country passes title to the adverse possessor with
certain stated qualifications.” 10 Thompson on Real Property § 87.01 at 75.
Today, all fifty states have some statutory form of adverse possession
.…
….Courts and commentators generally ascribe to “four traditional
justifications or clusters of justifications which support transferring the
entitlement to the [adverse possessor] after the statute of limitations
runs: the problem of lost evidence, the desirability of quieting titles, the
interest in discouraging sleeping owners, and the reliance interests of

Adverse Possession
[adverse possessors] and interested third persons.” Thomas W. Merrill,
Property Rules, Liability Rules, and Adverse Possession, 79 Nw. U. L. Rev.
1122, 1133 (1984). Effectively, our society has made a policy
determination that “all things should be used according to their nature
and purpose” and when an individual uses and preserves property “for
a certain length of time, [he] has done a work beneficial to the
community.” Teisen, 3 A.B.A. J. at 127. For his efforts, “his reward is
the conferring upon him of the title to the thing used.” Id. Esteemed
jurist Oliver Wendell Holmes, Jr. went a step further than Teisen, basing
our society’s tolerance of adverse possession on the ideal that “[a] thing
which you have enjoyed and used as your own for a long time, whether
property or an opinion, takes root in your being and cannot be torn away
without your resenting the act and trying to defend yourself, however
you came by it.” O Centro Espirita Beneficente Uniao Do Vegetal v.
Ashcroft, 389 F.3d 973, 1016 (10th Cir. 2004) (quoting Oliver Wendell
Holmes, Jr., The Path of the Law, 10 Harv. L. Rev. 457, 477 (1897)).
Regardless of how deeply the doctrine is engrained in our history,
however, courts have questioned “whether the concept of adverse
possession is as viable as it once was, or whether the concept always
squares with modern ideals in a sophisticated, congested, peaceful
society.” Finley, 160 Cal. Rptr. at 427. Commentators have also opined
that, along with the articulated benefits of adverse possession, numerous
disadvantages exist including the “infringement of a landowner’s rights,
a decrease in value of the servient estate, and the encouraged
[over]exploitation and [over]development of land. In addition, they …
[include] the generation of animosity between neighbors, a source of
damages to land or loss of land ownership, and the creation of
uncertainty for the landowner.” * Ackerman, 31 Land & Water L. Rev. at
92. In reality, “[a]dverse possession ‘[i]s nothing more than a person
taking someone else’s private property for his own private use.’ It is hard
to imagine a notion more in contravention of the ideals set forth in the

* [Eds.—The modifications to the quotation from Ackerman are ours, not the court’s.]

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Property
U.S. Constitution protecting life, liberty and property.” Ackerman, 31
Land & Water L. Rev. at 94-95 (quoting 2 C.J.S. Adverse Possession § 2
(1972)).
Although this Court duly recognizes its role as the judicial arm of
government tasked with applying the law, rather than making law, it is
not without an eyebrow raised at the ancient roots and arcane rationale
of adverse possession that we apply the doctrine to this modern property
dispute.

Cahill v. Morrow, 11 A.3d 82, 86-88 (R.I. 2011). Do you share the court’s skepticism?
Consider the rationales discussed above against the following case.
Tieu v. Morgan
265 P.3d 98 (Ore. App. 2011)
HADLOCK, J.
The parties dispute ownership of a strip of land that runs parallel to defendants’
driveway. Plaintiff, who owns residential property adjoining that strip of land, filed suit
seeking (1) a declaration that he owns the disputed strip and (2) an injunction
prohibiting defendants from trespassing on that property. Defendants counterclaimed,
asserting that they acquired the disputed strip through adverse possession, and
subsequently moved for summary judgment on that counterclaim. The trial court
granted defendants’ motion and entered a judgment declaring that defendants had
acquired the strip through adverse possession. Plaintiff appeals, and we affirm.…

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195

The two parcels subject to this appeal are adjoining residential tax lots in a Portland
subdivision. Tax lot 3100 is rectangular, with its north side fronting Southeast Boise
Street. Tax lot 3200 is a flag lot that is situated largely south of lot 3100; its driveway
(the “flagpole”) runs north from the main portion of the lot (the “flag”) to Southeast
Boise Street, parallel to the eastern edge of lot 3100. The disputed three-foot-wide strip
lies between lot 3200’s driveway and lot 3100. Defendants own lot 3200. Plaintiff owns
lot 3100 and also is the record owner of the disputed strip.
A north-south stretch of fence on plaintiff’s property runs along the western boundary
of the disputed strip, parallel to defendants’ driveway. The fence starts roughly halfway
down the driveway from Southeast Boise Street, running south, then turns 45 degrees
to the southwest, cutting off the southeast corner of lot 3100, then makes another 45degree turn before continuing west, roughly following the east-west boundary between
lots 3100 and 3200. The diagonal portion of the fence that cuts the corner of lot 3100
includes a gate wide enough to accommodate a boat trailer. As noted, the disputed
three-foot-wide strip lies between defendants’ driveway and the north-south fence on
lot 3100; its practical effect is to widen the “flagpole” portion of lot 3200.
The fencing that separates the two properties has existed for decades. As of 1984, the
two lots were owned by Robert Stevens, who installed most of the fencing that year,
including about half of the north-south stretch located west of lot 3200’s driveway. In
1994, Robert Stevens sold lot 3200 to his son, James Stevens, believing that the deed
he conveyed to James included all property on the east side of a north-south line

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Property

defined by that portion of the fence, i.e., the disputed strip. Although he never
specifically discussed the issue with his father, James also believed that his purchase of
the flag lot included the disputed strip along his driveway. James explained that he had
“no reason to know—to think [that the fence] would be in the wrong location.”
During the four years that James owned the flag lot, he granted Robert permission to
occasionally use James’s driveway and the disputed strip, so that Robert could drive a
large vehicle and boat trailer through the diagonal gate into Robert’s back yard. In 1996,
James installed a sewer line in the center of the disputed strip, running all the way from
Southeast Boise Street to the house on lot 3200. When James later put lot 3200 on the
market, he advertised it as having a “fully fenced yard,” based on his belief that his
ownership included the disputed strip.
James sold lot 3200 to defendants in 1998. The lot was not surveyed in conjunction
with that sale; nor did the parties to the sale discuss the lot’s recorded boundaries,
review paperwork or maps, or perform any investigation specifically related to that
subject.
Defendants have made use of the disputed strip since they purchased lot 3200.
Defendant Francine Morgan runs a daycare business from her home, and parents
regularly use the disputed strip when dropping off and picking up their children. In
1999, defendants extended the fence paralleling the strip north by roughly 40 feet,
choosing not to extend the fence all the way to Southeast Boise Street after Robert
suggested that they leave that area unfenced to accommodate maneuvering large
vehicles in and out of their driveways. Defendants have laid gravel and bark dust on
the disputed strip a number of times and have maintained the fence by replacing posts
and fence boards. While Robert still owned lot 3100, he specifically asked defendants’
permission each time he wanted to use the disputed strip to access or move his boat,
and defendants granted that permission.
Plaintiff bought lot 3100 from Robert in early 2006. Before purchasing the property,
plaintiff had it surveyed and learned that the north-south fence was not located on the
deeded boundary between lots 3100 and 3200. A survey pin marking the recorded
boundary was placed at that time. Plaintiff claims that he told defendant Francine
Morgan soon after the survey was completed that he planned to move the fence to the
deeded property line within two years. According to plaintiff, Francine neither disputed

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plaintiff’s right to move the fence nor claimed ownership of land between the survey
marker and the fence. Defendants deny that such a conversation occurred.
In 2008, plaintiff attempted to remove the north-south portion of the fence. After
defendants protested, plaintiff initiated this action, seeking a declaration that he owned
the disputed strip. As noted, defendants asserted in a counterclaim that they had
acquired the strip through adverse possession. The trial court ultimately granted
summary judgment to defendants, ruling that the undisputed facts established that
defendants had acquired the disputed strip through adverse possession.…
ORS 105.620 codifies the common-law elements of adverse possession, requiring a
claimant to prove by clear and convincing evidence that the claimant or the claimant’s
predecessors in interest maintained actual, open, notorious, exclusive, hostile, and
continuous possession of the property for ten years. In addition to those common-law
elements, the statute also requires the claimant to have had an honest belief of actual
ownership when he or she entered into possession of the property.
Plaintiff makes arguments related to each of the statutory elements, first claiming that
defendants did not establish actual, open, notorious, exclusive, or continuous
possession of the entire disputed strip. We recently summarized what proof is required
to satisfy those elements of an adverse-possession claim:
“The element of actual use is satisfied if a claimant established a use of
the land that would be made by an owner of the same type of land, taking
into account the uses for which the land is suited. To establish a use that
is open and notorious, plaintiffs must prove that their possession is of
such a character as to afford the owner the means of knowing it, and of
the claim. The exclusivity of the use also depends on how a reasonable
owner would or would not share the property with others in like
circumstances. A use is continuous if it is constant and not intermittent.
The required constancy of use, again, is determined by the kind of use
that would be expected of such land.”
Stiles v. Godsey, 233 Or. App. 119, 126, 225 P.3d 81 (2009) (internal quotations and
citations omitted).

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Property

Here, the land in question is a three-foot-wide strip, covered mostly with gravel or bark
dust, adjacent to a narrow driveway. Defendants and their predecessor have used the
strip as an extension of that driveway since 1994, both to accommodate wide vehicles
and to provide additional loading room for defendant Francine Morgan’s daycare
clients. That use is consistent with ownership and with the land’s character. Moreover,
that use was “open” and “notorious,” particularly when considered together with
James’s act of locating his sewer line on the strip and, later, defendants’ maintenance
of and improvements to the fence. Finally, defendants and their predecessor used the
strip continuously from 1994 (when James bought the lot) to at least 2006 (when
plaintiff bought lot 3100 from Robert), i.e., for longer than the statutory 10-year
adverse-possession period. Thus, the undisputed facts establish defendants’ actual,
open, notorious, exclusive, and continuous use of the property.
Plaintiff’s contrary argument rests on the fact that the disputed strip is not completely
separated from his residential lot by a fence; he emphasizes that the fence at issue does
not extend all the way to Southeast Boise Street, but starts partway down the
driveway.… Here, even though the fence does not extend to the street, it adequately
defines the entire disputed strip, indicating that it is separate from the land that abuts
it to the west.
Plaintiff also contends that defendants’ use of the disputed strip was not “exclusive”
because Robert sometimes used the property even after the fence was built. But
adverse-possession claimants are allowed the freedom to allow others to occasionally
use their property, in the manner that neighbors are wont to do, without thereby
abandoning their claim. In this case, Robert asked permission of defendants and their
predecessors each time that he used the disputed strip; that permissive use was
consistent with defendants’ ownership of the land and does not defeat their claim to it.
We also reject plaintiff’s argument that defendants’ use of the disputed strip was not
“hostile” because, he claims, defendants had a conscious doubt regarding the property
line. Under ORS 105.620(2)(a), a claimant “maintains ‘hostile possession’ of property
if the possession is under claim of right or with color of title.” A “claim of right” may
be established through proof of an honest but mistaken belief of ownership, resulting,
for example, from a mistake as to the correct location of a boundary. The mistaken
belief must be a “pure” mistake, however, and not one based upon “conscious doubt”

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about the true boundary. Furthermore, ORS 105.620(1)(b) requires that the claimants
(or their predecessors) have had an “honest belief” of actual ownership that (1)
continued through the vesting period, (2) had an objective basis, and (3) was reasonable
under the circumstances.
In Mid-Valley Resources, Inc. v. Engelson, 170 Ore App 255 (2000), we concluded that the
defendants had failed to establish pure mistake about the location of a boundary line
because one of the defendants had a conscious doubt on that subject. That Mid-Valley
defendant had testified that she had not known where the property line was when she
was a child, and she still did not know at the time of trial whether a particular fence
was located on that boundary. That defendant’s uncertainty about the property line’s
location defeated the defendants’ adverse-possession claim.
Here, by contrast, the undisputed evidence clearly establishes that defendants and their
predecessor, James, always believed that the fence marked the north-south line between
lots 3200 and 3100. James assumed when he bought lot 3200 in 1994 that the fence
was on the property line, and he perpetuated that belief in defendants by telling them,
when they bought the property, that it was “fully fenced.” Robert, then the record
owner of the disputed strip, confirmed those mistaken beliefs when he did not object
to installation of the sewer line, to defendants’ use of the strip, or to defendants’
extension of the fence. No evidence in the record supports plaintiff’s assertion that
defendants had a “conscious doubt” about whether the fence was actually located on
the line separating their property from plaintiff’s. Defendants did suggest in their
depositions that they had not given much thought to the property line’s location until
the dispute arose with plaintiff. Read in context, however, those statements simply
confirm defendants’ certainty that the property line was the same as the fence line; the
statements do not indicate that defendants had any conscious doubt as to the
boundary’s location.
Moreover, no evidence calls into question the reasonableness of defendants’ belief that
they owned the disputed strip. That strip of land is small in relation to the size of lots
3200 and 3100, it regularly has been used as an extension to the width of an existing
driveway, it is well suited to that purpose, and it is partly fenced off from plaintiff’s
property. Under the circumstances, defendants’ belief that they owned the disputed
strip was reasonable.

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Property

In sum, the undisputed evidence establishes clearly and convincingly that defendants
and their predecessor, James, had an “honest belief” that the disputed strip was part of
lot 3200 and that they continuously maintained actual, open, notorious, exclusive, and
hostile possession of that strip for well over 10 years, from 1994 at least until plaintiff
bought lot 3100 in 2006. 6 We conclude that defendants’ adverse-possession claim to
the disputed strip vested in 2004, giving them title and extinguishing any claim that
plaintiff might otherwise have had to that land.
Notes and Questions
1. Does the result in Tieu jibe with the rationales for adverse possession recited in
the note preceding it? Which ones? Cahill suggests that these rationales are less
relevant today than in the past. Do you agree? Should the defendants in Tieu
have been without recourse?
2. Tieu involves an error in a conveyance. The parties’ predecessors in interest
thought they had bargained to transfer land that they didn’t. This is a common
source of adverse possession litigation. Other recurring fact patterns include
mistaken deed descriptions, surveying errors, and accidental encroachments by
neighbors. Adverse possession claims may also follow the souring of
relationships, perhaps between cotenants or one involving permissive land use.
None of these cases necessarily involve bad faith actors; although the doctrine
may indeed be applied in favor of the mere trespasser, depending on the
jurisdiction’s interpretation of the state of mind required to satisfy the “hostility”
element. We will discuss this issue further below.
3. Title based on adverse possession is as good as any. To think through the
implications of that observation, imagine the following facts. Neighbor A
mistakenly builds a fence on her neighbor’s land and gains title to the enclosed

6

We reject plaintiff’s argument that defendants cannot satisfy the 10-year adverse-possession period by tacking
their possession to that of James. An adverse-possession claimant may tack his possessory interests to those of a
predecessor “if there is evidence that the predecessor intended to transfer whatever adverse possessory rights he
or she may have acquired.” Fitts v. Case, 243 Ore App 543, 549, 267 P3d 160 (2011). Here, James clearly intended
his transfer of lot 3200 to defendants to include the disputed strip, given his belief that the fence marked the
boundary line and his advertisement of lot 3200 as “fully fenced.”

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land by adverse possession. Neighbor B then notices the encroachment and
demands that A move the fence. She agrees, but changes her mind two years
later and rebuilds it. B sues for trespass. Who wins?
4. Open and notorious possession. Whatever its merits, adverse possession is
strong medicine. The doctrine therefore provides safeguards to prevent a title
owner from losing her property without adequate notice by, for example,
requiring that the possession be open and notorious—it has to be the kind of
act that an owner would notice.
But even overt acts may not be obvious threats to ownership rights. A fence on
someone else’s property certainly seems open and notorious, but what if it is
just an inch or two over the border? What about the three-foot incursion at
issue in Tieu? What if it had been built while the plaintiff was in occupation of
his lot? Do we expect owners to commission surveys anytime a neighbor builds
near the property line?
For some courts, the answer is no. Mannillo v. Gorski, 255 A.2d 258, 264 (N.J.
1969), for example, holds that minor encroachments are not open and
notorious without actual knowledge on the part of the title owner. But where
would that leave an innocent encroacher, whose trespass may be costly to
remedy? In Mannillo, the court balked at placing the trespasser, whose steps and
concrete walk extended 15 inches into the plaintiffs’ property, at her neighbor’s
mercy.
It is conceivable that the application of the foregoing rule may in
some cases result in undue hardship to the adverse possessor who
under an innocent and mistaken belief of title has undertaken an
extensive improvement which to some extent encroaches on an
adjoining property. In that event … equity may furnish relief.
Then, if the innocent trespasser of a small portion of land
adjoining a boundary line cannot without great expense remove
or eliminate the encroachment, or such removal or elimination is
impractical or could be accomplished only with great hardship,
the true owner may be forced to convey the land so occupied
upon payment of the fair value thereof without regard to whether

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the true owner had notice of the encroachment at its inception.
Of course, such a result should eventuate only under appropriate
circumstances and where no serious damage would be done to
the remaining land as, for instance, by rendering the balance of
the parcel unusable or no longer capable of being built upon by
reason of zoning or other restrictions.
Id. * Is this result—a forced transaction in which the innocent trespasser
becomes the owner, but must pay—the best accommodation of the relevant
interests? If the true owner wasn’t on notice of the incursion, why can she be
forced to surrender her land, even for payment?

5. Adverse possession and the property owner. State-to-state variation about
whether encroachments need to be obvious may reflect a deeper question about
the purpose of adverse possession. Some authorities view the doctrine as having
an object of punishing inattentive owners who sleep on their rights. If so, then

* As Manillo’s resort to equity shows, adverse possession is not the only way to address boundary disputes. Other

options include the equitable doctrine of acquiescence, Hamlin v. Niedner, 955 A.2d 251, 254 (Me. 2008) (“To
prove that title or a boundary line is established by acquiescence, a plaintiff must prove four elements by clear
and convincing evidence: (1) possession up to a visible line marked clearly by monuments, fences or the like; (2)
actual or constructive notice of the possession to the adjoining landowner; (3) conduct by the adjoining
landowner from which recognition and acquiescence, not induced by fraud or mistake, may be fairly inferred;
and (4) acquiescence for a long period of years[.]”); the doctrine of agreed boundaries, Finley v. Yuba Cnty. Water
Dist., 160 Cal. Rptr. 423, 428 (Cal. App. 1979); estoppel, Douglas v. Rowland, 540 S.W.2d 252 (Tenn. App. 1976),
and laches. See generally L. C. Warden, Mandatory injunction to compel removal of encroachments by adjoining landowner, 28
A.L.R.2d 679 (Originally published in 1953) (discussing factors influencing issuance of an injunction).
Laches raises a conceptual difficulty, as it seems to cover some of the same ground as adverse possession. Laches
is an equitable defense analogous to the legal defense provided by a statute of limitations: if a plaintiff
unreasonably delays in bringing suit and the defendant is prejudiced by the delay, laches will bar the suit as a
matter of equity. But if an owner tries to recover land within the limitations period, doesn’t that imply that there
has been no unreasonable delay? Clanton v. Hathorn, 600 So. 2d 963, 966 (Miss. 1992) (observing that the adverse
possession statute “would seem to occupy the field”); Kelly v. Valparaiso Realty Co., 197 So. 2d 35, 36 (Fla. Dist.
Ct. App. 1967) (where adverse possession was unavilable due to failure to pay taxes on the land “we do not feel
that equity can be invoked to circumvent the statutory law of adverse possession”); see generally 27A Am. Jur. 2d
Equity § 163 (“Only rarely should laches bar a case before the statute of limitations has run.”). But see Pufahl v.
White, No. 2050-S, 2002 WL 31357850, at *1 (Del. Ch. Oct. 9, 2002) (although laches claim cannot lead to title,
the “laches defense may, however, be applicable to the plaintiffs’ request to enjoin the defendants to remove the
encroachment”).

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perhaps it makes sense to require an incursion to be sufficiently obvious that a
property owner would not need to conduct a survey to determine the existence
of a violation.
But should sleeping owners be the target of the doctrine? Are property owners
who fail to assert their rights also less likely to develop their property (or sell it
to someone who will)? And if that is the underlying end, are there any problems
with using adverse possession doctrine as a means to it?
6. Adverse possession as reward. The reciprocal view—that adverse possession
exists to reward the possessors—has two flavors. One is externally focused. The
possessor, by putting the land to productive use, “has done a work beneficial to
the community.” Axel Teisen, 3 A.B.A. J. 97, 127 (1917). The other is more
internal:
A thing which you have enjoyed and used as your own for a long
time, whether property or an opinion, takes root in your being
and cannot be torn away without your resenting the act and trying
to defend yourself, however you came by it. The law can ask no
better justification than the deepest instincts of man. It is only by
way of reply to the suggestion that you are disappointing the
former owner, that you refer to his neglect having allowed the
gradual dissociation between himself and what he claims, and the
gradual association of it with another.
Oliver Wendell Holmes, The Path of the Law, 10 HARV. L. REV. 457, 477 (1897).
Do either of these views resonate? What does this rationale tell you about what
the state of mind of the adverse possessor should be?
7. Third-party interests. Consider the following justification for adverse
possession doctrine:
The statute has not for its object to reward the diligent trespasser
for his wrong nor yet to penalize the negligent and dormant
owner for sleeping upon his rights; the great purpose is
automatically to quiet all titles which are openly and consistently

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asserted, to provide proof of meritorious titles, and correct errors
in conveyancing.
Henry W. Ballantine, Title by Adverse Possession, 32 HARV. L. REV. 135, 135 (1918)
(footnotes omitted). By providing stability to existing property arrangements
after the passage of time, adverse possession simplifies transactions by relieving
purchasers and mortgagees of the risk that they are dealing with title founded
on a long-ago mistake or trespass. The doctrine is a healing mechanism that
realigns possession and paperwork when they’ve gotten too badly out of sync.
The benefit extends to the legal system as well by relieving courts of the need
to delve into the details of long-forgotten events.

8. Adverse possession’s information function. Adverse possession also enables
rights that exist as a matter of custom (e.g., “the Smiths always farm that strip
of land”) to receive legal status. A banker in a distant city may not understand
(or trust) allocations based on local understandings, but that doesn’t matter if
the claims are translated into recordable title. * The land may now serve as the
object of a sale or collateral for a loan for an expanded audience, enhancing its
value. Adverse possession’s role in converting informal understandings into
formal rights illustrates law’s ability to facilitate the aggregation and
dissemination of information across society. Can you think of others?
9. Tacking. What happens if a series of possessors occupy a property, but none
of them are present long enough for the limitations period to run? Tieu notes in
passing the concept of tacking, which enables a succession of adverse
possessors to collectively satisfy the statutory period. The usual approach is to
allow tacking so long as the successive possessors are in “privity”: a relationship
in which the prior possessor knowingly and intentionally transfers whatever
interest she holds to the subsequent possessor. See, e.g., Stump v. Whibco, 715
A.2d 1006 (N.J. Super. Ct. App. 1998) (“Tacking is generally permitted “unless

* “Quiet title” suits perform this function. They are actions that establish the claimant’s title to land and foreclose

the ability of others to contest it. Although quiet title suits are not necessary to gain rights under adverse
possession doctrine, they are very important to adverse possessors. Do you see why? If you cannot answer the
question, ask yourself whether you would ever buy property from an adverse possessor.

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it is shown that the claimant’s predecessor in title did not intend to convey the
disputed parcel.”) (citations and quotation omitted). So the clock continues to
run if one possessor sells or leases the occupied land, but there is no privity if
one trespasser wanders onto the lot after another leaves (or worse, dispossesses
the earlier trespasser by force).
Recall the question of whether adverse possession doctrine is more properly
focused on rewarding deserving possessors or punishing inattentive owners.
Does the U.S. approach to tacking shed light on our answer? The English view
is to allow tacking without privity. Cf. JAMES AMES, LECTURES ON LEGAL
HISTORY 197 (1913) (“English lawyers regard not the merit of the possessor,
but the demerit of the one out of possession. The statutes of limitation
provide . . . not that the adverse possessor shall acquire title, but that the one
who neglects for a given time to assert his right shall thereafter not enforce it.”).
10. Adverse possession and the environment. An underlying premise of the
rationales discussed above is that land should be used. For an argument that
this tilt makes adverse possession doctrine environmentally harmful, see John G.
Sprankling, An Environmental Critique of Adverse Possession, 79 CORNELL L. REV.
816, 840 (1994) (arguing that “American adverse possession law is
fundamentally hostile to the private preservation of wild lands” and proposing
exemption to doctrine for privately held wild lands).

B. “Hostility” and Intent
Adverse possession requires possession that is “hostile” and, often, “under a claim of
right.” Hostility is not animosity. “Hostile possession can be understood as possession
that is opposed and antagonistic to all other claims, and that conveys the clear message
that the possessor intends to possess the land as his or her own.” 16 POWELL ON REAL
PROPERTY § 91.01[2]. The requirement thus prevents permissive occupancy from
ripening into ownership; a lessor need not worry that the tenant will claim title by
adverse possession. See, e.g., Rise v. Steckel, 652 P.2d 364, 372 (1982) (“[T]he ten-year
statutory period for adverse possession did not begin to run until defendant asserted
to plaintiff that he was possessing the property in his own right, rather than as a tenant

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at sufferance.”). A “claim of right,” sometimes called claim of title,* means that the
possessor is holding the property as an owner would. This could be seen as
synonymous with the hostility requirement, but not all jurisdictions treat the concept
this way. The Powell treatise states that the predominant view in the United States is
that good faith is not required for adverse possession, 16 POWELL ON REAL PROPERTY
§ 91.01[2], but as you may have already noticed in the Tieu case above, intent often
matters.
Cahill v. Morrow
11 A.3d 82 (R.I. 2011)
INDEGLIA, J.
The property in dispute is located on Gooseberry Road in the Snug Harbor section of
South Kingstown, Rhode Island. Identified as lot 19 on assessor’s plat 88-1, the land is
sandwiched between lot 20, currently owned by Cahill, and lot 18, formerly coowned
by members of the Morrow family. Morrow is the record owner of the subject property,
lot 19.
In 1969, Morrow’s husband, George Morrow, purchased lot 19, and the same year
George and his brothers jointly purchased lot 18. At the time of lot 19’s purchase, it
was largely undeveloped, marked only by a preexisting clothesline, grass, and trees.
Since that time, the Morrows have not improved or maintained lot 19, but have paid
all property taxes assessed to it. As such, instead of vacationing on their lot 19, the
Morrows annually spent two weeks in the summer at the cottages on the adjacent lot
18. During these vacations, the Morrow children and their cousins played on lot 19’s
grassy area. Around 1985, the Morrows ceased summering on Gooseberry Road, 3 but
continued to return at least once a year to view the lot. Morrow stopped visiting lot 19
in October 2002, after her husband became ill, and she did not return again until July
2006.

* Which is not the same thing as “color of title,” as discussed below.
3

In 1991, George Morrow and his joint-owner brothers sold lot 18.

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In 1971, two years after George Morrow purchased lot 19, Cahill’s mother bought the
land and house designated as lot 20 as a summer residence. Between 1971 and 1975,
Cahill and her brother did some work on lot 19. They occasionally cut the grass, placed
furniture, and planted trees and flowers on it.
Cahill’s mother passed away in 1975, and in 1977, after purchasing her siblings’ shares,
Cahill became the sole record owner of the lot 20 property. Once she became lot 20’s
owner, Cahill began living in the house year-round. From that time through 1991, she
and her boyfriend, James M. Cronin, testified that they continued to mow lot 19’s grass
on occasion. In addition, she hung clothing on the clothesline, attached flags to the
clothesline pole, used the picnic table, positioned a bird bath and feeder, and planted
more flowers and trees. Cahill placed Adirondack chairs on lot 19 and eventually
replaced the clothesline and picnic table. In 1987, Cahill held the first annual “cousins’
party” allowing her relatives free rein with respect to her property and lot 19 for playing,
sitting, and car parking. She also entertained friends and family on lot 19 during other
summer days. Mary Frances McGinn, Cahill’s cousin, likewise recalled that lot 19 was
occupied by Cahill kindred during various family functions throughout this time period.
Cahill admitted that she never objected to neighborhood children using lot 19,
however.
During the period of 1991 through 1997, Cahill testified that she planted more flowers
and trees, in addition to cutting the grass occasionally. Cahill also stored her gas grill
and yard furniture on the lot and had her brother stack lobster pots for decorative
purposes. In 1991 or 1992, she began hosting the annual “Cane Berry Blossom
Festival,” another outdoor event that used both her lot and lot 19 as the party venue.
Like the other gatherings, the festival always took place on a day during a warm-weather
month. In 1997 or 1998, she installed a wooden border around the flower beds.
On July 22, 1997, Cahill wrote to George Morrow expressing an interest in obtaining
title to lot 19. In the 1997 letter, Cahill stated: “I am interested in learning if your narrow
strip of property is available for sale. If so, I would be interested in discussing
purchasing it from you.” Cahill continued: “If there is a possibility that you would like
to sell it, could you please either call me or send me a note?” Cahill did not receive a
response.

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In the “late 1990s,” though Cahill is unclear whether this occurred before or after the
1997 letter, a nearby marina sought permission to construct and elevate its property.
Cahill attended the related zoning board hearings and expressed her concerns about
increased flooding on lot 19 due to the marina elevation. She succeeded in having the
marina developer grade part of lot 19 to alleviate flooding. Additionally, Cahill
instituted her own trench and culvert drainage measures to divert water off of lot 19
and then reseeded the graded area. By Cahill’s own admission, however, her trenching
and reseeding work occurred in 1999 or 2000.
Subsequent to 2001, the new owners of lot 18 5 stored their boat on lot 19 and planted
their own flowers and small trees on the property. In 2002, when the town (with
approval from George Morrow) erected a stone wall and laid a sidewalk on the
Gooseberry Road border of lot 19, Cahill loamed and planted grass on that portion of
the lot. Also in 2002, Cahill asked Morrow’s two sisters on separate occasions whether
George Morrow would be interested in selling lot 19. The Morrows gave no response
to her 2002 inquiries. In 2003, George Morrow passed away.
After making her third inquiry concerning the purchase of lot 19 in 2002, Cahill
testified, she continued using the property in a fashion similar to her prior practice until
December 2005, when she noticed heavy-machinery tire marks and test pits on the
land. Thereafter, she retained counsel and authorized her attorney to send a letter on
January 10, 2006 to Morrow indicating her adverse possession claim to a “20-foot strip
of land on the northerly boundary” of lot 19. According to a survey of the disputed
property, however, the width of lot 19 from the northerly boundary (adjacent to Cahill’s
property) to lot 18 is 49.97 feet and therefore, more than double what Cahill originally
claimed in this letter. Nonetheless, on April 25, 2006, Cahill instituted a civil action
requesting a declaration that based on her “uninterrupted, quiet, peaceful and actual
seisin and possession” “for a period greater than 10 years,” she was the true owner of
lot 19 in its entirety. On July 25, 2007, the trial justice agreed that Cahill had proved
adverse possession under G.L. 1956 § 34-7-1 and vested in her the fee simple title to
lot 19.…

5

In approximately 2001, new owners purchased lot 18 from the Morrow brothers’ successor.

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In Rhode Island, obtaining title by adverse possession requires actual, open, notorious,
hostile, continuous, and exclusive use of property under a claim of right for at least a
period of ten years.
Here, the trial justice recited the proper standard of proof for adverse possession and
then found that Cahill had
“met her burden of establishing all of the elements of an adverse
possession claim to lot 19 by her and her mother’s continuous and
uninterrupted use of the parcel for well in excess of ten years. She
maintained the property, planted and improved the property with shrubs,
trees, and other plantings, sought drainage control measures, and used
the property as if it were her own since 1971. She established that use
not only by her own testimony, but as corroborated by other witnesses,
photographs, and expert testimony relative to the interpretation of aerial
photographs.”
At trial, as here on appeal, Morrow argued that Cahill’s offers to purchase the property
invalidated her claim of right and the element of hostile possession. To dispose of that
issue, the trial justice determined that “even assuming that [Cahill’s] inquiry is
circumstantial evidence of her knowledge that George Morrow, and subsequently
Margaret [Morrow], were the legal title holders of [lot] 19, that does not destroy the
viability of this adverse possession claim.” The trial justice relied upon our opinion in
Tavares, 814 A.2d at 350, to support his conclusion. Recalling that this Court stated in
Tavares that “even when the claimants know they are nothing more than black-hearted
trespassers, they can still adversely possess the property in question under a claim [of]
right to do so if they use it openly, notoriously, and in a manner that is adverse to the
true owner’s rights for the requisite ten-year period,” the trial justice found that Cahill’s
outward acknowledgement of Morrow’s record title did not alone “negate her claim of
right.” He further found that “even if somehow the expression of interest in purchasing
lot 19, made initially in 1997, stopped the running of the ten[-]year period under * * *
§ 34-7-1, the evidence was overwhelming that [Cahill] and her predecessor in title had
commenced the requisite ten-year period beginning in 1971.”
…On appeal, Morrow challenges the trial justice’s legal conclusion that Cahill’s offers
to purchase lot 19 did not extinguish her claim of right, hostile possession, and

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ultimately, the vesting of her title by adverse possession. Morrow also contends that
the trial justice erred in finding that Cahill’s testimonial and demonstrative evidence
was sufficient to prove adverse possession under the clear and convincing burden of
proof standard. We agree that as a matter of law the trial justice failed to consider the
impact of Cahill’s offers to purchase on the prior twenty-six years of her lot 19 use. As
a result, we hold that this failure also affects his factual determinations.
1. 1997 Offer-to-Purchase Letter
In Tavares, this Court explained that “requir[ing] adverse possession under a claim of
right is the same as requiring hostility, in that both terms simply indicate that the
claimant is holding the property with an intent that is adverse to the interests of the
true owner.” Tavares, 814 A.2d at 351 (quoting 16 Powell on Real Property, § 91.05[1]
at 91-28 (2000)). “Thus, [we said] a claim of right may be proven through evidence of
open, visible acts or declarations, accompanied by use of the property in an objectively
observable manner that is inconsistent with the rights of the record owner.” Here, the
first issue on appeal is how an offer to purchase has an impact on these elements.…
…[I]n Tavares, 814 A.2d at 351, with regard to “establishing hostility and possession
under a claim of right,” we explained that “the pertinent inquiry centers on the
claimants’ objective manifestations of adverse use rather than on the claimants’ knowledge
that they lacked colorable legal title.” (Emphases added.) Essentially, Tavares turned on
the difference between the adverse possession claimant’s “knowledge” regarding the
owner’s title and his “objective manifestations” thereof. In that case, the adversepossession claimant surveyed his land and discovered “that he did not hold title to the
parcels in question.” After such enlightenment, however, the claimant objectively
manifested his claim of ownership to the parcels by “posting no-trespass signs,
constructing stone walls, improving drainage, and wood cutting.” This Court explained
that simply having knowledge that he was not the title owner of the parcels was not
enough to destroy his claim of right given his objective, adverse manifestations
otherwise. In fact, we went so far as to state that “even when claimants know that they
are nothing more than black-hearted trespassers, they can still adversely possess the
property in question under a claim of right to do so if they use it openly, notoriously,
and in a manner that is adverse to the true owner’s rights for the requisite ten-year
period.” This statement is legally correct considering that adverse possession does not
require the claimant to make “a good faith mistake that he or she had legal title to the

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land.” 16 Powell on Real Property § 91.05[2] at 91-23. However, to the extent that
Tavares’s reference to “black-hearted trespassers” suggests that this Court endorses an
invade-and-conquer mentality in modern property law, we dutifully excise that
sentiment from our jurisprudence.
In the case before this Court, Cahill went beyond mere knowledge that she was not the
record owner by sending the offer-to-purchase letter. As distinguished from the Tavares
claimant who did not communicate his survey findings with anyone, Cahill’s letter
objectively declared the superiority of George Morrow’s title to the record owner
himself. See also Shanks v. Collins, 1989 OK 115, 782 P.2d 1352, 1355 (Okla. 1989) (“A
recognition by an adverse possessor that legal title lies in another serves to break the
essential element of continuity of possession.”).
In the face of this precedent, Cahill contends that the trial justice accurately applied the
law by finding that an offer to purchase does not automatically negate a claim of right
in the property. While we agree that this proposition is correct with respect to offers
made in an effort to make peace in an ongoing dispute, we disagree that this
proposition applies in situations, as here, where no preexisting ownership dispute is
evident.… Her offer was not an olive branch meant to put an end to pending litigation
with the Morrows. Rather, it was a clear declaration that Cahill “wanted title to the
property” from the record owner. By doing so, she necessarily acknowledged that her
interest in lot 19 was subservient to George Morrow’s.…
Accordingly, the trial justice erred by considering any incidents of ownership exhibited
by Cahill after the 1997 letter to George Morrow interrupted her claim.…
2. The Impact of Cahill’s Offer to Purchase on her Pre-1997 Adverse-Possession Claim
Furthermore, we also conclude that the trial justice should not have assumed that even
if Cahill’s “inquiry is circumstantial evidence of her knowledge that George Morrow,
and subsequently [Morrow], were the legal title holders of [lot] 19, that does not destroy
the viability of this adverse possession claim.” We agree that an offer to purchase does
not automatically invalidate a claim already vested by statute, but we nonetheless hold
that the objective manifestations that another has superior title, made after the statutory
period and not made to settle an ongoing dispute, are poignantly relevant to the

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ultimate determination of claim of right and hostile possession during the statutory
period.…
3. Questions of Fact Remain
Despite the significant deference afforded to the trial justice’s findings of fact, such
findings are not unassailable. Here, we find clear error in the trial justice’s conclusion
that “even if somehow the expression of interest in purchasing [lot] 19, made initially
in 1997, stopped the running of the ten[-]year period * * * the evidence was
overwhelming that [Cahill] and her predecessor in title had commenced the requisite
ten-year period beginning in 1971.” Given our opinion that some of Cahill’s lot 19
activities cannot be considered because of the time frame of their occurrence, we
disagree that the trial record can be classified as presenting “overwhelming” evidence
of adverse possession.
…. On remand, the trial justice is directed to limit his consideration to pre-1997 events
and make specific determinations whether Cahill’s intermittent flower and tree
planting, flag flying, clothesline replacing, lawn chair and beach-paraphernalia storing,
and annual party hosting are adequate. Furthermore, given our ruling today, the trial
court must evaluate the nature of Cahill’s and her predecessor’s twenty-six-year acts of
possession in the harsh light of the fact that Cahill openly manifested the existence of
George Morrow’s superior title on three occasions.…
FLAHERTY, J., dissenting.
…. Simply put, I do not agree that the correspondence between plaintiff and defendant
in which plaintiff offers to purchase defendant’s interest in lot 19 is the smoking gun
the majority perceives it to be. As is clear from a fair reading of plaintiff’s testimony,
she believed that she owned the property as a result of her longtime use of and
dominion over it. But her testimony also demonstrates that she drew a crisp distinction
between whatever ownership rights she may have acquired and record title, which she
recognized continued to reside in the Morrows…. Even if that letter were as significant
as the majority contends, there is no doubt that it was sent after the statutory period
had run. It is beyond dispute that plaintiff’s correspondence could not serve to divest
her of title if she had already acquired it by adverse possession…. There certainly was
credible evidence for the trial justice to find that plaintiff had used the property as her
own for well over twenty years before she corresponded with Mr. Morrow in 1997.…

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Dombkowski v. Ferland
893 A.2d 599 (Me. 2006)

DANA, J.
.…Although “some courts and commentators fail to distinguish between the elements
of hostility and claim of right, or simply consider hostility to be a subset of the claim of right
requirement[,] see, e.g., Johnson v. Stanley, 96 N.C. App. 72, 384 S.E.2d 577, 579 (1989)[,]
… under Maine law, the two elements are distinct.” Striefel, 1999 ME 111, P13 n.7, 733
A.2d at 991.
“‘Hostile’ simply means that the possessor does not have the true owner’s permission
to be on the land, and has nothing to do with demonstrating a heated controversy or a
manifestation of ill will, or that the claimant was in any sense an enemy of the owner
of the servient estate.” Id. P13, 733 A.2d at 991 (quotation marks and citation omitted).
“Permission negates the element of hostility, and precludes the acquisition of title by
adverse possession.” Id. “‘Under a claim of right’ means that the claimant is in
possession as owner, with intent to claim the land as [its] own, and not in recognition
of or subordination to [the] record title owner.” Id. P14, 733 A.2d at 991 (quotation
marks omitted).
Under Maine’s common law, as part of the claim of right element, we have historically
examined the subjective intentions of the person claiming adverse possession. See Preble
v. Maine C. R. Co., 85 Me. 260, 264, 27 A. 149, 150 (1893). Under this approach, which
is considered the minority rule in the country, “one who by mistake occupies … land
not covered by his deed with no intention to claim title beyond his actual boundary
wherever that may be, does not thereby acquire title by adverse possession to land
beyond the true line.” Preble, 85 Me. at 264, 27 A. at 150; see also McMullen, 483 A.2d at
700 (“[If] the occupier intend[s] to hold the property only if he were in fact legally
entitled to it[, the] occupation [is] ‘conditional’ and [cannot] form the basis of an
adverse possession claim.”). The majority rule in the country is based on French v. Pearce,
8 Conn. 439 (1831), and recognizes that the possessor’s mistaken belief does not defeat
a claim of adverse possession. [The court then interpreted legislation to overrule Maine
precedents and allow mistaken possession to meet the claim of right requirement.]

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Notes and Questions
1. Doctrine v. practice. Richard Helmholz has argued that though adverse
possession doctrine generally does not require the adverse possessor to plead
good faith, judicial practice is to disfavor those who know they are trespassing
compared to those acting out of a good faith mistake. Richard H. Helmholz,
Adverse Possession and Subjective Intent, 61 WASH. U. L. Q. 331, 332 (1983). Is Cahill
an example of this dynamic?
In recent decades, state legislatures have increasingly demanded good faith on
the part of the possessor (the Oregon statute in Tieu requiring honest belief in
ownership, for example, was passed in 1989). See 16 POWELL ON REAL
PROPERTY § 91.05 (collecting examples).
2. Should good faith be required? And if so, what is good faith? Is it an honest
belief about the facts on the ground (e.g., whether the fence builder is correct
that his fence is on the right side of the boundary line)? Or is it an attitude about
one’s potential adversary (a willingness to move the fence if wrong)? Either view
creates evidentiary difficulties.
Even when good faith is not part of the analysis as a formal matter, Helmholz
argues that judges and juries often cannot help but “prefer the claims of an
honest man over those of a dishonest man.” Helmholz, supra, at 358. Might this
be a satisfactory middle ground? Are there advantages to having courts officially
ignore intent while applying a de facto bar to the bad faith possessor when there
is evidence of dishonesty? Or is it problematic to have legal practice depart from
official doctrine?
Perhaps another way to reconcile the benefits of adverse possession with the
distaste for bad faith possessors would be to allow dishonest possessors to keep
the land, but pay for the privilege. Thomas W. Merrill, Property Rules, Liability
Rules, and Adverse Possession, 79 NW. U. L. REV. 1122, 1126 (1984) (suggesting
“requiring indemnification only in those cases where the [true owner] can show
that the [adverse possessor] acted in bad faith.”). As Merrill notes, a California
appellate court required such payment in a case concerning a prescriptive
easement (which is similar to adverse possession except that it concerns the right

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to use someone else’s land rather than its ownership), only to be overturned by
the state supreme court. Id. (discussing Warsaw v. Chicago Metallic Ceilings,
Inc., 676 P.2d 584 (Cal. 1984)). The proposal may remind you of the Manillo
case discussed above. How does it differ?
3. A minority of states, as Dombkowski indicates, require adverse possessors to
prove their subjective intent to take the land without regard to the existence of
other ownership interests. This is sometimes referred to as the “aggressive
trespass” standard: “I thought I did not own it [and intended to take it].”
Margaret Jane Radin, Time, Possession, and Alienation, 64 WASH. U. L.Q. 739, 746
(1986) (brackets in the original). Is there a reason to prefer it? Lee Anne Fennell
argues for a knowing trespass requirement that requires the adverse possessor
to document her knowledge:
[A] documented knowledge requirement facilitates rather than
punishes efforts at consensual dealmaking. One of the most
definitive ways of establishing that a possessor knew she was not
the owner of the disputed land is to produce evidence of her
purchase offer to the record owner. Currently, such an offer
often destroys one’s chance at adverse possession because it
shows one is acting in bad faith if one later trespasses; one does
far better to remain in ignorance (or pretend to) and never broach
the matter with the record owner. Under my proposal, such
offers would go from being fatal in a later adverse possession
action to being practically a prerequisite. As a result, it would be
much more likely that any resulting adverse possession claim will
occur only where a market transaction is unavailable. A
documented knowledge requirement would also reduce litigation
costs and increase the certainty of land holdings. Actions or
records establishing that the trespass was known at the time of
entry, necessary if the possessor ever wishes to gain title under
my approach, would serve to streamline trespass actions that
occur before the statute has run. Moreover, an approach that
refuses to reward innocent mistakes would be expected to reduce
mistake-making.

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Lee Anne Fennell, Efficient Trespass: The Case for “Bad Faith” Adverse Possession,
100 NW. U. L. REV. 1037, 1041-44 (2006) (footnotes omitted). One’s position
on these matters may depend on which scenarios one believes are most
common in adverse possession cases and adjust the state of mind required to
include or exclude them accordingly. Should the state of mind required depend
on the context? A state might, for example, require good faith for
encroachments, but bad faith or color of title if the possessor seeks to own the
parcel as a whole. Is this a good idea?

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C. Finer Points of Adverse Possession Law
1. Actual and Continuous Possession. Adverse possessors are not required to
live on the occupied property, what matters is acting like a true owner would.
That use, however, must be continuous, not sporadic. Compare, e.g., Lobdell v.
Smith, 690 N.Y.S.2d 171, 173 (N.Y. App. Div. 3d Dep’t 1999) (although
undeveloped land “does not require the same quality of possession as residential
or arable land,” no adverse possession where claimant “seldom visited the
parcel except to occasionally pick berries or hunt small game”), with Nome 2000
v. Fagerstrom, 799 P.2d 304, 310 (Alaska 1990) (claimants of a rural parcel
suitable for recreational and subsistence activities “visited the property several
times during the warmer season to fish, gather berries, clean the premises, and
play.… That others were free to pick berries and fish is consistent with the
conduct of a hospitable landowner, and undermines neither the continuity nor
exclusivity of their possession.”). Regular use of a summer home may constitute
continuous use. See, e.g., Nechow v. Brown, 120 N.W.2d 251, 252 (Mich. 1963).
2. Color of title. Claim of title, an intent to use land as one’s own, is distinct from
color of title, which describes taking possession under a defective instrument
(like a deed based on a mistaken land survey). States often apply more lenient
adverse possession standards to claims made under color of title. Compare, e.g.,
Fl. St. § 95.16, with id. § 95.18. Why do you think that is?
Entry under color of title may also affect the scope of the land treated as
occupied by the adverse possessor. 2 C.J.S. Adverse Possession § 252 (“Adverse
possession under color of title ordinarily extends to the whole tract described
in the instrument constituting color of title.”). But see Wentworth v. Forne, 137
So. 2d 166, 169 (Miss. 1962) (“In brief, when the land involved is, in part,
occupied by the real owner, the adverse possession, even when this possessor
has color of title, is confined to the area actually possessed.”).
3. Adverse possession by and against the government. Although government
agencies may acquire title by adverse possession, the general rule is that public
property held for public use is not subject to the doctrine. Why do you think
that is?

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4. Disabilities. The title owner of land may be subject to a disability (e.g., status
as a minor, mental incapacity) that may extend the time to bring an ejectment
action against an unlawful occupant. States generally spell out such exceptions
by statute.
5. A Moving Target. States vary their adverse possession rules to take into
account a variety of factors (e.g., claim under color of title, payment of property
taxes, enclosure or cultivation of land, etc.). These factors may change with the
times. In the aftermath of the financial crisis, for example, reports of trespassers
occupying foreclosed, vacant properties with the goal of acquiring title via
adverse possession prompted renewed attention to the doctrine. Florida
enacted legislation that requires those seeking adverse possession without color
of title to pay all outstanding taxes on the property within one year of taking
possession and disclose in writing the possessor’s identity, date of possession,
and a description of the property sufficient to enable the identification of the
property in the public records. Local officials are then required to make efforts
to contact the record owner of the property. FLA. STAT. § 95.18. The form
created under the statute is reprinted below. Are measures like these useful?
Consider the problem of “zombie foreclosures.” A property may be vacant
because the owners received a notice of foreclosure and left. Sometimes the
lenders never complete the foreclosure process, perhaps to avoid the costs that
come with ownership of the property. Title therefore remains with the out-ofpossession owners, who remain responsible for taxes, association fees, and the
like. What outcome should adverse possession law seek to promote in such
cases?

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D. Adverse Possession of Chattels
O’Keeffe v. Snyder
416 A.2d 862 (N.J. 1980)
The opinion of the Court was delivered by POLLOCK, J.
This is an appeal from an order of the Appellate Division granting summary judgment
to plaintiff, Georgia O’Keeffe, against defendant, Barry Snyder, d/b/a Princeton
Gallery of Fine Art, for replevin of three small pictures painted by O’Keeffe. In her
complaint, filed in March, 1976, O’Keeffe alleged she was the owner of the paintings
and that they were stolen from a New York art gallery in 1946. Snyder asserted he was
a purchaser for value of the paintings, he had title by adverse possession, and
O’Keeffe’s action was barred by the expiration of the six-year period of limitations
provided by N.J.S.A. 2A:14-1 pertaining to an action in replevin. Snyder impleaded
third party defendant, Ulrich A. Frank, from whom Snyder purchased the paintings in
1975 for $35,000.
The trial court granted summary judgment for Snyder on the ground that O’Keeffe’s
action was barred because it was not commenced within six years of the alleged theft.
The Appellate Division reversed and entered judgment for O’Keeffe. A majority of
that court concluded that the paintings were stolen, the defenses of expiration of the
statute of limitations and title by adverse possession were identical, and Snyder had not
proved the elements of adverse possession. Consequently, the majority ruled that
O’Keeffe could still enforce her right to possession of the paintings.
The dissenting judge stated that the appropriate measurement of the period of
limitation was not by analogy to adverse possession, but by application of the
“discovery rule” pertaining to some statutes of limitation. He concluded that the sixyear period of limitations commenced when O’Keeffe knew or should have known
who unlawfully possessed the paintings, and that the matter should be remanded to
determine if and when that event had occurred.
We granted certification …
I

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I

The record, limited to pleadings, affidavits, answers to interrogatories, and depositions,
is fraught with factual conflict. Apart from the creation of the paintings by O’Keeffe
and their discovery in Snyder’s gallery in 1976, the parties agree on little else.
O’Keeffe contended the paintings were stolen in 1946 from a gallery, An American
Place. The gallery was operated by her late husband, the famous photographer Alfred
Stieglitz.
An American Place was a cooperative undertaking of O’Keeffe and some other
American artists… . In 1946, Stieglitz arranged an exhibit which included an O’Keeffe
painting, identified as Cliffs. According to O’Keeffe, one day in March, 1946, she and
Stieglitz discovered Cliffs was missing from the wall of the exhibit. O’Keeffe estimates
the value of the painting at the time of the alleged theft to have been about $150.
About two weeks later, O’Keeffe noticed that two other paintings, Seaweed and
Fragments, were missing from a storage room at An American Place. She did not tell
anyone, even Stieglitz, about the missing paintings, since she did not want to upset him.
Before the date when O’Keeffe discovered the disappearance of Seaweed, she had
already sold it (apparently for a string of amber beads) to a Mrs. Weiner, now deceased.
Following the grant of the motion for summary judgment by the trial court in favor of
Snyder, O’Keeffe submitted a release from the legatees of Mrs. Weiner purportedly
assigning to O’Keeffe their interest in the sale.
O’Keeffe testified on depositions that at about the same time as the disappearance of
her paintings, 12 or 13 miniature paintings by Marin also were stolen from An
American Place. According to O’Keeffe, a man named Estrick took the Marin paintings
and “maybe a few other things.” Estrick distributed the Marin paintings to members
of the theater world who, when confronted by Stieglitz, returned them. However,
neither Stieglitz nor O’Keeffe confronted Estrick with the loss of any of the O’Keeffe
paintings.
There was no evidence of a break and entry at An American Place on the dates when
O’Keeffe discovered the disappearance of her paintings. Neither Stieglitz nor O’Keeffe
reported them missing to the New York Police Department or any other law

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enforcement agency. Apparently the paintings were uninsured, and O’Keeffe did not
seek reimbursement from an insurance company. Similarly, neither O’Keeffe nor
Stieglitz advertised the loss of the paintings in Art News or any other publication.
Nonetheless, they discussed it with associates in the art world and later O’Keeffe
mentioned the loss to the director of the Art Institute of Chicago, but she did not ask
him to do anything because “it wouldn’t have been my way.” O’Keeffe does not
contend that Frank or Snyder had actual knowledge of the alleged theft.
Stieglitz died in the summer of 1946, and O’Keeffe explains she did not pursue her
efforts to locate the paintings because she was settling his estate. In 1947, she retained
the services of Doris Bry to help settle the estate. Bry urged O’Keeffe to report the loss
of the paintings, but O’Keeffe declined because “they never got anything back by
reporting it.” Finally, in 1972, O’Keeffe authorized Bry to report the theft to the Art
Dealers Association of America, Inc., which maintains for its members a registry of
stolen paintings. The record does not indicate whether such a registry existed at the
time the paintings disappeared.
In September, 1975, O’Keeffe learned that the paintings were in the Andrew Crispo
Gallery in New York on consignment from Bernard Danenberg Galleries. On February
11, 1976, O’Keeffe discovered that Ulrich A. Frank had sold the paintings to Barry
Snyder, d/b/a Princeton Gallery of Fine Art. She demanded their return and, following
Snyder’s refusal, instituted this action for replevin.
Frank traces his possession of the paintings to his father, Dr. Frank, who died in 1968.
He claims there is a family relationship by marriage between his family and the Stieglitz
family, a contention that O’Keeffe disputes. Frank does not know how his father
acquired the paintings, but he recalls seeing them in his father’s apartment in New
Hampshire as early as 1941-1943, a period that precedes the alleged theft. Consequently,
Frank’s factual contentions are inconsistent with O’Keeffe’s allegation of theft. Until
1965, Dr. Frank occasionally lent the paintings to Ulrich Frank. In 1965, Dr. and Mrs.
Frank formally gave the paintings to Ulrich Frank, who kept them in his residences in
Yardley, Pennsylvania and Princeton, New Jersey. In 1968, he exhibited anonymously
Cliffs and Fragments in a one day art show in the Jewish Community Center in Trenton.
All of these events precede O’Keeffe’s listing of the paintings as stolen with the Art
Dealers Association of America, Inc. in 1972.

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Frank claims continuous possession of the paintings through his father for over thirty
years and admits selling the paintings to Snyder. Snyder and Frank do not trace their
provenance, or history of possession of the paintings, back to O’Keeffe.
As indicated, Snyder moved for summary judgment on the theory that O’Keeffe’s
action was barred by the statute of limitations and title had vested in Frank by adverse
possession. For purposes of his motion, Snyder conceded that the paintings had been
stolen. On her cross motion, O’Keeffe urged that the paintings were stolen, the statute
of limitations had not run, and title to the paintings remained in her.
II
[The court held that there was a genuine factual dispute whether the paintings had been
stolen.]
III
On the limited record before us, we cannot determine now who has title to the
paintings. That determination will depend on the evidence adduced at trial.
Nonetheless, we believe it may aid the trial court and the parties to resolve questions
of law that may become relevant at trial.
Our decision begins with the principle that, generally speaking, if the paintings were
stolen, the thief acquired no title and could not transfer good title to others regardless
of their good faith and ignorance of the theft. Proof of theft would advance O’Keeffe’s
right to possession of the paintings absent other considerations such as expiration of
the statute of limitations.
Another issue that may become relevant at trial is whether Frank or his father acquired
a “voidable title” to the paintings under N.J.S.A. 12A:2-403(1). That section, part of
the Uniform Commercial Code (U.C.C.), does not change the basic principle that a
mere possessor cannot transfer good title. Nonetheless, the U.C.C. permits a person
with voidable title to transfer good title to a good faith purchaser for value in certain
circumstances. * If the facts developed at trial merit application of that section, then

* [Eds. — We will explore this rule thoroughly in our unit on Improvers and Good Faith Purchasers.]

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Frank may have transferred good title to Snyder, thereby providing a defense to
O’Keeffe’s action. No party on this appeal has urged factual or legal contentions
concerning the applicability of the U.C.C. Consequently, a more complete discussion
of the U.C.C. would be premature, particularly in light of our decision to remand the
matter for trial.
On this appeal, the critical legal question is when O’Keeffe’s cause of action accrued.
The fulcrum on which the outcome turns is the statute of limitations in N.J.S.A. 2A:141, which provides that an action for replevin of goods or chattels must be commenced
within six years after the accrual of the cause of action. …
Since the alleged theft occurred in New York, a preliminary question is whether the
statute of limitations of New York or New Jersey applies. The New York statute, N.Y.
Civ. Prac. Law § 214 (McKinney), has been interpreted so that the statute of limitations
on a cause of action for replevin does not begin to run until after refusal upon demand
for the return of the goods. Here, O’Keeffe demanded return of the paintings in
February, 1976. If the New York statute applied, her action would have been
commenced within the period of limitations.
The traditional rule to determine which of two statutes of limitations is applicable is
that the statute of the forum governs unless the limitation is a condition of the cause
of action. However, this Court has discarded the mechanical rule that the statute of
limitations of the forum must be employed in every suit on a foreign cause of action.
Heavner v. Uniroyal, Inc., 63 N.J. 130, 140-141 (1973). Heavner set out five requirements
for barring an action by applying a statute of limitations other than the appropriate
New Jersey statute: (1) the cause of action arose in the other state; (2) the parties are all
present in and amenable to jurisdiction in the other state; (3) New Jersey has no
substantial interest in the matter; (4) the substantive law of the other jurisdiction is
applicable, and (5) the limitations’ period of the other jurisdiction has expired at the
time of the commencement of the suit in New Jersey. The Heavner rule provides a
limited and special exception to the general rule that the rule of the forum determines
the applicable period of limitations. In the present case, none of the parties resides in
New York and the paintings are located in New Jersey. On the facts before us, it would
appear that the appropriate statute of limitations is the law of the forum, N.J.S.A.

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2A:14-1. On remand, the trial court may reconsider this issue if the parties present
other relevant facts.
IV
On the assumption that New Jersey law will apply, we shall consider significant
questions raised about the interpretation of N.J.S.A. 2A:14-1. The purpose of a statute
of limitations is to stimulate to activity and punish negligence and promote repose by
giving security and stability to human affairs. A statute of limitations achieves those
purposes by barring a cause of action after the statutory period. In certain instances,
this Court has ruled that the literal language of a statute of limitations should yield to
other considerations.
To avoid harsh results from the mechanical application of the statute, the courts have
developed a concept known as the discovery rule. The discovery rule provides that, in
an appropriate case, a cause of action will not accrue until the injured party discovers,
or by exercise of reasonable diligence and intelligence should have discovered, facts
which form the basis of a cause of action. The rule is essentially a principle of equity,
the purpose of which is to mitigate unjust results that otherwise might flow from strict
adherence to a rule of law.
This Court first announced the discovery rule in Fernandi, supra, 35 N.J. at 434. In
Fernandi, a wing nut was left in a patient’s abdomen following surgery and was not
discovered for three years. The majority held that fairness and justice mandated that
the statute of limitations should not have commenced running until the plaintiff knew
or had reason to know of the presence of the foreign object in her body. …
Similarly, we conclude that the discovery rule applies to an action for replevin of a
painting under N.J.S.A. 2A:14-1. O’Keeffe’s cause of action accrued when she first
knew, or reasonably should have known through the exercise of due diligence, of the
cause of action, including the identity of the possessor of the paintings. …
In determining whether O’Keeffe is entitled to the benefit of the discovery rule, the
trial court should consider, among others, the following issues: (1) whether O’Keeffe
used due diligence to recover the paintings at the time of the alleged theft and
thereafter; (2) whether at the time of the alleged theft there was an effective method,
other than talking to her colleagues, for O’Keeffe to alert the art world; and (3) whether

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registering paintings with the Art Dealers Association of America, Inc. or any other
organization would put a reasonably prudent purchaser of art on constructive notice
that someone other than the possessor was the true owner.
V
The acquisition of title to real and personal property by adverse possession is based on
the expiration of a statute of limitations. R. Brown, The Law of Personal Property (3d
ed. 1975), § 4.1 at 33 (Brown). Adverse possession does not create title by prescription
apart from the statute of limitations.
To establish title by adverse possession to chattels, the rule of law has been that the
possession must be hostile, actual, visible, exclusive, and continuous. …
[T]here is an inherent problem with many kinds of personal property that will raise
questions whether their possession has been open, visible, and notorious. … For
example, if jewelry is stolen from a municipality in one county in New Jersey, it is
unlikely that the owner would learn that someone is openly wearing that jewelry in
another county or even in the same municipality. Open and visible possession of
personal property, such as jewelry, may not be sufficient to put the original owner on
actual or constructive notice of the identity of the possessor.
The problem is even more acute with works of art. Like many kinds of personal
property, works of art are readily moved and easily concealed. O’Keeffe argues that
nothing short of public display should be sufficient to alert the true owner and start
the statute running. Although there is merit in that contention from the perspective of
the original owner, the effect is to impose a heavy burden on the purchasers of
paintings who wish to enjoy the paintings in the privacy of their homes. …
The problem is serious. According to an affidavit submitted in this matter by the
president of the International Foundation for Art Research, there has been an
“explosion in art thefts” and there is a “worldwide phenomenon of art theft which has
reached epidemic proportions”.
The limited record before us provides a brief glimpse into the arcane world of sales of
art, where paintings worth vast sums of money sometimes are bought without inquiry
about their provenance. There does not appear to be a reasonably available method for

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an owner of art to record the ownership or theft of paintings. Similarly, there are no
reasonable means readily available to a purchaser to ascertain the provenance of a
painting. It may be time for the art world to establish a means by which a good faith
purchaser may reasonably obtain the provenance of a painting. An efficient registry of
original works of art might better serve the interests of artists, owners of art, and bona
fide purchasers than the law of adverse possession with all of its uncertainties.
Although we cannot mandate the initiation of a registration system, we can develop a
rule for the commencement and running of the statute of limitations that is more
responsive to the needs of the art world than the doctrine of adverse possession.
We are persuaded that the introduction of equitable considerations through the
discovery rule provides a more satisfactory response than the doctrine of adverse
possession. The discovery rule shifts the emphasis from the conduct of the possessor
to the conduct of the owner. The focus of the inquiry will no longer be whether the
possessor has met the tests of adverse possession, but whether the owner has acted
with due diligence in pursuing his or her personal property.
For example, under the discovery rule, if an artist diligently seeks the recovery of a lost
or stolen painting, but cannot find it or discover the identity of the possessor, the
statute of limitations will not begin to run. The rule permits an artist who uses
reasonable efforts to report, investigate, and recover a painting to preserve the rights
of title and possession.
Properly interpreted, the discovery rule becomes a vehicle for transporting equitable
considerations into the statute of limitations for replevin. In determining whether the
discovery rule should apply, a court should identify, evaluate, and weigh the equitable
claims of all parties. If a chattel is concealed from the true owner, fairness compels
tolling the statute during the period of concealment. That conclusion is consistent with
tolling the statute of limitations in a medical malpractice action where the physician is
guilty of fraudulent concealment.
It is consistent also with the law of replevin as it has developed apart from the discovery
rule. In an action for replevin, the period of limitations ordinarily will run against the
owner of lost or stolen property from the time of the wrongful taking, absent fraud or
concealment. Where the chattel is fraudulently concealed, the general rule is that the
statute is tolled …

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The discovery rule will fulfill the purposes of a statute of limitations and accord greater
protection to the innocent owner of personal property whose goods are lost or stolen.
…
By diligently pursuing their goods, owners may prevent the statute of limitations from
running. The meaning of due diligence will vary with the facts of each case, including
the nature and value of the personal property. For example, with respect to jewelry of
moderate value, it may be sufficient if the owner reports the theft to the police. With
respect to art work of greater value, it may be reasonable to expect an owner to do
more. In practice, our ruling should contribute to more careful practices concerning
the purchase of art.
The considerations are different with real estate, and there is no reason to disturb the
application of the doctrine of adverse possession to real estate. Real estate is fixed and
cannot be moved or concealed. The owner of real property knows or should know
where his property is located and reasonably can be expected to be aware of open,
notorious, visible, hostile, continuous acts of possession on it.
Our ruling not only changes the requirements for acquiring title to personal property
after an alleged unlawful taking, but also shifts the burden of proof at trial. Under the
doctrine of adverse possession, the burden is on the possessor to prove the elements
of adverse possession. Under the discovery rule, the burden is on the owner as the one
seeking the benefit of the rule to establish facts that would justify deferring the
beginning of the period of limitations.
VI
Read literally, the effect of the expiration of the statute of limitations under N.J.S.A.
2A:14-1 is to bar an action such as replevin. The statute does not speak of divesting
the original owner of title. By its terms the statute cuts off the remedy, but not the right
of title. Nonetheless, the effect of the expiration of the statute of limitations, albeit on
the theory of adverse possession, has been not only to bar an action for possession,
but also to vest title in the possessor. There is no reason to change that result although
the discovery rule has replaced adverse possession. History, reason, and common sense
support the conclusion that the expiration of the statute of limitations bars the remedy
to recover possession and also vests title in the possessor. …

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Before the expiration of the statute, the possessor has both the chattel and the right to
keep it except as against the true owner. The only imperfection in the possessor’s right
to retain the chattel is the original owner’s right to repossess it. Once that imperfection
is removed, the possessor should have good title for all purposes. Ames, The Disseisin
of Chattels, 3 HARV. L. REV. 313, 321 (1890) (Ames). As Dean Ames wrote: “An
immortal right to bring an eternally prohibited action is a metaphysical subtlety that the
present writer cannot pretend to understand.” Id. at 319.
Recognizing a metaphysical notion of title in the owner would be of little benefit to
him or her and would create potential problems for the possessor and third parties.
The expiration of the six-year period of N.J.S.A. 2A:14-1 should vest title as effectively
under the discovery rule as under the doctrine of adverse possession. …
VII
We next consider the effect of transfers of a chattel from one possessor to another
during the period of limitation under the discovery rule. Under the discovery rule, the
statute of limitations on an action for replevin begins to run when the owner knows or
reasonably should know of his cause of action and the identity of the possessor of the
chattel. Subsequent transfers of the chattel are part of the continuous dispossession of
the chattel from the original owner. The important point is not that there has been a
substitution of possessors, but that there has been a continuous dispossession of the
former owner.
Professor Ballantine explains:
Where the same claim of title has been consistently asserted for the
statutory period by persons in privity with each other, there is the same
reason to quiet and establish the title as where one person has held. The
same flag has been kept flying for the whole period. It is the same ouster
and disseisin. If the statute runs, it quiets a title which has been
consistently asserted and exercised as against the true owner, and the
possession of the prior holder justly enures to the benefit of the last. [H.
Ballantine, Title by Adverse Possession, 32 HARV. L. REV. 135, 158 (1919)]
…

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For the purpose of evaluating the due diligence of an owner, the dispossession of his
chattel is a continuum not susceptible to separation into distinct acts. Nonetheless,
subsequent transfers of the chattel may affect the degree of difficulty encountered by
a diligent owner seeking to recover his goods. To that extent, subsequent transfers and
their potential for frustrating diligence are relevant in applying the discovery rule. An
owner who diligently seeks his chattel should be entitled to the benefit of the discovery
rule although it may have passed through many hands. Conversely an owner who sleeps
on his rights may be denied the benefit of the discovery rule although the chattel may
have been possessed by only one person.
We reject the alternative of treating subsequent transfers of a chattel as separate acts of
conversion that would start the statute of limitations running anew. …
Treating subsequent transfers as separate acts of conversion could lead to absurd
results. As explained by Dean Ames: –
… If a converter were to sell the chattel, five years after its conversion,
to one ignorant of the seller’s tort, the disposed owner’s right to recover
the chattel from the purchaser would continue five years longer than his
right to recover from the converter would have lasted if there had been
no sale. In other words, an innocent purchaser from a wrong-doer would
be in a worse position than the wrong-doer himself,—a conclusion as
shocking in point of justice as it would be anomalous in law. [Ames, supra
at 323, footnotes omitted]
It is more sensible to recognize that on expiration of the period of limitations, title
passes from the former owner by operation of the statute. Needless uncertainty would
result from starting the statute running anew merely because of a subsequent transfer.
…
We reverse the judgment of the Appellate Division in favor of O’Keeffe and remand
the matter for trial in accordance with this opinion.
Notes and Questions
1. What did O’Keeffe do to locate the paintings? At least according to the court,
what more could she have done? What more should she have done? What did

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the Franks and Snyder do to make their possession of the paintings clear? What
more could they have done? What more should they have done? Did the court
properly balance the parties’ interests? Did it give the right incentives to future
parties in their positions?
2. The court argues that switching from adverse possession to the discovery rule
“shifts the emphasis from the conduct of the possessor to the conduct of the
owner.” Is this a good description of the difference between the two tests? Is
the court’s explanation of its reasons for the change persuasive?
3. Notice O’Keeffe’s discussion of the choice-of-law problem. O’Keeffe’s suit was
timely under the New York statute of limitations but may not have been under
New Jersey’s. In theory, choice of law is simple for property: the law of the
property’s “situs” (i.e. location) controls. * The rule is easy enough to apply to
real property, although even there hard cases are possible. † But personal
property can move around, generating contacts with multiple states. Suppose
the contacts had been flipped, so that the painting was stolen in New Jersey but
was currently in New York. Should New York law have applied? Another
possible rule is that the law of the place where the property is now applies. What
incentives would that rule create? How about a rule selecting the law of the
place where the property was at the time of the relevant events? (Wait. What are
the “relevant events” in a replevin case involving the statute of limitations?)
Another layer of difficulty in choice of law comes from the characterization
problem: is the validity of a mortgage securing a loan with an illegally high rate
of interest a “property” issue (governed by the situs rule) or a “contract” issue
(governed by the place the contract was made or the place of residence of the

* Relatedly, courts have in rem jurisdiction over property located within their state’s borders, and the traditional

rule has been that courts have no jurisdiction at all over real property outside their state’s borders. Why might
these rules have developed? Do they seem likely to simplify litigation or complicate it?
† In Durfee v. Duke, 375 U.S. 106 (1963), the Missouri River, which forms the boundary between Nebraska and

Missouri, had shifted its channel from the east of the land in question to the west of it. If the river had shifted
suddenly (by “avulsion”), the boundary stayed where it was and the land was legally in Nebraska. But if the river
had shifted course slowly (by “accretion”), the boundary moved with the river and the land was in Missouri. Since
the plaintiff claimed title under a Nebraska foreclosure proceeding and the defendant claimed title under a
Missouri swamp land patent, the case turned on which state the land was in.

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parties)? The characterization question puts O’Keeffe’s use of medicalmalpractice tort principles in a replevin case in a new light, doesn’t it?
The New York Mess

As noted in O’Keeffe, New York has a three-year statute of limitations for personalproperty actions, and traditionally applied a demand-and-refusal rule to start the statute
running. Two further doctrines complicate the picture. One is that the demand-andrefusal rule only applies against good-faith purchasers; the limitations period in a suit
against a thief starts at the time of the theft. (Do you see how this result, illogical as it
may sound, follows from the logic that the good-faith purchaser is not considered a
wrongdoer until she refuses a demand for return of the property?) The other is that an
owner who unreasonably delays making a demand for the return of property, at least
where she knows the identity of the possessor, may find her suit barred by the equitable
doctrine of laches.
In DeWeerth v. Baldinger, 836 F.2d 103 (2d Cir. 1987), a landscape by Claude Monet
owned by Gerda DeWeerth disappeared from a castle in Southern Germany where
American soldiers were quartered during World War II. It turned up on the art market
in the mid-1950s and was eventually sold by a New York gallery to Edith Baldinger,
who kept it in her apartment in New York. In 1981, DeWeerth’s nephew tracked the
painting to the gallery’s sale to Baldinger and made a demand for its return which was
refused. The Second Circuit, sitting in diversity, held that New York “would impose a
duty of reasonable diligence in attempting to locate stolen property,” not just a duty to
demand its return in a reasonable time after the property is located:
For if demand is delayed, then so is accrual of the cause of action, and
the good-faith purchaser will remain exposed to suit long after an action
against a thief or even other innocent parties would be time-barred. …
In this case, plaintiff’s proposed exception to the rule would rob it of all
of its salutary effect: The thief would be immune from suit after three
years, while the good-faith purchaser would remain exposed as long as
his identity did not fortuitously come to the property owner’s attention.
A construction of the rule requiring due diligence in making a demand
to include an obligation to make a reasonable effort to locate the
property will prevent unnecessary hardship to the good-faith purchaser,

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the party intended to be protected. … A rule requiring reasonable
diligence in attempting to locate stolen property is especially appropriate
with respect to stolen art. Much art is kept in private collections,
unadvertised and unavailable to the public. An owner seeking to recover
such property will almost never learn of its whereabouts by chance. Yet
the location of stolen art may frequently be discovered through
investigation.
The court concluded that DeWeerth’s efforts were “minimal” before her nephew took
up the case in 1981, so Baldinger kept the Monet.
That was 1987. Shortly thereafter, the same issue came up through the New York state
court system. In Guggenheim Foundation v. Lubell, 569 N.E.2d 426 (N.Y. 1991), a painting
by Marc Chagall was stolen from the Guggenheim Museum by a mailroom employee
in the 1960s. The Lubells bought the painting from a reputable dealer in 1967; the
museum demanded it back in 1986. The court rejected O’Keeffe, repudiated DeWeerth’s
interpretation of New York law, and reaffirmed the New York demand-and-refusal
rule. It specifically rejected the discovery rule with its requirement of reasonable
diligence by the owner:
Our case law already recognizes that the true owner, having discovered
the location of its lost property, cannot unreasonably delay making
demand upon the person in possession of that property. … Further, the
facts of this case reveal how difficult it would be to specify the type of
conduct that would be required for a showing of reasonable diligence.
Here, the parties hotly contest whether publicizing the theft would have
turned up the gouache. According to the museum, some members of the
art community believe that publicizing a theft exposes gaps in security
and can lead to more thefts; the museum also argues that publicity often
pushes a missing painting further underground. In light of the fact that
members of the art community have apparently not reached a consensus
on the best way to retrieve stolen art, it would be particularly
inappropriate for this Court to spell out arbitrary rules of conduct that
all true owners of stolen art work would have to follow to the letter if
they wanted to preserve their right to pursue a cause of action in replevin.
All owners of stolen property should not be expected to behave in the

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same way and should not be held to a common standard. The value of
the property stolen, the manner in which it was stolen, and the type of
institution from which it was stolen will all necessarily affect the manner
in which a true owner will search for missing property. We conclude that
it would be difficult, if not impossible, to craft a reasonable diligence
requirement that could take into account all of these variables and that
would not unduly burden the true owner.
Further, our decision today is in part influenced by our recognition that
New York enjoys a worldwide reputation as a preeminent cultural center.
To place the burden of locating stolen artwork on the true owner and to
foreclose the rights of that owner to recover its property if the burden is
not met would, we believe, encourage illicit trafficking in stolen art.
Three years after the theft, any purchaser, good faith or not, would be
able to hold onto stolen art work unless the true owner was able to
establish that it had undertaken a reasonable search for the missing art.
This shifting of the burden onto the wronged owner is inappropriate. In
our opinion, the better rule gives the owner relatively greater protection
and places the burden of investigating the provenance of a work of art
on the potential purchaser.

Armed with the New York Court of Appeals’s holding in Guggenheim, Gerda DeWeerth
filed a Rule 60(b) motion for relief from judgment, arguing that the decision against
her rested on a misinterpretation of New York law and that she should not have been
subjected to a diligent-search requirement. The District Court agreed with her, but the
Second Circuit reversed in DeWeerth v. Baldinger, 38 F.3d 1266 (2d Cir. 1994),
emphasizing the need for finality in litigation:
We conclude that the prior DeWeerth panel conscientiously satisfied its
duty to predict how New York courts would decide the due diligence
question, and that Erie and its progeny require no more than this. The
fact that the New York Court of Appeals subsequently reached a
contrary conclusion in Guggenheim does not constitute an “extraordinary
circumstance” that would justify reopening this case in order to achieve
a similar result.

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Finally, consider SongByrd Inc. v. Estate of Grossman, 206 F.3d 172 (2d Cir. 2000), another
diversity case under New York law. Henry Byrd, who recorded under the name
“Professor Longhair,” was a celebrated jazz musician. He went to Woodstock, New
York for a studio recording session for Bearsville Records in the 1970s. The session
was considered unsatisfactory at the time, so the tapes were never released. Instead,
Arthur Davis, the record-store owner who discovered Byrd, sent the tapes to Bearsville
“as demonstration tapes only, without any intent for either Albert Grossman or
Bearsville Records Inc. to possess these aforementioned tapes as owner.” Byrd’s
attorney wrote two letters to Bearsville requesting the return of the tapes in 1975, but
there was no evidence in the record that the letters were even received. Byrd died in
1980, and after Bearsville’s founder died in 1985, his estate licensed the recordings to
two record companies. One of the resulting albums won Byrd a (posthumous)
Grammy for Best Traditional Blues Album of 1987. SongByrd, the successor-ininterest to Byrd’s rights, sued in 1995. The Second Circuit held that the conversion
claim was barred, because the defendant “began using the master tapes as its own when
it licensed portions of them to Rounder in 1986.”
The conversion alleged by SongByrd occurred no later than that date.
The demand-and-refusal rule, which functioned to delay accrual of the
claim in [Guggenheim] … for the benefit of the true owner, normally
provides some benefit to the good-faith possessor by precipitating its
awareness that continued possession will be regarded as wrongful by the
true owner. New York has not required a demand and refusal for the
accrual of a conversion claim against a possessor who openly deals with
the property as its own.
As an alternative basis for its holding, the court added that the plaintiff had
unreasonably delayed making its demand.
Even if a demand were required for accrual of SongByrd’s claim,
[Guggenheim] instructs that a plaintiff may not unreasonably delay in
making a demand for property whose location is known. Byrd, either
independently or through his agents, had known since the 1970s that the
master tapes were in Grossman’s possession, and the unanswered letters
to Grossman in 1975 for return of the master tapes probably sufficed to
alert him to Grossman’s disregard of his ownership claim, thereby

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rendering any demand thereafter unreasonably delayed. In any event, his
successors’ delay in not making a demand in 1987, when Bearsville’s
licensing of the master tapes became well known in the music world as
a result of the Grammy Award for Byrd’s recordings, was clearly
unreasonable.

After DeWeerth, Guggenheim, and SongByrd, does New York have a coherent approach to
the statute of limitations in personal property cases? Does it depend whether the case
is brought in state or federal court? Has New York done better or worse than New
Jersey at balancing the competing interests at stake?

Improvers and Good-Faith Purchasers
A chimney-sweep finds a jewel. He gives it to his friend, a jeweler, who designs and
crafts a gold ring around the jewel’s unique shape. Frederica van Snoot sees the ring,
buys it for $10,000, and wears it around town. One day, Jeremiah Hobnob recognizes
the jewel he lost last month and demands it back. As against the chimney-sweep, this
is an easy case; nowhere near enough time has passed to satisfy the statute of limitations,
even in a jurisdiction that imposes a stringent duty of diligent search on owners. But
the jeweler and van Snoot are harder cases, because both of them have made
investments. The jeweler invested gold and labor to turn the jewel into a ring. For her
part, van Snoot paid out $10,000. If Hobnob is entitled to the jewel, the jeweler or van
Snoot or both will end up poorer than when they started.
The common law mitigated the harshness of this result with two doctrines. One, the
rule of accession, provided that someone who sufficiently improves another person’s
property is allowed to keep it. Importantly, the hornbook rule is that accession only
operates in favor of good-faith improvers; someone who knows the property is not hers
acts at her own peril when she combines it with her own property or labor. The jeweler
is potentially protected by accession. The other doctrine protected good faith purchasers
for value from the unknown claims of third parties. It too only protects only parties who
act in good faith, i.e., those who do not know or have reason to know they are buying
property with clouded title. Frederica van Snoot may be just such a purchaser.
This section presents both doctrines. As you read, pay close attention to the
preconditions that allow them to be invoked; despite their similarities, they have
important differences. For example, it is hornbook law that “a thief takes no title and
can give none”: good-faith purchase can never cut off the claims of an owner from
whom the property was stolen. But accession can, as you will see. Also, observe that
while ownership of the property may be the primary question in these cases, it is often
not the only issue. Once ownership is allocated, courts often require restitutionary
payments to shift losses from more innocent to more culpable parties.
237

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Wetherbee v. Green
22 Mich. 311 (1871)

This was an action of replevin, brought by George Green, Charles H. Camp and
George Brooks, in the circuit court for the county of Bay, against George Wetherbee,
for one hundred and fifty-eight thousand black ash barrel-hoops, alleged to be of the
value of eight hundred dollars. …
COOLEY J.:
The defendants in error replevied of Wetherbee a quantity of hoops, which he had
made from timber cut upon their land. Wetherbee defended the replevin suit on two
grounds. First, he claimed to have cut the timber under a license from one Sumner,
who was formerly tenant in common of the land with Green, and had been authorized
by Green to give such license. [This defense failed; Sumner was not authorized to let
Wetherbee cut timber on the land.]
But if the court should be against him on this branch of the case, Wetherbee claimed
further that replevin could not be maintained for the hoops, because he had cut the
timber in good faith, relying upon a permission which he supposed proceeded from
the parties having lawful right to give it, and had, by the expenditure of his labor and
money, converted the trees into chattels immensely more valuable than they were as
they stood in the forest, and thereby he had made such chattels his own. And he offered
to show that the standing timber was worth twenty-five dollars only, while the hoops
replevied were shown by the evidence to be worth near seven hundred dollars; also
[facts tending to show Wetherbee’s lack of knowledge of Sumner’s duplicity]. The
evidence offered to establish these facts was rejected by the court, and the plaintiffs
obtained judgment.
The principal question which, from this statement, appears to be presented by the
record, may be stated thus: Has a party who has taken the property of another in good
faith, and in reliance upon a supposed right, without intention to commit wrong, and
by the expenditure of his money or labor, worked upon it so great a transformation as
that which this timber underwent in being transformed from standing trees into hoops,
acquired such a property therein that it cannot be followed into his hands and reclaimed
by the owner of the trees in its improved condition?

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The objections to allowing the owner of the trees to reclaim the property under such
circumstances are, that it visits the involuntary wrong-doer too severely for his
unintentional trespass, and at the same time compensates the owner beyond all reason
for the injury he has sustained. In the redress of private injuries the law aims not so
much to punish the wrongdoer as to compensate the sufferer for his injuries; and the
cases in which it goes farther and inflicts punitory or vindictive penalties are those in
which the wrong-doer has committed the wrong recklessly, willfully, or maliciously,
and under circumstances presenting elements of aggravation. Where vicious motive or
reckless disregard of right are not involved, to inflict upon a person who has taken the
property of another, a penalty equal to twenty or thirty times its value, and to
compensate the owner in a proportion equally enormous, is so opposed to all legal idea
of justice and right and to the rules which regulate the recovery of damages generally,
that if permitted by the law at all, it must stand out as an anomaly and must rest upon
peculiar reasons.
As a general rule, one whose property has been appropriated by another without
authority has a right to follow it and recover the possession from any one who may
have received it; and if, in the mean time, it has been increased in value by the addition
of labor or money, the owner may, nevertheless, reclaim it, provided there has been no
destruction of substantial identity. So far the authorities are agreed. A man cannot
generally be deprived of his property except by his own voluntary act or by operation
of law; and if unauthorized parties have bestowed expense or labor upon it, that fact
cannot constitute a bar to his reclaiming it, so long as identification is not impracticable.
But there must, nevertheless, in reason be some limit to the right to follow and reclaim
materials which have undergone a process of manufacture. Mr. Justice Blackstone lays
down the rule very broadly, that if a thing is changed into a different species, as by
making wine out of another’s grapes, oil from his olives, or bread from his wheat, the
product belongs to the new operator, who is only to make satisfaction to the former
proprietor for the materials converted: 2 Bl. Com., 404. We do not understand this to
be disputed as a general proposition, though there are some authorities which hold that,
in the case of a willful appropriation, no extent of conversion can give to the willful
trespasser a title to the property so long as the original materials can be traced in the
improved article. The distinction thus made between the case of an appropriation in
good faith and one based on intentional wrong, appears to have come from the civil
law, which would not suffer a party to acquire a title by accession, founded on his own

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act, unless he had taken the materials in ignorance of the true owner, and given them a
form which precluded their being restored to their original condition: 2 Kent, 363.
While many cases have followed the rule as broadly stated by Blackstone, others have
adopted the severe rule of the civil law where the conversion was in willful disregard
of right. The New York cases of Betts v. Lee, 5 Johns., 348; Curtis v. Groat, 6 Johns., 168,
and Chandler v. Edson, 9 Johns., 362, were all cases where the willful trespasser was held
to have acquired no property by a very radical conversion, and in Silsbury v. McCoon, 3
N. Y., 378, 385, the whole subject is very fully examined … . [In Silsbury, a thief who
turned the plaintiff’s corn into whiskey did not thereby acquire ownership of it.] But
we are not called upon in this case to express any opinion regarding the rule applicable
in the case of a willful trespasser, since the authorities agree in holding that, when the
wrong had been involuntary, the owner of the original materials is precluded, by the
civil law and common law alike, from following and reclaiming the property after it has
undergone a transformation which converts it into an article substantially different.
The cases of confusion of goods are closely analogous. It has always been held that he
who, without fraud, intentional wrong, or reckless disregard of the rights of others,
mingled his goods with those of another person, in such manner that they could not
be distinguished, should, nevertheless, be protected in his ownership so far as the
circumstances would permit. The question of motive here becomes of the highest
importance; for, as Chancellor Kent says, if the commingling of property “was willfully
made without mutual consent, * * the common law gave the entire property, without
any account, to him whose property was originally invaded, and its distinct character
destroyed: Popham’s Rep. 38, Pl. 2. If A will willfully intermix his corn or hay with that
of B, or casts his gold into another’s crucible, so that it becomes impossible to
distinguish what belonged to A from what belonged to B, the whole belongs to B. But
this rule only applies to wrongful or fraudulent intermixtures. There may be an
intentional intermingling, and yet no wrong intended, as where a man mixes two parcels
together, supposing both to be his own; or, that he was about to mingle his with his
neighbor’s, by agreement, and mistakes the parcel. In such cases, which may be deemed
accidental intermixtures, it would be unreasonable and unjust that he should lose his
own or be obliged to take and pay for his neighbor’s, as he would have been under the
civil law: In many cases there will be difficulty in determining precisely how he can be
protected with due regard to the rights of the other party; but it is clear that the law

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will not forfeit his property in consequence of the accident or inadvertence, unless a
just measure of redress to the other party renders it inevitable.
The important question on this branch of the case appears to us to be, whether standing
trees, when cut and manufactured into hoops, are to be regarded as so far changed in
character that their identity can be said to be destroyed within the meaning of the
authorities. And as we enter upon a discussion of this question, it is evident at once
that it is difficult, if not impossible, to discover any invariable and satisfactory test
which can be applied to all the cases which arise in such infinite variety. “If grain be
taken and made into malt, or money taken and made into a cup, or timber taken and
made into a house, it is held in the old English law that the property is so altered as to
change the title:” 2 Kent, 363. But cloth made into garments, leather into shoes, trees
hewn or sawed into timber, and iron made into bars, it is said may be reclaimed by the
owner in their new and original shape: Some of the cases place the right of the former
owner to take the thing in its altered condition upon the question whether its identity
could be made out by the senses. But this is obviously a very unsatisfactory test, and in
many cases would wholly defeat the purpose which the law has in view in recognizing
a change of title in any of these cases. That purpose is not to establish any arbitrary
distinctions, based upon mere physical reasons, but to adjust the redress afforded to
the one party and the penalty inflicted upon the other, as near as circumstances will
permit, to the rules of substantial justice[.]
It may often happen that no difficulty will be experienced in determining the identity
of a piece of timber which has been taken and built into a house; but no one disputes
that the right of the original owner is gone in such a case. A particular piece of wood
might, perhaps, be traced without trouble into a church organ, or other equally valuable
article; but no one would defend a rule of law which, because the identity could be
determined by the senses, would permit the owner of the wood to appropriate a musical
instrument, a hundred or a thousand times the value of his original materials, when the
party who, under like circumstances, has doubled the value of another man’s corn by
converting it into malt, is permitted to retain it, and held liable for the original value
only. Such distinctions in the law would be without reason, and could not be tolerated.
When the right to the improved article is the point in issue, the question, how much
the property or labor of each has contributed to make it what it is, must always be one
of first importance. The owner of a beam built into the house of another loses his

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property in it, because the beam is insignificant in value or importance as compared to
that to which it has become attached, and the musical instrument belongs to the maker
rather than to the man whose timber was used in making it--not because the timber
cannot be identified, but because, in bringing it to its present condition the value of the
labor has swallowed up and rendered insignificant the value of the original materials.
The labor, in the case of the musical instrument, is just as much the principal thing as
the house is in the other case instanced; the timber appropriated is in each case
comparatively unimportant.
No test which satisfies the reason of the law can be applied in the adjustment of
questions of title to chattels by accession, unless it keeps in view the circumstance of
relative values. When we bear in mind the fact that what the law aims at is the
accomplishment of substantial equity, we shall readily perceive that the fact of the value
of the materials having been increased a hundred-fold, is of more importance in the
adjustment than any chemical change or mechanical transformation, which, however
radical, neither is expensive to the party making it, nor adds materially to the value.
There may be complete changes with so little improvement in value, that there could
be no hardship in giving the owner of the original materials the improved article; but
in the present case, where the defendant’s labor--if he shall succeed in sustaining his
offer of testimony—will appear to have given the timber in its present condition nearly
all its value, all the grounds of equity exist which influence the courts in recognizing a
change of title under any circumstances.
We are of opinion that the court erred in rejecting the testimony offered. The defendant,
we think, had a right to show that he had manufactured the hoops in good faith, and
in the belief that he had the proper authority to do so; and if he should succeed in
making that showing, he was entitled to have the jury instructed that the title to the
timber was changed by a substantial change of identity, and that the remedy of the
plaintiff was an action to recover damages for the unintentional trespass. …
Notes and Questions
1. What factors matter most to the court’s holding? Is this a case about the relative
value contributed by the plaintiff and defendant, about the difficulty of
identifying the plaintiff’s original property, about the difficulty of separating it,
or about the degree to which it has been physically altered? Consider Atlas

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Assurance Co. v. Gibbs, 183 A. 690 (Conn. 1936), which involved the engine from
a damaged car (the Hibben car) that had been properly sold and the body of a
car (the Sherline car) that had been stolen. The defendant’s predecessor in title
combined the two to make one working car. In an action for replevin by the
assignee of title to the Sherline car, who should get what?
2. How important is Wetherbee’s good faith? What if he had been told by Green
that Sumner lacked authority, but had examined Sumner’s title in some detail
and concluded that Green was wrong? What if Wetherbee steals a set of paints
and uses it to create a portrait that sells for $500,000?
3. Note that Green retains “an action to recover damages for the unintentional
trespass.” What is the measure of those damages? Given that Weatherbee owns
the hoops via accession, why does he need to pay? Or, to look at it another way,
why doesn’t an adverse possessor need to pay for the value of the property he
retains after the statute of limitations has run?
4. Sometimes property transforms itself. A cow from Farmer Jones’s herd wanders
onto Farmer Smith’s land, where it is impregnated by Farmer Smith’s bull. Who
owns the calf? Does it matter where the cow gives birth? Felix Cohen, in
Dialogue on Private Property, 9 RUTGERS L. REV. 357 (1954), claimed that every
legal system in human history appears to have resolved these cases in the same
way. Compare the case in which Farmer Smith’s bull kicks Farmer Jones’s cow
and badly injures it. What result then?
5. Another theme in confusion cases involves the distinction between unique and
fungible property. If I mistakenly pour your 55-gallon drum of water into my
storage tank, you are entitled to draw 55 gallons of water from the tank, even
though it is astoundingly improbable that you will get back the same water
molecules you started with. Water is water. If I mistakenly mix your your bottle
of 1967 Chateau de Snoot wine with my bottle of 2015 Rotgut Red, I can’t give
you a bottle of the resulting mixture and call it even. (What are you entitled to?)
But note that uniqueness is something courts create as well as discover. At the
start of the 19th century, wheat and other grains were stored and sold as though
they were unique goods; each farmer’s and merchant’s sacks of grain were

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treated as distinct from each other’s. Today, grain has been standardized and is
sold as a commodity: a merchant could order 100 bushels of U.S. No. 1 Hard
Red Spring Wheat without needing to specify or worry about what particular
farms it came from. A key to this shift was courts’ willingness to treat grain (and
many other agricultural commodities) as fungible. A merchant whose sacks of
wheat were dumped into a grain elevator without his consent would be entitled
to the same quantity of wheat of the same standard class, not to his specific
sacks or even to wheat with the same more specific characteristics. What was
gained and what was lost in this shift?
Uniform Commercial Code §§ 2-312, 2-403
§ 2-312. Warranty of title …

(1) Subject to subsection (2) there is in a contract for sale a warranty by the seller that
(a) The title conveyed shall be good, and its transfer rightful; and
(b) The goods shall be delivered free from any security interest or other lien or
encumbrance of which the buyer at the time of contracting has no knowledge.
(2) A warranty under subsection (1) will be excluded or modified only by specific
language or by circumstances which give the buyer reason to know that the person
selling does not claim title in himself or that he is purporting to sell only such right or
title as he or a third person may have. …
§ 2-403. Power to transfer; good faith purchase of goods; “entrusting”
(1) A purchaser of goods acquires all title which his transferor had or had power to
transfer except that a purchaser of a limited interest acquires rights only to the extent
of the interest purchased. A person with voidable title has power to transfer a good
title to a good faith purchaser for value. When goods have been delivered under a
transaction of purchase the purchaser has such power even though
(a) The transferor was deceived as to the identity of the purchaser, or
(b) The delivery was in exchange for a check which is later dishonored, or

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(c) It was agreed that the transaction was to be a “cash sale,” or
(d) The delivery was procured through fraud punishable as larcenous under the
criminal law.
(2) Any entrusting of possession of goods to a merchant who deals in goods of that
kind gives him power to transfer all rights of the entruster to a buyer in ordinary course
of business.
(3) “Entrusting” includes any delivery and any acquiescence in retention of possession
regardless of any condition expressed between the parties to the delivery or
acquiescence and regardless of whether the procurement of the entrusting or the
possessor’s disposition of the goods have been such as to be larcenous under the
criminal law.
Notes and Questions
1. What do these two provisions have to do with each other? Hint: think about
circumstances in which the warranty of § 2-312 would be violated and consider
whether § 2-403 comes into play, and vice-versa.
Kotis v. Nowlin Jewelry, Inc.
844 S.W.2d 920 (1992)
DRAUGHN, Justice.
Eddie Kotis appeals from a judgment declaring appellee, Nowlin Jewelry, Inc., the sole
owner of a Rolex watch, and awarding appellee attorney’s fees. Kotis raises fourteen
points of error. We affirm.
On June 11, 1990, Steve Sitton acquired a gold ladies Rolex watch, President model,
with a diamond bezel from Nowlin Jewelry by forging a check belonging to his brother
and misrepresenting to Nowlin that he had his brother’s authorization for the purchase.
The purchase price of the watch, and the amount of the forged check, was $9,438.50.
The next day, Sitton telephoned Eddie Kotis, the owner of a used car dealership, and
asked Kotis if he was interested in buying a Rolex watch. Kotis indicated interest and
Sitton came to the car lot[.] Kotis purchased the watch for $3,550.00. Kotis also called
Nowlin’s Jewelry that same day and spoke with Cherie Nowlin.

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Ms. Nowlin told Kotis that Sitton had purchased the watch the day before. Ms. Nowlin
testified that Kotis would not immediately identify himself. Because she did not have
the payment information available, Ms. Nowlin asked if she could call him back. Kotis
then gave his name and number. Ms. Nowlin testified that she called Kotis and told
him the amount of the check and that it had not yet cleared. Kotis told Ms. Nowlin
that he did not have the watch and that he did not want the watch. Ms. Nowlin also
testified that Kotis would not tell her how much Sitton was asking for the watch.
John Nowlin, the president of Nowlin’s Jewelry, testified that, after this call from Kotis,
Nowlin’s bookkeeper began attempting to confirm whether the check had cleared.
When they learned the check would not be honored by the bank, Nowlin called Kotis,
but Kotis refused to talk to Nowlin. Kotis referred Nowlin to his attorney. On June 25,
1990, Kotis’ attorney called Nowlin and suggested that Nowlin hire an attorney and
allegedly indicated that Nowlin could buy the watch back from Kotis. Nowlin refused
to repurchase the watch.
After Sitton was indicted for forgery and theft, the district court ordered Nowlin’s
Jewelry to hold the watch until there was an adjudication of the ownership of the watch.
Nowlin then filed suit seeking a declaratory judgment that Nowlin was the sole owner
of the watch. Kotis filed a counterclaim for a declaration that Kotis was a good faith
purchaser of the watch and was entitled to possession and title of the watch. After a
bench trial, the trial court rendered judgment declaring Nowlin the sole owner of the
watch. The trial court also filed Findings of Fact and Conclusions of Law.
In point of error one, Kotis claims the trial court erred in concluding that Sitton did
not receive the watch through a transaction of purchase with Nowlin, within the
meaning of Tex.Bus. & Com.Code Ann. § 2.403(a). Where a party challenges a trial
court’s conclusions of law, we may sustain the judgment on any legal theory supported
by the evidence. Incorrect conclusions of law will not require reversal if the controlling
findings of facts will support a correct legal theory.
Kotis contends there is evidence that the watch is a “good” under the UCC, there was
a voluntary transfer of the watch, and there was physical delivery of the watch. Thus,
Kotis maintains that the transaction between Sitton and Nowlin was a transaction of
purchase such that Sitton acquired the ability to transfer good title to a good faith

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purchaser under § 2.403 [which was identical in relevant part to the UCC excerpt
quoted above]. …
Neither the code nor case law defines the phrase “transaction of purchase.” “Purchase”
is defined by the code as a “taking by sale, discount, negotiation, mortgage, pledge, lien,
issue or reissue, gift or any other voluntary transaction creating an interest in property.”
Tex. Bus. & Com. Code Ann. § 1.201(32) (Vernon 1968). Thus, only voluntary
transactions can constitute transactions of purchase.
Having found no Texas case law concerning what constitutes a transaction of purchase
under § 2.403(a), we have looked to case law from other states. Based on the code
definition of a purchase as a voluntary transaction, these cases reason that a thief who
wrongfully takes the goods against the will of the owner is not a purchaser. See Suburban
Motors, Inc. v. State Farm Mut. Automobile Ins. Co., 268 Cal. Rptr. 16, 18 (Cal. Ct. App.
1990); Charles Evans BMW, Inc. v. Williams 395 S.E.2d 650, 651-52 (Ga. Ct. App. 1990);
Inmi-Etti v. Aluisi, 492 A.2d 917 (Md. Ct. App. 1985). On the other hand, a swindler
who fraudulently induces the victim to deliver the goods voluntarily is a purchaser
under the code.
In this case, Nowlin’s Jewelry voluntarily delivered the watch to Sitton in return for
payment by check that was later discovered to be forged. Sitton did not obtain the
watch against the will of the owner. Rather, Sitton fraudulently induced Nowlin’s
Jewelry to deliver the watch voluntarily. Thus, we agree with appellant that the trial
court erred in concluding that Sitton did not receive the watch through a transaction
of purchase under § 2.403(a). We sustain point of error one.
In point of error two, Kotis contends the trial court erred in concluding that, at the
time Sitton sold the watch to Kotis, Sitton did not have at least voidable title to the
watch. In point of error nine, Kotis challenges the trial court’s conclusion that Nowlin’s
Jewelry had legal and equitable title at all times relevant to the lawsuit. The lack of Texas
case law addressing such issues under the code again requires us to look to case law
from other states to assist in our analysis.
In Suburban Motors, Inc. v. State Farm Mut. Automobile Ins. Co., the California court noted
that § 2.403 provides for the creation of voidable title where there is a voluntary transfer
of goods. Section 2.403(a)(1)-(4) set forth the types of voluntary transactions that can

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give the purchaser voidable title. Where goods are stolen such that there is no voluntary
transfer, only void title results. Subsection (4) provides that a purchaser can obtain
voidable title to the goods even if “delivery was procured through fraud punishable as
larcenous under the criminal law.” This subsection applies to cases involving acts
fraudulent to the seller such as where the seller delivers the goods in return for a forged
check. Although Sitton paid Nowlin’s Jewelry with a forged check, he obtained
possession of the watch through a voluntary transaction of purchase and received
voidable, rather than void, title to the watch. Thus, the trial court erred in concluding
that Sitton received no title to the watch and in concluding that Nowlin’s retained title
at all relevant times. We sustain points of error two and nine.
In point of error three, Kotis claims the trial court erred in concluding that Kotis did
not give sufficient value for the watch to receive protection under § 2.403, that Kotis
did not take good title to the watch as a good faith purchaser, that Kotis did not receive
good title to the watch, and that Kotis is not entitled to the watch under § 2.403. In
points of error four through eight, Kotis challenges the trial court’s findings regarding
his good faith, his honesty in fact, and his actual belief, and the reasonableness of the
belief, that the watch had been received unlawfully.
Under § 2.403(a), a transferor with voidable title can transfer good title to a good faith
purchaser. Good faith means “honesty in fact in the conduct or transaction concerned.”
Tex.Bus. & Com. Code Ann. § 1.201(19) (Vernon 1968). The test for good faith is the
actual belief of the party and not the reasonableness of that belief. La Sara Grain v. First
Nat’l Bank, 673 S.W.2d 558, 563 (Tex.1984).
Kotis was a dealer in used cars and testified that he had bought several cars from Sitton
in the past and had no reason not to trust Sitton. He also testified that on June 12, 1990,
Sitton called and asked Kotis if he was interested in buying a Ladies Rolex. Once Kotis
indicated his interest in the watch, Sitton came to Kotis’s place of business. According
to Kotis, Sitton said that he had received $18,000.00 upon the sale of his house and
that he had used this to purchase the watch for his girlfriend several months before.
Kotis paid $3,550.00 for the watch. Kotis further testified that he then spoke to a friend,
Gary Neal Martin, who also knew Sitton. Martin sagely advised Kotis to contact
Nowlin’s to check whether Sitton had financed the watch. Kotis testified that he called
Nowlin’s after buying the watch.

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Cherie Nowlin testified that she received a phone call from Kotis on June 12, 1990,
although Kotis did not immediately identify himself. Kotis asked if Nowlin’s had sold
a gold President model Rolex watch with a diamond bezel about a month before. When
asked, Kotis told Ms. Nowlin that Sitton had come to Kotis’ car lot and was trying to
sell the watch. Ms. Nowlin testified that Kotis told her he did not want the watch
because he already owned a Rolex. Ms. Nowlin told Kotis that Sitton had purchased
the watch the day before. Kotis asked about the method of payment. Because Ms.
Nowlin did not know, she agreed to check and call Kotis back. She called Kotis back
and advised him that Sitton had paid for the watch with a check that had not yet cleared.
When Ms. Nowlin asked if Kotis had the watch, Kotis said no and would not tell her
how much Sitton was asking for the watch. Ms. Nowlin did advise Kotis of the amount
of the check.
After these calls, the owner of Nowlin’s asked his bookkeeper to call the bank regarding
Sitton’s check. They learned on June 15, 1990 that the check would be dishonored.
John Nowlin called Kotis the next day and advised him about the dishonored check.
Kotis refused to talk to Nowlin and told Nowlin to contact his attorney. Nowlin also
testified that a reasonable amount to pay for a Ladies President Rolex watch with a
diamond bezel in mint condition was $7,000.00-$8,000.00. Nowlin maintained that
$3,500.00 was an exorbitantly low price for a watch like this.
The trier of fact is the sole judge of the credibility of the witnesses and the weight to
be given their testimony. Kotis testified that he lied when he spoke with Cherie Nowlin
and that he had already purchased the watch before he learned that Sitton’s story was
false. The judge, as the trier of fact, may not have believed Kotis when he said that he
had already purchased the watch. If the judge disbelieved this part of Kotis’ testimony,
other facts tend to show that Kotis did not believe the transaction was lawful. For
example, when Kotis spoke with Nowlin’s, he initially refused to identify himself, he
said that he did not have the watch and that he did not want the watch, he refused to
divulge Sitton’s asking price, and he later refused to talk with Nowlin and advised
Nowlin to contact Kotis’ attorney. Thus, there is evidence supporting the trial court’s
finding that Kotis did not act in good faith.
There are sufficient facts to uphold the trial court’s findings even if the judge had
accepted as true Kotis’ testimony that, despite his statements to Nowlin’s, he had

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already purchased the watch when he called Nowlin’s. The testimony indicated that
Kotis was familiar with the price of Rolex watches and that $3,550.00 was an extremely
low price for a mint condition watch of this type. An unreasonably low price is evidence
the buyer knows the goods are stolen. Although the test is what Kotis actually believed,
we agree with appellee that we need not let this standard sanction willful disregard of
suspicious facts that would lead a reasonable person to believe the transaction was
unlawful. Thus, we find sufficient evidence to uphold the trial court’s findings
regarding Kotis’ lack of status as a good faith purchaser. We overrule points of error
three through eight. …
We affirm the trial court’s judgment.
Notes and Questions
1. The common-law baseline is nemo dat quod non habet: no man can give what he
does not have. If I “give” you a car I don’t own, you don’t own it either. If I sell
you a tract of land encumbered by a mortgage and an easement, you receive
only as much as I owned, so you take the land subject to the mortgage and the
easement. This nemo dat baseline is the source of the maxim that a thief cannot
give good title. So if Sitton had held up Nowlin’s at gunpoint, how would the
case have come out, and on what reasoning?
§ 2-403(1), as applied in Kotis, distinguishes the thief’s “void” title from merely
“voidable” title: the quality of title obtained by the buyer in a transaction that is
for some reason defective, or held by a merchant entrusted with the chattel who
ordinarily deals in similar goods. If the seller in that defective transaction
discovers the problem, she has a right to unwind the transaction (and get her
stuff back), and likewise someone who entrusts their chattel to a merchant
without transferring title can take it back if they so choose. But until she does,
the buyer or merchant has the power to convey not just his own, voidable title,
but something even better. A good-faith purchaser for value receives good title,
even as against the original seller/entruster. The original owner’s right to unwind the
transaction has been cut off. This is a harsh way to treat a victim of fraud or
mistake. Why would property law do something like that?

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2. Back to Kotis: How did the parties get into this mess? Obviously Sitton is most
to blame, but is there anything Kotis or Nowlin could have done? Who is left
holding the bag and why? Is there anything Kotis can do to recover his
$3,550.00?
3. Section 2-403 provides for two tests that the buyer must meet to be protected
(in addition to the threshold question of whether his seller had voidable title):
he must act in good faith and he must give “value.” Which of these tripped up
Kotis? And what is the reason for not protecting donees along with buyers?
4. Note that in distinguishing between void and voidable title, we must take care
to identify three distinct parties: (1) the original possessor; (2) the intermediary
possessor (a thief in the case of void title, or the buyer or trusted merchant in
the case of voidable title); and (3) the person who receives possession from the
intermediary possessor. Have we seen other factual scenarios in which such a
three-person chain of possessors presents itself?
Of course we have: Armory v. Delamirie is such a case. The main difference is
that the original possessor (our hypothetical Lord Hobnob) is not to be found—
we don’t even know who he is. Is this difference important? What other
differences are there among the various three-possessor problems we’ve seen?
Do these differences suggest that the rights of these three serial possessors as
against one another ought to be different depending on whether the chattel at
issue was found, stolen, or obtained by fraud or mistake by Possessor #2? If so,
how?

Bailments and Liens
We have seen numerous cases in which a possessor—a fox hunter, a finder of a jewel,
a lumber thief—is not the true owner according to the law. There are more. The
property could have been entrusted by the owner to the possessor: this is called a
bailment. (Note that the owner/entruster is the bail-OR and the temporary possessor is
the bail-EE.) Common bailees include delivery services, dry cleaners, and friends who
borrow each others’ casebooks. Or perhaps the property is owned by the possessor,
but subject to a security interest held by a third party. Car loans are a familiar class of
these liens: the bank has a right to repossess the car if the buyer fails to make payments
on time. Sometimes the two go together. A pawn shop, for example, is both a bailee
and lienholder: it has possession of the pawnor’s gold-plated fish tank on skis and a
lien against it, which it uses to secure the loan it makes to the pawnor.
These arrangements, all of which split full ownership from physical possession,
systematically raise the same kinds of issues. First, there is the question of the duties
between the possessor and the party out of possession: bailees have a duty to return
the property, and secured creditors can satisfy unpaid debts by taking ownership of the
property. Second, there is the question of which of the parties has enough of an interest
in the property to sue if some third party steals or damages it. Third, there is the difficult
problem of protecting the legitimate expectations of third parties dealing with a person
in possession of property who may or may not be its full owner—problems that should
be familiar from the materials on good-faith purchasers.

A. Bailments
Allen v. Hyatt Regency-Nashville Hotel
668 S.W.2d 286 (Tenn. 1984)
HARBISON, Justice.
In this case the Court is asked to consider the nature and extent of the liability of the
operator of a commercial parking garage for theft of a vehicle during the absence of
252

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the owner. Both courts below, on the basis of prior decisions from this state, held that
a bailment was created when the owner parked and locked his vehicle in a modern,
indoor, multi-story garage operated by appellant in conjunction with a large hotel in
downtown Nashville. We affirm.
There is almost no dispute as to the relevant facts. Appellant is the owner and operator
of a modern high-rise hotel in Nashville fronting on the south side of Union Street.
Immediately to the rear, or south, of the main hotel building there is a multi-story
parking garage with a single entrance and a single exit to the west, on Seventh Avenue,
North. As one enters the parking garage at the street level, there is a large sign reading
“Welcome to Hyatt Regency-Nashville.” There is another Hyatt Regency sign inside
the garage at street level, together with a sign marked “Parking.” The garage is available
for parking by members of the general public as well as guests of the hotel, and the
public are invited to utilize it.
On the morning of February 12, 1981, appellee’s husband, Edwin Allen, accompanied
by two passengers, drove appellee’s new 1981 automobile into the parking garage.
Neither Mr. Allen nor his passengers intended to register at the hotel as a guest. Mr.
Allen had parked in this particular garage on several occasions, however, testifying that
he felt that the vehicle would be safer in an attended garage than in an unattended
outside lot on the street.
The single entrance was controlled by a ticket machine. The single exit was controlled
by an attendant in a booth just opposite to the entrance and in full view thereof.
Appellee’s husband entered the garage at the street level and took a ticket which was
automatically dispensed by the machine. The machine activated a barrier gate which
rose and permitted Mr. Allen to enter the garage. He drove to the fourth floor level,
parked the vehicle, locked it, retained the ignition key, descended by elevator to the
street level and left the garage. When he returned several hours later, the car was gone,
and it has never been recovered. Mr. Allen reported the theft to the attendant at the
exit booth, who stated, “Well, it didn’t come out here.” The attendant did not testify at
the trial.
Mr. Allen then reported the theft to security personnel employed by appellant, and
subsequently reported the loss to the police. Appellant regularly employed a number
of security guards, who were dressed in a distinctive uniform, two of whom were on

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duty most of the time. These guards patrolled the hotel grounds and building as well
as the garage and were instructed to make rounds through the garage, although not
necessarily at specified intervals. One of the security guards told appellee’s husband
that earlier in the day he had received the following report:
He said, “It’s a funny thing here. On my report here a lady called me
somewhere around nine-thirty or after and said that there was someone
messing with a car.”
The guard told Mr. Allen that he closed his office and went up into the garage to
investigate, but reported that he did not find anything unusual or out of the ordinary.
Customers such as Mr. Allen, upon entering the garage, received a ticket from the
dispensing machine. On one side of this ticket are instructions to overnight guests to
present the ticket to the front desk of the hotel. The other side contains instructions to
the parker to keep the ticket and that the ticket must be presented to the cashier upon
leaving the parking area. The ticket states that charges are made for the use of parking
space only and that appellant assumes no responsibility for loss through fire, theft,
collision or otherwise to the car or its contents. The ticket states that cars are parked at
the risk of the owner, and parkers are instructed to lock their vehicles. The record
indicates that these tickets are given solely for the purpose of measuring the time during
which a vehicle is parked in order that the attendant may collect the proper charge, and
that they are not given for the purpose of identifying particular vehicles.
The question of the legal relationship between the operator of a vehicle which is being
parked and the operator of parking establishments has been the subject of frequent
litigation in this state and elsewhere. The authorities are in conflict, and the results of
the cases are varied.
It is legally and theoretically possible, of course, for various legal relationships to be
created by the parties, ranging from the traditional concepts of lessor-lessee, licensorlicensee, bailor-bailee, to that described in some jurisdictions as a “deposit.” Several
courts have found difficulty with the traditional criteria of bailment in analyzing parkand-lock cases. One of the leading cases is McGlynn v. Parking Authority of City of Newark,
432 A.2d 99 (N.J. 1981). There the Supreme Court of New Jersey reviewed numerous
decisions from within its own state and from other jurisdictions, and it concluded that

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it was more “useful and straightforward” to consider the possession and control
elements in defining the duty of care of a garage operator to its customers than to
consider them in the context of bailment. That Court concluded that the “realities” of
the relationship between the parties gave rise to a duty of reasonable care on the part
of operators of parking garages and parking lots. It further found that a garage owner
is usually better situated to protect a parked car and to distribute the cost of protection
through parking fees. It also emphasized that owners usually expect to receive their
vehicles back in the same condition in which they left them and that the imposition of
a duty to protect parked vehicles and their contents was consistent with that
expectation. The Court went further and stated that since the owner is ordinarily absent
when theft or damage occurs, the obligation to come forward with affirmative evidence
of negligence could impose a difficult, if not insurmountable, burden upon him. After
considering various policy considerations, which it acknowledged [to] be the same as
those recognized by courts holding that a bailment is created, the New Jersey Court
indulged or authorized a presumption of negligence from proof of damage to a car
parked in an enclosed garage.
Although the New Jersey Court concluded that a more flexible and comprehensive
approach could be achieved outside of traditional property concepts, Tennessee courts
generally have analyzed cases such as this in terms of sufficiency of the evidence to
create a bailment for hire by implication. We believe that this continues to be the
majority view and the most satisfactory and realistic approach to the problem, unless
the parties clearly by their conduct or by express contract create some other
relationship.
The subject has been discussed in numerous previous decisions in this state. One of
the leading cases is Dispeker v. New Southern Hotel Co., 373 S.W.2d 904 (Tenn. 1963). In
that case the guest at a hotel delivered his vehicle to a bellboy who took possession of
it and parked it in a lot adjoining the hotel building. The owner kept the keys, but the
car apparently was capable of being started without the ignition key. The owner
apparently had told the attendant how to so operate it. Later the employee took the
vehicle for his own purposes and damaged it. Under these circumstances the Court
held that a bailment for hire had been created and that upon proof of misdelivery of
the vehicle the bailee was liable to the customer.

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In the subsequent case of Scruggs v. Dennis, 440 S.W.2d 20 (Tenn. 1969), upon facts
practically identical to those of the instant case, the Court again held that an implied
bailment contract had been created between a customer who parked and locked his
vehicle in a garage. Upon entry he received a ticket dispensed by a machine, drove his
automobile to the underground third level of the garage and parked. He retained his
ignition key, but when he returned to retrieve the automobile in the afternoon it had
disappeared. It was recovered more than two weeks later and returned to the owner in
a damaged condition.
In that case the operator of the garage had several attendants on duty, but the
attendants did not ordinarily operate the parked vehicles, as in the instant case.
Although the Court recognized that there were some factual differences between the
Scruggs case and that of Dispeker v. New Southern Hotel Co., supra, it concluded that a
bailment had been created when the owner parked his vehicle for custody and safe
keeping in the parking garage, where there was limited access and where the patron had
to present a ticket to an attendant upon leaving the premises.
A bailment relationship was also found in Jackson v. Metropolitan Government of Nashville,
483 S.W.2d 92 (Tenn. 1972), when faculty members of a high school conducted an
automobile parking operation for profit upon the high school campus. A customer
who parked his vehicle there was allowed recovery for theft, even though he had parked
the vehicle himself after paying a fee, had locked the vehicle and had kept the keys.
On the contrary, in the case of Rhodes v. Pioneer Parking Lot, Inc., 501 S.W.2d 569 (Tenn.
1973), a bailment was found not to exist when the owner left his vehicle in an open
parking lot which was wholly unattended and where he simply inserted coins into a
meter, received a ticket, then parked the vehicle himself and locked it.
Denying recovery, the Court said:
In the case at bar, however, we find no evidence to justify a finding that
the plaintiff delivered his car into the custody of the defendant, nor do
we find any act or conduct upon the defendant’s part which would justify
a reasonable person believing that an obligation of bailment had been
assumed by the defendant. 501 S.W.2d at 571.

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In the instant case, appellee’s vehicle was not driven into an unattended or open
parking area. Rather it was driven into an enclosed, indoor, attended commercial garage
which not only had an attendant controlling the exit but regular security personnel to
patrol the premises for safety.
Under these facts we are of the opinion that the courts below correctly concluded that
a bailment for hire had been created, and that upon proof of nondelivery appellee was
entitled to the statutory presumption of negligence provided in T.C.A. § 24-5-111.
We recognize that there is always a question as to whether there has been sufficient
delivery of possession and control to create a bailment when the owner locks a vehicle
and keeps the keys. Nevertheless, the realities of the situation are that the operator of
the garage is, in circumstances like those shown in this record, expected to provide
attendants and protection. In practicality the operator does assume control and custody
of the vehicles parked, limiting access thereto and requiring the presentation of a ticket
upon exit. As stated previously, the attendant employed by appellant did not testify,
but he told appellee’s husband that the vehicle did not come out of the garage through
the exit which he controlled. This testimony was not amplified, but the attendant
obviously must have been in error or else must have been inattentive or away from his
station. The record clearly shows that there was no other exit from which the vehicle
could have been driven.
Appellant made no effort to rebut the presumption created by statute in this state
(which is similar to presumptions indulged by courts in some other jurisdictions not
having such statutes). While the plaintiff did not prove positive acts of negligence on
the part of appellant, the record does show that some improper activity or tampering
with vehicles had been called to the attention of security personnel earlier in the day of
the theft in question, and that appellee’s new vehicle had been removed from the garage
by some person or persons unknown, either driving past an inattentive attendant or
one who had absented himself from his post, there being simply no other way in which
the vehicle could have been driven out of the garage.
Under the facts and circumstances of this case, we are not inclined to depart from prior
decisions or to place the risk of loss upon the consuming public as against the operators
of commercial parking establishments such as that conducted by appellant. We
recognize that park-and-lock situations arise under many and varied factual

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circumstances. It is difficult to lay down one rule of law which will apply to all cases.
The expectations of the parties and their conduct can cause differing legal relationships
to arise, with consequent different legal results. We do not find the facts of the present
case, however, to be at variance with the legal requirements of the traditional concept
of a bailment for hire. In our opinion it amounted to more than a mere license or hiring
of a space to park a vehicle, unaccompanied by any expectation of protection or other
obligation upon the operator of the establishment.
The judgment of the courts below is affirmed at the cost of appellant. The cause will
be remanded to the trial court for any further proceedings which may be necessary.
DROWOTA, Justice, dissenting.
In this case we are asked to consider the nature and extent of liability of the operator
of a commercial “park and lock” parking garage. In making this determination, we must
look to the legal relationship between the operator of the vehicle and the operator of
the parking facility. The majority opinion holds that a bailment contract has been
created, and upon proof of non-delivery Plaintiff is entitled to the statutory
presumption of negligence provided in T.C.A. § 24-5-111. I disagree, for I find no
bailment existed and therefore the Plaintiff does not receive the benefit of the
presumption. Consequently, the Plaintiff had the duty to prove affirmatively the
negligence of the operator of the parking facility and this Plaintiff failed to do.
The majority opinion states that “courts have found difficulty with the traditional
criteria of bailment in analyzing park and lock cases.” The majority discusses the case
of McGlynn v. Parking Authority of City of Newark, 86 N.J. 551, 432 A.2d 99 (1981), which
suggests that bailment is an outmoded concept for analyzing parking lot and garage
cases. In Garlock v. Multiple Parking Services, Inc., 427 N.Y.S.2d 670, 677 (1980), the court
stated that “the ‘bailment theory’ as a basis for recovery in parking lot cases is no longer
appropriate.” That court concluded that since the concept of bailment is no longer a
viable theory in application to a very real modern problem that the proper standard to
be followed in such cases is “reasonable care under the circumstances whereby
foreseeability shall be a measure of liability.” Id. 427 N.Y.S.2d at 678.
Even though some courts now suggest that the theory of bailment is an archaic and
inappropriate theory upon which to base liability in modern park and lock cases, the

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majority opinion states that “Tennessee courts generally have analyzed cases such as
this in terms of sufficiency of the evidence to create a bailment for hire by implication,”
and concludes that this is “the most satisfactory and realistic approach to the problem.”
I do not disagree with the longstanding use of the bailment analysis in this type of case.
I do disagree, however, with the majority’s conclusion that a bailment for hire has been
created in this case.
The record shows that upon entering this parking garage a ticket, showing time of
entry, is automatically dispensed by a machine. The ticket states that charges are made
for the use of a parking space only and that the garage assumes no responsibility for
loss to the car or its contents. The ticket further states that cars are parked at the risk
of the owner, and parkers are instructed to lock their vehicles. The majority opinion
points out that it is not insisted that this language on the ticket is sufficient to exonerate
the garage, since the customer is not shown to have read it or to have had it called to
his attention. Savoy Hotel Corp. v. Sparks, 421 S.W.2d 98 (Tenn. Ct. App. 1967). The
ticket in no way identifies the vehicle, it is given solely for the purpose of measuring
the length of time during which the vehicle is parked in order that a proper charge may
be made.
In this case Mr. Allen, without any direction or supervision, parked his car, removed
his keys, and locked the car and left the parking garage having retained his ignition key.
The presentation of a ticket upon exit is for the sole purpose of allowing the cashier to
collect the proper charge. The cashier is not required to be on duty at all times. When
no cashier is present, the exit gate is opened and no payment is required. * As the
majority opinion states, the ticket is “not given for the purpose of identifying particular
vehicles.” The ticket functioned solely as a source of fee computation, not of vehicle
identification.
The majority opinion states: “[W]e do not find the facts of the present case to be at
variance with the legal requirements of the concept of a bailment for hire.” I must

* Between one or two in the morning and six or seven a.m., the garage is entirely open without a cashier to collect

parking fees. During the day if the cashier leaves his or her post on a break, the exit gate is opened and the vehicle
owner may exit without payment.

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disagree, for I feel the facts of the present case are clearly at variance with what I
consider to be the legal requirements of the traditional concept of a bailment for hire.
Bailment has been defined by this Court in the following manner:
The creation of a bailment in the absence of an express contract requires
that possession and control over the subject matter pass from the bailor
to the bailee. In order to constitute a sufficient delivery of the subject
matter there must be a full transfer, either actual or constructive, of the
property to the bailee so as to exclude it from the possession of the
owner and all other persons and give to the bailee, for the time being,
the sole custody and control thereof.
In parking lot and parking garage situations, a bailment is created where
the operator of the lot or garage has knowingly and voluntarily assumed
control, possession, or custody of the motor vehicle; if he has not done
so, there may be a mere license to park or a lease of parking space.
Rhodes v. Pioneer Parking Lot, Inc., 501 S.W.2d 569, 570 (Tenn. 1973).
From its earliest origins, the most distinguishing factor identifying a bailment has been
delivery. Our earliest decisions also recognize acceptance as a necessary factor,
requiring that possession and control of the property pass from bailor to bailee, to the
exclusion of control by others. The test thus becomes whether the operator of the
vehicle has made such a delivery to the operator of the parking facility as to amount to
a relinquishment of his exclusive possession, control, and dominion over the vehicle
so that the latter can exclude it from the possession of all others. If so, a bailment has
been created.
When the automobile began replacing the horse and buggy, our courts allowed
bailment law to carry over and govern the parking of vehicles. In cases such as Old
Hickory Parking Corp. v. Alloway, 177 S.W.2d 23 (Tenn. Ct. App. 1943), and Savoy Hotel
v. Sparks, 421 S.W.2d 98 (Tenn. Ct. App. 1967), where the operator of the vehicle left
his vehicle with an attendant and left the keys for the attendant to move the vehicle as
he wished, the bailment relationship was evident for we had a clear delivery, acceptance
of possession, control, and exercise of dominion over the vehicle—all the traditional
elements of a bailment. In Dispeker v. New Southern Hotel Company, 373 S.W.2d 904

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(Tenn. 1963), a bellboy parked plaintiff’s car, plaintiff retained the keys but explained
to the bellboy that the car could be operated without the key, and apparently showed
him how to operate it. The bellboy went off duty, then returned and stole the car. Once
again, the traditional elements of delivery and control were present.
These cases involving parking attendants and personalized service have caused us no
problems. The problem arises in this modern era of automated parking, when courts
have attempted to expand the limits of existing areas of the law to encompass
technological and commercial advances. Such is the case of Scruggs v. Dennis, 440 S.W.2d
20 (Tenn. 1969), relied upon in the majority opinion. In Scruggs, as in this case, the entire
operation is automated, with the exception of payment upon departure. The operation
bears little, if any, resemblance to the circumstances found in Old Hickory Parking Corp.,
Savoy Hotel, and Dispeker. Yet the Court in Scruggs, in quoting extensively from the
Dispeker opinion, states that “There are some minute differences of fact …” Id., 440
S.W.2d at 22. As pointed out above, the differences of fact in Dispeker are not minute
or so similar as the Scruggs court would suggest. Delivery, custody and control are clearly
present in Dispeker. I fail to find such delivery, custody and control in Scruggs or in the
case at bar. In Dispeker, the vehicle was actually taken from the owner by an attendant.
I believe the Scruggs court and the majority opinion today attempt to apply bailment law
in situations where there is not a true bailment relationship. …
The majority opinion, as did the Scruggs court, finds custody and control implied
because of the limited access and because “the presentation of a ticket upon exit” is
required. I cannot agree with this analysis as creating a bailment situation. I do not
believe that based upon the fact that a ticket was required to be presented upon leaving,
that this factor created a proper basis upon which to find a bailment relationship. The
ticket did not identify the vehicle or the operator of the vehicle, as do most bailment
receipts. The cashier was not performing the traditional bailee role or identifying and
returning a particular article, but instead was merely computing the amount owed and
accepting payment due for use of a parking space. I do not believe the Defendant
exercised such possession and control over Plaintiff’s automobile as is necessary in an
implied bailment. …
The full transfer of possession and control, necessary to constitute delivery, should not
be found to exist simply by the presentation of a ticket upon exit. In the case at bar, I

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find no such delivery and relinquishment of exclusive possession and control as to
create a bailment. Plaintiff parked his car, locked it and retained the key. Certainly
Defendant cannot be said to have sole custody of Plaintiff’s vehicle, for Defendant
could not move it, did not know to whom it belonged, and did not know when it would
be reclaimed or by whom. Anyone who manually obtained a ticket from the dispenser
could drive out with any vehicle he was capable of operating. Also, a cashier was not
always on duty. When on duty, so long as the parking fee was paid—by what means
could the Defendant reasonably exercise control? The necessary delivery and
relinquishment of control by the Plaintiff, the very basis upon which the bailment
theory was developed, is missing.
We should realize that the circumstances upon which the principles of bailment law
were established and developed are not always applicable to the operation of the
modern day automated parking facility. The element of delivery, of sole custody and
control are lacking in this case.
Notes and Questions
1. From time immemorial, potential bailees have attempted to limit their potential
liability by contract. Why didn’t the ticket in Allen suffice to protect the hotel
from liability for the lost car?
2. A common concern of bailees is taking responsibility for unexpectedly valuable
items. In Peet v. Roth Hotel, 253 N.W. 546 (Minn. 1934), the plaintiff left her
engagement ring with a hotel employee with instructions to give it to a jeweler
who paid regular visits to the hotel and was known to its employees. She
testified:
I had it [the ring] on my finger, and took it off my finger. The
Cashier—I told the Cashier that it was for Mr. Ferdinand Hotz.
She took out an envelope and wrote ‘Ferdinand Hotz.’ I
remember spelling it to her, and then I left. … I handed the ring
to the Cashier, and she wrote on the envelope. … The only
instructions I remember are telling her that it was for Mr.
Ferdinand Hotz who was stopping at the hotel.

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The ring was stolen while in the hotel’s possession and a jury awarded $2,140.66
in damages. The hotel objected, arguing that plaintiff “failed to divulge the
unusual value of her ring when she left it with [the cashier, who] testified that,
at the moment, she did not realize its value.” The court was unsympathetic,
writing, “No decision has been cited and probably none can be found where
the bailee of an article of jewelry, undeceived as to its identity, was relieved of
liability because of his own erroneous underestimate of its value.” Is this fair?
Compare Minnesota’s modern statute on innkeepers’ liability, in MINN. STAT.
§ 327.71(1):
No innkeeper who has in the establishment a fireproof, metal
safe or vault, in good order and fit for the custody of valuables,
and who keeps a copy of this subdivision clearly and
conspicuously posted at or near the front desk and on the inside
of the entrance door of every bedroom, shall be liable for the loss
of or injury to the valuables of a guest unless: (1) the guest has
offered to deliver the valuables to the innkeeper for custody in
the safe or vault; and (2) the innkeeper has omitted or refused to
take the valuables and deposit them in the safe or vault for
custody and to give the guest a receipt for them. Except as
otherwise provided in subdivision 6, the liability of an innkeeper
for the loss of or injury to the valuables of a guest shall not exceed
$1,000. No innkeeper shall be required to accept valuables for
custody in the safe or vault if their value exceeds $1,000, unless
the acceptance is in writing.
Would this statute have changed the result in Peet? How does it alter the
relationship between hotels and guests? Does it explain why hotel rooms
typically have a statement of this sort posted on the inside of their doors?
Here is part of the Uniform Commercial Code’s take on the issue (in the context
of carriers’ liability for lost or damaged goods given to them for delivery):
Damages may be limited by a term in the bill of lading or in a
transportation agreement that the carrier’s liability may not
exceed a value stated in the bill or transportation agreement if the

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carrier’s rates are dependent upon value and the consignor is
afforded an opportunity to declare a higher value and the
consignor is advised of the opportunity. However, such a
limitation is not effective with respect to the carrier’s liability for
conversion to its own use. …
UCC § 7-309(b). What do you think of this solution?

3. Bailments raise interesting issues about the bailor’s and bailee’s relationships
with third parties. Suppose Lord Hobnob takes a valuable jewel to a jewelry
shop for repair. While it is there, a chimney-sweep smashes the window and
runs off with it. Obviously Lord Hobnob sue the chimney-sweep to recover the
jewel or its value. (Is this so obvious?) What about the jeweler? He’s admittedly
not the owner of the jewel. Should he nonetheless be allowed to sue the
chimney-sweep? If the answer is yes, and he wins damages, can he keep the
money? If the jeweler wins damages from the chimney-sweep, can the chimneysweep be held liable in a subsequent suit by Lord Hobnob for the same amount?
Consider the following case:
The Winkfield
[1902] P. 42 (C.A. 1901)
APPEAL by the Postmaster-General against a decision of Sir F. H. Jeune P. confirming
a report of the registrar disallowing a portion of a claim in respect of the contents of
certain mail-bags lost in a collision.
The case raised the question as to the rights of the Postmaster-General as bailee of
letters and parcels in transit by post.
The facts were shortly as follows:-On April 5, 1900, a collision occurred in a fog off Table Bay, on the coast of Cape
Colony, South Africa, between the Government transport Winkfield, belonging to the
Seafield Shipping Company, Limited, outward bound to the Cape with troops for
service in South Africa, and the Union mail steam vessel Mexican from Cape Town,
homeward bound to Southampton with mails, passengers, and cargo. The Winkfield

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was damaged and the Mexican sank, but not until all the passengers, crew, and some of
the mails and luggage of the Mexican had been got on board the other vessel.
The owners, master, and crew of the Mexican and the owners of the Winkfield
commenced cross-actions, which resulted in the owners of the Winkfield admitting
liability for [half] of the damage sustained by the Mexican, and, the owners of the
Winkfield having commenced proceedings against the owners of the Mexican and all
other persons having claims arising out of the collision, they … obtained [a] decree,
under s. 503 of the Merchant Shipping Act, 1894, limiting their liability … to 8£. per
ton, and paid into court … the sum of 32,514£….
Against this fund claims by the owners of the Mexican, by her master and crew, by
passengers, and by cargo owners, were filed in the Admiralty Registry amounting to
90,085£. … These were allowed at 75810£, including a claim for 5147£ … filed by the
Postmaster-General …, and made up of the two following items, namely:—
(1) 105£…., the value of 282 cases of postal parcels and 678 mail-bags lost
on board the Mexican. This claim, made on behalf of the Crown in
respect of its own property, was admitted by the registrar....
(2) 5041£…, the value of the contents of 334 parcels, and 1155 registered
letters, in respect of which the parties interested had made claims upon
the Postmaster-General, and given him written authority to represent
them in these proceedings. This claim was admitted by the registrar on
the ground of the saving of expense by allowing the Postmaster-General
to make a claim instead of separate claims by the parties concerned….
[But the Postmaster-General objects to the Registrar’s disallowance of:—]
(3) A claim of 1706£..., the estimated value of the contents of letters and
parcels in respect of which no claim had been made by, or instructions
received from, the senders or addressees, but which the PostmasterGeneral undertook to distribute amongst them, and … further
undertook to indemnify the fund in court against any claims put forward
by the actual owners.

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On June 10, 1901, the President [of the Probate, Divorce and Admiralty Division] (Sir
F. H. Jeune) overruled the objection, and upheld the decision of the registrar, on the
same ground, namely, that the Postmaster-General, as representing the Crown, was not
under any liability to the parties interested in the lost letters and parcels included under
the third head, and, therefore, was precluded … from claiming for their value. [The
Postmaster-General then appealed.]
[Arguments of counsel on appeal omitted.]
COLLINS, M.R.
…The case was dealt with by all parties in the Court below as a claim by a bailee who
was under no liability to his bailor for the loss in question…
It seems to me that the position, that possession is good against a wrongdoer and that
the latter cannot set up the jus tertii unless he claims under it, is well established in our
law, and really concludes this case against the respondents. As I shall shew presently, a
long series of authorities establishes this in actions of trover and trespass at the suit of
a possessor. And the principle being the same, it follows that he can equally recover
the whole value of the goods in an action on the case for their loss through the tortious
conduct of the defendant. I think it involves this also, that the wrongdoer who is not
defending under the title of the bailor is quite unconcerned with what the rights are
between the bailor and bailee, and must treat the possessor as the owner of the goods
for all purposes quite irrespective of the rights and obligations as between him and the
bailor.
I think this position is well established in our law, though it may be that reasons for its
existence have been given in some of the cases which are not quite satisfactory. I think
also that the obligation of the bailee to the bailor to account for what he has received
in respect of the destruction or conversion of the thing bailed has been admitted so
often in decided cases that it cannot now be questioned; and, further, I think it can be
shewn that the right of the bailee to recover cannot be rested on the ground suggested
in some of the cases, namely, that he was liable over to the bailor for the loss of the
goods converted or destroyed. It cannot be denied that since the case of Armory v.
Delamirie, not to mention earlier cases from the Year Books onward, a mere finder may
recover against a wrongdoer the full value of the thing converted. That decision

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involves the principle that as between possessor and wrongdoer the presumption of
law is, in the words of Lord Campbell in Jeffries v. Great Western Ry. Co., “that the person
who has possession has the property…”
… But, if this be the fact in the case of a finder, why should it not be equally the fact
in the case of a bailee? Why, as against a wrongdoer, should the nature of the plaintiff’s
interest in the thing converted be any more relevant to the inquiry, and therefore
admissible in evidence, than in the case of a finder? It seems to me that neither in one
case nor the other ought it to be competent for the defendant to go into evidence on
that matter.
…[T]he root principle of the whole discussion is that, as against a wrongdoer,
possession is title. The chattel that has been converted or damaged is deemed to be the
chattel of the possessor and of no other, and therefore its loss or deterioration is his
loss, and to him, if he demands it, it must be recouped. His obligation to account to
the bailor is really not ad rem in the discussion. …As between bailee and stranger
possession gives title — that is, not a limited interest, but absolute and complete
ownership, and he is entitled to receive back a complete equivalent for the whole loss
or deterioration of the thing itself. As between bailor and bailee the real interests of
each must be inquired into, and, as the bailee has to account for the thing bailed, so he
must account for that which has become its equivalent and now represents it. What he
has received above his own interest he has received to the use of his bailor. The
wrongdoer, having once paid full damages to the bailee, has an answer to any action by
the bailor.
Notes and Questions
1. The Winkfield presents yet another of our three-party serial possessor scenarios,
with subtle variations. Here we have an owner-bailor (the postal customers), a
bailee (the Postmaster-General), and a wrongdoer (the Mexican). Do the rights
and obligations among these three parties track those in a finders scenario? A
theft scenario? A good-faith purchaser scenario? Look closely at the last line of
The Winkfield: “The wrongdoer, having once paid full damages to the bailee, has
an answer to any action by the bailor”—is this rule regarding the rights of
Possessor #1 against Possessor #3 (after Possessor #2 has already recovered
from Possessor #3) one that we’ve seen before?

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2. Here’s another variation. Suppose a chimney-sweep finds a jewel and gives it to
a jeweler for safekeeping. Lord Hobnob, the true owner, shows up in a carriage
and a huff, and demands the jewel from the jeweler. Can the jeweler turn it
over? Must he? If he does, is he liable to his bailor, the chimney-sweep, for
misdelivery?

B. Liens
Williams v. Ford Motor Credit Co.
674 F.2d. 717 (8th Cir. 1982)
BENSON, Chief Judge.
In this diversity action brought by Cathy A. Williams to recover damages for
conversion arising out of an alleged wrongful repossession of an automobile, Williams
appeals from a judgment notwithstanding the verdict entered on motion of defendant
Ford Motor Credit Company (FMCC). In the same case, FMCC appeals a directed
verdict in favor of third party defendant S & S Recovery, Inc. (S & S) on FMCC’s third
party claim for indemnification. We affirm the judgment n.o.v. FMCC’s appeal is
thereby rendered moot.
In July, 1975, David Williams, husband of plaintiff Cathy Williams, purchased a Ford
Mustang from an Oklahoma Ford dealer. Although David Williams executed the sales
contract, security agreement, and loan papers, title to the car was in the name of both
David and Cathy Williams. The car was financed through the Ford dealer, who in turn
assigned the paper to FMCC. Cathy and David Williams were divorced in 1977. The
divorce court granted Cathy title to the automobile and required David to continue to
make payments to FMCC for eighteen months. David defaulted on the payments and
signed a voluntary repossession authorization for FMCC. Cathy Williams was informed
of the delinquency and responded that she was trying to get her former husband David
to make the payments. There is no evidence of any agreement between her and FMCC.
Pursuant to an agreement with FMCC, S & S was directed to repossess the automobile.

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On December 1, 1977, at approximately 4:30 a.m., Cathy Williams was awakened by a
noise outside her house trailer in Van Buren, Arkansas. 2 She saw that a wrecker truck
with two men in it had hooked up to the Ford Mustang and started to tow it away. She
went outside and hollered at them. The truck stopped. She then told them that the car
was hers and asked them what they were doing. One of the men, later identified as
Don Sappington, president of S & S Recovery, Inc., informed her that he was
repossessing the vehicle on behalf of FMCC. Williams explained that she had been
attempting to bring the past due payments up to date and informed Sappington that
the car contained personal items which did not even belong to her. Sappington got out
of the truck, retrieved the items from the car, and handed them to her. Without further
complaint from Williams, Sappington returned to the truck and drove off, car in tow.
At trial, Williams testified that Sappington was polite throughout their encounter and
did not make any threats toward her or do anything which caused her to fear any
physical harm. The automobile had been parked in an unenclosed driveway which
plaintiff shared with a neighbor. The neighbor was awakened by the wrecker backing
into the driveway, but did not come out. After the wrecker drove off, Williams returned
to her house trailer and called the police, reporting her car as stolen. Later, Williams
commenced this action.
The case was tried to a jury which awarded her $5,000.00 in damages. FMCC moved
for judgment notwithstanding the verdict, but the district court, on Williams’ motion,
ordered a nonsuit without prejudice to refile in state court. On FMCC’s appeal, this
court reversed and remanded with directions to the district court to rule on the motion
for judgment notwithstanding the verdict. The district court entered judgment
notwithstanding the verdict for FMCC, and this appeal followed.
Article 9 of the Uniform Commercial Code (UCC), which Arkansas has adopted and
codified as Ark.Stat.Ann. § 85-9-503 (Supp.1981), provides in pertinent part:
Unless otherwise agreed, a secured party has on default the right to take
possession of the collateral. In taking possession, a secured party may

2 Cathy Williams testified that the noise sounded like there was a car stuck in her yard.

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proceed without judicial process if this can be done without breach of
the peace …. 4

In Ford Motor Credit Co. v. Herring, 589 S.W.2d 584, 586 (Ark. 1979), which involved an
alleged conversion arising out of a repossession, the Supreme Court of Arkansas cited
Section 85-9-503 and referred to its previous holdings as follows:
In pre-code cases, we have sustained a finding of conversion only where
force, or threats of force, or risk of invoking violence, accompanied the
repossession.
The thrust of Williams’ argument on appeal is that the repossession was accomplished
by the risk of invoking violence. The district judge who presided at the trial commented
on her theory in his memorandum opinion:
Mrs. Williams herself admitted that the men who repossessed her
automobile were very polite and complied with her requests. The
evidence does not reveal that they performed any act which was
oppressive, threatening or tended to cause physical violence. Unlike the
situation presented in Manhattan Credit Co. v. Brewer, supra, it was not
shown that Mrs. Williams would have been forced to resort to physical
violence to stop the men from leaving with her automobile.
In the pre-Code case Manhattan Credit Co. v. Brewer, S.W.2d 765 (Ark. 1961), the court
held that a breach of peace occurred when the debtor and her husband confronted the
creditor’s agent during the act of repossession and clearly objected to the repossession.
In Manhattan, the court examined holdings of earlier cases in which repossessions were
deemed to have been accomplished without any breach of the peace. In particular, the
Supreme Court of Arkansas discussed the case of Rutledge v. Universal C.I.T. Credit Corp,
237 S.W.2d 469 (Ark. 1951). In Rutledge, the court found no breach of the peace when
the repossessor acquired keys to the automobile, confronted the debtor and his wife,
informed them he was going to take the car, and immediately proceeded to do so. As
4 It is generally considered that the objectives of this section are (1) to benefit creditors in permitting them to

realize collateral without having to resort to judicial process; (2) to benefit debtors in general by making credit
available at lower costs; and (3) to support a public policy discouraging extrajudicial acts by citizens when those
acts are fraught with the likelihood of resulting violence.

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the Rutledge court explained and the Manhattan court reiterated, a breach of the peace
did not occur when the “Appellant [debtor-possessor] did not give his permission but
he did not object.” Manhattan, supra, 341 S.W.2d at 767-68; Rutledge, supra, 237 S.W.2d
at 470.
We have read the transcript of the trial. There is no material dispute in the evidence,
and the district court has correctly summarized it. Cathy Williams did not raise an
objection to the taking, and the repossession was accomplished without any incident
which might tend to provoke violence.
Appellees deserve something less than commendation for the taking during the night
time sleeping hours, but it is clear that viewing the facts in the light most favorable to
Williams, the taking was a legal repossession under the laws of the State of Arkansas.
The evidence does not support the verdict of the jury. FMCC is entitled to judgment
notwithstanding the verdict.
HEANEY, Circuit Judge, dissenting.
The only issue is whether the repossession of appellant’s automobile constituted a
breach of the peace by creating a “risk of invoking violence.” See Ford Motor Credit Co.
v. Herring, 589 S.W.2d 584, 586 (Ark. 1979). The trial jury found that it did and awarded
$5,000 for conversion. Because that determination was in my view a reasonable one, I
dissent from the Court’s decision to overturn it.
Cathy Williams was a single parent living with her two small children in a trailer home
in Van Buren, Arkansas. On December 1, 1977, at approximately 4:30 a.m., she was
awakened by noises in her driveway. She went into the night to investigate and
discovered a wrecker and its crew in the process of towing away her car. According to
the trial court, “she ran outside to stop them … but she made no strenuous protests to
their actions.” (Emphasis added.) In fact, the wrecker crew stepped between her and
the car when she sought to retrieve personal items from inside it, although the men
retrieved some of the items for her. The commotion created by the incident awakened
neighbors in the vicinity.
Facing the wrecker crew in the dead of night, Cathy Williams did everything she could
to stop them, short of introducing physical force to meet the presence of the crew. The

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confrontation did not result in violence only because Ms. Williams did not take such
steps and was otherwise powerless to stop the crew.
The controlling law is the UCC, which authorizes self-help repossession only when
such is done “without breach of the peace … .” Ark.Stat.Ann. § 85-9-503 (Supp.1981).
The majority recognizes that one important policy consideration underlying this
restriction is to discourage “extrajudicial acts by citizens when those acts are fraught
with the likelihood of resulting violence.” Supra, at 719. Despite this, the majority holds
that no reasonable jury could find that the confrontation in Cathy Williams’ driveway
at 4:30 a.m. created a risk of violence. I cannot agree. At a minimum, the largely
undisputed facts created a jury question. The jury found a breach of the peace and this
Court has no sound, much less compelling, reason to overturn that determination.
Indeed, I would think that sound application of the self-help limitation might require
a directed verdict in favor of Ms. Williams, but certainly not against her. If a “night
raid” is conducted without detection and confrontation, then, of course, there could
be no breach of the peace. But where the invasion is detected and a confrontation
ensues, the repossessor should be under a duty to retreat and turn to judicial process.
The alternative which the majority embraces is to allow a repossessor to proceed
following confrontation unless and until violence results in fact. Such a rule invites
tragic consequences which the law should seek to prevent, not to encourage. I would
reverse the trial court and reinstate the jury’s verdict.
Notes and Questions
1. True or false: Cathy Williams would have been better off if she had thrown a
punch or two. What do you make of the UCC’s purported policy of
discouraging private extrajudicial violence? Where does Williams leave other
single mothers facing towing crews at 4:30 AM?
2. Is the breach-of-the-peace test really about deterring violence, or is it a proxy
for the other kinds of individual and social harms repossession can cause? If so,
how good a proxy is it? Are there better ways to avoid those harms?
3. Notice that FMCC’s lien is a property interest. One key indicium of this fact—
or perhaps a component of it—is that it is freely assignable. FMCC was not the
original lender. Who was? How did FMCC end up owning the lien?

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4. On the other side of the loan, Cathy Williams was not the original borrower;
David Williams was. Why is his failure to pay her problem? Indeed, he was
under a court order to continue making payments. Why doesn’t that protect her
from repossession? This aspect of liens—that they run with the property—is
considered crucial to secured lending. Why? Would FMCC be willing to extend
credit in the first place if its resulting security interest did not bind David’s
successors in title?
5. In Williams the lienholder is not in physical possession of the collateral. Why
not? Would car loans work if the lender retained possession? This creates two
distinctive problems. First, how and when the lender can retake possession?
(Answer: with a tow truck in the middle of the night.) But what if Cathy Williams
drives the car out of state and hides it? For that matter, what if she destroys it
rather than let FMCC repossess it? So FMCC’s property interest in the car
provides some protection for its contract rights, but hardly perfect protection.
Could FMCC insist that Cathy Williams install a GPS device on the car that
continually broadcasts its location? Cf. American Car Rental, Inc. v.
Commissioner of Consumer Protection, 869 A.2d 1198 (Conn. 2005) (unfair
consumer practice for car rental agency to charge customer $150 per instance
of drivng over 79 miles per hour for more than two mintues, as revealed by
GPS tracker in car). Are there privacy concerns with this type of close
monitoring? Safety concerns? Are these more or less severe than if the lender
sent employees to personally follow Cathy Williams around and keep tabs on
the car? What about a kill-switch that automatically shuts down the car’s engine
if it is driven more than fifty miles from her house? If FMCC can shut down
the car remotely, could someone else? See Andy Greenberg, Hackers Remotely Kill
a Jeep on the Highway—With Me In It, WIRED (July 21, 2015).
6. The second distinctive problem when the lienholder is out of possession is
notice to third parties. What happens if Cathy Williams sells the car without
informing the buyer of the lien? Yes, this is yet another good-faith-purchaser
problem; they are everywhere in property law. In general, the law of secured
transactions attempts to minimize such problems, in part by setting up a public
record of liens to provide notice to potential future purchasers of—or lenders
against—the collateral. In re Housecraft Industries, 155 B.R. 79, 86–87 (Bankr. D.

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Vt. 1993) gives some background on the evolution of security interests in
personal property:
Until the early nineteenth century, the only way to create a valid
interest in personal property was by physical pledge—the transfer
of possession of the property (collateral) by a debtor (the pledgor)
to the creditor or secured party (the pledgee). Possession
provided public notice of a secured party’s interest in collateral
and prevented debtors from selling their pledged property to
innocent purchasers or from obtaining credit based on
encumbered assets. To further protect third parties against
undisclosed interests in property, the common law presumed that
nonpossessory interests were fraudulent and therefore
unenforceable against third parties. Twyne’s Case, 76 Eng. Rep.
809 (Star Chamber 1601).
The increasing demands of the credit economy eventually created
a need for collateral that remained in a debtor’s possession.
Limited only by their creativity, debtors, creditors, and their
counsel formulated methods of perfection that provided both
possession to debtors and security to creditors. The resulting
rules varied from jurisdiction to jurisdiction, producing what one
commentator has called a “labyrinthine melange” of personal
property securities laws. Throughout this development toward
modern commercial law, the common law pledge existed side by
side with other forms of perfecting security interests in personal
property.
The Uniform Commercial Code … streamlined commercial law
and preserved the pledge to complement a public filing system.
Article 9 of the UCC, … governs security interests in most forms
of personal property and fixtures. Article 9 recognizes three
general ways to perfect a security interest: filing (public
registration); possession of the collateral, either directly,
constructively or through an agent; and third party notice,

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including notice given by the secured party to another holding
the collateral.
7. What happens if a debtor has multiple creditors and is unable to pay them all?
This circumstance raises the perennial problem of priority. The ultimate system
for sorting out priority is federal bankruptcy law, but commercial law (especially
Article 9 of the UCC) plays a significant role too. Even a quick skim through
Article 9 shows how extensively its rules are adapted to the particular
characteristics of the class of property at issue (or perhaps, to the demands of
special-interest lobbying and the successive encrustations of history). See, e.g.,
UCC § 9-102, which distinguishes accounts; farm products; oil, gas, and
minerals both in and out of the ground; tort claims; commodity futures;
consumer goods; health-care debts; manufactured homes; software; and much,
much, more.
8. Complicating the problem of priority, every state has enacted a mechanic’s lien
statute. These statutes allow people who contribute labor and materials to the
repair or improvement of a chattel to retain possession of the chattel until the
fair value of the repairs or improvements have been paid. Moreover, these
statutes generally provide that mechanic’s liens have priority over most other
security interests in the chattel, even if the mechanic had notice of such interests.
Why might states provide these statutory protections to mechanics and other
improvers? What happens if the mechanic relinquishes possession of the chattel
to its owner before the repairs are paid for? Does the mechanic lose their
statutory priority over other creditors? Should they? See M&I Western State
Bank v. Wilson, 493 N.W.2d 387 (Wisc. Ct. App. 1992).
9. As Williams illustrates, among the most important and common chattels subject
to liens are motor vehicles. Some states require that car liens be recorded with
the state Department of Motor Vehicles and indicated on car owners’
certificates of title. The Maryland system, for example, provides that a security
interest in a vehicle is “perfected” by “Delivery to the [Motor Vehicle]
Administration of every existing certificate of title of the vehicle and an
application for certificate of title [including the necessary information about the
security interest]” and that a security interest that has not been so perfected “is

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not valid against any creditor of the owner or any subsequent transferee or
secured party.” Md. Code Transp. § 13.202. The theory is that the buyer or
lender can protect itself by demanding to see the title certificate—indeed, a
buyer will need to turn in the old title certificate to register the car and a lender
will need to turn it in to record its own security interest. Is this system fair to
senior lenders? Fair to buyers and junior lenders? How might the system go
wrong? How might a fraudster make it go wrong?

Part III: Interests
To this point we have largely been conceiving the res of property law—the “thing” in
which property rights inhere—as a physical thing (a plot of land, a jewel, an animal), or
perhaps a circumscribed intangible concept that we can treat as such a thing (a
trademark, a domain name, a radio frequency). But typically—and especially when
dealing with that most primal and valuable res: land—property does not confer
ownership of a thing. Rather, it confers ownership of a particular interest in a thing.
While in lay conversation and informal contexts it might be perfectly acceptable to say
you own a plot of land, to be precise you would have to say that you own a legal interest
in that plot of land—most likely a legal estate we will come to know as a fee simple
absolute. The conceptual separation between legal interests in a valuable physical (or
intangible) resource and the resource itself allows lawyers to structure a diverse array
of legal relations regarding the possession, use, disposition, and control of such
resources. Interests can be divided up among multiple people at the same time, or
among a succession of people over time, or any combination thereof, allowing for
subtle control of—and deep predictability about—the rights of all interested parties in
particular resources. In this part we will explore the legal tools and concepts that make
such arrangements possible.
The tools of control and planning that the common law puts in the hands of owners
(and their lawyers) are powerful, but they carry risks of both malice and incompetence.
Malice, because they can be abused by overzealous owners and attorneys in ways that
are detrimental to society’s interest in the appropriate allocation of scarce and contested
resources. Incompetence, because they are complex and subtle, and therefore provide
lots of opportunities for laypeople—and even lawyers and judges—to make mistakes
that have the effect of thwarting their wishes. Property law has developed tools to
guard against these dangers, and we will be investigating those tools as well.

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A. Introduction
All land under the dominion of the English
crown is held “mediately or immediately, of the
king”—that is, the crown has “radical title” to all
land under its political dominion. William the
Conqueror declared that all land in England was
literally the king’s property; everyone else had to
settle for the privilege of holding it for him—the
privilege of tenure (from the Norman French
word tenir—to hold). Tenurial rights were
intensely personal in early feudal society: the
right to hold land was a privilege granted by the
Homage Ceremony
crown in exchange for an oath of allegiance and
a promise of military service by the tenant—the
Source: JAMES HENRY BREASTED & JAMES HARVEY
ROBINSON, 1 OUTLINES OF EUROPEAN HISTORY 399
oath of homage. The word homage derives from
(1914).
the French word homme—literally “man”—
precisely because the ceremony surrounding the
oath created not only the right of tenure, but a
political and military relationship between “lord and man.” * In exchange for the

* The ceremony of homage, recorded by the 13th-century jurist and ecclesiastic Henry de Bracton, required the

tenant to come to the lord in a public place, and there “to place both his hands between the two hands of his
lord, by which there is symbolized protection, defense and warranty on the part of the lord and subjection and
reverence on that of the tenant, and say these words: ‘I become your man with respect to the tenement which I
hold of you … and I will bear you fealty in life and limb and earthly honour … and I will bear you fealty against
all men … saving the faith owed the lord king and his heirs.’ And immediately after this [to] swear an oath of
fealty to his lord in these words: ‘Hear this, lord N., that I will bear you fealty in life and limb, in body, goods,
and earthly honour, so help me God and these sacred relics.’” 2 Bracton Online 232
http://bracton.law.harvard.edu/Unframed/English/v2/232.htm. The Anglo-Saxon Chronicle contains a
remarkable and much-debated passage in which William the Conqueror is said to have held court at Salisbury

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tenant’s faithful support, or fealty, the lord warranted the tenant’s right to hold a plot of
land, called a fief, or fee.
Acceptance of this form of military tenure obligated the tenant to provide a certain
number of knights when called on by the king, and the land held by the tenant was
supposed to provide sufficient material support to enable him to meet this military
obligation. Sometimes, by the process of subinfeudation, the King’s direct tenants (or
“tenants-in-chief”) could spread this burden around by in turn accepting homage from
other, lesser nobles and freemen, each of whom would be responsible to the tenantin-chief for a portion of the tenant-in-chief’s obligation to provide knight-service. The
tenants-in-chief thereby became “mesne lords” in their own right (“mesne” being
Norman French for “middle” or “intermediate,” today pronounced “mean”). There
could be several layers of mesne lords (i.e., “land lords”) in the feudal hierarchy, at the
bottom of which were “tenants in demesne” (“demesne” being Norman French for
“domain” or “dominion”)—who actually held the land rather than subinfeudating it
further. Of course, holding land did not mean one actually worked it; a tenant in
demesne often left the cultivation and productive use of land to those of lower social
status. These could be “villeins”—serfs legally bound to the land by birth—or
“leasehold” tenants—a leasehold being a right to hold land for a term of years in
exchange for payment of rent in cash or (more often) kind, and of lesser status than
the “freehold” estate held by feudal tenants tracing their rights up the feudal pyramid
to the crown.
Because a feudal tenant’s land rights were intimately connected to this web of personal,
political, and military relationships, there was no logical reason why the tenant ought
to be free to transfer those rights to anyone else—and good reason for the lords to
resist such alienation of the fee by their tenants. Indeed, fees could be forfeited to the
lord for the tenant’s breach of the homage relationship or commission of some other
“felony,” and on the tenant’s death it was not clear that his family members had the
right to inherit the fee. The king was assumed to have the right to retake the fee and
re-grant it to a preferable new tenant upon his displeasure with or the death of the old

twenty years into his reign, and there summoned and taken direct oaths of homage and fealty from every
landowner “of any account” in the whole of England. See H. A. Cronne, The Salisbury Oath, 19 HISTORY 248
(1934); J.C. Holt, 1086, in COLONIAL ENGLAND, 1066-1215, at 31 (1997).

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tenant (it was his land, after all). Within a century, however, the dynastic ambitions of
the baronage compelled King Henry I to concede (in his Coronation Charter of 1100)
that a recently deceased baron’s heir could redeem his fee upon payment of “a just and
lawful relief”—i.e., a payment of money to the crown, as a kind of inheritance tax.
Under the principle of primogeniture that took hold in England around this time, the
lord’s heir was his eldest son; landowners were not free to choose who would take over
their tenancy after their death. Thus, subject to the payment of a relief, the fee became
descendible—capable of being inherited from one generation to the next—and the grant
of a descendible tenancy by the crown was now made not “to Lord Hobnob,” but “to
Lord Hobnob and his heirs.” To this day, the latter phrase remains the classic commonlaw formula for creating the broadest interest in land that the law will recognize: the fee
simple absolute.
Descendibility of the fee simple having been settled early in the history of English land
law, the broader question of full alienability took several more centuries to work out.
The history of medieval English land law is a history of tenants trying to secure their
families’ wealth and power by expanding alienability and evading tenurial obligations
to their lords and the crown, while the crown and higher nobility tried to adapt the law
to preserve their status and prevent such evasions. There is a dialectical quality to this
history. For example: for complicated reasons subinfeudation quickly came to present
a greater threat to the economic interests of the higher ranks of the feudal hierarchy
than simple substitution of one tenant for another. Thus, in 1290 the Statute of Quia
Emptores banned subinfeudation. (Quia Emptores is Latin for “Whereas Purchasers,” the
first two words of the statute which opens with a complaint against land purchasers
who engage in transactions that might effectively deprive a lawful lord of his fiefdom.)
But in banning subinfeudation Quia Emptores validated substitution, and with it the
practice of selling an entire fee in exchange for money during the life of the tenant.
Similarly, in 1536, at the insistence of King Henry VIII, the Statute of Uses abolished
many clever schemes adopted by tenants to use intermediaries to direct the disposition
of real property interests after death, and to put those interests outside the reach of the
law courts (and of the crown’s feudal authority). But in doing so, the statute validated
one type of flexible property arrangement we have come to know as a trust. Moreover,
the removal of the primary mechanism lawyers had developed to meet tenants’ demand
for intergenerational planning was sufficiently unpopular that Henry felt compelled to
consent to the enactment of the Statute of Wills in 1540—finally permitting tenants to

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pass their legal estates in land by will rather than being at the whim of the rule of
primogeniture. Finally, since the 16th century, primogeniture has given way to a more
complex system of default inheritance rights for various relatives of the deceased who
leaves no will; these rights are designed to try to approximate what legislatures think
the decedent would have wanted, not necessarily what is best for the government. This
set of default rights comprises the law of intestate succession, which we will discuss briefly
in a separate unit (and which you may study more thoroughly in a separate course on
trust and estates law).
Various other statutes and common-law developments over the centuries culminated
in the system of possessory estates and future interests that were imported into the
North American English colonies, and thus into the independent American states
(excluding Louisiana). Underlying them all is a fundamental distinction that traces back
to the “radical title” asserted by William the Conqueror in 1066: there is a conceptual
difference between the ownership of land and the ownership of a legal interest
in that land . This distinction remains important to modern property law, and this unit
will introduce you to the types of legal interests in land that American law will recognize.
In particular, it examines how the common law divides up legal interests in land among
successive owners over time.
Before delving into this material, we should warn you that the estates system has limited
relevance even for the practicing real estate lawyer of today. The study of estates and
future interests remains in property courses for three primary reasons: (1) the estates
are still legally valid property interests, and their complexity can therefore can be a
danger to lawyers who encounter them and are unfamiliar with them; (2) some of the
legal estates and future interests in real property can be usefully extended to equitable
interests in property held in trust; and (3) the bar examiners are fond of testing aspirant
attorneys on future interests—perhaps simply because they are fairly mechanical and
therefore highly testable. To be sure, mastering the system of estates and future
interests requires considerable exercise of the lawyerly skills of close reading, logical
reasoning, and breaking down a big problem into lots of smaller problems. But there
are other ways of learning those things, and a contemporary lawyer whose client wanted
to divide up interests in property would be courting malpractice by relying on legal
estates and future interests in land (which makes the bar examiners’ continued affection
for them even more baffling). Instead, the modern lawyer should look to the much

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more flexible law of trusts and to the various forms of business associations—such as
corporations—that can own property in their capacity as fictional legal “persons.” We
discuss these strategies in a separate chapter on trusts and corporate property.

B. Concepts, Vocabulary, and Conventions
To begin understanding how the law divides up interests in land over time, we begin
with the fundamental distinction between possessory estates and future interests. A
possessory estate is a legal interest that confers on its owner the right to present possession
of some thing. A future interest is a legal interest that exists in the present, but does not
entitle the owner to possession until some point in the future.
This may sound confusing, but you are probably already familiar with an arrangement
that follows this pattern: a lease. A lease is a transaction in which the landlord gives the
tenant a possessory estate (a leasehold estate), and retains a future interest—the right to
retake possession after the lease term ends. This retained future interest—an
unqualified right to future possession retained by the party who created the possessory
interest that precedes it—is called a reversion. (Landlord-tenant relationships are
obviously more complicated than this—they entail a number of contractual rights and
obligations and are heavily regulated by statutory and decisional law and, in many cases,
administrative codes. We cover these relationships more thoroughly in our unit on
Landlord and Tenant.)
The idea that both landlord and tenant can have legal interests in the same parcel of
land at the same time, even though only one of them has the right to possess the land at
any given time, is a good introduction to the concept of future interests. If you think
about it, you will probably recognize that the basic idea of a lease implies certain rights
and powers of a landlord in the leased premises even during the term of the lease. The
most important one is the reversionary right itself: the right to take possession at some
point in the future. That’s a right the tenant can’t take away, even while the tenant has
the right to possession. The landlord might be interested in selling (or mortgaging) this
reversionary right, even before the lease ends. And if she does sell or mortgage her
interest (which she may, subject to the tenant’s interest), the thing sold is not “the
property”; it is the landlord’s reversion: a legal interest in real property that exists in the present
but will not entitle its holder to possession of that real property until some point in the
future.

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When learning about estates and future interests, we will follow some conventions that
will simplify our discussion as much as possible. Most of our problems will involve an
owner of land transferring some interest in that land to one or more other parties.
Following longstanding tradition in the study of Anglo-American property law, we will
refer to the parcel of land in question as “Blackacre” (or “Whiteacre,” “Greenacre,”
“Ochreacre,” etc. if more than one parcel is at issue). We will refer to the original owner
as O, and the other parties as A, B, C, etc.
In addition, there are a variety of technical terms that arise, a few of which you should
be familiar with:
• A grant or conveyance is a transfer of an interest in property. The person making
the grant is the grantor (or transferor); the person receiving the grant is the grantee
(or transferee). If the grant is made during the life of the grantor, it is said to be
an inter vivos conveyance (literally, “between the living”). If in a will, it is said to
be a testamentary conveyance. A testamentary conveyance of real property is
called a devise. A testamentary conveyance of personal property is called a
bequest (or sometimes a legacy).
• When a person dies, they will either have left a valid will or not. A person who
dies with a valid will dies testate; one who dies without a valid will dies intestate.
Either way, the dead person can be referred to as a decedent. If the decedent did
leave a valid will, they may also be referred to as a testator if male, or a testatrix
if female.
• The assets that a decedent owned at her death are collectively referred to as
the decedent’s estate. An estate can sometimes take on the qualities of a legal
person—it is not uncommon to say that a certain asset is owned by “the estate
of O.” The property rights of this fictional legal person are managed by an
actual person whose title depends on whether the decedent left a will. The
instructions in a will are carried out by an executor, designated as such in the will
itself. An intestate estate is disposed of by a court-appointed administrator. In
some jurisdictions these titles are subject to binary gender distinctions; a female
executor may be referred to as an executrix and a female administrator as an
administratrix.

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• The authority of an administrator or executor to dispose of the estate’s assets
is conferred by a probate court. When a valid will is filed with the probate court
and deemed valid, the court will admit the will to probate (or probate the will), and
will issue letters testamentary to the executor authorizing him to take possession
of the estate’s assets and dispose of them according to the will’s instructions.
If the decedent died intestate, the court will issue letters of administration to an
administrator authorizing him to take possession of the estate’s assets and
dispose of them according to the laws of intestate succession.
• If the decedent did leave a valid will, it will typically contain instructions for
transferring assets to various identified people or entities. The parties receiving
the bequests are referred to as the will’s beneficiaries, devisees (for real property),
or legatees (for personal property). When a decedent passes property by will he
or she is said to have devised that property. A property interest that the decedent
has the power to transfer by will is said to be devisable.
• Sometimes a will fails to provide instructions for all the assets owned by the
testator at death; in this case the unallocated assets are said to create a partial
intestacy. When this happens, assets designated in the will are distributed
according to the will’s terms, while the estate’s remaining assets are distributed
according to the laws of intestate succession. In order to avoid partial intestacy,
it is good practice to include a residuary clause in a will, disposing of all the assets
of the decedent not designated in specific bequests. Such unenumerated assets
are referred to as the residuary estate.
• If the decedent did not leave a valid will, her property will pass to her heirs
(sometimes referred to as heirs at law). Heirs are those who are designated by
law as successors to property that passes by intestate succession rather than by
will. When heirs take such property, they are said to inherit it. A property
interest that can pass by intestate succession is said to be descendible.
• Note that until the decedent actually dies, we don’t know who her heirs are;
rights of inheritance are allocated only to relatives of the decedent who survive
her—who are still alive when the decedent dies. Thus, until a property owner
dies, her relatives have no legally enforceable rights in her property under the

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laws of intestate succession. It is sometimes said that such relatives have a mere
expectancy, and they are sometimes referred to as heirs apparent; but neither title
gives them any enforceable interest in property. Similarly, because a will can
always be changed by the testator prior to their death, the beneficiaries of a
will have no legally enforceable rights in a testator’s property until the testator
dies; they too are sometimes said to have a mere unenforceable expectancy.
• Heirs under intestacy laws are drawn from various categories of relatives. In
addition to spouses, there are issue: the direct descendants of the decedent
(children, grandchildren, great-grandchildren, etc.); ancestors (parents,
grandparents, great-grandparents, etc.); and collaterals: relatives who are not
direct ancestors or descendants (siblings, aunts, uncles, nieces, nephews,
cousins).
• If a person dies without a will and without any heirs at law, any property in
their estate escheats to the state, which becomes its owner.

C. Basic Estates and Future Interests
We will begin by examining two possessory estates—the fee simple absolute and the
life estate—and two future interests (one of which you have already encountered)—
the reversion and the remainder.

1. The Fee Simple Absolute
The fee simple absolute is the most complete interest in land that the law will recognize.
When we say that “O owns Blackacre” without any further qualification, what we
actually mean is that O owns a presently possessory fee simple absolute in Blackacre. The key
distinguishing characteristic of the fee simple absolute is that it has no inherent end—
it is an estate of indefinite duration. It is descendible, devisable, and alienable inter vivos; so
it can be transferred to a new owner, but it cannot be destroyed. At most, it can be carved
up into lesser estates and interests for a while, and we will spend most of the rest of
this chapter understanding how that happens.
At common law, as previously noted, the fee simple absolute was created by the
formula: “to A and his heirs.” (This reflected the medieval innovation of a fee that

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could be passed from father to son by inheritance, as opposed to one that reverted
back to the king on the death of the tenant.) That formula still works, but in modern
usage it is sufficient to simply say “to A,” and the use of such language in a conveyance
from the owner of a fee simple absolute will be presumed to create a fee simple absolute
in A. Note, however, that the traditional language creates no legal interest in anyone
other than A; the words “and his heirs” are simply a legal formula that has been passed
down over the centuries to indicate this particular type of estate. (Remember: a living
person has no heirs, and once A dies A’s property will pass by will or intestate
succession.)

2. The Life Estate
The life estate is just what it sounds like: an estate that confers a right to possession for
the life of its owner. The owner of a life estate is referred to as a life tenant. The life
estate terminates by operation of law upon the owner’s death (i.e., it ceases to exist). It
is created by the formula: “to A for life.” Because it must by definition end—we all
have to die sometime—any land held by a life tenant must also be subject to a future
interest in some other person. We’ll explore what those future interests might be shortly.
Recall the legal principle of nemo dat quod non habet (or nemo dat for short), which we
encountered in our discussion of good faith purchasers: a grantor cannot convey title
to something she doesn’t herself own. Following this principle, life estates are alienable
inter vivos during the life of the life tenant, but obviously not devisable or descendible:
they cease to exist upon the death of their owner, so the life tenant’s estate has nothing
to convey. Nemo dat also implies that the owner of an interest in real property cannot
convey more than their interest; a life tenant cannot convey a fee simple absolute, for
example. More to the point, if a life tenant A transfers their life estate to a grantee B,
B cannot receive anything more than what A owns: a possessory estate that will
terminate by operation of law when A dies. Because such an interest is measured by the
life of someone other than its owner, it is called a life estate pur autre vie (literally, in
Law French, “for another life”). A life estate pur autre vie can also be created explicitly,
as by a grant “to A for the life of B.”
We’ll hold off on any further illustrative problems at this point, because we still need
some exposition of what happens after a life tenant dies. The answer, as we’ve already
noted, involves future interests.

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3. The Reversion
We encountered the reversion once before, when discussing leases as an introduction
to the concept of a future interest. But reversions often arise in non-leasehold contexts
too. Consider what happens when A, owning a life estate in Blackacre, dies. A’s life
estate terminates by operation of law; it simply ceases to exist and disappears. Who
“owns” Blackacre now? It seems obvious that somebody must have a right to possession
of the land, but it seems equally obvious that whoever that somebody is, they had no
right to possession before A died. Whoever they are, during the term of A’s life estate they
must have held an interest that would entitle them to take possession at some point in the
future (that is, a future interest).
There are two candidates for such an interest. We will begin with the most basic: the
reversion. Suppose that O, owning a fee simple absolute in Blackacre, conveys
Blackacre “to A for life,” and says nothing more? What is the legal effect of this grant?
Based on the formula we just learned, it should be clear that A receives a life estate in
Blackacre. But what other effects does the grant have on the legal rights of the parties?
Think about the interest O held prior to the conveyance: the fee simple absolute.
Remember that a fee simple absolute is an interest of infinite duration—it never ends. So
when O starts with a possessory interest of infinite duration, and then gives away a life
estate—whose duration is limited by a human lifespan—to A, something was left over.
Specifically, O never gave away the right to possession of Blackacre from the day of
A’s death to the end of time. Whether meaning to or not, O gave away less of an
interest in Blackacre than what he owned, meaning he still holds some interest. We call this
type of interest—the residual interest left over when a grantor gives away less than they
have—a retained interest.
This retained interest can’t entitle O to possession during A’s life—A has the exclusive
right to possession as the life tenant. So O’s interest must be a future interest during the
term of A’s life estate: an interest that will entitle O to possession after the natural
termination of the life estate. As we discussed in the example of the lease, we call this kind
of future interest a reversion. It is a retained interest in the grantor—created when a grantor
conveys less than his entire interest—that will become possessory by operation of law
upon the natural termination of the preceding estate. Colloquially, we say that Blackacre

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“reverts” to O. In some opinions, you will see the holder of a reversion referred to as
a “reversioner.”
A reversion can of course also be created explicitly, for example, if O conveys Blackacre
“to A for life, then to O.” In this case, O has explicitly created a life estate in A followed
by a reversion in O.

4. The Remainder (Part 1)
A remainder is a type of future interest created in someone other than the grantor. The
distinguishing characteristic of the remainder is that—like a reversion—it cannot cut short
or divest any possessory or vested estate. (We will later encounter other future interests that
can.) A remainder simply “remains,” sitting around and waiting for the natural
termination of the preceding possessory estate (be it a life estate or a lease), at which
point the remainder will become possessory by operation of law. Suppose that O,
owning a fee simple absolute in Blackacre, conveys Blackacre “to A for life, and then to
B.” Again, A would have a life estate, but now O has also affirmatively created a future
interest in B. Because the future interest is created in someone other than the grantor, it
isn’t a reversion. And because it cannot cut short A’s life estate (note the “and then”
language), it must therefore be a remainder. Due to the persistence of dated gendered
terms in legal discourse, you will often see the holder of a remainder referred to as a
“remainderman,” even today, regardless of that person’s gender.
Future interests get a lot more complicated than this, but you now have enough to
begin examining some problems that can arise from even this limited set of interests.
Questions
1. O, owner of a fee simple absolute in Blackacre, conveys Blackacre “to A for life,
then to B for life.” (Assume that both A and B are alive at the time of the grant.)
What is the state of title in Blackacre?
a. What will be the state of title if A dies, survived by B and O?
b. What will be the state of title if B dies, survived by A and O?
c. What will be the state of title if O dies, then A dies, then B dies?

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2. What will be the state of title if, while O, A, and B are still alive, B conveys her
interest to C?
a. What will be the state of title if, after B conveys her interest to C, A dies,
survived by B, C, and O?
b. What will be the state of title if, after B conveys her interest to C, C dies,
leaving D as his heir, and is survived by A, B, and O?
c. What will be the state of title if, after B conveys her interest to C, B dies,
survived by A, C, and O?

D. Construing Ambiguous Grants
We’ve recited a few formulas for creating the small number of common-law interests
you’ve encountered. For example, “to A and his heirs” creates a fee simple absolute in
A; “to B for life, then to C” creates a life estate in B and a remainder in C. But the
actual language of documents conveying legal interests in real property don’t always
stick to the formula—especially (but unfortunately not exclusively) when they are
drafted without the assistance of counsel. Consider the following case.
In the Estate of Dalton Edward Craigen
305 S.W.3d 825 (Ct. App. Tex. 2010)
HOLLIS HORTON, Justice.
We are asked to determine whether the trial court properly interpreted the dispository
language in a holographic will. If the will is ambiguous, the applicable rules of will
construction yield one result. If the will is unambiguous, the trial court was required to
give effect to the express language of the will, and arguably should have reached a
different result.
The trial court, in construing the testator’s intentions under the will, found “[t]hat it
was the intent of the [t]estator to leave his entire estate to his surviving wife in full.”
The trial court further found “[t]hat there was no intention to leave a life estate to her.”
In a single issue on appeal, the testator’s adult children contend the testator intended
to leave a life estate to his wife, and they argue that the remainder of the estate passed

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to them through the laws of descent and distribution. We find the will is ambiguous
and hold that under the appropriate rules of will construction, the trial court properly
construed the will. Accordingly, we affirm the judgment.
THE WILL
Dalton Edward Craigen left a holographic will that in its entirety stated:
Last Will & testament
Debbie gets everything till
she dies.
Being of sound mind & this
is my w. last will & testament.
I leave to my Wife Daphne
Craigen all p. real & personal property.
12–17–99 Dalton Craigen
CONTENTIONS OF THE PARTIES
The parties stipulated “[t]hat Debbie and Daphne named in Dalton Craigen’s will are
one and the same person.” Brian Craigen and Sabrina Brumley, Craigen’s adult children,
argue that the testator’s intent under the will is “crystal clear—the testator left
everything (all of his real and personal property, his definition of ‘everything’) to his
wife for as long as she lived.” According to Brian and Sabrina, the dominant provision
of the will (the first sentence) creates a life estate, and the will’s third sentence can be
harmonized with the will’s first sentence by construing the third sentence to define the
property that Craigen intended to include in his wife’s life estate. Brian and Sabrina ask
that we render a judgment in their favor by holding that Daphne received only a life
estate under Craigen’s will.
Daphne died on January 17, 2009. Yvonne Christian, the independent administratrix
of Daphne’s estate, argues we should affirm the trial court’s judgment. According to
Christian, the will is not ambiguous as it reflects Craigen’s intent to leave his entire
estate to Daphne.

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RULES OF CONSTRUCTION
The rules involved in construing wills are well settled. “The primary object of inquiry
in interpreting a will is determining the intent of the testator.” Gee v. Read, 606 S.W.2d
677, 680 (Tex.1980). “The [testator’s] intent must be drawn from the will, not the will
from the intent.” Id. We ascertain intent from the language found within the four
corners of the will. “In construing the will, all its provisions should be looked to, for
the purpose of ascertaining what the real intention of the [testator] was; and, if this can
be ascertained from the language of the instrument, then any particular paragraph of
the will which, considered alone, would indicate a contrary intent, must yield to the
intention manifested by the whole instrument.” McMurray v. Stanley, 69 Tex. 227, 6 S.W.
412, 413 (1887).
When a will has been drafted by a layperson who is not shown to be familiar with the
technical meanings of certain words, courts do not place “‘too great emphasis on the
precise meaning of the language used where the will is the product of one not familiar
with legal terms, or not trained in their use.’” Gilkey v. Chambers, 146 Tex. 355, 207
S.W.2d 70, 71 (1947) (quoting 69 C.J. Wills § 1120 (1934)). Instead, in arriving at the
meaning intended by the layman-testator, courts refer to the popular meaning of the
words the testator chose to use. In summary, the testator’s intent, as gathered from the
will as a whole, prevails against a technical meaning that might be given to certain words
or phrases, unless the testator intended to use the word or phrase in the technical sense.
With respect to the creation of a life estate, no particular words are needed to create a
life estate, but the words used must clearly express the testator’s intent to create a life
estate. A very strong presumption arises that when a person makes a will, the testator
intended a complete disposition of his property. “[T]he very purpose of a will is to
make such provisions that the testator will not die intestate.” Gilkey, 207 S.W.2d at 73.
When faced with ambiguity, and in applying that presumption, courts generally
interpret wills to avoid creating an intestacy.
…In reconciling different parts of a will, the Texas Supreme Court has explained:
Where, however, the language of one part of a will is not easily reconciled with
that used in another, the principal and subordinate provisions should be
construed in their due relation to each other, and the intent which is disclosed

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in the express clause ought to prevail over the language used in subsidiary
provisions, unless modified or controlled by the latter. And a clearly expressed
intention in one portion of the will will not yield to a doubtful construction in
any other portion of the instrument.

Heller v. Heller, 114 Tex. 401, 269 S.W. 771, 774 (1925).
ANALYSIS
A will is ambiguous if it is capable of more than one meaning. Because Debbie and
Daphne are in fact the same person, the ambiguity in Craigen’s will becomes apparent.
Why would Craigen in the first sentence grant his wife a life estate, but then in the
concluding sentences bestow upon her all of his property? The resolution of that
question by Craigen’s children seems reasonable, as the last sentence could be
construed to merely describe the property that Craigen intended to include in Daphne’s
life estate.
On the other hand, Craigen did not mention his children in his will and he made no
provisions to expressly benefit them. Moreover, Brian and Sabrina’s construction of
Craigen’s will would, if adopted, allow all of Craigen’s property to pass under the laws
of intestacy at Daphne’s death. Brian and Sabrina’s construction assumes that Craigen,
when writing his will, did not intend to completely dispose of his estate. The rule that
Craigen did not likely intend to create an intestacy favors the construction of the will
that the trial court adopted.
Brian and Sabrina contend that the will gave Daphne a life estate, but Craigen did not
utilize those exact words in his will. Although no particular words are needed to create
a life estate, the words used must clearly express the testator’s intent to create one. In
the absence of a remainderman clause, we are skeptical that Craigen used the phrase
“till she dies” in a technical sense to create a life estate. Instead, Craigen likely intended
to limit Daphne’s use of his property; nevertheless, the will manifests an intent that she
have his property in fee simple absolute. Consequently, although the first sentence in
the will is susceptible to the interpretation that Craigen created a life estate, the will
becomes ambiguous when, in the will’s third sentence, Craigen expressly names
Daphne as the beneficiary of all of his property and he makes no further provision for
his estate upon her death.

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We conclude that the will is reasonably capable of more than one meaning; therefore,
we resort to the rules of construction that apply to ambiguous wills…. Craigen’s will
can be interpreted to avoid the intestacy certain to result under Brian and Sabrina’s
construction of the will. The potential intestacy is avoided if the phrase “till she dies”
is interpreted as a conditional bequest. The third sentence then functions as intended
to give Daphne all of Craigen’s property in fee simple. The immediate vesting
construction favors Daphne, the sole beneficiary named in Craigen’s will. It also affords
the phrase “till she dies” a nontechnical meaning.
We decline to apply the presumption that Craigen did not intend to disinherit his
children when the will expressly states that Craigen gave all of his real and personal
property to Daphne and when Brian and Sabrina offered no evidence regarding
Craigen’s situation and the circumstances surrounding the execution of the will. Taking
the will as a whole, the dominant gift is all of Craigen’s real and personal property, and
he made that gift to his wife. As this is the dominant clause, Craigen’s expressed
intention prevails.
We hold that under the appropriate rules of will construction, the trial court correctly
construed the will. We overrule the issue and affirm the judgment.
AFFIRMED.
Notes and Questions
1. Holographic Wills. A holographic will—a will handwritten by the testator—
often presents a particular challenge for courts attempting to interpret it. Indeed,
they are thought to be so problematic that about half of American jurisdictions
refuse to recognize them as valid wills at all. See Stephen Clowney, In Their Own
Hand: An Analysis of Holographic Wills and Homemade Willmaking, REAL PROPERTY,
TRUST AND ESTATE LAW JOURNAL 27 (2008) (arguing that the defects of
holographic wills, though real, are overstated). Lay testators attempting to settle
their affairs without assistance of counsel often make legal or technical errors
of various kinds, including errors of ambiguity such as the one that generated
the litigation in Craigen.
2. Presumptions and Rules of Construction. The court reviews a number of
rules of construction applied by courts in construing ambiguous grants. Most

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jurisdictions have similar rules of construction—sometimes promulgated by
statute, other times judge-made. In Craigen, two rules in particular do
considerable work: the presumption against intestacy and the clear-statement
rule for creation of a life estate. The latter rule is sometimes expressed in other
jurisdictions as a presumption in favor of the largest estate the grantor could
convey. See, e.g., White v. Brown, 559 S.W.2d 938, 939 (Tenn. 1977) (quoting
Tenn. C. Ann. § 32-301) (“Every grant or devise of real estate, or any interest
therein, shall pass all the estate or interest of the grantor or devisor, unless the
intent to pass a less estate or interest shall appear by express terms, or be
necessarily implied in the terms of the instrument.”).
What justification is there for presuming that an ambiguous grant conveys a fee
simple absolute rather than a life estate? Is it any different for the justification
underlying the presumption against intestacy? Was Craigen an appropriate case
for the application of these presumptions?

3. Finding Ambiguity. Are you convinced by the court’s arguments that the
language “till she dies” does not “clearly express the testator’s will to create a
life estate”? What do you think Dalton Craigen meant by this phrase?
4. Dueling Presumptions. The court mentions another rule of construction—
the presumption against disinheritance—but declines to apply it. Why? Is its
reason for following the presumption against intestacy but declining to follow
the presumption against disinheritance persuasive? How is a court to decide
when a presumption or other rule of construction applies and when it doesn’t?

E. Present vs. Future: The Doctrine of Waste
Even if we are very clear on the nature and allocation of possessory and future interests
in a parcel of land, we soon run into a practical problem: it can be difficult to protect
the value of a future interest while someone else is in possession of the land, acting for
most purposes as its owner. What if a life tenant burns down the structures on the
parcel? Or decides to undertake a remodeling project that would make the parcel less
desirable to future renters? Or fails to do anything about a leaky pipe, leading to a costly
mold infestation? What if the possessor uses the property in such a way as to maximize
its current value at the expense of its future value—depleting natural resources, wearing

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out buildings and fixtures without repairing or maintaining them—in ways that can’t
be recovered? Can it be wrongful—as a matter of property law—for a lawful possessor
to use the possessed premises however they wish, for good or for ill?
The common law recognized that it could be wrongful for a present lawful possessor to
take (or fail to take) certain acts with respect to land in their possession—if those acts
affected the ability of a future possessor to enjoy their interest when their turn came
around. To vindicate the rights of these future interest holders, the common law gave
them a private right of action to enjoin, and obtain damages for, the acts and omissions
of possessors that permanently decrease the value of the future interest. This was the
action for waste.
Jackson v. Brownson
7 Johns. 227 (N.Y. Sup. Ct. 1810)
… THIS was an action of ejectment for a farm in Whitestown. The cause was tried at
the Oneida circuit, the 5th June, 1809, before Mr. Justice Yates.
At the trial, the plaintiff gave in evidence the counterpart of a lease, dated the 3d
September, 1790, from Philip Schuyler, * of Albany, to the defendant, for the premises
in question, for the lives of the defendant, his wife, and Samuel Shaw, respectively. The
farm contained 133 acres and a half. The lease contained various covenants,
reservations and conditions, among which was the following: …“And it is further
conditioned on the part of the said lessee, that neither the said lessee, his executors,
&c., … shall, at any time hereafter, commit any waste.”
“And in case the said lessee, his, &c., shall not perform, fulfil, abide by, and keep all
and every of the covenants and conditions herein covenanted and conditioned, &c.,
then in each of the said cases, it shall thenceforth be lawful for the lessor, his, &c., into
the whole of the said premises, or into any part thereof, in the name of the whole, to
reënter, and the same to have again, repossess and enjoy, as his or their former estate,”
&c.

* [Yes, that Philip Schuyler.—eds.]

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The lessors were the heirs of Philip Schuyler; this action was brought to recover the
possession of the south half of the premises, on the ground of forfeiture by a breach
of the covenant; the lessee or his assigns having committed waste thereon by clearing
and draining off the land more than a reasonable and due proportion of the wood. It
was admitted that, at the date of the lease, the premises were wild and uncultivated,
and covered throughout with a forest of heavy timber.
The plaintiff proved that the defendant occupied the south half of the premises, which
were entirely cleared of wood, before the commencement of the suit; and that on the
north half occupied by Shaw, the whole was cleared except about six or eight acres, on
which more than half the wood and timber had been cut down and removed, before
the commencement of the suit.
It was also proved, that a permanent supply of fuel, timber for buildings, and wood for
fences, for the use of the demised premises, would require that, at least, thirty acres
should have been preserved in wood.
… It was also proved, that about 12 years since, there were 35 acres of land covered
with wood and timber on the premises, and about 12 acres of woodland, on that part
in the possession of the defendant, only half of which was good for timber, … that the
defendant had cut no wood or timber on the part in his possession, except for fuel,
fences, and building for the use of the farm, and which had been gradually cut, … [that]
the defendant had built a house on the premises, which was completed about four years
since; and had used the farm in a husbandlike manner, and had carried on more
materials for fences than he had taken off; that … cleared land was of much greater
value than land covered with wood and timber; and that good farms in the vicinity of
the premises had not reserved more than 12 acres of woodland out of 100 acres….
The judge was of opinion, … that the gradual clearing of that part in possession of the
defendant, … did not, in law, amount to waste; and he directed the jury to find a verdict
for the defendant; and the jury found accordingly.
A motion was made to set aside the verdict and for a new trial, for the misdirection of
the judge.…

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VAN NESS, J.
… It is a general principle, that the law considers every thing to be waste which does a
permanent injury to the inheritance. Now, to say that cutting down the wood on almost
every acre of the demised premises is not waste, within the spirit and meaning of the
covenant in the case, is to say that no waste, by the destruction of wood, can be
committed at all. We are bound to give effect to this covenant if we can, but to decide
that the facts stated in the case do not constitute waste, would be destroying it almost
altogether. That the destruction of the timber is a lasting injury to the reversion cannot
be disputed. For this injury the lessors of the plaintiff may, at their election, bring
covenant, or enter as for condition broken.
… It is true, that what would in England be waste, is not always so here. The covenant
must be construed with reference to the state of the property at the time of the demise.
The lessee undoubtedly had a right to fell part of the timber, so as to fit the land for
cultivation; but it does not follow that he may, with impunity, destroy all the timber,
and thereby essentially and permanently diminish the value of the inheritance. Good
sense and sound policy, as well as the rules of good husbandry, require that the lessee
should preserve so much of the timber as is indispensably necessary to keep the fences
and other erections upon the farm in proper repair. The counsel for the defendant is
mistaken when he says that lessees in England are prohibited from cutting wood upon
the demised premises altogether; the prohibition, in principle, extends no further, in
this respect, there than it does here. In England, that species of wood which is
denominated timber shall not be cut down, because felling it is considered as an injury
done to the inheritance, and therefore waste. Here, from the different state of many
parts of our country, timber may, and must be cut down to a certain extent, but not so
as to cause an irreparable injury to the reversioner. To what extent wood may be cut
before the tenant is guilty of waste, must be left to the sound discretion of a jury, under
the direction of the court, as in other cases.… The principle upon which all these cases
were decided is that which I have before stated, namely, that whenever wood has been
cut in such a manner as materially to prejudice the inheritance, it is waste; and that is
the principle upon which I place the decision of this cause.
…My opinion, therefore, is, that the motion for setting aside the nonsuit, and granting
a new trial, ought to be granted.

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KENT, Ch. J., and THOMPSON, J., were of the same opinion.
SPENCER, J.
... The land was covered with heavy timber; and, for the use of it, the lessee was to pay
a rent. The parties must, therefore, have intended that the lessee should be at liberty to
fell the timber to a certain extent, at least, for agricultural purposes.
If the restriction to commit waste would operate to restrain the lessee from the use of
the premises, it would be void, as repugnant to the grant. I shall have no difficulty in
maintaining that, according to the common law of England, the lessee could not enjoy
the land, nor derive any benefit from it, without the commission of waste; and should
that point be established, this covenant must be rejected. The general definition of
waste is, that it is a destruction in houses, gardens, trees, or other corporeal
hereditaments, to the disherison of him in remainder or reversion. It is not every injury
to lands that the law considers as waste, nor every act which injures the remainder-man,
or the reversioner. To test this supposed waste, by considering the reversioner injured
by the acts done, is not warranted by law; and, in point of fact, when the premises were
cleared of the timber, cleared land was more valuable than wood land.… Every tenant
has certain rights under his lease. Unless restrained from cutting wood altogether, he
has a right to house-bote, fire-bote, plough-bote and fence-bote. For the purposes of fuel,
he is bound first to take the dry, fallen and perishing wood; for the purposes of erecting
necessary buildings, he has a right to fell timber, and so for the other botes; but I insist
that, according to the common law of England, no tenant can cut down timber, &c.,
or clear land for agricultural purposes; and that the quantity of timber cut down never
enters into the consideration whether waste has or has not been committed; but that it
is always tested by the fact of cutting timber, without the justifiable excuse of having
done it for house-bote, fire-bote, plough-bote or fence-bote. A single tree cut down,
without such justifiable cause, is waste as effectually as if a thousand had been cut
down; and the reason is this, that such trees belong to the owner of the inheritance,
and the tenant has only a qualified property in them for shade and shelter.
The doctrine of waste, as understood in England, is inapplicable to a new, unsettled
country. If the parties before us intended that a sufficient quantity of timber should
be left for the use of the farm, it was very easy to have inserted a covenant to that effect.
We are tied down, in the present inquiry, to a literal, technical construction of the

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covenant, and have no right to go into the intention of the parties, or adopt any
equitable notions. …The criterion set up by the plaintiff, to decide whether waste has
been committed, is altogether fanciful and vague; and the case shows, that men differ
very widely as to how much woodland ought to be left for the use of a farm. The rule
furnished by the common law is fixed and certain; and the lessor knows what wood he
may cut, and for what purposes; but if a covenant not to commit waste is hereafter to
be considered as a covenant to leave a sufficient quantity of land in wood, no lessee is
safe. If the act of cutting timber on the premises, without the justifiable excuse already
stated, was not waste, cutting more or less was immaterial. Under the covenant not to
commit waste, we have no right to say some waste might be committed, and other
waste might not; the covenant is inapt to the case, and if any remedy exists, it must lie
in covenant. I am, therefore, against granting a new trial.
YATES, J., was of the same opinion.
Rule granted.
Notes and Questions
1. What exactly is the dispute between the majority and the dissent? Do they agree
on the existence of a remedy for waste under New York law? On the definition
of waste? On the applicability of waste doctrine to the lease before the court?
On the remedy for waste?
2. Although this case deals with a lease for life—a peculiar hybrid estate that is not
recognized in many jurisdictions—the doctrine of waste applies between
freehold possessory estate holders and future interest holders just as it applies
between leasehold tenants and landlords. Thus, even in the absence of a lease
contract, Brownson could have been held liable for damages, or enjoined from
felling any further timber, in an action for waste by the reversioners (if the jury
concluded that it would indeed be waste for a possessor in Brownson’s position
to fell such timber).
3. Forms of Waste. Waste can be either voluntary or permissive. Voluntary waste
(sometimes called affirmative waste) refers to acts of the holder of the possessory
estate, such as erecting or demolishing a structure, or extracting nonreplenishing natural resources. Permissive waste refers to omissions of the holder

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of the possessory estate, such as failing to pay property taxes, or failure to make
needed repairs. Either can support a claim for waste by the owner of a future
interest whose rights are permanently devalued as a result. Which form of waste
was at issue in Jackson?

4. Theories of Waste. One commentator argues that Jackson was the starting
point for a peculiarly American departure from the English doctrine of waste
deplored by the dissenters. In this view, “courts created the American law of
waste for several reasons: to promote efficient use of resources that the English
rule would have inhibited; to advance an idea of American landholding as a
republican enterprise, free of feudal hierarchy; and perhaps to advance a belief
that a natural duty to cultivate wild land underlay the Anglo-American claim to
North America.” Jedediah Purdy, The American Transformation of Waste Doctrine:
A Pluralist Interpretation, 91 CORNELL L. REV. 653, 661 (2006). And indeed, the
sensitivity of both opinions in Jackson to local conditions, the desirability of
converting wild lands to agricultural use, and the sustainability of yeoman
farming tend to support this pluralist view.
5. Law-and-economics theorists, in contrast, identify waste doctrine solely with
the criterion of efficiency, and particularly the internalization of externalities and
mitigation of holdout problems. As Judge Posner puts it: “The incentive of a
life tenant is to maximize not the value of the property—that is, the present
value of the entire stream of future earnings obtainable from it—but only the
present value of the earnings stream obtainable during his expected lifetime. So
he will, for example, want to cut timber before it has attained its mature growth
even though the present value of the timber would be greater if the cutting of
some or all of it were postponed; for the added value from waiting would inure
to the remainderman…. [Moreover,] since tenant and remainderman would
have only each other to contract with, the situation would be one of bilateral
monopoly and transaction costs might be high.” To avoid these problems,
“[t]he law of waste forbids the tenant to reduce the value of the property as a
whole by considering only his own interest in it.” Richard A. Posner, Comment
on Merrill on the Law of Waste, 94 MARQ. L. REV. 1095-96 (2011).

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A Note on Ameliorative Waste
What if, instead of doing something that decreases the value of the future interest, the
holder of the possessory estate does something that increases the market value of the
land, but in doing so changes the premises in ways the future interest holder doesn’t
like? Such alterations—known as ameliorative waste—have generated two types of
approaches in the courts.
The first approach, adopted in Melms v. Pabst Brewing Co., 79 N.W. 738 (Wisc. 1899),
looks to the effect of the life tenant’s actions on the market value of the parcel and
whether those actions were necessitated by a change in conditions surrounding the
parcel. In Melms, the Pabst Brewing Company had torn down an old mansion abutting
a brewery it owned, mistakenly believing it owned the lot in fee simple when in fact it
owned only the life estate of the widow Melms (the remainder being owned by her
children). At the time of the demolition, the neighborhood around the house had
become heavily industrialized, and had been re-graded such that the house stood 2030 feet above street level and was worthless as a residential property. In these
circumstances, the court held, whether the act of destroying the mansion and regrading the lot on which it stood to street level constitutes waste is a question of fact
for the jury. The court suggested that such actions will not constitute waste “when it
clearly appears that the change will be, in effect, a meliorating change, which rather
improves the inheritance than injures it.” Id. at 739.
The second approach—more consistent with the common-law roots of waste
doctrine—holds that any material change to real property caused by a lawful possessor
without the consent of the holder of the future interest is waste, full stop. This
approach informed the decision of the New York Supreme Court in Brokaw v. Fairchild,
237 N.Y.S. 6 (Sup. Ct. N.Y. Cty. 1929). In that case, the court refused to allow the life
tenant of a stately mansion on New York’s Fifth Avenue at 79th Street to tear the
mansion down over the objections of the holders of future interests in the lot, even
though living in the mansion had become cost-prohibitive and the neighborhood had
become a prime location for luxury apartment buildings, which could be built and
operated on the site for a substantial profit. The theory underlying this result is that a
life tenant has merely the rights of use, not full rights of ownership, and that the holder
of the future interest is entitled to take possession of the parcel in substantially the

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same condition as it existed at the time the future interest was created: “The act of the
tenant in changing the estate, and whether or not such act is lawful or unlawful, i.e.,
whether the estate is so changed as to be an injury to the inheritance, is the sole question
involved.” Id. at 15.
The opinion in Brokaw generated a backlash in New York’s reform-minded legislature,
which enacted a statute redefining waste law along the lines set forth in Melms; that
statute remains in force today. See N.Y. REAL PROP. ACTS. LAW § 803. But interestingly,
the opinion in Melms itself seems to have arisen from a number of questionable factual
and legal pronouncements from the Wisconsin courts. The full, fascinating story is
recounted in Thomas W. Merrill, Melms v. Pabst Brewing Co. and the Doctrine of Waste
in American Property Law, 94 MARQ. L. REV. 1055 (2011). As of 2009, the rule of Melms
was followed in most U.S. jurisdictions, while a small number continued to follow the
rule of Brokaw. Id. at 1083 (citing Gina Cora, Want Not, Waste Not: Contracting Around
the Law of Ameliorative Waste (Apr. 1, 2009) (Yale Law School Student Prize Papers:
Paper 47), http://digitalcommons.law.yale.edu/ylsspps_papers/47).
Which of these two rules do you think is most consistent with the pluralist justifications
for waste doctrine described by Professor Purdy? Which do you think is most
consistent with the law-and-economics approach? Do either of the rules require some
other form of justification, and if so, what might that justification be?

More Complex Estates
Strategy and Method

Problems:

We now turn to a more comprehensive review of the system of common law estates
and future interests. We begin with a warning: estates and future interests problems do
not generally reward creative thinking. They reward mechanical, tedious, careful
application of logical rules according to a set procedure—an algorithmic approach.
They require you to break a big problem up into lots of smaller problems, and solve
each small problem one at a time, in order. Attempts to short-circuit the analysis will
get you into trouble. In this chapter, we are going to adopt a routine process for
breaking down future interest problems into a series of questions that will generate
pieces of the answer we are trying to reach, then build the answer out of those pieces.
The best way to really learn this material is with practice, and you should review the
explanatory problems in the text several times before trying your hand at the questions
at the end of this section.

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A. The Method
In any problem involving estates and future interests, we must:
1. Break the fact pattern down into chronological steps, or points
in time.
2. For each point in time:
a. If the point in time is the making of a conveyance,
construe the language of any conveyance by
i. Parsing the interests created by the conveyance
ii. Identifying the nature and quantum of each
interest
iii. Determining whether there is any residual
interest in the grantor, and if so its nature and
quantum.
b. If the point in time is any other event (e.g., a birth, a
death, or the satisfaction or failure of a condition)
construe the effect of the event on the interests of the
parties.
c. Based on the analysis of Steps 2.a or 2.b, describe the
interests of every party at each point in time: this is the
state of title as of that step.
3. Arrange the state of title for each point in time sequentially to
compose a chain of title .
Once you have a chain of title, you can answer any question you might be asked about
the rights of any party at any point in time. We will talk about how to go about Step 2
in more detail as we dig in to the substance of the various estates and future interests.
Throughout this chapter, important rules that we will apply in Step 2 of our method
will be in bold, indented type, just like the description of the method above. At the end
of the exposition, we will plug all these rules we have learned into the method above
to arrive at a comprehensive approach to the subject.

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Step 1: Building A Chronology
Let’s revisit a problem we encountered earlier in introducing the life estate:
Let’s apply Step 1 of our method to this problem.
Problem 1
O, owner of a fee simple absolute in Blackacre, conveys Blackacre “to A for
life, then to B for life.” (Assume that both A and B are alive at the time of the
grant.) What is the state of title in Blackacre?
Note that, even though it isn’t explicit on the face of the problem, we really have two
points in time here that we need to distinguish:
1. O owns a fee simple absolute in Blackacre.
2. O conveys Blackacre “to A for life, then to B for life.”
Again, the state of title at Point 1 is self-explanatory. Point 2 involves a conveyance,
which we will have to parse in Step 2.a.i. of our method. We’ll learn how to do that
shortly. First, note that Step 1 generates longer chronologies as our problem becomes
more complex. For example, we could add on the complications we encountered when
first considering this problem:
Problem 1A
O, owner of a fee simple absolute in Blackacre, conveys Blackacre “to A for
life, then to B for life.” (Assume that both A and B are alive at the time of the
grant.) While O, A, and B are still alive, B conveys her interest to C. B then
dies, survived by A, C, and O. What is the state of title in Blackacre?

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Although our chronology becomes a bit longer in this version of the problem, it begins
exactly the same way:
1. O owns a fee simple absolute in Blackacre.
2. O conveys Blackacre “to A for life, then to B for life.”
We can then simply add the additional points in time presented by the problem:
3. B conveys her interest to C.
4. B dies.
We will next learn how to analyze each point in this chronology using Step 2 of our
method, and then put all our analyses together to build a chain of title using Step 3 of
our method. Let’s get started:

Step 2.a.i: Parsing a Conveyance
The conveyance at Point 2 of the chronology for Problem 1 reads “to A for life, then
to B for life.” This is a complex grant—it creates multiple interests in multiple parties.
We are going to introduce a rule for breaking up such complex grants for analysis:
Reading from left to right, the first comma, semicolon, or period
following words of purchase indicates the end of one interest, and
the beginning of the next interest.
“Words of purchase” is a technical term in conveyancing law. Despite the ordinary
English meaning of the word “purchase,” “words of purchase” do not necessarily mean
that the grantee paid a valuable consideration in exchange for the grant. They merely
identify who the grantee is. So, reading the conveyance in Problem 1 from left to right, we
find that the first two words of the conveyance—“to A”—are our first words of
purchase. To determine what interest this grant creates in A, we must take the entire
clause beginning with those words of purchase and ending with the first comma,
semicolon, or period we find. Thus, the first interest under this grant will be created by
the words:
“to A for life”

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Continuing to read the conveyance from left to right, we find our next words of
purchase: “to B.” Under our rule, the clause creating B’s interest begins at the end of
the previous clause and ends at the first comma, semicolon, or period following the
words “to B.” thus:
“then to B for life”
Taken together, we therefore have two clauses we will have to analyze in Step 2.a.ii of
our method:
“to A for life”
“then to B for life”
You probably already have a decent idea of what interests are created by this language
(or you may remember the answer from when we first encountered this problem), but
let’s approach the problem methodically so we can express our conclusion more
precisely, and later extend our analysis to address novel problems.

Step 2.a.ii: Identifying Legal Interests
In order to identify the legal interest created by a particular clause in a grant, we must
identify both the nature of that interest and the quantum of the interest.
a. Identifying the Quantum of an Interest
The quantum of an estate is a measure of its “size” (if size is a meaningful concept
with respect to intangible rights like estates). The common-law estates are, in decreasing
order of quantum:
• The Fee Simple
• The Fee Tail
• The Life Estate
• The Leasehold Estates
Of these, we will concern ourselves here only with the fees simple and the life estate.
The fee tail is relevant today only to those who wish to more fully appreciate certain

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works of 18th- and 19th-century English literature (and period dramas depicting the
same era), in which the estate is a hackneyed plot device. * It was associated with
hereditary aristocracy in the minds of American legislators and jurists, and accordingly
it been abolished, was never recognized, or is otherwise essentially moribund in all
American jurisdictions. † The Leasehold Estates, in contrast, are quite important to
modern real estate practice, but today they are governed by the law of Landlord and
Tenant, which we cover in a separate unit. Based on the hierarchy of estates, then, the
key fact for you to keep in mind during our study of the estates system is that a life estate
is a lesser estate than a fee simple. This will be an important point when we begin our
discussion of retained interests.
Let us illustrate the process of identifying the quantum of an interest with an example.
Recall the first part of the grant we parsed in Problem 1. The language “to A for life,”
as we know, creates a life estate in A. But the quantum of A’s interest—a life estate—
is not indicated by the words of purchase (“to A”). Instead, it is indicated by the two
words following the words of purchase: “for life.” These two extra words are called
words of limitation: they define or “limit” the nature or quantum of the estate that will be
held by A. For example, the traditional words of limitation of a fee simple are “and his
heirs.”
But what if a grant includes no words of limitation? In this case, we require an
additional rule to guide our analysis:

* The fee tail was created by a grant “to A and the heirs of his/her body,” and land held in tail passed from the

grantee to that grantee’s direct descendants at the death of each successive owner. Thus no owner at any point
in the family line had the power to dispose of the property for longer than their life or to direct its disposition
upon their death. Land subject to this type of arrangement was said to be “entailed.” The fee tail could be—and
often was—limited even further to male heirs; hence the literary trope of the man with no sons nearing the end
of his life and despairing for the future of his unwed daughters because he holds all his property in tail. See, e.g.,
JANE AUSTEN, PRIDE & PREJUDICE ch.7 (“Mr. Bennett’s property consisted almost entirely in an estate of two
thousand a year, which, unfortunately for his daughters, was entailed, in default of heirs male, on a distant
relation….”).
† For a discussion of the abolition of the fee tail and a review of the vestiges of the estate in the few American

jurisdictions that retain some form of it, see 2-14 POWELL ON REAL PROPERTY (2015).

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In the absence of clearly contrary words of limitation, a
conveyance is presumed to convey the grantor’s entire interest.
This rule helps explain the modern formula by which the owner of a fee simple absolute
can convey a fee simple absolute to another: “to A.” Because words of purchase
without any words of limitation convey the grantor’s entire interest, the owner of a fee
simple absolute who conveys an interest “to A” without any further qualification
conveys his entire interest—i.e., a fee simple absolute—to A.
We will see that the fee simple may be further decomposed into the fee simple absolute
(with which you are already familiar) and the defeasible fees (which you haven’t seen
yet). We will deal with the defeasible fees later, because identifying them is dependent
on identifying the future interests that follow them. Let’s turn to the identification of
future interests now.
b. Identifying the Nature of an Interest
We are now going to learn a large number of rules for determining the nature (or type)
of interest created by a particular grant. Those rules can be applied methodically,
according to a kind of algorithm. The flow chart on the next page presents that
algorithm, which will make much more sense to you after you read the ensuing sections
of the text. You will want to keep this flow chart handy as we continue our study of
the estates system, and particularly when we start dealing with problems of the kind
you might encounter on an exam.

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c. Possessory Estates vs. Future Interests
We now identify our rule for determining whether an interest is a possessory estate or
a future interest:
An interest will be a possessory estate if:
1. it is not preceded by any other interest; and
2. it is not subject to any condition precedent.
An interest that is not a possessory estate is a future interest.
A condition precedent is just what it sounds like: a condition that precedes the
possibility of an interest becoming possessory. That is, an interest is subject to a
condition precedent if something that has not yet happened must happen in order for that
interest to become possessory. For example, a conveyance “to A when A reaches her 21st
birthday,” made at a time when A is 10 years old, creates a future interest in A because
A’s interest is subject to a condition precedent: she must reach her 21st birthday in order to
be entitled to possession, and she hasn’t done that yet. (We will learn the name of this
future interest shortly.)
The question whether an interest is a possessory estate or a future interest is different
from the question of the quantum of that interest. One can hold a future interest in life
estate, just as one can hold a possessory life estate. To illustrate this point, let’s return
to the conveyance from Problem 1. Recall that we determined that this conveyance had
two operative clauses:
“to A for life”
“then to B for life”
The first clause, “to A for life” creates some interest in A. Is it a possessory estate or a
future interest? First, we ask whether it is preceded by some other interest, and find
that it isn’t—it’s the first interest created in the conveyance from O. Next, we ask
whether it is subject to a condition precedent—does anything that hasn’t yet happened
have to happen in order for A to take possession? Again, the answer is no: the grant is
“to A for life” with no other condition in the text of the relevant clause. Thus, A’s
interest is a possessory estate. And because the conveyance to A includes the words of

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limitation for a life estate (“for life”), we know that the quantum of A’s possessory estate
is a life estate. Thus, we conclude that under this language, A takes a possessory life estate.
What about B? The language “then to B” creates some interest in B—is it a possessory
estate or a future interest? The word “then,” following the grant to A, is a clue. When
we ask the first question demanded by our rule—whether B’s interest is preceded by
any other interest—the answer is clearly yes: B’s interest follows A’s possessory life estate.
Therefore B’s interest must be a future interest. We also know, from the words of
limitation “for life,” that the quantum of that interest will be a life estate. So we know
that B will take a future interest in life estate under this clause of the conveyance. But
we do not yet know what kind of future interest B takes. To answer that question, we
need to learn a few more rules.
d. Reviewing Familiar Interests
Recall that in our introduction to the basics of the estate system we encountered four
interests: the fee simple absolute, the life estate, the remainder, and the reversion.
You now understand that the fee simple absolute and the life estate are measures of
the quantum of an interest—whether it be a possessory estate or future interest—while
the remainder and the reversion are types of future interests. We can now formulate
rules to identify the remainder and the reversion. Our rule for identifying the remainder
is as follows:
If a future interest:
1. is created in someone other than the grantor, and
2. cannot cut short or divest a preceding possessory or
vested estate, but must instead wait until the
preceding estate naturally terminates in order to
become possessory,
then the future interest is a remainder.
Remember: the distinguishing characteristic of the remainder is that it cannot cut short or
divest a prior estate. It simply “remains,” sitting around and waiting for the natural
termination of the preceding possessory estate, at which point the remainder will
become possessory by operation of law.

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The reversion, like the remainder, cannot cut short or divest any possessory or vested
estate. Our rule for identifying it is as follows:
If a future interest:
1. is created in, or retained by, the grantor of the interest,
and
2. cannot cut short or divest a preceding possessory or
vested estate, but must instead wait until the
preceding estate naturally terminates in order to
become possessory,
then the future interest is a reversion.
We now have the tools to complete our analysis of the conveyance at Point 2 of the
chronology we developed for Problem 1. We identified two operative clauses in that
conveyance:
“to A for life”
“then to B for life”
And we further concluded that the first of these clauses created a possessory life estate in
A, while the second created some future interest in life estate in B. We can now
determine what B’s future interest is. B is not the grantor of this interest, and the
interest cannot cut short A’s life estate (the word “then” indicates that B’s interest will
become possessory only after A’s life estate naturally terminates at A’s death). Thus, B’s
interest must be a remainder. Moreover, because we know that the quantum of B’s interest
is a life estate, we can now precisely state exactly what interest B has at Point 2 of our
chronology: B has a remainder in life estate. (Sometimes you will see this interest referred
to as a life estate in remainder; the two formulations are equivalent.)
We have now analyzed all the language in the conveyance at Point 2 of our chronology
in Problem 1. But if you refer back to our method, you will see that Step 2 of the
method is not yet complete. We must undertake one more, crucially important, analysis:
we must ascertain whether our grantor has retained any interest. This step is often
overlooked, which can generate compounding errors at later points in the chronology
of an estates problem.

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Step 2.a.iii: Identifying Residual Interests
At Point 1 in our chronology O had a fee simple absolute, and at Point 2 O has
conveyed two life estates—one possessory and one in remainder. The grant has not
explicitly created any interest of the same quantum as O’s interest—a fee simple
absolute—and the express words of limitation on the grants to A and B mean that we
cannot apply our presumption that O granted a fee simple absolute to either grantee.
Therefore, O must have something left over. As we already know, that something is a
reversion in fee simple absolute. Again, somebody must be in a position to legally take
possession of Blackacre when the life estates have both terminated. Unless O identifies
such a taker explicitly, O must have retained that right to take possession in the future.
And because the quantum of O’s original interest was a fee simple absolute, that will
also be the quantum of O’s reversion.
We can formalize our retained-interest analysis in the following rule:
If a conveyance does not create a vested interest of equal quantum
to the grantor’s interest, then there must be a reversion in the
grantor of equal quantum to the grantor’s original interest.
You do not yet know what a vested interest is—we will turn to that shortly. For now,
you should note the following rule:
All possessory estates, and all interests retained out of vested
interests, are vested.
Turning to Step 2.c of our method, we can now fully identify the state of title at Point
2 in our chronology for Problem 1:
2. A has a possessory life estate
B has a remainder in life estate
O has a reversion in fee simple absolute.
Before turning to the rest of the future interests, let us expand our analysis to include
the additional Points in the chronology for Problem 1A. To do so, we need to apply
Step 2.b of our method for solving estates problems.

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Step 2.b: Construing the Effects of Events on Legal Interests
Recall the chronology we developed for Problem 1A:
1. O owns a fee simple absolute in Blackacre.
2. O conveys Blackacre “to A for life, then to B for life.”
3. B conveys her interest to C.
4. B dies.
We have completed Step 2.c for Points 1 and 2 of this chronology:
1. O owns a fee simple absolute in Blackacre.
2. A has a possessory life estate
B has a remainder in life estate
O has a reversion in fee simple absolute
At Point 3, however, we have no conveyance language to parse or analyze. Instead, we
must determine what the effect of B conveying “her interest” to C is. Whenever faced
with this type of problem, it is best to be thorough. We must determine what the effect
of this event is on each and every interest we identified in the previous Point of our
chronology.
With respect to A’s possessory life estate, B’s conveyance has no effect. Remember the
principle of nemo dat quod non habet: one cannot give away what one does not have. B’s
remainder in life estate is a different interest than A’s possessory life estate; absent A’s
consent B cannot convey any part of A’s interest. So at Point 3, A’s interest remains
unchanged.
What about B’s interest? The problem tells us that B has conveyed “her interest” to C.
Thus, B no longer has any interest in Blackacre. C, meanwhile, has acquired an interest
in Blackacre—specifically, the remainder in life estate heretofore held by B. But let us
take care: when will this interest terminate? Nemo dat again provides us with the answer:
C can only take what B had. In this case, that is a life estate measured by the life of B. If
you recall from our introduction to estates, we call this interest a life estate pur autre vie.
That is, C now has a remainder in life estate pur autre vie for the life of B.

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With respect to O’s reversion, again, nemo dat tells us that B cannot convey that
reversion without O’s consent. So O’s reversion remains unchanged.
Turning to Step 2.c of our method, we can now provide the state of title at Point 3 of
our chronology:
3. A has a possessory life estate
C has a remainder in life estate pur autre vie for the life of B
O has a reversion in fee simple absolute
We can perform a similar analysis at Point 4 of our chronology, wherein B dies.
Looking to A’s interest, again, there is nothing that B can do to affect A’s possessory
life estate, which remains unchanged. The same is true for O’s reversion: it too remains
unchanged. But B’s death terminates C’s remainder in life estate pur autre vie by
operation of law: the interest simply ceases to exist. (Note that this happens even
though the interest never became possessory.) Turning to Step 2.c, we can provide the
state of title at Point 4 of our chronology:
4. A has a possessory life estate
O has a reversion in fee simple absolute

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Step 3: Building a Chain of Title
We have now analyzed the state of title at each of the four Points in our chronology
for Problem 1A; let’s put them all together into a chain of title:
1. O owns a fee simple absolute in Blackacre.
2. A has a possessory life estate
B has a remainder in life estate
O has a reversion in fee simple absolute
3. A has a possessory life estate
C has a remainder in life estate pur autre vie for the life of B
O has a reversion in fee simple absolute
4. A has a possessory life estate
O has a reversion in fee simple absolute
This chain of title provides all the information we could possibly need to answer any
question about the interests of the parties in this problem at any point in time. As it
turns out, the question asks for the state of title at the end of this chain of events. To
answer that question, we simply look to the relevant Point in our chain of title (here,
Point 4) and respond: A has a possessory life estate, O has a reversion in fee simple
absolute.

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B. Other Estates and Future Interests
We now have a complete method for solving estates problems, but have only scratched
the surface of the types of estates and future interests we might encounter. We can now
learn about the remaining estates and future interests, plugging them in to our method
for additional practice.

1. Remainders, Part 2: Vested and Contingent Remainders
The first layer of complexity we will add to the mix is the distinction between vested and
contingent remainders. “Contingent” here means something similar to what it means in
ordinary usage: it refers to something that might or might not come to pass. There is a
straightforward rule for distinguishing between vested and contingent remainders:
A remainder is contingent if:
1. it is created in an unascertained or unborn person; or
2. it is subject to a condition precedent other than the natural
termination of the preceding possessory estate (i.e., it requires
the occurrence of some uncertain event or condition before it
can become possessory).
A remainder that is not contingent is vested .
Let’s look at a problem involving one of these possibilities.

Problem 2
O, owning a fee simple absolute in Blackacre, conveys Blackacre “to A for
life, then to A’s first-born child,” at a time when A has no children. Two years
later, A’s first child, B, is born. What is the state of title in Blackacre?
As always, we begin with Step 1 and break up this fact pattern to build a chronology:
1. O owns a fee simple absolute.

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2. O conveys Blackacre “to A for life, then to A’s first-born
child.” A has no children.
3. A’s first child, B, is born.
Now we must go through each of these points in time to construe any grant or
determine the legal effect of any event at each step. Point 1 is, as usual, self-explanatory.
At Point 2, we have a conveyance that we have to parse under Step 2.a.i. Applying our
rule, we break up the conveyance into two clauses:
“to A for life”
“then to A’s first-born child.”
Construing each of these clauses under Step 2.a.ii of our method, we see that the grant
“to A for life” has no other interest preceding it, and is not subject to any other
condition precedent, so it must be a presently possessory estate; the words of limitation
“for life” indicate that it is a possessory life estate. The grant to A’s first-born child
follows A’s life estate; it must therefore be a future interest. Because it is an interest in
someone other than the grantor, and it cannot cut short A’s life estate, it must be a
remainder.
But who owns the remainder? Well … nobody we can identify yet, because the only
person who could own the remainder—A’s first-born child—hasn’t yet been born
(indeed, may never be born). But the remainder still exists. Whether or not it will become
possessory depends on whether its owner—A’s first-born child—ever comes into
being. As you see, this is one of the criteria that will render a remainder contingent rather
than vested. We will say that the remainder is a contingent remainder in the first-born
child of A (even though there is, as yet, no such person). And what is the quantum of
that remainder? Note that the grant to A’s first-born child has no words of limitation
in it. Thus we can apply our presumption to conclude that A’s first-born child’s
contingent remainder is in fee simple absolute—the same estate O had prior to the
grant.
Are we through with Point 2 of our chronology? Not quite. We still have to deal with
Step 2.a.iii of our method—testing for a retained interest. To understand why this step
is so tricky here, we have to imagine ourselves standing at Point 2, not knowing what
the future holds, and contemplating every conceivable possibility, including the

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possibility that A will die without ever having children. (As you’ll see, future interests
problems require lawyers to dream up every manner of improbable tragedy.) If A were
to die without having had any children, who would have the right to take possession
of Blackacre at A’s death?
You may have surmised that this is a situation similar to the situation in which a grantor
conveys vested interests of a lesser quantum than his own. In Problem 1, for example, we
knew that there would come a day when none of O’s grantees had a right to
possession—everybody dies someday, so A’s and B’s interests would eventually
terminate. In our current problem, we don’t know for sure that such a day will come,
but we can see it as a very real possibility. O has conveyed a future interest in fee simple
absolute (the remainder), but that interest is contingent: it is possible that this interest will
never become possessory—that A will die without having had a first-born child.
Therefore we need someone to be able to step in and take possession if this possibility
materializes. And as before, the only person left to take possession is O. Therefore, O
must have a future interest at Point 2, and because O’s interest cannot cut short or
divest either A’s interest or the interest of A’s first-born child, it must be a reversion.
Moreover, because O’s interest in Blackacre prior to the grant was a fee simple absolute,
the reversion must also be in fee simple absolute.
Now you can better understand our rule for determining whether a grantor retains a
reversion. Our rule identified the two circumstances in which the grantor will need to
be in the position to retake possession in the future. In the first circumstance, the
reversion was necessary because the grantor had conveyed vested interests of a lesser
quantum than his own. In the second, the reversion was necessary because, although the
grantor had conveyed an interest of the same quantum as his own, that interest was
contingent and therefore not certain to become possessory. Both circumstances reflect
the same underlying principle: if a conveyance creates some gap in rightful possession,
that gap will be filled by the grantor’s original (and hence retained) right to possession.

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We are now prepared to move on to Step 2.c of our method and describe the state of
title as of Point 2 in our chronology:
2. A has a life estate.
A’s (non-existent) first-born child has a contingent
remainder in fee simple absolute.
O has a reversion in fee simple absolute.
Note that because a reversion is retained from O’s original possessory estate, it is always
considered vested. However, that does not mean that it is certain to become possessory
again. Analysis of Point 3 in our chronology will demonstrate why.
At Point 3, A has had a child, B. Under Step 2.b of our method, we need to ask: what
effect does this event have on each of the interests we identified in Point 2? Let’s again
consider the interests one at a time.
• A’s life estate would seem to be unaffected; neither the remainder nor the
reversion identified at Point 2 in our chronology can cut short a preceding
possessory estate such as A’s.
• Circumstances have changed with respect to the remainder. We can now
point to a living person who will have the right to possession of Blackacre
under the remainder: B. And there is no future event (other than the natural
termination of A’s life estate) that must come to pass in order for the
remainder to become possessory. As such, the remainder is no longer
contingent at Point 3: it is in a known, living person and it is not subject to
any condition precedent other than the termination of A’s life estate—
which we know will happen someday. We may therefore say that the
remainder has vested, and that B is its owner. The quantum of the remainder
remains the same: it is a vested remainder in fee simple absolute.
• What effect does the vesting of B’s remainder have on O’s reversion?
Recall our test for determining whether there is a reversion: we need to
know whether O’s conveyance created a vested interest of equal quantum to
the interest O held prior to the grant. The last interest created by O’s grant
is now a vested remainder in fee simple absolute. We therefore no longer need O

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to stand ready to take possession at A’s death; B is certain to have a right to
possession. Thus, we say that O’s reversion is divested by the vesting of B’s
remainder: the reversion simply disappears. In this circumstance—where
the occurrence of some condition both vests one future interest and
destroys a different future interest—we say that the two interests are
alternative future interests.

Based on this analysis, we are finally prepared to move on to Step 2.c of our method
and give the state of title at Point 3 in our chronology, which is what we’ve been after
all along:
3. A has a life estate.
B has a vested remainder in fee simple absolute.
Problem 2 dealt with one circumstance that could render a remainder contingent: its
creation in unborn or unascertained persons. We have yet to see an example of the
other circumstance that can render a remainder contingent: being subject to a condition
precedent. Let us consider such an example that also expands on the alternative nature
of the future interests in Problem 2.

2. Remainders, Part 3: Alternative Contingent Remainders
Recall that in Problem 2, we identified two future interests as alternatives—a contingent
remainder and a reversion. Either of them could become possessory, but not both.
Multiple contingent remainders can also be alternatives to one another. Suppose that O,
who owns Blackacre in fee simple, grants Blackacre “to A for life, and then to the first
of B or C to have a child,” at a time when neither B nor C has had any children. You
should be able to recognize by now that this grant creates a life estate in A, and a future
interest in both B and C. Because the future interests are in someone other than the
grantor and cannot cut short A’s life estate, they must be remainders. And because
there are no words of limitation on the remainders, they are remainders in fee simple
absolute (the same interest O had prior to the grant). Finally, because they are both
subject to a condition precedent other than the natural termination of A’s life estate before
they can come possessory, they are both contingent remainders. But note that logically,
they can’t both become possessory. The satisfaction of the condition precedent to B’s
remainder is logically equivalent to the failure of the condition precedent to C’s

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remainder, and vice versa. In this circumstance, we say that B and C have alternative
contingent remainders. The vesting of one alternative contingent remainder necessarily
means the destruction of the other.
There are some additional complications regarding vested remainders that we will have
to discuss, but we will first need to build up some additional knowledge about other
future interests. Before moving on, we should reinforce one final point about future
interests raised by the alternative contingent remainders described in the previous
paragraph. Even though neither B nor C has yet satisfied the condition precedent on
her interest becoming possessory and may never do so, their contingent remainders are still
their property. That property may not be worth very much, but it exists as soon as the
conveyance from O is executed. In most American jurisdictions today, B or C could
sell their interest, could mortgage it, or could give it away (though traditionally at
common law the contingent remainder was merely descendible, not devisable or
alienable inter vivos).

3. The Defeasible Fees
We mentioned earlier that the fee simple could be further decomposed into the fee
simple absolute and the defeasible fees. The full taxonomy of the fee simple is as
follows:
• The Fee Simple
o The Fee Simple Absolute
o The Defeasible Fees
 Fee Simple Determinable
 Fee Simple Subject to Condition Subsequent
 Fee Simple Subject to Executory Limitation
You have already encountered the fee simple absolute—the most complete interest in
land that the law will recognize. Recall that it is created by the modern formula “to A”;
or the ancient formula “to A and his heirs.”
Hopefully you have noticed that the reversion and the remainder share an important
characteristic: they cannot cut short or divest a preceding possessory or vested estate.

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The reversion is typically a leftover: it sits and waits just in case it is needed. The
remainder, as we’ve said, remains: it must wait until the natural termination of the
preceding possessory estate before it can become possessory. But there are future
interests that are not so polite. To the contrary, they can be rather pushy. These are
future interests that cut short or divest an estate that precedes them upon the occurrence
of some event or the satisfaction of some condition. Because the possessory estates
preceding such “pushy” future interests can be taken away—the owner can lose their
“fee”—we call them defeasible fees (“de-fee”: get it?).*
Based on the principle that a defeasible fee is an estate that looks like a fee simple
absolute, but can be divested—that is, cut short and destroyed—by some future interest
upon the occurrence of some condition, we can now formulate a rule for identifying
the quantum of an estate created by a conveyance:
If an estate can be divested or cut short by a future interest, it is a
defeasible fee; if it will terminate at the death of a natural person it
is a life estate; and if it has no inherent limitation it is a fee simple
absolute.
There are several different future interests that can cut short or divest a prior interest,
and each of these “pushy” future interests generally goes hand-in-hand with a particular
defeasible fee that precedes it; they are matched pairs. These pairings are set forth in
the following table:

* The word “defeasible” actually derives from the same source as the word “defeat,” rather than the source for

the word “fealty,” but this is still a useful mnemonic device. And, strictly speaking, the lesser common-law
freehold estates—the fee tail and the life estate—can also be defeasible, but we will ignore that possibility in our
study of the estates system because it is rare and of trivial importance. If you intend to experiment with such
grotesque creatures of the common law (and we advise against it), be aware that the future interest following a
defeasible life estate is still called a remainder (if in a grantee) or a reversion (if in the grantor); the additional
condition on the future interest following the life estate does not change it to a different future interest.

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Table 1: The Defeasible Fees and Their Corresponding Future Interests
Defeasible Fee

Corresponding Future Interest

Fee Simple Determinable

Possibility of Reverter

Fee Simple Subject to Condition Subsequent Right of Entry
Fee Simple Subject to Executory Limitation
Springing Executory Interest
(in a grantor)
Fee Simple Subject to Executory Limitation
Shifting Executory Interest
(in a grantee)

In order to determine which of the defeasible fees is created by a conveyance, we need
to analyze its relationship to the future interest that follows it. There are a few rules to
guide us here, having to do with the identity of the holder of each interest and the words of
limitation creating the pair of interests. We begin with the first of these criteria:
If the future interest that cuts short or divests a prior interest is
created in a grantee, it will be an executory interest, making the
preceding estate a fee simple subject to executory limitation.
Executory interests are traditionally classified further depending on who holds the
preceding defeasible estate:
An executory interest that divests or cuts short an estate held by
the grantor of the executory interest is a springing executory
interest. An executory interest that divests or cuts short an estate
of a grantee is a shifting executory interest.
Let us explore the executory interest a bit further. As our rule indicates, if a defeasible
fee is held by the grantor of the executory interest that could cut it short, the executory
interest is called a “springing” executory interest. (It “springs up” to take away the
grantor’s retained possessory interest.) This typically happens when an owner conveys
a conditional future interest in another while retaining the possessory estate. For

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example: if O, owning a fee simple absolute in Blackacre, conveys Blackacre “to A
when A marries,” A (assuming she is unmarried at the time) has no present right to
possession. She has received only a future interest, meaning that O must still have a
possessory estate. It is tempting to think of A’s interest as a contingent remainder—
after all it is subject to the condition precedent that A marry before the interest can
become possessory. But note that the natural termination of O’s possessory estate is
irrelevant to A’s interest; O’s right to possession could be cut short or divested by A if she
satisfies the condition—if she marries. A remainder can’t cut short or divest a preceding
estate like that; it remains, waiting for the preceding estate to terminate naturally. The
only future interest in a grantee that can cut short or divest a possessory estate is an
executory interest, which is what A has. Thus, O’s retained interest can no longer be a fee
simple absolute—it must be a fee simple subject to executory limitation—because it can be
cut short by A’s executory interest. And because the person being divested (O) is the
grantor of the future interest doing the divesting, A’s future interest is a springing executory
interest.
If, in contrast, the defeasible fee is held by a grantee under the conveyance that also
created the executory interest, then the future interest is a shifting executory interest (it
“shifts” the right to possession from one grantee to another). For example: if O,
owning a fee simple absolute in Blackacre, conveys Blackacre “to A, but if B marries,
then to B,” A now has a possessory estate while B has a future interest. Because A’s
presently possessory estate can be cut short by a future interest held by another, it must
be a defeasible fee. But which one? To answer that question we need to look at the future
interest that could cut it short. Because that future interest is in a grantee (B) and can
cut short the prior estate, it must be an executory interest, meaning that A’s estate is a fee
simple subject to executory limitation. And because the defeasible fee is held by a grantee of
the executory interest (A), the satisfaction of the condition (B’s marriage) will simply
“shift” the right to possession from one of O’s grantees to another (i.e., from A to B).
Therefore, B has a shifting executory interest.
An executory interest is never vested, because it is necessarily limited by a condition
precedent: there must be some “trigger” that allows the executory interest to cut short
or divest its predecessor. If that condition comes to pass, the executory interest vests
and becomes possessory at the same time, cutting short and divesting whatever
possessory estate is then in existence. The fact that executory interests are not vested

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is important primarily because it means they are subject to the Rule Against Perpetuities,
(which you may study in a trusts and estates law course).
We now turn to our rules concerning defeasible fees followed by future interests in a
grantor:
If the future interest that cuts short the prior estate is created in (or
retained by) the grantor, it will be either a possibility of reverter
(which follows a fee simple determinable ) or a right of entry
(which follows a fee simple subject to condition subsequent).
It is worth noting that at common law, neither the possibility of reverter nor the right
of entry was transferrable inter vivos or devisable; they could only pass by inheritance to
the grantor’s heirs at law. Today, many states have by statute provided for the inter vivos
transferrability and devisability of both future interests—though some have also put
sharp limits on them. For example, in New York the holder of the equivalent of either
a possibility of reverter or a right of entry must record in the title records a detailed
formal declaration of their intent to preserve their interest “not less than twenty-seven
years nor more than thirty years after the … [interest] was created,” and follow up
periodically with another formal declaration “after the expiration of nine years and
before the expiration of ten years from the date when the [previous] declaration was
recorded.” N.Y. REAL PROP. L. § 345. Failure to do so results in extinguishment of the
interest.
The precise identity of the defeasible fee/future interest in the grantor pair created by
a conveyance depends on subtle distinctions in the language of the conveyance itself.
We begin with the fee simple determinable and its paired future interest, the possibility
of reverter:
If a defeasible fee interest is limited by words of duration, it is a
fee simple determinable , and the grantor’s retained future interest
following the defeasible fee is a possibility of reverter.
The fee simple determinable is created using words of duration as the words of limitation for
the defeasible fee. This could include words such as “until,” “so long as,” “while,” and

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so forth. The fee simple determinable is followed by a possibility of reverter. * The
possibility of reverter is a future interest held by the grantor that will cut short the fee
simple determinable and become possessory by operation of law if the condition on
the continued existence of the fee simple determinable ever fails. It can be explicitly set
forth in the grant, but it also may be a retained interest, created by implication where a
grantor conveys a fee simple determinable and does not designate a future interest to
follow it. So, for example, a conveyance “from O to A so long as Blackacre is used for
residential purposes” creates a fee simple determinable in A, followed by a (retained)
possibility of reverter in fee simple absolute O. In this example, if A builds a factory or
an office park on Blackacre, A’s interest will terminate and O will have an immediate
right to possession.
Note how important it is to be careful about terminology here: there is no such thing
as a “reverter,” or a “possibility of reversion.” You should never use such terms. It is
unfortunate that the common law settled on such similar names for these two different
interests, but we are stuck with them and you must be clear which future interest you
are referring to by using the correct name for it.
We can now turn to our final defeasible fee/future interest pairing:
If a future interest in the grantor that cuts short or divests a prior
estate is limited by words of condition, it is a right of entry . The
defeasible fee followed by a right of entry is a fee simple subject to

a condition subsequent.

The right of entry (sometimes called a power of termination) is a future interest in the grantor
that is limited by words of condition: phrases such as “but if,” “provided that,” “however

* There are some authorities that hold that a determinable (i.e., durationally limited) estate can be followed by an

executory interest in a grantee, and indeed the Restatement (First) of Property calls such an estate a “fee simple
with an executory limitation” (distinguishing it from the fee simple “subject to” executory limitation). We will
not follow those authorities here; our rule is that any fee interest that can be cut short by a (valid) future interest
in a grantee is a fee simple subject to executory limitation. The disagreement among courts on this issue is useful
mainly for showing how confusing the estates system is even to common law judges, and how trivial some of its
distinctions can be; the Restatement notes that this distinction “is applicable to such a restricted combination of
circumstances that a set of facts permitting its application seldom exists.” RESTATEMENT (FIRST) OF PROPERTY
§ 47, cmt. b (1936).

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if,” “on condition that,” and so forth. The key practical distinction between the
possibility of reverter and the right of entry is that the right of entry does not automatically
become possessory by operation of law upon the satisfaction or failure of the relevant
condition. Rather, in order to be entitled to possession the owner of the right of entry
must take some affirmative step to assert her rights (for example, by bringing an
ejectment action). Until the owner of the power of entry exercises it, the state of title
remains the same as it was before the condition triggering the right of entry was
satisfied; the only change is that we would now say the right of entry “may be presently
exercised.”
The defeasible fee that can be cut short by a right of entry is called a fee simple subject to
condition subsequent. Note here the difference here between a condition precedent—
which is the type of condition that must be satisfied before a future interest such as a
contingent remainder, executory interest, or right of entry can become possessory—
and a condition subsequent—which is the type of condition that can arise after possessory
estate begins and have the effect of divesting that estate. Put simply: a condition
precedent must be satisfied before you can have your interest; a condition subsequent
can arise after you get your interest and take it away. We will explore this distinction in
more detail shortly.
Consider an example: O, an adherent of the Church of the Flying Spaghetti Monster
owning a fee simple absolute in Blackacre, conveys Blackacre “to my son A, but if A
ever marries a non-Pastafarian, to O.” Under this conveyance, A has a possessory estate
with no inherent limitation, but that estate is followed by a future interest that can cut
short A’s estate on the occurrence of an uncertain future condition (A’s marriage
outside the faith). Because this future interest is owned by the grantor (O), and because
it can cut short the prior possessory estate, it must be either a possibility of reverter or
a right of entry. And because there are no durational words of limitation on A’s
possessory interest, but there is a condition precedent on O’s future interest, we know
that O’s interest is a right of entry. This, in turn, means that A’s interest is the matching
defeasible fee: the fee simple subject to condition subsequent. Now imagine that A falls
in love with and marries B, an adherent of the Missionary Church of Kopimism. Upon
their marriage, A’s fee simple subject to condition subsequent does not change. Rather, all
that happens is that O’s right of entry—which has been there all along—becomes
presently exercisable. In an ejectment or quiet title action between O and A, O would now

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prevail—but until such an action is brought there is nothing wrongful about A’s
continued possession of Blackacre.
If, in contrast, O’s conveyance had been “to A so long as A does not marry a nonPastafarian,” A’s interest would have been limited by words of duration, and thus
would be a fee simple determinable followed by a possibility of reverter in fee simple
absolute in O. Upon A’s marriage to B, A’s estate would immediately terminate by
operation of law and O would have a presently possessory fee simple absolute. A’s
continued possession, in these circumstances, is wrongful against O.

4. Remainders, Part 4: Divestment of Future Interests; Types of Vested
Remainders
Before finishing off our catalogue of future interests there is one last issue—and one
more set of future interests—that we must examine. We already know that certain
“pushy” future interests (the possibility of reverter, the right of entry, and the executory
interest) can cut short a possessory interest. But it turns out that they can also divest a
vested future interest even before it becomes possessory. This is particularly an issue for
vested remainders (though it applies to the reversion as well). Consider the following
example: O, owning a fee simple in Blackacre, conveys Blackacre “to A for life, and
then to B, but if A ever remarries, then to C.” Note that B’s interest is a vested
remainder in fee simple absolute: nothing other than the natural termination of A’s life
estate needs to happen in order for B to take possession. However, there is one thing
that could happen that would take away B’s otherwise certain right to possession: A’s
remarriage could trigger a shifting executory interest in fee simple absolute in C. And note that,
if this happens, it will happen before B’s remainder becomes possessory—A can’t get remarried
from the grave. So in this case, C’s “pushy” future interest can divest B’s future interest,
but it could not cut short B’s interest once that interest becomes possessory. We call
B’s interest a vested remainder subject to divestment (or, as some call it, a vested remainder subject
to complete defeasance), and we can encapsulate the rule for identifying such a future
interest as follows:

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Where a vested remainder could be prevented from ever becoming
possessory by a different future interest, we say that it is a vested

remainder subject to divestment. *

Note that there are potentially other ways that a vested remainder could be affected by
events subsequent to its vesting. Consider an example: O, owning a fee simple absolute
in Blackacre, conveys Blackacre “to A for life, then to A’s children.” At the time, A has
no children. By now you can quickly conclude that A has a life estate and “A’s children”
have a future interest. Because the future interest is in a grantee and cannot cut short
the preceding estate, it must be a remainder. There is no condition other than the
natural termination of A’s life estate on the remainder becoming possessory, but there
is no one yet born who has a right to the remainder, so it must be a contingent remainder
in fee simple absolute (O would also have a reversion in fee simple absolute—do you
see why?).
So: what happens once A has her first child, B? Now we can identify at least one currently
living individual who can take possession when the remainder becomes possessory.
According to our rule for distinguishing vested from contingent remainders, B would
seem to now have a vested remainder in fee simple absolute (destroying O’s reversion).
But something is still up in the air: what happens if A has more children before dying?
Would those children have a right to share in the remainder? The answer is yes—they
would clearly be within the definition of “A’s children” in the words of purchase for
the remainder. This is what we call a “class grant”—a conveyance to a group of people
identified by their membership in some identified group, rather than as individuals. For
such a grant, the “class” remains “open” until it logically could no longer add new
members, at which point it “closes.” In this case, once A dies, the class of “A’s children”
clearly can’t get any new members. Note that this means that B’s remainder, though
vested, can be diluted by the addition of more members of the class entitled to take

* Different

jurisdictions may have slightly different rules for differentiating between remainders that are
“contingent” and those that are “vested subject to divestment” (or, in the language of Section 157 of the First
Restatement of Property, “vested subject to complete defeasance”), and the distinction has divided leading
scholars over the centuries. We will confine ourselves to relatively straightforward examples in this course to
avoid such disputations, but for an overview, see 3 POWELL ON REAL PROPERTY § 20.04 (2018).

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possession at the end of A’s life estate. We call such a future interest a vested remainder
subject to open, and can encapsulate the rule for identifying it as follows:
Where a vested remainder could be diluted by the addition of new
members to the class of persons entitled to it, we say that it is a

vested remainder subject to open.

Finally, we should note that it is sometimes good practice to make clear when
identifying a vested remainder that it is neither subject to divestment nor subject to
open. When this is the case, we say it is an indefeasibly vested remainder.
Where a vested remainder is neither subject to divestment nor
subject to open, it is an indefeasibly vested remainder.

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C. Future Interests Summary and Review
Congratulations! You’ve made your way through an introduction to all the commonlaw future interests. This is a lot of material to take in, and it can be difficult to keep it
organized in your mind. You will likely want to refer to the following summary table,
and back to the flow chart provided earlier in this chapter, to guide your thinking about
how to identify a future interest when you come across it.
Table 2: The Common-Law Future Interests
Future Interests in
the Grantor

Future Interests in a Grantee
Remainders:
Contingent Remainder

Cannot divest (cut short) a
preceding vested or
possessory estate

Indefeasibly Vested Remainder

Reversion

Vested Remainder Subject to Open
Vested Remainder Subject to
Divestment

Can divest (cut short) a
preceding vested or
possessory estate

Possibility of
Reverter

Executory Interests:

Right of Entry

Let’s apply what we’ve learned with a review problem:

Springing Executory Interest
Shifting Executory Interest

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Problem 3
Do the following conveyances create the same legal interests?
1. To A for life, then to B if B survives A, otherwise to A’s heirs.
2. To A for life, then to B, but if B does not survive A, then to A’s heirs.

Solution: Let’s return to our method. Step 1 is moot because we are analyzing the
language of a grant rather than a sequence of events, so we move on to Step 2.a.
Beginning with Step 2.a.i, and applying our punctuation rule, we can divide up each
grant as follows:
1. To A for life, | then to B if B survives A, | otherwise to A’s heirs.
2. To A for life, | then to B, but if B does not survive A, | to A’s heirs.
or, rewriting each grant of an individual interest on a separate line:
1. (a) To A for life,

2.

(a) To A for life,

(b) Then to B if B survives A,

(b) Then to B,

(c) Otherwise to A’s heirs.

(c) But if B does not survive A, to A’s heirs.

We can now move on to Step 2.a.ii and identify the interests created by each of these
clauses. Let us begin with interest 1(a). It is a possessory estate, with words of limitation
“for life,” meaning it is a life estate. Interest 1(b) is a future interest (we know because
of the existence of A’s life estate and the introductory word “then”). Because it is an
interest in a grantee (B), it must be either a remainder or an executory interest. The
words of limitation “if B survives A” do not permit B’s interest to cut short A’s life
estate, so it must be a remainder—it cannot become possessory until the natural
termination of A’s life estate. But note that it is also subject to a condition precedent:
something else (besides A’s death) must happen for B’s interest to become possessory.

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That condition (that B survive—or live longer than—A) means that B’s remainder
must be contingent. And its quantum? It contains no inherent limitation, meaning we can
apply our presumption that O conveyed a future interest in fee simple absolute—unless
the next estate gives us reason to change this view. Looking at interest 1(c), we find a
future interest in A’s heirs. The word “otherwise” refers to the inverse of the condition
on interest 1(b) (B surviving A), meaning that A’s heirs will take if A survives B. This
is yet another condition precedent, but does it allow interest 1(c) to cut short or divest any
prior interest? Clearly not: it cannot become possessory during A’s life estate, and the
word “otherwise” indicates that 1(b) and 1(c) are alternative future interests: if B survives
A, A will not have survived B (and vice versa). So interests 1(b) and 1(c) are alternative
contingent remainders, and because neither can be cut short by any later interest (there
being none), they are alternative contingent remainders in fee simple absolute. Finally,
recall Step 2.a.iii of our method: we need to know whether O has retained any interest.
Interest 1(a) is of a lesser quantum than O’s fee simple absolute, and interests 1(b) and
1(c), while of the same quantum, are contingent, not vested. So O must have a reversion
in fee simple absolute. Note that this is true even though the alternative nature of these
interests would seem to guarantee that either B or A’s heirs will take a fee simple
absolute on A’s death. Can you imagine any reason why we might nevertheless insist
on O having a reversion?
Having completed Step 2.a of our method, we move on to Step 2.c. Given the analysis
above, the state of title under Conveyance #1 is:
• Life estate in A
• Alternative contingent remainders in fee simple absolute in B and A’s heirs
• Reversion in fee simple absolute in O.
Repeating this process for Conveyance #2, we again begin with a life estate in A.
Interest 2(b), however, is somewhat different, in that it lacks the condition precedent
that was present in interest 1(b)—indeed, it lacks any words of limitation at all. Thus,
it is a vested rather than a contingent remainder. But what is its quantum? Since it has
no words of limitation, we can apply our presumption to conclude that it conveys a
vested remainder in fee simple absolute—unless the estate could be cut short or divested
by some subsequent interest. And here we come to clause 2(c), which tells us that if B

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dies before A, A’s heirs will take Blackacre instead of B. But this possibility does not
mean that B’s remainder is contingent: based on the language of the grant creating this
particular interest, it is vested. However, there is a condition subsequent (i.e., a condition
precedent to the vesting of a subsequent future interest) that could divest B. We therefore
call B’s interest a remainder vested subject to divestment. It is vested, but it could still be
divested (i.e., taken away) if some subsequent condition is satisfied.
Interest 2(c), because it is a future interest in a grantee that can divest the interest of
another grantee (B), is a shifting executory interest. Again, applying our presumption, the
quantum of interest 2(c) is a fee simple absolute. Going back now to consider the effect
of Interest 2(c) on the quantum of Interest 2(b), we should note that there is nothing
Interest 2(c) could do to cut short interest 2(b) after it becomes possessory: either B will survive
A and defeat the condition precedent to Interest 2(c), or B will predecease A and the
vested remainder will be divested and disappear before it becomes possessory. We can
therefore conclude that there is no future interest that could cut short B’s possessory
estate once it becomes possessory, meaning that under our presumption it is a vested
remainder subject to divestment in fee simple absolute. Finally, we move to Step 2.a.iii, and
note that unlike Conveyance #1, Conveyance #2 has created a vested interest of equal
quantum to the grantor’s interest: Interest 2(b). Therefore, there is no reversion.
Having completed Step 2.a of our method with respect to Conveyance #2, we move
on to Step 2.c. The state of title is:
• Life estate in A
• Vested Remainder Subject to Divestment in Fee Simple Absolute in B
• Shifting Executory Interest in Fee Simple Absolute in A’s Heirs.
As is apparent, these two conveyances, though appearing quite similar and turning on
the same contingencies (the relative timing of the deaths of A and B), create quite
different sets of legal interests.

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Problems
1. O, who owns a fee simple absolute in Blackacre, conveys Blackacre “to A for
life.” A subsequently conveys “all my right, title, and interest in Blackacre to B.”
Several years later, B dies. A is still alive. What is the state of title in Blackacre?
Support your conclusion with an analysis of the chain of title
2. O, who owns a fee simple absolute in Blackacre, conveys Blackacre “to A for
life, then to B if B survives A, but if A survives B then to C.” Who will own
Blackacre if A survives B? If B survives A?
3. O, who owns a fee simple absolute in Blackacre, conveys Blackacre “to A, but
if A ever divorces, then to A’s first-born child.” At the time of the conveyance,
A is married to B with one child, C. Five years later, A and B have a second
child, D. Three years later, B is killed in a car accident. Three years after that, A
remarries, to E. Two years later, A and E have a child, F. A and E then get a
divorce. Who owns Blackacre? Support your answer with an analysis of the
complete chain of title.
4. Imagine the same sequence of events as presented in Question 3, with the
exception that the initial conveyance is “to A so long as A does not divorce,”
and that subsequent to A’s divorce from E, A dies leaving a valid will devising
all her property to her children in equal shares. Who owns Blackacre? Support
your answer with an analysis of the complete chain of title.
5. O, who owns a fee simple absolute in Blackacre, conveys Blackacre “to A for
life, then to A’s children in equal shares,” at a time when A has one child, B. A
then has a second child, C. B then marries D. B then dies, leaving a valid will
devising all her property to her spouse, D. A then dies. What is the state of title
in Blackacre? Support your answer with an analysis of the complete chain of
title.
6. O, who owns a fee simple absolute in Blackacre, conveys Blackacre “to A for
life, then to B if B graduates from law school, but if C graduates from law school,
then to C.” B and C are both living at the time of the conveyance. B then
graduates from law school. A then dies. C then graduates from law school. Who

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owns Blackacre? Support your answer with an analysis of the complete chain of
title.

7. O dies owning a fee simple absolute in Blackacre, and leaves a valid will devising
Blackacre “to A for life, then to B and his heirs, unless B fails to graduate law
school before his 25th birthday,” and further devising O’s residuary estate “to C
and her heirs.” B is 15 years old at the time of O’s death. Five years after O’s
death, A dies. Seven years after O’s death, C dies, leaving D as her sole heir.
Nine years after O’s death, D conveys “all my right, title and interest in
Blackacre to E.” Ten years after O’s death, B turns 25 years old, not having
graduated (or even enrolled in) law school.
Assume that all future interests are freely devisable, descendible, and alienable.
Provide a chain of title for Blackacre.
8. Assume all the same facts as in Problem 7 except that O’s will devises Blackacre
“to A for life, then to B and his heirs, but if B fails to graduate law school before
his 25th birthday then to C and her heirs.”

Preserving Marketability
As we saw in our discussion of estates and future interests, the common law gave
property owners a fairly diverse and subtle array of tools to effectuate their intent
regarding the use and disposition of their property. But this level of control raises
serious potential for conflicts between the plans and wishes of the property owners of
yesterday and the needs and desires of (actual and aspiring) property owners of today.
Consider that about 80 years before the Empire State Building was constructed, the
land on which it now stands was a farm situated a mile beyond the northern edge of
the urban quarters of New York City. See JAMES REMINGTON MCCARTHY & JOHN
RUTHERFORD, PEACOCK ALLEY: THE ROMANCE OF THE WALDORF-ASTORIA 4-10
(1931). What if the first private owner of that farm—John Thompson, who purchased
it in 1799 out of the common lands held by the city government for $2,400 (id.)—had
executed a conveyance of the land that included a future interest in “the eldest of my
great-great-great-great-great grandchildren”? What if he had devised the land to his
eldest child “on condition that the family farm may never be sold”? Or “on condition
that the land may be used for farming purposes only”? Could the Empire State Building
ever have been built? If not, is that a result we would be happy with?
The common law recognized that some property owners might try to dictate the
disposition of property much farther into the future than could be justified by any
legitimate interest or expertise they might have. As one commentator put it, writing in
1967: “[I]t would have been utterly impossible for any testator dying in 1866 to foresee
the events that have taken place in the succeeding century, and ... any prediction as to
what may occur in the century following 1966 would be even more unlikely to conform
to reality.” W. BARTON LEACH, PROPERTY LAW INDICTED! 71 (1967). As years pass,
new generations undertake stewardship of resources, and the economic, social, and
cultural demands on those resources change with the times. Allowing long-dead
property owners to dictate the disposition of those resources to the fourth, fifth, or
sixth generation after they’re gone significantly limits the ability of the possessors of
today to flexibly direct resources to uses appropriate to the age.
339

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Property

The common law developed various doctrines designed to balance respect for property
owners’ wishes to provide for their families as they see fit with vigilance against the
dangers of dead-hand control. One powerful tool for striking this balance is the
infamous Rule Against Perpetuities. We will not be studying the Rule at any length here,
but its classic formulation—that an interest in property is void unless it necessarily will
vest within 21 years of the end of a life in being at the time the interest is created—
essentially operates to limit a property owner’s control to one generation beyond the
end of his own life. For example, a grant by John Thompson to his great-great-greatgreat-great grandchild would be clearly invalid under the Rule Against Perpetuities, but
a grant by John Thompson to his living daughter’s yet-unborn child would almost
certainly be valid. *
Beyond limiting the duration of property owners’ control, the common law developed
additional rules regarding the types of restrictions grantors could place on otherwise
valid interests in property that they conveyed. The following cases provide some
examples. As you read them, consider how the principles they rely on relate to the
aforementioned balance between respecting property owners’ wishes and guarding
against dead-hand control.
Ford v. Allen
526 S.W.2d 643 (Ct. Civ. App. Tex. 1975)
O’QUINN, Justice.
Chester Melvin Ford and Lola Mae Ford, the deceased persons whose wills are under
review, were married in August of 1943, and Clyde M. Ford, appellant here and plaintiff
below, was the only child born to their marriage. Mr. [Chester] Ford had been married
twice prior to his marriage to Mrs. Ford, but had no children from those marriages.
Mrs. Ford also had been married earlier, and from that marriage she had a son, Otis
Martin Allen, who died in April of 1958, leaving three sons, resulting from two

* We say “almost” only because if Thompson for some reason made the future interest in his unborn grandchild

subject to the condition precedent of that grandchild attaining an age of more than 21 years, the interest would
be void under the common-law Rule Against Perpetuities.

Preserving Marketability

341

marriages. The three surviving sons were defendants below and are appellees in this
appeal.
The undisputed evidence supports the finding of the trial court that Chester Melvin
Ford and his wife, Lola Mae Ford, each executed a holographic will on the same day in
April of 1960, and each of them devised ‘all my property to my beloved’ spouse,
followed by certain additional identical language which is under dispute. Mr. Ford died
November 25, 1972, and less than a month later Mrs. Ford died, on December 18,
1972.
It also appears undisputed that, as the court found, Mr. Ford at the time of his death
owned approximately 450 acres of land in Bell County….
The language of the wills giving rise to this suit, as contained in the will of Mr. Ford,
follows:
‘After the Payments of my Just Debts I devise all my property to my
beloved wife Lola Mae Ford to do with as she See fit except that she is
not to Sell, Morage (sic), or Lease any of our real Estate for more than
Three (3) years without the written agreement of our son Clyde Melvin
Ford.’
Appellant contends that the language is ambiguous and requires construction, and that
under a proper construction the language ‘created a life estate in real property in Lola
Mae Ford with remainder to Clyde M. Ford in fee simple, or alternatively created a
testamentary trust expressly or by implication for the use and benefit of Clyde M. Ford.’
… The trial court concluded (1) that the language in the wills, providing that the devisee
was not to sell, mortgage, or lease any of the realty for three years without written
agreement of Clyde M. Ford, was ‘void as being a restraint on alienation and repugnant
to the devise in fee;’ and (2) the language of the wills … devised fee simple title to all
property, since the wills contained no ‘language clearly showing a lesser estate than the
fee was intended to be devised.’ We approve these conclusions as correct applications
of the law to the language of the wills.
Appellant contends that by extrinsic evidence it may be demonstrated that the true
intent of Mr. and Mrs. Ford was to devise their real property to their only son, Clyde

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M. Ford, and that because of the ambiguity of the language in the wills, such evidence
should have been considered….
In brief, the evidence was that the real estate was the separate property of Mr. Ford,
and that the three grandsons of Mrs. Ford were not kin to Mr. Ford; that Clyde M.
Ford had helped to work the lands contained in the 450 acres, whereas the defendants
had never worked any part of the land; that the grandsons were not close to their
grandmother or to Mr. Ford, and none of them attended either the funeral of Mr. Ford
or their grandmother; that Mrs. Ford set up a savings account for the grandsons and
this alone was intended to take care of them; that Clyde M. Ford was close to his
parents and was the natural object of the deceaseds’ bounty, and the defendants were
not; that during their life both Mr. and Mrs. Ford indicated orally that they wanted
Clyde to have the land.
It is the established rule that an ambiguity arises only when the meaning which
emanates from language used in the will admits of more than one interpretation. We
find no ambiguity in the language of the Ford wills which in each writing clearly and
plainly devises all property to the other spouse to do with as the other may see fit. The
attempt, in language that follows, to place a restraint on alienation could not change or
nullify the devise. It is not a function of the courts, nor is it a role the courts may
assume, to revise or to make over the writing in a will to achieve results different from
results which flow from the plain language used by the maker of the will. The courts
may not speculate, from extrinsic evidence or otherwise, that some other result may
have been intended.
… Appellant also urges that the trial court erred in refusing to make a determination
of heirship, and under these points insists that if Mrs. Ford died intestate, appellant is
entitled to one-half of her estate and defendants are entitled only to the remaining onehalf. The trial court correctly declined to decide the matter of heirship since
administration of the estates is still pending in Bell County, where the County Court
has acquired jurisdiction to determine heirs of the deceased.
All of appellant’s point of error have been carefully examined and considered, and all
points are overruled.

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The trial court in its judgment denied the request of Clyde M. Ford that attorney’s fees,
court costs, and other expenses incurred by this suit to construe the wills be paid out
of the two estates as costs and expenses of administration, and ordered all such costs
and expenses to be paid by Ford individually.
The judgment of the trial court is in all things affirmed. It is ordered that costs of this
appeal be taxed against appellant, Clyde M. Ford, individually.
Notes and Questions
1. Do you think Clyde is right that his parents wanted him to have the farm after
both of them died? Or at least that they would rather Clyde have it than Lola
Mae’s estranged grandchildren from another marriage? If so, why do you think
both Chester and Lola Mae executed wills without any explicit devise to Clyde?
If not, why do you think the Fords’ wills included a restriction on alienating the
farm without Clyde’s consent? (Incidentally, what is a “holographic” will?)
2. Why is the court unwilling to consider Clyde’s evidence that his parents wanted
him to have the farm? What’s wrong with looking outside the four corners of
the will itself to understand what the testator really wanted? Would we take a
similar view of extrinsic evidence if the document being interpreted were, say,
a contract for the sale of goods?
3. Justice O’Quinn says that the language of the Fords’ wills “clearly and plainly
devises all property to the other spouse to do with as the other may see fit.” But
this is at best disingenuous and at worst deliberately false: the wills also, in the
very next clause, “clearly and plainly” purport to limit what the other spouse can
do with the property in the absence of Clyde’s consent. Why does the court
enforce the former clause and render the latter clause void?
The reasoning of the trial court in this case may help explain things. Note that
the trial court is said to have given two somewhat different reasons for
invalidating Clyde’s power to block any effort by his surviving parent to alienate
the farm (and with it any future interest he might have claimed by implication
from this right). We are told that an attempt to convey such a power to Clyde
must be void, both “as a restraint on alienation,” and as “repugnant to the …

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Property
fee.” These reasons invoke two long-standing common-law principles: a policy
against restraints on alienation, and the doctrine of numerus clausus.
Courts have generally strongly disfavored overt restraints on a grantee’s right to
alienate their interest. Such restraints can make it quite difficult to move
resources from lower-valued to higher-valued uses. A current owner of a
resource might well be willing to sell it to a willing buyer who wants it more and
can make more valuable use of it, but if we enforce a restraint on alienation
imposed on the current owner by a past grantor, such a beneficial transaction
cannot happen. The result would be serious misallocation of resources, and the
rule that restraints on alienation are void demonstrates the common law’s
willingness to defeat even the clearly expressed intent of a grantor where
necessary to avoid such misallocation.
Numerus clausus (literally, “the number is closed”) is a legal principle derived from
civil law systems but invoked in Anglo-American property law to refuse
recognition of any interest in land other than the traditional common-law
estates. Under this principle property owners may not create any new “bundle
of rights” other than those that are already represented by the common-law
estates themselves. So, because a possessory estate subject to a veto on the right
of alienation by someone other than the possessory estate’s owner is not a
“bundle of rights” that we can identify among our common-law estates, it must
be outside the power of the Fords to create it. Courts have similarly rejected
efforts by testators to, for example, give their surviving spouses unfettered
control over devised property while also giving any property left over at the
surviving spouse’s death to another beneficiary. Such hybrid bequests are, like
the devise in Ford, typically treated as a fee simple (rendering the putative future
interest void). See, e.g., Sumner v. Borders, 98 S.W.2d 918 (Ky. 1936).
Is the rule of numerus clausus motivated by the same rationales that give rise to
the rule against restraints on alienation? Imagine if, rather than selecting from
the fixed menu of common-law estates, property owners were free to build their
own tailored bundles of property interests for grantees, with their own ad hoc
collections of limitations and restrictions on the rights of those grantees, and
that these idiosyncratic collections of rights and limitations became

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commonplace across society. Suppose you now want to buy a parcel of land in
that society. Can you be sure what you’re buying? How? How well would we
expect a real estate market built on a potentially infinite variety of interests in
real property to function? See generally Thomas W. Merrill & Henry E. Smith,
Optimal Standardization in the Law of Property: The Numerus Clausus Principle, 110
YALE L. J. 1 (2000).
4. Are there other principles underlying the rule against restraints on alienation or
the numerus clausus principle other than ensuring a well-working market for
property rights? Consider that the law of intellectual property has long included a
so-called “first sale” doctrine, which provides that the first authorized purchaser
of a good embodying an intellectual property right (for example, a book
embodying a copyrighted work, or a machine embodying a patented invention)
has the power to alienate that particular article free of any claim by the intellectual
property right owner. See, e.g., 17 U.S.C. § 109(a) (copyright); Adams v. Burke,
84 U.S. 453, 456 (1873) (“[W]hen the patentee, or the person having his rights,
sells a machine or instrument whose sole value is in its use, he receives the
consideration for its use and he parts with the right to restrict that use.”) At
least where the owners of the relevant intellectual property rights can be clearly
identified, can this rule be justified by the same principle as the rule against
restraints on alienation of land? If not, what is the rationale for the first-sale
doctrine?
5. Consider the following excerpts from the September 6, 2012 Amazon Kindle
Store
Terms
of
Use
Agreement
(available
at
http://www.amazon.com/gp/help/customer/display.html?nodeId=20101495
0), which governs the downloading of electronic copies of copyrighted literary
works from Amazon for viewing on electronic devices.
“Kindle Content” means digitized electronic content obtained
through the Kindle Store, such as books, newspapers, magazines,
journals, blogs, RSS feeds, games, and other static and interactive
electronic content.
…

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Property
Use of Kindle Content. Upon your download of Kindle
Content and payment of any applicable fees (including applicable
taxes), the Content Provider grants you a non-exclusive right to
view, use, and display such Kindle Content an unlimited number
of times, solely on the Kindle or a Reading Application or as
otherwise permitted as part of the Service, solely on the number
of Kindles or Supported Devices specified in the Kindle Store,
and solely for your personal, non-commercial use. Kindle
Content is licensed, not sold, to you by the Content Provider….
Limitations. Unless specifically indicated otherwise, you may
not sell, rent, lease, distribute, broadcast, sublicense, or otherwise
assign any rights to the Kindle Content or any portion of it to any
third party, and you may not remove or modify any proprietary
notices or labels on the Kindle Content. In addition, you may not
bypass, modify, defeat, or circumvent security features that
protect the Kindle Content.
…
Termination. Your rights under this Agreement will
automatically terminate if you fail to comply with any term of this
Agreement. In case of such termination, you must cease all use
of the Kindle Store and the Kindle Content, and Amazon may
immediately revoke your access to the Kindle Store and the
Kindle Content without refund of any fees. Amazon’s failure to
insist upon or enforce your strict compliance with this
Agreement will not constitute a waiver of any of its rights.
Is this agreement consistent with the rules you’ve just learned? If not, is it
enforceable? See Vernor v. Autodesk, Inc., 621 F.3d 1102, 1111 (9th Cir. 2010).

6. Might a grantor impose restrictions on a grantee other than explicit limitations on
the power to alienate that would raise the same concerns as those that motivate
the rule against restraints on alienation? Consider the following cases:

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347
Wills v. Pierce
208 Ga. 417 (1951)

… Mrs. Walter Tilley Pierce and others filed in Terrell Superior Court, against Mrs. J.
C. Wills and others, a petition, which alleged substantially the following: On December
1, 1923, J. W. Tilley by warranty deed conveyed described realty known as the Aven
Home to J. C. Wills. The deed contained the clause: ‘The above property is conveyed
to J. C. Wills [the grantee] to be used as a home by himself, his family and his heirs,
upon condition that the same be used by him or them as a home and a residence, and
further that upon the failure of the said condition and the abandonment of said
property as a residence by [the grantee], … his family or heirs, the same shall revert to
[the grantor’s] … estate and go as directed by [the grantor’s] … will.’ The grantor died
testate in 1924, and under the terms of his will the petitioners are the owners of the
reversionary interest in the realty. The grantee died intestate in 1945, leaving as his sole
surviving heirs his widow, Mrs. J. C. Wills, and two named children, who are the
defendants. The condition under which the realty was conveyed has been violated, in
that the defendants have abandoned the property as a home and residence, and are
now residing elsewhere. … The petitioners prayed … that the interest of the
defendants in the realty be declared forfeited, and the fee-simple title thereof be
decreed to be in the petitioners; and that the petitioners have general equitable relief.
The defendants demurred to the petition on the ground that it failed to set forth any
cause of action against them. The trial court overruled the demurrer, and the
defendants excepted….
ATKINSON, Presiding Justice (after stating the foregoing facts).
The granting clause in the deed under consideration was: ‘In consideration of the sum
of one dollar to me paid, I … do hereby sell and convey to [the grantee and] … his
heirs, a tract or parcel of land and appurtenances in fee simple.’ Then followed a
description of the land, after which the grantor inserted the provision that the property
was to be used as a home by the grantee, his family, and his heirs, and that upon the
abandonment of the property as a residence by the grantee, his family, or his heirs, the
same should revert to the grantor’s estate and go as provided in his will.

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Property

Standing alone, the first clause in the deed would have conveyed an unconditional feesimple estate, and the sole question for determination is whether or not the condition
subsequent under which the forfeiture is claimed is valid and enforceable.
A provision in a deed or will that a fee-simple estate may not be sold is void as being
repugnant to the estate granted.
While no express language is used in the present deed inhibiting alienation of the
property, nevertheless—the condition being that the property was to be used as a home
by the grantee, his family, and his heirs—the requirement to use as a home and the
right to sell are mutually exclusive, and whether or not the case falls within the rule
against perpetuities, the conclusion is inescapable that since the grantee and his heirs
must use the premises as a home they cannot sell it.
…A different question would have been presented if the condition subsequent had
been that the premises should be used ‘as a home’ or ‘for residential purposes’ generally.
See, in this connection, City of Barnesville v. Stafford, 161 Ga. 588(1), 131 S.E. 487,
43 A.L.R. 1045; Taylor v. Bird, 150 Ga. 626, 104 S.E. 502; Rustin v. Butler, 195 Ga.
389, 24 S.E.2d 318; Williams v. Ramey, 201 Ga. 737(1), 41 S.E.2d 159; Tabor v. Gilmer
County, 205 Ga. 439(1), 53 S.E.2d 915; and similar cases, where conditions subsequent
requiring use of property generally for park, school, religious, and courthouse purposes
were held valid and enforceable.
Accordingly, the present petition, seeking to enforce a forfeiture for breach of a void
condition subsequent, failed to set forth a cause of action, and the trial court erred in
overruling the defendants’ general demurrer.
Judgment reversed.
All the Justices concur.
Notes and Questions
1. We learned in our unit on estates and future interests that grantors may use the
defeasible fees to impose conditions subsequent on the continued enjoyment
of a possessory estate. Are we still confident that grantors have such a power?
If so, what are its limits?

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349

2. Why does the court consider the enforcement of the condition that the property
at issue “be used as a home by [the grantee], his family and his heirs” to present
a “different question” than the enforcement of a condition “that the premises
should be used ‘as a home’ or ‘for residential purposes’ generally”? What makes
these questions different?
3. Is there any relationship between the holding of Wills and our previously
discussed rule against restraints on alienation or the principle of numerus clausus?
If so, what’s the connection?
Smedley v. City of Waldron
739 F.2d 399 (8th Cir. 1984)
PER CURIAM.
In 1940, the City of Waldron, lacking funds to acquire a reservoir site, asked Hannah
Smedley to donate land for that purpose. The governing agreement provided in part
that:
5. The City of Waldron shall never sell, transfer, convey, lease, rent or
otherwise dispose of the lands herein above described to other persons,
firms, groups and/or corporations, except successors and/or assigns of
itself, and if it attempts to do so, the lands immediately revert to Hannah
Smedley and her heirs[.]
In 1977, Harry Smedley (Hannah Smedley’s sole heir and devisee) sued unsuccessfully
for reconveyance, arguing that the city had abandoned the land. In dismissing the
complaint, the district court found that the city had not abandoned the reservoir; rather,
it continuously maintained and used it as a reserve water supply.
In 1981, the city leased the oil and gas rights of the deeded land to Texas Oil and Gas
Corporation. As a result, Harry Smedley brought this case, alleging that the city’s lease
of the mineral rights subjacent to the land violated paragraph 5 of the 1940 agreement.
For relief, he demanded immediate reconveyance of the land and payment of all monies
the city received under the lease. Both parties moved for summary judgment. The
district court found that the agreement was an impermissible restraint on alienation

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Property

and granted the city’s motion for summary judgment. We reverse and remand for
further proceedings.
Some Arkansas courts have disapproved restraints on alienation. See, e.g., First National
Bank of Fort Smith v. Graham, 195 Ark. 586, 593, 113 S.W.2d 497 (1938); Letzkus v.
Nothwang, 170 Ark. 403, 408, 279 S.W. 1006 (1926). … [But w]hen the grant is to a
governmental unit for a public purpose, Arkansas courts have been reluctant to void
the grant as impermissibly restraining alienation if doing so would flout the grantor’s
intent. One line of Arkansas cases, for example, approved disabling language in grants
to localities where the land was to be used for school purposes. McCrory School Dist. of
Woodruff v. Brogden, 231 Ark. 664, 333 S.W.2d 246, 249–50 (1960); Vanndale Special School
Dist. No. 6 v. Feltner, 215 Ark. 252, 220 S.W.2d 131, 133 (1949); Taylor v. School Dist. No.
45 of Searcy County, 214 Ark. 434, 216 S.W.2d 789 (1949); Coffelt v. Decatur School Dist. No.
17, 212 Ark. 743, 208 S.W.2d 1, 2 (1948); Milner v. New Edinburg School Dist., 211 Ark.
337, 200 S.W.2d 319, 322 (1947); Williams v. Kirby School Dist., 207 Ark. 458, 181 S.W.2d
488, 490 (1944); Steel v. Rural Special School Dist. No. 15, 180 Ark. 36, 20 S.W.2d 316, 317
(1929). Because summary judgment in favor of the city ignores the public purpose of
the grant and defeats the donor’s intent, we reverse the district court’s judgment.
Having decided that the restraint on alienation here is not impermissible, we remand
the case to the district court to resolve the important remaining factual questions. The
district court shall determine whether the mineral lease is a violation of the parties’
agreement. Because Arkansas courts hold that if the restraint is valid the intent of the
donor controls, Gibson v. Pickett, 256 Ark. 1035, 512 S.W.2d 532, 535 (1974), the district
court shall determine whether the donor intended that the city would lose the land only
if the land was not used for a reservoir. Finally, the district court should determine the
best means of fulfilling the donor’s intent: will her intentions be satisfied merely by
awarding her heirs the revenues from the lease, or will the extreme remedy of forfeiture
of the reservoir to the heirs be necessary?
Notes and Questions
1. Wait…what? How can Hannah Smedley’s clearly expressed intent to absolutely
forbid the City of Waldron from alienating the reservoir get around the
common-law rule against restraints on alienation? And why can’t Chester Ford’s

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far more modest but no less clearly expressed intent to restrain Lola Mae’s right
to alienate do the same thing?
2. Restraints on Alienation vs. Restrictions on Use. In Wills the court seemed
to be concerned that the condition subsequent restricting the grantee’s use of
the land conveyed was a sort of restraint on alienation in disguise. Could a naked
restraint on alienation—such as the one in Smedley—really be a restriction on use
in disguise? If so, would it be any less offensive to the principles underlying the
rule against restraints on alienation?
3. Does Smedley reach the opposite result from Ford and Wills because the grantor’s
motivation is different in Smedley than in the other cases? (Is it?) Because the
grantee is a public entity rather than a private individual? Because the restraint
on the grantee is less onerous? (Is it?)

Easements
A. What Is An Easement?
Easements are interests in land. Unlike fee simple ownership, they are nonpossessory.
Rather, they allow the easement holder to use or control someone else’s land. Suppose
Anna owns Blackacre, and Brad owns Whiteacre, which borders Blackacre. Anna
would like to cross Whiteacre to reach Blackacre. She could ask Brad for permission
to cross, but even if he says yes, permission can be revoked. Brad might also convey
Whiteacre to a less welcoming owner. Anna may therefore wish to acquire a property
interest that gives her an irrevocable right to cross over Whiteacre. If Brad conveys her
this interest (by sale or grant), Anna now owns an easement of access, which is a right
to enter and cross through someone’s land on the way to someplace else.
Terminology. Easements come in multiple flavors. The first distinction is between
affirmative and negative easements. An affirmative easement lets the owner do
something on (or affecting) the land of another, known as the servient estate (or
servient tenement). The right is the benefit of the easement, and the obligation on
the servient estate is its burden.
As noted above, a common affirmative easement is an easement of access (also
known as an easement of way), which requires the owner of the servient estate to
allow the easement holder to travel on the land to reach another location. In the
example above, Anna has an affirmative easement to cross Whiteacre, the servient
estate, to access Blackacre. * A negative easement prohibits the owner of the servient
estate from engaging in some action on the land. For example, if Anna has a solar panel
on her property, she might acquire a solar easement from Brad that would prohibit the
* If the easement holder is allowed to take something from the land (suppose Anna has the right to harvest wheat

from Whiteacre while in transit to Blackacre), the right is called a profit a prendre or profit. Profits were
traditionally classified as distinct from easements, though their legal treatment is typically similar. See, e.g., Figliuzzi
v. Carcajou Shooting Club of Lake Koshkonong, 516 N.W.2d 410, 414 (Wis. 1994) (“[W]e can find no distinction
between easements and profits relevant to recording the property interest[.]”). The Restatement characterizes the
profit as a kind of easement. § 1.2.

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construction of any structures on Whiteacre that might block the sun from Anna’s
panel on Blackacre.
Another distinction is between easements appurtenant and easements in gross. An
easement appurtenant benefits another piece of land, the dominant estate. The owner
of the dominant estate exercises the rights of the easement. If ownership of the
dominant estate changes, the new owner exercises the powers of the easement; the
prior owner retains no interest. So if Anna’s easement to cross Whiteacre to reach
Blackacre is an easement appurtenant, Blackacre is the dominant estate. If she conveys
Blackacre to Charlie, Charlie becomes the owner of the easement.
In an easement in gross, the easement benefits a specific person, who exercises the
rights of the easement rights regardless of land ownership. If Anna’s easement to cross
Whiteacre to reach Blackacre is an easement in gross, she keeps her easement even if
she conveys Blackacre. In general, the presumption is in favor of an easement
appurtenant over an easement in gross. Why do you think that is?
Easements are part of the larger law of servitudes, which include real covenants and
equitable servitudes. A servitude is a legal device that creates a right or obligation that
runs with the land. A right runs with the land when it is enjoyed not only by its initial
owner but also by all successors to that owner’s benefited property interest. A burden
runs with the land when it binds not only its initial obligor but also all successors to
that obligor’s burdened property interest. A servitude can be, among other things, an
easement, profit, or covenant. These interests overlap, and the Restatement (Third) of
Property (Servitudes) (2000) seeks to unify them. * As a matter of history, however,
easement law developed as a distinct set of doctrines, and this chapter gives them

* A covenant is a servitude if either its benefit or its burden runs with the land; otherwise it is merely a contract

enforceable only as between the original contracting parties (or perhaps a gratuitous promise enforceable by
nobody at all). When a covenant is a servitude, it may equivalently be described as either a “servitude” or “a
covenant running with the land.” We will discuss covenants in a later chapter.

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separate treatment. * We will discuss equitable servitudes in our chapter on Restrictive
Covenants.

B. Creating Easements
1. Express easements
Because easements are interests in land, express easements are subject to the Statute of
Frauds. Failures to comply with the statute may still be enforced in cases of reasonable
detrimental reliance. See, e.g., RESTATEMENT (THIRD) OF PROPERTY (SERVITUDES)
§ 2.9.
Third parties. Easements are often created as part of the transfer of land (e.g., selling
a property, but retaining the right to use its parking lot). Traditionally, grantors could
reserve an easement in the conveyed land for themselves, but could not create an
easement for the benefit of a third party. This rule led to extra transactions. Where the
traditional rule applied, if A wanted to convey to B while creating an easement for C,
A could convey to C who would then convey to B, while reserving an easement.
The modern trend discards this restriction. See, e.g., Minton v. Long, 19 S.W.3d 231,
238 (Tenn. Ct. App. 1999). The California Supreme Court explained:
The rule derives from the common law notions of reservations from a
grant and was based on feudal considerations. A reservation allows a
grantor’s whole interest in the property to pass to the grantee, but revests
a newly created interest in the grantor. While a reservation could
theoretically vest an interest in a third party, the early common law courts
vigorously rejected this possibility, apparently because they mistrusted
and wished to limit conveyance by deed as a substitute for livery by

* Moreover, the Third Restatement is somewhat notorious for the extent to which it seeks not only to “restate”

the common law, but to push it in a particular direction. While the Third Restatement does tend to provide the
modern approach to most servitudes issues, it has a tendency to advocate against traditional, formalist rules that
are often still good law in many American jurisdictions. We will not thoroughly explore these distinctions here;
you should however be aware of the importance of thoroughly investigating the applicable law in your jurisdiction
if you ever encounter servitudes in practice.

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seisin. Insofar as this mistrust was the foundation of the rule, it is clearly
an inapposite feudal shackle today. Consequently, several commentators
have attacked the rule as groundless and have called for its abolition.
California early adhered to this common law rule. In considering our
continued adherence to it, we must realize that our courts no longer feel
constricted by feudal forms of conveyancing. Rather, our primary
objective in construing a conveyance is to try to give effect to the intent
of the grantor. In general, therefore, grants are to be interested in the
same way as other contracts and not according to rigid feudal standards.
The common law rule conflicts with the modern approach to construing
deeds because it can frustrate the grantor’s intent. Moreover, it produces
an inequitable result because the original grantee has presumably paid a
reduced price for title to the encumbered property.
Willard v. First Church of Christ, Scientist, 7 Cal. 3d 473, 476-77 (1972) (citations
omitted). The modern Restatement likewise dispenses with the traditional approach,
allowing the direct creation of easements on behalf of third parties. RESTATEMENT
§ 2.6. Some jurisdictions nonetheless retain the bar, citing reliance interests and the
prospect that such easements create instability in title records. Estate of Thomson v.
Wade, 509 N.E.2d 309, 310 (N.Y. 1987) (“The overriding considerations of the public
policy favoring certainty in title to real property, both to protect bona fide purchasers
and to avoid conflicts of ownership, which may engender needless litigation, persuade
us to decline to depart from our settled rule.” (internal citation and quotation omitted)).
There is an argument that the extra transactions required by the traditional rule
promote better title indexing. The Restatement observes:
To avoid the prohibition, two conveyances must be used: the first
conveys the easement to the intended beneficiary; the second conveys
the servient estate to the intended transferee. The only virtue of the rule
is that it tends to ensure that a recorded easement will be properly
indexed in the land-records system, but there are so many exceptions to
the rule, where it is still in force, that it does not fill that function very
well.

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RESTATEMENT (THIRD) OF PROPERTY (SERVITUDES) § 2.6 cmt. a (2000). In light of
Hartig v. Stratman, from our chapter on Recording Acts, are you persuaded that the
benefits of a separate transaction for recording purposes outweigh the costs?

2. Implied Easements
Easements may come into being without explicit agreements. They may arise from
equitable enforcement of implied agreements or references to maps or boundary
references in conveyances. RESTATEMENT (THIRD) OF PROPERTY (SERVITUDES)
§ 2.13. In this section, we focus on two forms of implied easements: An easement
implied by existing use and an easement by necessity. Both such easements
commonly arise as a byproduct of land transactions.
a. Easement implied by existing use
An easement implied by existing use may arise when a parcel of land is divided and
amenities once enjoyed by the whole parcel are now split up, such that in order to enjoy
the amenity (a utility line, or a driveway, for example), one of the divided lots requires
access to the other. Imagine, for example, a home connected to a city sewer line via a
privately owned drainpipe, on a parcel that is later divided by carving out a portion of
the lot between the original house and the sewer line connection:

In such a situation, courts will frequently find an easement implied by prior existing
use, allowing the owner of the house to continue using the drainpipe even though it is

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now under someone else’s land. See, e.g., Van Sandt v. Royster, 83 P.2d 698 (Kan. 1938).
There are, however, some limits to the circumstances that will justify the implication
of such an easement:
[T]he easement implied from a preexisting use, [is] also characterized as a quasieasement. Such an easement arises where, during the unity of title, an apparently
permanent and obvious servitude is imposed on one part of an estate in favor
of another part. The servitude must be in use at the time of severance and
necessary for the reasonable enjoyment of the severed part. A grant of a right
to continue such use arises by implication of law. An implied easement from a
preexisting use is established by proof of three elements: (1) common
ownership of the claimed dominant and servient parcels and a subsequent
conveyance or transfer separating that ownership; (2) before severance, the
common owner used part of the united parcel for the benefit of another part,
and this use was apparent and obvious, continuous, and permanent; and (3) the
claimed easement is necessary and beneficial to the enjoyment of the parcel
conveyed or retained by the grantor or transferrer.
Dudley v. Neteler, 924 N.E.2d 1023, 1027-28 (Ill. App. 2009) (internal citations and
quotations omitted). The following notes consider each of these elements.
Notes and Questions
1. Common Ownership. Are easements implied by prior existing use fair to
owners of subdivided land? Why shouldn’t we require purchasers of subdivided
lots to “get it in writing”—that is, to bargain for easements to obvious and
necessary amenities when accepting a parcel carved out from a larger plot of
land? For that matter, why don’t we require the original owner to bargain for
the right to continue to use land that they are purporting to sell? Who do we
think is in a better position to identify the need for such an easement, the prior
owner of the undivided parcel, or the purchaser of the carved-out portion of
that parcel? Should the answer matter in determining whether to imply an
easement or not?
The common law did draw distinctions between implied reservation of an
easement (to the owner of the original undivided lot) and implied grant of an

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easement (to the first purchaser of the separated parcel). The latter required a
lesser showing of necessity than the former, which would only be recognized
upon a showing of strict necessity. The theory was that the deed that first severed
the parcels from one another should be construed against its grantor, who was
in a better position to know of the need for an easement to property she already
owned, and to write such an easement into the deed she was delivering. Indeed,
a minority of jurisdictions still follow this rule.
The modern Restatement, in contrast, makes no distinction as to whether the
easement is sought by the grantor or the grantee, providing simply that the use
will continue if the parties had reasonable grounds to so expect. Factors tending
to show that expectation are that: “(1) the prior use was not merely temporary
or casual, and (2) continuance of the prior use was reasonably necessary to
enjoyment of the parcel, estate, or interest previously benefited by the use, and
(3) existence of the prior use was apparent or known to the parties, or (4) the
prior use was for underground utilities serving either parcel.” RESTATEMENT
(THIRD) OF PROPERTY (SERVITUDES) § 2.12 (2000). The commentary allows
for the possibility that the balance of hardships and grantor knowledge might
justify a court’s refusing to imply a servitude in favor of the grantor when it
would have for the grantee. Id. cmt. a. But the general approach is to accept and
accommodate the fact that grantors do not always protect themselves as well as
they perhaps should. Id. (“Although grantors might be expected to know that
they should expressly reserve any use rights they intend to retain after severance,
experience has shown that too often they do not.”).

2. Reasonable necessity. Reasonable necessity is something less than absolute
necessity. See, e.g., Rinderer v. Keeven, 412 N.E.2d 1015, 1026 (Ill. App. 1980)
(“It is well established that one who claims an easement by implication need not
show absolute necessity in order to prevail; it is sufficient that such an easement
be reasonable, highly convenient and beneficial to the dominant estate.”
(internal quotation and citation omitted)). Does this leave courts with too much
discretion to impose easements? A minority of jurisdictions make a formal
distinction between implied easements in favor of grantees and grantors,
requiring strict necessity in the case of the latter. RESTATEMENT § 2.12.

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But see Tortoise Island Communities, Inc. v. Moorings Ass’n, Inc., 489 So. 2d
22, 22 (Fla. 1986) (concluding that an absolute necessity is required in all cases).
3. What is apparent? Should home purchasers be expected to investigate the state
of utility lines upon making a purchase? The Restatement reports that most
cases to consider the question imply the easement when underground utilities
are at issue. RESTATEMENT (THIRD) OF PROPERTY (SERVITUDES) § 2.12
(Reporter’s Note) (such easements “will be implied without regard to their
visibility or the parties’ knowledge of their existence if the utilities serve either
parcel”). Are such uses plausibly apparent? Or is this simply a case of the law
implying terms that the parties likely would have bargained for had they thought
to consider the matter?
b. Easement by necessity
An easement by necessity (or sometimes way by necessity) arises when land
becomes landlocked or incapable of reasonable use absent an easement. For example,
if A owns a rectangular parcel bordered on the north, east, and west by privately owned
land and on the south by a public street, and conveys to B a strip of her land on the
northern boundary, B will acquire an easement by necessity across the southern portion
of the parcel retained by A:

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There are two traditional rationales for easements by necessity. The first considers it
an implied term of a conveyance, assuming that the parties would not intend for land
to be conveyed without a means for access. The second simply treats the issue as one
of public policy favoring land use. See RESTATEMENT (THIRD) OF PROPERTY
(SERVITUDES) § 2.15 cmt. a (2000).
The traditional view is that the necessity giving rise to an easement by necessity must
exist at the time the property is severed. RESTATEMENT (THIRD) OF PROPERTY
(SERVITUDES) § 2.15 (2000) (“Servitudes by necessity arise only on severance of rights
held in a unity of ownership.”); Roy v. Euro-Holland Vastgoed, B. V., 404 So. 2d 410,
412 (Fla. Dist. Ct. App. 1981) (“[I]n order for the owner of a dominant tenement to be
entitled to a way of necessity over the servient tenement both properties must at one
time have been owned by the same party .… In addition, the common source of title
must have created the situation causing the dominant tenement to become landlocked.
A further requirement is that at the time the common source of title created the
problem the servient tenement must have had access to a public road.”).
Easements by necessity are typically about access, but other kinds of uses may be
necessary to the reasonable enjoyment of property. For example, suppose O conveys
mineral rights to Blackacre to A. A would have both an easement of access to Blackacre
and the right to engage in the mining necessary to reach the minerals. Likewise, an
express easement of way may require rights to maintain and improve the easement.
Access for utilities may also give rise to an easement by necessity, creating litigation
over which utilities are “necessary”:
When questioned by defendants as to why he could not use a cellular
phone on his property, plaintiff testified he ran a home business and a
cellular phone was not adequate to handle his business needs; for
example, a computer cannot access the Internet over a cellular phone.
Plaintiff also testified solar power and gas generators were unable to
produce enough electricity to make his home habitable.
Smith v. Heissinger, 745 N.E.2d 666, 672 (Ill. App. 2001) (affirming finding of
necessity of easement for underground utilities).

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Courts often describe the degree of necessity required to find an easement by necessity
as being “strict.” See, e.g., Ashby v. Maechling, 229 P.3d 1210, 1214 (Mont. 2010) “Two
essential elements of an easement by necessity are unity of ownership and strict
necessity.”). It is certainly higher than that needed for an easement implied by existing
use. That said, considerable precedent indicates that the necessity need not be absolute.
See, e.g., Cale v. Wanamaker, 121 N.J. Super. 142, 148, 296 A.2d 329, 333 (Ch. Div.
1972) (“Although some courts have held that access to a piece of property by navigable
waters negates the ‘necessity’ required for a way of necessity, the trend since the 1920’s
has been toward a more liberal attitude in allowing easements despite access by water,
reflecting a recognition that most people today think in terms of ‘driving’ rather than
‘rowing’ to work or home.”).
Several states provide owners of landlocked property a statutory right to obtain access
through neighboring land by means of a private condemnation action. Some courts
have held that the availability of private condemnation actions negate the necessity
prong of a common law easement by necessity claim. See, e.g., Ferguson Ranch, Inc. v.
Murray, 811 P.2d 287, 290 (Wyo. 1991) (“[A] civil action for a common law way of
necessity is not available because of the existence of W.S. 24–9–101.”). Private
condemnation actions may also extend to contexts beyond those covered by the
common law easement by necessity. See, e.g., CAL. CIV. CODE § 1001 (utilities).

3. Prescriptive Easements
Easements may also arise from prescription. An easement by prescription is acquired
in a manner similar to adverse possession, as it is a non-permissive use that ultimately
ripens into a property interest. Recall the five elements of adverse possession: Entry
and possession that is (1) actual, (2) exclusive, (3) hostile or under claim of right, (4)
open and notorious, and (5) continuous for the statutory limitations period. Which (if
any) of these elements might have to be modified where the right being acquired is not
a right of possession, but a right of use?

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Felgenhauer v. Soni
17 Cal.Rptr.3d 135 (Cal. App. 2004).

GILBERT, P.J.
Here we hold that to establish a claim of right to a prescriptive easement, the claimant
need not believe he or she is legally entitled to use of the easement. Jerry and Kim
Felgenhauer brought this action to quiet title to prescriptive easements over
neighboring property owned by Ken and Jennifer Soni. A jury made special findings
that established a prescriptive easement for deliveries. We affirm.
FACTS
In November of 1971, the Felgenhauers purchased a parcel of property consisting of
the front portion of two contiguous lots on Spring Street in Paso Robles. The parcel is
improved with a restaurant that faces Spring Street. The back portion of the lots is a
parking lot that was owned by a bank. The parking lot is between a public alley and the
back of the Felgenhauers’ restaurant.
From the time the Felgenhauers opened their restaurant in 1974, deliveries were made
through the alley by crossing over the parking lot to the restaurant’s back door. The
Felgenhauers never asked permission of the bank to have deliveries made over its
parking lot. The Felgenhauers operated the restaurant until the spring of 1978.
Thereafter, until 1982, the Felgenhauers leased their property to various businesses.
The Felgenhauers reopened their restaurant in June of 1982. Deliveries resumed over
the bank’s parking lot to the restaurant’s back door. In November of 1984, the
Felgenhauers sold their restaurant business, but not the real property, to James and
Ann Enloe. The Enloes leased the property from the Felgenhauers. Deliveries
continued over the bank’s parking lot.
James Enloe testified he did not believe he had the right to use the bank’s property and
never claimed the right. Enloe said that during his tenancy, he saw the bank manager
in the parking lot. The manager told him the bank planned to construct a fence to
define the boundary between the bank’s property and the Felgenhauers’ property.
Enloe asked the manager to put in a gate so that he could continue to receive deliveries
and have access to a trash dumpster. The manager agreed. Enloe “guess[ed]” the fence

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and gate were constructed about three years into his term. He said, “[Three years] could
be right, but it’s a guess.” In argument to the jury, the Sonis’ counsel said the fence and
gate were constructed in January of 1988.
The Enloes sold the restaurant to Brett Butterfield in 1993. Butterfield sold it to
William DaCossee in March of 1998. DaCossee was still operating the restaurant at the
time of trial. During all this time, deliveries continued across the bank’s parking lot.
The Sonis purchased the bank property, including the parking lot in dispute in 1998.
In 1999, the Sonis told the Felgenhauers’ tenant, DaCossee, that they were planning to
cut off access to the restaurant from their parking lot.
The jury found the prescriptive period was from June of 1982 to January of 1988.
DISCUSSION
…The Sonis contend there is no substantial evidence to support a prescriptive
easement for deliveries across their property. They claim the uncontroverted evidence
is that the use of their property was not under “a claim of right.”…
At common law, a prescriptive easement was based on the fiction that a person who
openly and continuously used the land of another without the owner’s consent, had a
lost grant. California courts have rejected the fiction of the lost grant. Instead, the
courts have adopted language from adverse possession in stating the elements of a
prescriptive easement. The two are like twins, but not identical. Those elements are
open and notorious use that is hostile and adverse, continuous and uninterrupted for
the five-year statutory period under a claim of right. Unfortunately, the language used
to state the elements of a prescriptive easement or adverse possession invites
misinterpretation. This is a case in point.
The Sonis argue the uncontroverted evidence is that the use of their property was not
under a claim of right. They rely on the testimony of James Enloe that he never claimed
he had a right to use the bank property for any purpose.
Claim of right does not require a belief or claim that the use is legally justified. It simply
means that the property was used without permission of the owner of the land. As the
American Law of Property states in the context of adverse possession: “In most of the

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cases asserting [the requirement of a claim of right], it means no more than that
possession must be hostile, which in turn means only that the owner has not expressly
consented to it by lease or license or has not been led into acquiescing in it by the denial
of adverse claim on the part of the possessor.” (3 Casner, American Law of Property
(1952) Title by Adverse Possession, § 5.4, p. 776.)… Enloe testified that he had no
discussion with the bank about deliveries being made over its property. The jury could
reasonably conclude the Enloes used the bank’s property without its permission. Thus
they used it under a claim of right.
The Sonis attempt to make much of the fence the bank constructed between the
properties and Enloe’s request to put in a gate. But Enloe was uncertain when the fence
and gate were constructed. The Sonis’ attorney argued it was constructed in January of
1988. The jury could reasonably conclude that by then the prescriptive easement had
been established.
The Sonis argue the gate shows the use of their property was not hostile. They cite
Myran v. Smith (1931) 117 Cal.App. 355, 362, 4 P.2d 219, for the proposition that to
effect a prescriptive easement the adverse user “... must unfurl his flag on the land, and
keep it flying, so that the owner may see, if he will, that an enemy has invaded his
domains, and planted the standard of conquest.”
But Myran made the statement in the context of what is necessary to create a
prescriptive easement. Here, as we have said, the jury could reasonably conclude the
prescriptive easement was established prior to the erection of the fence and gate. The
Sonis cite no authority for the proposition that even after the easement is created, the
user must keep the flag of hostility flying. To the contrary, once the easement is created,
the use continues as a matter of legal right, and it is irrelevant whether the owner of
the servient estate purports to grant permission for its continuance.…
Notes
1. Fiction of the lost grant. Felgenhauer refers to the fiction of the lost grant. The
principle traces back to English law. 4-34 POWELL ON REAL PROPERTY § 34.10
(“In early England the enjoyment had to have been ‘from time immemorial,’
and this date came to be fixed by statute as the year 1189. Towards the close of
the medieval period, this theory was rephrased and an easement of this type was

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said to arise from a grant, presumably made in favor of the claimant before the
time of legal memory, but since lost.”). The usual American approach is to
ignore the fiction and simply apply rules of prescription that largely track those
of adverse possession. See id.
2. How do the elements of a prescriptive easement differ from the elements of
adverse possession? Why do you think they differ in this way? How do the
resulting interests differ?
3. Easements acquired by the public. What happens if city pedestrians
routinely cut across a private parking lot? May an easement by prescription be
claimed by the public at large? Does it matter that the right asserted is not in
the hands of any one person? Here, too, the fiction of the lost grant may play a
role in the willingness of courts to entertain the possibility.
There is a split of authority as to whether a public highway may
be created by prescription. A number of older cases hold that the
public cannot acquire a road by prescription because the doctrine
of prescription is based on the theory of a lost grant, and such a
grant cannot be made to a large and indefinite body such as the
public. See II American Law of Property § 9.50 (J. Casner
ed.1952). The lost grant theory, however, has been discarded. W.
Burby, Real Property § 31, at 77 (1965). In its place, courts have
resorted to the justifications that underlie statutes of limitations:
“[The] functional utility in helping to cause prompt termination
of controversies before the possible loss of evidence and in
stabilizing long continued property uses.” 3 R. Powell, supra note
5, ¶ 413, at 34–103–04; W. Burby, supra, § 31, at 77; Restatement
of Property ch. 38, Introductory Note, at 2923 (1944). These
reasons apply equally to the acquisition of prescriptive easements
by public use. The majority view now is that a public easement
may be acquired by prescription. 2 J. Grimes, Thompson on Real
Property § 342, at 209 (1980).
Dillingham Commercial Co. v. City of Dillingham, 705 P.2d 410, 416 (Alaska
1985).

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What then should the owner of a publicly accessible location do? The owners
of Rockefeller Center reportedly block off its streets one day per year in order
to prevent the loss of any rights to exclude. David W. Dunlap, “Closing for a
Spell, Just to Prove It’s Ours,” New York Times (Oct. 28, 2011), available at
http://www.nytimes.com/2011/10/30/nyregion/lever-house-closes-once-ayear-to-maintain-its-ownership-rights.html?_r=0 (“But there is another
significant hybrid: purely private space to which the public is customarily
welcome, at the owners’ implicit discretion. These spaces include Lever House,
Rockefeller Plaza and College Walk at Columbia University, which close for
part of one day every year.”). Another option is to post a sign granting
permission to enter (thus negating any element of adversity). Some states
approve this approach by statute. Cal. Civ. Code § 1008 (“No use by any person
or persons, no matter how long continued, of any land, shall ever ripen into an
easement by prescription, if the owner of such property posts at each entrance
to the property or at intervals of not more than 200 feet along the boundary a
sign reading substantially as follows: ‘Right to pass by permission, and subject
to control, of owner: Section 1008, Civil Code.’”).

Image by Bryan Costales, used under a Creative Commons Attribution 4.0 International license.

4. Irrevocable Licenses
An easement is distinct from a license. A license is permission from the owner to enter
the land. Because it is permissive, it is revocable. Many difficulties with distinguishing
easements from licenses arise when parties fail to clearly bargain over the right to use

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land. See, e.g., Willow Tex, Inc. v. Dimacopoulos, 503 N.E.2d 99, 100 (N.Y. 1986) (“The
writing must establish unequivocally the grantor’s intent to give for all time to come a
use of the servient estate to the dominant estate. The policy of the law favoring
unrestricted use of realty requires that where there is any ambiguity as to the
permanence of the restriction to be imposed on the servient estate, the right of use
should be deemed a license, revocable at will by the grantor, rather than an easement.”).
Under the right circumstances, a license may become irrevocable.
Richardson v. Franc
182 Cal.Rptr.3d 853 (Cal. App. 2015)
RUVOLO, P.J.
In order to access their home in Novato, California, James Scott Richardson and Lisa
Donetti (respondents) had to traverse land belonging to their neighbors, Greg and
Terrie Franc (appellants) on a 150–foot long road which was authorized by an easement
for “access and public utility purposes.” Over a 20–year period, both respondents and
their predecessors-in-interest maintained landscaping, irrigation, and lighting
appurtenant to both sides of the road within the easement area without any objection.
Six years after purchasing the property burdened by the easement, appellants demanded
that respondents remove the landscaping, irrigation, and lighting on the ground that
respondents’ rights in the easement area were expressly limited to access and utility
purposes, and the landscaping and other improvements exceeded the purpose for
which the easement was granted. Respondents brought this lawsuit seeking, among
other things, to establish their right to an irrevocable license which would grant them
an uninterrupted right to continue to maintain the landscaping and other
improvements.…
…. In 1989, Karen and Tom Poksay began building their home on undeveloped
property at 2513 Laguna Vista Drive in Novato, California. The project included
constructing and landscaping a 150–foot long driveway within the 30–foot wide
easement running down to the site of their new home, which was hidden from the
street. The driveway was constructed pursuant to an easement over 2515 Laguna Vista
Drive, which was then owned by [appellants’ predecessors in interest]. The easement
was for access and utility purposes only.

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Landscaping along the driveway was important to the Poksays.… They hired a
landscaper, who dug holes for plants and trees. Ms. Poksay then added plants and trees
along both sides of the driveway in the easement area—hawthorn trees, Australian tea
trees, daylilies, Mexican sage, breath of heaven, flowering pear trees, and evergreen
shrubs.
The landscaper installed a drip irrigation system.… Water fixtures were also installed
along the driveway for fire safety. The Poksays also added electrical lighting along the
driveway, later replacing the electrical lighting with solar lighting.
During the decade that the Poksays resided at the property Ms. Poksay regularly tended
to the landscaped area, including trimming and weeding, ensuring the irrigation system
was working properly, and replacing plants and trees as necessary. In addition to Ms.
Poskay’s own labor, the Poksays paid their landscaper to perform general maintenance
….
Respondents purchased the property in late 2000.… Over the years, respondents added
new plants and trees, including oleanders, an evergreen tree, another tea tree, Mexican
sage, lavender, rosemary, and a potato bush. Respondent Donetti testified that
landscapers came weekly or every other week, and the landscapers spent 40 to 50
percent of their time in the easement area.… During her testimony, respondent
Donetti explained, “we’ve paid a lot of money to nurture it and grow it. It’s beautiful.
It has privacy. It’s absolutely tied to our house value. It’s our curb appeal.”
Appellants purchased 2515 Laguna Vista Drive in 2004. [Appellant Greg Franc
admitted he knew about the landscaping in the easement area, as well as the hiring of
landscapers.] He even admitted that the trees were “beautiful and provide a lot of color
and [were] just all-around attractive.” From 2004 to August 2010, appellants and
respondents lived in relative harmony …. It was not until late 2010—approximately six
years after appellants bought the property and two decades after the landscaping and
other improvements began—that appellants first raised a concern about the
landscaping and other improvements. Prior to that date, no one had ever objected.
In late September or early October 2010, without any notice, appellant Greg Franc cut
the irrigation and electrical lines on both sides of the driveway. He cut not only the
lines irrigating the landscaping on the easement, but also those irrigating respondents’

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own property. The water valve pumps leading to the irrigation lines were disassembled
as well. As part of these proceedings, the trial court granted respondents’ motion for
preliminary injunction and the irrigation system was restored.… Following a bench trial
and an on-site visit to the property, the court .… granted respondents’ request for an
irrevocable license . …
.… [A]s appellants acknowledge, the grant of an irrevocable license is “based in equity.”
After the trial court has exercised its equitable powers, the appellate court reviews the
judgment under the abuse of discretion standard.…
Before we address the specific issues appellants raise on appeal, it is helpful to review
the law governing the grant of an irrevocable license. “A license gives authority to a
licensee to perform an act or acts on the property of another pursuant to the express
or implied permission of the owner.” (6 Miller & Starr, Cal. Real Estate (3d ed. 2000)
Easements, § 15:2, p. 15–10.) “A licensor generally can revoke a license at any time
without excuse or without consideration to the licensee. In addition, a conveyance of
the property burdened with a license revokes the license....” (Id. at pp 15–10–15–11,
fns. omitted.)
However, a license may become irrevocable when a landowner knowingly permits
another to repeatedly perform acts on his or her land, and the licensee, in reasonable
reliance on the continuation of the license, has expended time and a substantial amount
of money on improvements with the licensor’s knowledge. Under such circumstances,
it would be inequitable to terminate the license. In that case, the licensor is said to be
estopped from revoking the license, and the license becomes the equivalent of an
easement, commensurate in its extent and duration with the right to be enjoyed. A trial
court’s factual finding that a license is irrevocable is reviewed for substantial evidence.
In the paradigmatic case, a landowner allows his neighbor the right to use some portion
of his property—often a right of way or water from a creek—knowing that the
neighbor needs the right to develop his property. The neighbor then builds a house,
digs an irrigation ditch, paves the right of way, plants an orchard, or farms the land in
reliance on the landowner’s acquiescence. Later, after failing to make a timely objection,
the landowner or his successor suddenly raises legal objections and seeks to revoke the
neighbor’s permissive usage.…

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In the instant case …. the statement of decision states: “Because [respondents] adduced
sufficient evidence at trial concerning their substantial expenditures in the easement
area for landscaping, maintenance, care, and physical labor, and because sufficient
evidence was presented at trial to support that [respondents’] predecessor-in-interest,
Ms. Poksay, also expended substantial sums in the easement area for landscaping,
maintenance, care, and physical labor, and because, as the evidence and testimony at
trial showed, that no objection was made to any of this by either [appellants] or
[appellants’] predecessor-in-interest, Mr. Schaefer, over the course of more than 20
years, [respondents] have sufficiently met the requirements for an irrevocable parol
license for both [respondents], and [respondents’] successors-in-interest. Both law and
equity dictate this result.”
.…[Appellants] contend the trial court erred in finding the evidence supported the
creation of an irrevocable license because respondents’ reliance on continued
permission to landscape and make other improvements in the easement area was not
reasonable as a matter of law. Appellants point out the evidence at trial revealed that
throughout the history of the ownership of the property, there was never an actual
request for permission to make and maintain these improvements and express consent
was never given. In essence, appellants contend that tacit permission by silence is
insufficient to create an irrevocable license and that respondents were required to show
an express grant of permission induced them into undertaking the improvements
within the easement area.
Permission sufficient to establish a license can be express or implied.… A license may
also arise by implication from the acts of the parties, from their relations, or from
custom. When a landowner knowingly permits another to perform acts on his land, a
license may be implied from his failure to object.…
.… Here, the undisputed evidence revealed appellants failed to object to the
landscaping and other improvements for 6 years before appellants first made their
demand that the landscaping and other improvements be removed. Thus, with full
knowledge that the road providing ingress and egress to respondents’ property was
landscaped, irrigated, and lit, and with full knowledge that respondents were
maintaining these improvements on an ongoing basis, appellants said nothing to
respondents. When coupled with the previous 14 years appellants’ predecessors-in-

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interest acquiesced in these improvements, this constituted a total of 20 years of
uninterrupted permissive use of the easement area for the landscaping and other
improvements. Therefore, we find the court had ample evidence to conclude that
adequate and sufficient permission was granted to respondents by appellants to
maintain the extensive landscaping improvements on either side of the roadway.
Appellants next stress that for the license to be irrevocable, there must be substantial
expenditures in reliance on the license. In this regard, the trial court made the necessary
findings that respondents “have expended substantial monetary sums to improve,
maintain, landscape, and care for the easement area, including the retention of
professional landscapers on a regular basis....”
Appellants next challenge “the unlimited physical scope and duration of the license”
granted by the trial court. They claim “the trial court, in derogation of equity and the
law, decided that [r]espondents ... should have sole and absolute discretion to decide
what will happen on property that is owned by [appellants].” In making this argument,
appellants ignore the fact that the trial court was vested with broad discretion in
framing an equitable result under the facts of this case.… As it was empowered to do,
the trial court exercised its broad equitable discretion and fashioned relief to fit the
specific facts of this case. The court found “by a preponderance of the evidence that
[respondents] hold an irrevocable parol license for themselves and their successors-ininterest to maintain and improve landscaping, irrigation, and lighting within the 30’
wide and 150’ long easement.”
Appellants assert “it is wholly erroneous and grossly unfair to make the license irrevocable
in perpetuity.” (Original italics.) Appellants argue that a proper ruling in this case would
be to grant respondents an irrevocable license but “with the license to landscape and
garden limited in duration until [respondents] transfer title to anyone else or no longer
reside on the property....”
The principles relating to the duration of an irrevocable license were stated by our
Supreme Court over a century ago, and these principles are still valid today. An
otherwise revocable license becomes irrevocable when the licensee, acting in
reasonable reliance either on the licensor’s representations or on the terms of the
license, makes substantial expenditures of money or labor in the execution of the
license; and the license will continue “for so long a time as the nature of it calls for.”

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As explained in a leading treatise, “A license remains irrevocable for a period sufficient
to enable the licensee to capitalize on his or her investment. He can continue to use it
only as long as justice and equity require its use.” (6 Miller & Starr, supra, § 15:2, p. 15–
15.)
The evidence adduced at trial indicates respondents and their predecessors in interest
expended significant money and labor when they planted and nurtured the landscaping
abutting the roadway, installed sophisticated irrigation equipment throughout the
easement area, and constructed lighting along the roadway. Under such circumstances
the trial court did not abuse its discretion in concluding it would be inequitable to
require respondents to remove these improvements when the property is transferred,
given the substantial investment in time and money and the permanent nature of these
improvements.…
Lastly, we reject appellants’ hyperbolic claim that in fashioning the scope and duration
of the irrevocable license granted in this case, “the trial court, without exercising
caution, took property that rightfully belonged to [appellants] and ceded it to
[r]espondents—and their successors—forever.”
This argument ignores that a license does not create or convey any interest in the real
property; it merely makes lawful an act that otherwise would constitute a trespass.…
Far from granting respondents “an exclusive easement amounting to fee title” as
appellants’ claim, the court’s decision simply maintains the status quo that has existed
for over 20 years and was obvious to appellants when they purchased the property a
decade ago.
Notes and Questions
1. The Restatement characterizes irrevocable license situations as a servitude
created by estoppel. RESTATEMENT (THIRD) OF PROPERTY (SERVITUDES)
§ 2.10. Is there any difference, then, between an irrevocable license and an
easement by prescription? Is there any reason to treat them differently?
2. Is landscaping important enough to justify the intrusion into property
ownership interests? What do you think would have happened had the
appellants won?

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3. How well does Richardson track your intuitions about everyday behavior? Would
you ask permission before engaging in the landscaping at issue here? Would you
advise a client to? Suppose you asked your neighbor for an easement of way to
enable you to build on an adjoining property? You’re friends, and he says yes.
But you know a thing or two about the law, so you know that if your relations
turn sour you would have to rely on an irrevocable license claim. Would you
push for a formal grant in writing? Is that a neighborly thing to do? For one
view, see Shepard v. Purvine, 248 P.2d 352, 361-62 (Or. 1952) (“Under the
circumstances, for plaintiffs to have insisted upon a deed would have been
embarrassing; in effect, it would have been expressing a doubt as to their
friend’s integrity.”). Does it make a difference that you know to ask? What about
those without legal training? Should the law accommodate private ordering or
funnel property holders into formal arrangements? Do the interests of third
parties, including possible future purchasers of each of the affected properties,
matter to your analysis?

C. Transferring Easements
Easements appurtenant. Transferring easements appurtenant is simple; when the
dominant estate is conveyed, the rights of the easement come along. This is a natural
consequence of the principle that servitudes (such as easements) run with the land. A
more complicated problem concerns the division of the dominant estate into smaller
parcels. The default approach is to allow each parcel to enjoy the benefit of the
easement. Restatement (First) of Property § 488 (1944) (“Except as limited by the terms
of its transfer, or by the manner or terms of the creation of the easement appurtenant,
those who succeed to the possession of each of the parts into which a dominant
tenement may be subdivided thereby succeed to the privileges of use of the servient
tenement authorized by the easement.”). Here, however, foreseeability and the extent
of the added burden matters. See generally R. W. Gascoyne, Right of owners of parcels into
which dominant tenement is or will be divided to use right of way, 10 A.L.R.3d 960 (Originally
published in 1966) (collecting cases).
Easements in gross. The modern view is that easements in gross are transferable,
assuming no contrary intent in their creation (e.g., that the benefit was intended to be
personal to the recipient). RESTATEMENT (THIRD) OF PROPERTY (SERVITUDES) § 4.6

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cmt. (2000) (“Although historically courts have often stated that benefits in gross are
not transferable, American courts have long carved out an exception for profits and
easements in gross that serve commercial purposes. Under the rule stated in this
section, the exception has now become the rule.”); RESTATEMENT (FIRST) OF
PROPERTY § 489 (1944) (commercial easements in gross, as distinct from easements
for personal satisfaction, are transferable); § 491 (noncommercial easements in gross
“determined by the manner or the terms of their creation”).
Another issue concerns the divisibility of an easement in gross. Here, too, the danger
is that divisibility may lead to excessive burdens on the servient estate. Section 493 of
the First Restatement of Property provides that whether divisibility is permitted
depends on the circumstances surrounding the easement’s creation. The facts giving
rise to a prescriptive easement, for example, may give a landowner fair notice that a
single trespasser may acquire an easement, but not that the easement may then be
shared by many others once the prescription period passes. In contrast, an exclusive
easement might lead to a presumption of divisibilty, for “the fact that [the owner of
the servient tenement] is excluded from making the use authorized by the easement,
plus the fact that apportionability increases the value of the easement to its owner,
tends to the inference in the usual case that the easement was intended in its creation
to be apportionable.” Id. cmt. c. Where the grant is non-exclusive a clearer indication
of intended divisibility may be required. Id. cmt. d. Section 5.9 of the modern
Restatement goes further by making divisibility the default assumption unless contrary
to the parties intent or where divisibility would place unreasonable burdens on the
servient estate.

D. Terminating Easements
Easements can be terminated in a variety of ways.
1. Unity of ownership. When the dominant and servient estates of an easement
appurtenant unite under one owner, the easement ends. Likewise an easement
in gross ends if the owner acquires an interest in the servient tenement that
would have provided independent authority to exercise the rights of the
easement.

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2. Release by the easement holder. The First Restatement would require a
written instrument under seal for an inter vivos release, while the modern
Restatement simply requires compliance with the Statute of Frauds.
3. Abandonment. Abandonment resembles a release. The First Restatement
treats them separately, however, and distinguishes the two by describing
abandonment as intent by the easement holder to give up the easement, while
a release is an act done on behalf of the owner of the burdened property.
Abandonment may be inferred by actions. RESTATEMENT (FIRST) OF
PROPERTY § 504 (1944).
4. Estoppel. Estoppel may terminate an easement when 1) the owner of the
servient tenement acts in a manner that is inconsistent with the easement’s
continuation; 2) the acts are in foreseeable reasonable reliance on conduct by
the easement holder; and 3) allowing the easement to continue would work an
unreasonable harm to the owner of the servient property. Id. § 505.
5. Prescription. Just as an easement may be gained by prescription, so too may it
be lost by open and notorious adverse acts by the owner of the servient
tenement that interrupt the exercise of the easement for the prescription period.
6. Condemnation. The exercise of the eminent domain power to take the servient
estate creates the possibility of compensation for the easement owner.
7. A tax deed. A tax deed is an instrument transferring title to property on which
taxes have gone unpaid following foreclosure of the resulting tax lien.
Sometimes the property transferred by tax deed will be encumbered by an
easement. Section 509 of the First Restatement provides that a tax deed will
extinguish an easement in gross encumbering the deeded property, but not an
easement appurtenant encumbering the deeded property.
8. Expiration, if the interest was for a particular time.
9. Recording Acts. Being property interests, easements are subject to the
recording acts, and unrecorded interests may be defeated by transferees without
notice. The modern restatement provides for exceptions for certain easements
not subject to the Statute of Frauds and generally for servitudes that “would be

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discovered by reasonable inspection or inquiry.” RESTATEMENT (THIRD) OF
PROPERTY (SERVITUDES) § 7.14 (2000).

E. Negative Easements/Conservation Easements
In the United States, most of the work that could have been done by negative
easements is largely performed by real covenants or equitable servitudes, which we take
up in a future reading. See RESTATEMENT (THIRD) OF PROPERTY (SERVITUDES) § 1.2
(“A ‘negative’ easement, the obligation not to use land in one’s possession in specified
ways, has become indistinguishable from a restrictive covenant, and is treated as such
in this Restatement.”). Nineteenth century English law gave negative easements a
narrow domain. They were available only to prevent the servient estate from restricting
light, air, support, or the flow of water of an artificial stream to the dominant estate. Id.
§ 1.2 cmt. h. Such easements were likewise not widely embraced in the United States,
where equitably enforced negative covenants held in gross were disfavored.
For the most part, negative easements only arise by agreement or grant. U.S. courts
therefore consistently reject the English “doctrine of ancient lights,” which recognizes
a right to light from a neighbor’s land after the passage of time under certain
circumstances. 4-34 POWELL ON REAL PROPERTY § 34.11.
The limitations of negative easements complicated efforts to create conservation and
preservation easements. Such easements tend to be held in gross (e.g., by a
conservation organization), and the common law prohibited equitable enforcement of
negative covenants held in gross. The law likewise was skeptical about expanding the
categories for which negative easements were available. RESTATEMENT (THIRD) OF
PROPERTY (SERVITUDES) § 1.6 cmt. a (2000). The problem was addressed by the
Uniform Conservation Easement Act, which has now been adopted by every state.
4 POWELL ON REAL PROPERTY § 34A.01.

F. Public Use Rights
Public prescriptive easements are not the only way to grant members of the public
access rights to land. The public trust doctrine addresses the public’s right to access
certain natural resources.

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Lawrence v. Clark Cnty.
254 P.3d 606, 608-09 (Nev. 2011)

The public trust doctrine is an ancient principle thought to be traceable to Roman law
and the works of Emperor Justinian. See State v. Sorensen, 436 N.W.2d 358, 361 (Iowa
1989). Justinian derived the doctrine from the principle that the public possesses
inviolable rights to certain natural resources, noting that “[b]y the law of nature these
things are common to mankind—the air, running water, the sea, and consequently the
shores of the sea.” THE INSTITUTES OF JUSTINIAN, Lib. II, Tit. I, § 1 (Thomas Collett
Sandars trans. 5th London ed. 1876). He also stated that “rivers and ports are public;
hence the right of fishing in a port, or in rivers, is common to all men.” Id. § 2.
The doctrine was thereafter adopted by the common law courts of England, which
espoused the similar principle that “title in the soil of the sea, or of arms of the sea,
below ordinary high-water mark, is in the King” and that such title “is held subject to
the public right.” Shively v. Bowlby, 152 U.S. 1, 13, 14 S.Ct. 548, 38 L.Ed. 331 (1894).…
Courts in this country have readily embraced the public trust doctrine. In 1821, in the
first notable American case to express public trust principles, the Supreme Court of
New Jersey observed that citizens have a common right to sovereign-controlled
waterways:
The sovereign power itself ... cannot, consistently with the principles of
the law of nature and the constitution of a well ordered society, make a
direct and absolute grant of the waters of the state, divesting all the
citizens of their common right. It would be a grievance which never
could be long borne by a free people.
Arnold v. Mundy, 6 N.J.L. 1, 78 (N.J.1821).
Thereafter, the United States Supreme Court similarly recognized that “when the
Revolution took place, the people of each state became themselves sovereign; and in
that character hold the absolute right to all their navigable waters and the soils under
them for their own common use.” Martin et al. v. Waddell, 41 U.S. 367, 410, 16 Pet.
367, 10 L.Ed. 997 (1842).

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Fifty years later, in what has become the seminal public trust doctrine case, the Supreme
Court decided Illinois Central Railroad v. Illinois, 146 U.S. 387 (1892). In Illinois Central the
Court noted that because the State of Illinois was admitted to the United States on
“equal footing” with the original 13 colonies, it, like the colonies, was granted title to
the navigable waters and the lands underneath them. For Illinois, that meant that upon
its admission, it held title to its portion of the waters of and lands beneath Lake
Michigan. However, the waters and lands underneath Lake Michigan were not freely
alienable by the State of Illinois—its title to those areas was “different in character from
that which the State holds in lands intended for sale.” More specifically, it possessed
only “title held in trust for the people of the State that they may enjoy the navigation
of the waters, carry on commerce over them, and have liberty of fishing therein freed
from the obstruction or interference of private parties.” As a result, the Court
concluded that the Illinois Legislature’s attempted relinquishment of such trust
property to the Illinois Central Railroad
is not consistent with the exercise of that trust which requires the
government of the State to preserve such waters for the use of the
public.... The State can no more abdicate its trust over property in which
the whole people are interested than it can abdicate its police powers in
the administration of government and the preservation of the peace.
While the Court noted that such lands need not, under all circumstances, be perpetually
held in trust, it recognized that in effecting transfers, the public interest is always
paramount, providing that “[t]he control of the State for the purposes of the trust can
never be lost, except as to such parcels as are used in promoting the interests of the
public therein, or can be disposed of without any substantial impairment of the public
interest in the lands and waters remaining.” Id.
As public uses of waters expanded, so too did the public trust doctrine. In New Jersey,
the courts extended the public trust doctrine to protect recreational uses. It then
extended the public’s right to access the “wet sands,” which is land extending from the
ocean to the average high tide water mark, to include access via certain “dry sands.”

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Matthews v. Bay Head Imp. Ass’n
471 A.2d 355 (N.J. 1984)

….In order to exercise these rights guaranteed by the public trust doctrine, the public
must have access to municipally-owned dry sand areas as well as the foreshore. The
extension of the public trust doctrine to include municipally-owned dry sand areas was
necessitated by our conclusion that enjoyment of rights in the foreshore is inseparable
from use of dry sand beaches.… We [previously] held that where a municipal beach is
dedicated to public use, the public trust doctrine “dictates that the beach and the ocean
waters must be open to all on equal terms and without preference and that any contrary
state or municipal action is impermissible.” 61 N.J. at 309, 294 A.2d 47.…
We now address the extent of the public’s interest in privately-owned dry sand beaches.
This interest may take one of two forms. First, the public may have a right to cross
privately owned dry sand beaches in order to gain access to the foreshore. Second, this
interest may be of the sort enjoyed by the public in municipal beaches … namely, the
right to sunbathe and generally enjoy recreational activities.
Beaches are a unique resource and are irreplaceable. The public demand for beaches
has increased with the growth of population and improvement of transportation
facilities.…
Exercise of the public’s right to swim and bathe below the mean high water mark may
depend upon a right to pass across the upland beach. Without some means of access
the public right to use the foreshore would be meaningless. To say that the public trust
doctrine entitles the public to swim in the ocean and to use the foreshore in connection
therewith without assuring the public of a feasible access route would seriously impinge
on, if not effectively eliminate, the rights of the public trust doctrine. This does not
mean the public has an unrestricted right to cross at will over any and all property
bordering on the common property. The public interest is satisfied so long as there is
reasonable access to the sea.…
The bather’s right in the upland sands is not limited to passage. Reasonable enjoyment
of the foreshore and the sea cannot be realized unless some enjoyment of the dry sand
area is also allowed. The complete pleasure of swimming must be accompanied by
intermittent periods of rest and relaxation beyond the water’s edge. The unavailability

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of the physical situs for such rest and relaxation would seriously curtail and in many
situations eliminate the right to the recreational use of the ocean. This was a principal
reason why in [earlier cases] we held that municipally-owned dry sand beaches “must
be open to all on equal terms ....” We see no reason why rights under the public trust
doctrine to use of the upland dry sand area should be limited to municipally-owned
property. It is true that the private owner’s interest in the upland dry sand area is not
identical to that of a municipality. Nonetheless, where use of dry sand is essential or
reasonably necessary for enjoyment of the ocean, the doctrine warrants the public’s use
of the upland dry sand area subject to an accommodation of the interests of the owner.
We perceive no need to attempt to apply notions of prescription, City of Daytona Beach
v. Tona-Rama, Inc., 294 So.2d 73 (Fla.1974), dedication, Gion v. City of Santa Cruz, 2 Cal.3d
29, 465 P.2d 50, 84 Cal.Rptr. 162 (1970), or custom, State ex rel. Thornton v. Hay, 254 Or.
584, 462 P.2d 671 (1969), as an alternative to application of the public trust doctrine.
Archaic judicial responses are not an answer to a modern social problem. Rather, we
perceive the public trust doctrine not to be “fixed or static,” but one to “be molded
and extended to meet changing conditions and needs of the public it was created to
benefit.” Avon, 61 N.J. at 309, 294 A.2d 47.
Precisely what privately-owned upland sand area will be available and required to satisfy
the public’s rights under the public trust doctrine will depend on the circumstances.
Location of the dry sand area in relation to the foreshore, extent and availability of
publicly-owned upland sand area, nature and extent of the public demand, and usage
of the upland sand land by the owner are all factors to be weighed and considered in
fixing the contours of the usage of the upper sand.
Today, recognizing the increasing demand for our State’s beaches and the dynamic
nature of the public trust doctrine, we find that the public must be given both access
to and use of privately-owned dry sand areas as reasonably necessary. While the public’s
rights in private beaches are not co-extensive with the rights enjoyed in municipal
beaches, private landowners may not in all instances prevent the public from exercising
its rights under the public trust doctrine. The public must be afforded reasonable access
to the foreshore as well as a suitable area for recreation on the dry sand.

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Notes and Questions

1. Do the rights covered by the public trust doctrine preexist the state, or are they
pure creatures of law? When may courts change public trust rules? When they
do so, are the rules changing or is the court explaining that the rule “always”
thus, but is only now being announced? Does anything turn on this distinction?
As we will see, how we define such changes has implications on whether a
property owner may claim that the state is committing a constitutional violation
by “taking” land without just compensation.
2. When a court alters preexisting conceptions of the right to exclude should
anything be due to the property owner? Does your conception of what the
public trust doctrine is help determine your answer to this question?
3. Other theories of expanding public access rights. Courts have used other
doctrines to expand public access to private lands, including theories of
prescriptive easements, “implied dedication,” and customary uses. See generally
4 POWELL ON REAL PROPERTY § 34.11. As an example of implied dedication,
the California Supreme Court declared:
Although ‘No Trespassing’ signs may be sufficient when only an
occasional hiker traverses an isolated property, the same action
cannot reasonably be expected to halt a continuous influx of
beach users to an attractive seashore property. If the fee owner
proves that he has made more than minimal and ineffectual
efforts to exclude the public, then the trier of fact must decide
whether the owner’s activities have been adequate. If the owner
has not attempted to halt public use in any significant way,
however, it will be held as a matter of law that he intended to
dedicate the property or an easement therein to the public, and
evidence that the public used the property for the prescriptive
period is sufficient to establish dedication.
Gion v. City of Santa Cruz, 2 Cal. 3d 29, 41, 465 P.2d 50, 58 (1970). On custom,
see, e.g., City of Daytona Beach v. Tona-Rama, Inc., 294 So. 2d 73, 78 (Fla. 1974)
(“The general public may continue to use the dry sand area for their usual

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recreational activities, not because the public has any interest in the land itself,
but because of a right gained through custom to use this particular area of the
beach as they have without dispute and without interruption for many years.”).

4. Politics! Do not overlook the role of the political process in questions of beach
access. Following the Gion ruling noted above, the California legislature enacted
CAL. CIV. CODE § 1009, which finds that “[o]wners of private real property are
confronted with the threat of loss of rights in their property if they allow or
continue to allow members of the public to use, enjoy or pass over their
property for recreational purposes” and that the “stability and marketability of
record titles is clouded by such public use, thereby compelling the owner to
exclude the public from his property.” It therefore provides that “no use of
such property by the public after the effective date of this section shall ever
ripen to confer upon the public or any governmental body or unit a vested right
to continue to make such use permanently, in the absence of an express written
irrevocable offer of dedication of such property to such use.” Does the
availability of a legislative remedy if landowners organize and convince the
legislature to act suffice to address the concerns about cases like Matthews?
5. Conflicting uses. Once the public has the right of access to private land, what
other limits on private ownership follow? See, e.g., City of Daytona Beach v.
Tona-Rama, Inc., 294 So. 2d 73, 78 (Fla. 1974) (private landowner’s
construction of tower on beach did not interfere with customary public rights).
6. Public Policy. Are expansions of public access rights by the courts beneficial?
What kinds of incentives do they create? Consider the following criticism:
Commentators were severe in their criticism of Gion-Dietz, noting
not only departure from precedent, the failure to consider total
loss to the owner, and the prohibition of taking property without
compensation, but also that the case created an obvious inequity
and would prove counterproductive to the public policy
espoused. [Citations of critical commentary omitted.]
The inequity addressed by commentators appears when weighing
penalties against rewards to landowners having no immediate use

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383
for their property so that permitting public use poses no
interference or impairment. Those landowners who were
neighborly and hospitable in permitting public use were penalized
by Gion-Dietz by loss of their land, while those excluding the
public by fencing or other means were rewarded by retention of
their exclusive use. While virtue is usually its own reward, the law
does not usually penalize the virtuous. The decision was asserted
to be counterproductive because landowners to avoid
prescriptive dedication would now exclude the public from using
open and unimproved property for recreation purposes. Thus the
very policy sought to be furthered would be defeated. (County of
Orange v. Chandler-Sherman Corp. (1976) 54 Cal.App.3d 561,
564, 126 Cal.Rptr. 765, 767, points out that one of the reactions
to Gion-Dietz was “soaring sales of chain link fences.”)

Cnty. of Los Angeles v. Berk, 26 Cal. 3d 201, 228-31, 605 P.2d 381, 398-401
(1980) (Clark, J., dissenting). But expanding access offers benefits of its own:
The law of beach access in Hawaii has an enormous, incalculable
impact on social life. Though the law limits the property rights of
beachfront owners as they are defined elsewhere, it increases the
wealth of every single person in the state by giving them a right
to go to the beach anywhere in the state. Everyone, no matter
how poor, has a backyard on the beach. Individuals and families
go the shore in the morning to swim or surf before work.
Families gather to watch the sun go down in the evening. Even
if they only have a small apartment inland, they have a right to sit
outside on the beach wherever they please. It affects the range of
options people have, their daily routine, and the sense of
satisfaction of almost everyone.
Joseph William Singer, Property as the Law of Democracy, 63 DUKE L.J. 1287, 1329
(2014).
7. Many European nations recognize (either by tradition or statute) a “right to
roam” on private lands (excluding homestead or cultivated areas). Heidi

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Gorovitz Robertson, Public Access to Private Land for Walking: Environmental and
Individual Responsibility As Rationale for Limiting the Right to Exclude, 23 GEO. INT’L
ENVTL. L. REV. 211 (2011). The right to roam often encompasses the picking
of berries, mushrooms, and the like. Open access used to be the norm for
unenclosed land in the United States until the late 1800s; open range laws
allowed cattle grazing on unimproved lands. Brian Sawers, The Right to Exclude
from Unimproved Land, 83 TEMP. L. REV. 665, 674 (2011); Nashville & C.R. Co.
v. Peacock, 25 Ala. 229, 232 (1854) (“Our present Code contains similar
provisions, which show conclusively that the unenclosed lands of this State are
to be treated as common pasture for the cattle and stock of every citizen.”).
Pressure to close the range and forbid the crossing of uncultivated or
unenclosed land came from three sources: farmers, who were relying less on
free range livestock; railroads, who wished to avoid liability for cattle collisions;
and southern planters, who viewed closed range laws as a mechanism for
limiting the independence of newly emancipated African-American farmers.
Sawers, supra, at 681-84; R. Ben Brown, Free Men and Free Pigs: Closing the Southern
Range and the American Property Tradition, 108 RADICAL HISTORY REVIEW 117,
119 (Fall 2010) (“When the most important political and economic project of
the post-Reconstruction era became recapturing the labor of African Americans
to produce staple crops, restricting African American access to open range
resources became a priority.”).

Trusts and Corporations
This section considers the two dominant forms of artificial entities that own and
manage property, and often serve as substitutes for the more rigid system of estates:
trusts and corporations.

A. Trusts
Note on Trusts
The origin of the trust lies in medieval estate planning and tax evasion. (Arguably,
nothing has changed in the last six hundred years.) Imagine Osbert, a minor lord in the
15th century, who holds Blackacre as a tenant of Leonard, a slightly less minor lord.
Osbert is getting on in years and has started to worry about the future of his family.
His elder son, Aylwin, is not showing promising signs of maturity, and Osbert has come
to think that Aylwin may be better suited to religious orders than the duties of managing
a great estate. But Osbert’s younger son Bartholomew appears to be a fine young
gentleman: athletic, patient, and wise in the ways of men. Osbert would like to provide
for Aylwin, but would prefer to have Blackacre go to Bartholomew. Osbert’s problem
is that the available conveyancing devices don’t work for him. If he does nothing, then
Blackacre goes to Alywin at Osbert’s death under the rule of primogeniture in effect in
England at the time, according to which the eldest son receives any land his father
owned at his death (was “seised of,” in contemporary terminology). A will leaving
Blackacre to Bartholomew doesn’t work because land could not be devised by will until
the Statute of Wills in 1540. And Osbert doesn’t want to convey Blackacre (or a future
interest in Blackacre) to Bartholomew now, because Bartholomew might die before
him, or Aylwin might get his act together, or something else could come along to force
a change in plan.
The solution hit on by contemporary lawyers was the “use.” Osbert conveys Blackacre
to his friend Theobald “to the use of Osbert and his heirs.” Then he writes a letter to
Theobald, instructing Theobald to convey Blackacre to Bartholomew at Osbert’s death.
This works. When Osbert dies, Theobald owns Blackacre, so primogeniture never kicks
in. Then Theobald conveys to Bartholomew while they are both alive, so again the
385

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conveyance is perfectly good. What’s more, Osbert can change his instructions to
Theobald at any time by writing a new letter. And as an added bonus, because the land
never passes by intestacy, the “feudal incidents”– effectively taxes payable to Leonard
when a new tenant inherits—never become due. Uses became highly popular for
solving numerous similar problems created by the inflexibility of the medieval system
of interests in land.
But there was a fly in the ointment. As far as the law courts could see—or rather, as
far as they were willing to look—the “to the use of” language was a superfluous,
meaningless, and ineffective addition to an otherwise valid conveyance. On their view
of the situation, Theobald owns Blackacre in fee simple once Osbert conveys to him.
Osbert’s subsequent letter is a worthless piece of paper; much as if you wrote to Bill
Gates telling him to convey to you some lakefront property in Washington. So if
Theobald turned out to be untrustworthy and held on to Blackacre for himself or
conveyed it to Aylwin contrary to Osbert’s instructions, Osbert’s plan would come to
ruin. In such cases, Osbert and Bartholomew could obtain relief from the Chancellor,
who would hold that Theobald was under a duty in equity and good conscience to
follow Osbert’s instructions.
The use thus created what we would today call an “equitable interest” in land. Theobald
remained the legal owner of Blackacre while he held it to the use of Osbert and his heirs,
but Osbert was the equitable owner, since he could enforce his claims and instructions
in a court of equity. Over time a variety of similar situations, in which Chancery would
enforce interests in land legally owned by another, gave rise to a reasonably coherent
body of equitable jurisdiction, equitable doctrine, and equitable interests in property.
The use is long gone, along with the medieval doctrines that necessitated it, but the
modern trust shares its essential characteristics. A trust requires three people and one
thing. The people are the settlor, who creates the trust; the trustee, who holds legal title
to the trust property and is responsible for following the settlor’s instructions, and the
beneficiary, who is entitled to receive distributions from the trust in accordance with the
settlor’s instructions but does not directly control it. The thing is the trust property (or
sometimes res, Latin for “thing,” or corpus, Latin for “body”), whose ownership is split
between the trustee (with legal title) and the beneficiary (with equitable title).

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Rothko v. Reis (In re Estate of Rothko)
372 N.E.2d 291 (N.Y. 1977)
COOKE, Judge.
Mark Rothko, an abstract expressionist painter whose works through the years gained
for him an international reputation of greatness, died testate on February 25, 1970. The
principal asset of his estate consisted of 798 paintings of tremendous value, and the
dispute underlying this appeal involves the conduct of his three executors in their
disposition of these works of art. In sum, that conduct as portrayed in the record and
sketched in the opinions was manifestly wrongful and indeed shocking.
Rothko’s will was admitted to probate on April 27, 1970 and letters testamentary were
issued to Bernard J. Reis, Theodoros Stamos and Morton Levine. Hastily and within a
period of only about three weeks and by virtue of two contracts each dated May 21,
1970, the executors dealt with all 798 paintings.
By a contract of sale, the estate executors agreed to sell to Marlborough A.G., a
Liechtenstein corporation (hereinafter MAG), 100 Rothko paintings as listed for
$1,800,000, $200,000 to be paid on execution of the agreement and the balance of
$1,600,000 in 12 equal interest-free installments over a 12-year period. Under the
second agreement, the executors consigned to Marlborough Gallery, Inc., a domestic
corporation (hereinafter MNY), “approximately 700 paintings listed on a Schedule to
be prepared”, the consignee to be responsible for costs covering items such as
insurance, storage restoration and promotion. By its provisos, MNY could sell up to
35 paintings a year from each of two groups, pre-1947 and post-1947, for 12 years at
the best price obtainable but not less than the appraised estate value, and it would
receive a 50% commission on each painting sold, except for a commission of 40% on
those sold to or through other dealers.
Petitioner Kate Rothko, decedent’s daughter and a person entitled to share in his estate
by virtue of an election under EPTL 5-3.3, instituted this proceeding to remove the
executors, to enjoin MNY and MAG from disposing of the paintings, to rescind the
aforesaid agreements between the executors and said corporations, for a return of the
paintings still in possession of those corporations, and for damages. She was joined by
the guardian of her brother Christopher Rothko, likewise interested in the estate, who
answered by adopting the allegations of his sister’s petition and by demanding the same

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relief. The Attorney-General of the State, as the representative of the ultimate
beneficiaries of the Mark Rothko Foundation, Inc., a charitable corporation and the
residuary legatee under decedent’s will, joined in requesting relief substantially similar
to that prayed for by petitioner. …
Following a nonjury trial covering 89 days and in a thorough opinion, the Surrogate
found: that Reis was a director, secretary and treasurer of MNY, the consignee art
gallery, in addition to being a coexecutor of the estate; that the testator had a 1969 inter
vivos contract with MNY to sell Rothko’s work at a commission of only 10% and
whether that agreement survived testator’s death was a problem that a fiduciary in a
dual position could not have impartially faced; that Reis was in a position of serious
conflict of interest with respect to the contracts of May 21, 1970 and that his dual role
and planned purpose benefited the Marlborough interests to the detriment of the
estate; that it was to the advantage of coexecutor Stamos as a “not-too-successful artist,
financially”, to curry favor with Marlborough and that the contract made by him with
MNY within months after signing the estate contracts placed him in a position where
his personal interests conflicted with those of the estate, especially leading to lax
contract enforcement efforts by Stamos; that Stamos acted negligently and
improvidently in view of his own knowledge of the conflict of interest of Reis; that the
third coexecutor, Levine, while not acting in self-interest or with bad faith, nonetheless
failed to exercise ordinary prudence in the performance of his assumed fiduciary
obligations since he was aware of Reis’ divided loyalty, believed that Stamos was also
seeking personal advantage, possessed personal opinions as to the value of the
paintings and yet followed the leadership of his coexecutors without investigation of
essential facts or consultation with competent and disinterested appraisers, and that the
business transactions of the two Marlborough corporations were admittedly controlled
and directed by Francis K. Lloyd. It was concluded that the acts and failures of the
three executors were clearly improper to such a substantial extent as to mandate their
removal under SCPA 711 as estate fiduciaries. The Surrogate also found that MNY,
MAG and Lloyd were guilty of contempt in shipping, disposing of and selling 57
paintings in violation of the temporary restraining order dated June 26, 1972 and of the
injunction dated September 26, 1972; that the contracts for sale and consignment of
paintings between the executors and MNY and MAG provided inadequate value to the
estate, amounting to a lack of mutuality and fairness resulting from conflicts on the
part of Reis and Stamos and improvidence on the part of all executors; that said

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contracts were voidable and were set aside by reason of violation of the duty of loyalty
and improvidence of the executors, knowingly participated in and induced by MNY
and MAG; that the fact that these agreements were voidable did not revive the 1969
inter vivos agreements since the parties by their conduct evinced an intent to abandon
and abrogate these compacts. The Surrogate held that the present value at the time of
trial of the paintings sold is the proper measure of damages as to MNY, MAG, Lloyd,
Reis and Stamos. He imposed a civil fine of $3,332,000 upon MNY, MAG and Lloyd,
same being the appreciated value at the time of trial of the 57 paintings sold in violation
of the temporary restraining order and injunction. It was held that Levine was liable
for $6,464,880 in damages, as he was not in a dual position acting for his own interest
and was thus liable only for the actual value of paintings sold MNY and MAG as of
the dates of sale, and that Reis, Stamos, MNY and MAG, apart from being jointly and
severally liable for the same damages as Levine for negligence, were liable for the
greater sum of $9,252,000 “as appreciation damages less amounts previously paid to
the estate with regard to sales of paintings.” The cross petition of the Attorney-General
to reopen the record for submission of newly discovered documentary evidence was
denied. The liabilities were held to be congruent so that payment of the highest sum
would satisfy all lesser liabilities including the civil fines and the liabilities for damages
were to be reduced by payment of the fine levied or by return of any of the 57 paintings
disposed of, the new fiduciary to have the option in the first instance to specify which
paintings the fiduciary would accept. [The Appellate Division affirmed.]
In seeking a reversal, it is urged that an improper legal standard was applied in voiding
the estate contracts of May, 1970, that the “no further inquiry” rule applies only to selfdealing and that in case of a conflict of interest, absent self-dealing, a challenged
transaction must be shown to be unfair. The subject of fairness of the contracts is
intertwined with the issue of whether Reis and Stamos were guilty of conflicts of
interest. 2 [Austin W. Scott Jr., Scott on Trusts] is quoted to the effect that “(a) trustee

2 In New York, an executor, as such, takes a qualified legal title to all personalty specifically bequeathed and an

unqualified legal title to that not so bequeathed; he holds not in his own right but as a trustee for the benefit of
creditors, those entitled to receive under the will and, if all is not bequeathed, those entitled to distribution under
the EPTL.

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does not necessarily incur liability merely because he has an individual interest in the
transaction … .”
These contentions should be rejected. First, a review of the opinions of the Surrogate
and the Appellate Division manifests that they did not rely solely on a “no further
inquiry rule”, and secondly, there is more than an adequate basis to conclude that the
agreements between the Marlborough corporations and the estate were neither fair nor
in the best interests of the estate. This is demonstrated, for example, by the comments
of the Surrogate concerning the commissions on the consignment of the 698 paintings
and those of the Appellate Division concerning the sale of the 100 paintings. The
opinions under review demonstrate that neither the Surrogate nor the Appellate
Division set aside the contracts by merely applying the no further inquiry rule without
regard to fairness. Rather they determined, quite properly indeed, that these agreements
were neither fair nor in the best interests of the estate.
To be sure, the assertions that there were no conflicts of interest on the part of Reis or
Stamos indulge in sheer fantasy. Besides being a director and officer of MNY, for which
there was financial remuneration, however slight, Reis, as noted by the Surrogate, had
different inducements to favor the Marlborough interests, including his own
aggrandizement of status and financial advantage through sales of almost one million
dollars for items from his own and his family’s extensive private art collection by the
Marlborough interests. Similarly, Stamos benefited as an artist under contract with
Marlborough and, interestingly, Marlborough purchased a Stamos painting from a third
party for $4,000 during the week in May, 1970 when the estate contract negotiations
were pending. The conflicts are manifest. Further, as noted in Bogert, Trusts and
Trustees (2d ed.), “The duty of loyalty imposed on the fiduciary prevents him from
accepting employment from a third party who is entering into a business transaction
with the trust” (s 543, subd. (S), p. 573). “While he (a trustee) is administering the trust
he must refrain from placing himself in a position where his personal interest or that
of a third person does or may conflict with the interest of the beneficiaries” (Bogert,
Trusts (Hornbook Series 5th ed.), p. 343). Here, Reis was employed and Stamos
benefited in a manner contemplated by Bogert. In short, one must strain the law rather
than follow it to reach the result suggested on behalf of Reis and Stamos.

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Levine contends that, having acted prudently and upon the advice of counsel, a
complete defense was established. Suffice it to say, an executor who knows that his
coexecutor is committing breaches of trust and not only fails to exert efforts directed
towards prevention but accedes to them is legally accountable even though he was
acting on the advice of counsel. When confronted with the question of whether to
enter into the Marlborough contracts, Levine was acting in a business capacity, not a
legal one, in which he was required as an executor primarily to employ such diligence
and prudence to the care and management of the estate assets and affairs as would
prudent persons of discretion and intelligence, accented by “(n)ot honesty alone, but
the punctilio of an honor the most sensitive” (Meinhard v. Salmon, 164 N.E. 545, 546
(N.Y. 1928). Alleged good faith on the part of a fiduciary forgetful of his duty is not
enough. He could not close his eyes, remain passive or move with unconcern in the
face of the obvious loss to be visited upon the estate by participation in those business
arrangements and then shelter himself behind the claimed counsel of an attorney.
Further, there is no merit to the argument that MNY and MAG lacked notice of the
breach of trust. The record amply supports the determination that they are chargeable
with notice of the executors’ breach of duty.

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Notes and Questions

1. DAR WILLIAMS, MARK ROTHKO SONG (Razor & Tie 1993):
The blue it speaks so full
It’s like the beauty, one can barely stand
Or too much things dropped in your hand
And there’s a green like the peace in your heart sometimes …
I met her at the funeral
She said, “I don’t know what he meant to me
I just know he affected me
An effect not unlike his art, I believe”
2. As Rothko illustrates, trusts can arise in a variety of settings. The executor of a
will and the administrator of an estate in intestacy act as trustees for the parties
who are to receive the decedent’s property. The estate of a bankrupt firm or
individual is also managed by a trustee, who acts to maximize its value for the
creditors.
There are many kinds of trusts. Private trusts have identifiable individual
beneficiaries. There are also charitable trusts, which can serve broader social
purposes and large classes of unidentified beneficiaries, and business trusts, in
which trustees manage financial assets for specific purposes. Many retirement
funds, for example, are organized as trusts with the employees who are entitled
to pensions as beneficiaries. Another common distinction is between revocable
trusts, which the settlor can terminate, and irrevocable trusts, which she cannot.
Trusts can also be inter vivos, i.e. established by the settlor during her lifetime, or
testamentary, i.e. created in the settlor’s will.
3. The basic duties of a trustee are obedience to the instructions given by the settlor,
loyalty to the interests of the beneficiaries (rather than the trustee’s own interests),
and prudence in managing the trust assets appropriately. Various subsidiary duties,
such as the duty to account for the trust assets and how they have been used,
ensure that the basic duties are carried out faithfully. Which of these duties did
the different trustees in Rothko violate? Observe the different standards of care
required for the trustees: why is the standard of loyalty so much more stringent
than the standard of prudence? Which of these duties should the settlor be able

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to waive when he or she sets up the trust? Which of them should the
beneficiaries be able to waive? To make this more concrete, do you think that
Mark Rothko wanted his executors to sell off his paintings quickly to
Marlborough? If so, should he have been allowed to specify so, and how? On
the other side, could Kate Rothko and the other heirs have given permission
for the sale, and if so, what form of notice and consent would the trustees have
needed to get?
4. In an omitted part of the opinion, the Rothko court discussed the proper
measure of damages. It upheld the Surrogate’s decision to award appreciation
damages, i.e. the value of the wrongfully sold paintings as of the time of the
Surrogate’s decree. This ended up being an especially large sum because the
price of Rothko works rose rapidly after his death (and continued rising well
after Rothko). Although sometimes justified in deterrence terms, it is a bit of an
anomalous remedy in trust law and has been criticized by trusts scholars:
holding trustees accountable for increases in value after they sell off trust assets
is unusual. Two other damage measures are more common. One is the familiar
make-whole remedy of tort law: if the trustees’ breach of trust has reduced the
value of the trust corpus, they are liable for the difference between the trust’s
actual value and what it would have been if not for the breach. This damage
measure makes evident sense against the trustee who imprudently sells a trust
asset too cheaply, or who holds on to an asset after a prudent trustee would
have sold it, or who imprudently fails to diversify a trust corpus that is
concentrated in a single risky asset. But breach of the duty of loyalty often calls
for something more. Take the trustee who withdraws $50,000 from a trust then
goes on a gambling spree in Las Vegas and wins an additional $100,000. Letting
the trustee deposit the original $50,000 back in the trust and walk away with the
$100,000 in gambling winnings would make the trust whole, but it would also
leave trustees with a temptation to gamble—literally and figuratively—with trust
assets for their own gain. In these circumstances, the usual remedy is restitution:
the trustee must disgorge her ill-gotten gains back to the trust. Even if this gives
the beneficiaries a windfall, the trustee would be unjustly enriched were she
allowed to keep the gains. (Do you see how appreciation damages go even
further than either of these measures?)

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Observe that the restitutionary remedy involves a kind of tracing: the
beneficiaries are regarded as having a right to the property in the trust corpus,
and they can reclaim that property even as the trustee modifies it or changes its
form. So if the trustee buys a Picasso with the trust corpus, and the Picasso
increases in value, and the trustee then sells it, she will be required to pay back
the full amount she received for the Picasso. Query: just the trustee? Why can’t
Kate Rothko et al. recover her father’s paintings from the people Marlborough
sold them to? What about the paintings sold to Marlborough but not yet resold
by it?

5. A trust beneficiary has equitable title to trust assets. Equitable title is not legal
title, as illustrated by spendthrift trusts. Suppose that the fabulously wealthy
parents of Rick von Slonecker, currently 28 and never employed, decide that
they want their son to enjoy a luxurious lifestyle, so they create in their wills a
trust to pay Rick $1 million a year for life, with the remainder to go either to his
children, or if there are none, to various charitable causes. (Side note: observe
the great flexibility provided by the trust form; equitable interests are almost
always better alternatives to legal ones in any complicated property settlement,
given the notorious inflexibility and troublesome traps of the system of estates
in land.) They fear, not without reason, that Rick will run up gambling debts
and want to pay off large legal settlements quietly. So they put a clause in the
trust instrument making abundantly clear that the monthly payments are to go
directly to Rick and no one else, and that Rick shall have no power to encumber
the trust corpus. Now, in many states, when the casino comes calling and
waving its bill, it must pursue Rick directly, even though he is penniless except
for a few days immediately after each check arrives from the trust. It would be
more convenient for the casino either to collect its debts from the trust corpus,
or to obtain an order directing the trustee to pay it instead, but the casino has
no more rights to the trust than Rick does, and Rick holds only an equitable interest
in the trust.
Is it fair and just for Rick’s parents to help Rick escape his debts in this way?
One might think that there would be an obvious motivation for states to protect
legitimate creditors against the various asset-shielding uses and abuses of trusts,
but the trend has been in the other direction. Competition for trust business has

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induced numerous jurisdictions to adopt highly settlor-friendly trust law, such
as validating spendthrift trusts like Rick’s or weakening the Rule Against
Perpetuities to attract long-lived dynastic trusts with beneficiaries spread out
over many generations in a family. There are even asset-protection trusts, in
which the settlor is also the principal beneficiary; the goal is that she can draw
on the trust but her creditors cannot. These legal concessions to settlors can
benefit state economies because trustees are entitled to compensation for
managing trust assets, and many financial and legal service providers offer
professional trust management services. But these benefits come at the expense
of frustrated creditors and current generations bound by the dead-hand control
of long-gone settlors. Is this a worthwhile trade for state legislatures to make?

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6. There is at least one way in which courts do not pursue the legal fiction that the
trustee has legal title to trust assets through to its logical conclusion. Suppose
the trustee (rather than the beneficiary) has a gambling problem and racks up
$500,000 in personal gambling debts. Can the casino collect out of the trust

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corpus? Strict logic would say yes; they are the trustee’s property. But Section
507 of the Uniform Trust Code flatly says no: “Trust property is not subject to
personal obligations of the trustee, even if the trustee becomes insolvent or
bankrupt.” See also 11 U.S.C. § 541(d) (exempting from a debtor’s estate in
bankruptcy “[p]roperty in which the debtor holds, as of the commencement of
the case, only legal title and not an equitable interest.”) Note that this rule cannot
be justified using the usual principle that one is not bound by prior equitable
interests of which one has no notice, since it affects even creditors who have
no notice of the trust. Only if the trustee affirmatively commits breach of trust
by withdrawing trust assets can she possibly be subjected to third-party claims.
(Incidentally, what about the settlor’s creditors? Should they be able to reach trust
assets?)

B. Corporations
Walkovszky v. Carlton
18 N.Y.2d 414 (1966)
FULD, Justice:
This case involves what appears to be a rather common practice in the taxicab industry
of vesting the ownership of a taxi fleet in many corporations, each owning only one or
two cabs.
The complaint alleges that the plaintiff was severely injured four years ago in New York
City when he was run down by a taxicab owned by the defendant Seon Cab
Corporation and negligently operated at the time by the defendant Marchese. The
individual defendant, Carlton, is claimed to be a stockholder of 10 corporations,
including Seon, each of which has but two cabs registered in its name, and it is implied
that only the minimum automobile liability insurance required by law (in the amount
of $10,000) is carried on any one cab. Although seemingly independent of one another,
these corporations are alleged to be “operated … as a single entity, unit and enterprise”
with regard to financing, supplies, repairs, employees and garaging, and all are named
as defendants. The plaintiff asserts that he is also entitled to hold their stockholders
personally liable for the damages sought because the multiple corporate structure
constitutes an unlawful attempt “to defraud members of the general public” who might
be injured by the cabs. ...

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The law permits the incorporation of a business for the very purpose of enabling its
proprietors to escape personal liability but, manifestly, the privilege is not without its
limits. Broadly speaking, the courts will disregard the corporate form, or, to use
accepted terminology, “pierce the corporate veil”, whenever necessary “to prevent
fraud or to achieve equity”. In determining whether liability should be extended to
reach assets beyond those belonging to the corporation, we are guided, as Judge
Cardozo noted, by “general rules of agency”. In other words, whenever anyone uses
control of the corporation to further his own rather than the corporation’s business,
he will be liable for the corporation’s acts “upon the principle of respondeat superior
applicable even where the agent is a natural person”. Such liability, moreover, extends
not only to the corporation’s commercial dealings but to its negligent acts as well.
In the Mangan case, the plaintiff was injured as a result of the negligent operation of a
cab owned and operated by one of four corporations affiliated with the defendant
Terminal. Although the defendant was not a stockholder of any of the operating
companies, both the defendant and the operating companies were owned, for the most
part, by the same parties. The defendant’s name (Terminal) was conspicuously
displayed on the sides of all of the taxis used in the enterprise and, in point of fact, the
defendant actually serviced, inspected, repaired and dispatched them. These facts were
deemed to provide sufficient cause for piercing the corporate veil of the operating
company — the nominal owner of the cab which injured the plaintiff — and holding
the defendant liable. The operating companies were simply instrumentalities for
carrying on the business of the defendant without imposing upon it financial and other
liabilities incident to the actual ownership and operation of the cabs. …
The individual defendant is charged with having “organized, managed, dominated and
controlled” a fragmented corporate entity but there are no allegations that he was
conducting business in his individual capacity. Had the taxicab fleet been owned by a
single corporation, it would be readily apparent that the plaintiff would face formidable
barriers in attempting to establish personal liability on the part of the corporation’s
stockholders. The fact that the fleet ownership has been deliberately split up among
many corporations does not ease the plaintiff’s burden in that respect. The corporate
form may not be disregarded merely because the assets of the corporation, together
with the mandatory insurance coverage of the vehicle which struck the plaintiff, are
insufficient to assure him the recovery sought. If Carlton were to be held individually

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liable on those facts alone, the decision would apply equally to the thousands of cabs
which are owned by their individual drivers who conduct their businesses through
corporations organized pursuant to section 401 of the Business Corporation Law and
carry the minimum insurance required by subdivision 1 (par. [a]) of section 370 of the
Vehicle and Traffic Law. These taxi owner-operators are entitled to form such
corporations, and we agree with the court at Special Term that, if the insurance
coverage required by statute “is inadequate for the protection of the public, the remedy
lies not with the courts but with the Legislature.” It may very well be sound policy to
require that certain corporations must take out liability insurance which will afford
adequate compensation to their potential tort victims. However, the responsibility for
imposing conditions on the privilege of incorporation has been committed by the
Constitution to the Legislature and it may not be fairly implied, from any statute, that
the Legislature intended, without the slightest discussion or debate, to require of taxi
corporations that they carry automobile liability insurance over and above that
mandated by the Vehicle and Traffic Law.
This is not to say that it is impossible for the plaintiff to state a valid cause of action
against the defendant Carlton. However, the simple fact is that the plaintiff has just not
done so here. While the complaint alleges that the separate corporations were
undercapitalized and that their assets have been intermingled, it is barren of any
“sufficiently particular[ized] statements” that the defendant Carlton and his associates
are actually doing business in their individual capacities, shuttling their personal funds
in and out of the corporations “without regard to formality and to suit their immediate
convenience.” Such a “perversion of the privilege to do business in a corporate form”
would justify imposing personal liability on the individual stockholders. Nothing of the
sort has in fact been charged, and it cannot reasonably or logically be inferred from the
happenstance that the business of Seon Cab Corporation may actually be carried on by
a larger corporate entity composed of many corporations which, under general
principles of agency, would be liable to each other’s creditors in contract and in tort.
In point of fact, the principle relied upon in the complaint to sustain the imposition of
personal liability is not agency but fraud. Such a cause of action cannot withstand
analysis. If it is not fraudulent for the owner-operator of a single cab corporation to
take out only the minimum required liability insurance, the enterprise does not become
either illicit or fraudulent merely because it consists of many such corporations. The

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plaintiff’s injuries are the same regardless of whether the cab which strikes him is
owned by a single corporation or part of a fleet with ownership fragmented among
many corporations. Whatever rights he may be able to assert against parties other than
the registered owner of the vehicle come into being not because he has been defrauded
but because, under the principle of respondeat superior, he is entitled to hold the whole
enterprise responsible for the acts of its agents.
In sum, then, the complaint falls short of adequately stating a cause of action against
the defendant Carlton in his individual capacity. …
Notes and Questions
1. Corporate structure sharply distinguishes between two kinds of property.
Corporate assets, like the cabs in Walkovszky, belong to the corporation. Corporate
shares belong to the corporation’s shareholders; they give the holders rights to
share in the corporation’s profits and to control the corporation’s activities. So
the shareholders own the corporation, which owns its assets—but the
shareholders do not directly own or control the assets. Instead, in a business
corporation (there are also nonprofit corporations, municipal corporations, and
more), the shareholders elect a board of directors, which is responsible for
operating the company. The board typically hires corporate officers and
delegates day-to-day operations to them, but in theory it can take the reins when
needed—and must do so for major corporate activities like mergers. If
shareholders do not like how the board of directors are running the corporation,
their two options are to sell their shares (if they can) or to elect new directors
(if they can). Understanding this structure is crucial for understanding corporate
law and the treatment of corporate property.
2. What purpose can possibly be served by allowing Carlton to escape liability for
the injuries tortiously caused by the taxicab companies he owns and controls?
Isn’t limited liability an open invitation to pillage and lay waste? Should there
perhaps be a distinction between (typically voluntary) contract creditors and
(typically involuntary) tort creditors? Or between closely held corporations with
one or a few shareholders and public corporations whose shares are traded on
major stock markets and held by thousands or millions of shareholders?

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3. The reverse of limited liability is asset partitioning: just as Seon’s creditors can’t
reach outside the corporation to Carlton’s personal assets, Carlton’s personal
creditors can’t reach inside the corporation to Seon’s corporate assets. Is there
anything his creditors can do to get at the wealth sitting inside Seon and its
corporate siblings?
4. In the aftermath of Walkovsky, the New York legislature increased the required
insurance coverage for taxicab operators, but it left alone the state’s law of veilpiercing. Does this suggest that the case was rightly or wrongly decided?
5. How does Walkovsky encourage taxicab companies to structure their
businesses? This is a recurring problem in corporate and commercial law (which
will become apparent in the mortgage crisis section): parties will arrange a
corporate or transactional form to gain specific advantages while isolating
themselves from the associated legal risks. In securitization, for example, a
group of assets is pushed into a separate legal entity, isolating them from claims
against their corporate parent, and vice-versa. If the new entity defaults on its
obligations, the company that loaded it up with toxic junk will avoid liability—
or such is the plan, anyway.
6. In an earlier era, corporations were charted by state legislatures for specific
purposes: e.g., building a bridge. Today, incorporation is generally a matter of
statutory right and a business corporation can be created for any lawful purpose.
What are the purposes of business corporation—or put another way, to whom
is it responsible and for what? Is the board under a legal or moral duty to
maximize profits to the shareholders above all else? Compare, e.g., Milton
Freedman, The Social Responsibility of Business is to Increase its Profits, N.Y. TIMES,
Sept. 30, 1970, at SM17 (yes), with, e.g., LYNN STOUT, THE MYTH OF
SHAREHOLDER VALUE, HOW PUTTING SHAREHOLDERS FIRST HARMS
INVESTORS, CORPORATIONS, AND THE PUBLIC (2012) (no). If so, how much of
a duty is it, given the extreme latitude of the business judgment rule? Some
courts, while strongly deferential to board decisions most of the time, apply a
higher level of scrutiny in cases involving corporate mergers, when the only
question the board faces is how much money shareholders will receive for their

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401

shares from someone trying to buy up the corporation. See, e.g., Revlon, Inc. v.
MacAndrews & Forbes Holdings, 506 A.2d 173 (Del. 1986).

Co-ownership and Marital Property
More than one person can “own” a thing at any given time. Their rights will be
exclusive as against the world, but not exclusive as against each other. When conflicts
between them develop, or when the outside world seeks to regulate their behavior, we
need to understand the nature and limits of their rights.
In this section, we will not address the form of concurrent ownership known as
partnership, which we cover separately, though you will see some comparative
references to it in the case that follows. Nor will we address corporations (in which
ownership can be nearly infinitely divided and is separated from control; see the Trusts
and Corporations chapter). These topics are dealt with in detail in business associations
and similar courses. We will also not consider forms of concurrent ownership that are
of purely historical interest, such as coparceny. * The main types of co-ownership we
will consider are (1) tenancy in common, (2) joint tenancy, and (3) tenancy by the
entireties, along with a brief look at (4) community property, a particular kind of coownership available in some states.
In the late 1980s, a sample of real estate records showed that about two-thirds of
residential properties were held in some form of co-ownership. † Given that many
justifications for the institution of private property rely on the idea that competing
interests in property lead to inefficiency, waste, and conflict, it is perhaps surprising
that so much private property is, in practice, owned by more than one person. If

* A form of ownership only available to female heirs, when there were no male heirs.
† Evelyn Alicia Lewis, Struggling with Quicksand: The Ins and Outs of Cotenant Possession Value Liability and a Call for

Default Rule Reform, 1994 WIS. L. REV. 331; see also CAROLE SHAMMAS ET AL., INHERITANCE IN AMERICA FROM
COLONIAL TIMES TO THE PRESENT 171-72 (1987) (showing percentage of land held in joint tenancies rising from
under 1% in 1890 to nearly 80% in 1960, then dropping to 63% in 1980); N. William Hines, Real Property Joint
Tenancies: Law, Fact, and Fancy, 51 IOWA L. REV. 582 (1966) (finding that joint tenancies in Iowa rose from under
1% of acquisitions in 1933 to over a third of farm acquisitions and over half of urban acquisitions in 1964, almost
exclusively by married couples); Yale B. Griffith, Community Property in Joint Tenancy Form, 14 STAN. L. REV. 87
(1961) (study of California counties in 1959 and 1960 finding that married couples held over two-thirds of
property as cotenants, 85% of which was as joint tenants).

402

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communal ownership is so inefficient, why do we recognize so many kinds of coownership?

A. Types of Co-Ownership: Introduction
U.S. v. Craft
535 U.S. 274 (2002)
Justice O’CONNOR delivered the opinion of the Court.
… English common law provided three legal structures for the concurrent ownership
of property that have survived into modern times: tenancy in common, joint tenancy,
and tenancy by the entirety. The tenancy in common is now the most common form
of concurrent ownership. The common law characterized tenants in common as each
owning a separate fractional share in undivided property. Tenants in common may each
unilaterally alienate their shares through sale or gift or place encumbrances upon these
shares. They also have the power to pass these shares to their heirs upon death. Tenants
in common have many other rights in the property, including the right to use the
property, to exclude third parties from it, and to receive a portion of any income
produced from it.
Joint tenancies were the predominant form of concurrent ownership at common law,
and still persist in some States today. The common law characterized each joint tenant
as possessing the entire estate, rather than a fractional share: “[J]oint-tenants have one
and the same interest … held by one and the same undivided possession.” Joint tenants
possess many of the rights enjoyed by tenants in common: the right to use, to exclude,
and to enjoy a share of the property’s income. The main difference between a joint
tenancy and a tenancy in common is that a joint tenant also has a right of automatic
inheritance known as “survivorship.” Upon the death of one joint tenant, that tenant’s
share in the property does not pass through will or the rules of intestate succession;
rather, the remaining tenant or tenants automatically inherit it. Joint tenants’ right to
alienate their individual shares is also somewhat different. In order for one tenant to
alienate his or her individual interest in the tenancy, the estate must first be severed—
that is, converted to a tenancy in common with each tenant possessing an equal
fractional share. Most States allowing joint tenancies facilitate alienation, however, by

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allowing severance to automatically accompany a conveyance of that interest or any
other overt act indicating an intent to sever.
A tenancy by the entirety is a unique sort of concurrent ownership that can only exist
between married persons. Because of the common-law fiction that the husband and
wife were one person at law (that person, practically speaking, was the husband),
Blackstone did not characterize the tenancy by the entirety as a form of concurrent
ownership at all. Instead, he thought that entireties property was a form of single
ownership by the marital unity. Neither spouse was considered to own any individual
interest in the estate; rather, it belonged to the couple.
Like joint tenants, tenants by the entirety enjoy the right of survivorship. Also like a
joint tenancy, unilateral alienation of a spouse’s interest in entireties property is typically
not possible without severance. Unlike joint tenancies, however, tenancies by the
entirety cannot easily be severed unilaterally. Typically, severance requires the consent
of both spouses, or the ending of the marriage in divorce. At common law, all of the
other rights associated with the entireties property belonged to the husband: as the
head of the household, he could control the use of the property and the exclusion of
others from it and enjoy all of the income produced from it. The husband’s control of
the property was so extensive that, despite the rules on alienation, the common law
eventually provided that he could unilaterally alienate entireties property without
severance subject only to the wife’s survivorship interest.
With the passage of the Married Women’s Property Acts in the late 19th century
granting women distinct rights with respect to marital property, most States either
abolished the tenancy by the entirety or altered it significantly. Michigan’s version of
the estate is typical of the modern tenancy by the entirety. Following Blackstone,
Michigan characterizes its tenancy by the entirety as creating no individual rights
whatsoever: “It is well settled under the law of this State that one tenant by the entirety
has no interest separable from that of the other …. Each is vested with an entire title.”
And yet, in Michigan, each tenant by the entirety possesses the right of survivorship.
Each spouse—the wife as well as the husband—may also use the property, exclude
third parties from it, and receive an equal share of the income produced by it. Neither
spouse may unilaterally alienate or encumber the property, although this may be
accomplished with mutual consent. Divorce ends the tenancy by the entirety, generally

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405

giving each spouse an equal interest in the property as a tenant in common, unless the
divorce decree specifies otherwise.…

B. Tenancy in Common
Tenancy in common is the modern default form of co-ownership, unless a contrary
intent is expressed; usually that intent must be in writing. All tenants in common are
entitled to possession and use of the property. Only partition, discussed below, results
in separate and divided interests.
Tenants in common need not own equal shares. If there is no document or legal rule
of inheritance specifying their shares, courts will often look to the contribution of the
cotenants to the purchase in order to determine appropriate shares.

1. Rights and Duties of Tenants in Common
Concurrent owners can generally contract among themselves to allocate the various
benefits and burdens of ownership as they see fit. But in the absence of such agreement,
there are several default rules regarding the rights and obligations that arise between
cotenants of property.
This system of default rules begins with the premise that each cotenant is entitled to all
the rights of ownership in the entire co-owned parcel. Thus, for example, cotenants do
not necessarily have the right to compromise other cotenants’ right to exclude. If one
cotenant objects to a police search and the other would allow it, the objecting cotenant
prevails. A warrantless search is not allowed unless an exception to the warrant
requirement applies. Georgia v. Randolph, 547 U.S. 103 (2006).
The implications of multiple equal and undivided interests in a co-owned parcel
become far more complicated with respect to other rights of ownership—particularly
the rights of possession and use. If all co-owners are equally entitled to possession and
use of the whole parcel, what happens when more than one cotenant decides to assert
those rights at the same time? Is it physically possible to put co-equal rights of all
concurrent owners into practice? And if not, what if any obligation does a cotenant in
possession owe to cotenants out of possession? Consider the following case:

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Martin v. Martin
878 S.W. 2d 30 (Ky. Ct. App. 1994)

… Garis and Peggy own an undivided one-eighth interest in a tract of land in Pike
County. This interest was conveyed to Garis by his father, Charles Martin, in 1971.
Appellees, Charles and Mary Martin, own a life estate in the undivided seven-eighths
of the property for their joint lives, with remainder to appellants.
In 1982, Charles Martin improved a portion of the property and developed a four lot
mobile home park which he and Mary rented. In July of 1990, Garis and Peggy moved
their mobile home onto one of the lots. It is undisputed that Garis and Peggy expended
no funds for the improvement or maintenance of the mobile home park, nor did they
pay rent for the lot that they occupied.
In 1990, Garis and Peggy filed an action which sought an accounting of their claimed
one-eighth portion of the net rent received by Charles and Mary from the lots. The
accounting was granted, however, the judgment of the trial court required appellants
to pay “reasonable rent” for their occupied lot. It is that portion of the judgment from
which this appeal arises.
The sole issue presented is whether one cotenant is required to pay rent to another
cotenant. Appellants argue that absent an agreement between cotenants, one cotenant
occupying premises is not liable to pay rent to a co-owner. Appellees respond that a
cotenant is obligated to pay rent when that cotenant occupies the jointly owned
property to the exclusion of his co-owner.
Appellants and appellees own the subject property as tenants in common. The primary
characteristic of a tenancy in common is unity of possession by two or more owners.
Each cotenant, regardless of the size of his fractional share of the property, has a right
to possess the whole.
The prevailing view is that an occupying cotenant must account for outside rental
income received for use of the land, offset by credits for maintenance and other
appropriate expenses. The trial judge correctly ordered an accounting and recovery of
rent in the case sub judice.

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However, the majority rule on the issue of whether one cotenant owes rent to another
is that a cotenant is not liable to pay rent, or to account to other cotenants respecting
the reasonable value of the occupancy, absent an ouster or agreement to pay.
The trial court relied erroneously on Smither v. Betts, Ky., 264 S.W.2d 255 (1954), for
its conclusion that appellants were “obligated to pay seven-eighths of the reasonable
rental for the use of the lot they occupy.” In Smither, one cotenant had exclusive
possession of jointly owned property by virtue of a lease with a court-appointed
receiver and there was an agreement to pay rent. That clearly is not the case before us.
There was no lease or any other agreement between the parties.
The appellees reason that the award of rent was proper upon the premise that Garis
and [Peggy] ousted their cotenants. While the proposition that a cotenant who has been
ousted or excluded from property held jointly is entitled to rent is a valid one, we are
convinced that such ouster must amount to exclusive possession of the entire jointly
held property. We find support for this holding in Taylor, supra, in which the Court
stated at 807-08:
But, however this may be, running throughout all the books will be
found two essential elements which must exist before the tenant sought
to be charged is liable. These are: (a) That the tenant sought to be
charged and who is claimed to be guilty of an ouster must assert
exclusive claim to the property in himself, thereby necessarily including
a denial of any interest or any right or title in the supposed ousted tenant;
(b) he must give notice to this effect to the ousted tenant, or his acts
must be so open and notorious, positive and assertive, as to place it
beyond doubt that he is claiming the entire interest in the property.
We conclude that appellants’ occupancy of one of the four lots did not amount to an
ouster. To hold otherwise is to repudiate the basic characteristic of a tenancy in
common that each cotenant shares a single right to possession of the entire property
and each has a separate claim to a fractional share.
Accordingly, the judgment of the Pike Circuit Court is reversed as to the award of rent
to the appellees.

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Property
Notes and Questions

1. Recurring conflicts between cotenants. Rules for cotenant liability are
incoherent and unsatisfactory despite centuries of litigated cases. Evelyn Lewis
speculates that “cotenant conflicts receive little attention from property law
reformers” because they involve “‘one-shotters’—parties who rarely litigate,
who are predominantly members of the obedient middle-class and who suffer
quietly the rules of law they were too unsophisticated to know or consider in
advance of the conflict.” Evelyn Lewis, Struggling with Quicksand: The Ins and Outs
of Cotenant Possession Value Liability, 1994 WIS. L. REV. 331.
Management conflicts can arise easily because, unlike in a trust or a corporation
(both forms of joint ownership) there is no one with the legal right to manage
the property on behalf of the other owners, and a cotenant who takes on the
burden of management is not entitled to be paid for her services to the others.
See Combs v. Ritter, 223 P.2d 505 (Cal. Ct. App. 1950). Although each cotenant
has the right to possess and benefit from the property, and the duty to pay her
share of necessary expenses such as taxes, there is no mechanism for group
decision-making. If co-owners can’t agree, they may simply have to split—by
divorce followed by a transfer to one party or sale in the case of tenancy by the
entirety and community property; by severance and partition for joint tenants;
and by partition for tenants in common. Short of partition, which involves
selling or physically dividing the property, the only assistance the courts offer
cotenants is a claim for accounting for rents or profits received by another
cotenant, or a claim for contribution for payments of another cotenant’s share
of taxes, mortgage payments, and necessary maintenance expenses.
2. Ouster. Denial of a right to possession constitutes ouster, and the damages are
the non-possessing cotenant’s share of the rental value of the property. Harlan
v. Harlan, 168 P.2d 985 (Cal. Ct. App. 1946) (damages for ouster are rental
value).
Evelyn Lewis concludes that, as with adverse possession, the standard for what
constitutes an ouster is so manipulable that courts can reach almost any result
on any given set of facts. See, e.g., Cox v. Cox, 71 P.3d 1028 (Idaho 2003) (tenant
in common was ousted and was entitled to ½ of the fair rental value of the

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house occupied by her brother when he told her he was selling the house and
that she “had better find a place to live”); Mauch v. Mauch, 418 P.2d 941 (Okla.
1966) (cotenants in possession of family farm ousted widowed sister-in-law by
telling her they “didn’t want to have her on the place” and that she “was not to
come back”); but see Fitzgerald v. Fitzgerald, 558 So.2d 122 (Fla. Dist. Ct. App.
1990) (ex-wife didn’t oust ex-husband by telling him to leave the family home
and that otherwise “she’d call the law”).
What if one cotenant denies that the other has any title to the property? See
Estate of Duran, 66 P.3d 326 (N.M. 2003) (cotenant lived on the property kept
silent or gave evasive answers to questions about his use of the property; this
was not ouster where he “never expressly told [the other cotenants] that he
claimed to own their portions of the property”). Purporting to convey full title
to the property is an ouster, since it sets up a claim for adverse possession by
the grantee. Whittington v. Cameron, 52 N.E.2d 134 (Ill. 1943).
What if one cotenant seeks to use a portion of the land, and the other prevents
her from doing so, perhaps by building a structure on it?
3. Constructive Ouster. What if the property is a single-family home and the cotenants are recently divorced or separated? See Hertz v. Hertz, 657 P. 2d 1169
(N.M. 1983) (applying theory of “constructive ouster” to require payment of
half of fair rental value); Stylianopoulos v. Stylianopoulos, 455 N.E.2d 477
(Mass. Ct. App. 1983) (divorce constituted ouster, so ex-wife had to pay fair
rental value to ex-husband); In re Marriage of Watts, 217 Cal. Rptr. 301 (Ct.
App. 1985) (separated spouse must reimburse community for exclusive use of
house); Palmer v. Protrka, 476 P.2d 185 (Or. 1970) (if, as a practical matter, the
couple can’t live together, requiring the cotenant in possession to pay half of
fair rental value most closely matches parties’ intentions).
Suppose a woman moves out of her family home after being physically assaulted
by her husband. The husband begs her to come back, but she refuses. After
two years, when their divorce becomes final, the ex-wife sues for half the fair
rental value of the house during the two-year period she was out of possession.
Should she win? What if, instead of the wife leaving, she ejects the husband
and tells him not to come back, and two years later, after she’s awarded the

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house in the divorce, he sues for half the fair rental value of the house during
the two-year period he was out of possession? See Cohen v. Cohen, 746
N.Y.S2d 22 (App. Div. 2002) (no right to rent for period during which a court
protective order barred cotenant from the property due to his assaultive
conduct).
The majority rule is against constructive ouster, in the absence of physical
exclusion. See, e.g., Reitmeier v. Kalinoski, 631 F. Supp. 565 (D.N.J. 1986)
(“[T]he mere fact that defendant does not wish to live with plaintiff on the
premises is of no import. What counts is that she could physically live on the
premises.”).
Which rule is better? If you were advising a client in a divorce, how would you
deal with co-owned property?
What if the property is so small that physical occupation by all cotenants is
impracticable? Some courts will also call this a “constructive ouster” of the
cotenants out of possession. Capital Fin. Co. Delaware Valley, Inc. v. Asterbadi,
942 A.2d 21 (N.J. Super. Ct. App. Div. 2008) (finding that a bank that was a
cotenant through foreclosure with the wife of the defaulting mortgagor was
constructively ousted from a single-family home).
4. Contribution: sharing the costs. “[T]he protection of the interest of each
cotenant from extinction by a tax or foreclosure sale imposes on each the duty
to contribute to the extent of his proportionate share the money required to
make such payments.” 2 AMERICAN LAW OF PROPERTY §6.17. Because failure
to pay carrying costs increases the risk that the asset will be lost to all cotenants,
every concurrent owner has an obligation to pay her share. See also Beshear v.
Ahrens, 709 S.W.2d 60 (Ark. 1986) (allowing contribution for mortgage
payments and property taxes as “expenditures necessarily made for the
protection of the common property”).
The majority rule is that cotenants out of possession need not share in the costs
of repairs in the absence of an agreement to do so. The idea is that questions
“of how much should be expended on repairs, their character and extent, and
whether as a matter of business judgment such expenditures are justified,” are

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too uncertain for judicial resolution. 2 AMERICAN LAW OF PROPERTY §6.18.
But then, in a partition action, cotenants who pay for repairs will get credit for
them—does that make sense? Further, some courts will allow contribution for
“necessary” repairs. Palanza v. Lufkin, 804 A.2d 1141 (Me. 2002) (finding
contribution towards necessary repairs justified, even though some of the
repairs had cosmetic effects). Some jurisdictions require a cotenant to provide
her fellow cotenants with notice and opportunity to object to the repairs in
order to be entitled to contribution. Anderson v. Joseph, 26 A.3d 1050 (Md.
Ct. Spec. App. 2011) (denying contribution for repairs that resulted from
“massive flooding” for failure to provide notice).
5. Accounting: the right to share in profits. Cotenants who allow others to use
the land, whether to exploit resources or to rent, must give other cotenants their
shares of any consideration received from the third-party users.
Recall that in at least some contexts one cotenant cannot unilaterally exercise
the right to exclude of the other cotenants. But that isn’t always true with respect
to productive uses of land by third parties with permission of one cotenant. To
be sure, in some states, a lease from only one co-owner is void and the lessee
can be ejected. But in other states, one cotenant can lease his interest, subject
only to a duty to account to the non-leasing cotenants for net profits.
Swartzbaugh v. Sampson, 54 P.2d 73 (Cal. Ct. App. 1936). Where there is such
a duty, to whom does the lessee owe rent? The answer is that she only owes
rent to the leasing cotenant, unless she ousts the other cotenants. Those other
cotenants must look to a contribution action against the leasing cotenant.
The usual rule is that cotenants must account for the raw value of resources
they extract themselves, but particularly bad misbehavior by a cotenant may lead
to an award of the processed value. Kirby Lumber Co. v. Temple Lumber Co.,
83 S.W.2d 638 (Tex. 1935) (raw value of timber where timber was taken in good
faith); cf. White v. Smyth, 214 S.W.2d 967 (Tex. 1948) (cotenant who mined
asphalt without consent from other cotenants had to account for net profits,
although he took no more than his one-ninth interest—resource could not be
partitioned in kind because the quality and quantity of asphalt varied sharply

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across the parcel in ways that could not be easily determined; cotenant couldn’t
take the most easily mined resources for himself and make his own partition).
Absent an ouster, an accounting usually just requires the cotenant to share the
actual value received, not the fair market value. Suppose a lease claims to be
nonexclusive and to only lease one cotenant’s share, and is for half of the fair
market rental value of the property. What should happen when the other
cotenant seeks an accounting? See Annot., 51 A.L.R.2d 388 (1957). Suppose
the lease is made by one cotenant to spite or harm another? Cf. George v.
George, 591 S.W.2d 655 (Ark. Ct. App. 1979) (where 99-year lease carried
nominal rent and the court found an intent to defraud the cotenant, the lease
was set aside).
6. Tenants in possession; tenants out of possession. Martin applies the
majority rule that—absent ouster—a cotenant in possession need not pay
anything to cotenants out of possession if she lives on and farms the land,
absent an ouster. DesRoches v. McCrary, 24 N.W.2d 511 (Mich. 1946) (no duty
of cotenant in possession to pay rent to other cotenants). Reciprocally, there is
generally no ouster if one cotenant requests her share of the fair rental value of
the land from the occupying cotenant, and the occupying cotenant denies the
request. Von Drake v. Rogers, 996 So. 2d 608 (La. Ct. App. 2008) (“A co-owner
in exclusive possession may be liable for rent, but only beginning on the date
another co-owner has demanded occupancy and been refused.”) (emphasis added).
But a few cases hold that denying a request for rent constitutes an ouster.
Eldridge v. Wolfe, 221 N.Y.S. 508 (1927).
Why might courts have developed a practice of requiring cotenants to account
for profits from mining and cutting lumber, but not for profits from their own
farming or residential uses of co-owned property? Logically, the cotenant in
possession should have to pay—she is receiving a benefit from using the land,
the fair market rental value of the property, and the other cotenants are not. As
Martin itself proves, if she did rent the land to a third party, she would be
required to share that benefit with the other co-owners. This rule creates an
incentive for the cotenant to stay in possession rather than renting the land out,
even if renting to a third party would be more efficient overall.

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7. The relationship between contribution and accounting. If one cotenant
occupies the property, with no ouster, and seeks contribution from the nonoccupant for his share of the taxes and insurance, can the non-occupant offset
the amounts due by the value of living on the property to the occupant? Many
courts say yes. See, e.g., Barrow v. Barrow, 527 So. 2d 1373 (Fla. 1988) (occupant
can only recover contribution if non-occupant’s proportionate share of
expenses is greater than the value of occupying the property); Esteves v. Esteves,
775 A.2d 163 (N.J. Super. Ct. App. Div. 2001) (parents who occupied house for
18 years were entitled to be reimbursed by their son for half of the expenses of
mortgage and maintenance, but the son was allowed to set off the amount equal
to the reasonable value of the parents’ sole occupancy). This view is not strictly
consistent with the majority rule that non-ousting tenants are not liable to nonpossessing cotenants for rent, because it means that the occupant is essentially
paying the non-occupant for being able to live on the land. Is this rule, which
will often keep much actual cash from changing hands nonetheless fair?
The minority view is that no defensive offset is available against a cotenant in
possession, absent ouster. Yakavonis v. Tilton, 968 P.2d 908 (Wash. Ct. App.
1998); Baird v. Moore, 141 A.2d 324 (N.J. App. Div. 1958) (cotenant out of
possession may not offset value of occupation if cotenant’s possession is not
adverse). Which rule makes more logical sense? More practical sense?
Basically, courts often have enough flexibility to rule in the direction the equities
point—finding that contribution is or isn’t available. The need to balance the
harms from imposition of unexpected costs on cotenants out of possession with
the harms to the property’s value from negligent co-owners also gives courts
flexibility. Ultimately, because partition is always available to cotenants who
truly can’t agree, it makes sense for courts to point them towards partition if
they’re fighting over maintenance and repairs.
In Martin, when calculating Garis and Peggy’s 1/8th share of the “net rent,” what
expenses should be deducted? Can they be required to pay a share of the costs
of developing the mobile home park, such as putting in sewage lines and
electrical connections? Note that a cotenant is generally not entitled to
contribution from other cotenants for the costs of improving the property (see

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note 9 below). But, on partition, the improver is entitled to the part of the
property that’s been improved, or in case of sale to the lesser of (1) the increase
in value due to the improvement or (2) the cost of the improvement. Should
that rule be applied in an accounting as well?
Lewis suggests that courts use ouster to enagage in the “equitable secondguessing that so often blurs crystalline rules.” Compare Spiller v. Mackereth, 334
So. 2d 859 (Ala. 1976) (lock change wasn’t ouster), with Morga v. Friedlander,
680 P.2d 1267 (Ariz. Ct. App. 1984) (lock change was ouster). In effect, courts
use ouster, plus the majority rule allowing offset of the value of an occupying
cotenant’s possession in an action for contribution, to nullify the formal rule
that any cotenant can occupy the land rent-free, regardless of the size of his or
her share, and still seek contribution for necessary expenses.
8. Quasi-fiduciary duties of good faith. Cotenants are fiduciaries for each other,
at least if they receive their interests in the same will or grant, or through the
same inheritance. Poka v. Holi, 357 P.2d 100 (Haw. 1960) (cotenants have
fiduciary obligation to give other cotenants adequate notice of adverse claims
to the property); but see Wilson v. S.L. Rey, Inc., 21 Cal. Rptr. 2d 552 (Ct. App.
1993) (cotenants who acquire interests at different times by different
instruments have no fiduciary relationship).
If one co-tenant buys the property at a tax sale or a foreclosure sale, the title is
shared with the other co-tenants: for these purposes, the co-tenant is a fiduciary
for the other co-tenants. Johnson v. Johnson, 465 S.W.2d 309 (Ark. 1971); but
see Stevenson v. Boyd, 96 P. 284 (Cal. 1908) (finding assertion of cotenant’s
claim barred by laches after four-year delay). However, the purchasing cotenant can seek contribution from the others, so that they bear their fair share
of the cost of removing the lien or mortgage. Why would the courts create such
a fiduciary duty? What is the abusive practice that they fear?
9. Improvements. Any cotenant has the right to make improvements to the
property, but other cotenants are not required to contribute. See Knight v.
Mitchell, 240 N.E.2d 16 (Ill. Ct. App. 1968) (cotenant couldn’t seek
contribution for developing and running oil wells, though he could set off
necessary operating expenses in other cotentant’s action for accounting of his

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profits); Johnie L. Price, The Right of a Cotenant to Reimbursement for Improvements to
the Common Property, 18 BAYLOR L. REV. 111 (1966).
In most states, the interests of the improver will be protected if that won’t harm
the interests of the other cotenants. This usually allows the improver to recoup
the added value, if any, resulting from his improvements on partition, or in
accounting for rents and profits. Graham v. Inlow, 790 S.W.2d 428 (Ark. 1990).
But if improvements fail to pay off, the improver is not compensated—he bears
all the risk. A few cases limit recovery to the smaller of the amount of value
added by an improvement or its costs. The risk is borne by the improver, but
the rewards are shared. Which rule makes more sense?
10. Waste. If one cotenant damages the property or harms its value, other
cotenants may have claims for waste. While the ordinary remedy for waste is
treble damages, courts will normally just hold the tenant in possession
accountable for net profits from exploiting the property, as explained above in
the discussion of removing timber and similar resources. CASNER, AMERICAN
LAW OF PROPERTY, §6.15. What effects does that rule have on the use of land?
Waste claims are correspondingly difficult to win. Davis v. Byrd, 185 S.W.2d
866 (Mo. 1945) (mining by one cotenant isn’t waste as long as the other
cotenants aren’t excluded and the miner doesn’t willfully or negligently injure
the land); Hihn v. Peck, 18 Cal. 640 (1861) (cotenant may remove valuable
timber “to an extent corresponding to [his] share of the estate” without
commiting waste); Prairie Oil & Gas Co. v. Allen, 2 F.2d 566 (9th Cir. 1924)
(cotenant can produce oil without other cotenants’ consent, but cannot exclude
other cotenants from exercising the same right). Consider whether time
matters: should the standard for what constitutes waste vary depending on
whether the other interest-holders have present interests (and could act now to
reap their own benefits, albeit at greater cost than waiting) or future interests
(and thus can only wait for their ownership interests to attach)?
11. Adverse possession by cotenants against other cotenants. Because each
cotenant has the right to possession, it can be difficult for one cotenant to
possess adversely to another. Under New York law, a cotenant must have
exclusive possession for ten years before the statutory adverse possession can

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even begin to run against other cotenants. Myers v. Bartholomew, 697 N.E.2d
160 (N.Y. 1998). After all, the fact that someone else is living on and using the
land lacks its ordinary significance to cotenants. Ex parte Walker, 739 So. 2d 3
(Ala. 1999) (cotenant’s redemption of property at tax sale in 1934, payment of
all property taxes, exclusive possession for over 50 years, demolition of old
buildings, and harvesting of timber did not show adverse possession against
other cotenants); Tremayne v. Taylor, 621 P.2d 408 (Idaho 1980) (“A cotenant
who claims to have adversely possessed the interest of his cotenants must prove
that the fact of adverse possession was ‘brought home’ to the cotenants.”); Hare
v. Chisman, 101 N.E.2d 268 (Ind. 1951) (husband’s sole possession of house
after wife died was not adverse to his cotenants, her heirs, since it “was not an
unnatrual act of them to permit their father to occupy this property, collect the
income, pay the expense, and enjoy the surplus”); West v. Evans, 175 P.2d 219
(Cal. 1946) (cotenant out of possession must have either actual or constructive
notice of hostility; recordation of a deed isn’t sufficient notice); GA. CODE ANN.
§44-6-123 (allowing cotenant to gain title by adverse possession if she “effects
an actual ouster, retains exclusive possession after demand, or gives [her]
cotenant express notice of adverse possession”).
Adverse possession is, however, not entirely impossible in these circumstances.
See Johnson v. James, 377 S.W.2d 44 (Ark. 1964) (presumption against adversity
is even stronger when cotenants are related, though presumption was overcome
through sole possession for 36 years, where cotenants knew of a will
purportedly granting occupant sole possession and said nothing); McCree v.
Jones, 430 N.E.2d 676 (Ill. Ct. App. 1981) (finding in favor of claimant who’d
been in possession for thirty years under a quitclaim deed purporting to give
title to the entire property).
12. Intangible assets. In the U.S., “joint authorship” occurs when two or more
authors contribute to the creation of a unitary work of authorship, such as a
song with music written by one author and lyrics written by another. (Here,
“joint” doesn’t mean what it means in real property. There is no right of
survivorship, so the ownership rights behave more like what you know as
tenancy in common.) Courts have interpreted copyright law to impose a default
rule, absent explicit agreement, that each joint author owns an equal share of

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the resulting work, even if her contribution was substantially less than that of
other authors. This rule, which is not mandated by the statute, has led courts
to be extremely reluctant to find joint authorship when there is one clear
“dominant” author and someone else seeks to be recognized as a co-author.
Because copyrights are intangible, they cannot be partitioned, nor can there be
an ouster of one co-author by another. Instead, each co-owner can grant a
nonexclusive license to other people to use the work—whether that means
putting a song on a record, using a sample of it in a new song, or using it in a
television show. This right to license is subject only to a duty to account to the
other co-owners for their shares of the resulting profits. An exclusive license
requires the agreement of all the co-owners acting together.
Suppose one co-author, angry at her co-author, grants Quentin Tarantino a
nonexclusive license to turn their book into a movie for $1, and duly gives her
co-author fifty cents. Because of this license, no other moviemaker will buy the
rights, fearing competition from Tarantino’s movie. Has the licensor
committed waste? Would it matter if, instead of acting out of malice, the coauthor granted the $1 license because she believed in Tarantino’s vision for the
film and only a low price would induce him to take on the book as his next
project? Do tenancy in common rules work for property that can’t be
exclusively possessed?
13. Concluding thoughts: crystals and mud. Transaction costs—the costs of
managing the property and getting cotenants to agree—can be very high among
cotenants, as compared to the costs of having a manager with authority to make
decisions for the group. (For example, consider the issue of approving a
particular tenant who wishes to rent the property and have exclusive
possession.) The actively engaged cotenant who rents to a third party gets only
some of the gain, but takes most of the risk. After all, if the renter turns into a
nightmare who trashes the place, the cotenant who rented the property will be
liable for any harm; but the other cotenants might sue to share in any gains that
materialize. Professor Carol Rose argues that courts sometimes impose
equitable duties—muddy rules—on parties in order to replicate the results that
would have occurred had they trusted each other and behaved fairly and
decently towards one another. Thus, our rules about co-ownership are not just

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rules about economic efficiency, but about how people should behave. See
generally Carol Rose, Crystals and Mud in Property Law, 40 STAN. L. REV. 577 (1988).
Does this help you make any sense of the co-ownership rules?

2. Partition
Delfino v. Vealencis
436 A.2d 27 (Conn. 1980)
ARTHUR H. HEALEY, Associate Justice.
The central issue in this appeal is whether the Superior Court properly ordered the sale,
pursuant to General Statutes s 52-500, 1 of property owned by the plaintiffs and the
defendant as tenants in common.
The plaintiffs, Angelo and William Delfino, and the defendant, Helen C. Vealencis,
own, as tenants in common, real property located in Bristol, Connecticut. The property
consists of an approximately 20.5 acre parcel of land and the dwelling of the defendant
thereon. The plaintiffs own an undivided 99/144 interest in the property, and the
defendant owns a 45/144 interest. The defendant occupies the dwelling and a portion
of the land, from which she operates a rubbish and garbage removal business. 3
Apparently, none of the parties is in actual possession of the remainder of the property.
The plaintiffs, one of whom is a residential developer, propose to develop the property,
upon partition, into forty-five residential building lots.

1 General Statutes s 52-500 states: “Sale of Real or Personal Property Owned by Two or More. Any court of

equitable jurisdiction may, upon the complaint of any person interested, order the sale of any estate, real or
personal, owned by two or more persons, when, in the opinion of the court, a sale will better promote the
interests of the owners.… A conveyance made in pursuance of a decree ordering a sale of such land shall vest
the title in the purchaser thereof, and shall bind the person entitled to the life estate and his legal heirs and any
other person having a remainder interest in the lands; but the court passing such decree shall make such order in
relation to the investment of the avails of such sale as it deems necessary for the security of all persons having
any interest in such land.”
3 The defendant’s business functions on the property consist of the overnight parking, repair and storage of

trucks, including refuse trucks, the repair, storage and cleaning of dumpsters, the storage of tools, and general
office work. No refuse is actually deposited on the property.

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In 1978, the plaintiffs brought an action in the trial court seeking a partition of the
property by sale with a division of the proceeds according to the parties’ respective
interests. The defendant moved for a judgment of in-kind partition and the
appointment of a committee to conduct said partition. The trial court, after a hearing,
concluded that a partition in kind could not be had without “material injury” to the
respective rights of the parties, and therefore ordered that the property be sold at
auction by a committee and that the proceeds be paid into the court for distribution to
the parties.
On appeal, the defendant claims essentially that the trial court’s conclusion that the
parties’ interests would best be served by a partition by sale is not supported by the
findings of subordinate facts, and that the court improperly considered certain factors
in arriving at that conclusion. In addition, the defendant directs a claim of error to the
court’s failure to include in its findings of fact a paragraph of her draft findings.
General Statutes s 52-495 authorizes courts of equitable jurisdiction to order, upon the
complaint of any interested person, the physical partition of any real estate held by
tenants in common, and to appoint a committee for that purpose. 7 When, however,
in the opinion of the court a sale of the jointly owned property “will better promote
the interests of the owners,” the court may order such a sale under s 52-500.
It has long been the policy of this court, as well as other courts, to favor a partition in
kind over a partition by sale. … Due to the possible impracticality of actual division,
this state, like others, expanded the right to partition to allow a partition by sale under
certain circumstances. The early decisions of this court that considered the partitionby-sale statute emphasized that “(t)he statute giving the power of sale introduces … no
new principles; it provides only for an emergency, when a division cannot be well made,
in any other way. The court later expressed its reason for preferring partition in kind
when it stated: “(A) sale of one’s property without his consent is an extreme exercise
of power warranted only in clear cases.” Ford v. Kirk, 41 Conn. 9, 12 (1874). Although
under General Statutes s 52-500 a court is no longer required to order a partition in
kind even in cases of extreme difficulty or hardship; it is clear that a partition by sale

7 If the physical partition results in unequal shares, a money award can be made from one tenant to another to

equalize the shares.

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should be ordered only when two conditions are satisfied: (1) the physical attributes of
the land are such that a partition in kind is impracticable or inequitable; and (2) the
interests of the owners would better be promoted by a partition by sale. Since our law
has for many years presumed that a partition in kind would be in the best interests of
the owners, the burden is on the party requesting a partition by sale to demonstrate
that such a sale would better promote the owners’ interests.
The defendant claims in effect that the trial court’s conclusion that the rights of the
parties would best be promoted by a judicial sale is not supported by the findings of
subordinate facts. We agree.
Under the test set out above, the court must first consider the practicability of
physically partitioning the property in question. The trial court concluded that due to
the situation and location of the parcel of land, the size and area of the property, the
physical structure and appurtenances on the property, and other factors, a physical
partition of the property would not be feasible. An examination of the subordinate
findings of facts and the exhibits, however, demonstrates that the court erred in this
respect.
It is undisputed that the property in question consists of one 20.5 acre parcel, basically
rectangular in shape, and one dwelling, located at the extreme western end of the
property. Two roads, Dino Road and Lucien Court, abut the property and another,
Birch Street, provides access through use of a right-of-way. Unlike cases where there
are numerous fractional owners of the property to be partitioned, and the practicability
of a physical division is therefore drastically reduced; in this case there are only two
competing ownership interests: the plaintiffs’ undivided 99/144 interest and the
defendant’s 45/144 interest. These facts, taken together, do not support the trial court’s
conclusion that a physical partition of the property would not be “feasible” in this case.
Instead, the above facts demonstrate that the opposite is true: a partition in kind clearly
would be practicable under the circumstances of this case.
Although a partition in kind is physically practicable, it remains to be considered
whether a partition in kind would also promote the best interests of the parties. In
order to resolve this issue, the consequences of a partition in kind must be compared
with those of a partition by sale.

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The trial court concluded that a partition in kind could not be had without great
prejudice to the parties since the continuation of the defendant’s business would hinder
or preclude the development of the plaintiffs’ parcel for residential purposes, which
the trial court concluded was the highest and best use of the property. The court’s
concern over the possible adverse economic effect upon the plaintiffs’ interest in the
event of a partition in kind was based essentially on four findings: (1) approval by the
city planning commission for subdivision of the parcel would be difficult to obtain if
the defendant continued her garbage hauling business; (2) lots in a residential
subdivision might not sell, or might sell at a lower price, if the defendant’s business
continued; (3) if the defendant were granted the one-acre parcel, on which her
residence is situated and on which her business now operates, three of the lots
proposed in the plaintiffs’ plan to subdivide the property would have to be consolidated
and would be lost; and (4) the proposed extension of one of the neighboring roads
would have to be rerouted through one of the proposed building lots if a partition in
kind were ordered. The trial court also found that the defendant’s use of the portion
of the property that she occupies is in violation of existing zoning regulations. The
court presumably inferred from this finding that it is not likely that the defendant will
be able to continue her rubbish hauling operations from this property in the future.
The court also premised its forecast that the planning commission would reject the
plaintiffs’ subdivision plan for the remainder of the property on the finding that the
defendant’s use was invalid. These factors basically led the trial court to conclude that
the interests of the parties would best be protected if the land were sold as a unified
unit for residential subdivision development and the proceeds of such a sale were
distributed to the parties.
… The defendant claims that the trial court erred in finding that the defendant’s use of
a portion of the property is in violation of the existing zoning regulations, and in
refusing to find that such use is a valid nonconforming use. … [T]he court’s finding in
this regard must be stricken as unsupported by sufficient competent evidence. We are
left, then, with an unassailed finding that the defendant’s family has operated a “garbage
business” on the premises since the 1920s and that the city of Bristol has granted the
defendant the appropriate permits and licenses each year to operate her business. There
is no indication that this practice will not continue in the future.

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Our resolution of this issue makes it clear that any inference that the defendant would
probably be unable to continue her rubbish hauling activity on the property in the
future is unfounded. We also conclude that the court erred in concluding that the city’s
planning commission would probably not approve a subdivision plan relating to the
remainder of the property. Any such forecast must be carefully scrutinized as it is
difficult to project what a public body will decide in any given matter. … The court’s
finding indicates that only garbage trucks and dumpsters are stored on the property;
that no garbage is brought there; and that the defendant’s business operations involve
“mostly containerized … dumpsters, a contemporary development in technology
which has substantially reduced the odors previously associated with the rubbish and
garbage hauling industry.” These facts do not support the court’s speculation that the
city’s planning commission would not approve a subdivision permit for the
undeveloped portion of the parties’ property.
The court’s remaining observations relating to the effect of the defendant’s business
on the probable fair market value of the proposed residential lots, the possible loss of
building lots to accommodate the defendant’s business 13 and the rerouting of a
proposed subdivision road, which may have some validity, are not dispositive of the
issue. It is the interests of all of the tenants in common that the court must consider;
and not merely the economic gain of one tenant, or a group of tenants. The trial court
failed to give due consideration to the fact that one of the tenants in common has been
in actual and exclusive possession of a portion of the property for a substantial period
of time; that the tenant has made her home on the property; and that she derives her
livelihood from the operation of a business on this portion of the property, as her
family before her has for many years. A partition by sale would force the defendant to
surrender her home and, perhaps, would jeopardize her livelihood. It is under just such
circumstances, which include the demonstrated practicability of a physical division of
the property, that the wisdom of the law’s preference for partition in kind is evident.
…Since the property in this case may practicably be physically divided, and since the
interests of all owners will better be promoted if a partition in kind is ordered, we

13 It should be noted in this regard that a partition in kind would result in a physical division of the land according

to the parties’ respective interests. The defendant would, therefore, not obtain any property in excess of her
beneficial share of the parties’ concurrent estates.

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conclude that the trial court erred in ordering a partition by sale, and that, under the
facts as found, the defendant is entitled to a partition of the property in kind.

Subdivision plot plan for the 20.5 acre parcel

Notes and Questions
1. Owelty. * Courts have the equitable power to order owelty payments when it is
impractical to partition in kind according to exact shares, but when monetary
payments can adjust for the variance in the value of the parcels from the
interests held by the respective cotenants. See Dewrell v. Lawrence, 58 P.3d 223,

* This charming term is followed in Black’s Legal Dictionary by another winner: To quote Blackstone, “Owling, so

called from its being usually carried on in the night, … is the offense of transporting sheep or wool out of this
kingdom.”

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227 (Okla. Civ. App. 2002); ALA. CODE § 35-6-24 (2010); CAL. CIV. PROC.
CODE § 873.250 (West 2009).

2. Denouement. Thomas Merrill and Henry Smith did some digging for their
property casebook, Property: Principles and Policies. Apparently, Vealencis was a
difficult client and antagonized the trial judge, which meant that her victory on
the law did not translate to victory in the real world. In Delfino, Vealencis was
awarded three lots, including her homestead, a total of about one acre worth
$72,000. (See lot 135-1 on far left of image.) She was also required to pay
$26,000 in owelty to the Delfinos to compensate them for the harm her garbage
operation imposed on the proposed subdivision.
While Vealencis had a 5/16 interest in the land, her net benefit was only $46,000,
or less than one-fourth of what she was due. Three years later, the Delfinos
sold their roughly 19 acres to a developer for $725,000. The developer
separated Vealencis’ lot from the rest of the subdivision by a two-foot-wide
strip of land (see lots 39 and 40). This deprived her of access to Dino Road and
its sewer and water connections, as well as preventing her trucks from entering
the subdivision (even though she’d already paid for diminishing the value of the
homes in the subdivision). Vealencis’ only access to the land was a 16.5 foot
easement over lot 9C. She was required to use an artesian well and a septic tank.
See Manel Baucells & Steven A. Lippman, Justice Delayed Is Justice Denied: A
Cooperative Game Theoretic Analysis to Hold-up in Coownership, 22 CARDOZO L. REV.
1191 (2001). Vealencis died in 1990, still running the garbage business.
Why was she required to pay owelty up-front rather than waiting to see if the
harm materialized and allowing the Delfinos to recover in an action for nuisance
later? Is there anything the court could have done in its division to avoid the
unfairness to Vealencis? And what does this result suggest about the
appropriate choice of remedies—injunction or damages—in nuisance cases?
3. Implementing partition in kind. In a partition in kind, how should the court
determine who gets what land? See Anderson v. Anderson, 560 N.W.2d 729
(Minn. Ct. App. 1997) (cotenants awarded parcel on which they had a
residence); Barth v. Barth, 901 P.2d 232 (Okla. Ct. App. 1995) (considering
cotenant’s ownership of adjacent land). In Louisiana, partition in kind is not

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allowed unless parcels of equal value can be created, and parcels must be drawn
by lot. See McNeal v. McNeal, 732 So. 2d 663 (La. Ct. App. 1999). Is this a
good idea? What about “I cut, you choose” as a way of implementing partition
in kind? There’s a large literature in game theory, mathematics, and computer
science on these problems, dealing with more than two parties, heterogenous
resources, etc. Very little of this seems to have made its way into law. But see
Note, Cutting the Baby in Half, 77 BROOK. L. REV. 263 (2011) (surveying some
of the literature).
Some state laws also provide for allotment, in which the court allocates part of
the property to a cotenant—which can include an owelty payment if the
allocated portion is more than the cotenant’s share—and then sells the
remainder. E.g., 25 DEL. CODE §730; S.C. CODE ANN. §15-61-50; VA. CODE
ANN. §8.01-83. Sometimes a cotenant must show an equitable claim to
allotment in order to get it. HAW. REV. STAT. §§668-7(5)-(6).
4. Partition by sale as the default? Consider the court’s claims about the
preference for partition in kind. Partition in kind will essentially always diminish
the market value of the land compared to partition by sale. Do other, intangible
interests nonetheless adequately justify a preference for partition in kind?
Ark Land Co. v. Harper, 599 S.E.2d 754 (W. Va. 2004), suggests that a rule
favoring maximization of market value “would permit commercial entities to
always ‘evict’ pre-existing co-owners, because a commercial entity’s interest in
property will invariably increase its value.”
Though partition in kind is supposedly favored by the law on the books,
governing legal practice is different, as the Uniform Law Commission has
written:
Despite the overwhelming statutory preference for partition in
kind, courts in a large number of states typically resolve partition
actions by ordering partition by sale which usually results in
forcing property owners off their land without their consent. This
occurs even in cases in which the property could easily have been
divided in kind or an overwhelming majority of the cotenants had

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opposed partition by sale or even in some cases when the only
remedy any cotenant petitioned the court to order was partition
in kind and not partition by sale.
UNIFORM PARTITION OF HEIRS PROPERTY ACT, Prefatory Note.

5. Heirs Property. “Heirs’ property,” that is, property whose ownership is
divided by intestate succession over several generations, has resulted in highly
fractionated ownership of land in many African-American families. The ULC
explains that “many of these owners [in possession] believe that their property
ownership is secure because they pay property taxes, they live on the land, and
they make productive use of the land. They also believe that their property may
only be sold against their will if a majority or more of their cotenants agree,
which gives some of these families with a large number of members with an
interest in the property false confidence that their ownership is extremely
secure.” Id. But their rights are, in fact, highly insecure. “Unfortunately, the
first time that many of these owners are informed about the actual legal rules
governing partition is after a partition action has been filed, and often after
critical, early court rulings have been made against them.” Id.
When heirs’ property became valuable for development, third parties would
often acquire the interest of a distant relative who has a fractional share and
petition for partition. Given the often hundreds of people who own interests
in a piece of heirs’ property, courts generally hold that partition in kind is
impossible. The resulting sale can dispossess people who have lived on or used
the land for decades; family members who would like to keep the land are rarely
able to outbid developers, who nonetheless usually pay substantially belowmarket prices because of the forced nature of the sale. Ironically, once sale is
ordered, courts will not overturn a sale price unless it “shocks the conscience,”
even though the rationale for ordering the sale was that it would provide the
cotenants with more benefit than partition in kind. Sales have been confirmed
even though the property sold for twenty percent or less of its market value. In
many states, family members who oppose partition by sale can even be required
to pay the petitioner’s attorneys’ fees. Thomas Mitchell—a law professor at
Texas A&M University, a national expert on heirs property, and the Reporter

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for the Uniform Law Commission’s Uniform Partition of Heirs Property Act—
explains: “It would be like if you owned incredibly small shares of Microsoft,
and you were given the right to go to your local state court and file a motion to
liquidate Microsoft at a fire sale.”
The problem is substantial. Anna Stolley Persky, In the Cross-Heirs, ABA
JOURNAL (May 2, 2009):
According to the Land Loss Prevention Project, a Durham, N.C.based organization that provides legal support to financially
distressed farmers and landowners in the state, of the 15 million
acres of land acquired by African-Americans after Emancipation,
about 2 million remain owned by their descendants. Nationally,
it’s estimated that African-American land ownership has
decreased from as much as 19 million acres in 1910 to 1.5 million
acres in 1997, according to the Southern Coalition for Social
Justice.
The problem also occurs in urban areas, where a family home may have been
passed down through several generations. Barriers to transfers by will include
poverty, lack of knowledge, or an unwillingness to cause family conflict by
picking specific heirs. Heirs property created significant problems in New
Orleans after Hurricane Katrina, when many people who thought they were
owners were unable to show title to their homes.
Recent dramatic investigative reports have drawn increased attention to the
decades of heirs property abuse documented by scholars and activists. See, e.g
VICE, HOW PROPERTY LAW IS USED TO APPROPRIATE BLACK LAND (Aug. 11,
2020), https://youtu.be/ls3P_FicO7I; ProPublica, Dispossessed: How Black
Families are Losing Their Land, https://www.propublica.org/series/dispossessed.
These combined efforts have built momentum behind the Uniform Partition of
Heirs’ Property Act, a model state law that has been enacted in 19 states as of
2021. The UPHPA provides co-owners with a right of first refusal to buy the
petitioning co-owner’s share, and, if they do not exercise that right, attempts to
create a more competitive bidding process. The expectation is that even coowners who can’t raise enough money to buy the entire parcel at fair market

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value, as at a traditional partition sale, are more likely to be able to buy another
cotenant’s fractional share. Under the Act, courts can also consider the
historical and cultural value of the land to the people living on it, not just the
economic value of the land, in deciding whether to reject partition by sale. See,
e.g., Chuck v. Gomes, 532 P.2d 657 (Haw. 1975) (Richardson, C.J., dissenting):
[T]here are interests other than financial expediency which I
recognize as essential to our Hawaiian way of life. Foremost is
the individual’s right to retain ancestral land in order to
perpetuate the concept of the family homestead. Such right is
derived from our proud cultural heritage. . . . [W]e must not lose
sight of the cultural traditions which attach fundamental
importance to keeping ancestral land in a particular family line.

6. Preventing Fractionation. The common law operated under a presumption
that grants to multiple grantees created a joint tenancy—precisely the opposite
of the modern presumption in favor of a tenancy in common. Should we return
to a presumption in favor of joint tenancy, at least for family homes where
children are the heirs by intestacy?
Or should small fractional interests disappear over time? Recall that
traditionally, one cotenant’s possession is not adverse to any other cotenant’s
possession, unless there is an ouster. Although cotenants are due their share of
rents or other income arising from use of the property, mere failure to pay them
does not start the adverse possession clock running. Would it make sense to
change these rules? What are the risks from doing so? (There would be due
process and takings issues if legislatures tried to extinguish fractional interests
outright. *)

Due to previous legislation attempting to assimilate members of Indian tribes into (white) American society,
combined with generations of inherited interests, reservation land has often become highly fractionated. Many
allotments have several hundred owners. Fractional shares have been denominated in millions, billions, and even
54 trillion. For example, one tract of forty acres produced $1080 in annual income. It had 439 owners, onethird of whom received less than five cents in annual rent and two-thirds of whom received less than a dollar.
The largest interest holder received $82.85 a year, while the smallest was entitled to one penny every 177 years.
The administrative costs to the Bureau of Indian Affairs of managing this distribution were over $17,000 per
*

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7. Contracting around partition rights. Should cotenants be able to waive their
right to partition? See Gore v. Beren, 867 P.2d 330 (Kan. 1994) (cotenants
agreed to a right of first refusal if any cotenant wished to sell; this agreement
impliedly waived the right to partition and didn’t violate the Rule Against
Perpetuities because it was personal to the parties and would necessarily end
during the lifetime of one of the parties); see also Michalski v. Michalski, 142
A.2d 645 (N.J. Super. 1958) (otherwise valid restriction on right to partition may
be unenforceable when circumstances have changed so much that enforcement
would be unduly harsh); Reilly v. Sageser, 467 P.2d 358 (Wash. Ct. App. 1970)
(option to purchase from cotenant at cost of cotenant’s investment in land and
improvements was valid unless both parties agreed or one party substantially
breached other elements of agreement); cf. Low v. Spellman, 629 A.2d 57 (Me.
1993) (invalidating right of first refusal given to grantors, heirs, and assigns as
in violation of the Rule Against Perpetuities; fixed price of $6500 also created
unreasonable restraint on alienation).
8. Partitioning a future interest. Can owners who own only a future interest
seek partition of that interest? At common law, the answer was no because they
lacked a present possessory interest, and some states still adhere to this rule. See,
e.g., Trieber v. Citizens State Bank, 598 N.W.2d 96 (N.D. 1999). Many states,
however, allow co-owners of vested future interests to seek partition of that
interest. See, e.g., ARK. CODE §18-60-401.

year. Hodel v. Irving, 481 U.S. 704 (1987). Fractionation makes productive use of land almost impossible.
Indian Land Consolidation Act Amendment, S. Rep. No. 98-632, at 82-83 (1984), reprinted in 1984 U.S.C.C.A.N.
5470. Allotment lands can only be leased or partitioned with the unanimous consent of all interest holders. The
Indian Land Consolidation Act of 1983 attempted to solve these problems by mandating that extremely
fractionated interests would escheat to the relevant tribe, without compensation to the fractional owners. The
Supreme Court invalidated this law as an unconstitutional taking, Hodel, and likewise invalidated the attempted
replacement, Babbitt v. Youpee, 519 U.S. 234 (1997).
The American Indian Probate Reform Act of 2004 tried again; the Department of the Interior runs a land
consolidation program under which it buys back fractionated shares. Under the AIPRA, if Indian land would
pass by intestate succession, the Department of the Interior can buy any interests in the land that are under 5%.
This purchase can occur even if the heir objects, unless the heir is living on the land. Other heirs, co-owners,
and the tribe on whose reservation the land is located can also buy the land, as long as they pay fair market value
and have the consent of anyone holding more than a 5% interest.

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9. Partitioning personal property. Are there circumstances in which a physical
partition of personal property would make sense? How would you divide up a
photo album with hundreds of photographs? See In re Estate of McDowell,
345 N.Y.S.2d 828 (Sur. Ct. 1973) (custody of rocking chair desired by both heirs
should be divided in six-month increments, remainder to the survivor); Ronen
Perry & Tal Zarsky, Taking Turns, 43 FLA. ST. U. L. REV. (2015). This solution
raises a more general question: why don’t we see more co-ownership of real
property on the time-share model?

C. Joint Tenancy
Joint tenancy (in some jurisdictions called a “joint tenancy with right of survivorship”
and abbreviated “JTWROS”) is a form of ownership that can be unilaterally severed
and turned into a tenancy in common. Its distinctive feature is the right of
survivorship: If a joint tenancy is not severed before a joint tenant’s death, that joint
tenant’s interest disappears and the remaining tenant continues to own an undivided
interest, allowing the survivor to avoid probate. Thus, joint tenancy is most widely
used today as a substitute for a will. *
In modern times, tenancy in common is preferred to other kinds of co-ownership. A
conveyance “to Alice and Beth” therefore creates a tenancy in common by default,
though it’s relatively standard to include “as tenants in common” to avoid all
uncertainty. The creation and continuation of a joint tenancy is beset with traps, even
though it may well be most co-owners’ preferred form of ownership for residential
property. Some states have statutes that appear to abolish the joint tenancy, but they
will often find joint tenancies with a right of survivorship if the intent to create them
is clear enough. See, e.g., McLeroy v. McLeroy, 40 S.W.2d 1027 (Tenn. 1931).

* Note that the federal government does not follow the fiction that nothing passes at death to the surviving joint

tenant; the decedent’s interest will be taxed as if it were transferred to the survivor, though if the joint tenants
are married no tax will be due.

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1. Creating a Joint Tenancy
The traditional test for the creation and continuation of a joint tenancy depended upon
the presence of the four “unities”: (1) time—the joint tenants’ interests were all
acquired at the same time; (2) title—the interests were all acquired by the same
document or by joint adverse possession; (3) interest—the tenants’ shares must all be
equal and undivided; and (4) possession—all joint tenants must have equal rights to
possess the whole (in the absence of an agreement to the contrary *:
Unless the unities existed at the tenancy’s inception, or if they were
broken at any subsequent point, the joint tenancy was automatically
severed, and the owners became tenants in common. This requirement
meant, for example, that the owner of property could not create a joint
tenancy in himself and others without first making use of a straw man.
Because all joint tenants had to receive their interest in the property at
the same time and by the same title, the owner had first to convey to a
third party, who would in turn convey the property back to the grantor
and the other tenants. They would then take in joint tenancy. Without
this purely formal step, however, they would be only tenants in common.
R. H. Helmholz, Realism and Formalism in the Severance of Joint Tenancies, 77 NEB. L. REV.
1 (1998). Today (as was already largely true in the 1950s), the necessity for using a straw
man to create a joint tenancy has been largely eliminated from American law,
sometimes by judicial decision but more often by statutory enactment. We will examine
this issue further below, when we discuss severance of a joint tenancy.
A conveyance “to Alice and Beth as joint tenants, and not as tenants in common,” will
create a joint tenancy in most states. See Kurpiel v. Kurpiel, 271 N.Y.S.2d 114 (N.Y.
Sup. Ct. 1966) (joint tenancy created). Most states consider that this language confirms
the grantor’s intent—“joint” alone might have been misunderstood by a layperson who
thinks that tenants in common are joint owners in a general sense, though some states

* At common law, joint tenants could not hold unequal shares, and attempting to create such a tenancy would

create a tenancy in common. However, modern courts are increasingly willing to accept a clearly shown intent
to hold unequal shares. See Moat v. Ducharme, 555 N.E.2d 897 (Mass. App. 1990) (unequal contributions); Jezo
v. Jezo, 127 N.W.2d 246 (Wis. 1964) (evidence of contrary intent can override presumption of equal shares).

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accept “to Alice and Beth jointly” as sufficient to create a joint tenancy. Compare
Downing v. Downing, 606 A.2d 208 (Md. 1992) (“to A and B as joint tenants” creates
a joint tenancy where the state statute provides that a tenancy in common is created
unless a written instrument “expressly provides that the property granted is to be held
in joint tenancy”), and Germaine v. Delaine, 318 So. 2d 681 (Ala. 1975) (“jointly as
tenants in common” created a joint tenancy where the deed indicated a clear intent for
survivorship), with Taylor v. Taylor, 17 N.W.2d 745 (Mich. 1945) (“jointly,” absent
circumstantial evidence of intent to create the legal effect of a joint tenancy, does not
suffice to create a joint tenancy); Montgomery v. Clarkson, 585 S.W.2d 483 (Mo. 1979)
(“jointly” is not “express declaration” of joint tenancy, as required by state statute);
Overheiser v. Lackey, 100 N.E. 738 (N.Y. 1913) (where the layman who prepared a
will used “jointly,” the will created a tenancy in common), and Householter v.
Householter, 164 P.2d 101 (Kan. 1945) (“jointly,” used five times in a will prepared by
a person who had served as a probate judge, created a joint tenancy).
In some states, precedents require more, usually specific invocation of a right of
survivorship. Compare Germaine v. Delaine, 318 So. 2d 681 (Ala. 1975) (deed to A and
B “jointly, as tenants in common and to the survivor thereof” created joint tenancy
because of survivorship language), with Hoover v. Smith, 444 S.E.2d 546 (Va. 1994)
(“to A and B as joint tenants, and not as tenants in common” was insufficient to create
a joint tenancy because it was not explicit about the right of survivorship).
In other states, however, use of that same language will cause problems. See, e.g.,
Hunter v. Hunter, 320 S.W.2d 529 (Mo. 1959) (will devising property to A and B “as
joint tenants with the right of survivorship” created life estates with remainder to the
survivor); Snover v. Snover, 502 N.W.2d 370 (Mich. Ct. App. 1993) (“to A and B as
joint tenants with full rights of survivorship and not as tenants in common” created
life estate in tenancy in common with remainder to survivor). Be sure you understand
what the problem is: under what circumstances will it make a difference whether A and
B have a joint tenancy, with right of survivorship, or instead have a tenancy in common
in life estate, with the remainder to the survivor? Courts sometimes refer to the latter
as an “indestructible” remainder, which is confusing language—the remainder can’t be
destroyed by the other cotenant, whereas a right of survivorship in a joint tenancy can
be unilaterally destroyed.

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It is vitally important to consult your state’s statutes and precedent before drafting a
conveyance to more than one owner. James v. Taylor, 969 S.W.2d 672 (Ark. App. Ct.
1998), is an example of how the law can lay traps for the well-intentioned but poorly
advised. The issue in the case was whether a deed conveyed property from a mother
to her three children as tenants in common or as joint tenants. The court of appeals
reversed an initial ruling that the conveyance created a joint tenancy. The deed named
the three children “jointly and severally, and unto their heirs, assigns and successors
forever,” and the mother retained a life estate. Two of the three children subsequently
died, and then the mother died. Melba Taylor, the surviving child, sought a declaration
that she was the sole owner, while the heirs of the other two children opposed her.
Arkansas, like most states, provides that every shared interest in land “shall be in
tenancy in common unless expressly declared in the grant or devise to be a joint
tenancy.” ARK. CODE ANN. § 18-12-603 (1987).
The heirs argued that any ambiguity therefore pointed to a tenancy in common,
whereas Taylor argued that her mother’s intent to create a joint tenancy could be
determined from the surrounding circumstances. The evidence of such intent was
relatively strong: Taylor testified that her mother told her lawyer that she wanted the
deed drafted so that, if one of her children died, the property would belong to the other
two children, and so on; and that her mother was upset when she learned, just before
her death, that there was a problem with the deed. In addition, after the first child died,
the mother drafted a new will splitting her property between her two living children
and giving nothing to the dead child’s heirs, and the mother deleted the names of each
dead child from bank accounts payable on death, leaving only Taylor’s name.
The court of appeals nonetheless held that the policy of the statute, favoring tenancy
in common unless a joint tenancy was expressly granted, overrode any inquiry into the
mother’s intent. While the words “joint tenancy” didn’t need to be used, some intent
to convey a survivorship estate needed to appear in the grant. The words “jointly and
severally” were insufficient, contradictory, and therefore meaningless in the context of
estates.
Assuming a court looked for extrinsic evidence of the drafter’s intent in a case involving
ambiguous language, what would constitute persuasive evidence of an intent to create
a joint tenancy?

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2. Severance of a Joint Tenancy
Severance is any act that destroys one or more of the four unities required to maintain
a joint tenancy. The legal consequence of severance is that the joint tenancy is
converted to a tenancy in common. (For those rare joint tenancies involving three or
more joint tenants, one joint tenant may sever the joint tenancy as to his interest, but
the others remain joint tenants with each other.) The traditional rule for severance
required either that all the tenants expressly agree to hold as tenants in common, or
that one of the tenants convey to a third person in order to destroy the unities
(particularly the unities of time and title), to turn a joint tenancy into a tenancy in
common. In modern times, a conveyance from oneself as joint tenant to oneself as
tenant in common is likely to succeed just as well as a conveyance by one tenant to a
straw owner plus a reconveyance from the straw. See Hendrickson v. Minneapolis Fed.
Sav. & Loan Ass’n, 161 N.W.2d 688 (Minn. 1968); Riddle v. Harmon, 162 Cal. Rptr.
530 (Cal. Ct. App. 1980); see also Countrywide Funding Corp. v. Palmer, 589 So. 2d
994 (Fla. Dist. Ct. App. 1991) (one joint tenant forged the other’s signature in
purported conveyance to himself; court held that his act severed the tenancy). But see
Krause v. Crossley, 277 N.W.2d 242 (Neb. 1979) (rejecting this modern trend and
requiring conveyance to a third party for an effective severance); L.B. 694, § 11, 1980
Neb. Laws 577 (codified as NEB. REV. STAT. § 76-118(4) (Reissue 1996)) (reversing
result in Krause and allowing self-conveyance to sever).
The largest problem in severance is one of surprise, which can occur whether or not a
third party straw is required to partipate in the severance. As Helmholz explains:
Since one joint tenant has always been able to sever the tenancy without
the concurrence or even the knowledge of the other, the possibility of a
severance that is unfair to the other has long existed. It can take several
forms, as where the joint tenant who has contributed nothing to the
purchase of the assets then severs unilaterally, thereby upsetting the
normal expectations of the other joint tenant. Its most extreme form is
the secret severance. If the tenant who severs secretly is the first to die,
the heirs or successors produce the severing document and take half of
the property. It accrues to them under the tenancy in common that was
the result of the severance. If the severing tenant survives, however, the
severing document is suppressed and the survivor takes the whole. The

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heirs or successors of the first to die get nothing. It is what the
economists call “strategic behavior.”
Helmholz, supra, at 25-26.
Why not impose a notice requirement for a deliberate severance? What about imposing
a requirement that a severing instrument be timely recorded in the public land records?
See CAL. CIV. CODE § 683.2 (West 1998) (if a joint tenancy is recorded, severance is
only effective against the non-severing tenant if the severance is recorded either before
the severing tenant’s death or, in limited circumstances, recorded within seven days
after death; the severing tenant’s right of survivorship is cut off even without
recording); MINN. STAT. ANN. § 500.19-5 (West 1997) (requiring recording to make
unilateral severance valid); N.Y. REAL PROP. LAW § 240-c(2) (similar). Does a
recording requirement solve the problem of surprise?
Joint tenants may also take acts that are more ambiguous with respect to their rights.
Courts then have to decide what kinds of acts are sufficient to work a severance.
Harms v. Sprague
473 N.E.2d 930 (1984)
Thomas J. MORAN, Justice.
Plaintiff, William H. Harms, filed a complaint to quiet title and for declaratory judgment
in the circuit court of Greene County. Plaintiff had taken title to certain real estate with
his brother John R. Harms, as a joint tenant, with full right of survivorship. The plaintiff
named, as a defendant, Charles D. Sprague, the executor of the estate of John Harms
and the devisee of all the real and personal property of John Harms. Also named as
defendants were Carl T. and Mary E. Simmons, alleged mortgagees of the property in
question. Defendant Sprague filed a counterclaim against plaintiff, challenging
plaintiff’s claim of ownership of the entire tract of property and asking the court to
recognize his (Sprague’s) interest as a tenant in common, subject to a mortgage lien. At
issue was the effect the granting of a mortgage by John Harms had on the joint tenancy.
Also at issue was whether the mortgage survived the death of John Harms as a lien
against the property.

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The trial court held that the mortgage given by John Harms to defendants Carl and
Mary Simmons severed the joint tenancy. Further, the court found that the mortgage
survived the death of John Harms as a lien against the undivided one-half interest in
the property which passed to Sprague by and through the will of the deceased. The
appellate court reversed, finding that the mortgage given by one joint tenant of his
interest in the property does not sever the joint tenancy. Accordingly, the appellate
court held that plaintiff, as the surviving joint tenant, owned the property in its entirety,
unencumbered by the mortgage lien.…
Two issues are raised on appeal: (1) Is a joint tenancy severed when less than all of the
joint tenants mortgage their interest in the property? and (2) Does such a mortgage
survive the death of the mortgagor as a lien on the property?
A review of the stipulation of facts reveals the following. Plaintiff, William Harms, and
his brother John Harms, took title to real estate located in Roodhouse, on June 26,
1973, as joint tenants. The warranty deed memorializing this transaction was recorded
on June 29, 1973, in the office of the Greene County recorder of deeds.
Carl and Mary Simmons owned a lot and home in Roodhouse. Charles Sprague entered
into an agreement with the Simmons whereby Sprague was to purchase their property
for $25,000. Sprague tendered $18,000 in cash and signed a promissory note for the
balance of $7,000. Because Sprague had no security for the $7,000, he asked his friend,
John Harms, to co-sign the note and give a mortgage on his interest in the joint tenancy
property. Harms agreed, and on June 12, 1981, John Harms and Charles Sprague,
jointly and severally, executed a promissory note for $7,000 payable to Carl and Mary
Simmons. The note states that the principal sum of $7,000 was to be paid from the
proceeds of the sale of John Harms’ interest in the joint tenancy property, but in any
event no later than six months from the date the note was signed. The note reflects
that five monthly interest payments had been made, with the last payment recorded
November 6, 1981. In addition, John Harms executed a mortgage, in favor of the
Simmonses, on his undivided one-half interest in the joint tenancy property, to secure
payment of the note. William Harms was unaware of the mortgage given by his brother.
John Harms moved from his joint tenancy property to the Simmons property which
had been purchased by Charles Sprague. On December 10, 1981, John Harms died. By

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the terms of John Harms’ will, Charles Sprague was the devisee of his entire estate. The
mortgage given by John Harms to the Simmonses was recorded on December 29, 1981.
Prior to the appellate court decision in the instant case no court of this State had directly
addressed the principal question we are confronted with herein-the effect of a mortgage,
executed by less than all of the joint tenants, on the joint tenancy. Nevertheless, there
are numerous cases which have considered the severance issue in relation to other
circumstances surrounding a joint tenancy. All have necessarily focused on the four
unities which are fundamental to both the creation and the perpetuation of the joint
tenancy. These are the unities of interest, title, time, and possession. The voluntary or
involuntary destruction of any of the unities by one of the joint tenants will sever the
joint tenancy.
In a series of cases, this court has considered the effect that judgment liens upon the
interest of one joint tenant have on the stability of the joint tenancy. In Peoples Trust
& Savings Bank v. Haas (1927), 328 Ill. 468, 160 N.E. 85, the court found that a
judgment lien secured against one joint tenant did not serve to extinguish the joint
tenancy. As such, the surviving joint tenant “succeeded to the title in fee to the whole
of the land by operation of law.”
…Clearly, this court adheres to the rule that a lien on a joint tenant’s interest in
property will not effectuate a severance of the joint tenancy, absent the conveyance by
a deed following the expiration of a redemption period. It follows, therefore, that if
Illinois perceives a mortgage as merely a lien on the mortgagor’s interest in property
rather than a conveyance of title from mortgagor to mortgagee, the execution of a
mortgage by a joint tenant, on his interest in the property, would not destroy the unity
of title and sever the joint tenancy.
Early cases in Illinois, however, followed the title theory of mortgages. In 1900, this
court recognized the common law precept that a mortgage was a conveyance of a legal
estate vesting title to the property in the mortgagee. Consistent with this title theory of
mortgages, therefore, there are many cases which state, in dicta, that a joint tenancy is
severed by one of the joint tenants mortgaging his interest to a stranger. Yet even the
early case of Lightcap v. Bradley, cited above, recognized that the title held by the
mortgagee was for the limited purpose of protecting his interests. The court went on
to say that “the mortgagor is the owner for every other purpose and against every other

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person. The title of the mortgagee is anomalous, and exists only between him and the
mortgagor * * *.” Lightcap v. Bradley (1900), 186 Ill. 510, 522-23, 58 N.E. 221.
Because our cases had early recognized the unique and narrow character of the title
that passed to a mortgagee under the common law title theory, it was not a drastic
departure when this court expressly characterized the execution of a mortgage as a
mere lien …
[A] joint tenancy is not severed when one joint tenant executes a mortgage on his
interest in the property, since the unity of title has been preserved. As the appellate
court in the instant case correctly observed: “If giving a mortgage creates only a lien,
then a mortgage should have the same effect on a joint tenancy as a lien created in
other ways.” Other jurisdictions following the lien theory of mortgages have reached
the same result.
…An inherent feature of the estate of joint tenancy is the right of survivorship, which
is the right of the last survivor to take the whole of the estate. Because we find that a
mortgage given by one joint tenant of his interest in the property does not sever the
joint tenancy, we hold that the plaintiff’s right of survivorship became operative upon
the death of his brother. As such plaintiff is now the sole owner of the estate, in its
entirety.
Further, we find that the mortgage executed by John Harms does not survive as a lien
on plaintiff’s property. A surviving joint tenant succeeds to the share of the deceased
joint tenant by virtue of the conveyance which created the joint tenancy, not as the
successor of the deceased. The property right of the mortgaging joint tenant is
extinguished at the moment of his death. While John Harms was alive, the mortgage
existed as a lien on his interest in the joint tenancy. Upon his death, his interest ceased
to exist and along with it the lien of the mortgage. Under the circumstances of this case,
we would note that the mortgage given by John Harms to the Simmonses was only
valid as between the original parties during the lifetime of John Harms since it was
unrecorded. In addition, recording the mortgage subsequent to the death of John
Harms was a nullity. As we stated above, John Harms’ property rights in the joint
tenancy were extinguished when he died. Thus, he no longer had a property interest
upon which the mortgage lien could attach….

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Notes and Questions
1. The result in Harms, in which the mortgage disappears if the joint tenant who
granted it predeceases the other joint tenant, is the most common result in “lien
theory” states, which represent the vast majority of states today. However, for
the reasons discussed in Harms, the results in “title theory” states are mixed.
Compare Downing v. Downing, 606 A.2d 208 (Md. 1992) (no automatic
severance although Maryland is a “title” state), with Schaefer v. Peoples Heritage
Savings Bank, 669 A.2d 185 (Me. 1996) (mortgage severs joint tenancy), and
General Credit Co. v. Cleck, 609 A.2d 553 (Pa. Sup. Ct. 1992) (same); Taylor
Mattis, Severance of Joint Tenancies by Mortgages: A Contextual Approach, 1977 S. ILL.
U. L.J. 27.
Suppose we adopted an intent-based standard to determine whether the joint
tenancy was severed. How would we have determined John Harms’ intent after
his death?
2. Is the result in Harms fair? Suppose John had instead survived William. Would
the mortgage burden half the interest in the property, or the whole interest? See
People v. Nogarr, 330 P.2d 858 (Cal. Ct. App. 1958) (if the mortgaging joint
tenant survives the nonmortgaging joint tenant, the lien attaches to the entire
interest). Wouldn’t the mortgagees get a windfall if the value of their secured
interest suddently jumped in value? On the other hand, isn’t that just the flip
side of the loss they suffer if William survives John? Should we create a hybrid
that would protect the lender, and burden William’s interest after John’s death,
even without severing?
Suppose the mortgage had worked a severance. If John had paid the mortgage
off before dying, should the severance be undone and the joint tenancy
restored? What would the parties likely have expected?
3. Given the result in Harms, how will lenders behave when one co-owner seeks
to take out a loan? Sophisticated lenders make mistakes, see Texas American
Bank v. Morgan, 733 P.2d 864 (N.M. 1987), but mostly the lenders at risk are
ordinary people, often relatives or friends of the borrower.

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What about a creditor who has a judgment against one joint tenant—what
should she do to make sure she can get access to the property to satisfy the
judgment? In practice, the creditor must act during the debtor’s life to attach a
lien to the property and foreclose on that lien. See, e.g., Rembe v. Stewart, 387
N.W.2d 313 (Iowa 1986); Jamestown Terminal Elev., Inc. v. Knopp, 246
N.W.2d 612 (N.D. 1976) (judgment lien on joint tenancy property did not
survive when debtor cotenant died before execution sale); Jackson v. Lacy, 97
N.E.2d 839 (Ill. 1951) (severance doesn’t occur at foreclosure, but only on
expiration of the redemption period after foreclosure sale); see also Harris v.
Crowder, 322 S.E.2d 854 (W. Va. 1984) (a creditor may do what the debtor
could do, so a creditor of one joint tenant could convert a joint tenancy into a
tenancy in common, as long as the other cotenant’s interest wouldn’t be
otherwise prejudiced; an example of prejudice would be the loss of a favorable
interest rate on a mortgage due to the timing of the creditor’s act).

4. According to Charles Sprague’s lawyer, Charles and John were romantically
involved. If the events underlying the case occurred today, they could have
married before John’s death. Would that have changed anything?
In Riccelli v. Forcinito, 595 A.2d 1322 (Pa. Super. Ct. 1991), discussed above, Sam
Riccelli and Carmen Pirozek had a joint tenancy. Four years later, Sam Riccelli
married Rita Riccelli. Carmen Pirozek lived in the Riccelli-Pirozek property
until her death in 1984. Her son lived in the house until Sam Riccelli died in
1987; Rita Riccelli then sued to kick him out, claiming to be the sole owner
because Sam had inherited the whole property by right of survivorship. Did the
marriage sever the joint tenancy? It might seem that the marriage, which gave
Rita at least a potential interest in the property, severed the unities of time, title,
interest, and possession. However, the court held that marriage of one joint
tenant did not sever the joint tenancy. What’s the best argument against
severance? Is it the same as the argument in Harms against allowing a mortgage
given by only one joint tenant to sever the joint tenancy?
Compare the case of Goldman v. Gelman, 77 N.E.2d 200 (N.Y. 2000). Before a
divorce decree became final, the wife gave her divorce attorney a mortgage on
the marital home, which was owned by the entirety, in order to secure her debt

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to her attorney. The husband was awarded exclusive title to the whole marital
home. New York’s highest court held that the divorce did not destroy the
mortgage, because the wife’s interest was valid until the final divorce decree,
which turned the tenancy by the entirety into a tenancy in common. The
mortgage still burdened the wife’s interest, and survived when the wife’s interest
was transferred to the husband. Who ultimately has to pay the wife’s divorce
lawyer?
5. Other acts that might work a severance. Technical breaches of the four
unities are unlikely to work a severance. For example, when one joint tenant is
adjudged an incompetent and the legal title to the incompetent’s property is
assigned to a guardian, courts hold that no severance occurred. See, e.g., Moses
v. Butner (In re Estate and Guardianship of Wood), 14 Cal. Rptr. 147 (Cal. Ct.
App. 1961). Cases are divided on whether the grant of a lease by one joint
tenant works a severance. Compare Tenhet v. Boswell, 554 P.2d 330 (Cal. 1976)
(lease by one joint tenant does not sever joint tenancy, though lease is
terminated by death of leasing joint tenant), with Estate of Gulledge, 673 A.2d
1278 (D.C. 1996) (lease to third person severs joint tenancy); see also In re Estate
of Johnson, 739 N.W.2d 493 (Iowa 2007) (adopting intent-based approach to
severance). Some cases even suggest that a lease only works a temporary
severance, and the joint tenancy is automatically reformed when the lease ends.
Isn’t that a ridiculous rule? Are the four unities doing any real work here?
The traditional rule was that, when property is held jointly by spouses, divorce
did not sever the joint tenancy. Unlike entireties property, jointly held property
need not be held by spouses, so the four unities remain intact even after divorce.
Does this make sense? Some states now presume severance upon divorce. See
e.g., OHIO REV. CODE ANN. § 5302.20(c)(5) (Anderson 1996). Others require
courts to deal with the status of property as part of the divorce decree. See, e.g.,
Johnson v. Johnson, 169 N.W.2d 595 (Minn. 1969). The majority rule is that
divorce works a severance, though the cases are divided; Helmholz argues that
the results turn not on the four unities but on the courts’ best understanding of
the parties’ intent. In a divorce case, both parties are alive, so it may seem
possible to determine that intent. As Helmholz points out, matters get dicey
when a divorce or a sale is pending and one of the spouses dies:

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Most of these disputes arose where the parties were not thinking
at all about what would happen if one of them died. Why would
they? They assumed that the divorce would be completed or that
the contract for sale would be fulfilled. In most situations that is
exactly what did happen. But not all. Where the unexpected does
happen and one party dies, litigation all too easily ensues. In it,
the courts have been left with the task of discovering the intent
of the parties from what are very often the slenderest of
indications.
Helmholz, supra, at 25. Given that “intent” may be an unworkable standard, is
a formalist approach looking only to the four unities preferable in that it at least
provides courts with an answer?
Finally, where joint tenants have sought partition but the partition hasn’t yet
occurred, the almost universal rule is that there is no severance until a court has
granted the partition, or at least until only the barest formalities remain to
finalize it. See, e.g., Heintz v. Hudkins, 824 S.W.2d 139 (Mo. Ct. App. 1992).
Helmholz again:
Although it may be said in favor of this rule that the parties might
always have changed their mind before the final decree, that
seems a poor justification in the face of their clearly expressed
intent to sever and the untimely death of one of them. The true
reason for the rule must be a formal one: the rule is necessary in
order to safeguard the integrity of the underlying action for
partition. Partition cannot be effective before it is obtained. One
cannot secure the results of a judicial action simply by asking for
it.
Helmholz, supra, at 30.

6. What shares exist after severance? The general assumption is that joint
tenants have equal shares after severance—after all, the unity of interest requires
that all joint tenants have equal shares before severance. However, if the equities
strongly favored unequal shares, courts might well bend the rules. Compare

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Cunningham v. Hastings, 556 N.E.2d 12 (Ind. Ct. App. 1990) (though one
cotenant paid the purchase price, the creation of a joint tenancy entitles each
party to an equal share of the proceeds on partition; equitable adjustments to
cotenants’ equal shares are allowed for tenancies in common, not joint
tenancies), with Moat v. Ducharme, 555 N.E.2d 897 (Mass. App. Ct. 1990)
(presumption of equal shares is rebuttable because partition must be equitable),
and Jezo v. Jezo, 127 N.W.2d 246 (Wis. 1964) (presumption of equal shares is
rebuttable).
7. Joint tenants who kill. The general rule is that a person who intentionally
causes another’s death loses any inheritance rights he otherwise would have had
from his victim’s estate. In Estate of Castiglioni, 47 Cal. Rptr. 2d 288 (Ct. App.
1995), the surviving spouse petitioned for half of the property she held in joint
tenancy with her deceased husband, of whose murder she was subsequently
convicted. California Probate Code Section 251 provides in part: “A joint
tenant who feloniously and intentionally kills another joint tenant thereby
effects a severance of the interest of the decedent so that the share of the
decedent passes as the decedent’s property and the killer has no rights by
survivorship.” Thus, there was no question that she could not inherit the entire
property through a right of survivorship; her husband’s share went to her
husband’s heir, a daughter.
However, years before the murder, the husband put his separate property in
joint tenancy with the wife. The question was therefore whether the husband’s
share was an undivided half of the former joint tenancy property, or whether
equitable tracing rules should apply to increase that share. The court of appeals
held the latter, and that it was error to give the killer half of the joint tenancy
property. The court noted that, had the tenancy been severed by divorce rather
than by murder, the widow/murderer wouldn’t have received any of the
property at issue, because under California’s community property regime the
husband would have been reimbursed by tracing his contributions to their joint
property. CAL. FAMILY CODE § 2640(b). Thus, equitable principles dictated
that she should not be allowed to benefit from her crime, and her share would
be reduced by the amount necessary to reflect his contribution.

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What should have happened if the couple had lived in a state without
community property rules, the source of the court’s equitable tracing principle?
Suppose section 251 instead read: “If a joint tenant feloniously and intentionally
kills another joint tenant, the share of the decedent passes as though the killer
had predeceased the decedent.” What would the result be in Estate of Castiglioni
in that situation?

8. Simultaneous death. What happens when two joint tenants die in the same
accident, or the order of their death can’t be determined? The Uniform
Simultaneous Death Act initially provided that, without sufficient evidence of
the order of death, half of the property should be distributed as if the first joint
tenant had died first, and the other half as if the other joint tenant had died first.
This rule led to some unpleasant litigation and “gruesome” attempts by heirs to
prove that a specific joint tenant died first. The 1993 revision of the USDA
states that, unless a governing instrument such as a will specifies otherwise, the
half-and-half approach will be used in the absence of “clear and convincing”
evidence that one joint tenant survived the other by 120 hours.
9. Joint accounts with rights of survivorship. “Joint accounts” are bank
accounts generally held by couples, children and parents, or business partners.
Each account holder has the ability to draw on the account. Many joint
accounts come with a right of survivorship: If a joint account owner dies, the
survivor(s) get all the money—creating another way around the delays involved
in probating a will.
In many states, joint account-holders do not have the same undivided interest
and rights to the use and enjoyment of the deposits that joint owners of real
property do. That is, the donee/nondepositor isn’t entitled to the funds unless
she survives the donor/depositor. See UNIFORM PROBATE CODE §6-211 (2008).
On the donor/depositor’s death, the majority rule is that the surviving joint
tenant takes the balance in a joint account unless there is clear and convincing
evidence that the depositor’s intent was to create a “convenience account,” that
is, an account that was supposed to be used by the nondepositor—usually a
younger relative—to take care of the depositor’s business affairs. Some

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jurisdictions conclusively presume that the surviving joint tenant should receive
the balance. See Wright v. Bloom, 635 N.E.2d 31 (Ohio 1994).
What should happen if Orlando deposits $10,000 in a joint bank account with
Abbie, and Abbie then withdraws $5000 from the account while Orlando is
alive, without his permission or later agreement? Orlando can force Abbie to
return the money. Why not presume that Orlando intended a present gift to
Abbie? By the same logic, her creditors can’t reach all the money to satisfy their
claims against her unless and until she survives the donor/depositor. N.
William Hines, Personal Property Joint Tenancies: More Law, Fact and Fancy, 54 MINN.
L. REV. 509 (1970).
However, the presumption against a present gift can be overcome by clear and
convincing evidence. In a minority of jurisdictions, joint account owners have
equal shares in the account during their lifetimes, as in a joint tenancy in land.
Joint accounts with a right of survivorship can be used as a will substitute, but
there are potential tax consequences, not to mention risks of dispute during the
time the person who put the money in the account is alive, or disputes after
death when alternate heirs argue that the account was never intended to benefit
the survivor. If the depositor’s intent is to give whatever money is in the
account to the non-depositing joint account holder when the depositor dies but
not before, many states allow accounts to be designated “payable on death,”
preventing the non-depositing account holder from withdrawing the money
while the depositor is alive. In the alternative, a revocable inter vivos trust will
also provide the desired results. As for an elderly parent who wants her child
to use money for her care, a better solution would be a power of attorney,
making her child into her agent with the power to act on her behalf. This power
of attorney would end with the parent’s death.
10. Why not allow severance by will? If a joint tenant can sever without
constraint during her lifetime, why not by will? Courts will not recognize such
a transfer. See, e.g., Gladson v. Gladson, 800 S.W.2d 709 (Ark. 1990). There is
an easy formalist explanation: by definition, the joint tenant’s interest ends at
her death and ownership automatically passes to the survivor, so there is
nothing for her to pass by will. But isn’t this just playing with definitions? A

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number of cases have allowed severance by will when the joint owners make
joint wills, indicating a clear intent to sever at death, on the theory that it’s the
agreement to make the joint will that severs the joint tenancy.
The best explanation for the “no severance by will” rule is that it is about the
operation of the system of wills, and preserves the use of joint tenancy as a
device to avoid probate, even if it frustrates the intent of the testator. In addition,
a joint tenant who severs by will is playing a no-lose game at the other tenant’s
expense. If she dies first, her designated heir takes her share. If she survives the
other tenant, she takes all. If she has to sever during her lifetime, the severance
occurs, whether that ends up benefiting her or not. This rule may not matter
much given the cavalier way states allow secret severances, but still, severance
by will is so contrary to the sharing spirit of joint tenancies that the rule requiring
joint wills makes sense.

D. Marital Interests
1. Tenancy by the Entirety
U.S. v. Craft
535 U.S. 274 (2002)
Justice O’CONNOR delivered the opinion of the Court.
This case raises the question whether a tenant by the entirety possesses “property” or
“rights to property” to which a federal tax lien may attach. Relying on the state law
fiction that a tenant by the entirety has no separate interest in entireties property, the
United States Court of Appeals for the Sixth Circuit held that such property is exempt
from the tax lien. We conclude that, despite the fiction, each tenant possesses individual
rights in the estate sufficient to constitute “property” or “rights to property” for the
purposes of the lien, and reverse the judgment of the Court of Appeals.
I
In 1988, the Internal Revenue Service (IRS) assessed $482,446 in unpaid income tax
liabilities against Don Craft, the husband of respondent Sandra L. Craft, for failure to
file federal income tax returns for the years 1979 through 1986. When he failed to pay,

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a federal tax lien attached to “all property and rights to property, whether real or
personal, belonging to” him. 26 U.S.C. § 6321.
At the time the lien attached, respondent and her husband owned a piece of real
property in Grand Rapids, Michigan, as tenants by the entirety. After notice of the lien
was filed, they jointly executed a quitclaim deed purporting to transfer the husband’s
interest in the property to respondent for one dollar. When respondent attempted to
sell the property a few years later, a title search revealed the lien. The IRS agreed to
release the lien and allow the sale with the stipulation that half of the net proceeds be
held in escrow pending determination of the Government’s interest in the property.
Respondent brought this action to quiet title to the escrowed proceeds. The
Government claimed that its lien had attached to the husband’s interest in the tenancy
by the entirety. It further asserted that the transfer of the property to respondent was
invalid as a fraud on creditors. The District Court granted the Government’s motion
for summary judgment, holding that the federal tax lien attached at the moment of the
transfer to respondent, which terminated the tenancy by the entirety and entitled the
Government to one-half of the value of the property.
Both parties appealed. The Sixth Circuit held that the tax lien did not attach to the
property because under Michigan state law, the husband had no separate interest in
property held as a tenant by the entirety. It remanded to the District Court to consider
the Government’s alternative claim that the conveyance should be set aside as
fraudulent.
On remand, the District Court concluded that where, as here, state law makes property
exempt from the claims of creditors, no fraudulent conveyance can occur. It found,
however, that respondent’s husband’s use of nonexempt funds to pay the mortgage on
the entireties property, which placed them beyond the reach of creditors, constituted a
fraudulent act under state law, and the court awarded the IRS a share of the proceeds
of the sale of the property equal to that amount. …
We granted certiorari to consider the Government’s claim that respondent’s husband
had a separate interest in the entireties property to which the federal tax lien attached.

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II

Whether the interests of respondent’s husband in the property he held as a tenant by
the entirety constitutes “property and rights to property” for the purposes of the
federal tax lien statute, is ultimately a question of federal law. The answer to this federal
question, however, largely depends upon state law. The federal tax lien statute itself
“creates no property rights but merely attaches consequences, federally defined, to
rights created under state law.” Accordingly, “[w]e look initially to state law to
determine what rights the taxpayer has in the property the Government seeks to reach,
then to federal law to determine whether the taxpayer’s state-delineated rights qualify
as ‘property’ or ‘rights to property’ within the compass of the federal tax lien legislation.”
A common idiom describes property as a “bundle of sticks”—a collection of individual
rights which, in certain combinations, constitute property. State law determines only
which sticks are in a person’s bundle. Whether those sticks qualify as “property” for
purposes of the federal tax lien statute is a question of federal law.
In looking to state law, we must be careful to consider the substance of the rights state
law provides, not merely the labels the State gives these rights or the conclusions it
draws from them. Such state law labels are irrelevant to the federal question of which
bundles of rights constitute property that may be attached by a federal tax lien. In Drye
v. United States, 528 U.S. 49 (1999), we considered a situation where state law allowed
an heir subject to a federal tax lien to disclaim his interest in the estate. The state law
also provided that such a disclaimer would “creat[e] the legal fiction” that the heir had
predeceased the decedent and would correspondingly be deemed to have had no
property interest in the estate. We unanimously held that this state law fiction did not
control the federal question and looked instead to the realities of the heir’s interest. We
concluded that, despite the State’s characterization, the heir possessed a “right to
property” in the estate—the right to accept the inheritance or pass it along to another
—to which the federal lien could attach.
III
We turn first to the question of what rights respondent’s husband had in the entireties
property by virtue of state law.…

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In determining whether respondent’s husband possessed “property” or “rights to
property” within the meaning of 26 U.S.C. § 6321, we look to the individual rights
created by these state law rules. According to Michigan law, respondent’s husband had,
among other rights, the following rights with respect to the entireties property: the right
to use the property, the right to exclude third parties from it, the right to a share of
income produced from it, the right of survivorship, the right to become a tenant in
common with equal shares upon divorce, the right to sell the property with the
respondent’s consent and to receive half the proceeds from such a sale, the right to
place an encumbrance on the property with the respondent’s consent, and the right to
block respondent from selling or encumbering the property unilaterally.
IV
We turn now to the federal question of whether the rights Michigan law granted to
respondent’s husband as a tenant by the entirety qualify as “property” or “rights to
property” under § 6321. The statutory language authorizing the tax lien “is broad and
reveals on its face that Congress meant to reach every interest in property that a
taxpayer might have.” “Stronger language could hardly have been selected to reveal a
purpose to assure the collection of taxes.” We conclude that the husband’s rights in the
entireties property fall within this broad statutory language.
Michigan law grants a tenant by the entirety some of the most essential property rights:
the right to use the property, to receive income produced by it, and to exclude others
from it. See Dolan v. City of Tigard, 512 U.S. 374, 384 (1994) (“[T]he right to exclude
others” is “‘one of the most essential sticks in the bundle of rights that are commonly
characterized as property’”). These rights alone may be sufficient to subject the
husband’s interest in the entireties property to the federal tax lien. They gave him a
substantial degree of control over the entireties property, and, as we noted in Drye, “in
determining whether a federal taxpayer’s state-law rights constitute ‘property’ or ‘rights
to property,’ [t]he important consideration is the breadth of the control the [taxpayer]
could exercise over the property.”
The husband’s rights in the estate, however, went beyond use, exclusion, and income.
He also possessed the right to alienate (or otherwise encumber) the property with the
consent of respondent, his wife. It is true, as respondent notes, that he lacked the right
to unilaterally alienate the property, a right that is often in the bundle of property rights.

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There is no reason to believe, however, that this one stick—the right of unilateral
alienation—is essential to the category of “property.”…
Excluding property from a federal tax lien simply because the taxpayer does not have
the power to unilaterally alienate it would, moreover, exempt a rather large amount of
what is commonly thought of as property. … Community property States often
provide that real community property cannot be alienated without the consent of both
spouses. Accordingly, the fact that respondent’s husband could not unilaterally alienate
the property does not preclude him from possessing “property and rights to property”
for the purposes of § 6321.
Respondent’s husband also possessed the right of survivorship—the right to
automatically inherit the whole of the estate should his wife predecease him.
Respondent argues that this interest was merely an expectancy, which we suggested in
Drye would not constitute “property” for the purposes of a federal tax lien. 528 U.S.,
at 60, n. 7 (“[We do not mean to suggest] that an expectancy that has pecuniary value
… would fall within § 6321 prior to the time it ripens into a present estate”). Drye did
not decide this question, however, nor do we need to do so here. As we have discussed
above, a number of the sticks in respondent’s husband’s bundle were presently existing.
It is therefore not necessary to decide whether the right to survivorship alone would
qualify as “property” or “rights to property” under § 6321.
That the rights of respondent’s husband in the entireties property constitute “property”
or “rights to property” “belonging to” him is further underscored by the fact that, if
the conclusion were otherwise, the entireties property would belong to no one for the
purposes of § 6321. Respondent had no more interest in the property than her husband;
if neither of them had a property interest in the entireties property, who did? This result
not only seems absurd, but would also allow spouses to shield their property from
federal taxation by classifying it as entireties property, facilitating abuse of the federal
tax system.
Justice SCALIA’s and Justice THOMAS’ dissents claim that the conclusion that the
husband possessed an interest in the entireties property to which the federal tax lien
could attach is in conflict with the rules for tax liens relating to partnership property.
This is not so. As the authorities cited by Justice THOMAS reflect, the federal tax lien
does attach to an individual partner’s interest in the partnership, that is, to the fair

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market value of his or her share in the partnership assets.. As a holder of this lien, the
Federal Government is entitled to “receive … the profits to which the assigning partner
would otherwise be entitled,” including predissolution distributions and the proceeds
from dissolution....
There is, however, a difference between the treatment of entireties property and
partnership assets. The Federal Government may not compel the sale of partnership
assets (although it may foreclose on the partner’s interest). It is this difference that is
reflected in Justice SCALIA’s assertion that partnership property cannot be
encumbered by an individual partner’s debts. This disparity in treatment between the
two forms of ownership, however, arises from our decision in United States v. Rodgers,
supra (holding that the Government may foreclose on property even where the coowners lack the right of unilateral alienation), and not our holding today. In this case,
it is instead the dissenters’ theory that departs from partnership law, as it would hold
that the Federal Government’s lien does not attach to the husband’s interest in the
entireties property at all, whereas the lien may attach to an individual’s interest in
partnership property….
We therefore conclude that respondent’s husband’s interest in the entireties property
constituted “property” or “rights to property” for the purposes of the federal tax lien
statute. We recognize that Michigan makes a different choice with respect to state law
creditors: “[L]and held by husband and wife as tenants by entirety is not subject to levy
under execution on judgment rendered against either husband or wife alone.” But that
by no means dictates our choice. The interpretation of 26 U.S.C. § 6321 is a federal
question, and in answering that question we are in no way bound by state courts’
answers to similar questions involving state law. As we elsewhere have held, “‘exempt
status under state law does not bind the federal collector.’”…
Justice SCALIA, with whom Justice THOMAS joins, dissenting.
…I write separately to observe that the Court nullifies (insofar as federal taxes are
concerned, at least) a form of property ownership that was of particular benefit to the
stay-at-home spouse or mother. She is overwhelmingly likely to be the survivor that
obtains title to the unencumbered property; and she (as opposed to her business-world
husband) is overwhelmingly unlikely to be the source of the individual indebtedness

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against which a tenancy by the entirety protects. It is regrettable that the Court has
eliminated a large part of this traditional protection retained by many States.
Justice THOMAS, with whom Justice STEVENS and Justice SCALIA join, dissenting.
…The Court does not contest that the tax liability the IRS seeks to satisfy is Mr. Craft’s
alone, and does not claim that, under Michigan law, real property held as a tenancy by
the entirety belongs to either spouse individually. Nor does the Court suggest that the
federal tax lien attaches to particular “rights to property” held individually by Mr. Craft.
Rather, borrowing the metaphor of “property as a ‘bundle of sticks’—a collection of
individual rights which, in certain combinations constitute property,” the Court
proposes that so long as sufficient “sticks” in the bundle of “rights to property”
“belong to” a delinquent taxpayer, the lien can attach as if the property itself belonged
to the taxpayer.
This amorphous construct ignores the primacy of state law in defining property
interests ….
I
Title 26 U.S.C. § 6321 provides that a federal tax lien attaches to “all property and rights
to property, whether real or personal, belonging to” a delinquent taxpayer. It is
uncontested that a federal tax lien itself “creates no property rights but merely attaches
consequences, federally defined, to rights created under state law.” Consequently, the
Government’s lien under § 6321 “cannot extend beyond the property interests held by
the delinquent taxpayer,” under state law….
A
…As the Court recognizes, pursuant to Michigan law, as under English common law,
property held as a tenancy by the entirety does not belong to either spouse, but to a
single entity composed of the married persons. Neither spouse has “any separate
interest in such an estate.” An entireties estate constitutes an indivisible “sole tenancy.”
Because Michigan does not recognize a separate spousal interest in the Grand Rapids
property, it did not “belong” to either respondent or her husband individually when
the IRS asserted its lien for Mr. Craft’s individual tax liability. Thus, the property was
not property to which the federal tax lien could attach for Mr. Craft’s tax liability.

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Drye … was concerned not with whether state law recognized “property” as belonging
to the taxpayer in the first place, but rather with whether state laws could disclaim or
exempt such property from federal tax liability after the property interest was created.
Drye held only that a state-law disclaimer could not retroactively undo a vested right in
an estate that the taxpayer already held, and that a federal lien therefore attached to the
taxpayer’s interest in the estate. 528 U.S., at 61 (recognizing that a disclaimer does not
restore the status quo ante because the heir “determines who will receive the
property—himself if he does not disclaim, a known other if he does”).…
B
…Rather than adopt the majority’s approach, I would ask specifically, as the statute
does, whether Mr. Craft had any particular “rights to property” to which the federal
tax lien could attach. He did not. 5 … With such rights subject to lien, the taxpayer’s
interest has “ripen[ed] into a present estate” of some form and is more than a mere
expectancy, and thus the taxpayer has an apparent right “to channel that value to
[another].”
In contrast, a tenant in a tenancy by the entirety not only lacks a present divisible vested
interest in the property and control with respect to the sale, encumbrance, and transfer
of the property, but also does not possess the ability to devise any portion of the
property because it is subject to the other’s indestructible right of survivorship. This
latter fact makes the property significantly different from community property, where
each spouse has a present one-half vested interest in the whole, which may be devised
by will or otherwise to a person other than the spouse. See 4 G. Thompson, Real
Property § 37.14(a) (D. Thomas ed. 1994) (noting that a married person’s power to
devise one-half of the community property is “consistent with the fundamental

5 Even such rights as Mr. Craft arguably had in the Grand Rapids property bear no resemblance to those to which

a federal tax lien has ever attached. See W. Elliott, Federal Tax Collections, Liens, and Levies ¶ ¶ 9.09[3][a]—[f]
(2d ed.1995 and 2000 Cum. Supp.) (listing examples of rights to property to which a federal tax lien attaches,
such as the right to compel payment; the right to withdraw money from a bank account, or to receive money
from accounts receivable; wages earned but not paid; installment payments under a contract of sale of real estate;
annuity payments; a beneficiary’s rights to payment under a spendthrift trust; a liquor license; an easement; the
taxpayer’s interest in a timeshare; options; the taxpayer’s interest in an employee benefit plan or individual
retirement account).

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characteristic of community property”: “community ownership means that each
spouse owns 50% of each community asset”).
It is clear that some of the individual rights of a tenant in entireties property are
primarily personal, dependent upon the taxpayer’s status as a spouse, and similarly not
susceptible to a tax lien. For example, the right to use the property in conjunction with
one’s spouse and to exclude all others appears particularly ill suited to being transferred
to another, and to lack “exchangeable value.”
Nor do other identified rights rise to the level of “rights to property” to which a § 6321
lien can attach, because they represent, at most, a contingent future interest, or an
“expectancy” that has not “ripen[ed] into a present estate.” By way of example, the
survivorship right wholly depends upon one spouse outliving the other, at which time
the survivor gains “substantial rights, in respect of the property, theretofore never
enjoyed by [the] survivor.” …
Similarly, while one spouse might escape the absolute limitations on individual action
with respect to tenancy by the entirety property by obtaining the right to one-half of
the property upon divorce, or by agreeing with the other spouse to sever the tenancy
by the entirety, neither instance is an event of sufficient certainty to constitute a “right
to property” for purposes of § 6321. Finally, while the federal tax lien could arguably
have attached to a tenant’s right to any “rents, products, income, or profits” of real
property held as tenants by the entirety, the Grand Rapids property created no rents,
products, income, or profits for the tax lien to attach to….
Ownership by “the marriage” is admittedly a fiction of sorts, but so is a partnership or
corporation. There is no basis for ignoring this fiction so long as federal law does not
define property, particularly since the tenancy by the entirety property remains subject
to lien for the tax liability of both tenants….
Notes and Questions
1. Sawada v. Endo, 561 P.2d 1291 (Haw. 1977), reached a different result under
state law. Sawada allowed a transfer of entireties property (the family home) by
a husband and wife to their children, in order to avoid the risk that the home
would be vulnerable to claims by Masako and Helen Sawada, who’d been
injured when they were struck by a car operated by the husband, and who

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eventually became judgment creditors as a result of the lawsuits they filed
against the husband, Kokichi Endo. Given that any lien against the house could
only attach to the husband’s interest and that the house couldn’t be sold without
the wife’s consent, what exactly was the risk to the Endos’ ownership of the
house?
The Endos conveyed the house to their children, for no valuable consideration,
after the accident and after the first complaint was filed. The parents continued
to live in the house, though they had no legal interest in it. After trial, both
Sawadas were awarded a total of roughly $25,000. The wife, Ume Endo, died
shortly thereafter, survived by Kokichi. The Sawadas, unable to recover against
Kokichi Endo’s personal property, sought to invalidate the transfer of the
family home to the children as fraudulent.
The Hawaii Supreme Court found that a spouse’s interest in property held by
the entireties was not subject to levy and execution by that spouse’s individual
creditors, even though some states do allow seizure and sale by creditors, subject
to the other spouse’s contingent right of survivorship. The Hawaii Supreme
Court reasoned that the Married Women’s Property Acts equalized husband
and wife, creating a unity of equals who both had the right to use and enjoy the
whole estate. This insulated the wife’s interest in the estate from the separate
debts of her husband, and vice versa. “A joint tenancy may be destroyed by
voluntary alienation, or by levy and execution, or by compulsory partition, but
a tenancy by the entirety may not. The indivisibility of the estate, except by joint
action of the spouses, is an indispensable feature of the tenancy by the entirety.”
Creditors of one spouse could not even attach that spouse’s right of
survivorship, because that would make a conveyance by both spouses too
uncertain, harming the other spouse’s interest.
The Hawaii Supreme Court continued, “there is obviously nothing to prevent
[a] creditor from insisting upon the subjection of property held in tenancy by
the entirety as a condition precedent to the extension of credit. Further, the
creation of a tenancy by the entirety may not be used as a device to defraud
existing creditors.” That’s all well and good for voluntary creditors, but what
about involuntary creditors like the Sawadas? They weren’t offered any options

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before they extended “credit” to Kokichi Endo in the form of the injuries he
inflicted on them. Is this rule fair to them? (Is the proper comparison a world
in which Kokichi Endo didn’t own a house at all when he hit them, or a world
in which he owned a house jointly or in common when he hit them? Does it
matter that the law is less directly involved in whether Endo owned a house
than in the rules of co-ownership?)
The Hawaii Supreme Court concluded that public policy supported its
holding, because tenancy by the entirety protected an interest in family
solidarity:
When a family can afford to own real property, it becomes their
single most important asset. Encumbered as it usually is by a first
mortgage, the fact remains that so long as it remains whole during
the joint lives of the spouses, it is always available in its entirety
for the benefit and use of the entire family. Loans for education
and other emergency expenses, for example, may be obtained on
the security of the marital estate. This would not be possible
where a third party has become a tenant in common or a joint
tenant with one of the spouses, or where the ownership of the
contingent right of survivorship of one of the spouses in a third
party has cast a cloud upon the title of the marital estate, making
it virtually impossible to utilize the estate for these purposes.
561 P.2d at 1297. A dissent pointed out that, under the Married Women’s
Property Acts, what was required was equality as between spouses, not any
particular rule about creditors. At common law, “the interest of the husband in
an estate by the entireties could be taken by his separate creditors on execution
against him, subject only to the wife’s right of survivorship.” Thus, the dissent
reasoned, equal treatment merely required that both spouses be subjected to
this rule.
One way of looking at the matter: entireties property is specifically designed, at
least in its modern incarnation, to protect the interest of one spouse against the
other’s independent acts. If that’s the case, then aren’t the Craft dissents correct?
If a state may choose this objective in its property law, why shouldn’t this choice

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be respected? Or are there special concerns relating to federal tax that justify
overriding this choice? If so, should the government be able to force the sale
of entireties property, or should it be forced to wait to see which spouse survives
the other?
2. Forfeiture. What about criminal forfeiture of property involved in a crime,
such as a house in which a drug transaction occurred? Some forfeiture statutes
exempt property used without the consent or knowledge of its owner. Under
those statutes, some courts allow the innocent spouse to retain use and
possession of entirety property during her lifetime, as well as her right of
survivorship. Compare United States v. 1500 Lincoln Ave., 949 F.2d 73 (3d Cir.
1991) (guilty spouse’s interest is forfeited, subject to innocent spouse’s
possession and survivorship rights), with United States v. 15621 S.W. 209th Ave.,
894 F.2d 1511 (11th Cir. 1990) (not allowing current forfeiture, but allowing
government to file lis pendens * preserving its right to guilty spouse’s interest upon
death of innocent spouse or severance of estate). What if a forfeiture statute
doesn’t protect innocent owners? In that case, the government can seize the
entire property, including the innocent spouse’s interest. Bennis v. Michigan,
516 U.S. 442 (1996) (rejecting takings and due process claims).
3. Homestead acts as an alternative? Many states have so-called “homestead”
acts, protecting the family home (up to a certain value or size) from many
creditors’ claims, though not against foreclosure of a mortgage on that home.
California provides for $50,000 for a single person, $75,000 for a “family unit,”
and $150,000 for people 65 or older, disabled, or 55 or older with an annual
income under $15,000. CAL. CIV. PROC. CODE § 704.730 (2003). Washington
provides for protections for $40,000 real property or $15,000 personal property.
WASH. REV. CODE § 6.13.030 (1999). Should the tenancy by the entirety be

* Lis pendens translates to “a suit is pending”; it refers to a written notice on the public title records that a lawsuit

has been filed concerning the title to real property or some interest in that real property. In general, potential
purchasers of any interest in the real property are charged with notice of lis pendens and therefore any interest they
acquire is subject to the outcome of the pending litigation. We will more thoroughly discuss the effects of this
type of “record notice” on the rights of subsequent purchasers later in our chapter on Recording Acts.

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Property
abolished in favor of homestead exemptions? Compare the protections for
mortgagors, discussed in the unit on Mortgages.

4. Creating a tenancy by the entirety. Traditionally, a tenancy by the entirety
was created by granting property “to X and Y, husband and wife, as tenants by
the entirety.” Today, X and Y can be any spouses, and states that recognize
tenancies by the entirety often presume that a transfer “to A and B, [spouses],”
creates that estate. See, e.g., Constitution Bank v. Olson, 620 A.2d 1146 (Pa.
Super. Ct. 1993). Other states always presume a tenancy in common even when
the co-owners are married, so a clear expression of the requisite intent is
required. See MISS. CODE ANN. §89-11-7. As a rule, the magic words “tenants
by the entirety” should be used.
If the cotenants are not married, the magic words will not work. In Riccelli v.
Forcinito, 595 A.2d 1322 (Pa. Super. Ct. 1991), Sam Riccelli and Carmen Pirozek
bought property in 1962 “as tenants by the entireties with the right of
survivorship.” However, they weren’t married at the time of the purchase, and
so they couldn’t have a tenancy by the entirety. What kind of tenancy did they
have? The court reasoned: “The appropriate form of tenancy is to be
determined by the intention of the parties, ‘the ultimate guide by which all deeds
must be interpreted.’… [J]oint tenancy with the right of survivorship best
effectuates their intention to the extent legally permissible, that being the form
of tenancy for unmarried persons most nearly resembling the tenancy by the
entireties enjoyed by husband and wife, since in both instances the survivor
takes the whole.” The modern presumption in favor of tenancy in common
yielded to a clearly expressed contrary intent. See also Funches v. Funches, 413
S.E.2d 44 (Va. 1992) (“tenancy by the entirety” with express survivorship
language that was given to unmarried parties created a joint tenancy because of
the survivorship language). But see Smith v. Stewart, 596 S.W.2d 346 (Ark. Ct.
App. 1980) (deed “to A and B, his wife,” when A and B were unmarried, failed
to create a joint tenancy; the relevant state statute required an express
declaration of joint tenancy with right of survivorship), aff’d, 601 S.W.2d 837
(Ark. 1980).

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5. Divorce. Because marriage is a requirement for a tenancy by the entirety,
divorce ends that form of ownership. What should replace it? The modern
preference is for tenancy in common as a general rule, and many states follow
that rule with tenancies by the entireties that end by divorce. See, e.g., MICH.
COMP. LAWS ANN. § 552.102. A few states presume that a tenancy by the
entirety is converted to a joint tenancy unless the parties otherwise agree. See,
e.g., Estate of Childress v. Long, 5888 So. 2d 192 (Miss. 1991).
6. Common law marriage. Common law marriage was widely recognized when
access to formal marriage was sometimes difficult, particularly in rural areas.
However, it is now recognized only in 11 states and the District of Columbia.
Where it is recognized, the parties must manifest an intent to be married and
hold themselves out as husband and wife. If they do so, they have exactly the
same rights as any other married couple. Is this a kind of “adverse possession”
of the benefits of marriage?
Many states abolished common law marriage on the theory that it was no longer
required, given the ease of accessing a marriage license, and that it encouraged
people to lie about whether they’d held themselves out as husband and wife.
Moreover, a marriage license makes it easy to understand who is entitled to
pensions and other benefits, which became more important as those types of
assets became more significant throughout the twentieth century.

2. Community Property
Nine states, representing roughly 30% of the population of the U.S., recognize
community property for married people: Arizona, California, Idaho, Louisiana, Nevada,
New Mexico, Texas, Washington, and Wisconsin. Under community property regimes,
marital property belongs to each spouse equally. Each spouse has a right to pass on his
or her share to anyone by will, making community property different from joint
tenancy; however, it is also possible to hold community property with a right of
survivorship, highly similar to joint tenancy. In the absence of a right of survivorship,
a surviving spouse is typically entitled to some of the community property when the
other spouse dies intestate; his or her share generally depends on whether there are
surviving issue (children and other descendants), and how many there are.

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The basic idea of community property is that a marriage is a cooperative endeavor, and
each spouse contributes to gains, whether directly or indirectly. Except for Alaska,
which requires an explicit agreement, ALASKA STAT. § 34.77.090 (2002), the default
rule under a community property regime is that property earned by a spouse during
marriage belongs to the marital community, and each spouse owns half of the
community property as an equal undivided interest. This includes property purchased
with income earned during the marriage. This contrasts to common law states, in
which property belongs by default to the spouse who acquires it during the marriage.
Property owned before marriage, as well as property acquired by inheritance or gift
during the marriage, remains separate property in most states. States are divided about
whether and when income from separate property, such as interest, royalties, and rent,
becomes part of the community property. Idaho, Louisiana, Texas and Wisconsin treat
the income from all property as community property, while the other states allow such
income to remain separate property. Classification may prove complicated: for
example, is an award of damages from a bike accident involving one spouse community
property? The answer may depend on whether the award represents economic harm
such as lost earnings (community property) or pain and suffering (separate property).
What if the award is for loss of a limb, which has both earnings-related and quality of
life-related aspects? What if the award is for loss of consortium—the caretaking and
intimate relations shared between spouses?
In general, spouses are free to take property as separate property by agreement, and to
convert property from one regime to the other by agreement. If community and
separate property are commingled, tracing the shares may prove very difficult, and the
party with the burden of showing that the property is separate may have a hard time
prevailing. Carefully kept records may allow a tracing spouse to overcome the
presumption that assets held during marriage are community property. Under the
“family expense presumption,” family expenses are presumed to have come from
community assets in a commingled account. If such expenses exceeded deposits of
community funds, the balance will be separate property. See v. See, 415 P.2d 776 (Cal.
1966). As for outstanding debt paid off in part with community property, California
apportions community and separate property according to the contributions made.
Thus, a person who has a house subject to a mortgage before she marries, and then
pays the remainder of the mortgage with money earned during marriage, will own the

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house partly as separate property and partly as community property. Other states use
an “inception” theory and consider the house entirely separate property because the
purchase was made before the marriage. And other states use a “vesting” theory and
consider the house entirely community property because title didn’t vest until the
mortgage was paid off.
In most cases, either spouse may manage community property. However, if title is in
only one spouse’s name, that spouse may be the only one who can manage the property.
In addition, a spouse who runs a business that is community property may have
exclusive control. The controlling spouse has a kind of fiduciary duty: she must act in
good faith towards her spouse, but she is not required to act with good judgment.
Transferring or mortgaging community property, unlike day-to-day management,
requires the consent of both spouses in a number of community property states,
though not all. See J. Thomas Oldham, Management of the Community Estate During an
Intact Marriage, 56 L. & CONTEMP. PROBS. 99 (1993). The fact that a deed says that
property is separate property is not controlling, because the law prevents a spouse from
converting community property to separate property unilaterally. In some states, such
as Texas, the controlling spouse can make reasonable gifts of community property,
while California and Washington allow any gift by the managing spouse to be set aside
by the other spouse. In most states, a bona fide purchaser from any managing spouse
is protected against invalidation of the sale.
In some states, creditors can reach whatever property a spouse is entitled to manage.
If the spouses share the family car, for example, then a creditor of either spouse could
seize the car to satisfy one spouse’s debt (after following the appropriate procedures).
Others only allow creditors to reach community property if both spouses consented to
the relevant debt, and others limit the amount of community property creditors of only
one spouse can reach.
A spouse may dispose of half of the community property at his or her death. There is
no right of survivorship, but the other half belongs to the survivor. The decedent can
allocate the property however she wants in a will; if there is no will, then some
community property states make the other spouse the heir, while others give the
decedent’s issue priority.

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There is no such thing as a tenancy by the entireties in a community property state;
there can be joint tenancy or tenancy in common, but property held in those forms is
separate property. Like a tenancy by the entireties, community property can only exist
between married people. Moreover, neither spouse alone can convey his or her
undivided share to another person, except to the other spouse. Community property
is not subject to partition. Without agreement, the spouse’s only option to separate the
couple’s undivided interests is divorce, which will result in an equal or “equitable”
division of community property, depending on the state. California, New Mexico, and
Louisiana divide community property and debts equally, * while courts use the more
flexible equitable division in the other community property states. In California, absent
a written agreement to the contrary, a spouse who contributes separate property to
acquiring community property must be reimbursed for the contribution at divorce,
though the spouse can’t get interest or an adjustment for a change in the value of the
property, and the reimbursement can’t exceed the net value of the property at the time
the property was acquired. CAL. FAMILY CODE §2640(b). Can you see why the
legislature felt it necessary to impose the net value cap? What kind of unsavory
activities might result if the rule were different?
If a married couple moves to a non-community property state, community property
retains its character, which can lead to some complicated situations.
A family law course will cover the significant differences between community property
and joint tenancy in more detail, including tax implications. The regimes reward careful
planning, especially for people with substantial assets. See Andrea B. Carroll,
Incentivizing Divorce, 30 CARDOZO L. REV. 1925 (2009) (arguing that marital property
rules, particularly in community property states, create perverse incentives toward
divorce).

* In the absence of agreement to the contrary or deliberate misappropriation of community property by one

spouse.

Leasing Real Property
The law of concurrent ownership, discussed in the previous chapter, generally regulates
relationships between intimates. Arrangements like the joint tenancy generally arise
between individuals who know each other and remain locked in ongoing relationships.
As a result, there’s not much arms-length bargaining and relatively few disputes work
their way into the court system.
The law of landlord-tenant is very different. It is the law of strangers—strangers who
often have little in common and may never interact after the lease terminates. How
the law responds to this difference is one of the central theoretical questions you will
wrestle with in this chapter. More practically, in this section of the course you will learn
about the types of leaseholds, tenant selection, transferring leases, ending leases, and
the various rights and responsibilities of tenants and landlords during the course of the
lease.

A. The Dual Nature of the Lease
In its simplest form, the lease is a transfer in which the owner of real property conveys
exclusive possession to a tenant (generally in exchange for rent). Most law students
know through personal experience that the process of renting generally entails signing
a lease contract. Like other contracts, a lease’s terms can be negotiated and they
explicitly govern many of the rights and responsibilities of the parties involved. So why
then are leases discussed in the property course rather than contracts?
The short response is that a lease is a property-contract hybrid. While it is surely a
contract, it’s a contract for a very particular kind of property interest. The fuller answer,
like so much in property, lies in the history of feudal land law. Under the traditional
common law, a leasehold was understood primarily as a property interest, similar in
nature to the estates covered in our chapter on Estates and Future Interests. A lord
(often a baron) conveyed a possessory right to a tenant (usually a peasant) and retained
for himself a future interest (typically a reversion). Importantly, once the landlord
transferred the right to possession, he had few other obligations to the tenant.
463

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Property

This basic model survived until the 1960s, when many jurisdictions began to introduce
general contract law principles (e.g. the implied duty of good faith and fair dealing) into
the law of landlord-tenant. Importing contract theories into the lease has had two
practical effects. First, parties to a lease now have the option to terminate in the case
of any material breach; in the past tenants could only terminate if the landlord interfered
with their possession. Second, modern tenants have far more protections from
indifferent and unscrupulous landlords than their counterparts 50 years ago. Courts
and legislatures have proven particularly eager to help residential tenants—whom they
view as vulnerable—from predations of the free market.

B. Creating the Leasehold
1. A Lease or Something Else?
A lease is a transfer of the right of possession of specific property for a limited period
of time. It’s important to see that not all legal relationships that grant the use of an
owner’s property qualify as leaseholds. Take, for example, the case of Snow White and
Seven Dwarfs. If the Dwarfs give Snow White sole possession of their cottage for 12
months in exchange for a monthly payment, they have almost certainly created a lease.
If, however, the Dwarfs invite Snow White to sleep on their couch for a few nights
while she evades the Queen, they probably have created something called a license (a
revocable permission to use the property of another, which we’ll study in greater detail
later in the book) rather than a leasehold. This determination matters (as we’ll soon
see) because the law extends a number of protections to grantees who qualify as tenants.
It affects, among other things, whether the grantee can exclude the owner from certain
spaces, how the parties can terminate the interest, whether the grantee can invite
outsiders onto the property, who has the obligation to perform maintenance, who is
liable if the grantee suffers an injury on the property, and what remedies the parties
have if a disagreement arises.
To determine whether parties have created a leasehold or some other legal interest,
courts have traditionally focused on whether a grantor has turned over exclusive
possession or a more limited set of use rights. Possession, however, remains a slippery
concept, difficult to define. Consider the following post from an internet message
board:

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2. Types of Leasehold
As we have seen throughout this course, property interests come in a limited number
of forms, many of which we have inherited directly from feudal England. This theme
holds in landlord-tenant. The common law developed three types of leaseholds that
our modern property system still recognizes: the term of years, the periodic tenancy,
and the tenancy at will.
a. The Term of Years
The term of years is a leasehold measured by any fixed period of time. The most familiar
term of years lease is the residential one-year lease. The actual term, however, may vary
greatly. In 2001, the U.S. government signed a 99-year lease for an embassy in
Singapore. Leases of hundreds or even thousands of years are not unheard of, either.
See Monbar v. Monaghan, 18 Del. Ch. 395 (1932) (two thousand year lease). At the
other end of the spectrum, vacation properties like beach condos and lake houses
commonly rent for one-week periods.
Whatever the duration, a term of years automatically ends when the stated term expires.
For example, imagine L leases Blackacre to T “from September 1, 2015 to August 31,
2016.” Neither party is required to give the other notice of termination. The tenant
must simply surrender possession to the landlord by midnight on August 31. The death
of either contracting party does not affect a term of years lease, unless the landlord and

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tenant have agreed otherwise. If the tenant dies, the law requires her estate to carry
out the lease.
b. The Periodic Tenancy
The periodic tenancy is a lease for some fixed duration that automatically renews for
succeeding periods until either the landlord or tenant gives notice of termination. This
automatic renewal is the chief practical difference between the periodic tenancy and
the term of years. The most common type of periodic tenancy is the month-to-month
lease. As the name suggests, a month-to-month lease lasts for a month and then
continues for subsequent months, until either the landlord or tenant ends the lease.
Periodic tenancies have no certain end date; some residential tenants with month-tomonth leases stay in their apartments for decades.
Termination requires one party to give advance notice to the other. These notice
requirements are now heavily regulated by statute in most jurisdictions. Under the
common law (which is still the basis for many state regulations), for year-to-year
periodic leases (or any periodic lease with a longer initial duration), parties must give
notice at least six months before the period ends. For leases less than a year, the
minimum notice equals the length of the lease period. Additionally, unless the parties
make an agreement to the contrary, the lease must terminate on the final day of a period.
Assume, for example, that T signs a month-to-month lease that begins May 1. On
August 20, T gives notice of termination to her landlord. When will the lease end? T
must give the landlord a minimum of one month notice. That pushes T’s obligations
under the lease to September 19. A periodic tenancy, however, must end on the last
day of a period. Thus, T’s lease will terminate on September 30 at midnight.
The death of either the landlord or tenant does not end a periodic tenancy. If, for
example, the tenant dies before the lease terminates, the law vests the tenant’s estate
with the responsibility to fulfill the remaining obligations under the lease.
c. The Tenancy at Will
The tenancy at will has no fixed duration and endures so long as both of the parties desire.
For example, if the landlord and tenant sign a document that reads, “Tenant will pay
the Landlord $500 on the first of the month and the lease will endure as long as both

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of us wish” they have created a tenancy at will. Under the common law, either party
could end such a lease at any moment. Today, most states have enacted statutes that
establish minimum notice periods—30 days is common. Tenancies at will also
terminate if the landlord sells the property, the tenant abandons the unit, or either party
dies. *
Tenancies at will can arise as a result of the clear intention of the parties—the ease of
termination is a valued feature in some negotiations. But note, the tenancy at will is
also the catchall lease category. If a leasehold doesn’t qualify as either a term of years
or periodic tenancy, the law crams it into the tenancy at will box—even if that clearly
violates the goals of the parties. This occasionally creates real hardship for individuals
with sloppily drafted leases.
Effel v. Rosberg
360 S.W.3d 626 (Tex. App. 2012)
MORRIS, Justice.
This is an appeal from the trial court’s judgment awarding Robert G. Rosberg
possession of property in a forcible detainer action. Appellant Lena Effel brings
seventeen issues generally contending the trial court . . . erred in concluding Rosberg
was entitled to possession of the property. After examining the record on appeal and
reviewing the applicable law, we conclude appellant’s arguments are without merit. We
affirm the trial court’s judgment.
I.
[On March 1, 2006, Robert G. Rosberg filed suit against Lena Effel’s nephews, Henry
Effel and Jack Effel. The parties settled the dispute out of court and signed a
compromise settlement agreement. As part of the settlement, Rosberg received a piece
of land owned by Henry and Jack Effel. The property contained the home where Lena
Effel lived. The settlement agreement between the Effels and Rosberg stated that Lena
Effel] “shall continue to occupy the property for the remainder of her natural life, or

* In jurisdictions that require 30-day notice periods before the termination of a tenancy at will, this is one of the

key remaining differences between the month-to-month periodic lease and the tenancy at will.

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until such time as she voluntarily chooses to vacate the premises.” The settlement
agreement further stated that a lease agreement incorporating the terms of the
settlement agreement would be prepared before the closing date of the purchase. . . .
The property in question was deeded to Rosberg with no reservation of a life estate. A
lease for appellant was prepared by the Effels’ attorney. The term of the lease was “for
a term equal to the remainder of the Lessee’s life, or until such time that she voluntarily
vacates the premises.” The lease also contained various covenants relating to payment
of rent and charges for utilities as well as the use and maintenance of the grounds. The
lease provided that if there was any default in the payment of rent or in the performance
of any of the covenants, the lease could be terminated at the option of the lessor. The
lease was signed by Rosberg as lessor and by Henry Effel on behalf of appellant under
a power of attorney as lessee.
Three years later, on February 24, 2010, Rosberg, through his attorney, sent a letter to
appellant both by regular mail and certified mail stating that he was terminating her
lease effective immediately. The reason for the termination, according to the letter, was
Rosberg’s discovery that appellant had installed a wrought iron fence in the front yard
of the property in violation of two covenants of the lease. The letter stated that
appellant was required to leave and surrender the premises within ten days and, if she
did not vacate the premises, Rosberg would commence eviction proceedings. Appellant
did not vacate the property.
On April 29, 2010, Rosberg filed this forcible detainer action in the justice court. The
justice court awarded possession of the property to Rosberg, and appellant appealed
the decision to the county court at law. The county court held a trial de novo without
a jury and, again, awarded the property to Rosberg. The court concluded the lease
created a tenancy at will terminable at any time by either party. The court further
concluded that Rosberg was authorized to terminate the lease, whether because it was
terminable at will or because appellant violated the terms of the lease, and the lease was
properly terminated on February 24, 2010. Appellant now appeals the county court’s
judgment.

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II.

. . . In appellant’s remaining issues, she challenges the findings of fact and conclusions
of law made by the county court. In her tenth issue, appellant challenges the county
court’s first conclusion of law in which it stated “[t]he lease, which purported to be for
the rest of Lena Effel’s life, created only a tenancy at will terminable at any time by
either party.” Appellant argues that the lease must be read together with the settlement
agreement and the court must give effect to the intent of the parties. Appellant was not
a party to the settlement agreement, however. Appellant was a party only to the lease.
It is the lease, and not the settlement agreement, that forms the basis of this forcible
detainer action. Accordingly, we look solely to the lease to determine appellant’s rights
in this matter.
The lease states that appellant was a lessee of the property “for a term equal to the
remainder of Lessee’s life, or until such time as she voluntarily vacates the premises.”
It is the long-standing rule in Texas that a lease must be for a certain period of time or
it will be considered a tenancy at will. See Holcombe v. Lorino, 124 Tex. 446, 79 S.W.2d
307, 310 (1935). Courts that have applied this rule to leases that state they are for the
term of the lessee’s life have concluded that the uncertainty of the date of the lessee’s
death rendered the lease terminable at will by either party.
Appellant argues the current trend in court decisions is away from finding a lease such
as hers to be terminable at will. Appellant relies on the 1982 decision of Philpot v. Fields,
633 S.W.2d 546 (Tex. App. 1982). In Philpot, the court stated that the trend in law was
away from requiring a lease to be of a definite and certain duration. In reviewing the
law since Philpot, however, we discern no such trend. See Kajo Church Square, Inc. v.
Walker, 2003 WL 1848555, at *5 (Tex. App. 2003). The rule continues to be that a lease
for an indefinite and uncertain length of time is an estate at will. See Providence Land
Servs., L.L.C. v. Jones, 353 S.W.3d 538, 542 (Tex. App. 2011). In this case, not only was
the term of the lease stated to be for the uncertain length of appellant’s life, but her
tenancy was also “until such time that she voluntarily vacates the premises.” If a lease
can be terminated at the will of the lessee, it may also be terminated at the will of the
lessor. Because the lease at issue was terminable at will by either party, the trial court’s
first conclusion of law was correct. We resolve appellant’s tenth issue against her.

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In her fourth issue, appellant contends the trial court erred in concluding that Rosberg
sent her a proper notice to vacate the premises under section 24.005 of the Texas
Property Code. Section 24.005 states that a landlord must give a tenant at will at least
three days’ written notice to vacate before filing a forcible detainer suit unless the
parties contracted for a longer or shorter notice period in a written lease or agreement.
TEX. PROP. CODE ANN. § 24.005(b) (West Supp. 2011). The section also states that
the notice must be delivered either in person or by mail at the premises in question. Id.
§ 24.005(f). If the notice is delivered by mail, it may be by regular mail, registered mail,
or certified mail, return receipt requested, to the premises in question.
The undisputed evidence in this case shows that Rosberg, through his attorney, sent
appellant a written notice to vacate the premises by both regular mail and certified mail
on February 24, 2010. The notice stated that appellant had ten days to surrender the
premises. Nothing in the lease provided for a longer notice period. Henry Effel testified
at trial that appellant received the notice and read it. Rosberg did not bring this forcible
detainer action until April 29, 2010. The evidence conclusively shows, therefore, that
Rosberg’s notice to vacate the property complied with section 24.005. . . .
Because Rosberg had the right to terminate appellant’s tenancy at any time and properly
notified her of the termination under section 24.005 of the Texas Property Code, the
trial court did not err in awarding the property at issue to Rosberg. Consequently, it is
unnecessary for us to address the remainder of appellant’s issues.
We affirm the trial court’s judgment.
Notes and Questions
1. The parties’ intent? When Henry and Jack Effel drafted the settlement
agreement transferring their property to Robert Rosberg, what where they
trying to accomplish? Did the court carry out the intentions of the parties?
Why?
2. Other approaches. In Garner v. Gerrish, 473 N.E.2d 223 (N.Y. 1984), the New
York Court of Appeals faced a case with very similar facts. The tenant, Lou
Gerrish, had a lease stating, “Lou Gerrish [sic] has the privilege of termination
[sic] this agreement at a date of his own choice.” The New York court found
that the document created a new kind of leasehold—a lease for life. The Garner

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opinion attacked the argument in favor of the tenancy at will as being grounded
in the “antiquated notion[s]” of medieval property law. Is there any good reason
for the law to only recognize three leasehold tenancies? What if, instead, the
lease gave only the landlord the power to terminate, and required the tenant to
stay and pay as long as the landlord desired?
3. Working within the system. Could the lease have been drafted in a way that
would have let Lena Effel stay on the property for the duration of her life or
until she chose to move, as long as she kept paying the rent?
4. Institutional competence. Are courts or legislatures better positioned to
create new property forms?
5. The background story. Lena Effel lived in the house owned by her nephews
for over 20 years. Before that, her twin brother (Henry and Jack’s father) had
lived in the home for many years. At the time the compromise settlement
agreement was signed, Lena was 93 years old. At the time Rosberg sought to
evict her, Lena was 97. Should any of those facts have influenced the judges in
the case?
Lease Hypotheticals
A professionally drafted lease will almost always make clear what type of leasehold the
parties have elected. When problems arise it’s often because lessors and lessees have
drafted legal documents without the help of a qualified lawyer. In the following
examples try to figure out what kind of leasehold the parties have created. If it’s a term
of years, how long is the term? If it’s a periodic tenancy, what is the period?
1. L and T sign an agreement that reads, “The term is one year, beginning
September 1.”
2. L and T sign a lease that reads, “This agreement lasts as long as the parties
consent.”
3. L and T sign an agreement that reads, “The lease will run from September 1
until the following August 31. One thousand dollars payable on the first of
every month.”

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4. L and T enter a lease that reads in relevant part, “the rent is $48,000 per year,
payable $4,000 on the first of each month.”
5. L and T enter a lease that reads, “the rent is $1,000 per month.”
6. L and T enter a lease that reads, “the rent is $1,000 per month and lasts until
the tenant completes medical school.”
7. L and T are negotiating on the phone over an apartment lease. At the end of
the conversation L says, “Have we got a deal? Five years lease with rent at
$10,000 a year?” T replies, “Great. I accept. It’s a deal.”

3. The Problem of Holdovers
a. The Tenancy at Sufferance
Imagine that you own a small apartment building in a college town. At the end of the
school year, one of your tenants refuses to move out. The law refers to such tenants
as holdovers. As a landlord, what are your options in this situation? How does the legal
system treat individuals who stay past the end of their leases? Can you kick them out?
Are they obligated to pay you rent?
When a tenant stays in possession after the lease has expired, the law allows the
landlord to make a one-time election. The landlord has the option to treat the holdover
as a trespasser, bring an eviction proceeding, and sue for damages. Alternatively, the
landlord may renew the holdover’s lease for another term. This second option is
typically referred to as a tenancy at sufferance. Some hornbooks list the tenancy at
sufferance as a fourth type of common law leasehold. The tenancy at sufferance,
however, is not based on any affirmative agreement between parties and is probably
better understood as a remedy for wrongful occupancy. Also note that disputes
sometimes pop-up over what election the landlord has made. For example, what if the
landlord does nothing for two months but then initiates eviction?
In most jurisdictions, when a landlord chooses to hold the tenant to a new lease, it
creates a periodic tenancy. States differ, however, on how to compute the length of
the period and, thus, the amount of the damages. Some simply copy over the length
of the original lease (with a maximum of one year). Others divine the repeating period

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by looking at how the rent was paid. Imagine, for example, your tenant had originally
signed a lease reading, “This lease will run from January 1, 2014 to December 31, 2014.
Rent is due on the first of each month.” The tenancy created by the holdover would
either be a year-to-year lease or a month-to-month lease depending on the jurisdiction.
Still other states take other approaches. Some, for example, specify that a holdover
must pay double (or triple) rent for the holdover period.
Notes and Questions
1. The landlord’s options. Under what circumstances should a landlord move to
evict a tenant who holds over? Are there any scenarios where a landlord might
want to keep a tenant who has already proven themselves untrustworthy by
staying past the agreed-upon term?
2. Drafting. How can landlords draft leases to better protect themselves from the
threat of holdovers?
3. A holdover problem. Seven years ago, Tommy Hillclimber leased a
commercial building on a busy street from Lisa. The lease was for a five-year
term with annual rent of $100,000. At the end of the term, Tommy retained
possession of the building but continued to make rent payments. Lisa has
cashed all of Tommy’s rent checks. Last week, Sprawl-Mart contacted Lisa and
offered to rent the building for $200,000 a year. Lisa quickly sent notice to
Tommy stating that the lease will terminate in 30 days. Does Tommy have to
vacate?

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b. Delivering Possession
Holdovers can also cause problems for other renters. Suppose that before the start of
law school you agree to a one-year lease that begins on August 1. Although you’ve
signed a binding lease agreement and have received a set of keys, when your van pulls
into the driveway on move-in day, you find that the previous tenant hasn’t left “your”
apartment. If the lease doesn’t include a contingency for such an event, what are your
rights?
Hannan v. Dusch
153 S.E. 824 (Va. 1930)
PRENTIS, C.J.,
The declaration filed by the plaintiff, Hannan, against the defendant, Dusch, alleges
that Dusch had on August 31, 1927, leased to the plaintiff certain real estate in the city
of Norfolk, Virginia, therein described, for fifteen years, the term to begin January 1,
1928, at a specified rental; that it thereupon became and was the duty of the defendant
to see to it that the premises leased by the defendant to the plaintiff should be open
for entry by him on January 1, 1928, the beginning of the term, and to put said
petitioner in possession of the premises on that date; that the petitioner was willing and
ready to enter upon and take possession of the leased property, and so informed the
defendant; yet the defendant failed and refused to put the plaintiff in possession or to
keep the property open for him at that time or on any subsequent date; and that the
defendant suffered to remain on said property a certain tenant or tenants who occupied
a portion or portions thereof, and refused to take legal or other action to oust said
tenants or to compel their removal from the property so occupied. Plaintiff alleged
damages which he had suffered by reason of this alleged breach of the contract and
deed, and sought to recover such damages in the action. There is no express covenant
as to the delivery of the premises . . . .
The single question of law therefore presented in this case is whether a landlord, who
without any express covenant as to delivery of possession leases property to a tenant,
is required under the law to oust trespassers and wrongdoers so as to have it open for
entry by the tenant at the beginning of the term — that is, whether without an express
covenant there is nevertheless an implied covenant to deliver possession. . . .

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It seems to be perfectly well settled that there is an implied covenant in such cases on
the part of the landlord to assure to the tenant the legal right of possession — that is,
that at the beginning of the term there shall be no legal obstacle to the tenant’s right of
possession. This is not the question presented. Nor need we discuss in this case the
rights of the parties in case a tenant rightfully in possession under the title of his
landlord is thereafter disturbed by some wrongdoer. In such case the tenant must
protect himself from trespassers, and there is no obligation on the landlord to assure
his quiet enjoyment of his term as against wrongdoers or intruders.
Of course, the landlord assures to the tenant quiet possession as against all who
rightfully claim through or under the landlord.
The discussion then is limited to the precise legal duty of the landlord in the absence
of an express covenant, in case a former tenant, who wrongfully holds over, illegally
refuses to surrender possession to the new tenant. This is a question about which there
is a hopeless conflict of the authorities. It is generally claimed that the weight of the
authority favors the particular view contended for. There are, however, no scales upon
which we can weigh the authorities. In numbers and respectability they may be quite
equally balanced.
It is then a question about which no one should be dogmatic, but all should seek for
that rule which is supported by the better reason. . . .
It is conceded by all that the two rules, one called the English rule, which implies a
covenant requiring the lessor to put the lessee in possession, and that called the
American rule, which recognizes the lessee’s legal right to possession, but implies no
such duty upon the lessor as against wrongdoers, are irreconcilable.
The English rule is that in the absence of stipulations to the contrary, there is in every
lease an implied covenant on the part of the landlord that the premises shall be open
to entry by the tenant at the time fixed by the lease for the beginning of his term. . . .
[A] case which supports the English rule is Herpolsheimer v. Christopher, 76 Neb. 352, 107
N.W. 382, 111 N.W. 359, 9 L.R.A. (N.S.) 1127, 14 Ann. Cas. 399, note. In that case the
court gave these as its reasons for following the English rule:

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We think . . . that the English rule is most in consonance with good
conscience, sound principle, and fair dealing. Can it be supposed that the
plaintiff in this case would have entered into the lease if he had known
at the time that he could not obtain possession on the 1st of March, but
that he would be compelled to begin a lawsuit, await the law’s delays,
and follow the case through its devious turnings to an end before he
could hope to obtain possession of the land he had leased? Most
assuredly not. It is unreasonable to suppose that a man would knowingly
contract for a lawsuit, or take the chance of one. Whether or not a tenant
in possession intends to hold over or assert a right to future term may
nearly always be known to the landlord, and is certainly much more apt
to be within his knowledge than within that of the prospective tenant.
Moreover, since in an action to recover possession against a tenant
holding over, the lessee would be compelled largely to rely upon the
lessor’s testimony in regard to the facts of the claim to hold over by the
wrongdoer, it is more reasonable and proper to place the burden upon
the person within whose knowledge the facts are most apt to lie. We are
convinced, therefore, that the better reason lies with the courts following
the English doctrine, and we therefore adopt it, and hold that, ordinarily,
the lessor impliedly covenants with the lessee that the premises leased
shall be open to entry by him at the time fixed in the lease as the
beginning of the term. . . .

So let us not lose sight of the fact that under the English rule a covenant which might
have been but was not made is nevertheless implied by the court, though it is manifest
that each of the parties might have provided for that and for every other possible
contingency relating to possession by having express covenants which would
unquestionably have protected both.
Referring then to the American rule: Under that rule, in such cases, [ ]the landlord is
not bound to put the tenant into actual possession, but is bound only to put him in
legal possession, so that no obstacle in the form of superior right of possession will be
interposed to prevent the tenant from obtaining actual possession of the demised
premises. If the landlord gives the tenant a right of possession he has done all that he
is required to do by the terms of an ordinary lease, and the tenant assumes the burden

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of enforcing such right of possession as against all persons wrongfully in possession,
whether they be trespassers or former tenants wrongfully holding over.[ ] . . .
So that, under the American rule, where the new tenant fails to obtain possession of
the premises only because a former tenant wrongfully holds over, his remedy is against
such wrongdoer and not against the landlord — this because the landlord has not
covenanted against the wrongful acts of another and should not be held responsible
for such a tort unless he has expressly so contracted. This accords with the general rule
as to other wrongdoers, whereas the English rule appears to create a specific exception
against lessors. It does not occur to us now that there is any other instance in which
one clearly without fault is held responsible for the independent tort of another in
which he has neither participated nor concurred and whose misdoings he cannot
control. . . .
For the reasons which have been so well stated by those who have enforced the
American rule, our judgment is that there is no error in the judgment complained of.
Affirmed
Notes and Questions
1. The basic law. U.S. jurisdictions remain split over the landlord’s duty to
provide possession. A majority of jurisdictions (and the Uniform Residential
Landlord and Tenant Act) now follow the English rule, but the American rule
remains alive and well. As should be obvious, the biggest difference between
the two approaches is the remedy available to the dispossessed tenant. Under
the English view, the tenant may terminate the lease and sue the landlord for
damages. The tenant can also choose to withhold payment from the landlord
until the tenant is able to take possession. In contrast, under the American rule,
the tenant must bring an eviction action directly against the holdover.
2. Justifying the rules. What policies support the English view? What polices
support the American view? Would you find the remedies available under the
American rule helpful?
3. Conceptual Arguments. The Hannan case does an excellent job discussing the
policy rationales for and against the two rules. But what about the more

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conceptual arguments? If we view the lease as a conveyance of the legal right
to possession, isn’t the American rule “correct?” Once a landlord turns over
possessory rights, aren’t her obligations fulfilled?

4. What do tenants know? Do you think that tenants in American rule
jurisdictions know that their landlord has no obligation provide them with
actual possession? Should that matter?
5. What rules are mandatory? Imagine that you sit in a state legislature that wants
to adopt the English Rule by statute. Should you make the new law a mandatory
rule or a default position that parties can negotiate around?
6. Your Lease? Does the lease for the apartment you’re currently renting make
any provision for this problem?

4. Tenant Selection
As we saw earlier in the textbook, the right to exclude remains a cornerstone of
property ownership. Owners have expansive power to keep others off of their land
and out of their homes. Generally speaking, this right extends to landlords, who have
broad discretion to select tenants as they see fit. Landlords, for example, remain free
to exclude smokers from their properties. They can also refuse to rent to a tenant who
acts erratically, possesses a criminal record, or has a low credit score. Landlords,
however, cannot violate state or federal anti-discrimination laws when they go through
the leasing process.
a. The Civil Rights Act of 1866
One of the oldest laws that protects tenants against discrimination in the housing
market is the Civil Rights Act of 1866. Passed in the aftermath of the Civil War, the
Civil Rights Act of 1866 prohibits all discrimination based on race in the purchase or
rental of real or personal property. See Jones v. Alfred H. Mayer Co., 392 U.S. 409
(1968). Thus, landlords cannot deny an apartment unit to a potential tenant based on
tenant’s heritage or the color of their skin. There are no exceptions.

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b. The Fair Housing Act of 1968
The Fair Housing Act of 1968 (and its many amendments) greatly expanded the
number of individuals covered by anti-discrimination law. Broadly speaking, the Fair
Housing Act (FHA) prohibits discrimination in the renting, selling, advertising, or
financing of real estate on the basis of race, color, national origin, religion, sex, familial
status, and disability. It is worth looking closely at some of its provisions. The Act
begins with a statement of policy and a few (counter-intuitive) definitions:
§3601. Declaration of Policy
It is the policy of the United States to provide, within constitutional
limitations, for fair housing throughout the United States.
§3602. Definitions
As used in this subchapter . . .
(c) “Family” includes a single individual. .. .
(h) “Handicap” means, with respect to a person—
(1) a physical or mental impairment which substantially
limits one or more of such person’s major life activities,
(2) a record of having such an impairment, or
(3) being regarded as having such an impairment, but such
term does not include current, illegal use of or addiction to a controlled
substance (as defined in section 802 of title 21). . . .
(k) “Familial status” means one or more individuals (who have not
attained the age of 18 years) being domiciled with—
(1) a parent or another person having legal custody of such
individual or individuals; or
(2) the designee of such parent or other person having such
custody, with the written permission of such parent or other person.
The protections afforded against discrimination on the basis of familial
status shall apply to any person who is pregnant or is in the process of

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securing legal custody of any individual who has not attained the age of
18 years.

The definition of “familial status” surprises many students. Whom, exactly, does it
protect? Unmarried people? Single mothers? Although more intuitive, the definition of
handicap has generated a number of legal disputes. Alcohol, for example, is not a
controlled substance under section 802 of title 21. Does that mean that a landlord
cannot refuse to rent to a person who drinks heavily or sounds very drunk (and
belligerent) over the phone?
The real meat of the Fair Housing act comes in §3604. The first subsection makes it
unlawful to “refuse to sell or rent . . . or otherwise make unavailable” a “dwelling” to
any person because of race, color, religion, sex, familial status, or national origin. See 42
U.S.C. §3604(a). Later sections provide similar protections for the handicapped. The
Act then takes a number of additional steps designed to eliminate discrimination from
the housing market. Under the terms of the law it is illegal to:
(1) discriminate in the terms or conditions of a sale or rental [§3604(b)];
(2) create or publish an advertisement or statement that express a preference
or hostility toward individuals in any of the protected categories
[§3604(c)];
(3) lie about or misrepresent the availability of housing [§3604(d)];
(4) refuse to permit handicapped tenants from making reasonable
modifications of the existing premise at their own expense
[§3604(f)(3)(A)];
(5) refuse to make reasonable accommodations in rules and policies to
accommodate individuals with handicaps [§3604(f)(3)(B)];
(6) Harass or intimidate persons in their enjoyment of a dwelling [§3617].
Unlike the Civil Rights Act of 1866, the Fair Housing Act does contain a number of
important exemptions. Section 3607(b), for example, allows housing designated for
older persons to bar families with young children. Similarly, section 3607(a) allows
religious organizations and private clubs to give preferences to their own members.

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The most controversial exemption, reproduced below, is the so-called Mrs. Murphy
exemption:
(b) Nothing in section 3604 of this title (other than subsection (c)) shall
apply to—
(1) any single-family house sold or rented by an owner: Provided,
That such private individual owner does not own more than three
such single-family houses at any one time: Provided further , That
in the case of the sale of any such single-family house by a private
individual owner not residing in such house at the time of such
sale or who was not the most recent resident of such house prior
to such sale, the exemption granted by this subsection shall apply
only with respect to one such sale within any twenty-four month
period: Provided further , That such bona fide private individual
owner does not own any interest in, nor is there owned or
reserved on his behalf, under any express or voluntary agreement,
title to or any right to all or a portion of the proceeds from the
sale or rental of, more than three such single-family houses at any
one time: Provided further , That after December 31, 1969, the
sale or rental of any such single-family house shall be excepted
from the application of this subchapter only if such house is sold
or rented (A) without the use in any manner of the sales or rental
facilities or the sales or rental services of any real estate broker,
agent, or salesman, or of such facilities or services of any person
in the business of selling or renting dwellings, or of any employee
or agent of any such broker, agent, salesman, or person and (B)
without the publication, posting or mailing, after notice, of any
advertisement or written notice in violation of section 3604(c) of
this title; but nothing in this proviso shall prohibit the use of
attorneys, escrow agents, abstractors, title companies, and other
such professional assistance as necessary to perfect or transfer
the title, or
(2) rooms or units in dwellings containing living quarters
occupied or intended to be occupied by no more than four

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families living independently of each other, if the owner actually
maintains and occupies one of such living quarters as his
residence.

What does this exemption allow? If the act is intended to root out pernicious
discrimination, why include this provision?
It is crucial to note that the plain text of the Mrs. Murphy exemption states that it does
not apply to 3604(c)—the subsection that prohibits discriminatory advertising. Thus,
although certain categories of landlords are exempted from the statute’s basic
framework, they are still not allowed to post discriminatory advertisements.
c. State Anti-Discrimination Efforts
Some state legislatures have passed laws that afford far more protection from
discrimination than the federal statutes provide. Minnesota, for example, protects
against housing discrimination on the basis of sexual orientation, gender identity,
marital status, and source of income. Other states in the Northeast and West Coast
provide similar coverage, but these positions are in no way a majority. As the map
below indicates, in most states nothing in state law prevents a landlord from denying
an apartment to an engaged heterosexual couple, based on the belief that cohabitation
before marriage is sinful.

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Despite the small number of states that extend protection against housing
discrimination on the basis of sexual orientation or transgender status, recent changes
in the interpretation of federal antidiscrimination law may make state protections a
moot point. In June of 2020, the Supreme Court held that an employer who fires an
employee for their sexual orientation or transgender status unlawfully discriminates on
the basis of sex for purposes of Title VII of the Civil Rights Act of 1964. See 42 U.S.C.
§ 2000e–2(a)(1) (prohibiting employment discrimination “because of … sex.”). As the
Court explained:
[I]t is impossible to discriminate against a person for being homosexual
or transgender without discriminating against that individual based on
sex. Consider, for example, an employer with two employees, both of
whom are attracted to men. The two individuals are, to the employer’s
mind, materially identical in all respects, except that one is a man and the
other a woman. If the employer fires the male employee for no reason
other than the fact he is attracted to men, the employer discriminates
against him for traits or actions it tolerates in his female colleague. Put
differently, the employer intentionally singles out an employee to fire
based in part on the employee’s sex, and the affected employee’s sex is
a but-for cause of his discharge. Or take an employer who fires a
transgender person who was identified as a male at birth but who now
identifies as a female. If the employer retains an otherwise identical
employee who was identified as female at birth, the employer
intentionally penalizes a person identified as male at birth for traits or
actions that it tolerates in an employee identified as female at birth. Again,
the individual employee’s sex plays an unmistakable and impermissible
role in the discharge decision.
Bostock v. Clayton Cty., Ga., 140 S.Ct. 1731, 1741-42 (2020). Given that the Fair
Housing Act uses the same “because of … sex” language as Title VII, it seems probable
that the federal courts will conclude that sexual orientation and transgender status are
protected categories under the Fair Housing Act as well. Indeed, the Federal
Department of Housing and Urban Development has already announced that it will
enforce the Fair Housing Act against housing discrimination on the basis of sexual
orientation and gender identity. HUD Directive re: Implementation of Executive

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Order 13988 on the Enforcement of the Fair Housing Act (Feb. 11, 2021),
https://www.hud.gov/sites/dfiles/PA/documents/HUD_Memo_EO13988.pdf.
d. Proving Discrimination
Two broad categories of cases may be brought under the Fair Housing Act: disparate
treatment claims and disparate impact claims.

A sign erected by white homeowners trying to prevent black tenants from moving into their Detroit neighborhood (1942).

Disparate treatment claims target intentional forms of discrimination, including the
refusal to rent based on one of the protected categories. A plaintiff can show intent to
discriminate with “smoking gun” style evidence, such as statements by the landlord
that he “would never rent to an Irishman.” Of course, modern landlords rarely make
such forthright admissions. As a result, courts in the United States have established a
burden-shifting approach that allows plaintiffs to prove intentional discrimination with
indirect circumstantial evidence. The initial burden is on the plaintiff to make a prima
facie case of discrimination. In a refusal to rent case, the plaintiff must show that (1)
that she is a member of a class protected by the FHA; (2) that she applied for and was
qualified to rent the unit; (3) that she was rejected; and (4) the unit remained unrented.
Once the plaintiff has established sufficient evidence to state a prima facie case, the
burden shifts to the defendant landlord to proffer a legitimate nondiscriminatory
reason for the refusal to rent. If the defendant meets this requirement, the burden then
shifts back to the tenant to prove that the reason offered is a pretext.

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Discrimination is often ferreted out through the use of “testers.” Advocacy groups,
many of which are funded by the federal government, will send comparable white and
black individuals to inquire about renting a vacant unit. If the landlord treats the testers
differently (e.g., provides different levels of assistance, shows different units, provides
different information about unit availability) this provides persuasive evidence of illegal
discrimination.
Disparate impact claims allege that some seemingly neutral policy has a
disproportionately harmful effect on members of a group protected by the FHA.
These cases rely heavily on statistical evidence and employ a very similar burdenshifting methodology as the disparate treatment claims. Using statistics, plaintiffs need
to show that a defendant’s policy has actually caused some disparity. The defendant
then has the opportunity to escape liability if it can show show that its actions are
necessary to achieve a valid goal. See Texas Department of Housing & Community
Affairs v. Inclusive Communities Project, Inc., 135 S. Ct. 2507 (2015).
Problems
1. William Neithamer, who is gay and HIV positive attempted to rent an
apartment from Brenneman Properties. Neithamer did not reveal his HIV
status, but admitted to the property manager that he had dismal credit because
he had recently devoted all of his resources to taking care of a lover who had
died of AIDS. Neithamer, however, offered to pre-pay one year’s rent.
Brenneman Properties rejected Neithamer’s application and, in turn, Neithamer
sued under the FHA. Does he have a case? See Neithamer v. Brenneman
Property Services, Inc., 81 F. Supp 2d 1 (D.D.C. 1999).
2. Over the phone, Landlord said to Plaintiff, “Do you have children? I don’t want
any little boys because they’ll mess up the house and nobody would be here to
watch them. Really, this house isn’t good for kids because it’s right next to a
main road.” Plaintiff sues. Landlord argues that her statements only show that
she is concerned about the welfare of children. Is that a legitimate nondiscriminatory reason to refuse to rent?
3. A local government has decided to knock down two high-rise public housing
projects within its borders. The high-rises primarily house recent immigrants

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from Guatemala. A local advocacy group brings a lawsuit on their behalf,
claiming that the government action has a disparate impact on a protected group.
Is this a disparate treatment or disparate impact case? Can you think of a nondiscriminatory reason why the government may have taken such an action?

4. The FHA requires landlords to make “reasonable accommodations” for
individuals with handicaps. Which of the following requests by a tenant would
qualify as a reasonable accommodation? (a) Asking a landlord with a firstcome/first-served parking policy to create a reserved parking space for a tenant
who has difficulty walking; (b) Requesting that a landlord waive parking fees for
a disabled tenant’s home health care aide; (c) Asking the landlord to make an
exception to the building’s “no pets” rule for a tenant with a service animal; (d)
Requesting landlord to pay for a sign language interpreter for a deaf individual
during the application process; (e) Asking the landlord to provide oral reminders
to pay the rent for a tenant with documented short-term memory loss.

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e. An Exercise in Advertising
Imagine that you are a lawyer for a newspaper in a large metropolitan area. The local
chapter of the ACLU has raised concerns that some advertisements in the classifieds
section of your paper violate the Fair Housing Act. * Your boss has asked you to review
the ads for any offending language. Which of the following would you feel comfortable
printing? †

* Would any of these ads violate the Civil Rights Act of 1866?
† The government does provide some guidance to landlords worried about triggering FHA liability through their

advertisements. There are, for example, published lists of “words to avoid” and “acceptable language.” Although
context is important, landlords can generally use these phrases: good neighborhood, secluded setting, single
family home, quality construction, near public transportation, near places of worship, and assistance animals only.

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What about this ad for a roommate on Craigslist? Is it objectionable to you? Does it
violate the FHA? Does it matter that the poster is looking for a roommate? Would your
answers change if the advertisement read, “Have a room available for an able-bodied
white man with no children?”

Fair Housing Council of San Fernando Valley v. Roommate.com, LLC
666 F.3d 1216 (9th Cir. 2012)
KOZINSKI, Chief Judge:
There’s no place like home. In the privacy of your own home, you can take off your
coat, kick off your shoes, let your guard down and be completely yourself. While we
usually share our homes only with friends and family, sometimes we need to take in a
stranger to help pay the rent. When that happens, can the government limit whom we
choose? Specifically, do the anti-discrimination provisions of the Fair Housing Act
(“FHA”) extend to the selection of roommates?
Roommate.com, LLC (“Roommate”) operates an internet-based business that helps
roommates find each other. Roommate’s website receives over 40,000 visits a day and
roughly a million new postings for roommates are created each year. When users sign
up, they must create a profile by answering a series of questions about their sex, sexual
orientation and whether children will be living with them. An open-ended “Additional
Comments” section lets users include information not prompted by the questionnaire.
Users are asked to list their preferences for roommate characteristics, including sex,
sexual orientation and familial status. Based on the profiles and preferences, Roommate
matches users and provides them a list of housing-seekers or available rooms meeting
their criteria. Users can also search available listings based on roommate characteristics,
including sex, sexual orientation and familial status. The Fair Housing Councils of San

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Fernando Valley and San Diego (“FHCs”) sued Roommate in federal court, alleging
that the website’s questions requiring disclosure of sex, sexual orientation and familial
status, and its sorting, steering and matching of users based on those characteristics,
violate the Fair Housing Act (“FHA”), 42 U.S.C. § 3601 et seq. . . .
ANALYSIS
If the FHA extends to shared living situations, it’s quite clear that what Roommate
does amounts to a violation. The pivotal question is whether the FHA applies to
roommates.
I
The FHA prohibits discrimination on the basis of “race, color, religion, sex, familial
status, or national origin” in the “sale or rental of a dwelling.” 42 U.S.C. § 3604(b)
(emphasis added). The FHA also makes it illegal to:
make, print, or publish, or cause to be made, printed, or published any notice,
statement, or advertisement, with respect to the sale or rental of a dwelling that
indicates any preference, limitation, or discrimination based on race, color,
religion, sex, handicap, familial status, or national origin, or an intention to make
any such preference, limitation, or discrimination.
Id. § 3604(c) (emphasis added). The reach of the statute turns on the meaning of
“dwelling.”
The FHA defines “dwelling” as “any building, structure, or portion thereof which is
occupied as, or designed or intended for occupancy as, a residence by one or more
families.” Id. § 3602(b). A dwelling is thus a living unit designed or intended for
occupancy by a family, meaning that it ordinarily has the elements generally associated
with a family residence: sleeping spaces, bathroom and kitchen facilities, and common
areas, such as living rooms, dens and hallways.
It would be difficult, though not impossible, to divide a single-family house or
apartment into separate “dwellings” for purposes of the statute. Is a “dwelling” a
bedroom plus a right to access common areas? What if roommates share a bedroom?

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Could a “dwelling” be a bottom bunk and half an armoire? It makes practical sense to
interpret “dwelling” as an independent living unit and stop the FHA at the front door.
There’s no indication that Congress intended to interfere with personal relationships
inside the home. Congress wanted to address the problem of landlords discriminating
in the sale and rental of housing, which deprived protected classes of housing
opportunities. But a business transaction between a tenant and landlord is quite
different from an arrangement between two people sharing the same living space. We
seriously doubt Congress meant the FHA to apply to the latter. Consider, for example,
the FHA’s prohibition against sex discrimination. Could Congress, in the 1960s, really
have meant that women must accept men as roommates? Telling women they may not
lawfully exclude men from the list of acceptable roommates would be controversial
today; it would have been scandalous in the 1960s.
While it’s possible to read dwelling to mean sub-parts of a home or an apartment, doing
so leads to awkward results. . . . Nonetheless, this interpretation is not wholly
implausible and we would normally consider adopting it, given that the FHA is a
remedial statute that we construe broadly. Therefore, we turn to constitutional
concerns, which provide strong countervailing considerations.
II
The Supreme Court has recognized that “the freedom to enter into and carry on certain
intimate or private relationships is a fundamental element of liberty protected by the
Bill of Rights.” Bd. of Dirs. of Rotary Int’l v. Rotary Club of Duarte, 481 U.S. 537 (1987).
“[C]hoices to enter into and maintain certain intimate human relationships must be
secured against undue intrusion by the State because of the role of such relationships
in safeguarding the individual freedom that is central to our constitutional scheme.”
Roberts v. U.S. Jaycees, 468 U.S. 609, 617-18 (1984). Courts have extended the right of
intimate association to marriage, child bearing, child rearing and cohabitation with
relatives. Id. While the right protects only “highly personal relationships,” IDK, Inc. v.
Clark Cnty., 836 F.2d 1185, 1193 (9th Cir. 1988) (quoting Roberts, 468 U.S. at 618), the
right isn’t restricted exclusively to family, Bd. of Dirs. of Rotary Int’l, 481 U.S. at 545. The
right to association also implies a right not to associate. Roberts, 468 U.S. at 623.

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To determine whether a particular relationship is protected by the right to intimate
association we look to “size, purpose, selectivity, and whether others are excluded from
critical aspects of the relationship.” Bd. of Dirs. of Rotary Int’l, 481 U.S. at 546. The
roommate relationship easily qualifies: People generally have very few roommates; they
are selective in choosing roommates; and non-roommates are excluded from the critical
aspects of the relationship, such as using the living spaces. Aside from immediate family
or a romantic partner, it’s hard to imagine a relationship more intimate than that
between roommates, who share living rooms, dining rooms, kitchens, bathrooms, even
bedrooms.
Because of a roommate’s unfettered access to the home, choosing a roommate
implicates significant privacy and safety considerations. The home is the center of our
private lives. Roommates note our comings and goings, observe whom we bring back
at night, hear what songs we sing in the shower, see us in various stages of undress and
learn intimate details most of us prefer to keep private. . . .
Equally important, we are fully exposed to a roommate’s belongings, activities, habits,
proclivities and way of life. This could include matter we find offensive (pornography,
religious materials, political propaganda); dangerous (tobacco, drugs, firearms);
annoying (jazz, perfume, frequent overnight visitors, furry pets); habits that are
incompatible with our lifestyle (early risers, messy cooks, bathroom hogs, clothing
borrowers). When you invite others to share your living quarters, you risk becoming a
suspect in whatever illegal activities they engage in.
Government regulation of an individual’s ability to pick a roommate thus intrudes into
the home, which “is entitled to special protection as the center of the private lives of
our people.” Minnesota v. Carter, 525 U.S. 83, 99 (1998) (Kennedy, J., concurring). . . .
Holding that the FHA applies inside a home or apartment would allow the government
to restrict our ability to choose roommates compatible with our lifestyles. This would
be a serious invasion of privacy, autonomy and security.
For example, women will often look for female roommates because of modesty or
security concerns. As roommates often share bathrooms and common areas, a girl may
not want to walk around in her towel in front of a boy. She might also worry about
unwanted sexual advances or becoming romantically involved with someone she must
count on to pay the rent.

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An orthodox Jew may want a roommate with similar beliefs and dietary restrictions, so
he won’t have to worry about finding honey-baked ham in the refrigerator next to the
potato latkes. Non-Jewish roommates may not understand or faithfully follow all of
the culinary rules, like the use of different silverware for dairy and meat products, or
the prohibition against warming non-kosher food in a kosher microwave. . . .
It’s a “well-established principle that statutes will be interpreted to avoid constitutional
difficulties.” Frisby v. Schultz, 487 U.S. 474, 483 (1988). “[W]here an otherwise
acceptable construction of a statute would raise serious constitutional problems, the
Court will construe the statute to avoid such problems unless such construction is
plainly contrary to the intent of Congress.” Pub. Citizen v. U.S. Dep’t of Justice, 491 U.S.
440, 466 (1989). Because the FHA can reasonably be read either to include or exclude
shared living arrangements, we can and must choose the construction that avoids
raising constitutional concerns. . . . Reading “dwelling” to mean an independent
housing unit is a fair interpretation of the text and consistent with congressional intent.
Because the construction of “dwelling” to include shared living units raises substantial
constitutional concerns, we adopt the narrower construction that excludes roommate
selection from the reach of the FHA. . . .
As the underlying conduct is not unlawful, Roommate’s facilitation of discriminatory
roommate searches does not violate the FHA.
Notes and Questions
1. What’s a dwelling? The FHA defines “dwelling” as “any building, structure,
or portion thereof which is occupied as, or designed or intended for occupancy
as, a residence by one or more families.” Id. § 3602(b). Do you think the FHA
applies to college dormitories? Is it illegal to reserve some dormitories for
women or to have ethnic-themed dorms?
2. A broader Craigslist problem. It’s not unusual to stumble across
advertisements for apartments (as opposed to just roommate ads) on Craigslist
that violate the FHA. If a local newspaper published similar ads they would be
liable under the FHA for publishing discriminatory material. Why doesn’t
anyone sue Craigslist? The answer is that section 230(c) of the Communications
Decency Act provides internet service providers and website owners with broad

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immunity from liability for content posted by third parties. Craigslist and other
similar sites may voluntarily remove offending posts, but they are not required
to do so.

C. Exiting a Lease
Most leases expire either at the end of the agreed-upon term or when one party serves
the other with notice that they’ve decided not to renew for another period. Sometimes,
however, either a tenant or landlord seeks to get out of the lease before the negotiated
term concludes. For example, a new job in a faraway state, a family emergency, or a
business failure can all change a tenant’s needs or ability to pay the rent. We turn now
to the legal consequences of exiting a lease.

1. Landlord Exit: Transfer
Landlords may sell their properties to third parties at any time. The law categorizes a
landlord’s interest in rented property as a reversion and, like most other property
interests, the landlord’s reversion is fully alienable. But what happens to a lease if a
property is transferred? As a default rule, when a landlord sells his interest, the
purchaser takes subject to any leases. If there are tenants with unexpired term-of-years
leases, for example, the new landlord cannot evict them. Conversely, the tenants must
continue to pay the agreed upon rent to the new owner. If the lease is a periodic
tenancy (or tenancy at will), the new landlord may end the leasehold by providing the
tenant with the required notice. Until then, the leases continue unabated.
Remember that these are default rules, alterable by contract. In fact, landlords often
insert provisions into leases that give them the option to terminate rental agreements
upon sale of the property.

2. Tenant Exit: Transfer
Tenants have exit options, too. The default rule is that a tenant’s interest in a term of
years lease or periodic tenancy is also freely transferable. (Note, however, that a tenant
cannot transfer a tenancy at will to another party.) The law recognizes two types of
transfer: the assignment and the sublease. The vast majority of jurisdictions use an
objective test to distinguish the two. In an assignment, the original tenant transfers all

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of the remaining interest under the lease to a new tenant. In a sublease, on the other
hand, the original tenant transfers less than all of her remaining rights in the unexpired
period—the original tenant either gets the unit back at the end of the sublease or
reserves a right to cut the sublease short.
An example should illuminate the concepts. Imagine that the Witch leases her
Gingerbread Cottage to Hansel for a period of one year—January 1 to December 31—
in exchange for $100 a month. Four months into the lease, Hansel then transfers all
of his remaining interest in the property to Gretel so that she now has exclusive
possessory rights until the end of the term. This transfer is an assignment because
Hansel has no further rights in the property. If Hansel had retained for himself the
final two months of the lease or if he’d rented the cottage to Gretel for only the summer
months, we would then categorize the agreement as a sublease.

A minority of jurisdictions takes a less formalistic approach to the assignment/sublease
division. In these states, the subjective intent of the parties, rather than the structure
of the transaction, controls. Arkansas, for example, allows parties to designate their
leases as subleases or assignment (and receive all the attendant rights and obligations
under the chosen category) regardless of whether the new tenant takes the unit for the
entire remaining term.
The distinction between subleases and assignments has a few significant legal
consequences. Primarily, it affects who can benefit from the promises in the original
lease and who is on the hook for the obligations. Think again about the Hansel and
Gretel example described above. If Gretel, who took over the lease, stops making rent

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payments, whom can the landlord sue? The original tenant, Hansel? Gretel? Both?
What if the original one-year lease contained a provision allowing the tenant to renew
for a second year with the same terms? Can Gretel take advantage of that clause?
To enforce any promise, the law requires a certain type of legal relationship between
the parties, known as privity. Donald Trump, for example, cannot successfully sue you
if one of his Trump Tower tenants suddenly fails to pay rent—there’s simply no
connection between Trump and you. Trump could only sue you if a privity relationship
exists: either privity of contract or privity of estate. Privity of contract is easy enough to
understand. Parties are in privity of contract if they have entered into a valid contract
with each other. In our example, the Witch and Hansel are in privity of contract
because they signed the original lease agreement. The Witch gave Hansel the right to
exclusive possession for one year and Hansel promised to pay rent every month. As a
result of this legal relationship, the Witch has the option to sue Hansel if she doesn’t
receive rent. That remains true even if Hansel transfers his lease to someone else. That
bears repeating: the original tenant’s promise to pay the landlord stands until the
original lease expires (or until the landlord releases the tenant from this obligation).
When Hansel and the Witch first sign the lease, they also stand in privity of estate with
each other. This concept is yet another holdover from feudal times. Privity of estate
makes concrete the medieval belief that an individual takes on a series of rights and
obligations when they occupy land owned by another. * For our purposes, privity of
estate arises when two parties have successive ownership claims in the same property.
Hansel and the Witch have privity of estate because once Hansel’s possessory interest
concludes, his property rights flow immediately back to the Witch. Despite its archaic
origin, the idea remains important in modern property law because individuals in privity
of estate can sue each other directly for (some) violations of a rental agreement. †

* The medieval mind thought of rent as something that came from the land itself: the tenant paid the land-lord

out of the fruits of the land, sometimes metaphorically but sometimes literally, with crops harvested from the
land being leased.
† We’ll learn more about which promises “run with the land” in a later chapter about covenants.

enough to know that transferees can only enforce promises that concern the property or land.

For now, it’s

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Consider, again, what happens when Hansel transfers his rights in the gingerbread
cottage to Gretel. Can the Witch successfully haul Gretel into court if she stops making
payments? It should be obvious that Gretel has not made any direct agreement with
the Witch (or made any promise to benefit her) so they are not in privity of contract.
But what about privity of estate? This is where the distinction between assignments
and subleases matters. If Hansel assigns his interest to Gretel, then Gretel and the
Witch would be in privity of estate (and the Witch could sue Gretel for the missing
rent). We know they have privity of estate because when Gretel’s rights end under the
assignment, the Witch would immediately be entitled to exclusive possession of the
cottage—they have successive interests in the same piece of real estate. Conversely, if
Hansel subleases his apartment to Gretel for the summer, a privity relationship would
not arise between Gretel and the Witch. Instead, Gretel would have privity of estate
with Hansel because at the conclusion of Gretel’s interest, Hansel would have the right
to exclusive possession. Thus, under the sublease, the Witch could not sue Gretel for
rent.
Figuring out which parties stand in privity of estate can initially cause a lot of confusion.
However, asking two quick questions can help define these relationships. The first
step is to ask, “Have any tenants made an assignment of their rights?” If a tenant has
assigned their rights they have no chance of possessing the property again and, thus,
cannot stand in privity of estate with anyone (although they may still be in privity of
contract with various parties). For all the remaining tenants ask, “Who receives the
property when this tenant’s possessory rights finally end?” Remember, parties with
successive interests have privity of estate.
Although it may be redundant, a few diagrams may help clarify these relationships.
Assume that L leases an apartment to T. Whenever a landlord initially leases to a tenant
the two parties are in both privity of contract and privity of estate:

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When T’s rights
end,
L
gets
property
back,
establishing privity
of estate

Lease
establishes
privity of
contract

L and T are in privity of contract because they agreed on a lease contract. To figure out
the privity of estate relationships, we first ask if anyone has assigned their interest. The
answer here is “no.” For all remaining tenants, we inquire “who gets control over the
property when this tenant’s possessory rights end?” In this hypothetical, who gets the
leased premise when T’s term concludes? The answer, of course, is the landlord. T and
L are in privity of estate because the landlord gets the property back from the tenant
at the end of the lease.
The relationships change if T assigns his rights to a new party, T2. The diagram of an
assignment is below:

privity
privity

privity

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The contractual relationships are easy enough to map. As discussed earlier, when T
assigns his interest, he remains in privity of contract with L—they signed a rental
agreement that has not expired. T and T2 are also in privity of contract as a result of
the assignment contract. But what about privity of estate? L and T are no longer in
privity of estate because T has relinquished all of his property interests. Remember
that parties who assign their rights stand in privity of estate with no one. For all other
tenants we ask, “Who receives the property when this tenant’s possessory rights finally
end?” When T2’s possessory rights conclude, who takes control of the property? The
answer is the landlord. L and T2 now have a privity of estate relationship.
How do things change with a sublease?

privity
privity
privity

privity

As before, T remains in privity of contract with L for the duration of the original lease.
In this example, there are no assignments, so we begin by asking which parties have
successive property interests. When the possessory rights of T2 end, T will then have
control over the property. Thus T2 and T have a privity of estate relationship. Then,
when T’s rights over the property conclude, the possessory rights will flow back to the
landlord, meaning that T and L also have privity of estate.
Before moving on, one final wrinkle merits attention. As discussed earlier, when the
original tenant subleases or assigns his leasehold, the default rule is that the landlord
and the new tenant are not in privity of contract. It is possible, however, to create a
privity of contract relationship between the L and T2. Most often this is accomplished

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by including a clause in the takeover agreement between the original tenant and the
new tenant that reads, “New Tenant assumes the obligation to perform all of the
original tenant’s duties under the original lease.” If the new tenant takes on this
responsibility, the landlord becomes a third-party beneficiary to the agreement and
comes into privity of contract with the new tenant.
Problems
1. Landlord leases property to T1 from January 1, 2015 to December 31, 2015.
On March 1, T1 sold T2 her remaining interest in the property. On October 1,
T2 rented the property to T3 for two months. Describe the privity relationships
between all of the parties. If T3 stops sending rent payments to Landlord,
whom can the Landlord sue to recover the money?
2. Alger, a landlord, rents a commercial building to Brown for 5 years. Six months
into the lease, Brown subleases his interest to Clancy for 3 years. Clancy then
turns around and assigns his interest to Dahl. Describe the privity relationships
between all of the parties. If Dahl stops sending rent checks to Alger, whom
can Alger sue to recover the money.
3. Picasso, a landlord, rents an apartment to Renoir for one year. The lease
contains a provision allowing the tenant to renew the leasehold for a second
year on the same terms. Renoir assigns his interest in the lease to Seurat. Seurat
then assigns his interest to Turner. What are the privity relationships between
the parties? Can Turner exercise the renewal clause in the original lease? See
Castle v. Double Time, Inc., 737 P.2d 900 (Okla. 1987) (discussing renewal
clauses).
4. Landlord leases a unit to T1 for ten years beginning in 2010. In 2012, T1
transfers all of his right to T2 “for a period of five” years. In 2013, T2 subleases
to T3 for one year. What are the privity relationships and whom can the
landlord sue if T3 stops paying rent?
5. L leases a commercial property to T1 for ten years beginning in 2010. In 2012,
T1 assigns all of her interest to T2. A year later, T2 assigns all of her interest to
T3. In 2014, T3 subleases to T4 for a term of four years. In the sublease
contract, T4 agrees to assume “all of the covenants and promises” in the original

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lease between L and T1. In 2015, T4’s business fails and she ceases making
paying rent. What are the privity relationships? Whom can L sue to recover
the unpaid rent money?

3. Tenant Exit: Limiting the Right to Transfer
Under the traditional common law, leaseholds were freely transferable property
interests. Modern courts continue to recognize the alienability of tenancies as a default
position, but allow parties to contract around the basic rule. As a result, most leases
(including yours, probably) now contain some restriction on a tenant’s ability to assign
or sublease her property interests. For example, one oft-used lease agreement, which
can be downloaded for free from the Internet, includes the following provision: “The
tenant will not assign this Lease, or sublet or grant any concession or license to use the
Property or any part of the Property. Any assignment or subletting will be void and
will, at the Landlord’s option, terminate the Lease.” In most states, courts uphold such
bars on transfer as reasonable restraints on alienation. More controversial are clauses
that allow sublease or assignment but only “with the consent of the landlord.”
Julian v. Christopher
575 A.2d 735 (Md. 1990)
CHASANOW, Judge.
In 1961, this Court decided the case of Jacobs v. Klawans, 169 A.2d 677 (1961) and held
that when a lease contained a “silent consent” clause prohibiting a tenant from
subletting or assigning without the consent of the landlord, landlords had a right to
withhold their consent to a subletting or assignment even though the withholding of
consent was arbitrary and unreasonable. . . . We now have before us the issue of
whether the common law rule applied in Klawans should be changed.
In the instant case, the tenants, Douglas Julian and William J. Gilleland, III, purchased
a tavern and restaurant business, as well as rented the business premises from landlord,
Guy D. Christopher. The lease stated in clause ten that the premises, consisting of both
the tavern and an upstairs apartment, could not be assigned or sublet “without the prior
written consent of the landlord.” Sometime after taking occupancy, the tenants
requested the landlord’s written permission to sublease the upstairs apartment. The

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landlord made no inquiry about the proposed sublessee, but wrote to the tenants that
he would not agree to a sublease unless the tenants paid additional rent in the amount
of $150.00 per month. When the tenants permitted the sublessee to move in, the
landlord filed an action in the District Court of Maryland in Baltimore City requesting
repossession of the building because the tenants had sublet the premises without his
permission.
At the district court trial, the tenants testified that they specifically inquired about clause
ten, and were told by the landlord that the clause was merely included to prevent them
from subletting or assigning to “someone who would tear the apartment up.” The
district court judge refused to consider this testimony. He stated in his oral opinion
that he would “remain within the four corners of the lease, and construe the document
strictly,” at least as it pertained to clause ten. Both the District Court and, on appeal,
the Circuit Court for Baltimore City found in favor of the landlord. The circuit judge
noted: “If you don’t have the words that consent will not be unreasonably withheld,
then the landlord can withhold his consent for a good reason, a bad reason, or no
reason at all in the context of a commercial lease, which is what we’re dealing with.”
We granted certiorari to determine whether the Klawans holding should be modified in
light of the changes that have occurred since that decision.
While we are concerned with the need for stability in the interpretation of leases, we
recognize that since the Klawans case was decided in 1961, the foundations for that
holding have been substantially eroded. The Klawans opinion cited Restatement of
Property § 410 as authority for its holding. The current Restatement (Second) of
Property § 15.2 rejects the Klawans doctrine and now takes the position that:
A restraint on alienation without the consent of the landlord of the
tenant’s interest in the leased property is valid, but the landlord’s consent
to an alienation by the tenant cannot be withheld unreasonably, unless a
freely negotiated provision in the lease gives the landlord an absolute
right to withhold consent.
Another authority cited in Klawans in support of its holding was 2 R. Powell, Powell on
Real Property. The most recent edition of that text now states:

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Thus, if a lease clause prohibited the tenant from transferring his or her
interest without the landlord’s consent, the landlord could withhold
consent arbitrarily. This result was allowed because it was believed that
the objectives served by allowing the restraints outweighed the social
evils implicit in them, inasmuch as the restraints gave the landlord
control over choosing the person who was to be entrusted with the
landlord’s property and was obligated to perform the lease covenants. It
is doubtful that this reasoning retains full validity today. Relationships
between landlord and tenant have become more impersonal and housing
space (and in many areas, commercial space as well) has become scarce.
These changes have had an impact on courts and legislatures in varying
degrees. Modern courts almost universally adopt the view that
restrictions on the tenant’s right to transfer are to be strictly construed.
(Footnotes omitted.)

2 R. Powell, Powell on Real Property § 248[1] (1988).
Finally, in support of its decision in Klawans, this Court noted that, “although it,
apparently, has not been passed upon in a great number of jurisdictions, the decisions
of the courts that have determined the question are in very substantial accord.” Klawans,
169 A.2d at 679. This is no longer true. Since Klawans, the trend has been in the opposite
direction. “The modern trend is to impose a standard of reasonableness on the landlord
in withholding consent to a sublease unless the lease expressly states otherwise.”
Campbell v. Westdahl, 715 P.2d 288, 292 (Ariz. Ct. App. 1985). . . .
Traditional property rules favor the free and unrestricted right to alienate interests in
property. Therefore, absent some specific restriction in the lease, a lessee has the right
to freely alienate the leasehold interest by assignment or sublease without obtaining the
permission of the lessor. R. Schoshinski, American Law of Landlord and Tenant § 5:6
(1980); 1 American Law of Property § 3.56 (1952).
Contractual restrictions on the alienability of leasehold interests are permitted. R.
Cunningham, W. Stoebuck, and D. Whitman, The Law of Property § 12.40 (1984).
Consequently, landlords often insert clauses that restrict the lessee’s common law right
to freely assign or sublease. Id. Probably the most often used clause is a “silent consent”

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clause similar to the provision in the instant case, which provides that the premises may
not be assigned or sublet without the written consent of the lessor.
In a “silent consent” clause requiring a landlord’s consent to assign or sublease, there
is no standard governing the landlord’s decision. Courts must insert a standard. The
choice is usually between 1) requiring the landlord to act reasonably when withholding
consent, or 2) permitting the landlord to act arbitrarily and capriciously in withholding
consent.
Public policy requires that when a lease gives the landlord the right to withhold consent
to a sublease or assignment, the landlord should act reasonably, and the courts ought
not to imply a right to act arbitrarily or capriciously. If a landlord is allowed to arbitrarily
refuse consent to an assignment or sublease, for what in effect is no reason at all, that
would virtually nullify any right to assign or sublease.
Because most people act reasonably most of the time, tenants might expect that a
landlord’s consent to a sublease or assignment would be governed by standards of
reasonableness. Most tenants probably would not understand that a clause stating “this
lease may not be assigned or sublet without the landlord’s written consent” means the
same as a clause stating “the tenant shall have no right to assign or sublease.” Some
landlords may have chosen the former wording rather than the latter because it vaguely
implies, but does not grant to the tenant, the right to assign or sublet.
There are two public policy reasons why the law enunciated in Klawans should now be
changed. The first is the public policy against restraints on alienation. The second is
the public policy which implies a covenant of good faith and fair dealing in every
contract.
Because there is a public policy against restraints on alienation, if a lease is silent on the
subject, a tenant may freely sublease or assign. Restraints on alienation are permitted in
leases, but are looked upon with disfavor and are strictly construed. Powell on Real
Property, supra. If a clause in a lease is susceptible of two interpretations, public policy
favors the interpretation least restrictive of the right to alienate freely. Interpreting a
“silent consent” clause so that it only prohibits subleases or assignments when a
landlord’s refusal to consent is reasonable, would be the interpretation imposing the
least restraint on alienation and most in accord with public policy.

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Since the Klawans decision, this Court has recognized that in a lease, as well as in other
contracts, “there exists an implied covenant that each of the parties thereto will act in
good faith and deal fairly with the others.” Food Fair v. Blumberg, A.2d 166, 174 (1964).
When the lease gives the landlord the right to exercise discretion, the discretion should
be exercised in good faith, and in accordance with fair dealing; if the lease does not
spell out any standard for withholding consent, then the implied covenant of good faith
and fair dealing should imply a reasonableness standard.
We are cognizant of the value of the doctrine of stare decisis, and of the need for stability
and certainty in the law. However, as we noted in Harrison v. Mont. Co. Bd. of Educ., 456
A.2d 894, 903 (1983), a common law rule may be modified “where we find, in light of
changed conditions or increased knowledge, that the rule has become unsound in the
circumstances of modern life, a vestige of the past, no longer suitable to our people.”
The Klawans common law interpretation of the “silent consent” clause represents such
a “vestige of the past,” and should now be changed.
REASONABLENESS OF WITHHELD CONSENT
In the instant case, we need not expound at length on what constitutes a reasonable
refusal to consent to an assignment or sublease. We should, however, point out that
obvious examples of reasonable objections could include the financial irresponsibility
or instability of the transferee, or the unsuitability or incompatibility of the intended
use of the property by the transferee. We also need not expound at length on what
would constitute an unreasonable refusal to consent to an assignment or sublease. If
the reasons for withholding consent have nothing to do with the intended transferee
or the transferee’s use of the property, the motivation may be suspect. Where, as alleged
in this case, the refusal to consent was solely for the purpose of securing a rent increase,
such refusal would be unreasonable unless the new subtenant would necessitate
additional expenditures by, or increased economic risk to, the landlord.
PROSPECTIVE EFFECT
The tenants ask us to retroactively overrule Klawans, and hold that in all leases with
“silent consent” clauses, no matter when executed, consent to assign or sublease may
not be unreasonably withheld by a landlord. We decline to do so. In the absence of
evidence to the contrary, we should assume that parties executing leases when Klawans

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governed the interpretation of “silent consent” clauses were aware of Klawans and the
implications drawn from the words they used. We should not, and do not, rewrite these
contracts.
In appropriate cases, courts may “in the interest of justice” give their decisions only
prospective effect. Contracts are drafted based on what the law is; to upset such
transactions even for the purpose of improving the law could be grossly unfair. . . .
For leases with “silent consent” clauses which were entered into before the mandate in
this case, Klawans is applicable, and we assume the parties were aware of the court
decisions interpreting a “silent consent” clause as giving the landlord an unrestricted
right to withhold consent.
For leases entered into after the mandate in this case, if the lease contains a “silent
consent” clause providing that the tenant must obtain the landlord’s consent in order
to assign or sublease, such consent may not be unreasonably withheld. If the parties
intend to preclude any transfer by assignment or sublease, they may do so by a freely
negotiated provision in the lease. . . . For example, the clause might provide, “consent
may be withheld in the sole and absolute subjective discretion of the lessor.”
The final question is whether the tenants in the instant case, having argued successfully
for a change in the law, should receive the benefit of the change. . . . [Even though our
decision is to have only prospective effect] [t]he tenants in the instant case should get
the benefit of the interpretation of the “silent consent” clause that they so persuasively
argued for, unless this interpretation would be unfair to the landlord. We note that the
tenants testified they were told that the clause was only to prevent subleasing to
“someone who would tear the apartment up.” Therefore, we will reverse the judgment
of the Circuit Court with instructions to vacate the judgment of the District Court and
remand for a new trial. At that trial, the landlord will have the burden of establishing
that it would be unfair to interpret the “silent consent” clause in accordance with our
decision that a landlord must act reasonably in withholding consent. He may establish
that it would be unfair to do so by establishing that when executing the lease he was
aware of and relied on the Klawans interpretation of the “silent consent” clause. . . .

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Notes and Questions

1. Landlords love restrictions. Why are restrictions on transfer so common in
both commercial and residential leases? You might want to refer back to the
Sprawl-Mart example from earlier in the chapter, which makes clear why a
landlord and tenant might disagree about who should get the benefit of the
remaining term.
2. Status of the Julian rule. The approach taken in Julian, which reads a
reasonableness requirement into the lease, is still a minority rule. Roughly 15
states have taken a position similar to Maryland’s highest court, including
California, Illinois, North Carolina, and Ohio. Although the Julian/minority
approach has gained popularity in the last two decades (and is considered the
“modern” rule), it’s important to note that in most states a landlord may still
arbitrarily refuse to consent to any sublease or assignment under a “silent
consent” clause.
3. Contracting around the rule? Imagine a lease that includes the following
provision: “The tenant shall not sublease or assign any part of their interest in
the property without the Landlord’s written permission. The Landlord reserves
the absolute right to deny any request for any and all reasons at his sole and
absolute discretion.” Under the holding in Julian, would this clause be valid?
See RESTATEMENT (SECOND) PROPERTY § 15.2 (“A restraint on alienation with
the consent of the landlord of the tenant’s interest in the leased property is valid,
but the landlord’s consent to an alienation by the tenant cannot be withheld
unreasonably, unless a freely negotiated provision in the lease gives the landlord
an absolute right to withhold consent.”)
4. Defining reasonableness. What counts as a reasonable objection to a sublease
or assignment request? Courts in Illinois have found that it’s proper to consider:
(1) the sublessee’s credit history, (2) the sublessee’s capital on hand, (3) whether
the subleesee’s business is compatible with landlord’s other properties, (4)
whether the sublessee’s business will compete with those of the leassor or any
other lessee, and, (5) the subleesee’s expertise and business plan. See, e.g., Jack
Frost Sales, Inc. v. Harris Trust & Savings Bank, 433 N.E. 2d 941 (Ill. App. 3d

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1982). In most jurisdictions, tenants have the burden to show the sublessee or
assignee meets the reasonable commercial standard.
5. The Landlord’s Stance. Is the reasonableness rule fair to landlords? Imagine
you’re a landlord and your original tenant announces that they’re moving out
and proffers a subleasee for your approval. If you’re not completely satisfied
with the new tenant, should you object? If you say “no” and the tenant either
leaves or sues you, how much will that enforcement action cost?
6. Residential v. Commercial. Courts have not imposed the rule articulated in
Julian on residential tenants. Why not? Aren’t commercial tenants better able
to protect themselves and bargain than residential tenants? Consider the
following statute from a jurisdiction where residential leases account for a huge
proportion of extremely scarce housing stock: New York. As you read it,
consider whether and to what extent the statute permits parties to residential
leases to contract around its provisions, and whether it is more or less restrictive
than the rule of Julian.
New York Real Property Law § 226-B
1. Unless a greater right to assign is conferred by the lease, a tenant renting a residence
may not assign his lease without the written consent of the owner, which consent may
be unconditionally withheld without cause provided that the owner shall release the
tenant from the lease upon request of the tenant upon thirty days notice if the owner
unreasonably withholds consent which release shall be the sole remedy of the tenant.
If the owner reasonably withholds consent, there shall be no assignment and the tenant
shall not be released from the lease.
2. (a) A tenant renting a residence pursuant to an existing lease in a dwelling having
four or more residential units shall have the right to sublease his premises subject to
the written consent of the landlord in advance of the subletting. Such consent shall not
be unreasonably withheld.
(b) The tenant shall inform the landlord of his intent to sublease by mailing a notice of
such intent by certified mail, return receipt requested. Such request shall be
accompanied by the following information: (i) the term of the sublease, (ii) the name
of the proposed sublessee, (iii) the business and permanent home address of the

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proposed sublessee, (iv) the tenant’s reason for subletting, (v) the tenant’s address for
the term of the sublease, (vi) the written consent of any cotenant or guarantor of the
lease, and (vii) a copy of the proposed sublease, to which a copy of the tenant’s lease
shall be attached if available, acknowledged by the tenant and proposed subtenant as
being a true copy of such sublease.
(c) Within ten days after the mailing of such request, the landlord may ask the tenant
for additional information as will enable the landlord to determine if rejection of such
request shall be unreasonable. Any such request for additional information shall not be
unduly burdensome. Within thirty days after the mailing of the request for consent, or
of the additional information reasonably asked for by the landlord, whichever is later,
the landlord shall send a notice to the tenant of his consent or, if he does not consent,
his reasons therefor. Landlord’s failure to send such a notice shall be deemed to be a
consent to the proposed subletting. If the landlord consents, the premises may be
sublet in accordance with the request, but the tenant thereunder, shall nevertheless
remain liable for the performance of tenant’s obligations under said lease. If the
landlord reasonably withholds consent, there shall be no subletting and the tenant shall
not be released from the lease. If the landlord unreasonably withholds consent, the
tenant may sublet in accordance with the request and may recover the costs of the
proceeding and attorneys fees if it is found that the owner acted in bad faith by
withholding consent.
…
5. Any sublet or assignment which does not comply with the provisions of this section
shall constitute a substantial breach of lease or tenancy.
6. Any provision of a lease or rental agreement purporting to waive a provision of this
section is null and void.
Problems
1. Last year, X rented a storefront in a local strip mall and opened a successful
coffee shop. The lease is for 10 years and includes the following provision: “No
assignments or subleases without the landlord’s consent. Landlord can only
deny consent based on commercially reasonable objections.” Recently X was
offered her dream job on a coffee plantation in a faraway country. She now

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wishes to exit her lease. Must the Landlord consent to the following assignment
proposals?
a. Alfred plans to open a mattress store. He’s a college dropout with no
business experience but his rich father will co-sign the lease and
guarantee all payments get made on time.
b. Bob, an experienced therapist with good credit, wants to open a marriage
counseling practice targeted at same-sex couples. The landlord, however,
believes same-sex marriage is immoral and worries that the counseling
center will hurt the business of a Christian bookstore in the strip mall.
c. Cathy has a well-thought out plan to open a shooting range. The
Landlord agrees to the assignment on the condition that Cathy increase
the rent payment by $100/month. Cathy refuses.

4. Tenant Exit: Abandonment and the Duty to Mitigate
A tenant who needs to exit a lease early and cannot find another party to sublet must
seek out other alternatives. For example, a tenant can always ask her landlord to
terminate the lease before the term ends. The tenant generally agrees to turn over the
property and pay a small fee and, in return, the landlord releases the tenant from all
further obligations. This is called a surrender.
Alternatively, a tenant may simply pack her things, abandon the premise, and stop
making rent payments. This often happens if a tenant cannot work out a surrender
agreement or finds herself in desperate financial circumstances. What are the rights
and obligations of the parties in this scenario? What happens if a tenant breaks a lease
and leaves?

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The Pierre Apartments today

Sommer v. Kridel
378 A.2d 767 (N.J. 1977)
PASHMAN, J.
We granted certification in these cases to consider whether 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. Separate parts of the
Appellate Division held that, in accordance with their respective leases, the landlords
in both cases could recover rents due under the leases regardless of whether they had
attempted to re-let the vacated apartments. Although they were of different minds as
to the fairness of this result, both parts agreed that it was dictated by Joyce v. Bauman,
174 A. 693 (1934) . . . . We now reverse and hold that a landlord does have an obligation
to make a reasonable effort to mitigate damages in such a situation. We therefore
overrule Joyce v. Bauman to the extent that it is inconsistent with our decision today.
I.
This case was tried on stipulated facts. On March 10, 1972 the defendant, James Kridel,
entered into a lease with the plaintiff, Abraham Sommer, owner of the “Pierre
Apartments” in Hackensack, to rent apartment 6-L in that building. The term of the
lease was from May 1, 1972 until April 30, 1974, with a rent concession for the first six
weeks, so that the first month’s rent was not due until June 15, 1972.

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One week after signing the agreement, Kridel paid Sommer $690. Half of that sum was
used to satisfy the first month’s rent. The remainder was paid under the lease provision
requiring a security deposit of $345. Although defendant had expected to begin
occupancy around May 1, his plans were changed. He wrote to Sommer on May 19,
1972, explaining:
I was to be married on June 3, 1972. Unhappily the engagement was
broken and the wedding plans cancelled. Both parents were to assume
responsibility for the rent after our marriage. I was discharged from the
U.S. Army in October 1971 and am now a student. I have no funds of
my own, and am supported by my stepfather.
In view of the above, I cannot take possession of the apartment and am
surrendering all rights to it. Never having received a key, I cannot return
same to you.
I beg your understanding and compassion in releasing me from the lease,
and will of course, in consideration thereof, forfeit the 2 month’s rent
already paid.
Please notify me at your earliest convenience.
Plaintiff did not answer the letter.
Subsequently, a third party went to the apartment house and inquired about renting
apartment 6-L. Although the parties agreed that she was ready, willing and able to rent
the apartment, the person in charge told her that the apartment was not being shown
since it was already rented to Kridel. In fact, the landlord did not re-enter the apartment
or exhibit it to anyone until August 1, 1973. At that time it was rented to a new tenant
for a term beginning on September 1, 1973. The new rental was for $345 per month
with a six week concession similar to that granted Kridel.
Prior to re-letting the new premises, plaintiff sued Kridel in August 1972, demanding
$7,590, the total amount due for the full two-year term of the lease. Following a mistrial,
plaintiff filed an amended complaint asking for $5,865, the amount due between May
1, 1972 and September 1, 1973. The amended complaint included no reduction in the
claim to reflect the six week concession provided for in the lease or the $690 payment
made to plaintiff after signing the agreement. Defendant filed an amended answer to

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the complaint, alleging that plaintiff breached the contract, failed to mitigate damages
and accepted defendant’s surrender of the premises. He also counterclaimed to demand
repayment of the $345 paid as a security deposit.
The trial judge ruled in favor of defendant. Despite his conclusion that the lease had
been drawn to reflect “the ‘settled law’ of this state,” he found that “justice and fair
dealing” imposed upon the landlord the duty to attempt to re-let the premises and
thereby mitigate damages. He also held that plaintiff’s failure to make any response to
defendant’s unequivocal offer of surrender was tantamount to an acceptance, thereby
terminating the tenancy and any obligation to pay rent. As a result, he dismissed both
the complaint and the counterclaim. The Appellate Division reversed in a per curiam
opinion, 153 N.J.Super. 1 (1976), and we granted certification. . . .
II
As the lower courts in both appeals found, the weight of authority in this State supports
the rule that a landlord is under no duty to mitigate damages caused by a defaulting
tenant. See Joyce v. Bauman, supra . . . . This rule has been followed in a majority of
states . . . and has been tentatively adopted in the American Law Institute’s Restatement
of Property. . . .
Nevertheless, while there is still a split of authority over this question, the trend among
recent cases appears to be in favor of a mitigation requirement. . . .
The majority rule is based on principles of property law which equate a lease with a
transfer of a property interest in the owner’s estate. Under this rationale the lease
conveys to a tenant an interest in the property which forecloses any control by the
landlord; thus, it would be anomalous to require the landlord to concern himself with
the tenant’s abandonment of his own property. Wright v. Baumann, 398 P.2d 119, 12021 (Or. 1965).
For instance, in Muller v. Beck, supra, where essentially the same issue was posed, the
court clearly treated the lease as governed by property, as opposed to contract, precepts.
The court there observed that the “tenant had an estate for years, but it was an estate
qualified by this right of the landlord to prevent its transfer,” 110 A. at 832, and that
“the tenant has an estate with which the landlord may not interfere.” Id. at 832. Similarly,
in Heckel v. Griese, supra, the court noted the absolute nature of the tenant’s interest in

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the property while the lease was in effect, stating that “when the tenant vacated, . . . no
one, in the circumstances, had any right to interfere with the defendant’s possession of
the premises.” 171 A. 148, 149. Other cases simply cite the rule announced in Muller v.
Beck, supra, without discussing the underlying rationale. See Joyce v. Bauman, supra, 174 A.
693 . . . .
Yet the distinction between a lease for ordinary residential purposes and an ordinary
contract can no longer be considered viable. As Professor Powell observed, evolving
“social factors have exerted increasing influence on the law of estates for years.” 2
Powell on Real Property (1977 ed.), § 221(1) at 180-81. The result has been that:
[t]he complexities of city life, and the proliferated problems of modern
society in general, have created new problems for lessors and lessees and
these have been commonly handled by specific clauses in leases. This
growth in the number and detail of specific lease covenants has
reintroduced into the law of estates for years a predominantly
contractual ingredient.
(Id. at 181). . . .
This Court has taken the lead in requiring that landlords provide housing services to
tenants in accordance with implied duties which are hardly consistent with the property
notions expressed in Muller v. Beck, supra, and Heckel v. Griese, supra. See Braitman v.
Overlook Terrace Corp., 346 A.2d 76 (1975) (liability for failure to repair defective
apartment door lock); Berzito v. Gambino, 308 A.2d 17 (1973) (construing implied
warranty of habitability and covenant to pay rent as mutually dependent); Marini v.
Ireland, 265 A.2d 526 (1970) (implied covenant to repair); Reste Realty Corp. v. Cooper, 251
A.2d 268 (1969) (implied warranty of fitness of premises for leased purpose). In fact,
in Reste Realty Corp. v. Cooper, supra, we specifically noted that the rule which we
announced there did not comport with the historical notion of a lease as an estate for
years. 251 A.2d 268. And in Marini v. Ireland, supra, we found that the “guidelines
employed to construe contracts have been modernly applied to the construction of
leases.” 265 A.2d at 532.

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Application of the contract rule requiring mitigation of damages to a residential lease
may be justified as a matter of basic fairness. Professor McCormick first commented
upon the inequity under the majority rule when he predicted in 1925 that eventually:
4

the logic, inescapable according to the standards of a ‘jurisprudence of
conceptions’ which permits the landlord to stand idly by the vacant,
abandoned premises and treat them as the property of the tenant and
recover full rent, [will] yield to the more realistic notions of social
advantage which in other fields of the law have forbidden a recovery for
damages which the plaintiff by reasonable efforts could have avoided.
(McCormick, The Rights of the Landlord Upon Abandonment of the Premises by
the Tenant, 23 Mich. L. Rev. 211, 221-22 (1925)).
Various courts have adopted this position.
The pre-existing rule cannot be predicated upon the possibility that a landlord may lose
the opportunity to rent another empty apartment because he must first rent the
apartment vacated by the defaulting tenant. Even where the breach occurs in a multidwelling building, each apartment may have unique qualities which make it attractive
to certain individuals. Significantly, in Sommer v. Kridel, there was a specific request to
rent the apartment vacated by the defendant; there is no reason to believe that absent
this vacancy the landlord could have succeeded in renting a different apartment to this
individual.
We therefore hold that antiquated real property concepts which served as the basis for
the pre-existing rule, shall no longer be controlling where there is a claim for damages
under a residential lease. Such claims must be governed by more modern notions of
fairness and equity. A landlord has a duty to mitigate damages where he seeks to recover
rents due from a defaulting tenant.
If the landlord has other vacant apartments besides the one which the tenant has
abandoned, the landlord’s duty to mitigate consists of making reasonable efforts to relet the apartment. In such cases he must treat the apartment in question as if it was one
of his vacant stock.
As part of his cause of action, the landlord shall be required to carry the burden of
proving that he used reasonable diligence in attempting to re-let the premises. We note

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that there has been a divergence of opinion concerning the allocation of the burden of
proof on this issue. See Annot., supra, s 12 at 577. While generally in contract actions
the breaching party has the burden of proving that damages are capable of mitigation . . .
here the landlord will be in a better position to demonstrate whether he exercised
reasonable diligence in attempting to re-let the premises. . . .
III
The Sommer v. Kridel case presents a classic example of the unfairness which occurs
when a landlord has no responsibility to minimize damages. Sommer waited 15 months
and allowed $4658.50 in damages to accrue before attempting to re-let the apartment.
Despite the availability of a tenant who was ready, willing and able to rent the apartment,
the landlord needlessly increased the damages by turning her away. While a tenant will
not necessarily be excused from his obligations under a lease simply by finding another
person who is willing to rent the vacated premises, see, e. g., Reget v. Dempsey-Tegler &
Co., 216 N.E.2d 500 (Ill. App.1966) (new tenant insisted on leasing the premises under
different terms); Edmands v. Rust & Richardson Drug Co., 77 N.E. 713 (Mass. 1906)
(landlord need not accept insolvent tenant), here there has been no showing that the
new tenant would not have been suitable. We therefore find that plaintiff could have
avoided the damages which eventually accrued, and that the defendant was relieved of
his duty to continue paying rent. Ordinarily we would require the tenant to bear the
cost of any reasonable expenses incurred by a landlord in attempting to re-let the
premises . . . but no such expenses were incurred in this case. . . .
In assessing whether the landlord has satisfactorily carried his burden, the trial court
shall consider, among other factors, whether the landlord, either personally or through
an agency, offered or showed the apartment to any prospective tenants, or advertised
it in local newspapers. Additionally, the tenant may attempt to rebut such evidence by
showing that he proffered suitable tenants who were rejected. However, there is no
standard formula for measuring whether the landlord has utilized satisfactory efforts
in attempting to mitigate damages, and each case must be judged upon its own facts.
Compare . . . Carpenter v. Wisniewski, 215 N.E.2d 882 (Ind. App.1966) (duty satisfied
where landlord advertised the premises through a newspaper, placed a sign in the
window, and employed a realtor); Re Garment Center Capitol, Inc., 93 F.2d 667, 115 A.L.R.
202 (2 Cir. 1938) (landlord’s duty not breached where higher rental was asked since it

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was known that this was merely a basis for negotiations); Foggia v. Dix, 509 P.2d 412,
414 (Or. 1973) (in mitigating damages, landlord need not accept less than fair market
value or “substantially alter his obligations as established in the pre-existing lease”); with
Anderson v. Andy Darling Pontiac, Inc., 43 N.W.2d 362 (Wis. 1950) (reasonable diligence
not established where newspaper advertisement placed in one issue of local paper by a
broker); . . . Consolidated Sun Ray, Inc. v. Oppenstein, 335 F.2d 801, 811 (8 Cir. 1964)
(dictum) (demand for rent which is “far greater than the provisions of the lease called
for” negates landlord’s assertion that he acted in good faith in seeking a new tenant).
IV
The judgment in Sommer v. Kridel is reversed.
Notes and Questions
1. The basic law. Today almost all states impose a duty to mitigate on residential
landlords. The rule also applies to commercial tenancies in many states. The
Restatement (Second) of Property § 12.1(3), however, continues to cling to the
common law notion that a landlord can wait until the end of the term and then
sue the tenant for all of the unpaid rent. The authors of the Restatement believe
the traditional rule discourages abandonment, limits vandalism, and better
protects the expectations of landlords. The New York courts have similarly
continued to uphold the traditional common law rule in both residential and
commercial contexts, primarily to avoid unsettling the expectations of landlords
and tenants as to their legal rights and obligations. See Holy Properties, Ltd. v.
Kenneth Cole Productions, Inc., 87 N.Y.2d 130, 134 (1995) (commercial
leases); Rios v. Carrillo, 861 N.Y.S.2d 129 (N.Y App. Div. 2d 2008) (residential
leases). But see Jeremy N. Sheff, A Tale of Two Cities: The Residential Landlord’s Duty
to Mitigate in New York, 25 J. CIV. RTS. & ECON. DEV. 673 (2011) (discussing
earlier lower court rulings in New York that had applied a duty to mitigate in
the residential context).
2. Tenants still on the hook. Importantly, the duty to mitigate does not relieve
an abandoning tenant of all liability. Even if a new tenant rents the unit, the
landlord can still recover damages for all of the costs of finding the replacement
tenant and for any time that the unit remained empty. The landlord can also

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recoup any unpaid rent that accrued before the abandonment. Finally, if the
rental market in the area has softened and landlord is forced to rent the unit at
lower price, the tenant is responsible for the difference between the new rent
and the original rent.
3. Property v. Contract. The lingering controversy over the duty to mitigate
stems largely from the property/contract tension inherent in the nature of the
lease. If a leasehold is primarily a property interest, then the landlord has few
responsibilities to the tenant after ceding possession and control—the tenant is
free to use the property or let it lay fallow. If, on the other hand, the lease is
viewed through the lens of contract law, the parties clearly have a responsibility
to mitigate damages. But see Edward Chase & E. Hunter Taylor, Jr., Landlord
and Tenant: A Study in Prooperty and Contract, 30 VILL. L. REV. 571 (1985) (arguing
the distinction is overstated).
4. What’s a good faith effort? Ken rents an apartment to Sarah for one year.
Three months into the lease, Sarah gets a new job in a different state and turns
the apartment back over to Ken. Ken puts an 8x11 “for rent” sign in the
window of the unit. Has he made a good faith effort to mitigate damages? Does
it matter how he advertises the other units? What if Tim offers to rent Sarah’s
unit but Tim has bad credit: does Ken have to accept Tim?
5. The Legend of Jim Kridel. The woman Jim Kridel intended to marry came
from a family with significant assets. When the engagement fell through,
Kridel—who had no income of his own—could not afford the rent at the Pierre
Apartments. The opinion mentions that Kridel notified Sommer of his
predicament in writing, but does not reflect that Kridel and Sommer also had a
heated discussion on the phone. During the telephone conversation, Kridel
offered Sommer $750 of the pre-paid rent as compensation for breaking the
lease (adjusted for inflation, that’s roughly equivalent to $3000 today). Sommer,
however, knew that Kridel’s stepfather was a prominent (and presumably welloff) physician and demanded an additional $750. Kridel refused, and told
Sommer, “If you don’t like it, you can sue me, baby!” Sommer did just that.
When the litigation began, Kridel was a first year law student at Rutgers. He
initially represented himself but gradually picked up pro bono help from lawyers

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he met at summer jobs and partners in the firm where he worked after
graduating. Kridel estimates that Sommer—a very wealthy landlord—spent
over $500,000 on legal fees. Kridel also recalls that the law of New Jersey was
firmly against his position that the lease should be governed by contract
principles. On appeal, he relied primarily on a case from the state of Oregon,
which opposing counsel disparaged as a place full of bumpkin fishermen and
loggers. When Kridel won, he wrapped the opinion around an Oregon salmon
and sent to Sommer’s lawyers. Asked why he pursued the case with such vigor,
he replied, “Sommer was wrong. The rule was unfair. And I was probably the
only tenant in New Jersey who could afford to pour that much time and
attention into a case like that.” In the intervening years, Kridel has had a long
and successful legal career in New Jersey and New York. He’s currently best
known for representing Real Housewives of New Jersey star Teresa Giudice in her
bankruptcy proceeding.

5. Tenant Exit: Eviction
If a tenant fails to pay rent or otherwise commits a material breach of the lease, the
landlord can elect to terminate the leasehold and evict the tenant from the property. It
is undoubtedly true that the eviction process and the subsequent scramble for a new
place to live can be a traumatic, humiliating, and disruptive occurrence. Eviction
displaces children from their schools, rends the social networks of the poor, and forces
many families into shelters or onto the streets. Matthew Desmond, a sociologist at
Harvard, has found that forced relocations are also shockingly common. In Milwaukee,
the location of Desmond’s research, 17 percent of the moves undertaken by renters
over a two-year period were forced relocations. See Matthew Desmond et al., Forced
Relocation and Residential Instability Among Urban Renters, 89 SOC. SCI. REV. 227 (2015). In
response to the social cost of eviction, some American cities and many countries
around the world make it difficult for landlords to remove tenants. Should more U.S.
jurisdictions follow suit? Consider the following story:
A patient political scientist … might be able to place American cities on
a left-to-right spectrum according to how long tenants whose eviction
has become a cause manage to stay where they are. It may be, for
instance that some city like Houston is on the far right of the

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spectrum. . . . Houston’s most powerful citizens are known for a
devotion to private property so intense that they see routine planning
and zoning as acts of naked confiscation. . . . San Francisco might qualify
for the left end of the spectrum. [I]ts best-known evictees [are] the
tenants of the run-down three-story building called the International
Hotel . . . . In the fall of 1968, about a hundred and fifty people who
were living in the hotel . . . were told to be out of the building by January
1, 1969. The building was finally cleared—in what amounted to a
military operation requiring several hundred policemen—on August 4,
1977.
Calvin Trillin, Some Thoughts on the International Hotel Controversy, NEW YORKER, Dec. 19,
1977, at 116.
Notes and Questions
1. Would you rather be a tenant in a place like Houston—where evictions happen
quickly—or in San Francisco—where they do not?
2. Imagine you’re a landlord in a jurisdiction where it takes a long time to remove
a tenant for non-payment of rent. How would that change your business
strategy? Would you ever take a chance on a tenant with bad credit or a history
of being evicted?
3. The COVID-19 epidemic interrupted the income of millions of Americans in
early 2020, leading to fears of widespread defaults on rent and mortgage
payments. Several jurisdictions, as well as Congress, attempted to stave off mass
dislocations and housing loss by imposing moratoria on evictions, with varying
degrees of coverage and effect. See, e.g., CARES Act, Pub. L. No. 116-136 §
4024, 134 Stat. 281, 492-94 (Mar. 27, 2020), codified at 15 U.S.C. § 9058
(imposing a 120 day moratorium on the filing of eviction proceedings or the
charging of nonpayment penalties by any residential landlord whose property is
subject to a federally backed mortgage or certain other federal funding
programs). What is likely to be the net effect of such measures? How useful
would it be for landlords to initiate eviction proceedings for nonpayment of
rent during the sharpest economic decline on record anyway?

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We turn now to the procedure of eviction. When a landlord believes that a tenant has
committed a material breach of the lease, how exactly does she go about removing a
lessee from the property?
Berg v. Wiley
264 N.W.2d 145 (Minn. 1978)
ROGOSHESKE, Justice.
Defendant landlord, Wiley Enterprises, Inc., and defendant Rodney A. Wiley (hereafter
collectively referred to as Wiley) appeal from a judgment upon a jury verdict awarding
plaintiff tenant, A Family Affair Restaurant, Inc., damages for wrongful eviction from
its leased premises. The issues for review are whether the evidence was sufficient to
support the jury’s finding that the tenant did not abandon or surrender the premises
and whether the trial court erred in finding Wiley’s reentry forcible and wrongful as a
matter of law. We hold that the jury’s verdict is supported by sufficient evidence and
that the trial court’s determination of unlawful entry was correct as a matter of law, and
affirm the judgment.
On November 11, 1970, Wiley, as lessor . . . executed a written lease agreement letting
land and a building in Osseo, Minnesota, for use as a restaurant. The lease provided a
5-year term beginning December 1, 1970, and specified that the tenant agreed to bear
all costs of repairs and remodeling, to “make no changes in the building structure”
without prior written authorization from Wiley, and to “operate the restaurant in a
lawful and prudent manner.” Wiley also reserved the right “at (his) option (to) retake
possession” of the premises “(s)hould the Lessee fail to meet the conditions of this
Lease.”1 In early 1971, plaintiff Kathleen Berg took assignment of the lease from the
prior lessee, and on May 1, 1971, she opened “A Family Affair Restaurant” on the
premises. In January 1973, Berg incorporated the restaurant and assigned her interest
in the lease to “A Family Affair Restaurant, Inc.” As sole shareholder of the
corporation, she alone continued to act for the tenant.
The present dispute has arisen out of Wiley’s objection to Berg’s continued remodeling
of the restaurant without procuring written permission and her consequent operation
of the restaurant in a state of disrepair with alleged health code violations. Strained
relations between the parties came to a head in June and July 1973. In a letter dated

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June 29, 1973, Wiley’s attorney charged Berg with having breached lease items 5 and 6
by making changes in the building structure without written authorization and by
operating an unclean kitchen in violation of health regulations. The letter demanded
that a list of eight remodeling items be completed within 2 weeks from the date of the
letter, by Friday, July 13, 1973, or Wiley would retake possession of the premises under
lease item 7. Also, a June 13 inspection of the restaurant by the Minnesota Department
of Health had produced an order that certain listed changes be completed within
specified time limits in order to comply with the health code. The major items on the
inspector’s list, similar to those listed by Wiley’s attorney, were to be completed by July
15, 1973.
During the 2-week deadline set by both Wiley and the health department, Berg
continued to operate the restaurant without closing to complete the required items of
remodeling. The evidence is in dispute as to whether she intended to permanently close
the restaurant and vacate the premises at the end of the 2 weeks or simply close for
about 1 month in order to remodel to comply with the health code. At the close of
business on Friday, July 13, 1973, the last day of the 2-week period, Berg dismissed her
employees, closed the restaurant, and placed a sign in the window saying “Closed for
Remodeling.” Earlier that day, Berg testified, Wiley came to the premises in her absence
and attempted to change the locks. When she returned and asserted her right to
continue in possession, he complied with her request to leave the locks unchanged.
Berg also testified that at about 9:30 p. m. that evening, while she and four of her
friends were in the restaurant, she observed Wiley hanging from the awning peering
into the window. Shortly thereafter, she heard Wiley pounding on the back door
demanding admittance. Berg called the county sheriff to come and preserve order.
Wiley testified that he observed Berg and a group of her friends in the restaurant
removing paneling from a wall. Allegedly fearing destruction of his property, Wiley
called the city police, who, with the sheriff, mediated an agreement between the parties
to preserve the status quo until each could consult with legal counsel on Monday, July
16, 1973.
Wiley testified that his then attorney advised him to take possession of the premises
and lock the tenant out. Accompanied by a police officer and a locksmith, Wiley
entered the premises in Berg’s absence and without her knowledge on Monday, July
16, 1973, and changed the locks. Later in the day, Berg found herself locked out. The

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lease term was not due to expire until December 1, 1975. The premises were re-let to
another tenant on or about August 1, 1973. Berg brought this damage action against
Wiley . . . . [for] intentional infliction of emotional distress . . . and other tort damages
based upon claims in wrongful eviction. . . . Wiley answered with an affirmative defense
of abandonment and surrender and counterclaimed for damage to the premises. . . .
With respect to the wrongful eviction claim, the trial court found as a matter of law
that Wiley did in fact lock the tenant out, and that the lockout was wrongful.
The jury, by answers to the questions submitted, found no liability on Berg’s claim for
intentional infliction of emotional distress and no liability on Wiley’s counterclaim for
damages to the premises, but awarded Berg $31,000 for lost profits and $3,540 for loss
of chattels resulting from the wrongful lockout. The jury also specifically found that
Berg neither abandoned nor surrendered the premises. . . .
On this appeal, Wiley seeks an outright reversal of the damages award for wrongful
eviction, claiming insufficient evidence to support the jury’s finding of no
abandonment or surrender and claiming error in the trial court’s finding of wrongful
eviction as a matter of law.
The first issue before us concerns the sufficiency of evidence to support the jury’s
finding that Berg had not abandoned or surrendered the leasehold before being locked
out by Wiley. Viewing the evidence to support the jury’s special verdict in the light
most favorable to Berg, as we must, we hold it amply supports the jury’s finding of no
abandonment or surrender of the premises. While the evidence bearing upon Berg’s
intent was strongly contradictory, the jury could reasonably have concluded, based on
Berg’s testimony and supporting circumstantial evidence, that she intended to retain
possession, closing temporarily to remodel. Thus, the lockout cannot be excused on
ground that Berg abandoned or surrendered the leasehold.
The second and more difficult issue is whether Wiley’s self-help repossession of the
premises by locking out Berg was correctly held wrongful as a matter of law.
Minnesota has historically followed the common-law rule that a landlord may rightfully
use self-help to retake leased premises from a tenant in possession without incurring
liability for wrongful eviction provided two conditions are met: (1) The landlord is
legally entitled to possession, such as where a tenant holds over after the lease term or

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where a tenant breaches a lease containing a reentry clause; and (2) the landlord’s means
of reentry are peaceable. Mercil v. Broulette, 69 N.W. 218 (1896). Under the commonlaw rule, a tenant who is evicted by his landlord may recover damages for wrongful
eviction where the landlord either had no right to possession or where the means used
to remove the tenant were forcible, or both. See, e. g., Poppen v. Wadleigh, 51 N.W.2d 75
(1952) . . . .
Wiley contends that Berg had breached the provisions of the lease, thereby entitling
Wiley, under the terms of the lease, to retake possession, and that his repossession by
changing the locks in Berg’s absence was accomplished in a peaceful manner. In a
memorandum accompanying the post-trial order, the trial court stated two grounds for
finding the lockout wrongful as a matter of law: (1) It was not accomplished in a
peaceable manner and therefore could not be justified under the common-law rule, and
(2) any self-help reentry against a tenant in possession is wrongful under the growing
modern doctrine that a landlord must always resort to the judicial process to enforce
his statutory remedy against a tenant wrongfully in possession. Whether Berg had in
fact breached the lease and whether Wiley was hence entitled to possession was not
judicially determined. . . .
In applying the common-law rule, we have not before had occasion to decide what
means of self-help used to dispossess a tenant in his absence will constitute a
nonpeaceable entry, giving a right to damages without regard to who holds the legal
right to possession. Wiley argues that only actual or threatened violence used against a
tenant should give rise to damages where the landlord had the right to possession. We
cannot agree.
It has long been the policy of our law to discourage landlords from taking the law into
their own hands, and our decisions and statutory law have looked with disfavor upon
any use of self-help to dispossess a tenant in circumstances which are likely to result in
breaches of the peace. We gave early recognition to this policy in Lobdell v. Keene, 88
N.W. 426, 430 (1901), where we said:
“The object and purpose of the legislature in the enactment of the
forcible entry and unlawful detainer statute was to prevent those
claiming a right of entry or possession of lands from redressing their
own wrongs by entering into possession in a violent and forcible manner.

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All such acts tend to a breach of the peace, and encourage high-handed
oppression. The law does not permit the owner of land, be his title ever
so good, to be the judge of his own rights with respect to a possession
adversely held, but puts him to his remedy under the statutes.”

To facilitate a resort to judicial process, the legislature has provided a summary
procedure in Minn. St. 566.02 to 566.17 whereby a landlord may recover possession of
leased premises upon proper notice and showing in court in as little as 3 to 10 days. As
we recognized in Mutual Trust Life Ins. Co. v. Berg, 246 N.W. 9, 10 (1932), “(t)he forcible
entry and unlawful detainer statutes were intended to prevent parties from taking the
law into their own hands when going into possession of lands and tenements . . . .” To
further discourage self-help, our legislature has provided treble damages for forcible
evictions, ss 557.08 and 557.09, and has provided additional criminal penalties for
intentional and unlawful exclusion of a tenant. § 504.25. In Sweeney v. Meyers, supra, we
allowed a business tenant not only damages for lost profits but also punitive damages
against a landlord who, like Wiley, entered in the tenant’s absence and locked the tenant
out.
In the present case, as in Sweeney, the tenant was in possession, claiming a right to
continue in possession adverse to the landlord’s claim of breach of the lease, and had
neither abandoned nor surrendered the premises. Wiley, well aware that Berg was
asserting her right to possession, retook possession in her absence by picking the locks
and locking her out. The record shows a history of vigorous dispute and keen animosity
between the parties. Upon this record, we can only conclude that the singular reason
why actual violence did not erupt at the moment of Wiley’s changing of the locks was
Berg’s absence and her subsequent self-restraint and resort to judicial process. Upon
these facts, we cannot find Wiley’s means of reentry peaceable under the common-law
rule. Our long-standing policy to discourage self-help which tends to cause a breach of
the peace compels us to disapprove the means used to dispossess Berg. To approve
this lockout, as urged by Wiley, merely because in Berg’s absence no actual violence
erupted while the locks were being changed, would be to encourage all future tenants,
in order to protect their possession, to be vigilant and thereby set the stage for the very
kind of public disturbance which it must be our policy to discourage. . . .
We recognize that the growing modern trend departs completely from the commonlaw rule to hold that self-help is never available to dispossess a tenant who is in

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possession and has not abandoned or voluntarily surrendered the premises. Annotation,
6 A.L.R.3d 177, 186; 76 Dickinson L.Rev. 215, 227. This growing rule is founded on
the recognition that the potential for violent breach of peace inheres in any situation
where a landlord attempts by his own means to remove a tenant who is claiming
possession adversely to the landlord. Courts adopting the rule reason that there is no
cause to sanction such potentially disruptive self-help where adequate and speedy
means are provided for removing a tenant peacefully through judicial process. At least
16 states have adopted this modern rule, holding that judicial proceedings, including
the summary procedures provided in those states’ unlawful detainer statutes, are the
exclusive remedy by which a landlord may remove a tenant claiming possession. . . .
While we would be compelled to disapprove the lockout of Berg in her absence under
the common-law rule as stated, we approve the trial court’s reasoning and adopt as
preferable the modern view represented by the cited cases. To make clear our departure
from the common-law rule for the benefit of future landlords and tenants, we hold
that, subsequent to our decision in this case, the only lawful means to dispossess a
tenant who has not abandoned nor voluntarily surrendered but who claims possession
adversely to a landlord’s claim of breach of a written lease is by resort to judicial process.
We find that Minn.St. 566.02 to 566.17 provide the landlord with an adequate remedy
for regaining possession in every such case. Where speedier action than provided in §§
566.02 to 566.17 seems necessary because of threatened destruction of the property or
other exigent circumstances, a temporary restraining order under Rule 65, Rules of
Civil Procedure, and law enforcement protection are available to the landlord.
Considered together, these statutory and judicial remedies provide a complete answer
to the landlord. In our modern society, with the availability of prompt and sufficient
legal remedies as described, there is no place and no need for self-help against a tenant
in claimed lawful possession of leased premises.
Applying our holding to the facts of this case, we conclude, as did the trial court, that
because Wiley failed to resort to judicial remedies against Berg’s holding possession
adversely to Wiley’s claim of breach of the lease, his lockout of Berg was wrongful as
a matter of law. The rule we adopt in this decision is fairly applied against Wiley, for it
is clear that, applying the older common-law rule to the facts and circumstances
peculiar to this case, we would be compelled to find the lockout nonpeaceable for the
reasons previously stated. The jury found that the lockout caused Berg damage and, as

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between Berg and Wiley, equity dictates that Wiley, who himself performed the act
causing the damage, must bear the loss.
Affirmed.
Notes and Questions
1. Who did what wrong? Kathleen Berg, the tenant, never missed a rent payment.
Why, exactly, did Wiley think he was entitled to enter the property and exclude
the tenant? Is Rodney Wiley at fault for this dispute? If you were his lawyer at
the time, would you have given him different advice? If he was entitled to
possession, how did he end up owing $34,500 to Berg?
2. Tending to Cause a Breach of the Peace. In case you aren’t convinced that
repossession carries an inherent risk of a breach of the peace, consider the story
of Erskine G. Bryce. In the summer of 2001, Mr. Bryce—a 66-year-old city
marshal in Brooklyn, New York—arrived at the second-story apartment of 53year-old JoAnne Jones to remove her from possession pursuant to a duly issued
court order for her eviction. At the time, Ms. Jones owed about $14,000 in back
rent. She violently attacked the marshal, knocking him over a stairwell railing
down to the ground floor below. Mr. Bryce’s head hit a refrigerator on the way
down. Ms. Jones grabbed an aluminum rod, ran down the stairs, and began
beating Mr. Bryce with the rod. She then doused his body with paint thinner
and set him on fire with a cigarette lighter. Almost as quickly as it had arisen,
Ms. Jones’s rage subsided, and she attempted to put out the flames she had
ignited by running back and forth to her apartment to fetch basins of water—
but it was too late. The medical examiner concluded that Mr. Bryce died from
a combination of blunt force injuries and the flames that quickly consumed his
upper body—in other words, that he had been beaten to within an inch of his
life and then burned alive. C.J. Chivers, Tenant Held in Murder of Marshal, N.Y.
TIMES (Aug. 23, 2001).
Mr. Bryce had two decades of experience as a marshal and a reputation for
dealing calmly and compassionately with those he evicted. He was a stranger to
Ms. Jones until he arrived to evict her. But in the moment, the situation still
exploded into horrific, deadly violence. How much more likely do we think such

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violence would be where a landlord—who has a personal stake in recovering
possession, no particular professional experience in managing or defusing tense
situations, no imprimatur of government authority, and a bitter history with the
tenant—attempts to repossess?
3. Do landlords love violence? If the court here is correct that all self-help
remedies contain the inherent potential for violence, why do landlords seem so
eager to employ them? Why would a landlord ever resist going through the court
process, which the Justice Rogosheske describes as “adequate and speedy”?
4. Can landlords stand their ground? Many states have so-called “stand your
ground” laws. Stand your ground laws authorize individuals to use deadly force
in self-defense when faced with a reasonable threat. There is no duty to retreat
first. Why are legislatures concerned about violence in the landlord/tenant
context but not in the self-defense setting?
5. Costs. Who does the demise of self-help hurt?
6. Basic eviction procedure. Every state has now enacted statutes—often
referred to as forcible entry and detainer laws—that help landlords to promptly
regain possession when a tenant holds over or commits a material breach of the
lease. In most jurisdictions, statutes mandate that landlords pursue relief
through the court system and refrain from self-help remedies. While these
eviction procedures vary between jurisdictions, there are some significant
commonalities between most states’ forced entry and detainer laws. In all
jurisdictions, for example, a landlord who wishes to evict a tenant must first
send the tenant proper written notice. The notice requirement generally obliges
the landlord to accurately state the tenant’s name and address, and reveal the
nature of the alleged breach. Most states also require the landlord to give the
tenant an opportunity (often 3 days, but sometimes as long as 14) to either cure
the default or move out. These are often referred to as “Cure or Quit” notices.
If the tenant corrects the problem, they must be allowed to stay. However, if
the tenant stays in the unit and does not cure the default, the landlord can file a
petition for eviction with the local housing court. Upon the landlord’s request,
the court will quickly set a trial date and a process server will deliver a summons
and complaint to each tenant. Most tenants do not contest their evictions. If

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the tenant does not respond to the summons, the court will enter a judgment in
favor of the landlord and the landlord will then hire a local sheriff to remove
the tenant from the property. The entire process generally takes from 20 to 60
days.

7. Defending against eviction. Occasionally a tenant will mount a vigorous
defense to an eviction notice. The most commonly raised defenses are (1)
notice was faulty, (2) the tenant cured the default, (3) the landlord illegally
retaliated against the tenant, and, (4) the tenant had a right to withhold rent
because the unit failed to meet certain minimum standards required by law.

6. Tenant Exit: Security Deposits
Most landlords require their tenants to pay a security deposit—a sum of money that
the landlord can raid if the tenant defaults on the rent, leaves the unit untidy, or
damages any property during the course of the tenancy. State law mandates that if the
tenant has compiled with all terms of the lease and kept the unit in good order, the
landlord must return the security deposit (generally within 30 or 60 days). If the tenant
causes damage, the landlord has the right to use the security to restore the unit to its
previous condition, but must provide the tenant with a list of damages and receipts for
the repairs.
Although the law of security deposits is generally crystal-clear, a huge number of renters
report that they have unfairly lost deposit money to their landlords. Why is this so?
Game theorists argue that the structure of the landlord-tenant relationship makes
disputes over security deposits almost unavoidable. The key insight is that while the
tenancy is ongoing, landlords and tenants have incentives to get along and make
compromises—the landlord wants the tenant to make timely rent payments and the
tenant wants the landlord to respond quickly when problems arise. However, once the
landlord and tenant decide to end their relationship, there are few checks to prevent
bad behavior. If the landlord will never interact with the tenant again, why not fudge
a little bit with security deposit? Additionally, the small amounts of money involved
security deposit disputes mean that it’s rarely worth hiring a lawyer or taking the time
to sue the landlord in small claims court.

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Notes and Questions

1. Tenant self help? If tenants recognize that landlords often cheat them out of
their security deposits, why don’t more tenants respond by refusing to pay the
last month’s rent? After all, eviction procedures almost always take longer than
30 days.
2. America v. England. To solve the security deposit dilemma, English law does
not permit landlords to keep their tenants’ deposits. Rather, they must place
them with a government-approved holding agency. If a dispute arises over the
money at the end of the lease, the parties are referred to an arbitrator who works
for the organization that holds the money. The dispute resolution service does
not charge either party but they are bound by its decision. Should jurisdictions
in the U.S. move toward this model? Would it change your opinion to know
that English landlords routinely fail to comply with these rules? Are there other
solutions worth considering?

D. The Quest for Clean, Safe, and Affordable Premises
In feudal England, policy makers and government officials expressed little concern
over the housing conditions of renters. The law was well-settled: Once a landlord
turned over the right of possession, the tenant became responsible for maintenance of
the leased property. If a tenant decided to live in squalor rather than complete basic
repairs, that was the tenant’s problem, not the landlord’s worry. Although it may seem
counterintuitive to modern readers (who rely on landlords to fix nearly everything),
putting the burden on the tenant to maintain the property actually produced efficient
results in the medieval world: landlords often lived long distances from their lessees,
communication was slow, houses were simply constructed, and most tenants had the
knowledge and skills to complete basic repairs.
The basic principle that tenants are responsible for their own living conditions
remained unchallenged until the 1960s, when both academics and politicians expressed
growing concern about the rental housing stock in central cities. Many worried that
exploitative landlords were flouting safety regulations and taking advantage of tenants
who had few housing choices as a result of their poverty and the rampant
discrimination in the housing market. The problems in the poorest neighborhoods

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also had spillover effects in surrounding communities—disease, vermin, and fires do
not respect municipal borders. In response to these problems, the law began to vest
tenants with a new series of rights against their landlords. This subsection traces the
evolution of these rights and explores the rise of legal tools to ensure minimum housing
standards for all renters.

1. The Covenant of Quiet Enjoyment
Traditional common law principles do not leave renters completely defenseless against
unprincipled landlords. Every lease, whether residential or commercial, contains a
covenant of quiet enjoyment. Often this promise is explicitly stated in the lease contract.
Where it’s not specifically mentioned, all courts will imply it into the agreement. The
basic idea is that the landlord cannot interfere with the tenant’s use of the property.
Most courts state the legal test this way: A breach of the covenant of quiet enjoyment
occurs when the landlord substantially interferes with the tenant’s use or enjoyment of
the premises.
Consider the following hypothetical:
Little Bo Peep Detective Services rents the second floor of a four-floor
building. A year into the five-year lease, the landlord suddenly begins a
construction project designed to update the suites on the first floor.
These renovations create loud noise and regular interruptions of electric
service. The construction work has also made the parking lot inaccessible.
Employees and customers need to walk a quarter-mile to access the
building from a nearby parking garage.

Do these problems amount to a violation of the covenant of quiet enjoyment? To
determine whether the interference is “substantial” courts generally consider the
purpose the premises are leased for, the foreseeability of the problem, the potential
duration, and the degree of harm. In this example, if the construction project lasts for
more than a few days, then Little Bo Peep can most likely bring a successful claim
against its landlord under the covenant of quiet enjoyment. The problems here are not
mere trifles—the noise, lack of electricity, and inadequate parking fundamentally affect
the company’s ability to use the property as they intended.

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The difficult conceptual issue with the covenant of quiet enjoyment concerns the
remedy. If the landlord breaks the covenant, what are the tenant’s options? After a
breach, the tenant can always choose to stay in the leased property, continue to pay
rent, and sue the landlord for damages.
Additionally, certain violations of the covenant of quiet enjoyment allow the tenant to
consider the lease terminated, leave, and stop paying rent. Recall from earlier in the
chapter that the landlord’s fundamental responsibility is to provide the tenant with
possession (or, in some jurisdictions, the right to possession). From that principle,
courts developed a rule that in cases where the landlord wrongfully evicts the tenant,
all the tenant’s obligations under the lease cease. Imagine:
Landlord and tenant both sign a lease that reads, “Landlord agrees to
provide Tenant with possession of 123 Meadowlark Lane for a period
of 12 months beginning April 1. Tenant agrees to pay $100 per month.”
After 4 months, however, the Landlord retakes possession of the
property by forcing the tenant out and changing the locks.
Assuming the tenant hasn’t committed a material breach, the landlord’s actions
constitute an obvious violation of the covenant of quiet enjoyment—the tenant can no
longer use the property for any purpose. Thus, any eviction where the tenant is
physically denied access to the unit ends the tenant’s obligation to pay rent and allows
the tenant to sue for damages incurred from being removed from possession (A tenant
could also sue to regain the unit). The law is very clear on this point. Relatedly, if the
landlord denies the tenant access to some portion of the rented space (say, an allotted
parking space) that, too, constitutes a breach of the covenant of quiet enjoyment. The
tenant subject to such a partial eviction has the option to terminate the lease and sue
for damages.
But what if the landlord doesn’t physically interfere with her tenant’s occupancy? What
if the landlord creates an environment that’s so miserable that the tenant is forced to
flee? Is this an “eviction” that would allow the tenant to consider the lease terminated
or must the tenant stay and continue paying rent while he brings a damages lawsuit

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Fidelity Mutual Life Insurance Co. v. Kaminsky
768 S.W.2d 818 (Tex. App. 1989)

MURPHY, Justice.
The issue in this landlord-tenant case is whether sufficient evidence supports the jury’s
findings that the landlord and appellant, Fidelity Mutual Life Insurance Company
[“Fidelity”], constructively evicted the tenant, Robert P. Kaminsky, M.D., P.A. [“Dr.
Kaminsky”] by breaching the express covenant of quiet enjoyment contained in the
parties’ lease. We affirm.
Dr. Kaminsky is a gynecologist whose practice includes performing elective abortions.
In May 1983, he executed a lease contract for the rental of approximately 2,861 square
feet in the Red Oak Atrium Building for a two year term which began on June 1, 1983.
The terms of the lease required Dr. Kaminsky to use the rented space solely as “an
office for the practice of medicine.” Fidelity owns the building and hires local
companies to manage it. At some time during the lease term, Shelter Commercial
Properties [“Shelter”] replaced the Horne Company as managing agents. Fidelity has
not disputed either management company’s capacity to act as its agent.
The parties agree that: (1) they executed a valid lease agreement; (2) Paragraph 35 of
the lease contains an express covenant of quiet enjoyment conditioned on Dr.
Kaminsky’s paying rent when due, as he did through November 1984; Dr. Kaminsky
abandoned the leased premises on or about December 3, 1984 and refused to pay
additional rent; anti-abortion protestors began picketing at the building in June of 1984
and repeated and increased their demonstrations outside and inside the building until
Dr. Kaminsky abandoned the premises.
When Fidelity sued for the balance due under the lease contract following Dr.
Kaminsky’s abandonment of the premises, he claimed that Fidelity constructively
evicted him by breaching Paragraph 35 of the lease. Fidelity apparently conceded
during trial that sufficient proof of the constructive eviction of Dr. Kaminsky would
relieve him of his contractual liability for any remaining rent payments. Accordingly,
he assumed the burden of proof and the sole issue submitted to the jury was whether
Fidelity breached Paragraph 35 of the lease, which reads as follows:

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Quiet Enjoyment.

Lessee, on paying the said Rent, and any Additional Rental, shall and
may peaceably and quietly have, hold and enjoy the Leased Premises for
the said term.
A constructive eviction occurs when the tenant leaves the leased premises due to
conduct by the landlord which materially interferes with the tenant’s beneficial use of
the premises. See Downtown Realty, Inc. v. 509 Tremont Bldg., 748 S.W.2d 309, 313
(Tex.App.—Houston [14th Dist.] 1988, n.w.h.). Texas law relieves the tenant of
contractual liability for any remaining rentals due under the lease if he can establish a
constructive eviction by the landlord. . . .
In order to prevail on his claim that Fidelity constructively evicted him and thereby
relieved him of his rent obligation, Dr. Kaminsky had to show the following: 1) Fidelity
intended that he no longer enjoy the premises, which intent the trier of fact could infer
from the circumstances; 2) Fidelity, or those acting for Fidelity or with its permission,
committed a material act or omission which substantially interfered with use and
enjoyment of the premises for their leased purpose, here an office for the practice of
medicine; 3) Fidelity’s act or omission permanently deprived Dr. Kaminsky of the use
and enjoyment of the premises; and 4) Dr. Kaminsky abandoned the premises within
a reasonable period of time after the act or omission. E.g., Downtown Realty, Inc., 748
S.W.2d at 311 . . . .
[T]he jury found that Dr. Kaminsky had established each element of his constructive
eviction defense. The trial court entered judgment that Fidelity take nothing on its suit
for delinquent rent.
Fidelity raises four points of error. . . .
Fidelity’s first point of error relies on Angelo v. Deutser, 30 S.W.2d 707 (Tex.Civ.App.—
Beaumont 1930, no writ), Thomas v. Brin, 38 Tex.Civ.App. 180, 85 S.W. 842 (1905, no
writ) and Sedberry v. Verplanck, 31 S.W. 242 (Tex.Civ.App.1895, no writ). These cases
all state the general proposition that a tenant cannot complain that the landlord
constructively evicted him and breached a covenant of quiet enjoyment, express or
implied, when the eviction results from the actions of third parties acting without the
landlord’s authority or permission. Fidelity insists the evidence conclusively establishes:

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a) that it did nothing to encourage or sponsor the protestors and; b) that the protestors,
rather than Fidelity or its agents, caused Dr. Kaminsky to abandon the premises.
Fidelity concludes that reversible error resulted because the trial court refused to set
aside the jury’s answers to the special issues and enter judgment in Fidelity’s favor and
because the trial court denied its motion for a new trial. We disagree. . . .
The protests took place chiefly on Saturdays, the day Dr. Kaminsky generally scheduled
abortions. During the protests, the singing and chanting demonstrators picketed in the
building’s parking lot and inner lobby and atrium area. They approached patients to
speak to them, distributed literature, discouraged patients from entering the building
and often accused Dr. Kaminsky of “killing babies.” As the protests increased, the
demonstrators often occupied the stairs leading to Dr. Kaminsky’s office and
prevented patients from entering the office by blocking the doorway. Occasionally they
succeeded in gaining access to the office waiting room area.
Dr. Kaminsky complained to Fidelity through its managing agents and asked for help
in keeping the protestors away, but became increasingly frustrated by a lack of response
to his requests. The record shows that no security personnel were present on Saturdays
to exclude protestors from the building, although the lease required Fidelity to provide
security service on Saturdays. The record also shows that Fidelity’s attorneys prepared
a written statement to be handed to the protestors soon after Fidelity hired Shelter as
its managing agent. The statement tracked TEX.PENAL CODE ANN. § 30.05
(Vernon Supp.1989) and generally served to inform trespassers that they risked criminal
prosecution by failing to leave if asked to do so. Fidelity’s attorneys instructed Shelter’s
representative to “have several of these letters printed up and be ready to distribute
them and verbally demand that these people move on and off the property.” The same
representative conceded at trial that she did not distribute these notices. Yet when Dr.
Kaminsky enlisted the aid of the Sheriff’s office, officers refused to ask the protestors
to leave without a directive from Fidelity or its agent. Indeed, an attorney had instructed
the protestors to remain unless the landlord or its representative ordered them to leave.
It appears that Fidelity’s only response to the demonstrators was to state, through its
agents, that it was aware of Dr. Kaminsky’s problems.
Both action and lack of action can constitute “conduct” by the landlord which amounts
to a constructive eviction. E.g., Downtown Realty Inc., 748 S.W.2d at 311. In Steinberg v.

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Medical Equip. Rental Serv., Inc., 505 S.W.2d 692 (Tex. Civ. App.—Dallas 1974, no writ)
accordingly, the court upheld a jury’s determination that the landlord’s failure to act
amounted to a constructive eviction and breach of the covenant of quiet enjoyment.
505 S.W.2d at 697. Like Dr. Kaminsky, the tenant in Steinberg abandoned the leased
premises and refused to pay additional rent after repeatedly complaining to the landlord.
The Steinberg tenant complained that Steinberg placed trash bins near the entrance to
the business and allowed trucks to park and block customer’s access to the tenant’s
medical equipment rental business. The tenant’s repeated complaints to Steinberg
yielded only a request “to be patient.” Id. Fidelity responded to Dr. Kaminsky’s
complaints in a similar manner: although it acknowledged his problems with the
protestors, Fidelity, like Steinberg, effectively did nothing to prevent the problems.
This case shows ample instances of Fidelity’s failure to act in the fact of repeated
requests for assistance despite its having expressly covenanted Dr. Kaminsky’s quiet
enjoyment of the premises. These instances provided a legally sufficient basis for the
jury to conclude that Dr. Kaminsky abandoned the leased premises, not because of the
trespassing protestors, but because of Fidelity’s lack of response to his complaints
about the protestors. Under the circumstances, while it is undisputed that Fidelity did
not “encourage” the demonstrators, its conduct essentially allowed them to continue
to trespass. The general rule of the Angelo, Thomas and Sedberry cases, that a landlord is
not responsible for the actions of third parties, applies only when the landlord does not
permit the third party to act. See e.g., Angelo, 30 S.W.2d at 710 [“the act or omission
complained of must be that of the landlord and not merely of a third person acting
without his authority or permission” (emphasis added) ]. We see no distinction between
Fidelity’s lack of action here, which the record shows resulted in preventing patients’
access to Dr. Kaminsky’s medical office, and the Steinberg case where the landlord’s
inaction resulted in trucks’ blocking customer access to the tenant’s business. We
overrule the first point of error. . . . .
In its [final] point of error, Fidelity maintains the evidence is factually insufficient to
support the jury’s finding that its conduct permanently deprived Dr. Kaminsky of use
and enjoyment of the premises. Fidelity essentially questions the permanency of Dr.
Kaminsky’s being deprived of the use and enjoyment of the leased premises. To
support its contentions, Fidelity points to testimony by Dr. Kaminsky in which he
concedes that none of his patients were ever harmed and that protests and

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demonstrations continued despite his leaving the Red Oak Atrium building. Fidelity
also disputes whether Dr. Kaminsky actually lost patients due to the protests.
The evidence shows that the protestors, whose entry into the building Fidelity failed to
prohibit, often succeeded in blocking Dr. Kaminsky’s patients’ access to his medical
office. Under the reasoning of the Steinberg case, omissions by a landlord which result
in patients’ lack of access to the office of a practicing physician would suffice to
establish a permanent deprivation of the use and enjoyment of the premises for their
leased purpose, here “an office for the practice of medicine.” Steinberg, 505 S.W.2d at
697; accord, Downtown Realty, Inc., 748 S.W.2d at 312 (noting jury’s finding that a
constructive eviction resulted from the commercial landlord’s failure to repair a heating
and air conditioning system in a rooming house).
Texas law has long recited the requirement, first stated in Stillman, 266 S.W.2d at 916,
that the landlord commit a “material and permanent” act or omission in order for his
tenant to claim a constructive eviction. However, as the Steinberg and Downtown Realty,
Inc. cases illustrate, the extent to which a landlord’s acts or omissions permanently and
materially deprive a tenant of the use and enjoyment of the premises often involves a
question of degree. Having reviewed all the evidence before the jury in this case, we
cannot say that its finding that Fidelity’s conduct permanently deprived Dr. Kaminsky
of the use and enjoyment of his medical office space was so against the great weight
and preponderance of the evidence as to be manifestly unjust. We overrule the fourth
point of error.
We affirm the judgment of the trial court.
Notes and Questions
1. Evolution of the doctrine. As discussed above, English judges widely
recognized that tenants could terminate the lease (and sue for damages) if the
landlord physically denied them possession of the rented property. Eventually
the basic concept was expanded to situations where the landlord commits some
act that, while it falls short of an actual eviction, so severely affects the value of
the tenancy that the tenant is forced to flee. This is known as constructive eviction.
2. Basic constrictive eviction law. To make a claim of constructive eviction a
tenant must show that some act or omission by the landlord substantially

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interferes with the tenant’s use and enjoyment of the property. The tenant also
needs to notify the landlord about the problem, give the landlord an opportunity
to cure the defect, and then vacate the premise within a reasonable amount of
time.
3. Stay or go? Why might a tenant contemplating bringing a constructive eviction
claim worry about the requirement to vacate the premises? Is constructive
eviction a more powerful remedy in a place like San Francisco, which has a very
tight housing market, or Houston, which has more open units?
4. Landlord’s wrongful conduct. To make use of the doctrine of quiet
enjoyment, the tenant must show that the landlord committed some wrongful
act. There’s wide agreement that any affirmative step taken by the landlord that
impedes the tenant’s use of the property can meet the requirement of an “act.”
Examples would include burning toxic substances on the property, prolonged
construction activities, or a substantial alteration of an essential feature of the
leased premises. The trickier doctrinal question is whether a landlord’s failure
to act can ever qualify as the wrongful conduct. Traditionally, courts hesitated
to impose liability on landlords for their omissions, but the law of most states
now asserts that a “lack of action” can constitute the required act. For example,
a landlord’s failure to provide heat in the winter months is generally found to
violate the covenant of quiet enjoyment. Some courts, nervous about unjustly
expanding landlords’ potential liability, deem omissions wrongful only when the
landlord fails to fulfill some clear duty—either a duty bargained for in the lease
or a statutory duty.
5. Troublesome tenants. Suppose your landlord rents the floor above your
apartment to the members of a Led Zeppelin cover band. If the band practices
every night between the hours of 3:00 am and 4:00 am, could you bring a
successful constructive eviction claim against the landlord?
6. Third parties. What if the Led Zeppelin cover band played every night at a
club across the street? If the noise from the bar kept you awake, could you sue
your landlord for constructive eviction?

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2. The Implied Warranty of Habitability
Although the covenant of quiet enjoyment offers tenants some protections, the
doctrine—without more—can leave renters exposed to dreadful living conditions.
What if cockroaches invade a tenant’s apartment? Or a sewer pipe in the basement
begins to leak? What if a storm shatters the windows of the apartment? Or a wall of a
building falls down? Unless the landlord somehow caused any of these disasters (or
had a clearly articulated duty to fix them) a tenant cannot bring a successful case under
the covenant of quiet enjoyment. In Hughes v. Westchester Development Corp., 77 F.2d 550
(D.C. Cir. 1935), for example, vermin invaded the tenant’s apartment, making it
“impossible to use the kitchen and toilet facilities.” Despite the infestation, the court
found that the tenant remained responsible for the rent because the landlord was not
to blame for the bugs’ sudden appearance. Leases, the court ruled, contained no
implied promise that the premise was fit for the purpose it was leased. If tenants
desired more and better protection, they had the burden to bargain for such provisions
in the lease.
All of this changed in the late 1960s and early 70s. The most lasting accomplishment
of the tenants’ rights movement was the widespread adoption of the implied warranty of
habitability. In the United States, only Arkansas has failed to adopt the rule. In a nutshell,
the implied warranty of habitability imposes a duty on landlords to provide residential
tenants with a clean, safe, and habitable living space.
Hilder v. St. Peter
478 A.2d 202 (Vt. 1984)
BILLINGS, Chief Justice.
Defendants appeal from a judgment rendered by the Rutland Superior Court. The
court ordered defendants to pay plaintiff damages in the amount of $4,945.00, which
represented “reimbursement of all rent paid and additional compensatory damages”
for the rental of a residential apartment over a fourteen month period in defendants’
Rutland apartment building. Defendants filed a motion for reconsideration on the issue
of the amount of damages awarded to the plaintiff, and plaintiff filed a cross-motion
for reconsideration of the court’s denial of an award of punitive damages. The court
denied both motions. On appeal, defendants raise [two] issues for our consideration:

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first, whether the court correctly calculated the amount of damages awarded the
plaintiff; secondly, whether the court’s award to plaintiff of the entire amount of rent
paid to defendants was proper since the plaintiff remained in possession of the
apartment for the entire fourteen month period. . . .
The facts are uncontested. In October, 1974, plaintiff began occupying an apartment
at defendants’ 10–12 Church Street apartment building in Rutland with her three
children and new-born grandson. Plaintiff orally agreed to pay defendant Stuart St.
Peter $140 a month and a damage deposit of $50; plaintiff paid defendant the first
month’s rent and the damage deposit prior to moving in. Plaintiff has paid all rent due
under her tenancy. Because the previous tenants had left behind garbage and items of
personal belongings, defendant offered to refund plaintiff’s damage deposit if she
would clean the apartment herself prior to taking possession. Plaintiff did clean the
apartment, but never received her deposit back because the defendant denied ever
receiving it. Upon moving into the apartment, plaintiff discovered a broken kitchen
window. Defendant promised to repair it, but after waiting a week and fearing that her
two year old child might cut herself on the shards of glass, plaintiff repaired the window
at her own expense. Although defendant promised to provide a front door key, he
never did. For a period of time, whenever plaintiff left the apartment, a member of her
family would remain behind for security reasons. Eventually, plaintiff purchased and
installed a padlock, again at her own expense. After moving in, plaintiff discovered that
the bathroom toilet was clogged with paper and feces and would flush only by dumping
pails of water into it. Although plaintiff repeatedly complained about the toilet, and
defendant promised to have it repaired, the toilet remained clogged and mechanically
inoperable throughout the period of plaintiff’s tenancy. In addition, the bathroom light
and wall outlet were inoperable. Again, the defendant agreed to repair the fixtures, but
never did. In order to have light in the bathroom, plaintiff attached a fixture to the wall
and connected it to an extension cord that was plugged into an adjoining room. Plaintiff
also discovered that water leaked from the water pipes of the upstairs apartment down
the ceilings and walls of both her kitchen and back bedroom. Again, defendant
promised to fix the leakage, but never did. As a result of this leakage, a large section of
plaster fell from the back bedroom ceiling onto her bed and her grandson’s crib. Other
sections of plaster remained dangling from the ceiling. This condition was brought to
the attention of the defendant, but he never corrected it. Fearing that the remaining
plaster might fall when the room was occupied, plaintiff moved her and her grandson’s

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bedroom furniture into the living room and ceased using the back bedroom. During
the summer months an odor of raw sewage permeated plaintiff’s apartment. The odor
was so strong that the plaintiff was ashamed to have company in her apartment.
Responding to plaintiff’s complaints, Rutland City workers unearthed a broken sewage
pipe in the basement of defendants’ building. Raw sewage littered the floor of the
basement, but defendant failed to clean it up. Plaintiff also discovered that the electric
service for her furnace was attached to her breaker box, although defendant had agreed,
at the commencement of plaintiff’s tenancy, to furnish heat.
In its conclusions of law, the court held that the state of disrepair of plaintiff’s
apartment, which was known to the defendants, substantially reduced the value of the
leasehold from the agreed rental value, thus constituting a breach of the implied
warranty of habitability. The court based its award of damages on the breach of this
warranty and on breach of an express contract. Defendant argues that the court
misapplied the law of Vermont relating to habitability because the plaintiff never
abandoned the demised premises and, therefore, it was error to award her the full
amount of rent paid. Plaintiff counters that, while never expressly recognized by this
Court, the trial court was correct in applying an implied warranty of habitability and
that under this warranty, abandonment of the premises is not required. Plaintiff urges
this Court to affirmatively adopt the implied warranty of habitability.
Historically, relations between landlords and tenants have been defined by the law of
property. Under these traditional common law property concepts, a lease was viewed
as a conveyance of real property. See Note, Judicial Expansion of Tenants’ Private Law
Rights: Implied Warranties of Habitability and Safety in Residential Urban Leases, 56 Cornell
L.Q. 489, 489–90 (1971) (hereinafter cited as Expansion of Tenants’ Rights). The
relationship between landlord and tenant was controlled by the doctrine of caveat
lessee; that is, the tenant took possession of the demised premises irrespective of their
state of disrepair. Love, Landlord’s Liability for Defective Premises: Caveat Lessee, Negligence,
or Strict Liability?, 1975 Wis. L. Rev. 19, 27–28. The landlord’s only covenant was to
deliver possession to the tenant. The tenant’s obligation to pay rent existed
independently of the landlord’s duty to deliver possession, so that as long as possession
remained in the tenant, the tenant remained liable for payment of rent. The landlord
was under no duty to render the premises habitable unless there was an express

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covenant to repair in the written lease. Expansion of Tenants’ Rights, supra, at 490. The
land, not the dwelling, was regarded as the essence of the conveyance.
An exception to the rule of caveat lessee was the doctrine of constructive eviction.
Lemle v. Breeden, 462 P.2d 470, 473 (Haw. 1969). Here, if the landlord wrongfully
interfered with the tenant’s enjoyment of the demised premises, or failed to render a
duty to the tenant as expressly required under the terms of the lease, the tenant could
abandon the premises and cease paying rent. Legier v. Deveneau, 126 A. 392, 393 (Vt.
1924).
Beginning in the 1960’s, American courts began recognizing that this approach to
landlord and tenant relations, which had originated during the Middle Ages, had
become an anachronism in twentieth century, urban society. Today’s tenant enters into
lease agreements, not to obtain arable land, but to obtain safe, sanitary and comfortable
housing.
[T]hey seek a well known package of goods and services—a package
which includes not merely walls and ceilings, but also adequate heat, light
and ventilation, serviceable plumbing facilities, secure windows and
doors, proper sanitation, and proper maintenance.
Javins v. First National Realty Corp., 428 F.2d 1071, 1074 (D.C.Cir.), cert. denied, 400 U.S.
925, 91 S.Ct. 186, 27 L.Ed.2d 185 (1970).
Not only has the subject matter of today’s lease changed, but the characteristics of
today’s tenant have similarly evolved. The tenant of the Middle Ages was a farmer,
capable of making whatever repairs were necessary to his primitive dwelling. Green v.
Superior Court, 517 P.2d 1168, 1172 (Cal. 1974). Additionally, “the common law courts
assumed that an equal bargaining position existed between landlord and tenant. . . .”
Note, The Implied Warranty of Habitability: A Dream Deferred, 48 UMKC L.REV. 237, 238
(1980) (hereinafter cited as A Dream Deferred).
In sharp contrast, today’s residential tenant, most commonly a city dweller, is not
experienced in performing maintenance work on urban, complex living units. Green v.
Superior Court, supra, 517 P.2d at 1173. The landlord is more familiar with the dwelling
unit and mechanical equipment attached to that unit, and is more financially able to
“discover and cure” any faults and break-downs. Id. Confronted with a recognized

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shortage of safe, decent housing, see 24 V.S.A. § 4001(1), today’s tenant is in an inferior
bargaining position compared to that of the landlord. Park West Management Corp. v.
Mitchell, 391 N.E.2d 1288, 1292 (N.Y. 1979). Tenants vying for this limited housing are
“virtually powerless to compel the performance of essential services.” Id.
In light of these changes in the relationship between tenants and landlords, it would be
wrong for the law to continue to impose the doctrine of caveat lessee on residential
leases.
The modern view favors a new approach which recognizes that a lease
is essentially a contract between the landlord and the tenant wherein the
landlord promises to deliver and maintain the demised premises in
habitable condition and the tenant promises to pay rent for such
habitable premises. These promises constitute interdependent and
mutual considerations. Thus, the tenant’s obligation to pay rent is
predicated on the landlord’s obligation to deliver and maintain the
premises in habitable condition.
Boston Housing Authority v. Hemingway, 293 N.E.2d 831, 842 (Mass. 1973).
Recognition of residential leases as contracts embodying the mutual covenants of
habitability and payment of rent does not represent an abrupt change in Vermont law.
Our case law has previously recognized that contract remedies are available for
breaches of lease agreements. Clarendon Mobile Home Sales, Inc. v. Fitzgerald, 381 A.2d
1063, 1065 (Vt. 1977). . . . More significantly, our legislature, in establishing local
housing authorities, 24 V.S.A. § 4003, has officially recognized the need for assuring
the existence of adequate housing.
[S]ubstandard and decadent areas exist in certain portions of the state
of Vermont and . . . there is not . . . an adequate supply of decent, safe
and sanitary housing for persons of low income and/or elderly persons
of low income, available for rents which such persons can afford to
pay . . . this situation tends to cause an increase and spread of
communicable and chronic disease . . . [and] constitutes a menace to the
health, safety, welfare and comfort of the inhabitants of the state and is
detrimental to property values in the localities in which it exists . . . .

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24 V.S.A. § 4001(4). In addition, this Court has assumed the existence of an implied
warranty of habitability in residential leases. Birkenhead v. Coombs, 465 A.2d 244, 246 (Vt.
1983).
Therefore, we now hold expressly that in the rental of any residential dwelling unit an
implied warranty exists in the lease, whether oral or written, that the landlord will
deliver over and maintain, throughout the period of the tenancy, premises that are safe,
clean and fit for human habitation. This warranty of habitability is implied in tenancies
for a specific period or at will. Boston Housing Authority v. Hemingway, supra, 293 N.E.2d
at 843. Additionally, the implied warranty of habitability covers all latent and patent
defects in the essential facilities of the residential unit. Id. Essential facilities are
“facilities vital to the use of the premises for residential purposes. . . .” Kline v. Burns,
276 A.2d 248, 252 (N.H. 1971). This means that a tenant who enters into a lease
agreement with knowledge of any defect in the essential facilities cannot be said to have
assumed the risk, thereby losing the protection of the warranty. Nor can this implied
warranty of habitability be waived by any written provision in the lease or by oral
agreement.
In determining whether there has been a breach of the implied warranty of habitability,
the courts may first look to any relevant local or municipal housing code; they may also
make reference to the minimum housing code standards enunciated in 24 V.S.A. §
5003(c)(1)–5003(c)(5). A substantial violation of an applicable housing code shall
constitute prima facie evidence that there has been a breach of the warranty of
habitability. “[O]ne or two minor violations standing alone which do not affect” the
health or safety of the tenant, shall be considered de minimus and not a breach of the
warranty. Javins v. First National Realty Corp., supra, 428 F.2d at 1082 n. 63. . . . In addition,
the landlord will not be liable for defects caused by the tenant. Javins v. First National
Realty Corp., supra, 428 F.2d at 1082 n. 62.
However, these codes and standards merely provide a starting point in determining
whether there has been a breach. Not all towns and municipalities have housing codes;
where there are codes, the particular problem complained of may not be addressed.
Park West Management Corp. v. Mitchell, supra, 391 N.E.2d at 1294. In determining
whether there has been a breach of the implied warranty of habitability, courts should

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inquire whether the claimed defect has an impact on the safety or health of the tenant.
Id.
In order to bring a cause of action for breach of the implied warranty of habitability,
the tenant must first show that he or she notified the landlord “of the deficiency or
defect not known to the landlord and [allowed] a reasonable time for its correction.”
King v. Moorehead, supra, 495 S.W.2d at 76.
Because we hold that the lease of a residential dwelling creates a contractual
relationship between the landlord and tenant, the standard contract remedies of
rescission, reformation and damages are available to the tenant when suing for breach
of the implied warranty of habitability. Lemle v. Breeden, supra, 462 P.2d at 475. The
measure of damages shall be the difference between the value of the dwelling as
warranted and the value of the dwelling as it exists in its defective condition. Birkenhead
v. Coombs, supra, 465 A.2d at 246. In determining the fair rental value of the dwelling as
warranted, the court may look to the agreed upon rent as evidence on this issue. Id.
“[I]n residential lease disputes involving a breach of the implied warranty of habitability,
public policy militates against requiring expert testimony” concerning the value of the
defect. Id. at 247. The tenant will be liable only for “the reasonable rental value [if any]
of the property in its imperfect condition during his period of occupancy.” Berzito v.
Gambino, 308 A.2d 17, 22 (N.J. 1973).
We also find persuasive the reasoning of some commentators that damages should be
allowed for a tenant’s discomfort and annoyance arising from the landlord’s breach of
the implied warranty of habitability. See Moskovitz, The Implied Warranty of Habitability:
A New Doctrine Raising New Issues, 62 CAL. L. REV. 1444, 1470–73 (1974) (hereinafter
cited as A New Doctrine); A Dream Deferred, supra, at 250–51. Damages for annoyance
and discomfort are reasonable in light of the fact that:
the residential tenant who has suffered a breach of the warranty . . .
cannot bathe as frequently as he would like or at all if there is inadequate
hot water; he must worry about rodents harassing his children or
spreading disease if the premises are infested; or he must avoid certain
rooms or worry about catching a cold if there is inadequate weather
protection or heat. Thus, discomfort and annoyance are the common

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injuries caused by each breach and hence the true nature of the general
damages the tenant is claiming.
Moskovitz, A New Doctrine, supra, at 1470–71. Damages for discomfort and annoyance
may be difficult to compute; however, “[t]he trier [of fact] is not to be deterred from
this duty by the fact that the damages are not susceptible of reduction to an exact
money standard.” Vermont Electric Supply Co. v. Andrus, 315 A.2d 456, 459 (Vt. 1974).
Another remedy available to the tenant when there has been a breach of the implied
warranty of habitability is to withhold the payment of future rent. King v. Moorehead,
supra, 495 S.W.2d at 77. The burden and expense of bringing suit will then be on the
landlord who can better afford to bring the action. In an action for ejectment for
nonpayment of rent, 12 V.S.A. § 4773, “[t]he trier of fact, upon evaluating the
seriousness of the breach and the ramification of the defect upon the health and safety
of the tenant, will abate the rent at the landlord’s expense in accordance with its
findings.” A Dream Deferred, supra, at 248. The tenant must show that: (1) the landlord
had notice of the previously unknown defect and failed, within a reasonable time, to
repair it; and (2) the defect, affecting habitability, existed during the time for which rent
was withheld. See A Dream Deferred, supra, at 248–50. Whether a portion, all or none of
the rent will be awarded to the landlord will depend on the findings relative to the
extent and duration of the breach. Javins v. First National Realty Corp., supra, 428 F.2d at
1082–83. Of course, once the landlord corrects the defect, the tenant’s obligation to
pay rent becomes due again. Id. at 1083 n. 64.
Additionally, we hold that when the landlord is notified of the defect but fails to repair
it within a reasonable amount of time, and the tenant subsequently repairs the defect,
the tenant may deduct the expense of the repair from future rent. 11 Williston on
Contracts § 1404 (3d ed. W. Jaeger 1968); Marini v. Ireland, 265 A.2d 526, 535 (N.J.
1970).
In addition to general damages, we hold that punitive damages may be available to a
tenant in the appropriate case. Although punitive damages are generally not recoverable
in actions for breach of contract, there are cases in which the breach is of such a willful
and wanton or fraudulent nature as to make appropriate the award of exemplary
damages. Clarendon Mobile Home Sales, Inc. v. Fitzgerald, supra, 381 A.2d at 1065. A willful
and wanton or fraudulent breach may be shown “by conduct manifesting personal ill

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will, or carried out under circumstances of insult or oppression, or even by conduct
manifesting . . . a reckless or wanton disregard of [one’s] rights . . . . ” Sparrow v. Vermont
Savings Bank, 112 A. 205, 207 (Vt. 1921). When a landlord, after receiving notice of a
defect, fails to repair the facility that is essential to the health and safety of his or her
tenant, an award of punitive damages is proper. 111 East 88th Partners v. Simon, 434
N.Y.S.2d 886, 889 (N.Y. Civ. Ct. 1980).
The purpose of punitive damages . . . is to punish conduct which is
morally culpable. . . . Such an award serves to deter a wrongdoer . . .
from repetitions of the same or similar actions. And it tends to
encourage prosecution of a claim by a victim who might not otherwise
incur the expense or inconvenience of private action. . . . The public
benefit and a display of ethical indignation are among the ends of the
policy to grant punitive damages.
Davis v. Williams, 402 N.Y.S.2d 92, 94 (N.Y.Civ.Ct.1977).
In the instant case, the trial court’s award of damages, based in part on a breach of the
implied warranty of habitability, was not a misapplication of the law relative to
habitability. Because of our holding in this case, the doctrine of constructive eviction,
wherein the tenant must abandon in order to escape liability for rent, is no longer viable.
When, as in the instant case, the tenant seeks, not to escape rent liability, but to receive
compensatory damages in the amount of rent already paid, abandonment is similarly
unnecessary. Northern Terminals, Inc. v. Smith Grocery & Variety, Inc., supra, 418 A.2d at
26–27. Under our holding, when a landlord breaches the implied warranty of
habitability, the tenant may withhold future rent, and may also seek damages in the
amount of rent previously paid.
In its conclusions of law the trial court stated that the defendants’ failure to make
repairs was compensable by damages to the extent of reimbursement of all rent paid
and additional compensatory damages. The court awarded plaintiff a total of $4,945.00;
$3,445.00 represents the entire amount of rent plaintiff paid, plus the $50.00 deposit. . . .
Additionally, the court denied an award to plaintiff of punitive damages on the ground
that the evidence failed to support a finding of willful and wanton or fraudulent
conduct. See Clarendon Mobile Home Sales, Inc. v. Fitzgerald, supra, 381 A.2d at 1065. The

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facts in this case, which defendants do not contest, evince a pattern of intentional
conduct on the part of defendants for which the term “slumlord” surely was coined.
Defendants’ conduct was culpable and demeaning to plaintiff and clearly expressive of
a wanton disregard of plaintiff’s rights. The trial court found that defendants were
aware of defects in the essential facilities of plaintiff’s apartment, promised plaintiff
that repairs would be made, but never fulfilled those promises. The court also found
that plaintiff continued, throughout her tenancy, to pay her rent, often in the face of
verbal threats made by defendant Stuart St. Peter. These findings point to the “bad
spirit and wrong intention” of the defendants, Glidden v. Skinner, 458 A.2d 1142, 1144
(Vt. 1983), and would support a finding of willful and wanton or fraudulent conduct,
contrary to the conclusions of law and judgment of the trial judge. However, the
plaintiff did not appeal the court’s denial of punitive damages, and issues not appealed
and briefed are waived. R. Brown & Sons, Inc. v. International Harvester Corp., 453 A.2d 83,
84 (Vt. 1982).
Notes and Questions
1. Residential v. commercial. Unlike the covenant of quiet enjoyment, the
implied warranty of habitability only applies to residential leases. Commercial
tenants still largely operate under common-law legal rules. Commonly,
commercial landlords and tenants do not rely on the default rules, but rather
assign the duty of upkeep and repair with an express provision in the lease.
2. What is habitability? Do all defects in an apartment amount to violations?
What is the standard of habitability as laid out in Hilder?
3. Paternalism? Is the implied warranty of habitability too paternalistic? Some
economists argue that the poorest Americans should have more freedom over
how they spend their limited dollars. Isn’t it possible that some individuals
might want to occupy a really cheap (if slightly dangerous) dwelling so that they
have more money to spend on healthy foods, transportation, and clothes?
Would it matter if the evidence showed that such apartments were in fact
cheaper than “habitable” apartments?

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4. Necessary? Do you agree with the arguments made by the court in Hilder
about the necessity of the implied warranty of habitability? Don’t landlords
already have excellent incentives to maintain their buildings?
5. Arkansas and beyond. As mentioned above, Arkansas is the one state that
has not adopted the implied warranty of habitability—either by statute or
judicial fiat. Is Arkansas a Mad Max-style hellscape for renters? Are tenants
there worse (or worse off) than the tenants in other states? Some people think
so. Vice magazine recently dubbed Arkansas, “The Worst Place to Rent in
America.” You can see the report on renting in Arkansas at:
https://www.youtube.com/watch?v=9G2Pk2JZP-E. But does the implied
warranty of habitability provide much practical protection? Do poor tenants
know about it? Do they have the resources to push back against aggressive
landlords who threaten lawsuits and other forms of retaliation? Professor
David Super has suggested that the decision of tenants’ rights movement to
focus on habitability over affordability and overcrowding was a strategic mistake.
See David A. Super, The Rise and Fall of the Implied Warranty of Habitability, 99 CAL.
L. REV. 389-463 (2011). Is there a nirvana for renters anywhere?
6. Procedure & remedies. If a tenant believes his apartment does not meet the
standard of habitability, he must first must notify the landlord of the defects
and give the landlord a reasonable amount of time to cure the problems. If the
landlord either cannot or will not make repairs, the implied warranty of
habitability offers the renter a menu of options. Each option presents a
different combination of costs and risks to the tenant. If the landlord breaches,
the tenant may:
a. Leave, terminate contract. The tenant may consider the lease terminated and
move out.
b. Stay and sue for damages. As with the covenant of quiet enjoyment, a tenant
may stay in the unit and pay rent, while suing the landlord for damages.
There is significant disagreement among jurisdictions about how to
calculate damages. In Hilder, the court uses the difference between the
rental price of the dwelling if it met the standard of habitability and the
value of the dwelling as it exists; the rent charged is not evidence of

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actual value, but rather evidence of the appropriate price if it met the
standard of habitability. [Note that given the court’s calculation, the
value was apparently zero?] Other courts look at the difference between
the amount of rent stated in the lease and the fair market value of the
premises. What is the better approach? Should the rent charged be
considered evidence of fair market value? If not, why not?
c. Stay and charge the cost of repair. A tenant has the option to fix the defect
and then deduct the cost of repair from the rent.
d. Stay and withhold rent. In most jurisdictions, a tenant can withhold the
entire rent for violations of the implied warranty of habitability (although,
a cautious tenant should pay the rent into an escrow account). This is a
very powerful remedy. First, it gives the landlord strong incentive to
respond to valid complaints from tenants. Second, it puts the burden
on the landlord (rather than the tenant) to initiate a lawsuit when
contested issues arise. Finally, if the landlord does move to evict the
tenant for non-payment, violations of the implied warranty of
habitability can serve as a defense.
e. Extreme violations. Tenants have won punitive damages in cases where
the landlord committed repeated or gruesome violations of the implied
warranty.
Problem
1. The Mad Hatter and the Alice each decide to rent an apartment in Wonderland.
The Mad Hatter walks into a large apartment and sees a hole in the roof, but he
decides to rent the unit anyway. The apartment that Alice decides to lease has
no obvious problems. The next day, however, some mold spots appear by one
of the vents. The mold grows rapidly and Alice starts to have regular headaches
and some trouble breathing. Additionally, an unknown troublemaker smashed
Alice’s air conditioning unit and it no longer works. Can either the Mad Hatter
or Alice win a lawsuit against their landlord if their problems aren’t fixed?

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3. Retaliatory Eviction
Imperial Colliery Co. v. Fout
373 S.E.2d 489 (W. Va. 1988)
Danny H. Fout, the defendant below, appeals a summary judgment dismissing his claim
of retaliatory eviction based on the provisions of W.Va.Code, 55–3A–3(g), which is
our summary eviction statute. Imperial Colliery had instituted an eviction proceeding
and Fout sought to defend against it, claiming that his eviction was in retaliation for
his participation in a labor strike.
This case presents two issues: (1) whether a residential tenant who is sued for
possession of rental property under W.Va.Code, 55–3A–1, et seq., may assert retaliation
by the landlord as a defense, and (2) whether the retaliation motive must relate to the
tenant’s exercise of a right incidental to the tenancy.
Fout is presently employed by Milburn Colliery Company as a coal miner. For six years,
he has leased a small house trailer lot in Burnwell, West Virginia, from Imperial Colliery
Company. It is alleged that Milburn and Imperial are interrelated companies. A written
lease was signed by Fout and an agent of Imperial in June, 1983. This lease was for a
primary period of one month, and was terminable by either party upon one month’s
notice. An annual rental of $1.00 was payable in advance on January 1 of each year. No
subsequent written leases were signed by the parties.
On February 14, 1986, Imperial advised Fout by certified letter that his lease would be
terminated as of March 31, 1986. Fout’s attorney corresponded with Imperial before
the scheduled termination date. He advised that due to various family and monetary
problems, Fout would be unable to timely vacate the property. Imperial voluntarily
agreed to a two-month extension of the lease. A second letter from Fout’s attorney,
dated May 27, 1986, recited Fout’s personal problems and requested that Imperial’s
attempts to oust Fout be held “in abeyance” until they were resolved. A check for $1.00
was enclosed to cover the proposed extension. Imperial did not reply.
On June 11, 1986, Imperial sued for possession of the property, pursuant to
W.Va.Code, 55–3A–1, et seq., in the Magistrate Court of Kanawha County. Fout
answered and removed the suit to the circuit court on June 23, 1986. He asserted as a

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defense that Imperial’s suit was brought in retaliation for his involvement in the United
Mine Workers of America and, more particularly, in a selective strike against Milburn.
Imperial’s retaliatory motive was alleged to be in violation of the First Amendment
rights of speech and assembly, and of the National Labor Relations Act, 29 U.S.C. §
151, et seq. Fout also counter-claimed, seeking an injunction against Imperial and
damages for annoyance and inconvenience.
After minimal discovery, Imperial moved for summary judgment. The circuit court
granted Imperial’s motion in an amended judgment order dated October 8, 1986,
relying principally upon Criss v. Salvation Army Residences, 173 W.Va. 634, 319 S.E.2d 403
(1984). The court concluded that the retaliation defense “must derive from, or in some
respect be related to, exercise by the tenant of rights incident to his capacity as a
‘tenant’.” Since Fout’s participation in the labor strike was admittedly unrelated to his
tenancy, the defense was dismissed and possession of the property was awarded to
Imperial. It is from this order that Fout appeals.
Our initial inquiry is whether retaliation by the landlord may be asserted by the tenant
as a defense in a suit under W.Va.Code, 55–3A–3(g). We addressed this issue in Criss v.
Salvation Army Residences, supra, and stated without any extended discussion that this
section “specifically provides for the defense of retaliation.” 173 W.Va. at 640, 319
S.E.2d at 409. We did not have occasion in Criss to trace the development of the
retaliatory eviction defense.
It appears that the first case that recognized retaliatory eviction as a defense to a
landlord’s eviction proceeding was Edwards v. Habib, 397 F.2d 687 (D.C.Cir.1968), cert.
denied, 393 U.S. 1016, 89 S.Ct. 618, 21 L.Ed.2d 560 (1969). There, a month-to-month
tenant who resided in a District of Columbia apartment complex reported to a local
health agency a number of sanitary code violations existing in her apartment. The
agency investigated and ordered that remedial steps be taken by the landlord, who then
advised Edwards that her lease was terminated. When the landlord sued for possession
of the premises, Edwards alleged the suit was brought in retaliation for her reporting
of the violations. A verdict was directed for the landlord and Edwards appealed.
On appeal, the court reviewed at length the goals sought to be advanced by local
sanitary and safety codes. It concluded that to allow retaliatory evictions by landlords
would seriously jeopardize the efficacy of the codes. A prohibition against such

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retaliatory conduct was therefore to be implied, even though the regulations were silent
on the matter.
Many states have protected tenant rights either on the Edwards theory or have implied
such rights from the tenant’s right of habitability. Others have utilized statutes
analogous to section 5.101 of the Uniform Residential Landlord and Tenant Act, 7B
U.L.A. 503 (1985), which is now adopted in fifteen jurisdictions. Similar landlord and
tenant reform statutes in seventeen other states also provide protection for tenancyrelated activities.
Under W.Va.Code, 37–6–30, a tenant is, with respect to residential property, entitled
to certain rights to a fit and habitable dwelling. In Teller v. McCoy, 162 W.Va. 367, 253
S.E.2d 114 (1978), we spoke at some length of the common law right of habitability
which a number of courts had developed to afford protection to the residential tenant.
We concluded that these rights paralleled and were spelled out in more detail in
W.Va.Code, 37–6–30. In Teller, we also fashioned remedies for the tenant where there
had been a breach of the warranty of habitability. However, we had no occasion to
discuss the retaliatory eviction issue in Teller.
The central theme underlying the retaliatory eviction defense is that a tenant should
not be punished for claiming the benefits afforded by health and safety statutes passed
for his protection. These statutory benefits become a part of his right of habitability. If
the right to habitability is to have any meaning, it must enable the tenant to exercise
that right by complaining about unfit conditions without fear of reprisal by his landlord.
See Annot., 40 A.L.R.3d 753 (1971).
After the seminal decision in Edwards, other categories of tenant activity were deemed
to be protected. Such activity was protected against retaliation where it bore a
relationship to some legitimate aspect of the tenancy. For example, some cases
provided protection for attempts by tenants to organize to protect their rights as
tenants. Others recognized the right to press complaints directly against the landlord
via oral communications, petitions, and “repair and deduct” remedies. . . .
A few courts recognize that even where a tenant’s activity is only indirectly related to
the tenancy relationship, it may be protected against retaliatory conduct if such conduct
would undermine the tenancy relationship. Typical of these cases is Winward Partners v.

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Delos Santos, 59 Haw. 104, 577 P.2d 326 (1978). There a group of month-to-month
tenants gave testimony before a state land use commission in opposition to a proposal
to redesignate their farm property from “agricultural” to “urban” uses. The proposal
was sponsored by the landlord, a land developer. As a result of coordinated activity by
the tenants, the proposal was defeated. Within six months, the landlord ordered the
tenants to vacate the property and brought suit for possession.
The Hawaii Supreme Court noted that statutory law provided for public hearings on
proposals to redesignate property, and specifically invited the views of the affected
tenants. The court determined that the legislative policy encouraging such input would
be jeopardized “if ... [landlords] were permitted to retaliate against ... tenants for
opposing land use changes in a public forum.” 59 Haw. at 116, 577 P.2d at 333. It relied
on Pohlman v. Metropolitan Trailer Park, Inc., 126 N.J.Super. 114, 312 A.2d 888
(Ch.Div.1973), which involved a similar fact pattern where tenants’ intervention in
zoning matters to protect their tenancy was sufficiently germane to the landlord-tenant
relationship to support the defense of retaliatory eviction. See also S.P. Growers Ass’n v.
Rodriguez, 17 Cal.3d 719, 552 P.2d 721, 131 Cal.Rptr. 761 (1976) (retaliation for suit by
tenant charging violation of Farm Labor Contractor Registration Act, 7 U.S.C. § 2041,
et seq.).
The Legislature, in giving approval to the retaliation defense, must have intended to
bring our State into line with the clear weight of case law and statutory authority
outlined above. We accordingly hold that retaliation may be asserted as a defense to a
summary eviction proceeding under W.Va.Code, 55–3A–1, et seq., if the landlord’s
conduct is in retaliation for the tenant’s exercise of a right incidental to the tenancy.
Fout seeks to bring this case within the Windward line of authority. He argues principally
that Imperial’s conduct violated a public policy which promotes the rights of
association and free speech by tenants. We do not agree, simply because the activity
that Fout points to as triggering his eviction was unrelated to the habitability of his
premises.
From the foregoing survey of law, we are led to the conclusion that the retaliatory
eviction defense must relate to activities of the tenant incidental to the tenancy. First
Amendment rights of speech and association unrelated to the tenant’s property interest
are not protected under a retaliatory eviction defense in that they do not arise from the

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tenancy relationship. Such rights may, of course, be vindicated on other independent
grounds.
For the reasons discussed above, the judgment of the Circuit Court of Kanawha
County is affirmed.
Notes and Questions
1. The basic law. In states that recognize retaliatory eviction, a landlord may not
punish tenants when they exercise legal rights incidental to their tenancy.
Generally, this means that a landlord cannot raise the rent, reduce services,
refuse to renew a lease, or bring an eviction action for the purpose of retaliating
against a tenant who has complained about the condition of the unit, filed a
lawsuit concerning the fitness of the unit, contacted a local agency, or exercised
rights under the implied warranty of habitability.
2. Legal change. Under the traditional English common law, a landlord could
raise the rent or refuse to renew a tenant’s lease for any reason. How does the
court in Imperial Colliery justify changing a long-settled rule?
3. Rise of the doctrine. The doctrine of retaliatory eviction came to prominence
around the same time as the implied warranty of habitability. What’s the link
between these two rules?
4. Retaliate for what? West Virginia, like most states, protects tenants from
retaliatory eviction. In the case above, Fout presented evidence that he lost his
tenancy as a result of retaliation by his landlord. Why then did Fout lose? Do
you agree with the limitations that West Virginia has put on the doctrine of
retaliatory eviction? Why should tenants fear losing their homes if they exercise
their First Amendment rights?
5. Property serves human values? Recall New Jersey v. Shack (private farm owners
cannot bar social service workers from meeting with migrant laborers who live
on the farm). In that opinion we saw that property rights are occasionally
trumped by other values. Why don’t Fout’s rights under the First Amendment
and the National Labor Relations Act outweigh his landlord’s desire to kick him
out? Can you distinguish Imperial Colliery from Shack?

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6. Is housing special? Is housing a good like any other, or is it somehow different
from most things we buy and sell on the market? In continental European
countries there’s a tentative national consensus that all housing—even privately
owned apartments—has a uniquely public or social dimension. As a result,
many European nations grant citizens strong protections against forced
relocations. For example, “good faith” eviction schemes are pervasive. In a
“good faith” jurisdiction, a landlord can only refuse to renew a tenancy for a
good reason—generally some faulty behavior on the part of the tenant
(damaging the premise, creating a nuisance, breaching a material term in the
lease) or the landlord’s desire to remodel the unit. Should U.S. states adopt such
a rule?
7. Remedies. What’s the appropriate remedy for a tenant who wins a retaliatory
eviction case?
8. Establishing motive. Peter Pan calls his local Board of Health to complain
about the conditions in The Neverland Apartments, where he rents a twobedroom unit. The landlord, Hook, is furious at Pan. They get into a heated
screaming match in front of the building. If Hook waits a year and then
dramatically raises Pan’s rent, will Pan be able to win a retaliatory eviction case?
What if Hook waits six months? Three months? Some states require the tenant
to show that the landlord would not have taken action “but for” the tenant
exercising a right. Because of the difficulties in establishing motive, other states
employ a burden-shifting model in retaliatory eviction cases. In these
jurisdictions, the law presumes that the landlord has acted with a retaliatory
motive if the landlord raises the rent (or takes another retaliatory action) within
a certain amount of time after the tenant has availed himself of a legal
entitlement. The window of time varies from three months to a year, but many
states use a six-month period. Importantly, the presumption against the
landlord is rebuttable.
9. How common is retaliation? In his book, Evicted: Poverty and Profit in the
American City, Matthew Desmond recounts an anecdote about a landlord who
would immediately begin preparing eviction papers as soon as his tenants
complained about their living conditions.

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4. Landlord’s Tort Liability
A landlord’s responsibility for injuries sustained on the leased premise has dramatically
expanded in the last 50 years. As discussed in the previous subsection, under the
traditional common law rule, the tenant had the duty to undertake all repairs and
maintenance on the rented property. As a result, the law absolved landlords from
liability for injuries sustained because of dangerous conditions in the unit. The costs
of damage (to both property and persons) sustained from rotted decks, falling plaster,
and collapsing walls all fell squarely on tenants.
Almost every jurisdiction now imposes greater duties on landlords. At the very least,
landlords must exercise reasonable care in keeping common areas safe, use reasonable
care when making repairs, and warn tenants about latent defects—unsafe conditions
that would not be obvious upon an inspection. Other jurisdictions, following the logic
of the implied warranty of habitability, have gone farther. They reason that since the
landlord now has a duty to provide tenants (and their guests) with safe and clean
premises, a failure to comply with this obligation may amount to negligence. The basic
rule in these states is that a landlord must take reasonable steps to repair defects of
which the landlord becomes aware. Failure to comply exposes landlords to liability for
injuries that result from the defective conditions.
Landlords sometimes attempt to avoid the obligation to repair by inserting into the
lease a clause stating that the lessor is not responsible for personal injury or property
damage that occurs on the premise. While such exculpatory clauses are typically upheld
in commercial settings, courts increasingly strike them from residential leases as
violations of public policy.

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5. Gentrification & Rent Control
Defined broadly, gentrification is the movement of wealthier people into a poor
neighborhood, which results in a subsequent increase in rents and the ultimate
displacement of longtime residents. The stereotypic progression starts when artists and
gay couples move into a run-down but centrally located neighborhood in the urban
core. They fix up houses, open trendy cafes, and start galleries. The newcomers also
demand better public services and police protection from the local government. As
the number of amenities grows, home
prices and rents begin to rise. Married
couples without children start to flow
into the area, followed quickly by
bankers, lawyers, and families attracted
the neighborhood’s beautiful older
homes and terrific location. As rents
continue to rise, many of the original
residents—who are often poor and
black—can no longer afford the
neighborhood. They are forced to
either move or pay an enormous
percentage of their income toward
rent.
One resident of a gentrifying
neighborhood in Portland gives a
personal account of the basic problem:

Photo courtesy of Flickr user Keith Hamm

Last week I heard a shuffle at my front door and saw that my building
manager was slipping a notice under my door. I opened it only to read
that my rent was being raised by 10%. . . . [In the last year], my rent has
gone up a total of 14%. If it continues at this pace, I’ll have to find
another place to live because I’ll be priced out of my very walkable, very
centrally-located neighborhood.
[Gentrification is] an emotional tinderbox. People who are just going
about their lives are having to face eviction, displacement, or just have

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to spend a lot more on housing if they want to stay where they are
because of forces completely out of their control. In other words, you
could be doing everything “right” in your life—being a responsible
citizen, earning a viable income and doing your best—but it still isn’t
good enough. Not unlike the tragedy of having your house destroyed by
a natural phenomenon like a hurricane or a flood, you could become a
victim of the “greed phenomenon” where developers look with dollar
signs in their eyes at the house you live in with the intention of razing it
and building a hugely profitable and expensive condo building there
instead.

For low-income individuals pushed out of their neighborhoods, the process of
gentrification often produces traumatic effects. In addition to the financial costs of an
unwanted move, gentrification often shatters valuable personal networks. People who
have lived their entire lives within a small geographic area may suddenly find
themselves separated from the friends and family who provide emotional support and
economic resources that serve as a vital buffer against the ills of poverty.
Many activists have suggested that rent control laws are the best solution to problems
spawned by gentrification. Rent control legislation comes in a variety of forms but
most often puts caps on the amount of rent that a landlord can charge (first-generation
controls) and/or requires that prices for rented properties do not increase by more
than a certain percent each year (second-generation controls). Rent controls, activists
argue, allow existing tenants to stay in their homes while continuing to devote the same
percentage of their incomes to rent has they have in the past.
Economists have a very different perspective on fighting gentrification with rent
control mechanisms. American legal economists are typically opposed to rent controls.
Often heatedly so. To understand why, put yourself in the shoes of a landlord in a city
that holds the price of rent below what the market will bear. How would you respond
if you were forced to provide a service for less than the market price? First and
foremost, you probably wouldn’t build any new rental housing units. Why? Because
you’d almost certainly make more money if you used your capital to build something
that’s not regulated by the government. Ultimately, the lack of proper incentive to
build apartments lowers the supply of rental housing and thereby increases the price
(for anyone who doesn’t qualify for rent controls). Second, you might decide to skimp

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on the maintenance of your rent-controlled unit in order to recoup some of the lost
profits. After all, will a tenant in a rent-controlled apartment really give up their unit if
you don’t respond to their request to fix the sink?
So goes the theory, at any rate—and it is a theory that has found expression in judicial
opinions, particularly among those judges of the U.S. Court of Appeals for the Seventh
Circuit who moonlight as academic legal economists of the so-called “Chicago School.”
See Chicago Board of Realtors, Inc. v. City of Chicago, 819 F.2d 732, 741-42 (7th Cir.
1987) (Opinion of Posner, J.). In apparent agreement with these theoretical arguments,
very few American jurisdictions today maintain rent control policies—only New York,
Los Angeles, and a few places in the Bay Area have significant rent control laws. State
and local governments are much more likely to attack problems of affordable housing
by either giving rent vouchers to the poor or building government-owned housing
projects (are these better options?).
But perhaps the legal economists of a generation ago were mistaken—or at least
insufficiently sensitive to the potential variety of rent control measures and the diversity
of urban environments in which they can be deployed. While first-generation rent
control measures have few academic defenders in the United States, there is some
suggestion that the actual empirics of second-generation rent controls and other tenant
protections may diverge from the dire theoretical predictions of the Chicago School.
In particular, the effects of rent control on the supply, quality, and distribution of rental
housing may depend significantly on the nature of the protective regulation imposed,
the density of existing housing stock, availability of vacant land, the mix of other
regulatory constraints on land use in general and housing in particular, and
idiosyncrasies of the local economy—particularly the degree of competition among
landlords. See generally Richard Arnott, Time for Revisionism on Rent Control?, 9 J. ECON.
PERSPECT. 99 (1995); Bengt Turner & Stephen Malpezzi, A review of empirical evidence on
the costs and benefits of rent control, 10 SWED. ECON. POLICY REV. 11 (2003). Outside of
the United States, moreover, economists and politicians are less antagonistic toward
rent control. Paris, for example, recently passed a law capping many rents. Germany,
the Netherlands, and Sweden also have widespread limitations on how much rent
landlords can charge.

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Notes and Questions

1. Europe v. America. What do you think accounts for the different views on
rent control between European policy makers and their American counterparts?
2. Getting to Affordability. If rent control isn’t the answer, what steps should
government take to ensure access to affordable housing? Should the
government have any role at all in the housing market? Before the Great
Depression the federal government played almost no part housing policy. How
should government housing policy regarding affordable housing fit into the mix
of economic regulations addressing problems of poverty and equity?

E. Wrapping Up
The following rental agreement is modeled on an actual lease that a friend of the
casebook authors was asked to sign. Do you see any potential problems for a tenant?
Would you sign this lease?
Residential Rental Agreement and Contract
THIS AGREEMENT (hereinafter known as the “Lease” or the “Agreement”) is made
and entered into this 1st day of September 2015, between Peter Rabbit (hereinafter
referred to as the “Tenant”) and Mr. McGregor (hereinafter referred to as the
“Landlord”). In exchange for valuable consideration, the landlord and tenant agree to
the following:
1. Property. The landlord owns certain real property and improvements at 123
Vegetable Garden Way, Potterville, Beatrixia (hereinafter referred to as the
“Property” or the “Premise”). The Landlord wishes to lease the Premise to the Tenant
upon the terms and conditions stated in this Lease. The Tenant wishes to lease the
Premise from the Landlord upon the terms and conditions stated in this Lease.
2. Term. This agreement shall commence on September 1, 2015 and shall commence
on August 31, 2018 at 11:59 PM. Upon any termination of the Agreement, the Tenant
will pay off all outstanding bills, remove all personal property from the Premise, bring
the leased premise back to the condition it was in upon move-in (excepting normal

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wear and tear), peacefully vacate the premise, return all keys to the Landlord, and give
the Landlord a forwarding address.
3. Holdovers. If the Tenant holds over after the termination of the lease, a new
tenancy from month-to-month shall be created. Under the new month-to-month lease
the Tenant shall be responsible for double the agreed upon rent.
4. Rent. The Tenant shall pay the landlord $1000 per month as rent for the entire term
of the agreement. The rent shall be due on the 1st day of each calendar month.
Weekends, holidays, and religious observances do not excuse the Tenant’s obligation
to make timely payments.
5. Delivery of Possession. The Landlord shall not be held liable for any failure to
deliver possession of the Premise by the starting date of the agreed upon term.
6. Late Fees. A late fee of 5% shall be due if the rent is received after the 5th day of
the month. A late of 10% shall be due if the rent is received after the 10th day of the
month. Acceptance of a late fee does not affect or waive any other right or remedy the
Landlord may exercise for Tenant’s failure to timely pay rent.
7. Returned Checks. In the event that any payment by the Tenant is returned for
insufficient funds or if the Tenant stops payment, the Tenant will pay $100 to the
Landlord for each such event, in addition to the Late Fees described above.
8. Security Deposit. The Tenant shall deposit with the Landlord $1500 as a security
deposit for this Agreement. All interest that accrues on such a security deposit shall
belong to the Landlord alone. The Landlord may use the deposit money for any and
all purposes allowed by law.
9. Utilities. It is the responsibility of the Tenant to obtain all utilities for the leased
Property. Tenant’s failure to make any payment for the utilities shall constitute a
material breach of the agreement. The Landlord shall not be held liable for any failure
to deliver any utility service or for any damage caused by a problem with any utility
service, whatever the cause of such problem. The Tenants do hereby waive any claim
for damages that result from any problem with utility service.

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10. Keys. The Tenant shall not install any new locks anywhere on the property or
make any copies of the keys. The Tenant also shall refrain from providing any keys to
any person not listed on this Agreement. When the lease terminates, the Tenant shall
return all keys to the Landlord.
11. Pets. No pets of any kind, type, or breed shall be allowed on the property without
the Landlord’s express written consent. This consent, if given, will require an
additional pet deposit.
12. Use of the Premise. The premise shall be used and occupied solely by the Tenant.
Tenant shall not allow any other person to use or occupy the premise without first
obtaining Landlord’s written consent. No part of the Premise shall be used at any time
during the term for any business, trade, or other commercial purpose. Additionally,
the tenant agrees to comply with all local, state, and federal laws, regulations, and
ordinances. No part of the property may be used in any way that aids or advances a
criminal enterprise.
13. Assignments and Subletting. The Tenant shall not license, assign, or sublet the
Property and/or this agreement without the written consent of the Landlord. An
assignment, subletting or license without the Landlord’s written consent shall be
considered absolutely null and void and, at the Landlord’s option, terminate this
Agreement.
14. Alterations. The Tenant shall make no alterations to the Premise without written
consent of the Landlord. If the Tenant makes any unauthorized improvement,
modification, or change to the Property, the landlord has the option to charge the
Tenant the cost of restoring the Premise to its original condition. In the event that the
Landlord approves an alteration made by the Tenant, such alternations shall become
the property of the Landlord and remain on the Property.
15. Maintenance & Repair. Except for normal wear and tear, the Tenant shall maintain
the Premise in the condition it was upon the starting date of the Agreement. Should
any damages, malfunctions, breakages, or other problems occur during the course of
the Lease, the Landlord shall have a reasonable amount of time to complete such
repairs. During that time, the Tenant’s rent shall remain due in full and on time despite
any hardships such repairs or delays may cause. Tenant also has a contractual duty to

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(1) notify Landlord of any problems with the leased premise, (2) Deposit all trash,
rubbish, refuse, and garbage in the trash cans provided by the city, (3) keep all windows,
doors, and locks in good order, (4) inspect the fire alarms each and every month.
16. Noise. The Tenant and the Tenant’s guests shall at all times keep the level of
sound down to a level that does not annoy or interfere with other residents or
neighbors.
17. Sale of the Property. The Landlord shall have the right to sell or transfer his
ownership of the Property and this Agreement at any time and without restriction.
Upon sale or transfer of the Landlord’s interest, this agreement may be terminated by
either the Landlord or the party who purchases the Landlord’s interest. The Tenant
agrees to release, waive, and hold harmless the Landlord and the Landlord’s successor
from all liabilty if such a transfer occurs.
18. Access. The Landlord and his agents shall have the right to enter the Property
without notice to inspect the property, make repairs, or show the property to
prospective tenants or purchasers.
19. Condition of the Premise. The Landlord makes no guarantees or warranties about
the condition of the leased premise. The Tenant assumes all risk of injury or harm
stemming from any accidents or criminal acts occurring on or around the Premise. The
Tenant agrees to hold the Landlord harmless for all liability stemming any injury or
harm to the Tenant, Tenant’s property, or Tenant’s guests. The Tenant further agrees
to indemnify, defend, and hold harmless the Landlord from any and all claims over the
condition of the premise. Should the Tenant damage the Premise, he shall indemnify
the Landlord for all costs of repair or replacement within 30 days.
20. Natural Disaster. In the event of a natural disaster, fire, or other catastrophic event,
the Landlord may choose not to repair the Premise, in which case the Lease shall
terminate. The Landlord may also elect to fix the Premise, in which case the Tenant
must continue to pay the full monthly rent so long as the repairs are completed within
a reasonable time. In either case, any and all damages and injuries connected to acts of
the Tenant, his guests, or property shall be the sole financial responsibility of the
Tenant.

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21. Eminent Domain. If a government or private entity takes the Premise or any part
of the Premise by eminent domain, this Lease shall terminate. The new termination
shall be the date of the final taking order. Any award or court judgment in favor of the
Landlord in an eminent domain case or any settlement award stemming from an
eminent domain proceeding shall belong to the Landlord in full. The Tenant shall have
no claim over such awards.
22. Attorney’s Fees. Tenant agrees to pay all reasonable attorney’s fees, court costs,
and other expenses if it becomes necessary for the Landlord to enforce any of the
conditions of covenants of this Lease, including but not limited to eviction proceedings,
collection of rents, and damage to the Premise caused by the Tenant. The Tenant also
agrees to indemnify the Landlord for all attorney’s fees, court costs, and other expenses
that the Landlord may incur while successfully defending a lawsuit brought by the
Tenant.
22. Abandonment. If at any time during the term of this Lease the Tenant abandons
the Premise, the Landlord may obtain possession of the Premise in any manner
provided for by law. Any personal property left behind shall be considered abandoned.
The Landlord may dispose of such personal property in any manner he deems fit and
is released of all liability for doing so.
23. Severability. If any portion of this Lease shall be found unenforceable, invalid, or
void under any law or public policy, that portion of the Lease shall be severed from the
remainder of the Agreement. All remaining portions of the Agreement will remain in
effect and enforceable.
24. Governing Law. This lease shall be governed and interpreted under the laws of
the Commonwealth of Beatrixia.
25. Non-Waiver. No delay or non-enforcement of any term of this Agreement by the
Landlord shall not be deemed a waiver. All terms and conditions of this Agreement
shall remain fully enforceable should the Landlord seek to enforce any condition or
covenant at a later date, even if the Landlord has intentionally or unintentionally
neglected to do so in a previous instance.

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26. Notices. Any notice required or permitted under this Agreement must be written
on 8½ x 11 paper and sent by United Parcel Service (UPS). Notice shall be sent to the
address of the Property for the Tenant or to 345 Bunny Pie Lane, Potterville,
Beatrixia for the Landlord.
27. Spelling and Grammar. Any mistakes in spelling, grammar, punctuation, or gender
usage shall not be fatal to the Agreement. Rather, they shall be interpreted to carry out
the intent of the parties.
28. Default. Tenant shall be in default of this Agreement if he fails to comply with
any covenant, condition or term and/or fails to pay rent when due and/or causes
damage to the Premise during the term which cumulatively equals or exceeds $100.
Should the Tenant ever default, the Landlord may with or without notice either (1)
terminate the Lease or (2) terminate the Tenant’s right to possession of the Premise
while leaving this Agreement operative. If the Landlord elects option (2), the Landlord
will have the immediate right to possess the Premises and the Tenant shall lose all
possessory rights and have the obligation to immediately vacate the Premise. However,
the Tenant shall still have the duty to pay all rents, fees and expenses mandated under
this Agreement and/or by the judicial system until either the agreed upon term
concludes or the property is re-rented at a monthly rate not less than the amount owned
under this Agreement with any negative balance owed by the Tenant.
____________________
Tenant Signature
_____________________
Date
_____________________
Landlord Signature
____________________
Date

Part IV: Transfers
Rules about transferring property are created by law. There are only certain ways
people can rearrange property relations. Some rearrangements happen even if the
people involved don’t want them, and some don’t happen even if the people involved
do want them. Knowing the rules is key to understanding which transfers work and
why.
There are several methods of transferring property. The key voluntary methods are
gifts, sales, and transfers at death, which can be divided into transfers by will (also
known as transfer by devise) and transfers by operation of law because of the
decedent’s intestacy (dying without a will). We have already seen examples of transfers
at death in our examination of the estates system. We will see more shortly in our
chapter on Wills and Intestacy.
In this part of the course, we will focus primarily on transfers of interests in real
property by sale, and the elaborate legal infrastructure established to support such
transactions. But we will begin our study of voluntary transfers with the law of gratuitous
transfers, specifically gifts of personal property. With this most simple of transfers, we
will lay a foundation for understanding how the law of transfers tries to respect and
facilitate the intent to consensually transfer property while guarding against fraud and
mistake, all while being mindful of public policy interests that may compete with the
private interests of some property owners.

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Gifts
Although most litigated transfers involve sales, it is useful to study gifts for several
reasons. First, gift law recapitulates our previous exploration of the significance of
possession to ownership. Second, gift law highlights how some problems in contract
law arise only out of executory promises: completed promises involving property will
often be valid as gifts, even if they lacked consideration. Gift law also provides an
introduction to methods of transferring land, particularly transfers by deed and
transfers by will. In order for a valid gift to occur, three elements must be present: (1)
the donor must intend to give the property as a gift; (2) the donor must deliver the
property to the donee; and (3) the donee must accept the gift. We won’t spend much
time on the third element, because when the property has some value, acceptance will
generally be presumed in the absence of an explicit rejection.
Unlike a sale or a contract, a gift does not require consideration. This leads to concerns
that often shape judicial doctrine. First, without tangible consideration, we need to
keep people from lying about what was given to them. Because gift issues often arise
after the alleged donor died, courts have been concerned to protect the donor’s heirs
from having the donor’s estate stripped by people who claim to be donees.
Second and relatedly, we desire to protect the system of written wills and to encourage
its use. A standard will must be signed and witnessed. A system that easily allows premortem gifts might undermine people’s incentives to take the time to write a will—
they might think they can always just give their property away when death
approaches—and also harm the legitimate expectations of those who are named in a
will. If the person who writes a will, known as the testator, identifies specific property
in her will, but sells it or gives it away before she dies, the devise in the will is nullified;
it’s no longer her property to give away when she dies. Although people named as
devisees in a will have no legal rights to the property before the testator dies, they might
nonetheless have practically and morally compelling expectations—especially if we
worry about the people surrounding a dying person exercising undue influence and
extracting gifts that the dying person wouldn’t give if she were thinking more clearly.
Thus, by making it more difficult to give gifts, we may protect the overall system of
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property transfers. This concern can lead courts to find that no gift has been made
even when the would-be donor very clearly wanted to give the property away. Consider
as you read whether this overall structural concern is justified.

A. Intent
Although laypeople may not be aware of this distinction, there is a huge legal difference
between “I will give you this car when you graduate” and “I now give you this car.”
(In the next section we will investigate a third variant, in which the gift is of a future
interest.) “I will give you this car” is a mere promise with no legal force. No matter
how serious the speaker’s intent is, it is not an intent to make a present gift, and it will
therefore not result in a gift.
Intent is rarely an issue in gift cases, but it can arise when it is not clear what the donor
intended to give: Suppose O says to D, “I want you to have the jewelry box on my
dresser and the jewelry inside,” believing that she’s storing costume jewelry in the box.
D takes the box, but inside there are no costume jewels, only a diamond necklace.
What gift has been made? What if O says “I want you to have the jewelry box and its
contents,” and the contents are bearer bonds worth $100,000? If O is deceased when
the issue is litigated, how would you determine her intent?

B. Delivery
Simply put, the property must in some way pass out of the grantor’s control in order
for a gift to be valid; this is known as delivery. Professor Philip Mechem summarized
the reasons for the requirement:
(1) Delivery has psychological significance, forcing the donor to
confront the loss of the property: the “wrench of delivery” protects
the donor from poor choices.
(2) Delivery signifies the gift to third party witnesses, settling doubts
about whether what was intended was a mere promise to make a gift
in the future or a present gift.

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(3) Delivery lets the property itself bear mute witness to the fact of the
gift: possession itself has evidentiary weight.
Philip Mechem, The Requirement of Delivery in Gifts of Chattels and of Choses in Action
Evidenced by Commercial Instruments, 21 ILL. L. REV. 341, 348-49 (1926); but see Chad A.
McGowan, Special Delivery: Does the Postman Have to Ring at All—the Current State of the
Delivery Requirement for Valid Gifts, 31 REAL PROP. PROB. & TR. J. 357 (1996) (critiquing
Mechem).
Land doesn’t move, at least not for these purposes, so manual delivery is impossible,
and “symbolic” delivery of land has always been accepted. At early common law, the
transfer of land involved a ceremony called livery of seisin, in which the transferor
physically handed over a clod of dirt or a twig from the land to the transferee.
Fortunately, transfer of an interest in land is now generally accomplished by a written
instrument, known as a deed. At a minimum, a deed must describe the land to be
transferred, contain some words indicating an intent to make a present transfer of title,
and the grantor’s signature (which courts construe liberally—almost any mark or
symbol of the grantor’s approval, including the signature of the grantor’s agent, will be
sufficient). These formalities will be covered in more detail in the land conveyancing
section.
What about personal property? Most gifts, especially gifts of personal property, are
given during life. Nonetheless, many litigated cases arise around near-death gifts. As
you read, consider why the case law would diverge so much from the practice of giving.
In re Estate of Evans
356 A.2d 778 (Pa. 1976)
Appellant, Vivian Kellow, objected to the inventory, proposed schedule of distribution
and final accounting of the executor of the estate of Arthur Evans. After appellant
finished the presentation of her case, the lower court granted appellees’ motion to
dismiss appellant’s objections. … The thrust of her appeal to this Court is that certain
contents of a safe deposit box were the subject of an inter vivos gift to her from Arthur
Evans, the deceased, and, consequently, should not have been included in his estate.

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Appellant, the niece of Arthur Evans’ deceased wife, began working for the Evans
family when she was 16. For several years she took care of Mrs. Evans who for some
years prior to death was an invalid. Appellant cooked meals for the Evanses, cleaned
their house, did their laundry and generally cared for Mrs. Evans. She received adequate
compensation for performing these needed services. When Mrs. Evans died, appellant
continued to cook at least one hot meal a day for Mr. Evans, do his laundry and make
sure his house was tidy. After appellant was married, she continued to perform these
same services and visited Mr. Evans once a day. In May of 1971, following one of his
four hospitalizations, the deceased moved into appellant’s home.
Although at times Mr. Evans was confined to his bed because of water in his legs, he
frequently took walks, had visits with his lawyers and made trips to his bank. On
October 22, 1971, appellant’s husband drove Mr. Evans and a friend of his, Mr. Turley,
to town so that Mr. Evans might go to the bank. Turley testified that Mr. Evans spent
about one hour going through the contents of his safe deposit box. Before leaving the
bank, the deceased obtained both keys to the box.
Various witnesses presented by appellant testified to seeing the keys to the safe deposit
box beneath appellant’s mattress and to statements by Mr. Evans to the effect that the
contents of the safe deposit box had been given to appellant. Mr. Evans entered the
hospital for the last time on November 5, 1971. During this last hospital stay, Reverend
Cunnings visited with him and was told that Mr. Evans was giving the Reverend’s
church $10,000.00 and that he had given the rest of his possessions and the keys to his
safe deposit box to appellant. Mr. Evans expired on November 23, 1971.
Appellant relinquished the keys to the safe deposit box to a bank officer, but not
without protesting that the contents of the box were hers. The box revealed a
holographic will of Mr. Evans dated September 16, 1965, and approximately
$800,000.00 in bonds, preferred and common stock and several miscellaneous items. *

* The will was uncontested and under its terms provided for a $1,000.00 bequest to appellant.

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The lower court correctly noted that the requirements for a valid inter vivos gift were
donative intent and delivery, actual or constructive. With respect to donative intent,
the court found:
‘Turning to the facts of this case, certainly no one can reasonably argue
that Arthur Evans lacked sufficient motive to make a gift to Vivian. The
record clearly manifests, both by his conduct and his statements,
donative intent, the first prerequisite.’
Nevertheless, the court ruled that no delivery had been made. This result was
predicated upon a finding that the deceased had not divested himself of complete
dominion and control over the safe deposit box. After properly noting that
constructive delivery is sufficient when manual delivery is impractical or inconvenient,
the court reasoned:
The record contains no evidence of circumstances which were such that
it was impractical or inconvenient to deliver the contents of this box into
the actual possession or control of Vivian.
Arthur Evans, although suffering physical infirmities and apprehensive of death, was
nonetheless ambulatory. On October 22, 1971, he appeared at the Nanticoke National
Bank in the company of Harold Turley and Leroy Kellow and spent approximately one
hour going over the contents of his safe deposit box in a cubicle provided in the bank
for that purpose. He left the bank after redepositing the contents and took with him
only the keys which independent testimony indicates he delivered to Vivian the next
day. There was no manual delivery of the contents. The contents of the box remained
undisturbed. The box, and its contents, were registered in the name of the decedent at
the date of his death. The objects of the gift were not placed in the hands of Vivian,
nor was there placed within her power the means of obtaining the contents.’…
‘A claim of a gift inter vivos against the estate of the dead must be
supported by clear and convincing evidence. In order to effectuate an
inter vivos gift there must be evidence of an intention to make a gift and a
delivery, actual or constructive, of a nature sufficient not only to divest
the donor of all dominion over the property but also invest the donee

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with complete control over the subject-matter of the gift. … [Tomayko
v. Carson, 368 Pa. 379, 385 (1951).
In the instant case, the controversy focuses on whether there was an adequate delivery.
…:
… ‘If there remains something for the donor to do before the title of
the donee is complete, the donor may decline the further performance
and resume his own,’ … ‘(i)t is not possible that a chancellor would
compel an executor or administrator to complete a gift by the doing of
any act which the alleged donor if living might have refused to do, and
thereby revoked his purpose to give.’ … ‘Though every other step be
taken that is essential to the validity of the gift, if there is no delivery, the
gift must fail. Intention cannot supply it; words cannot supply it; actions
cannot supply it. It is an indispensable requisite, without which the gift
fails, regardless of consequence.’ The consequence is that no matter how
often or how emphatically the desire or intention of the donor to make
the gift has been expressed, upon his death before delivery has been
completed, the promise or purpose to give is revoked.
We have recognized that in some cases due to the form of the subject matter of the
gift or due to the immobility of the donor actual, manual delivery may be dispensed
with and constructive or symbolic delivery will suffice. In Ream Estate, 413 Pa. 489,
198 A.2d 556 (1964), for example, the Court found there had been a valid constructive
delivery of an automobile where the donor gave the keys to the alleged donee and also
gave him the title to the car after executing an assignment of it leaving the designation
of the assignee blank. The assignment was executed in the presence of a justice of the
peace and the evidence was overwhelming that the name of the donee was to be
inserted upon the death of the decedent. …
Appellant relies heavily on Leadenham’s Estate, 289 Pa. 216, 137 A. 247 (1927), and
Leitch v. Diamond National Bank, 234 Pa. 557, 83 A. 416 (1912). These decisions,
however, support the Court’s finding that there was no delivery in the instant case. In
Leadenham’s Estate, supra, the donor had rented a separate safe deposit box in the
name of the intended donee, put the contents of his box into the newly rented one and

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delivered the keys to it to the donee. On those facts we held that the constructive
delivery of the keys was sufficient to sustain the inter vivos gift because the donor had
divested himself of dominion and control and invested the donee with complete
dominion and control.
In Leitch v. Diamond National Bank, supra, the donor and donee were husband and
wife and had lived together harmoniously for many years. The husband had three safe
deposit boxes registered in his name and the name of his wife and he designated one
of them as his wife’s. He gave her the keys to that box. The Court found that she had
complete control over that box and that he only entered it with her permission. Since
she had complete control over the access to the box the Court found there was a valid
delivery of the contents of the box to her.
In both of these cases, the determinative factor was that the donee had complete
dominion and control over the box and its contents. In that posture we ruled that
giving the keys to the box to the donee was a valid constructive delivery. In the instant
case, appellant did not have dominion and control over the box even though she was
given the keys to it. The box remained registered in Mr. Evans’ name and she could
not have gained access to it even with the keys. Mr. Evans never terminated his control
over the box, consequently he never made a delivery, constructive or otherwise.
Although appellant suggests that it was impractical and inconvenient for Mr. Evans to
manually deliver the contents of his box to her because of his physical condition and
the hazards of taking such a large sum of money out of the bank to her home, we need
only note that the deceased was obviously a shrewd investor, familiar with banking
practices, and could have made delivery in a number of simple, convenient ways. First,
he was not on his deathbed. He was ambulatory and not only went to the bank on
October 22, 1971, but took walks thereafter and did not enter the hospital until
November 5, 1971. On the day he went to the bank he could have rented a second safe
deposit box in appellant’s name, delivered the contents of his box to it and then given
the keys to appellant. He could have assigned the contents of his box to appellant. For
that matter, he could have written a codicil to his will.

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The lower court noted that the deceased was an enigmatic figure. It is not for us to
guess why people perform as they do. On the record before us it is clear that regardless
of Mr. Evans’ intention to make a gift to appellant, he never executed that intention
and we will not do it for him. On these facts, we are constrained to hold that there was
not an inter vivos gift to appellant and that the contents of the safe deposit box were
properly included in the inventory of Mr. Evans’ estate….
ROBERTS, Justice (dissenting).
I dissent. The central issue in this case is whether donor made an adequate delivery of
the gift to donee. The majority finds that adequate delivery was not made because the
safe deposit box was leased solely in donor’s name and supports this conclusion by
pointing out that there were several alternative means of delivering the gift which would
have been adequate. I believe that the inquiry should not be what form of delivery
would have been clearly sufficient, but rather whether the delivery made by donor was
adequate. I believe that it was.
In Rynier Estate, 349 Pa. 471, 32 A.2d 736 (1943), we said that delivery is determined
on the facts of each case, with reference to the donor’s intent.
‘As the chief factor in the determination of the question whether a legal
delivery has been effected is the intention of the donor to transfer title
to the donee, as manifested by his words and actions and by the
circumstances surrounding the transaction, it is evident that each case
must depend largely upon its own facts.’
… The majority suggests that donor was ‘obviously a shrewd investor, familiar with
banking practices. . . .’ From this ‘familiar(ity) with banking practices,’ which is nowhere
shown on the record, and the absence of a joint lease for the box, it apparently
concludes that donor did not intend a gift. There are two reasons why this result is not
correct.
First, there is no doubt in this case that donor intended a gift. He told many people
that he had given the contents of the box to appellant. In fact, there is competent
testimony that donor directed donee to display the keys, hidden under her mattress, to
several witnesses.

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Second, it is apparent from the record that donor believed undisputed and
unconditional delivery of the keys to be sufficient to complete the gift. Most of this
Court’s cases dealing with inter vivos gifts of the contents of safe deposit boxes turn on
the delivery or nondelivery of the keys to the box to the donee. If the key was delivered,
the gift was normally upheld; if the key was not delivered, the gift was set aside, whether
or not the box was jointly leased. I have found no case which turned on the presence
or absence of a joint lease. Given this line of authority, and accepting the majority’s
conclusion that donor was sophisticated in these matters, it must be concluded that
donor believed delivery of the keys to the box completed the gift. If this were not so,
why would donor cause donee to take several witnesses into her bedroom to show
them that she had the keys and why would he speak in terms that indicated a completed
gift—’I gave to Vivian . . . the keys and the contents are hers.’ Because it is donor’s
intention to transfer title which is crucial to a valid delivery, and because this donor
intended to transfer title, I dissent from the majority’s conclusion….
Notes and Questions
1. The majority writes, “regardless of Mr. Evans’ intention to make a gift to
appellant, he never executed that intention and we will not do it for him.” But
it also quotes approvingly the lower court’s statement that “[t]he record clearly
manifests, both by his conduct and his statements, [Mr. Evans’] donative intent.”
Has the court contradicted itself, or can these statements be squared?
2. Why does the court note that Vivian Kellow “received adequate compensation”
for the services she provided to Arthur Evans? What were his motivations for
the attempted gift, and why are the appellees contesting it? Does the family
setting shed any light on the positions of the majority and dissent?
3. The common law required manual delivery of personal property for a valid gift
unless the object was too big to move. See, e.g., Newman v. Bost, 20 S.E. 848
(N.C. 1898) (symbolic delivery insufficient where objects were small items that
could easily have been physically delivered, even though would-be donor was ill
in bed). If the object was too big to move, substitutes for physical delivery were
acceptable. Keys are a classic example: handing over car keys is “constructive”
or “symbolic” delivery of the car. The keys symbolize the car (symbolic

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delivery) and provide the means for exercising dominion and control over it
(constructive delivery). Today, because all states require car owners to register
the title to their cars, many states require that a gift of a car is not complete
unless the donor also hands over the title documents. Why would the law
require delivery of the title documents? What happens when someone who
doesn’t know this rule hands over only the keys, and then a year later changes
her mind and demands the car back? (You should see here how a title system
can both make it easier to determine who owns property and easier for legally
unsophisticated people to make significant mistakes.)
Why isn’t saying “I give you this car” without delivery enough to complete the
gift? The keys could be handed over later, after all. If there’s a present donative
intent, what further purpose does a delivery requirement serve? Most answers
focus on the evidentiary role played by delivery: possession of the property by
the putative donee is strong evidence that the putative donor really did make a
gift. This is especially important because most gift disputes arise after the
putative donor’s death. Notice to third parties who deal with the property and
need to know who owns it is another common rationale. But when might a
putative donee’s possession not be particularly probative of whether a gift had
occurred? Suppose a father allows his daughter to use his second car when she
moves to town, and that this continues for six months. If, after they have a
falling out, the father sought to retrieve the car, how would you figure out
whether this was a loan or a gift?
4. Modern courts often relax the delivery requirement to allow constructive or
symbolic delivery even of smaller, more portable items, but some delivery
requirement remains. Suppose the would-be donor signed a document in front
of two witnesses saying “I now give my daughter $100,000,” and gave the
document to his daughter. But the donor didn’t actually deliver the money.
Should we relax the delivery requirement because we are very confident that a
gift was intended? Or does delivery still serve an important purpose? See Devol
v. Dye, 24 N.E. 246 (Ind. 1890) (“The intention of a donor in peril of death,
when clearly ascertained and fairly consummated within the meaning of wellestablished rules, is not to be thwarted by a narrow and illiberal construction of

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what may have been intended for and deemed by him a sufficient delivery.”);
Ferrell v. Stinson, 11 N.W.2d 701 (Iowa 1943) (deed made out to intended
donee was kept in box in donor’s house, and recorded after grantor’s death;
held: delivered given strong evidence of donor’s intent and fact that seriously ill
grantor was physically inable to access box after executing deed); cf. Hocks v.
Jeremiah, 759 P.2d 312 (Or. App. 1988) (bonds and diamond ring placed over
a period of years in a safe deposit box held jointly with putative grantee were
not properly delivered). What should have happened in the Ferrell case if the
grantor had made out the deed, put it in the box, and then a week later, still in
her sickbed, made out a deed to another person and handed that second deed
to the intended grantee?
5. The Restatement (Third) of Property: Wills and Other Donative Transfers § 6.2,
Comment yy, takes the position that personal property can be validly given
without delivery “if the donor’s intent to make a gift is established by clear and
convincing evidence.” Is this the right rule? As you’ll see in the next case, some
states require clear and convincing evidence of the presence of each element for
any gift.
Gruen v. Gruen
496 N.E.2d 869 (N.Y. 1986)
Plaintiff commenced this action seeking a declaration that he is the rightful owner of a
painting which he alleges his father, now deceased, gave to him. He concedes that he
has never had possession of the painting but asserts that his father made a valid gift of
the title in 1963 reserving a life estate for himself. His father retained possession of the
painting until he died in 1980. Defendant, plaintiff’s stepmother, has the painting now
and has refused plaintiff’s requests that she turn it over to him. She contends that the
purported gift was testamentary in nature and invalid insofar as the formalities of a will
were not met or, alternatively, that a donor may not make a valid inter vivos gift of a
chattel and retain a life estate with a complete right of possession. Following a sevenday nonjury trial, Special Term found that plaintiff had failed to establish any of the
elements of an inter vivos gift and that in any event an attempt by a donor to retain a
present possessory life estate in a chattel invalidated a purported gift of it. The

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Property

Appellate Division held that a valid gift may be made reserving a life estate and, finding
the elements of a gift established in this case …. We now affirm.
The subject of the dispute is a work entitled “Schloss Kammer am Attersee II” painted
by a noted Austrian modernist, Gustav Klimt. It was purchased by plaintiff’s father,
Victor Gruen, in 1959 for $8,000. On April 1, 1963 the elder Gruen, a successful
architect with offices and residences in both New York City and Los Angeles during
most of the time involved in this action, wrote a letter to plaintiff, then an
undergraduate student at Harvard, stating that he was giving him the Klimt painting
for his birthday but that he wished to retain the possession of it for his lifetime. This
letter is not in evidence, apparently because plaintiff destroyed it on instructions from
his father. Two other letters were received, however, one dated May 22, 1963 and the
other April 1, 1963. Both had been dictated by Victor Gruen and sent together to
plaintiff on or about May 22, 1963. The letter dated May 22, 1963 reads as follows:
“Dear Michael:
“I wrote you at the time of your birthday about the gift of the painting
by Klimt.
“Now my lawyer tells me that because of the existing tax laws, it was
wrong to mention in that letter that I want to use the painting as long as
I live. Though I still want to use it, this should not appear in the letter. I
am enclosing, therefore, a new letter and I ask you to send the old one
back to me so that it can be destroyed.
“I know this is all very silly, but the lawyer and our accountant insist that
they must have in their possession copies of a letter which will serve the
purpose of making it possible for you, once I die, to get this picture
without having to pay inheritance taxes on it.
“Love,
“s/Victor”.
Enclosed with this letter was a substitute gift letter, dated April 1, 1963, which stated:

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579

“Dear Michael:
“The 21st birthday, being an important event in life, should be celebrated
accordingly. I therefore wish to give you as a present the oil painting by
Gustav Klimt of Schloss Kammer which now hangs in the New York
living room. You know that Lazette and I bought it some 5 or 6 years
ago, and you always told us how much you liked it.
“Happy birthday again.
“Love,
“s/Victor”. *
Plaintiff never took possession of the painting nor did he seek to do so. Except for a
brief period between 1964 and 1965 when it was on loan to art exhibits and when
restoration work was performed on it, the painting remained in his father’s possession,
moving with him from New York City to Beverly Hills and finally to Vienna, Austria,
where Victor Gruen died on February 14, 1980. Following Victor’s death plaintiff
requested possession of the Klimt painting and when defendant refused, he
commenced this action.
The issues framed for appeal are whether a valid inter vivos gift of a chattel may be made
where the donor has reserved a life estate in the chattel and the donee never has had
physical possession of it before the donor’s death and, if it may, which factual findings
on the elements of a valid inter vivos gift more nearly comport with the weight of the
evidence in this case, those of Special Term or those of the Appellate Division. The
latter issue requires application of two general rules. First, to make a valid inter vivos gift
there must exist the intent on the part of the donor to make a present transfer; delivery
of the gift, either actual or constructive to the donee; and acceptance by the donee.
Second, the proponent of a gift has the burden of proving each of these elements by
clear and convincing evidence.

* [Eds.—As we will discuss below, Victor Gruen evaded substantial taxes on this gift by pretending that he did

not reserve a life estate.]

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Property

Donative Intent
There is an important distinction between the intent with which an inter vivos gift is
made and the intent to make a gift by will. An inter vivos gift requires that the donor
intend to make an irrevocable present transfer of ownership; if the intention is to make
a testamentary disposition effective only after death, the gift is invalid unless made by
will.
Defendant contends that the trial court was correct in finding that Victor did not intend
to transfer any present interest in the painting to plaintiff in 1963 but only expressed
an intention that plaintiff was to get the painting upon his death. The evidence is all
but conclusive, however, that Victor intended to transfer ownership of the painting to
plaintiff in 1963 but to retain a life estate in it and that he did, therefore, effectively
transfer a remainder interest in the painting to plaintiff at that time. Although the
original letter was not in evidence, testimony of its contents was received along with
the substitute gift letter and its covering letter dated May 22, 1963. The three letters
should be considered together as a single instrument and when they are they
unambiguously establish that Victor Gruen intended to make a present gift of title to
the painting at that time. But there was other evidence for after 1963 Victor made
several statements orally and in writing indicating that he had previously given plaintiff
the painting and that plaintiff owned it. Victor Gruen retained possession of the
property, insured it, allowed others to exhibit it and made necessary repairs to it but
those acts are not inconsistent with his retention of a life estate. … Victor’s failure to
file a gift tax return on the transaction was partially explained by allegedly erroneous
legal advice he received, and while that omission sometimes may indicate that the donor
had no intention of making a present gift, it does not necessarily do so and it is not
dispositive in this case.
Defendant contends that even if a present gift was intended, Victor’s reservation of a
lifetime interest in the painting defeated it. … Defendant recognizes that a valid inter
vivos gift of a remainder interest can be made not only of real property but also of such
intangibles as stocks and bonds. Indeed, several of the cases she cites so hold. That
being so, it is difficult to perceive any legal basis for the distinction she urges which
would permit gifts of remainder interests in those properties but not of remainder

Gifts

581

interests in chattels such as the Klimt painting here. The only reason suggested is that
the gift of a chattel must include a present right to possession. [Permitting] a gift of the
remainder in this case, however, is consistent with the distinction, well recognized in
the law of gifts as well as in real property law, between ownership and possession or
enjoyment. Insofar as some of our cases purport to require that the donor intend to
transfer both title and possession immediately to have a valid inter vivos gift, they state
the rule too broadly and confuse the effectiveness of a gift with the transfer of the
possession of the subject of that gift. The correct test is “ ‘whether the maker intended
the [gift] to have no effect until after the maker’s death, or whether he intended it to
transfer some present interest.’” As long as the evidence establishes an intent to make
a present and irrevocable transfer of title or the right of ownership, there is a present
transfer of some interest and the gift is effective immediately. Thus, in Speelman v.
Pascal, we held valid a gift of a percentage of the future royalties to the play “My Fair
Lady” before the play even existed. There, as in this case, the donee received title or
the right of ownership to some property immediately upon the making of the gift but
possession or enjoyment of the subject of the gift was postponed to some future time.
Defendant suggests that allowing a donor to make a present gift of a remainder with
the reservation of a life estate will lead courts to effectuate otherwise invalid
testamentary dispositions of property. The two have entirely different characteristics,
however, which make them distinguishable. Once the gift is made it is irrevocable and
the donor is limited to the rights of a life tenant not an owner. Moreover, with the gift
of a remainder title vests immediately in the donee and any possession is postponed
until the donor’s death whereas under a will neither title nor possession vests
immediately….
Delivery
In order to have a valid inter vivos gift, there must be a delivery of the gift, either by a
physical delivery of the subject of the gift or a constructive or symbolic delivery such
as by an instrument of gift, sufficient to divest the donor of dominion and control over
the property. As the statement of the rule suggests, the requirement of delivery is not
rigid or inflexible, but is to be applied in light of its purpose to avoid mistakes by donors
and fraudulent claims by donees. Accordingly, what is sufficient to constitute delivery

582

Property

“must be tailored to suit the circumstances of the case.” The rule requires that “ ‘[t]he
delivery necessary to consummate a gift must be as perfect as the nature of the property
and the circumstances and surroundings of the parties will reasonably permit.’ ”
Defendant contends that when a tangible piece of personal property such as a painting
is the subject of a gift, physical delivery of the painting itself is the best form of delivery
and should be required. Here, of course, we have only delivery of Victor Gruen’s letters
which serve as instruments of gift. Defendant’s statement of the rule as applied may be
generally true, but it ignores the fact that what Victor Gruen gave plaintiff was not all
rights to the Klimt painting, but only title to it with no right of possession until his
death. Under these circumstances, it would be illogical for the law to require the donor
to part with possession of the painting when that is exactly what he intends to retain.
Nor is there any reason to require a donor making a gift of a remainder interest in a
chattel to physically deliver the chattel into the donee’s hands only to have the donee
redeliver it to the donor. As the facts of this case demonstrate, such a requirement
could impose practical burdens on the parties to the gift while serving the delivery
requirement poorly. Thus, in order to accomplish this type of delivery the parties would
have been required to travel to New York for the symbolic transfer and redelivery of
the Klimt painting which was hanging on the wall of Victor Gruen’s Manhattan
apartment. Defendant suggests that such a requirement would be stronger evidence of
a completed gift, but in the absence of witnesses to the event or any written
confirmation of the gift it would provide less protection against fraudulent claims than
have the written instruments of gift delivered in this case.
Acceptance
Acceptance by the donee is essential to the validity of an inter vivos gift, but when a gift
is of value to the donee, as it is here, the law will presume an acceptance on his part.
Plaintiff did not rely on this presumption alone but also presented clear and convincing
proof of his acceptance of a remainder interest in the Klimt painting by evidence that
he had made several contemporaneous statements acknowledging the gift to his friends
and associates, even showing some of them his father’s gift letter, and that he had
retained both letters for over 17 years to verify the gift after his father died. Defendant
relied exclusively on affidavits filed by plaintiff in a matrimonial action with his former

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583

wife, in which plaintiff failed to list his interest in the painting as an asset. These
affidavits were made over 10 years after acceptance was complete and they do not even
approach the evidence in Matter of Kelly where the donee, immediately upon delivery
of a diamond ring, rejected it as “too flashy”. We agree with the Appellate Division
that interpretation of the affidavit was too speculative to support a finding of rejection
and overcome the substantial showing of acceptance by plaintiff.
Accordingly, the judgment appealed from and the order of the Appellate Division
brought up for review should be affirmed, with costs.
Notes and Questions:
1. Postscript. Michael took possession and immediately sold the painting for $5
million. A decade later it was resold for $23 million.
2. Future Interests. Michael’s remainder interest is a type of future interest. It
is a future interest because Michael can only take possession in the future.
However, as a legal matter, Michael’s future interest exists before his right to
take possession does. Victor needed to have a present donative intent in order
to make a valid gift, and he had that intent: he intended to give Michael something
when he wrote. That something was a future interest.
Corresponding to Michael’s remainder interest is Victor Gruen’s life estate,
which is a present possessory interest as long as Victor Gruen lives—and thus
the court holds that Victor may keep possession of the painting, despite the
delivery requirement. Victor isn’t giving Michael a present possessory interest,
so requiring him to deliver the painting wouldn’t serve the ordinary purpose
served by delivery of uniting the property owner with physical possession of the
property.
Does Gruen’s willingness to recognize legal future interests in personal property
undermine the certainty provided by a delivery requirement? What if Victor
had intended an even more complicated transfer—perhaps giving the painting
to his widow for as long as she lived, then to Michael? This could have raised
troubling issues of who owned what. On the other hand, if courts are going to

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allow freehold interests in personal property besides the fee simple absolute,
how can one deliver such an interest in accordance with the policies underlying
the delivery requirement?
3. Tax fraud. If the donor retains a life estate in property transferred inter vivos,
that property will be included in the donor’s estate for estate tax purposes. I.R.C.
§2036(a). As a result, the estate tax owed will be the same as if the property
hadn’t been transferred at all. This provision is designed to discourage evasion
of the estate tax (which was substantially more onerous when this case was
litigated). Victor did just this, but his lawyer told him to “doctor up” the
transaction so that he wouldn’t have to pay the resulting taxes. Do not do this.
It is called tax fraud, and you may be disbarred, or worse. Relatedly,
backdating the letter raises serious ethical problems, and it too could have
serious consequences for a lawyer who advised backdating in situations where
the date of the transfer matters. Should Victor’s apparently successful tax
evasion have factored into the court’s decision on the state law question of
whether the gift was valid? If so, how?
4. Substitutes for testamentary transfers? Consider the outcomes of the
following scenarios:
• Victor Gruen writes the same letter giving his son Michael a
future interest, but simply shows it to Michael rather than mailing
it.
• Victor writes a letter granting Michael total ownership of the
painting, without reserving a life estate for himself, and mails the
letter to Michael, then dies before being able to deliver the
painting.
• Victor writes a will in 1963 devising the painting to Michael.
Victor dies in 1980. (What interest, if any, does Michael own in
the painting before Victor dies?)

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• Victor writes a letter saying “I intend for you to have the painting
when I die.”
As you should see, the last possibility is an attempted testamentary transfer, but
it is unlikely to meet the requirements for a transfer by will. Rather than being
a present transfer of a future interest, it’s a statement of intent to make a transfer
in the future. Is the difference between what Victor actually did and “I intend
for you to have the painting when I die” big enough to explain the different
results? If this rule allows legally savvy people to carry out their intent more
successfully than laypeople innocent of the law, is that a good thing or a bad
thing, compared to the alternatives? Some states now allow land transfers in
this form—a deed that expressly says it won’t take effect until the death of the
grantor will be honored, but only if it’s recorded before the death of the grantor.
See MO. STAT. ANN. §461.025(1). Would you support such a law?
5. Another Variant of Symbolic or Constructive Delivery: Delivery to a Place.
Sometimes, the would-be donor does not physically hand the object or
document to the donee, but instead puts it in a particular place, from which she
expects the donee to retrieve it. Should this constitute delivery? Courts have
disagreed about the details, but if the putative donee does not have any right to
control the place and other people do, then there is no delivery. For example,
a household servant does not have dominion over the whole house, so a piano
placed in the living room would not be delivered to such a servant, even if there
was explicit donative intent. Another rule is that, if the putative donee has
exclusive dominion over the place, there is delivery. Thus, furniture placed in a
live-in servant’s bedroom in her employer’s house would be delivered to the
servant. See Newman v. Bost, supra. (In such a case, disputes might still arise
over donative intent.)
What about shared spaces? Suppose four people are living together in a house,
and A tells B that she’s giving him a book, which she leaves on the kitchen table
for him. The kitchen is shared by all four residents. Should this be sufficient
delivery? Does the fact that she could easily instead have put the book in his
bedroom, which is under his exclusive control, make any difference? (What

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should we expect laypeople to know about the law of gifts?) Cf. Robinson v.
Hoalton, 2 P.2d 34 (Cal. 1931) (personal property was validly delivered when
there was an oral grant and the donor and donee lived together: “The rule as to
delivery is not so strictly applied to transactions between members of a family
living in the same house ….”).
Disclosure of the location of an item may also serve as delivery, at least when it
is otherwise hidden or inaccessible. See Waite v. Grubbe, 73 P. 206 (Ore. 1903)
(disclosing location of buried cash sufficed for valid gift); Teague v. Abbott, 100
N.E. 27 (Ind. Ct. App. 1912) (disclosing combination to safe sufficed for valid
gift).
6. Intermediated Delivery. Can you identify a unifying principle behind the
constructive/symbolic delivery cases? Following the logic of these cases,
suppose that, while Buffy Summers is working at the fast food restaurant
Doublemeat Palace, her friends leave a present for her at the door, before the
restaurant opens. When the manager comes to open up, he takes the present
for himself. Who should bring the claim against him, Buffy or her friends?
Handing the property, or an appropriate symbol of the property, to a third party
for delivery to the donee will also complete delivery, as long as the donor has
no power to recall the third party. If the donor can still control the third party
and interrupt the delivery, by contrast, then the delivery is not complete. These
principles have led courts to diverge on the proper treatment of checks: because
a check can be stopped by the payor at any time before it’s cashed, * the majority
of courts say there’s no delivery until that time. The payor has not given up
complete control until the check is cashed. See, e.g., Rosano v. United States, 67
F. Supp. 2d 113 (E.D.N.Y. 1999); In re Estate of Heyn, 47 P.3d 724 (Colo. Ct.
App. 2002); Woo v. Smart, 442 S.E.2d 690 (Va. 1994). Other courts say that,
at least with respect to gifts made in anticipation of death (of which more below),

* Be aware that the law governing checks is complicated, and stopping a check may not always succeed or may

have other consequences—this note just discusses how courts in gift cases have treated checks.

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when the check is not stopped before the donor dies, the gift is complete even
before the check is cashed.
7. Delivering Intangibles. Given the delivery requirement, how would you
accomplish the gift of an intangible right, such as a copyright or a share of stock?

C. Acceptance
As you’ve seen, acceptance is generally presumed for gifts of value. Given that
presumption, why do you think acceptance is an element of a valid gift at all?
If the donee doesn’t want to accept the gift, then the donee may “disclaim” the gift.
This usually only arises in cases of attempted transfers by will.

D. Irrevocability of Gifts and Exceptions
A gift, once given, is usually irrevocable: once the gift is complete, the donor may not
change her mind and demand the gift back. The donee may voluntarily give the property
back, but that’s a second transfer of ownership. Irrevocability makes it important to
be able to figure out when the gift was complete, because before it is complete, it is
revocable.
Suppose that Bobby Singer leaves his junkyard to Dean Winchester in his will. Dean
moves in, then realizes after two days that he doesn’t want to run a junkyard, disclaims
the gift, and tells Bobby’s residual heirs—Bobby’s second cousins—that the property
is theirs. Is it?
Suppose that, on Spencer Hastings’s eighteenth birthday, her parents put the keys to a
car in an envelope by her place at the table. However, before the birthday meal, the
family gets into a screaming fight, and the parents snatch up the keys from the table
and say they no longer think Spencer deserves the car. Who owns the car?
There are two notable exceptions to the irrevocability of a gift: Gifts causa mortis and
conditional gifts. In the materials that follow, we will explore complications relating to
both. As you read, keep an eye on the ways in which courts are interpreting the various
elements of a gift in order to achieve an overall result they find appropriate.

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1. Gifts causa mortis .
The gifts with which you are likely most familiar—gifts to mark a special occasion or
relationship—are generally inter vivos gifts, that is, gifts given by living people (the Latin
literally means “between the living”). A special category of gift law exists to deal with
gifts that are not given in a will, but are given because the donor fears he is soon to die.
Again, concerns about interfering with the law of wills and estates shape judicial
treatment of this category, known as gifts causa mortis (literally, “gifts on account [or
‘because’] of death”).
The elements of a gift causa mortis are the same as the elements of an inter vivos gift: (1)
intent, (2) delivery, and (3) acceptance, but the donor must also (4) anticipate imminent
death. A gift causa mortis is subject to a condition subsequent: if the donor survives the
peril that caused her to fear death, the gift is either revoked or revocable. In most
states, the gift is revoked automatically, while in others the donor may choose to revoke
the gift. In the latter states, delay may be troublesome. See RESTATEMENT (SECOND)
OF PROPERTY: DONATIVE TRANSFERS §31.3 (“A failure to revoke within a reasonable
time after the donor is no longer in apprehension of imminent death eliminates the
right of revocation.”). In all states, if the donor dies from the anticipated cause, then
the gift becomes irrevocable. Some jurisdictions extend this to situations in which the
donor dies from something else within roughly the same time frame or in which the
cause of death is related to the anticipated peril.
Suppose D is going into the hospital for heart surgery that might end in death. She
says to her son, “If I die, I want you to have the contents of my safe deposit box,” and
gives him the key. While the surgery is a success, she dies a week later from an infection
acquired in the hospital. Is the gift valid? What if she dies six months later from the
same infection? See Brind v. Int’l Trust Co., 179 P. 148 (Colo. 1919) (putative donor
didn’t die from the operation that caused her to fear death, but six months later from
the ailment that had triggered the operation; held: no gift causa mortis, because putative
donor was specific about the operation as the cause of the gift, and her lawyer told her
that she probably needed to take further action to reaffirm the gift, but she didn’t).
Courts are often suspicious of gifts causa mortis. Courts may apply the delivery
requirement more stringently than in other gift cases. Is this reluctance justified?

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For example, in Foster v. Reiss, 112 A.2d 553 (N.J. 1955), the putative donee obtained
the property at issue by taking a note written to him from the hospital bedside of his
estranged wife, who was then unconscious. The note disclosed the location of money
and bank books (which gave access to savings accounts) hidden in their house. The
husband found out about the note from a friend who’d been directed to tell him about
it. He took the note, went home, and found the cash and the bank books. She died a
few days later, never having regained consciousness. Her will gave $1 to her estranged
husband and the rest of her estate to her children and grandchildren, who sued to
recover the cash and the bank books. The court held that there had been no gift causa
mortis, and said the following:
[A] gift causa mortis is essentially of a testamentary nature and as a practical matter
the doctrine, though well established, is an invasion into the province of the
statute of wills ….
‘These gifts causa mortis are dangerous things. The law requires, before Mr. Hitt
can come into this court and claim $10,000 as an ordinary testamentary gift from
Mrs. Thompson, that he should produce an instrument in writing signed by Mrs.
Thompson, and also acknowledged with peculiar solemnity by her in the
presence of two witnesses, who thereupon subscribed their names as witnesses.
That is what Mr. Hitt would have to prove if he claimed a testamentary gift in
the ordinary form of one-third of Mrs. Thompson’s estate. And yet, in cases of
these gifts causa mortis, it is possible that a fortune of a million dollars can be
taken away from the heirs, the next of kin of a deceased person, by a stranger,
who simply has possession of the fortune, claims that he received it by way of
gift, and brings parol testimony to sustain that claim.’ Varick v. Hitt, 55 A. 139,
153 (Ch.1903), affirmed 66 N.J.Eq. 442, 57 A. 406 (E. & A.1904).
Gifts causa mortis are not favored in the law … ‘for the reason that this mode of
disposition permits property without limit of value to be transferred by mere
delivery, and the proof thereof to be made when death has closed the lips of the
claimed donor.’…

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The first question confronting us is whether there has been ‘actual, unequivocal,
and complete delivery during the lifetime of the donor, wholly divesting him
(her) of the possession, dominion, and control’ of the property. …
The test was this: that the transfer was such that, in conjunction with the
donative intention, it completely stripped the donor of his dominion of the
thing given, whether that thing was a tangible chattel or a chose in action.’
Thus, under New Jersey law actual delivery of the property is still required
except where ‘there can be no actual delivery’ or where ‘the situation is
incompatible with the performance of such ceremony.’ In the case of a savings
account, where obviously there can be no actual delivery, delivery of the
passbook or other indicia of title is required.
The court found that there had been no delivery. Instead, the putative donee had
merely taken possession of the property, at a time when the would-be donor was
incapacitated and incapable of authorizing him to act for her. The court emphasized
the separateness of the two elements of intent and delivery:
As stated in Madison Trust Co. v. Allen, supra, 105 N.J.Eq. 230, 235, 147 A.
546, 548, ‘the burden of proof is upon the alleged donee to clearly prove both
delivery and donative intent’ (emphasis supplied). This was clearly brought out
by the court in Parker v. Copland, 70 N.J.Eq. 685, 64 A. 129, 130 (E. & A.1906):
… [T]he crucial test is not the strenuousness of the language in which the gift
is couched, but in ‘the transfer,’ which is something that is both different from
the donative intention and yet capable of acting in conjunction with it, so that
both are necessary to the creation of an enforceable gift. … [W]hen two steps
are required by law to complete a transaction, the excess of one cannot supply
the lack of the other ….
Thus, an informal writing such as we have here does not satisfy the separate and
distinct requirement of delivery, but rather there must be such delivery of the
property that the donor stands absolutely deprived of his control over it. …

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We must not forget that since a gift causa mortis is made in contemplation of
death and is subject to revocation by the donor up to the time of his death it
differs from a legacy only in the requirement of delivery. Delivery is in effect
the only safeguard imposed by law upon a transaction which would ordinarily
fall within the statute of wills. To eliminate delivery from the requirements for
a gift causa mortis would be to permit any writing to effectuate a testamentary
transfer, even though it does not comply with the requirements of the statute
of wills.
The court quoted an earlier case emphasizing the risks of false testimony in such cases:
“‘Around every other disposition of the property of the dead, the legislative power has
thrown safeguards against fraud and perjury; around this mode the requirement of
actual delivery is the only substantial protection, and the courts should not weaken it
by permitting the substitution of convenient and easily proven devices.’”
A strong dissent emphasized that the donor was fully competent when she wrote her
note, clearly intended to make the gift, and never revoked the gift. The dissent would
have honored her clearly stated intent because “justice fairly cries out for the fulfillment
of [the] wife’s wishes”:
I find neither reason nor persuasive authority anywhere which compels this
untoward result. See Gulliver and Tilson, Classification of Gratuitous Transfers,
51 Yale L.J. 1, 2 (1941):
‘One fundamental proposition is that, under a legal system recognizing the
individualistic institution of private property and granting to the owner the
power to determine his successors in ownership, the general philosophy of the
courts should favor giving effect to an intentional exercise of that power. This
is commonplace enough but it needs constant emphasis, for it may be obscured
or neglected in inordinate preoccupation with detail or dialectic. A court
absorbed in purely doctrinal arguments may lose sight of the important and
desirable objective of sanctioning what the transferror wanted to do, even
though it is convinced that he wanted to do it.’

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Concerns over fraud or uncertainty, the dissent thought, were irrelevant here, where
the donor’s wishes “were freely and clearly expressed in a written instrument and the
donee’s ensuing possession was admittedly bona fide.” The dissent noted that, in
contradiction to New Jersey’s approach, other courts have relaxed the delivery
requirement in cases of gifts causa mortis, rather than strengthening it. Such courts
reason that gifts causa mortis generally come about as the result of some emergency that
makes it impossible to write a formal will. While delivery is still important to avoid
problems of figuring out what was really given, the requirements for sufficient delivery
ought to be liberally interpreted to protect the donor’s intent. Here, for example, the
wife’s authorization of the husband to take physical possession, and the fact that he
did indeed take physical possession before she died, ought to have sufficed. As the
dissent saw it, “[w]hen Ethel Reiss signed the note and arranged to have her husband
receive it, she did everything that could reasonably have been expected of her to
effectuate the gift causa mortis; and while her husband might conceivably have attempted
to return the donated articles to her at the hospital for immediate redelivery to him, it
would have been unnatural for him to do so.”
Which position is more persuasive to you? Should it make a difference if the putative
donee were an unrelated friend? If the heirs named in the will were unrelated friends?
As noted above, in many cases, a donee’s control over the place in which the gift was
left is likely to suffice for delivery. Why didn’t the husband’s possession of the house
in which the money was hidden in Foster suffice for delivery?

2. Conditional gifts
Speaking more generally, it is possible to give other kinds of conditional gifts. A
conditional gift is a gift that will return to the donor if a condition subsequent is not
fulfilled. (By contrast, a promise to give a gift if a condition precedent is fulfilled is an
unenforceable promise to make a gift.) For example, a student’s parents might give him
a car, conditioned on his graduating law school in three years. If the student fails to
graduate in that time, the car must be returned. During that period, however, the gift
is otherwise irrevocable: the parents cannot change their minds in year two and demand

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the car back, as long as the student remains willing to fulfill the condition and remains
on track to do so.
Since many gifts are given orally, how can we know which are conditional, and what
those conditions are? Would you support a rule that conditions can only be imposed
on gifts if the conditions are written down? See State ex rel. Pai v. Thom, 563 P.2d 982
(Haw. 1977) (delivery of a deed with an oral condition was irrevocable even if condition
was unsatisfied); but see Martinez v. Martinez, 678 P.2d 1163 (N.M. 1984) (allowing
grantor of deed to offer parol evidence of oral condition). We will discuss delivery of
deeds in a later unit on Land Transactions. Pai states the traditional common law
delivery rule for such transfers—why do you think this is so? What might justify
relaxing the traditional rule?
Can conditions sometimes be implied on gifts of personal property? Consider the
following case, involving an engagement ring.
Albinger v. Harris
48 P.3d 711 (Mont. 2002)
Who owns a ring given in anticipation of marriage after the engagement is broken?
Michelle L. Harris (Harris) appeals the disposition of an engagement ring by the Eighth
Judicial District Court, Cascade County, Montana, and Michael A. Albinger (Albinger)
cross-appeals the denial of reimbursement for certain telephone charges incurred by
Harris and the award of damages for a prior, unlitigated assault and battery claim. We
reverse the disposition of the engagement ring, affirm the denial of reimbursement for
telephone charges and affirm the award for pain, suffering and emotional distress.
We frame the issues on appeal as follows:
1. Did the District Court err in determining an engagement ring is a conditional gift
that may be revoked upon termination of the engagement?...
FACTUAL AND PROCEDURAL BACKGROUND
Harris and Albinger met in June 1995, and began a troubled relationship that endured
for the next three years, spiked by alcohol abuse, emotional turmoil and violence.

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Albinger presented Harris with a diamond ring and diamond earrings on December 14,
1995. The ring was purchased for $29,000. Days after accepting the ring, Harris
returned it to Albinger and traveled to Kentucky for the holidays. Albinger immediately
sent the ring back to Harris by mail. The couple set a tentative wedding date of June
27, 1997, but plans to marry were put on hold as Harris and Albinger separated and
reconciled several times. The ring was returned to or reclaimed by Albinger upon each
separation, and was re-presented to Harris after each reconciliation.
Albinger and Harris lived together in Albinger’s home from August 1995 until April
1998. During this time, Albinger conferred upon Harris a new Ford Mustang
convertible, a horse and a dog, in addition to the earrings and ring. Harris gave Albinger
a Winchester hunting rifle, a necklace and a number of other small gifts. Albinger
received a substantial jury award for injuries sustained in a 1991 railroad accident. He
paid all household expenses and neither party was gainfully employed during their
cohabitation.
On the night of February 23, 1997, during one of the couple’s many separations,
Albinger broke into the house where Harris was staying. He stood over Harris’ bed,
threatened her with a knife and shouted, “I’m going to chop your finger off, you better
get that ring off.” After severely beating Harris with a railroad lantern, Albinger forcibly
removed the ring and departed. Harris sued for personal injuries and the county
attorney charged Albinger by information with aggravated burglary, felony assault, and
partner and family member assault. The next month, after another reconciliation,
Harris requested the county attorney drop all criminal charges in exchange for
Albinger’s promise to seek anger management counseling and to pay restitution in the
form of Harris’ medical expenses and repair costs for damage to her friend’s back door.
Harris also directed her attorney to request the court dismiss the civil complaint
without prejudice.
The parties separated again in late April 1998. Albinger told Harris to “take the car, the
horse, the dog, and the ring and get the hell out.” During their last month together,
Harris ran up approximately $1,000 in telephone charges on Albinger’s credit card.
Harris had been free to use Albinger’s telephone throughout the relationship, and
Albinger paid the bills. Harris moved from Great Falls, Montana to Kentucky, where

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she now resides. The parties dispute who was responsible for the end of the
relationship. No reconciliation followed, marriage plans evaporated and Harris refused
to return the ring.
Albinger filed a complaint on August 31, 1998, seeking recovery of the ring or its
monetary value and payment for $1,000 in telephone charges. Harris counterclaimed
for damages resulting from the assault of February 23, 1997.
At the conclusion of the trial, both parties submitted briefs discussing how the statute
barring actions for breach of promise to marry, § 27-1-602, MCA, impacts an action to
recover an engagement ring. The District Court found the ring to be a gift in
contemplation of marriage, and reasoned that § 27-1-602, MCA, did not bar the action
because the case could be decided on common-law principles, as opposed to contract
theories. The court implied the existence of a condition attached to the gift of the
engagement ring. Disregarding allegations of fault for “breaking” the engagement, the
court concluded that the giver is entitled to the return of the ring upon failure of the
condition of marriage.
On September 2, 1999, the District Court awarded the engagement ring or its
reasonable value and court costs to Albinger, and denied recovery for the telephone
charges. … From this judgment, Harris appeals the disposition of the ring and Albinger
cross-appeals the denial of telephone charges ….
Did the District Court err in determining an engagement ring is a conditional gift that
may be revoked upon termination of the engagement?
Albinger and Harris gave one another numerous gifts of substantial value during their
engagement. The ring is the only item now in controversy….
Legal ownership of the gift of an engagement ring when marriage plans are called off
is an issue of first impression in Montana. In 1963, the Legislature barred access to the
courts for actions arising from breach of the promise to marry. The District Court
determined that this action brought to recover an antenuptial gift is maintainable,
notwithstanding § 27-1-602, MCA, which states:

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All causes of action for breach of contract to marry are hereby abolished.
However, where a plaintiff has suffered actual damage due to fraud or
deceit or a defendant has been unjustly enriched, the plaintiff may
maintain an action for fraud or deceit or unjust enrichment and recover
therein only the actual damage proved or for the benefit wrongfully
obtained or restitution of property wrongfully withheld where such
action otherwise is maintainable under existing law.
… Albinger argues that the engagement ring was a conditional gift that he could revoke
when the implied condition of marriage failed. Hence, Harris’ refusal to return the ring
upon demand constituted unjust enrichment. Harris contends she deserves the ring
because Albinger repeatedly beat her, forcibly took the ring back, and was the one who
finally ended the engagement by ordering Harris to move out of the residence where
they had been living together.
The District Court declined to undertake a determination of which party was at fault
in terminating the engagement. The court cited the following three reasons: 1) judicial
holdings that fault is an inappropriate concern in matters of family relations; 2)
pragmatic difficulties in discerning fault when the conduct of both parties likely
contributes to the failure of a relationship; and, 3) aversion to concepts of legal
“rightness” and “wrongness” regarding the choice of a marriage partner. We agree, and
affirm that judicial fault-finding is irrelevant and immaterial in the adjudication of
matters of antenuptial gifting under existing law, absent fraud or deceit.
The District Court employed the “conditional gift” theory advanced by Albinger to
determine present ownership of the disputed engagement ring. The theory holds that
an implied condition of marriage attaches to the gift of a ring upon initial delivery due
to the ring’s symbolic association with the promise to marry and, when the condition
of marriage fails, the incomplete gift may be revoked by the giver. Albinger urges this
Court to affirm the District Court’s conclusion that the ownership of an engagement
ring remains with the one who gave the ring when plans to marry are called off.
Only in engagement ring cases does precedent from other jurisdictions weigh heavily
for conditional gift theory in the absence of an expressed condition. Considering it
“unduly harsh and unnecessary” to require a hopeful suitor to express any condition

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upon which a ring might be premised, many courts stepped in to impute the condition
of marriage. In practice, courts presume the existence of the implied condition of
marriage attaching to an engagement ring in the absence of an expressed intent to the
contrary….
ABOLITION OF BREACH OF PROMISE ACTIONS
Historic breach of promise jurisprudence tended to view an engagement ring as either
a pledge of personal property given to secure a marital promise or as consideration for
the contract of marriage. When a contract to marry was abrogated, the jilted lover could
seek redress in a breach of promise action that sounded in contract law, but availed the
plaintiff of tort damages. “The law allows punitive or vindictive damages to be assessed
by the jury; and all the circumstances attending the breach before, at the time, and after
may be given in evidence in aggravation of damages.” The plaintiffs were almost
invariably women seeking economic relief for themselves, compensation for pregnancy
and material support for children of the relationship. Whatever “heart balm” was
awarded to assuage lost love, ruined reputation or foreclosed opportunities to marry
well “rest[ed] in the sound discretion of the jury.”
By the mid-1930’s, several state legislatures questioned the efficacy of court
“interference with domestic relations” and passed statutes barring actions for breach
of promise to marry, alienation of affections, criminal conversation and other
inappropriate conduct of the “private realm.” See Rebecca Tushnet, Rules of
Engagement (1998), 107 Yale Law Journal 2583, 2586-91. Commentators noted all of
these actions “afforded a fertile field for blackmail and extortion by means of
manufactured suits in which the threat of publicity is used to force a settlement.”
“There is good reason to believe that even genuine actions of this type are brought
more frequently than not with purely mercenary or vindictive motives [and] that it is
impossible to compensate for such damage with what has derisively been called ‘heart
balm.’ ”
In the wake of “anti-heart balm” statutes that barred breach of contract to marry
actions, courts heard a plethora of legal theories designed to involve them in settling
antenuptial property disputes while avoiding the language of contract law. The results
were mixed. Some courts allowed actions in replevin. Others entertained claims for

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restitution and unjust enrichment. Out of this legal morass, conditional gift analysis
emerged as a popular way to resolve acrimonious engagement ring disputes. While
some states pursue a fault-based determination for awarding the ring in equity, the
modern wave aligns ring disposition with no-fault divorce property disposition and
follows a bright-line rule of ring return….
CONDITIONAL GIFT THEORY
According to Montana law, “a gift is a transfer of personal property made voluntarily
and without consideration.” … When clear and convincing evidence demonstrates the
presence of the essential elements of donative intent, voluntary delivery and acceptance,
the gift is complete and this Court will not void the transfer when the giver experiences
a change of heart.
Another essential element of a gift is that it is given without consideration. A purported
“gift” that is part of the inducement for “an agreement to do or not to do a certain
thing,” becomes the consideration essential to contract formation. An exchange of
promises creates a contract to marry, albeit an unenforceable one. When an
engagement ring is given as consideration for the promise to marry, a contract is
formed and legal action to recover the ring is barred by the abolition of the breach of
promise actions.
… Albinger maintains he held a reversionary interest in the gift of the engagement ring
grounded in an implied condition subsequent. Montana law recognizes the transfer of
personal property subject to an express or implied condition which must be satisfied
before title vests, as either a contract, or as a gift in view of death. Since actions
stemming from breach of the contract to marry are barred by our “anti-heart balm”
statute, Albinger urges the Court to adopt a conditional gift theory patterned on the
law relevant to a gift in view of death. Under Montana law, no gift is revocable after
acceptance except a gift in view of death. While some may find marriage to be the end
of life as one knows it, we are reluctant to analogize gifts in contemplation of marriage
with a gift in contemplation of death. This Court declines the invitation to create a new
category of gifting by judicial fiat.

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GENDER BIAS
… The Montana Legislature made the social policy decision to relieve courts of the
duty of regulating engagements by barring actions for breach of promise. While not
explicitly denying access to the courts on the basis of gender, the “anti-heart balm”
statutes closed courtrooms across the nation to female plaintiffs seeking damages for
antenuptial pregnancy, ruined reputation, lost love and economic insecurity. During
the mid-20th Century, some courts continued to entertain suits in equity for antenuptial
property transfers. The jurisprudence that rose upon the implied conditional gift theory,
based upon an engagement ring’s symbolic associations with marriage, preserved a right
of action narrowly tailored for ring givers seeking ring return…. The proposed no-fault
adjudication of a disputed engagement ring also ignores the particular circumstances of
a couple’s decision not to marry.
Conditional gift theory applied exclusively to engagement ring cases, carves an
exception in the state’s gift law for the benefit of predominately male plaintiffs.…While
antenuptial traditions vary by class, ethnicity, age and inclination, women often still
assume the bulk of pre-wedding costs, such as non-returnable wedding gowns, moving
costs, or non-refundable deposits for caterers, entertainment or reception halls.
Consequently, the statutory “anti-heart balm” bar continues to have a disparate impact
on women. If this Court were to fashion a special exception for engagement ring
actions under gift law theories, we would perpetuate the gender bias attendant upon
the Legislature’s decision to remove from our courts all actions for breach of
antenuptial promises.
ENGAGEMENT RING DISPOSITION
To preserve the integrity of our gift law and to avoid additional gender bias, we decline
to adopt the theory that an engagement ring is a gift subject to an implied condition of
marriage.… We hold that the engagement ring was an unconditional, completed gift
upon acceptance and remains in Harris’ ownership and control.

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Justice TERRY N. TRIEWEILER concurring [as to the telephone charges] and
dissenting.
Gender discrimination is a bad thing. I am glad the majority is against it. However, I
regret that the majority has taken this opportunity to declare their good intentions
because gender equity has about as much to do with this case as banking law. …
The simple fact is that if women are more likely to be the subject of an action to recover
a conditional gift given in anticipation of a marriage which does not occur, it is because
they are more frequently the recipient of the gift. Should we just prohibit gifts in
anticipation of marriage altogether because men are more likely to have to pay for
them?
… The District Court found in Finding No. 7 that each time, except for the last time,
the couple broke up (and they broke up frequently), the ring was either returned by
Michelle or taken back by Michael. These findings were fully supported by the evidence.
For example, Michael testified as follows:
Q. Now, when you gave her the engagement ring, were you
contemplating that you were going to get married?
A. That was the whole idea.
Q. Was there any way in your mind that the engagement ring was just a
ring and she could keep it whether you were married or not?
A. No….
It is equally clear from the record that the engagement ring was treated differently by
the couple than other gifts which had been given by Michael to Michelle while they
were engaged. He testified as follows:
Q. Okay. Now, you heard her testify, didn’t you, about the other gifts
you’d given her?
A. Yes, I did.

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Q. The 1995 Mustang that cost about $24,000, was that in contemplation
of getting married?
A. No.
Q. Have you ever made any demand that she return that to you?
A. No.
Q. How about the diamond earrings that were the Christmas gift? Have
you ever made any demands that she return those because they were
given in contemplation of marriage?
A. No.
Q. How about the horse?
A. No.
Q. Any gift you gave her beside the engagement ring, did you ever
contend that those other gifts were made in contemplation of marriage?
A. No. They were gifts. Those are gifts.
… [A]n older line of cases limited a donor’s recovery of the gift to situations where the
engagement is dissolved by agreement or unjustifiably broken by the donee. However,
the court concluded that the notion of one party being at blame for the termination of
an engagement is archaic and outdated.
… [E]ither gender can [be] given an engagement ring. For example, in Vigil v. Haber
(1994), 119 N.M. 9, 888 P.2d 455, the parties exchanged engagement rings. However,
their relationship deteriorated, the couple separated, and following their separation a
hearing examiner determined that the parties should return the rings they had given
each other. The plaintiff immediately returned the ring he had along with other of the
defendant’s possessions. However, the defendant objected to returning the
engagement ring that had been given to her. The New Mexico Supreme Court held
that the ring was a conditional gift depend[e]nt on the parties’ marriage and should be
returned. What if the roles had been reversed and the woman had returned the
engagement ring given to her but the man had refused to do so? According to this

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Court, she would not be allowed to recover the engagement ring that she had given to
her fiancé, no matter how substantial the value and unfair the result because requiring
the return of engagement rings is unfair to women.
The second problem with the majority’s assumptions is the assumption that conditional
gift law as it relates to gifts exchanged in anticipation of marriage only applies to
wedding rings. It does not. For example, in Pavlicic, a case which disproves the theory
that jurisprudence cannot be written in readable prose, the plaintiff was a 75-year-old
man when the 26-year-old defendant asked for his hand in marriage. While he first
protested on the basis of his age, she assured him that she was no longer interested in
“young fellows” and prevailed upon him to make the commitment. Over the course of
the next four years, she then prevailed upon him to pay the mortgage on her home,
buy her two new cars, an engagement ring, a diamond for her mother’s ring, remodel
her house, and advance her $5000 to purchase a saloon which they could jointly operate.
The problem was that after she received the money for the saloon, she disappeared.
She was next seen in another town operating Ruby’s bar and married to a man two
years her junior.
As noted by the Pennsylvania Supreme Court:
When George emerged from the mists and fogs of his disappointment
and disillusionment he brought an action in equity praying that the
satisfaction of the mortgage on Sara Jane’s property be stricken from the
record, that she be ordered to return the gifts which had not been
consumed, and pay back the moneys [sic] which she had gotten from
him under a false promise to marry.
The Pennsylvania Supreme Court held that George’s action was not barred by the
state’s “Heart Balm Act” and that all gifts, not just the wedding ring, were conditional
gifts in anticipation of marriage which must be returned or repaid. …
The point is that there is no reason to limit the law of “conditional gifts” in anticipation
of marriage to engagement rings. …

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Notes and Questions
1. Would the court rule the same way if a woman had given a man an engagement
ring, or a man had given a man an engagement ring? Compare Lindh v. Surman,
742 A.2d 643 (Pa. 1999) (adopting the majority no-fault rule requiring return of
the ring in any broken engagement).
2. Does the adoption of a no-fault rule require the mandatory return of the ring in
every case? Wouldn’t a no-return rule also be a no-fault rule that distributed the
losses differently?
3. If the dissent is correct, could Albinger have sought the return of his other gifts?
4. The dissent argues that the anti-heartbalm laws were fully consistent with nofault conditional gift theory, but see Rebecca Tushnet, Rules of Engagement, 107
YALE L. J. 2583, 2594 (1998):
[The early post-reform cases like Pavlicic, holding that women had
to return engagement rings when they were at fault for breaking
the engagement,] subtly shifted the justification for antiheartbalm
laws in a paternalistic direction. The laws were no longer
understood to protect wholly innocent men who had not
promised anything to mercenary women; instead, they were
construed to protect men who had foolishly, but willingly, made
actual promises to marry and who then gave gifts in reliance on a
woman’s deceitful promise. Blackmail and extortion disappeared,
leaving trickery and desire-induced gullibility as the only
rationales for the rule. Whereas prereform cases had presumed
that women were vulnerable to a naturally dominating male
influence, the emerging line of engagement gift cases were
premised on the view that women could misuse their power over
love-blinded men. There was a related shift in the presumed goal
of a promise-breaker’s deceit: Duplicitous men attempting to get
sex were replaced as the targets of premarital law by duplicitous
women attempting to get material goods.

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Property

If the reason for having a unique rule for engagement rings grows out of a
history of sexist views of women, does that support the majority’s conclusion?
5. Cooper v. Smith, 800 N.E.2d 372 (Ohio Ct. App. 2003), concluded that the
engagement ring was a conditional gift recoverable without fault, but that other
premarital gifts to a then-fiancee—including a car, a computer, a tanning bed,
and horses—were irrevocable inter vivos gifts unless they were expressly
conditioned on the ocurrence of the marriage, and gifts to ex-fiancee’s mother
were also irrevocable:
The engagement ring has a special significance because it
symbolizes the couple’s promise to marry. As a symbol of the
promise to marry, what value does the ring have for the donee
once the engagement is ended? * Moreover, we realize that a
donor proposing to his or her beloved is unlikely to expressly
condition the gift of the engagement ring on the occurrence of
the marriage. Not only do we realize how unlikely this is, we
recognize how unromantic such a requirement would be. Thus,
because of the engagement ring’s symbolic significance, we are
willing to imply a condition to the gift of the engagement ring.
Unless the parties have agreed otherwise, the donor is entitled to
recover the engagement ring (or its value) if the marriage does
not occur, regardless of who ended the engagement.
While we are willing to imply a condition concerning the
engagement ring, we are unwilling to do so for other gifts given
during the engagement period. Unlike the engagement ring, the
other gifts have no symbolic meaning. Rather, they are merely
“token[s] of the love and affection which [the donor] bore for the
[donee].”… “Many gifts are made for reasons that sour with the
passage of time.” Unfortunately, gift law does not allow a donor
* [Eds.—As a symbol of the promise to marry, what value does the ring have for the donor once the engagement

is ended?]

Gifts

605

to recover/revoke an inter vivos gift simply because his or her
reasons for giving it have “soured.”
… If we were to imply a condition on gifts given during the
engagement period, then every gift the donor gave, no matter
how small or insignificant, would be recoverable.… We believe
that the best approach is to treat gifts exchanged during the
engagement period (excluding the engagement ring) as absolute
and irrevocable inter vivos gifts unless the donor has expressed an
intent that the gift be conditioned on the subsequent marriage.
What’s the difference between a gift being “symbolic” and a gift being a “token[]”
of “love and affection”—aren’t those synonyms? Why not then imply the same
conditions on other premarital gifts?
Does it matter that willingness and ability to perform, and not actual
performance, is the usual rule for all conditional gifts except for the engagement
ring? This would roughly equate to the older fault rule in broken engagement
cases. See Curtis v. Anderson, 106 S.W.3d 251 (Tex. Ct. App. 2003) (agreement
that fiancee would return ring if marriage did not occur had to be in writing to
be enforceable; applying fault rule and finding that donor, as person responsible
for calling off marriage, was not entitled to return of engagement ring under
conditional gift doctrine). But is it actually “fault” to break an engagement
where at least one party doesn’t want to get married?
6. How will this rule affect the behavior of engaged couples in Montana? (Did
you know the majority no-fault rule before reading this section?)
7. Susan and Sarah announce their engagement. Numerous gifts arrive before the
day of the wedding, some at a “bridal shower” and some just before the wedding.
On the morning of the wedding, Susan and Sarah call off their engagement.
Who owns the gifts? (If you think the gifts don’t have to be returned, how
should Susan and Sarah split them?) What if Sarah has a stroke and dies the day
before the wedding? If Susan and Sarah marry on Sunday and divorce on
Monday?

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Property

8. Other odious conditions. Tennessee Div. of the United Daughters of the Confederacy
v. Vanderbilt Univ., 174 S.W.3d 98 (Tenn. Ct. App. 2005), involved a 1933
donation from the UDC of $50,000 to Peabody College. The gift came with the
express condition that a dormitory must be maintained with the inscription
“Confederate Memorial Hall.” In 1979, Peabody College merged into
Vanderbilt University, which in 2002 sought to change the name to repudiate
the association with slavery and racial exclusion. The court of appeals found
that Vanderbilt could not do so unless it returned the present value of the gift.
Is that the right result? The court said that it wasn’t within the court’s mandate
“to resolve the larger cultural and social conflicts regarding whether and how
those who fought for the Confederacy should be honored or remembered.” A
concurring judge commented that a majority of those who fought for the
Confederacy owned no slaves, and called Vanderbilt’s stance a “misperception.”
(Query: Is the alleged misperception about what Confederate soldiers fought to
preserve?)
Was the problem merely that the court of appeals didn’t find the condition
odious enough? In fact, the agreement between the UDC and Peabody apparently
called for Peabody to house young women descended from Confederate
soldiers for free in the dormitory. Vanderbilt stopped the free housing, with no
objection. In the litigation, Vanderbilt argued that the conditions were never
properly put in place, but the court of appeals rejected its arguments. Should
Vanderbilt be required either to reinstate the free housing for descendants of
Confederate soldiers or pay up? (Laws against racial discrimination would make
the first alternative impossible.) Ultimately, Vanderbilt changed the name on
all official documents and the university’s website, but kept “Confederate
Memorial Hall” on the building itself. As you will see, this condition—
apparently destined to persist forever—raises issues of “dead hand” control by
past owners, issues we have seen before and will see again.

Gifts

607

E. Review Problems
1. Abbie Mills lends her friend Ichabod Crane a book when Ichabod is visiting her
home. A week later, she calls Ichabod and tells him to keep the book. Does he
own the book? At what point did he come to own the book?
2. Walter Bishop, on his deathbed, tells Olivia Dunham, “Because I love you like
a daughter and I want to ensure your financial security, I want you to have my
house in Disturbia City. Continue to rent it out as I have done and you will
always have an income.” He hands her the deed to the house, then dies.
Walter’s will leaves all his property to Peter Bishop. For the last five years, the
property has been rented to Astrid Farnsworth as a furnished dwelling. Peter
Bishop sues Dunham for possession of the furniture in the house as well as the
rare book collection stored on the bookshelves of the house. Who owns the
furniture, and why? Who owns the rare book collection, and why?
3. Victoria Grayson hires Amanda Clarke as nanny to her children, Charlotte and
Daniel Grayson. One day, Clarke praises one of Victoria Grayson’s diamond
necklaces. Grayson says, “You can have it if Charlotte and Daniel are accepted
into Evernight Academy. In the meantime, you can wear it.” Clarke thanks
Grayson and wears the necklace thereafter. Right before the Evernight entrance
results are released, Grayson fires Clarke, telling her, “I despise you and I will
never do anything for you!” Clarke leaves, taking the necklace with her. A day
later, Charlotte and Daniel are accepted into Evernight. A day after that,
Victoria Grayson sends a letter to Clarke demanding the return of the necklace.
Who owns the necklace and why?
4. Damon and Stefan Salvatore, brothers, owned their family home. They fought,
and, in an attempt to placate Stefan, Damon executed a deed transferring his
ownership interest in the home to Stefan. Damon went to Stefan’s study and
handed him the deed. Stefan dropped the deed (it landed on his desk) and yelled,
“You’ll never buy my forgiveness!” Then he punched Damon and left town.
Damon continued to live in the house. Two years later, with Stefan still gone,
Damon executed a new deed transferring his ownership interest to Elena

608

Property

Gilbert, who had no idea about the previous deed. Damon handed the deed to
Elena, telling her, “With all my family has done to yours, this is the least I can
do.” She thanked him. A year later, Stefan returned. Damon’s first deed was
still on Stefan’s desk, albeit very dusty. At that point, Stefan put the deed in his
safety deposit box at the bank and thanked Damon for the gesture. Damon
said, “No problem.” Which gift was completed first?
5. Fox Mulder gives Dana Scully a keychain with an Apollo 11 medallion on it.
But when she tries to put her keys on it, the ring doesn’t work. He tells her,
“Let me have that fixed for you,” and she lets him have the keychain.
Afterwards, he decides that he doesn’t want her to have the keychain. Who
owns the keychain?

Wills and Intestacy
Lon L. Fuller, Consideration and Form
41 COLUM. L. REV. 799 (1941)
§ 2.

The Evidentiary Function.—The most obvious function of a legal formality is, to
use Austin’s words, that of providing “evidence of the existence and purport of
the contract, in case of controversy.” The need for evidentiary security may be
satisfied in a variety of ways: by requiring a writing, or attestation, or the
certification of a notary. It may even be satisfied, to some extent, by such a
device as the Roman stipulatio, which compelled an oral spelling out of the
promise in a manner sufficiently ceremonious to impress its terms on
participants and possible bystanders.

§ 3.

The Cautionary Function.—A formality may also perform a cautionary or deterrent
function by acting as a check against inconsiderate action. The seal in its original
form fulfilled this purpose remarkably well. The affixing and impressing of a
wax wafer-symbol in the popular mind of legalism and weightiness-was an
excellent device for inducing the circumspective frame of mind appropriate in
one pledging his future. To a less extent any requirement of a writing, of course,
serves the same purpose, as do requirements of attestation, notarization, etc.

§ 4.

The Channeling Function.—... That a legal formality may perform a function not
yet described can be shown by the seal. The seal not only insures a satisfactory
memorial of the promise and induces deliberation in the making of it. It serves
also to mark or signalize the enforceable promise; it furnishes a simple and
external test of enforceability. ... The thing which characterizes the law of
contracts and conveyances is that in this field forms are deliberately used, and
are intended to be so used, by the parties whose acts are to be judged by the law.
To the business man who wishes to make his own or another’s promise binding,
the seal was at common law available as a device for the accomplishment of his
objective. In this aspect form offers a legal framework into which the party may
609

610

Property

fit his actions, or, to change the figure, it offers channels for the legally effective
expression of intention.
John H. Langbein, Substantial Compliance with the Wills Act
88 HARV.. L. REV. 489 (1975)
The Protective Function.—Courts have traditionally attributed to the Wills Act the object
“of protecting the testator against imposition at the time of execution.” The
requirement that attestation be made in the presence of the testator is meant “to
prevent the substitution of a surreptitious will.” Another common protective
requirement is the rule that the witnesses should be disinterested, hence not motivated
to coerce or deceive the testator.
Stevens v. Casdorph
203 W. Va. 450 (1988)
PER CURIAM: …
On May 28, 1996, [Patricia Eileen Casdorph and Paul Douglas Casdorph] took Mr.
Homer Haskell Miller to Shawnee Bank in Dunbar, West Virginia, so that he could
execute his will.1 Once at the bank, Mr. Miller asked Debra Pauley, a bank employee
and public notary, to witness the execution of his will. After Mr. Miller signed the will,
Ms. Pauley took the will to two other bank employees, Judith Waldron and Reba
McGinn, for the purpose of having each of them sign the will as witnesses. Both Ms.
Waldron and Ms. McGinn signed the will. However, Ms. Waldron and Ms. McGinn
testified during their depositions that they did not actually see Mr. Miller place his
signature on the will. Further, it is undisputed that Mr. Miller did not accompany Ms.
Pauley to the separate work areas of Ms. Waldron and Ms. McGinn.

Wills and Intestacy

611

Mr. Miller died on July 28, 1996. The last will and testament of Mr. Miller, which named
Mr. Paul Casdorph as executor, left the bulk of his estate to the Casdorphs. The
Stevenses, nieces of Mr. Miller, filed the instant action to set aside the will. ... 4
The Stevenses’ contention is simple. They argue that all evidence indicates that Mr.
Miller’s will was not properly executed. Therefore, the will should be voided. The
procedural requirements at issue are contained in W.Va. Code § 41-1-3 (1997). The
statute reads:
No will shall be valid unless it be in writing and signed by the testator,
or by some other person in his presence and by his direction, in such
manner as to make it manifest that the name is intended as a signature;
and moreover, unless it be wholly in the handwriting of the testator, the
signature shall be made or the will acknowledged by him in the presence of at least
two competent witnesses, present at the same time; and such witnesses shall subscribe
the will in the presence of the testator, and of each other, but no form of attestation
shall be necessary. (Emphasis added.)
The relevant requirements of the above statute calls for a testator to sign his/her will
or acknowledge such will in the presence of at least two witnesses at the same time,
and such witnesses must sign the will in the presence of the testator and each other. In
the instant proceeding the Stevenses assert, and the evidence supports, that Ms.
McGinn and Ms. Waldron did not actually witness Mr. Miller signing his will. Mr. Miller
made no acknowledgment of his signature on the will to either Ms. McGinn or Ms.
Waldron. Likewise, Mr. Miller did not observe Ms. McGinn and Ms. Waldron sign his
will as witnesses. Additionally, neither Ms. McGinn nor Ms. Waldron acknowledged to
Mr. Miller that their signatures were on the will. It is also undisputed that Ms. McGinn
and Ms. Waldron did not actually witness each other sign the will, nor did they
acknowledge to each other that they had signed Mr. Miller’s will. ...

4 As heirs, the Stevenses would be entitled to recover from Mr. Miller’s estate under the intestate laws if his will

is set aside as invalidly executed. ...

612

Property

Our analysis begins by noting that “the law favors testacy over intestacy.” However,
we clearly held in syllabus point 1 of Black v. Maxwell, 131 W. Va. 247, 46 S.E.2d 804
(1948), that “testamentary intent and a written instrument, executed in the manner
provided by [W.Va. Code § 41-1-3], existing concurrently, are essential to the creation
of a valid will.” Black establishes that mere intent by a testator to execute a written will
is insufficient. The actual execution of a written will must also comply with the dictates
of W.Va. Code § 41-1-3. The Casdorphs seek to have this Court establish an exception
to the technical requirements of the statute. In Wade v. Wade, 119 W. Va. 596 (1938),
this Court permitted a narrow exception to the stringent requirements of the W.Va.
Code § 41-1-3. This narrow exception is embodied in syllabus point 1 of Wade:
Where a testator acknowledges a will and his signature thereto in the
presence of two competent witnesses, one of whom then subscribes his
name, the other or first witness, having already subscribed the will in the
presence of the testator but out of the presence of the second witness,
may acknowledge his signature in the presence of the testator and the
second witness, and such acknowledgment, if there be no indicia of
fraud or misunderstanding in the proceeding, will be deemed a signing
by the first witness within the requirement of Code, 41-1-3, that the
witnesses must subscribe their names in the presence of the testator and
of each other. …
Wade stands for the proposition that if a witness acknowledges his/her signature on a
will in the physical presence of the other subscribing witness and the testator, then the
will is properly witnessed within the terms of W.Va. Code § 41-1-3. In this case, none
of the parties signed or acknowledged their signatures in the presence of each other.
This case meets neither the narrow exception of Wade nor the specific provisions of
W.Va. Code § 41-1-3.
WORKMAN, J., dissenting:
The majority once more takes a very technocratic approach to the law, slavishly
worshiping form over substance. In so doing, they not only create a harsh and
inequitable result wholly contrary to the indisputable intent of Mr. Homer Haskell

Wills and Intestacy

613

Miller, but also a rule of law that is against the spirit and intent of our whole body of
law relating to the making of wills.
There is absolutely no claim of incapacity or fraud or undue influence, nor any
allegation by any party that Mr. Miller did not consciously, intentionally, and with full
legal capacity convey his property as specified in his will. The challenge to the will is
based solely upon the allegation that Mr. Miller did not comply with the requirement
of West Virginia Code 41-1-3 that the signature shall be made or the will acknowledged
by the testator in the presence of at least two competent witnesses, present at the same
time. The lower court, in its very thorough findings of fact, indicated that Mr. Miller
had been transported to the bank by his nephew Mr. Casdorph and the nephew’s wife.
Mr. Miller, disabled and confined to a wheelchair, was a shareholder in the Shawnee
Bank in Dunbar, West Virginia, with whom all those present were personally familiar.
When Mr. Miller executed his will in the bank lobby, the typed will was placed on Ms.
Pauley’s desk, and Mr. Miller instructed Ms. Pauley that he wished to have his will
signed, witnessed, and acknowledged. After Mr. Miller’s signature had been placed
upon the will with Ms. Pauley watching, Ms. Pauley walked the will over to the tellers’
area in the same small lobby of the bank. Ms. Pauley explained that Mr. Miller wanted
Ms. Waldron to sign the will as a witness. The same process was used to obtain the
signature of Ms. McGinn. Sitting in his wheelchair, Mr. Miller did not move from Ms.
Pauley’s desk during the process of obtaining the witness signatures. The lower court
concluded that the will was valid and that Ms. Waldron and Ms. McGinn signed and
acknowledged the will “in the presence” of Mr. Miller. ...
The majority embraces the line of least resistance. The easy, most convenient answer
is to say that the formal, technical requirements have not been met and that the will is
therefore invalid. End of inquiry. Yet that result is patently absurd. That manner of
statutory application is inconsistent with the underlying purposes of the statute. Where
a statute is enacted to protect and sanctify the execution of a will to prevent substitution
or fraud, this Court’s application of that statute should further such underlying policy,
not impede it. When, in our efforts to strictly apply legislative language, we abandon
common sense and reason in favor of technicalities, we are the ones committing the
injustice.

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Property

Questions
1. Wills Act Formalities. The requirements to make a valid will vary from state
to state, but in general a will must be in writing, signed by the testator, and
attested by two witnesses. How well do these formalities serve the various
purposes identified by Fuller and Langbein? Which of them failed in Stevens v.
Casdorph? How? Why is the court so stringent about enforcing the formalities?
2. Informal Wills. Whether out of ignorance about the law, skittishness in
thinking about their own death, or bad advice, people do all kinds of things that
blatantly fail to qualify as wills under the traditional test. They write chatty emails
to family members explaining what they want to happen to their property after
their death; they scrawl marginalia on old wills, crossing out specific bequests
and adding new ones; they leave behind multiple conflicting undated “last” wills.
What should courts do in such cases? In one memorably tragic case, Cecil
George Harris used his pocketknife to scratch the words, “In case I die in this
mess, I leave all to the wife. Cecil Geo Harris." into the fender of a tractor he
was fatally pinned under. It was upheld as a valid holographic will: a will that has
been handwritten and signed by the testator. A majority of states recognize
holographic wills, although their specific requirements vary and an estates
attorney should never rely on the validity of one. (For example, Maryland
recognizes holographic wills only by testators serving in the armed services
abroad. MD. CODE ESTATES & TRUSTS § 4-103(a)).
3. Interpretive Problems. The general interpretive rule for wills is the “intent of
the testator.” Is there any reason this might be a harder problem for wills than
for other types of legal instruments? Consider:
• T’s will leaves “all my property to my daughters A and B.” Five
years after making the will but ten years before his death, T and
his wife have another child, C.
• T’s will leaves “my red Toyota to my nephew A.” After making
the will, T wrecks the red Toyota and buys a blue Toyota to
replace it.

Wills and Intestacy

615

• T’s will leaves $10,000 to A, $10,000 to B, and his antique writing
desk to C. After expenses, T’s estate consists of $5,000 in cash
and the writing desk.
• T’s will leaves his estate equally to his sisters A and B. A dies in
the same car accident as T. She leaves behind two children, C and
D. T has one child of his own, E, from whom he is estranged.
Maryland Code, Estates and Trusts, §§ 3-101 to 3-104
§ 3-101. Order of distribution of net intestate estate
Any part of the net estate of a decedent not effectively disposed of by his will shall be
distributed by the personal representative to the heirs of the decedent in the order
prescribed in this subtitle.
§ 3-102. Share of surviving spouse
(a) In general. -- The share of a surviving spouse shall be as provided in this section.
(b) Surviving minor child. -- If there is a surviving minor child, the share shall be onehalf.
(c) No surviving minor child, but surviving issue. -- If there is no surviving minor child,
but there is surviving issue, the share shall be the first $ 15,000 plus one-half of the
residue.
(d) No surviving issue, but surviving parent. -- If there is no surviving issue but a
surviving parent, the share shall be the first $ 15,000 plus one-half of the residue.
(e) No surviving issue or parent. -- If there is no surviving issue or parent, the share
shall be the whole estate. …
§ 3-103. Division among surviving issue
The net estate, exclusive of the share of the surviving spouse, or the entire net estate if
there is no surviving spouse, shall be divided equally among the surviving issue……

616

Property

§ 3-104. Distribution when there is no surviving issue …
(b) Parents and their issue. — … it shall be distributed to the surviving parents equally,
or if only one parent survives, to the survivor; or if neither parent survives, to the issue
of the parents, by representation.
(c) Grandparents and their issue. — …
(d) Great-grandparents and their issue. — …
(e) No surviving blood relative. — If there is no surviving blood relative entitled to
inherit under this section, it shall be divided into as many equal shares as there are
stepchildren of the decedent …
Notes and Questions
1. If you don’t make a will, the state will make one for you. This portion of the
Maryland Code describes the default inheritance rules for people who die
domiciled in Maryland without a will. How well do you think they track people’s
expectations about what will happen to their property after they die? In addition
to total intestacy—dying without a will—the intestacy statute also applies in cases
of partial intestacy—dying with a will that fails to dispose of all of one’s property.
How might that happen?

Land Transactions
In 1250, to transfer ownership of land, the grantor and grantee would physically go to
the land. The grantor would physically (or perhaps metaphysically) put the grantee in
possession by handing over a clod of dirt. The grantee would swear homage to the
grantor, and the grantor would swear to defend the grantee’s title. This was a public
ceremony, performed in front of witnesses who could later be called on to recall what
had happened if necessary. In contrast, written conveyances—called “charters”—were
treated with skepticism; they were considered an inferior form of evidence because of
the risk of forgery.
In the seven and a half centuries since, this attitude has completely flipped. Now, land
transactions are paper transactions: the Statute of Frauds almost always requires a
written conveyance—now called a “deed”—to transfer an interest in real property.
Transfers by operation of law (primarily through adverse possession and intestacy) are
very much the exception. In addition, land transactions are influenced by the common
law’s attitude that land is of distinctive importance, so that parties dealing with it need
especial clarity about their rights, and by the fact that land transactions are often highstakes, with hundreds of thousands, millions, or sometimes even billions of dollars at
issue. This section focuses on the written instruments at the heart of land transactions.
It considers when a deed is required, when a deed is effective, how deeds are interpreted,
and what they promise about the property and the interest being conveyed.

A. The Deed
Indiana Code Title 32, Art. 21
§ 32-21-1-1—Requirement of written agreement; agreements or promises covered
(a) This section does not apply to a lease for a term of not more than three (3) years.
(b) A person may not bring any of the following actions unless the promise, contract,
or agreement on which the action is based, or a memorandum or note describing the
617

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Property

promise, contract, or agreement on which the action is based, is in writing and signed
by the party against whom the action is brought or by the party’s authorized agent: …
(4) An action involving any contract for the sale of land.
§ 32-21-1-13—Conveyance of land; written deed required
Except for a bona fide lease for a term not exceeding three (3) years, a conveyance of
land or of any interest in land shall be made by a deed that is:
(1) written; and
(2) subscribed, sealed, and acknowledged by the grantor … or by the grantor’s
attorney.
Questions
1. What is the difference between these two sections? Why are both necessary?
2. Consider the following sequence of text messages:
A: still want apt 4C @ 321 sesame st?
B: $450,000 ok?
A: deal. :-) -A
B: yay! kthx bai
Can either of the parties treat this as an enforceable contract for the sale of land?
Harding v. Ja Laur
315 A.2d 132 (Md. Ct. Spec. App. 1974)
GILBERT, Judge: ...
The bill alleged that a deed had been obtained from the appellant through fraud
practiced upon her by the agent of Ja Laur Corporation. The bill further averred that
the paper upon which the appellant had affixed her signature was “falsely and

Land Transactions

619

fraudulently attached to the first page of a deed identified as the same deed” through
which the appellee, Ja Laur Corporation, and its assigns, the other appellees, claim title.
...
There is no dispute that the appellant signed some type of paper. Her claim is not that
her signature was forged in the normal sense, i.e., someone copied or wrote it, but
rather that the forgery is the result of an alteration. Mrs. Harding alleges that at the time
that she signed a blank paper she was told that her signature was necessary in order to
straighten out a boundary line. She represents that she did not know that she was
conveying away her interest in and to a certain 1517 acres of land in Montgomery
County.
The parcel of land that was conveyed by the allegedly forged deed is contiguous to a
large tract of real estate in which Ja Laur and others had “a substantial interest.” It
appears from the bill that Mrs. Harding’s land provided the access from the larger tract
to a public road, so that its value to the appellees is obvious. Mrs. Harding excuses
herself for signing the “blank paper” by averring that she did so at the instigation of an
attorney, an agent of Ja Laur, who had “been a friend of her deceased husband, and ...
represented her deceased husband in prior business and legal matters, and that under
[the] circumstances [she] did place her complete trust and reliance in the
representations made to her ...” by the attorney. The “blank paper” was signed “on or
about April 2, 1970.” Mrs. Harding states that she did not learn of the fraud until the
“summer of 1972.” At that time an audit, by the Internal Revenue Service, of her
deceased husband’s business revealed the deed to Ja Laur, and its subsequent
conveyance to the other appellees.
In Smith v. State, 256 A.2d 357, 360 (1970), we said that:
Forgery has been defined as a false making or material alteration, with
intent to defraud, of any writing which, if genuine, might apparently be
of legal efficacy or the foundation of a legal liability. More succinctly,
forgery is the fraudulent making of a false writing having apparent legal
significance. It is thus clear that one of the essential elements of forgery

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Property

is a writing in such form as to be apparently of some legal efficacy and
hence capable of defrauding or deceiving.
Perkins, Criminal Law ch. 4, § 8 (2d ed. 1969) states, at 351:
A material alteration may be in the form of (1) an addition to the writing,
(2) a substitution of something different in the place of what originally
appeared, or (3) the removal of part of the original. The removal may be
by erasure or in some other manner, such as by cutting off a qualifying
clause appearing after the signature.
A multitude of cases hold that forgery includes the alteration of or addition to any
instrument in order to defraud. That a deed may be the subject of a forgery is beyond
question.
The Bill of Complaint alleges that the signature of Mrs. Harding was obtained through
fraud. More important, however, to the issue is whether or not the bill alleges forgery.
In our view the charge that appellant’s signature was written upon a paper, which paper
was thereafter unbeknown to her made a part of a deed, if true, demonstrates that there
has been a material alteration and hence a forgery. ...
We turn now to the discussion of whether vel non the demurrers of Macro Housing,
Inc. and Montgomery County, the other appellees, should have been sustained. There
was no allegation in the bill that their agent had perpetrated the fraud upon Mrs.
Harding. If they are to be held in the case, it must be on the basis that they are not bona
fide purchasers without notice. The title of a bona fide purchaser, without notice, is not
vitiated even though a fraud was perpetrated by his vendor upon a prior title holder. A
deed obtained through fraud, deceit or trickery is voidable as between the parties
thereto, but not as to a bona fide purchaser. A forged deed, on the other hand, is void
ab initio. ...
[T]he common law rule that a forger can pass no better title than he has is in full force
and effect in this State. A forger, having no title can pass none to his vendee.
Consequently, there can be no bona fide holder of title under a forged deed. A forged
deed, unlike one procured by fraud, deceit or trickery is void from its inception. The

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distinction between a deed obtained by fraud and one that has been forged is readily
apparent. In a fraudulent deed an innocent purchaser is protected because the fraud
practiced upon the signatory to such a deed is brought into play, at least in part, by
some act or omission on the part of the person upon whom the fraud is perpetrated.
He has helped in some degree to set into motion the very fraud about which he later
complains. A forged deed, on the other hand, does not necessarily involve any action
on the part of the person against whom the forgery is committed. So that if a person
has two deeds presented to him, and he thinks he is signing one but in actuality, because
of fraud, deceit or trickery he signs the other, a bona fide purchaser, without notice, is
protected. On the other hand, if a person is presented with a deed, and he signs that
deed but the deed is thereafter altered e.g. through a change in the description or
affixing the signature page to another deed, that is forgery and a subsequent purchaser
takes no title.
In the instant case, the Bill of Complaint, for the reasons above stated, alleged a forgery
of the deed by which Ja Laur took title from Mrs. Harding. This allegation, if true,
renders that deed a nullity. Ja Laur could not have passed title to the other appellees,
Macro Housing, Inc. and Montgomery County. Those two appellees would therefore
have no title to the land of Mrs. Harding. ...
Questions
1. What is the point of the distinction between forging a deed (sometimes called
“fraud in the factum”) and tricking someone into signing it (“fraud in the
inducement”)? As between the fraudster and the victim, is there a significant
difference? What about once third parties get involved?
2. Mrs. Harding signs a blank piece of paper, which Ja Laur then staples to a deed.
Forgery? What if she signs the same piece of paper after it is stapled to the deed?
Do the policy reasons for distinguishing forgery from fraud provide a
convincing reason to treat these cases differently?

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Walters v. Tucker
281 S.W.2d 843 (Sup. Ct. Mo. 1955)
This is an action to quiet title to certain real estate situate in the City of Webster Groves,
St. Louis County, Missouri. Plaintiff and defendants are the owners of adjoining
residential properties fronting northward on Oak Street. Plaintiff’s property, known as

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450 Oak Street, lies to the west of defendants’ property, known as 446 Oak Street. The
controversy arises over their division line. Plaintiff contends that her lot is 50 feet in
width, east and west. Defendants contend that plaintiff’s lot is only approximately 42
feet in width, east and west. The trial court, sitting without a jury, found the issues in
favor of defendants and rendered judgment accordingly, from which plaintiff has
appealed.
The common source of title is Fred F. Wolf and Rose E. Wolf, husband and wife, who
in 1922 acquired the whole of Lot 13 of West Helfenstein Park, as shown by plat
thereof recorded in St. Louis County. In 1924, Mr. and Mrs. Wolf conveyed to Charles
Arthur Forse and wife the following described portion of said Lot 13:
The West 50 feet of Lot 13 of West Helfenstein Park, a Sub-division in
United States Survey 1953, Twp. 45, Range 8 East, St. Louis County,
Missouri, … .
Plaintiff, through mesne conveyances carrying a description like that above, is the last
grantee of and successor in title to the aforesaid portion of Lot 13. Defendants, through
mesne conveyances, are the last grantees of and successors in title to the remaining
portion of Lot 13.
At the time of the above conveyance in 1924, there was and is now situate on the tract
described therein a one-story frame dwelling house (450 Oak Street), which was then
and continuously since has been occupied as a dwelling by the successive owners of
said tract, or their tenants. In 1925, Mr. and Mrs. Wolf built a 1 1/2-story stucco
dwelling house on the portion of Lot 13 retained by them. This house (446 Oak Street)
continuously since has been occupied as a dwelling by the successive owners of said
portion of Lot 13, or their tenants.
Despite the apparent clarity of the description in plaintiff’s deed, extrinsic evidence was
heard for the purpose of enabling the trial court to interpret the true meaning of the
description set forth therein. At the close of all the evidence the trial court found that
the description did not clearly reveal whether the property conveyed ‘was to be fifty
feet along the front line facing Oak Street or fifty feet measured Eastwardly at right
angles from the West line of the property …’; that the ‘difference in method of

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ascertaining fifty feet would result in a difference to the parties of a strip the length of
the lot and approximately eight feet in width’; that an ambiguity existed which justified
the hearing of extrinsic evidence; and that the ‘West fifty feet should be measured on
the front or street line facing Oak Street.’ The judgment rendered in conformity with
the above finding had the effect of fixing the east-west width of plaintiff’s tract at about
42 feet.
Plaintiff contends that the description in the deed is clear, definite and unambiguous,
both on its face and when applied to the land; that the trial court erred in hearing and
considering extrinsic evidence; and that its finding and judgment changes the clearly
expressed meaning of the description and describes and substitutes a different tract
from that acquired by her under her deed. Defendants do not contend that the
description, on its face, is ambiguous, but do contend that when applied to the land it
is subject to ‘dual interpretation’; that under the evidence the trial court did not err in
finding it contained a latent ambiguity and that parol evidence was admissible to
ascertain and determine its true meaning; and that the finding and judgment of the trial
court properly construes and adjudges the true meaning of the description set forth in
said deed.
[The plaintiff and defendants introduced dueling survey plats. The one included here
is the plaintiff’s. North is at the bottom. Note in particular the locations of the two
houses and of the driveway. It may help to mark on the plat where the defendant’s
proposed line would fall.]
It is seen that Lot 13 extends generally north and south. It is bounded on the north by
Oak Street (except that a small triangular lot from another subdivision cuts off its
frontage thereon at the northeast corner). On the south it is bounded by the Missouri
Pacific Railroad right of way. Both Oak Street and the railroad right of way extend in a
general northeast-southwest direction, but at differing angles. ...
Both plats show a concrete driveway 8 feet in width extending from Oak Street to
plaintiff’s garage in the rear of her home, which, the testimony shows, was built by one
of plaintiff’s predecessors in title. The east line of plaintiff’s tract, as measured by the
Joyce (plaintiff’s) survey, lies 6 or 7 feet east of the eastern edge of this driveway.

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Admittedly, the driveway is upon and an appurtenance of plaintiff’s property. On the
Elbring (defendants’) plat, the east line of plaintiff’s lot, as measured by Elbring, is
shown to coincide with the east side of the driveway at Oak Street and to encroach
upon it 1.25 feet for a distance of 30 or more feet as it extends between the houses.
Thus, the area in dispute is essentially the area between the east edge of the driveway
and the line fixed by the Joyce survey as the eastern line of plaintiff’s tract. ...
The description under which plaintiff claims title, to wit: ‘The West 50 feet of Lot 13
…’, is on its face clear and free of ambiguity. It purports to convey a strip of land 50
feet in width off the west side of Lot 13. So clear is the meaning of the above language
that defendants do not challenge it and it has been difficult to find any case wherein
the meaning of a similar description has been questioned.
The law is clear that when there is no inconsistency on the face of a deed and, on
application of the description to the ground, no inconsistency appears, parol evidence
is not admissible to show that the parties intended to convey either more or less or
different ground from that described. But where there are conflicting calls in a deed,
or the description may be made to apply to two or more parcels, and there is nothing
in the deed to show which is meant, then parol evidence is admissible to show the true
meaning of the words used.
No ambiguity or confusion arises when the description here in question is applied to
Lot 13. The description, when applied to the ground, fits the land claimed by plaintiff
and cannot be made to apply to any other tract. When the deed was made, Lot 13 was
vacant land except for the frame dwelling at 450 Oak Street. The stucco house (446
Oak Street) was not built until the following year. Under no conceivable theory can the
fact that defendants’ predecessors in title (Mr. and Mrs. Wolf) thereafter built the
stucco house within a few feet of the east line of the property described in the deed be
construed as competent evidence of any ambiguity in the description. ...
Whether the above testimony and other testimony in the record constitute evidence of
a mistake in the deed we do not here determine. Defendants have not sought
reformation, and yet that is what the decree herein rendered undertakes to do. It seems
apparent that the trial court considered the testimony and came to the conclusion that

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the parties to the deed did not intend a conveyance of the ‘West 50 feet of Lot 13’, but
rather a tract fronting 50 feet on Oak Street. And, the decree, on the theory of
interpreting an ambiguity, undertakes to change (reform) the description so as to
describe a lot approximately 42 feet in width instead of a lot 50 feet in width, as
originally described. That, we are convinced, the courts cannot do.
Questions
1. Why does the court apply such a strict integration rule?
2. The boundary line as enforced by the court comes within inches of the
defendants’ house. This does not seem like an ideal state of affairs. (Then again,
the defendant’s theory would have drawn the boundary line through the
plaintiffs’ driveway.) Are there any doctrines that can clean up the messes that
result when (by accident or otherwise) strict interpretation of deeds produces
results at odds with natural features, structures, or uses of land?
3. The deed here used three different techniques to describe the land. Start at the
end. “United States Survey 1953, Twp. 45, Range 8 East, St. Louis County,
Missouri” is a reference to a government survey. Townships are standard 36square-mile tracts established by federal government survey; “Twp. 45, Range
8 East” identifies a specific township in Missouri. Next, “of Lot 13 of West
Helfenstein Park” is a reference to the subdivision plat filed by the developer who
laid out the neighborhood; the plat is a survey map filed in the county recording
office that shows the boundaries of individual parcels. Finally, “The West 50
feet” is a (crude attempt at) a metes and bounds description of the property in
terms of its boundaries. Metes and bounds descriptions may refer to geospatial
coordinates (e.g. latitude and longitude as measured by GPS), to natural
landmarks (“Millers’ Creek”), artificial markers (“the survey stake labelled
G34”), and distances and directions (“300 feet along a course at 45˚). How
precise are these various means of description? Which of them strike you as
most prone to error?
4. Note that the boundary lines as shown on the survey map are at an angle to the
north-south axis. Does this affect how the court should interpret the deed?

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B. Delivery
Loughran v. Kummer
146 A. 534 (Pa. 1929)
KEPHART, J.
Appellee, a bachelor 67 years of age, conveyed, for $1, land in Pittsburgh to Mrs.
Kummer, appellant, who was one of his tenants. A bill was filed to set aside this deed;
the grounds laid were confidential relationship, undue influence, and impaired
mentality. Inasmuch as the facts must again be considered, we will mention only such
as raise the legal question on which the case was decided; we venture no opinion on
the other facts.
The court below found from the evidence that a deed absolute on its face had been
executed, acknowledged, and delivered to appellant by appellee, on condition that it
should not be recorded until the latter’s death; that undoubtedly in his mind this meant
that the deed was not to take effect until after his death; and that he, demanding the
return of the deed within a very few days after the delivery, thus revoked it and with
that revocation revoked the gift. Appellant deceived appellee when she stated the deed
had been destroyed. The excuse given was appellee was worried and she wanted to ease
his mind by making him believe that it had been destroyed. …
The question we are asked to consider is whether a deed absolute on its face,
acknowledged, executed, and delivered under circumstances as here indicated, vested
such title in the grantee as could be revoked for the above reasons. It amounts in
substance to this, that the grantor said the deed should not be recorded until after his
death, and the grantee in accepting the deed took it on that condition. The evidence on
which this finding was based was all oral, and the scrivener and defendant denied any
such condition was imposed when the deed was delivered. All control over the deed
was relinquished when it was handed appellant. The presumption must be that at that
time it was the intention to pass title. ‘The general principle of law is that the formal
act of signing, sealing and delivering is the consummation of the deed, and it lies with
the grantor to prove clearly that appearances are not consistent with truth. The
presumption stands against him, and the burden is on him to destroy it by clear and

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positive proof that there was no delivery and that it was so understood at the time. …
Where we have, as here, a deed, absolute and complete in itself, attacked as being in
fact otherwise intended, … there is a further presumption that the title is in conformity
with the deed, and it should not be dislodged except by clear, precise, convincing and
satisfactory evidence to the contrary.’ Cragin’s Estate, 117 A. 445 (Pa. 1922).
The gift here was executed, and that defendant was not to record it was not of the
slightest consequence when viewed as against these major actions, delivery and passing
of title. It was merely a promise the keeping of which lay in good faith, the breach of
which entailed no legal consequences. To have effected the grantor’s purpose, the
intervention of a third party was absolutely essential. There are circumstances where
acknowledgment, together with physical possession of the deed in the grantee, does
not conclusively establish an intention to deliver, and the presumption arising from
signing, sealing, and acknowledging, accompanied by manual possession of the deed
by the grantee, is not irrebuttable, but this presumption can be overcome only by
evidence that no delivery was in fact intended and none made. Such evidence is not
present in this case. Here the grantor by his own testimony intended the grantee to get
the land. The only question was when it was to take effect.
Here is one of the instances in which the law fails to give effect to the honest intention
of the parties, for the reason that they have not adopted the proper legal means of
accomplishing their object. Therefore the legal effect of such delivery is not altered by
the fact that both parties suppose the deed will not take effect until recorded, and that
it may be revoked at any time before record, or by contemporaneous agreements
looking to the reconveyance of the property to the grantor or to the third party upon
the happening of certain contingent events or the nonperformance of certain
conditions.
The reason for these rules is obvious. It is quite possible to prove in most deliveries
that some parol injunction was attached to the formal delivery of the deed; if they are
to be given the effect her[e] contended, there would be no safety in accepting a deed
under most circumstances. It opens the door to the fabrication of evidence that would
inevitably be appalling and go far toward violating the security of written instruments.
We have so held in matters of less import than the conveyance of land. The rule must

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not be relaxed as to realty. Such conveyances are vastly more important, as they involve
instruments of title and ownership which are used as a means of extending credit. Title
to land ought not to be exposed to the peril of successful attack except where the right
is clear and undoubted, and whatever may be our desire to recognize circumstances
argued as unfortunate, we cannot go to the extent of overthrowing principles of law
governing conveyances of real estate that have stood the test of ages.
In Cragin’s Estate, supra, the deeds were in a tin box for more than 23 years in an
envelope indorsed with the words: ‘To be recorded upon Mrs. Cragin’s death, if before
me.’ The deed was in grantee’s possession, and it was urged the delivery was
conditional. We said that indorsement may have been placed on the envelope for other
reasons than to defer the transfer of title. In the present case it was evident appellee
did not want his relatives to learn of the conveyance. Recording would be necessary to
pass a title examiner’s inspection, but nonrecording did not prevent the title from
passing. It has been quite generally held that an oral understanding on the delivery of a
deed that it should not be recorded will not affect the absolute character of the
conveyance if free of other conditions. An agreement to deliver a deed in escrow to
the person in whose favor it is made, and who is likewise a party to it, will not make
the delivery conditional. If delivered under such an agreement, it will be deemed an
absolute delivery and a consummation of the execution of the deed. …
Questions
1. The old phrase is that a deed was effective when it was “signed, sealed, and
delivered.” But the seal is obsolete, so the principal elements are that it be a
sufficient writing (discussed above), that it be signed, and that it be delivered.
Delivery of deeds has much in common with delivery in the law of gifts; it too
can be a subtle question. In a famous passage of his landmark 17th-century
treatise, Institutes of the Lawes of England, Edward Coke wrote, “As a deed may be
delivered to a party without words, so may a deed be delivered by words without
any act of delivery.” That sounds paradoxical, but Coke continued, “as if the
writing sealed lies upon the table, and the [grantor] says to the [grantee], ‘Go
and take up that writing, it is sufficient for you;’ or ‘it will serve your turn;’ or

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‘Take it as my deed;’ or the like words; either is a sufficient delivery.” Is that
better?
2. In Wiggill v. Cheney, 597 P.2d 1351 (Utah 1979), Lillian Cheney executed a deed
to Flora Cheney and put it in a safety deposit box in the names of Lillian Cheney
and Francis E. Wiggill. Lillian told Francis that his name was on the box, that
on her death he would be granted access to the box, and that “in that box is an
envelope addressed to all those concerned. All you have to do is give them that
envelope and that’s all.” On her death, he gained access to the box, took the
deed, and gave it to Flora. Delivery?
3. There are at least two ways to do delivery “right.” One is to sign and hand over
a deed at closing, when all of the necessary parties are in the same room and
can execute all of the appropriate documents effectively simultaneously.
Another is to use an escrow: a third party who receives custody of the signed
deed along with instructions to deliver it to the grantee when appropriate events
have taken place. What if the escrow agent disregards her instructions and hands
over the deed early? Can a grantor who is concerned the transaction will fall
through demand the deed back from the escrow agent?
4. Loughran is more complicated because the parties intended a conditional gift that
would take effect at Loughran’s death, rather than immediately. Grantors often
try to put other kinds of conditions on transfers. In Martinez v. Martinez, 678
P.2d 1163 (N.M. 1984), Delfino and Eleanor Martinez gave their son Carlos
and his wife Sennie a deed to a property in exchange for assuming a mortgage
in it. Delfino and Eleanor instructed Carlos and Sennie to take the deed to the
bank to be held in escrow until Carlos and Sennie had paid off the mortgage,
but they recorded it first. Carlos and Sennie had marital difficulties and fell
behind on the mortgage; eventually Delfino and Eleanor paid off the balance.
Who owns the property?
5. The Loughran court says the parties “have not adopted the proper legal means
of accomplishing their object.” What does it mean? Is there anything they could
have done differently that would avoided this mess?

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C. Warranties of Title
Sometimes a buyer discovers a problem with the property they purchased after the
deed has been delivered. If this happens, is there anything the buyer can do? It depends
in part on what type of deed the buyer accepted. Consider the following statute.
New York Real Property Law § 258
Short forms of deeds and mortgages.
The use of the following forms of instruments for the conveyance and mortgage of
real property is lawful, but this section does not prevent or invalidate the use of other
forms:
DEED WITH FULL COVENANTS.
Statutory Form A (Individual)
This indenture, made the ...... day of ........ nineteen hundred
and ......,
between .............(insert residence) party of the first part, and .............. (insert residence)
party of the second part,
Witnesseth, that the party of the first part, in consideration of ............ dollars, lawful
money of the United States, paid by the party of the second part, does hereby grant
and release unto the party of the second part, ........... and assigns forever, all .........
(description), together with the appurtenances and all the estate and rights of the party
of the first part in and to said premises,
To have and to hold the premises herein granted unto the party of the second
part, ............ and assigns forever. And said ............ covenants as follows:
First. That said ............ is seized of said premises in fee simple, and has
good right to convey the same;
Second. That the party of the second part shall quietly enjoy the said
premises;

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Third. That the said premises are free from incumbrances;
Fourth. That the party of the first part will execute or procure any further
necessary assurance of the title to said premises;
Fifth. That said ............ will forever warrant the title to said premises.
In witness whereof, the party of the first part has hereunto set his hand and seal the
day and year first above written…
BARGAIN AND SALE DEED.
Statutory Form C. With Covenant against Grantor. (Individual)
This indenture, made the ...... day of ......, nineteen hundred and ......, between .............,
(insert residence) party of the first part, and ............., (insert residence) party of the
second part:
Witnesseth, that the party of the first part, in consideration of ............. dollars, lawful
money of the United States, paid by the party of the second part, does hereby grant
and release unto the party of the second part, ............. and assigns forever, all .............
(description), together with the appurtenances and all the estate and rights of the party
of the first part in and to said premises,
To have and to hold the above granted premises unto the party of the second
part, ............. and assigns forever. And the party of the first part covenants that he has
not done or suffered anything whereby the said premises have been incumbered in any
way whatever.
In witness whereof, the party of the first part has hereunto set his hand and seal the
day and year first above written….

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QUITCLAIM DEED.
Statutory Form D. (Individual)
This indenture, made the ....... day of ..........., nineteen hundred and .........., between
..............., (insert residence), party of the first part, and .............., (insert residence), party
of the second part:
Witnesseth, that the party of the first part, in consideration of ........... dollars, lawful
money of the United States, paid by the party of the second part, does hereby remise,
release, and quitclaim unto the party of the second part, ............... and assigns forever,
all (description), together with the appurtenances and all the estate and rights of the
party of the first part in and to said premises.
To have and to hold the premises herein granted unto the party of the second part,
............ and assigns forever.
In witness whereof, the party of the first part has hereunto set his hand and seal the
day and year first above written….
Notes and Questions
1. What is the difference between the first and the second of these deed forms?
Why would a grantee ever accept a quitclaim deed?
2. The “usual covenants” that one finds in a general warranty deed (or “Deed with
Full Covenants” per the New York statute) are as follows (though they may be
combined in different ways and there is some state to state variation):
• Covenant of seisin—The grantor covenants that he owns the
estate or interest that he purports to convey.
• Covenant of right to convey—The grantor covenants that he has
the power to make the conveyance. This covenant is satisfied if
the grantor has title and is under no disability, or if he is acting as
trustee or agent for the owner.

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• Covenant against encumbrances—The grantor covenants that
there are no easements, covenants, mortgages, liens, or other
encumbrances on the property.
• Covenant of quiet enjoyment—The grantor covenants that the
grantee will not be disturbed in possession or enjoyment of the
property by a third party’s lawful assertion of superior title.
• Covenant of general warranty—The grantor covenants that he
will defend on behalf of the grantee any lawful claims existing at
the date of conveyance, and will compensate the grantee for any
loss sustained by the assertion of superior title. Note that for all
practical purposes, this covenant and the covenant of quiet
enjoyment amount to the same thing.
• Covenant of further assurances—The grantor covenants to
perform whatever acts are reasonably necessary to perfect the
purchaser’s title, if it turns out to be imperfect.
Our next case investigates the scope of these covenants.
McMurray v. Housworth
638 S.E.2d 421 (Ga. Ct. App. 2006)
PHIPPS, Judge:
Michael and Deborah Housworth sold a 24-acre tract of land which the purchasers—
Lance and Melanie McMurray, and James and Alberta McMurray— subdivided into
two tracts. A lake created by a dam is situated on the property. The McMurrays brought
this suit against the Housworths for breach of their general warranty of title upon
discovering after purchasing the property that the owner and operator of the dam holds
a floodwater detention easement that burdens the tract. The superior court awarded
summary judgment to the Housworths on the ground that this easement is not such
an encumbrance on the property as breaches the title warranty. We disagree and
reverse.

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Lance and Melanie McMurray purchased one of the twelve-acre parcels from the
Housworths for $120,000 in 2004. On the same date, James and Alberta McMurray
purchased the other parcel for the same price. The parcels were conveyed by warranty
deeds that contained general warranties of title without any limitations applicable here.
The McMurrays informed the Housworths that they were buying the property to build
single-family residences on each parcel.
Apparently, however, the McMurrays failed to discover that recorded within the chain
of title to their property in 1962 was a “floodwater retarding structure” easement which
had been granted to the Oconee River Soil Conservation District. This easement is for
construction, operation, and maintenance of a floodwater retarding structure or dam;
for the flowage of waters in, over, upon, or through the dam; and for the permanent
storage and temporary detention of any waters that are impounded, stored, or detained
by the dam. It also reserved in the grantor and his successors the right to use the
easement area for any purpose not inconsistent with full use and enjoyment of the
grantee’s rights and privileges, i.e., it is nonexclusive. After learning of the easement
following their purchase of the property, the McMurrays demanded that the
Housworths compensate them for the damages they would suffer as a result of the
restrictions thereby placed on their usage.
Because the Housworths failed to comply with these demands, the McMurrays brought
this suit against them seeking damages for breach of their warranties of title. ...
1. The McMurrays contend that the superior court erred in analogizing the floodwater
detention easement to a public roadway easement or zoning regulation and in thereby
concluding that a floodwater detention easement is not the type of easement that
breaches a general warranty of title.
(a) Each of the deeds in this case contained a general warranty of title in which the
grantors agreed to “defend the right and title to the above described property, unto
[the grantees], their heirs, assigns, and successors in title, against the claims of all
persons.” Under OCGA § 44-5-62, “[a] general warranty of title against the claims of
all persons includes covenants of a right to sell, of quiet enjoyment, and of freedom
from encumbrances.” “An incumbrance has been defined as ‘Any right to, or interest

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in, land which may subsist in another to the diminution of its value, but consistent with
the passing of the fee,’ and this definition . . . encompasses an easement or right of
way.” OCGA § 44-5-63 provides that “[i]n a deed, a general warranty of title against
the claims of all persons covers defects in the title even if they are known to the
purchaser at the time he takes the deed.”
(b) The rule in Georgia, as established in the early case of Desvergers v. Willis, 56 Ga. 515
(1876), is that the existence of a public road on land, of which the purchaser knew or
should have known at the time of the purchase, is not such an encumbrance as would
constitute a breach of a general warranty of title. The Desvergers rule is thus an exception
to the general rule stated in OCGA § 44-5-63 that a general warranty of title by deed
covers even defects known to the purchaser at the time he takes the deed.
Although the Desvergers rule is not uniform throughout the country, it is the majority
rule. In adopting the rule, the court in Desvergers concluded that a contrary holding
would produce a “crop of litigation” that would be “almost interminable.” The reason,
as later explained by the Supreme Court of Iowa in Harrison v. The Des Moines & Ft.
Dodge R. Co., was that the immense number of warranty deeds then in existence rarely
contained exceptions as to public roadways because of the universal belief that roadway
access was a benefit rather than a burden to land. Therefore, a determination that public
roadway easements were warranty-breaching encumbrances would have created
innumerable liabilities where none had been thought to exist.
Courts in other states have also based their adoption of the Desvergers rule on the
broader ground that where easements are open, notorious, and presumably known to
the purchaser at the time of the purchase, that knowledge will exclude the easement
from operation of a title warranty. These courts have reasoned that where the
encumbrance involves an open and obvious physical condition of the property, the
purchaser is presumed to have seen it and fixed his price with reference to it. In view,
however, of the Georgia rule that knowledge of a title defect will not exclude it from
operation of a general warranty of title, creation of an exception for easements for
public roadways or other purposes must be based on other grounds. And courts in
other states have ultimately concluded that public roadway easements should not be
regarded as encumbrances on the additional ground that “public highways are not

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depreciative, but, on the contrary, they are highly appreciative, of the value of the lands
on which they constitute an easement, and are a means without which such lands are
not available for use, nor sought after in the markets.”
For a number of reasons, we do not find the floodwater detention easement in this
case analogous to a public roadway easement. (1) We do not anticipate that we would
open the litigation floodgates, so to speak, by holding that a floodwater detention
easement breaches a general title warranty. (2) Moreover, a floodwater detention
easement does not benefit the land to which it is subject. Although the property is
benefitted by the lake or other body of water that creates the need for the easement (to
the extent that the one enhances the value or enjoyment of the other), the easement
burdens the property by permitting the impoundment of water on it to prevent
flooding or increased water runoff on other property located downstream. (3) The
McMurrays brought this action for damages because of the easement, not the lake. And
even though the lake is certainly open and obvious, the same cannot necessarily be said
of the easement. Although the superior court found that the dam is visible on the
McMurrays’ property, the McMurrays correctly point out that there is no evidence of
record to support this finding. As argued by the McMurrays, not every lake is created
by a dam or burdened by a floodwater detention easement. (4) And although the
McMurrays’ constructive notice of the easement by reason of its recordation within
their chains of title would provide a compelling reason for exempting the easement
from operation of the warranty deed, OCGA § 44-5-63 provides otherwise. (5) The
recording of the easement certainly renders it binding on the McMurrays insofar as
concerns the rights of the easement holder; but the question here is whether the
existence of the easement gives rise to a claim against the grantor for breach of the
warranty against encumbrances. For these reasons, the superior court erred in
concluding that the floodwater detention easement should be excepted from the rule
of OCGA § 44-5-63 in view of the exception for public roadways.
(c) The McMurrays also contend that the superior court erred in equating floodwater
detention easements with zoning regulations, which have been held not to breach a
general warranty of title. Because the floodwater detention easement does not function
in the same manner as a zoning regulation in all respects, we agree with this contention.

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The floodwater detention easement does more than impose zoning-type restrictions
on development activities on the property. It also grants the county soil and water
conservation district rights for the storage and detention of impounded waters on the
property. And it grants the district a right of ingress and egress upon the property.
Easement rights such as these constitute an interest in property that must be acquired
either by agreement of the property owner or by condemnation. And although the
easement does impose limitations on the McMurrays’ use of their property that
duplicate restrictions imposed under zoning-type regulations applicable to the
property, the two do not appear to be coextensive. ...
Where an encumbrance is a servitude or easement which can not be removed at the
option of either the grantor or grantee, damages will be awarded for the injury
proximately caused by the existence and continuance of the encumbrance, the measure
of which is deemed to be the difference between the value of the land as it would be
without the easement and its value as it is with the easement.
Notes and Questions
1. Even the general warranty given by the Housworths is subject to significant
exceptions, including one for public roadways and one for zoning regulations.
What is the point of these exceptions? Did the court correctly interpret those
underlying policies as not covering the floodwater detention easement?
2. The exception for zoning regulations can be tricky. Suppose that the property
is a vacant lot and that local zoning laws restrict houses to 15 feet in height? Is
this an encumbrance? What if the property contains a house 30 feet high?
Would it make a difference in either case if the restriction came from a private
neighborhood covenant rather than a public zoning law?
3. What should the Housworths (or rather, their attorney) have done? Presumably,
the Oconee River Soil Conservation District is not interested in terminating its
easement. Are the Housworths stuck with an unsaleable tract of land?

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D. Disclosure of Defects
Engelhart v. Kramer
570 N.W.2d 550 (S.D. 1997)
GILBERTSON, Justice.
A $34,800 judgment was rendered against Crystal Kay Kramer based on violation of
SDCL ch 43-4 and for failure to properly disclose a defect in the home she sold to
Karen Engelhart. The case was tried without a jury before the Second Judicial Circuit
Court. Kramer appeals the award claiming that Engelhart did not show that Kramer
failed to meet the required standard in completing the seller’s property disclosure
statement. 1 We affirm.
FACTS AND PROCEDURE
In May of 1991, Crystal Kay Kramer purchased a home in Sioux Falls, South Dakota
for $35,000. Over the next few years Kramer made several improvements. Four days
prior to putting the home on the market, in September, 1993, Kramer enlisted the
support of friends and family and began an extensive cleaning of the basement. There
were several large cracks in the basement’s cement walls and pieces of various sizes had
fallen off. They removed old sheet rock and put up wood paneling over the basement
walls. The basement project was memorialized by Kramer with several photographs
depicting the before, during and after condition of the walls.
During this period Karen Engelhart was searching for a home commensurate with her
income level. Engelhart was a first-time home buyer and was assisted by Dorothy Ecker,
a real estate agent. Engelhart viewed Kramer’s home, became interested, and then
decided to purchase it.

1 Kramer also argues that the trial court erred in finding Kramer’s actions constituted fraud and deceit. In light

of our disposition of the case on the disclosure requirement issue, the fraud and deceit issue need not be
addressed.

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Kramer was represented by Shirley Ullom, a Century 21 Advantage, Inc. real estate
agent. Kramer completed the detailed “property condition disclosure statement” form
required by SDCL 43-4-44. Part two of the form required the seller to disclose certain
structural information. Specifically, question 2 asked “Have you experienced water
penetration in the basement ... within the past two years?” Kramer replied, “Small amt
of H20 penetration in NW + NE corners [when it] rains.” (emphasis added). In
answering question 3 “[a]re there any cracked walls or floors?” Kramer responded
“basement floor, some spots in basement walls, East bedroom walls.” Under § 5,
Miscellaneous Information, Kramer was required to disclose any additional problems
that were not previously mentioned. Kramer offered, “basement cement walls have some
crumbling, behind paneling, basement floor cracked [and] uneven in spots.” (emphasis
added).
The trial court found that Engelhart relied upon, among other things, Kramer’s
disclosure statement with regard to the condition of the basement walls and that
Engelhart believed “some spots” and “some crumbling” to mean the problems were
minimal. Kramer allegedly offered to remove the paneling to expose the basement walls
but the trial court concluded that the offer was “a gambit, or a bluff ... without any real
intention of performing” and that the typical buyer in Engelhart’s position would be
“reluctant to remove paneling from someone else’s house.” Kramer admitted taking
photographs before installing the paneling and that showing the photos to a potential
purchaser would have been easier than removing it. Kramer could not explain why she
did not offer the photos.
Engelhart purchased the property in October 1994. In March of 1995, she discovered
water seepage through the south wall of the basement. The paneling was removed and
water was discovered running through cracks in the south wall. Also noted were several
other large cracks, including a large horizontal crack running around the basement.
Engelhart hired a structural engineer, Chester Quick (Quick) to diagnose the problem.
Quick issued a report in which he found the basement walls “very badly cracked” and

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testified that the cement had “leeched out” which allowed dirt and water to pass into
the basement. 2
Further, Quick noted that the concrete was showing “considerable disintegration
especially at the south wall” which was not repairable. He concluded that the
foundation had to be replaced and that “As bad as [the walls] are cracked they could
collapse at any time.” When asked whether the disclosure statement adequately
described the condition of the basement Quick testified that, although accurate in part,
“some crumbling” did not adequately describe the damage that existed behind the
paneling.
Engelhart brought suit against Kramer based upon misrepresentations made in the
disclosure statement. The trial court ruled in favor of Engelhart on failure to comply
with South Dakota’s Disclosure Statutes and fraud. Kramer appeals the $34,800 award
entered against her. …
LEGAL ANALYSIS AND DECISION
Whether Kramer failed to complete the disclosure statement in good faith as required
by SDCL Ch 43-A?
In 1993 the South Dakota legislature enacted specific requirements for disclosures in
certain real estate transfers. SDCL §§ 43-4-38 to -44. SDCL 43-4-38 provides:
The seller of residential real property shall furnish to a buyer a completed
copy of the disclosure statement before the buyer makes a written offer.
If after delivering the disclosure statement to the buyer or the buyer’s
agent and prior to the date of closing for the property or the date of
possession of the property, whichever comes first, the seller becomes
2 Quick testified that the wall was “a mixture of sand, cement [which holds the mixture together], and usually

some rock, and over time with excess water and cracks the cement ‘leeches out’ of the mixture and you wind up
with nothing but sand and rock.”

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aware of any change of material fact which would affect the disclosure
statement, the seller shall furnish a written amendment disclosing the
change of material fact.
SDCL 43-4-41 requires that “The seller shall perform each act and make each
disclosure in good faith.” SDCL 43-4-40 absolves sellers of liability for defects in
certain circumstances by providing:
Except as provided in § 43-4-42, a seller is not liable for a defect or other
condition in the residential real property being transferred if the seller
truthfully completes the disclosure statement.
(Emphasis added). The disclosure form mandated by SDCL 43-4-44 establishes that
beyond the above obligations, there is no warranty passing from the seller to the buyer:
THIS STATEMENT IS A DISCLOSURE OF THE CONDITION
OF THE ABOVE DESCRIBED PROPERTY.... IT IS NOT A
WARRANTY OF ANY KIND BY THE SELLER OR ANY AGENT
REPRESENTING ANY PARTY IN THIS TRANSACTION AND IS
NOT A SUBSTITUTE FOR ANY INSPECTIONS OR
WARRANTIES THE PARTIES MAY WISH TO OBTAIN.
(Capitals in original).
Kramer relies on SDCL 43-4-40 and contends that even if her description of the
basement was inadequate or under Kramer’s phraseology, an innocent
misrepresentation, that it was truthful nonetheless and therefore no liability should
attach. It is important to note that in SDCL 43-4-40, the terms “truthfully” and
“complete” do not operate independently to the exclusion of the other. A plain reading
of the terms together evince a more exacting standard than truth alone.
Until today, this Court has not addressed the scope of the disclosure statutes at issue.
Of central concern to our resolution is what is required by the term “good faith,” in
the absence of a definition in SDCL 43-4-41, and whether the disclosure of “some
crumbling” violates that standard? We recognize that the concept of “good faith” may,

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at times, seem as elusive as the “reasonableness” that is spoken of in the law of torts.
However, there exists several sources from which meaning can be found.
Statutory guidance can be found at SDCL 2-14-2(13) which states that “good faith” is:
an honest intention to abstain from taking any unconscientious
advantage of another, even through the forms or technicalities of law,
together with an absence of all information or belief of facts which
would render the transaction unconscientious;
Black’s Law Dictionary 693 (6th ed 1990) offers the following:
Good faith is an intangible and abstract quality with no technical
meaning or statutory definition, and it encompasses, among other things,
an honest belief, the absence of malice and the absence of design to
defraud or to seek an unconscionable advantage.... In common usage
this term is ordinarily used to describe that state of mind denoting
honesty of purpose, freedom of intention to defraud, and, generally
speaking, means being faithful to one’s duty or obligation.
Case law decided under different contexts has provided additional meaning to the term
“good faith” to include “honesty in fact,” Garrett v. BankWest, Inc., 459 N.W.2d 833,
841 (S.D.1990) (contractual context; meaning of good faith “varies with the context
and emphasizes faithfulness to an agreed common purpose and consistency with the
justified expectations of the other party”), and an “honest belief in the suitability of the
actions taken.” B.W. v. Meade Co., 534 N.W.2d 595, 598 (S.D.1995), (in the context of
reporting and investigating child abuse). In the case now before us the trial court
properly relied upon the definition found in SDCL 2-14-2(13).
Kramer contends that since she described the condition of the basement walls as
having “some spots” and “some crumbling,” she fulfilled her duty of good faith by
truthfully completing the Disclosure Statement. Kramer argues that to hold otherwise
would, in effect, result in a strict liability standard on sellers of real estate. We disagree.
SDCL 43-4-42 provides:

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Property

A transfer that is subject to §§ 43-4-37 to 43-4-44, inclusive, is not
invalidated solely because a person fails to comply with §§ 43-4-37 to 434-44, inclusive. However, a person who intentionally or who negligently
violates §§ 43-4-37 to 43-4-44, inclusive, is liable to the buyer for the
amount of the actual damages and repairs suffered by the buyer as a
result of the violation or failure. A court may also award the buyer costs
and attorney fees. Nothing in this section shall preclude or restrict any
other rights or remedies of the buyer.
(Emphasis added).
Kramer relies on Amyot v. Luchini, 932 P.2d 244 (Alaska 1997), for the proposition that
a disclosure statement can be truthful yet not “perfect” and that “innocent
misrepresentations” do not violate good faith. However, it must be noted that
Kramer’s representation of the issue to this Court incorrectly assumes that the
misrepresentation of the basement walls was found merely innocent by the trial court.
To the contrary, the trial court specifically found that the Kramer’s paneling of the
walls four days before putting the house on the market was not “solely for aesthetic
purposes” and was completed deliberately 3 in an attempt to hide their true condition.
Kramer’s colorful attempt to characterize her description of the basement as an
innocent misrepresentation is inaccurate.
In 1993, Alaska enacted residential real property disclosure statement statutes
(substantially similar to that of South Dakota enacted the same year). Alaska Stat. §§
34.70.010 to 34.70.090 (Michie 1996). 4 The Amyot court stated:

3 The trial court relied on Kramer’s deposition and trial testimony in that when she purchased the house “[t]he

walls were crumbling with cracks in places,” that the residue she had discovered on the basement floor was “Part
of the basement wall ... whatever makes up the wall was there in a pile” and further that Kramer admitted in her
disclosure statement that no water ever came in on the south wall.
4 The Alaska disclosure statutes did not define “good faith” but held that “good faith” envisioned an “honest

and reasonable belief.” Id. at 247. Amyot is distinguishable from the present facts in that the court held an
“innocent misrepresentation” did not violate the good faith standard. South Dakota does not attach liability in

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Prior to the enactment of [the mandatory disclosure statutes], sellers of
real property were not required to make any representations about the
property. However, sellers were strictly liable for those representations
they made. (Citation omitted.) Under the disclosure statute a seller is
now required to make representations about a wide range of the
property’s features and characteristics. We conclude that the legislature
intended to offset the seller’s increased disclosure responsibilities by the
lower liability standard for misrepresentations.
Amyot, 932 P.2d at 246.
We agree with the Amyot court and hold that strict liability is not the requisite standard
under South Dakota’s disclosure statutes. A plain reading of SDCL 43-4-42 tells us that
liability will not attach unless an intentional or negligent violation occurs. The legal
maxim “expressio unius est exlusio alterius” means “the expression of one thing is the
exclusion of another.” Black’s Law Dictionary 581 (6th ed.1990). The maxim is a
general rule of statutory construction. Applying the general rule to SDCL 43-4-42, we
find the language “intentionally or ... negligently” is exclusive and negates strict liability.
It is fair to presume that sellers know the character of the property they convey. At
present, when Kramer became aware of Engelhart’s concern over the basement she
could have simply shown the pictures of its true condition. Her failure to do so was
unreasonable and amounts to negligence. SDCL 43-4-42. It must be noted that Kramer
admitted taking the photographs before installing the paneling and that showing the
photos would have been easier than removing it. Kramer could not explain why she
did not offer the photos.
We hold that with the adoption of South Dakota’s detailed disclosure statutes the
doctrine of caveat emptor has been abandoned in favor of full and complete disclosure

this context unless the seller’s conduct amounts to an “intentional or negligent” violation the disclosure statutes.
SDCL 43-4-42.

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of defects of which the seller is aware. We are not inferring, as Kramer suggests, that a
seller must possess the expertise of a structural engineer to pass good faith muster. Nor
are we suggesting that a seller will be liable for defects of which she is unaware. Those
claims are clearly disposed of in the closing section of the mandated disclosure form
of SDCL 43-4-44:
The Seller hereby certifies that the information contained herein is true
and correct to the best of the Seller’s information, knowledge and belief
as of the date of the Seller’s signature below.... THE SELLER AND
THE BUYER MAY WISH TO OBTAIN PROFESSIONAL ADVICE
AND INSPECTIONS OF THE PROPERTY TO OBTAIN A TRUE
REPORT AS TO THE CONDITION OF THE PROPERTY AND
TO PROVIDE FOR APPROPRIATE PROVISIONS IN ANY
CONTRACT OF SALE AS NEGOTIATED BETWEEN THE
SELLER AND THE BUYER WITH RESPECT TO SUCH
PROFESSIONAL ADVICE AND INSPECTIONS.
(Capitals in original). It is clear that, as per SDCL § 43-4-41 and 43-4-44, a seller’s “good
faith” is determined under a reasonable person standard.
Affirmed.
Questions
1. In Lucero v. Van Wie, 598 NW 2d 893 (S.D. 1999), the seller failed to provide
the statutorily required disclosure statement, but the contract of sale contained
the following clause:
The buyer acknowledges that she has examined the premises and
the same are in satisfactory condition and they accept the
property in the “as-is” condition … .
This time, the South Dakota Supreme Court held that the buyer could not
recover for undisclosed defects in the property; she “entered into an enforceable
contract and purchased the property ‘as is,’ the result of which was to waive
disclosure requirements.” After Lucero, what do you expect happened to real

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estate sales contracts in South Dakota? What do you expect the South Dakota
courts will do in cases where the sales contract contains an “as-is” clause but
the buyer alleges that the seller affirmatively lied about the condition of the
property—e.g., “No, the roof has never leaked.”
2. In addition to the distinction between unknown defects and defects known to
the seller, some courts draw a distinction between latent and apparent defects.
Only hidden defects—e.g., rotting support beams in the walls—need to be
disclosed, while readily visible defects, or ones that a reasonable inspection
could discover—e.g., nonworking plumbing on the second floor—need not.
The theory, at least, is that the buyer depends on the seller to tell her about
conditions she could not reasonably discover herself. But isn’t there a
connection between defects the buyer doesn’t know about and defects the seller
doesn’t know about, either? Cases like Engelhart are one thing, where the Seller
literally plasters (or at least panels) over the problem. But who should bear the
loss if a previously unknown sinkhole surprises everyone by swallowing up the
back porch the day after closing? Consider, in this regard, a seller who doesn’t
know whether her home’s attic walls contain asbestos insulation, and a buyer
whose offer to buy the house is contingent on drilling into the walls to confirm
that they do not contain asbestos. If you represented the seller, would you advise
your client to accept this contingency?
3. What kinds of conditions must be disclosed? A leaky roof? A leaky faucet? The
presence of lead paint on the walls? The fact that a previous inhabitant of the
home was gruesomely murdered by a family member? That the homeowner
regularly gave “ghost tours” on which she pretended to tourists that the house
was haunted? The fact that a registered sex offender lives on the block? The
fact that there is a municipal garbage dump half a mile away?
4. In many states, new-home builders are required to give a non-waivable warranty
of habitability that substantially parallels the warranty of habitability required of
landlords. What might account for the decision to hold sellers of new houses to
a higher standard than sellers of existing houses? When should the statute of
limitations on breach of warranty claims start running? Should subsequent

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purchasers be able to sue the original builder for breach of the warranty if the
defects become apparent only after a resale?

E. Risk of Loss
Brush Grocery Kart, Inc. v. Sure Fine Market, Inc.
47 P.3d 680 (Colo. 2002)
JUSTICE COATS delivered the opinion of the court: ...
In October 1992 Brush Grocery Kart, Inc. and Sure Fine Market, Inc. entered into a
five-year “Lease with Renewal Provisions and Option to Purchase” for real property,
including a building to be operated by Brush as a grocery store. Under the contract’s
purchase option provision, any time during the last six months of the lease, Brush could
elect to purchase the property at a price equal to the average of the appraisals of an
expert designated by each party.
Shortly before expiration of the lease, Brush notified Sure Fine of its desire to purchase
the property and begin the process of determining a sale price. Although each party
offered an appraisal, the parties were unable to agree on a final price by the time the
lease expired. Brush then vacated the premises, returned all keys to Sure Fine, and
advised Sure Fine that it would discontinue its casualty insurance covering the property
during the lease. Brush also filed suit, alleging that Sure Fine failed to negotiate the
price term in good faith and asking for the appointment of a special master to
determine the purchase price. Sure Fine agreed to the appointment of a special master
and counterclaimed, alleging that Brush negotiated the price term in bad faith and was
therefore the breaching party.
During litigation over the price term, the property was substantially damaged during a
hail storm. With neither party carrying casualty insurance, each asserted that the other
was liable for the damage. The issue was added to the litigation at a stipulated amount
of $60,000. ... The court then found that under the doctrine of equitable conversion,
Brush was the equitable owner of the property and bore the risk of loss. It therefore
declined to abate the purchase price or award damages to Brush for the loss.

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Brush appealed the loss allocation, and the court of appeals affirmed on similar
grounds. ...
In the absence of statutory authority, the rights, powers, duties, and liabilities arising
out of a contract for the sale of land have frequently been derived by reference to the
theory of equitable conversion. This theory or doctrine, which has been described as a
legal fiction, is based on equitable principles that permit the vendee to be considered
the equitable owner of the land and debtor for the purchase money and the vendor to
be regarded as a secured creditor. The changes in rights and liabilities that occur upon
the making of the contract result from the equitable right to specific performance. Even
with regard to third parties, the theory has been relied on to determine, for example,
the devolution, upon death, of the rights and liabilities of each party with respect to the
land, and to ascertain the powers of creditors of each party to reach the land in payment
of their claims.
The assignment of the risk of casualty loss in the executory period of contracts for the
sale of real property varies greatly throughout the jurisdictions of this country. What
appears to yet be a slim majority of states places the risk of loss on the vendee from
the moment of contracting, on the rationale that once an equitable conversion takes
place, the vendee must be treated as owner for all purposes. Once the vendee becomes
the equitable owner, he therefore becomes responsible for the condition of the
property, despite not having a present right of occupancy or control. In sharp contrast,
a handful of other states reject the allocation of casualty loss risk as a consequence of
the theory of equitable conversion and follow the equally rigid “Massachusetts Rule,”
under which the seller continues to bear the risk until actual transfer of the title, absent
an express agreement to the contrary. A substantial and growing number of
jurisdictions, however, base the legal consequences of no-fault casualty loss on the right
to possession of the property at the time the loss occurs. This view has found
expression in the Uniform Vendor and Purchaser Risk Act, and while a number of
states have adopted some variation of the Uniform Act, others have arrived at a similar
position through the interpretations of their courts. ...
In Wiley v. Lininger, 204 P.2d 1083, [(1949)] where fire destroyed improvements on land
occupied by the vendee during the multi-year executory period of an installment land

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contract, we held, according to the generally accepted rule, that neither the buyer nor
the seller, each of whom had an insurable interest in the property, had an obligation to
insure the property for the benefit of the other. We also adopted a rule, which we
characterized as “the majority rule,” that “the vendee under a contract for the sale of
land, being regarded as the equitable owner, assumes the risk of destruction of or injury
to the property where he is in possession, and the destruction or loss is not proximately
caused by the negligence of the vendor.” Id. (emphasis added). The vendee in
possession was therefore not relieved of his obligation to continue making payments
according to the terms of the contract, despite material loss by fire to some of the
improvements on the property. ... Those jurisdictions that indiscriminately include the
risk of casualty loss among the incidents or “attributes" of equitable ownership do so
largely in reliance on ancient authority or by considering it necessary for consistent
application of the theory of equitable conversion. Under virtually any accepted
understanding of the theory, however, equitable conversion is not viewed as entitling
the purchaser to every significant right of ownership, and particularly not the right of
possession. As a matter of both logic and equity, the obligation to maintain property
in its physical condition follows the right to have actual possession and control rather
than a legal right to force conveyance of the property through specific performance at
some future date. See 17 SAMUEL WILLISTON, A TREATISE ON THE LAW OF
CONTRACTS § 50:46, at 457-58 (Richard A. Lord ed., 4th ed. 1990) (“[I]t is wiser to
have the party in possession of the property care for it at his peril, rather than at the
peril of another.”).
The equitable conversion theory is literally stood on its head by imposing on a vendee,
solely because of his right to specific performance, the risk that the vendor will be
unable to specifically perform when the time comes because of an accidental casualty
loss. It is counterintuitive, at the very least, that merely contracting for the sale of real
property should not only relieve the vendor of his responsibility to maintain the
property until execution but also impose a duty on the vendee to perform despite the
intervention of a material, no-fault casualty loss preventing him from ever receiving the
benefit of his bargain. Such an extension of the theory of equitable conversion to
casualty loss has never been recognized by this jurisdiction, and it is neither necessary
nor justified solely for the sake of consistency.

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By contrast, there is substantial justification, both as a matter of law and policy, for not
relieving a vendee who is entitled to possession before transfer of title, like the vendee
in Wiley, of his duty to pay the full contract price, notwithstanding an accidental loss.
In addition to having control over the property and being entitled to the benefits of its
use, an equitable owner who also has the right of possession has already acquired
virtually all of the rights of ownership and almost invariably will have already paid at
least some portion of the contract price to exercise those rights. By expressly including
in the contract for sale the right of possession, which otherwise generally accompanies
transfer of title, the vendor has for all practical purposes already transferred the
property as promised, and the parties have in effect expressed their joint intention that
the vendee pay the purchase price as promised. ...
In the absence of a right of possession, a vendee of real property that suffers a material
casualty loss during the executory period of the contract, through no fault of his own,
must be permitted to rescind and recover any payments he had already made. ...
Here, Brush was clearly not in possession of the property as the equitable owner. Even
if the doctrine of equitable conversion applies to the option contract between Brush
and Sure Fine and could be said to have converted Brush’s interest to an equitable
ownership of the property at the time Brush exercised its option to purchase, neither
party considered the contract for sale to entitle Brush to possession. Brush was, in fact,
not in possession of the property, and the record indicates that Sure Fine considered
itself to hold the right of use and occupancy and gave notice that it would consider
Brush a holdover tenant if it continued to occupy the premises other than by
continuing to lease the property. The casualty loss was ascertainable and in fact
stipulated by the parties, and neither party challenged the district court’s enforcement
of the contract except with regard to its allocation of the casualty loss. Both the court
of appeals and the district court therefore erred in finding that the doctrine of equitable
conversion required Brush to bear the loss caused by hail damage.
Notes and Questions
1. Why is the risk of loss during the executory period even a thing? Why would
the parties leave time between signing a contract of sale and closing? Why not
just hand over a deed on the spot?

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2. If the grocery store had been damaged by hail during the five-year lease
preceding the sale, who would have borne the risk of loss? Would it matter
whether Brush had taken possession of the property? Who bears the risk of loss
if Brush owns a grocery store subject to Sure Fine’s mortgage? Does it matter
whether Colorado follows the title or lien theory of mortgages?

Mortgages and Foreclosures
A. Introduction: What is a Mortgage?
A mortgage is an interest in land. It is not a possessory or usufructary interest: the
owner of a mortgage has no right to enter or use the property, the way the owner of
the fee or an easement owner would. Instead, mortgages exist to secure loans. A
secured loan is backed, or “secured,” by a specific asset such as a house or a car, which
the lender can seize in case of default. An unsecured loan is not secured by any specific
asset—for example, credit card debt and student loans are unsecured. The borrower
owes the money, and the lender can go after the borrower’s unsecured assets in case
of default, but if those assets are too small, the unsecured lender is out of luck. Secured
loans are generally considered less risky than unsecured loans, for obvious reasons, and
should bear lower interest rates (absent some foolery on the part of the lender or
government intervention into the market, both of which do happen).
Most mortgages are residential mortgages. Usually, homebuyers in the U.S. can’t afford
to pay the entire purchase price of a house at the time they buy it. Instead, they take
out a loan—a mortgage—to pay the bulk of the purchase price. They will sign a
promissory note (the note) that creates personal liability for the borrowers if they fail
to pay, and also sets out the terms of the mortgage such as the repayment period and
the interest rate. They will also sign a mortgage, a written instrument that grants the
lender an interest in their newly purchased land. Usually, this transaction occurs at the
time the buyers buy the land, though mortgages can also be refinanced or taken out on
already-owned property.
The homebuyers are the mortgagors. The lender is the mortgagee. Over time, the buyers
pay off the loan. As they pay off the loan, they build “equity” in their homes. Equity
is the difference between what a home is worth and what the homeowners owe on
their mortgage. 1 As a result of deliberate policy choices, the model residential mortgage
in the U.S. is for no more than 80% of the value of the house at time of purchase; has
1 This terminology has a historical basis in the “equity of redemption,” which was a means by which early

chancellors protected early mortgagors from abuses by lenders. Over time, the equitable procedures created by
courts gave way to legislation establishing rules for how foreclosures could occur.

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a fixed interest rate; and amortizes over a period of years, usually twenty or thirty.
Amortization means that the payments are the same throughout the period of the
mortgage: at the beginning, most of the payments go to interest on the loan, while over
time more and more of the payments go to reduce the loan principal.
The mortgagors can transfer the land at will. However, any transfer will not free the
land from the mortgage (nor will a transfer free them from their contractual promise
to pay the debt); the mortgage runs with the land. Thus, a sensible transferee will not be
willing to pay full value for the land—the fair market value of the land is reduced by
the amount of the mortgage. A transferee can either take “subject to the mortgage,”
which means that the original mortgagors still owe the debt and the transferee is at risk
if they don’t pay, or “assuming the mortgage,” which means that the new owner agrees
to pay the mortgage directly. When the purchaser assumes the mortgage, the seller still
has a duty to pay the mortgage if the buyer doesn’t, but the seller can pursue the buyer
for reimbursement if that happens. However, this all risks some big messes; to avoid
problems associated with transfers, many mortgages have “due on sale” clauses, which
means that the full amount of the mortgage comes due (or “accelerates”) when the
mortgagor sells the property. One important feature of a due on sale clause is that it
enables lenders to reprice loans: if the interest rate has risen since the initial mortgage
loan, the buyer can’t just assume the existing loan and receive a lower interest rate than
would otherwise be available to him.
Suppose Joan Watson wants to sell her house to Sherlock Holmes. She still owes
$400,000 on her house; Holmes will be buying it for $500,000. But she doesn’t have
$400,000 in the bank to pay off her mortgage, which has a due on sale clause. How
can she accomplish the sale? The answer is that a series of transactions take place
together. The day of the sale, Holmes will give Watson a check for $500,000 (most of
which will likely come from Holmes’ own new mortgage on the property). Watson
will then pay her lender $400,000 and keep $100,000. As you can see, there will be
some time at which both Holmes and Watson are relying on the value of the underlying
property—Holmes to get his mortgage and Watson to pay hers off. For this reason,
real estate transactions regularly involve the use of multiple third parties, including
escrow agents, to facilitate and guarantee the sale.

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If the mortgagors default on the mortgage by failing to pay the appropriate amounts at
the appropriate times, the mortgagee can foreclose. Foreclosure can be timeconsuming and expensive, so in some circumstances the mortgagee may accept a “deed
in lieu of foreclosure,” by which the mortgagor surrenders the property to the
mortgagee and the mortgagee accepts the deed. However, deeds in lieu of foreclosure
are relatively rare; most of the time, if a default is not cured and the loan is not modified,
the result will be a foreclosure.
Either by a private sale (nonjudicial foreclosure) or under judicial supervision (judicial
foreclosure), the mortgagee can have the property sold and apply the proceeds of the
sale to the amount due on the note. The foreclosure is so called because it forecloses
the mortgagee’s ability to get the property back by paying off the mortgage debt; after
the foreclosure, it is too late to become current. 1
In a number of states, it is possible to avoid judicial foreclosure—which takes more
time and money than nonjudicial foreclosure—through the use of a “deed of trust,”
which is recognized in most jurisdictions. Under a deed of trust, the borrower conveys
title to the property to a person to hold in trust to secure the debt. If the borrower
defaults, the trustee has the power of sale without needing to go to court. However,
almost all states that allow this procedure do impose some procedural safeguards, such
as notice and public sale. Other than the ability to avoid judicial foreclosure, you can
expect a deed of trust to be treated like a mortgage.
In addition, there are two different types of secured loans: recourse and nonrecourse
loans. For a nonrecourse loan, the only way the lender can get its money back in case
of default is by seizing the asset, and if there’s not enough money to satisfy the debt
from the asset, too bad for the lender. The lender has no “recourse” against any of the
borrower’s other assets. A recourse loan is different: in case of default, the lender can
seize and sell the asset, and if there’s not enough money to satisfy the debt, the lender

1 At common law, the equity of redemption allowed the mortgagor to redeem the property from the mortgagee.

This equity of redemption was extinguished by foreclosure sale. In about half of the states, there is also a statutory
right to redeem the property from the purchaser at a foreclosure sale for a certain period of time. This right is
rarely used, because most people would already have paid, if they could, before the sale.

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is now an unsecured creditor for the remaining balance (the deficiency) and can go
after any of the borrower’s other assets, such as her bank account. Foreclosure wipes
out the lender’s interest in the land, which means that the land can then be resold free
of the lender’s interest. However, with a recourse loan, foreclosure will not wipe out
the borrower’s debt, if it is greater than the foreclosure sale amount.
Obviously, lenders ordinarily prefer recourse loans, but will grant nonrecourse loans in
various circumstances. 1 Many businesses can get nonrecourse loans based on their
assets. Some states bar deficiency judgments for residential mortgages, which makes
them nonrecourse loans. Other states bar deficiency judgments unless there is a judicial
foreclosure, with its greater expense and greater procedural protections for the
borrower. Still others limit the amount of any deficiency judgment to the difference
between the principal balance and the property’s fair market value at the time of
foreclosure—this limit recognizes that foreclosed properties often sell for below
market value for a variety of reasons, including buyers’ uncertainty about the true
condition of the property and the limited number of potential buyers who bid at
foreclosure sales. (Historically, the mortgagee is often the only bidder at a foreclosure
sale. Why would this be true?)
Even states that allow deficiency judgments generally recognize an exception: if the sale
price shocks the conscience, then a deficiency judgment may not be allowed. More
generally, even in the absence of a potential deficiency judgment, the foreclosing entity
has a limited duty of good faith to the mortgagor in seeking an acceptable price at the
sale. However, mere inadequacy of price will not invalidate a sale in the absence of
fraud, unfairness, or procedural problems that deterred bidding. As a result, very low
sale prices are sometimes accepted by courts. Compare Moeller v. Lien, 30 Cal. Rptr. 2d
777 (Ct. App. 1994) (sale at 25% of market value was acceptable where sale was to
bona fide purchaser and there was no irregularity in the sale procedure), with Murphy

1 In fact, the basic idea of a corporation is a way of limiting a lender’s recourse: before the corporate form, if a

business owner went bust, creditors could go after the owner’s personal assets until they were gone. The
corporation allows shareholders/owners to limit their liability to the extent of the corporation’s assets. If a
person owned shares of Lehman Brothers, its creditors could make her shares worthless, but they couldn’t make
her pay Lehman Brothers’ debts.

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v. Fin. Dev. Corp., 495 A.2d 1245 (N.H. 1985) (finding that mortgagee violated duty
to mortgagor when (1) sale was rescheduled and poorly advertised, (2) sale price was
so low that it wiped out substantial equity for homeowners, and (3) mortgagee quickly
resold property at substantially higher price).
One final introductory point: it is possible to take out a second and even a third
mortgage. The first mortgage has “priority” over the second mortgage: it will be paid
first at foreclosure. Only if there is money remaining after the first mortgage is paid
off in full will the holder of the second mortgage be paid. As a result of the greater
risk involved in second mortgages, they generally bear higher interest rates than first
mortgages.
Problem
Betty Finn buys a house for $450,000. She puts down $90,000 and takes out a
mortgage for $250,000 from Heather Chandler, and a second mortgage for
$110,000 from Veronica Sawyer. When Betty defaults, the house is sold for
$500,000 at foreclosure. Assuming the amounts due on the mortgages haven’t
changed at all, how should the proceeds be distributed? What would the answer
be if the house brought $350,000 at foreclosure?

B. Crystals and Mud in Property Law
We have skimped on the history of mortgage law, which is a long struggle between
creditors and debtors. Mostly, legislatures and courts act to protect debtors, who are
usually seen as the more vulnerable parties, from sharp dealing by creditors. As rules
stretch to be more equitable and less hard-edged, pressure grows to create new clear
rules, which then grow their own exceptions and qualifications.
Carol Rose describes the legal seesawing in the following excerpt, which has important
lessons for property law generally:

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Carol M. Rose, Crystals And Mud In Property Law
40 STAN. L. REV. 577 (1988) (excerpts reprinted by permission)
Property law, and especially the common law of property, has always been heavily laden
with hard-edged doctrines that tell everyone exactly where they stand. Default on
paying your loan installments? Too bad, you lose the thing you bought and your past
payments as well. Forget to record your deed? Sorry, the next buyer can purchase free
of your claim, and you are out on the street. Sell that house with the leak in the
basement? Lucky you, you can unload the place without having to tell the buyer about
such things at all.
In a sense, hard-edged rules like these—rules that I call ‘crystals’—are what property is
all about. If, as Jeremy Bentham said long ago, property is ‘nothing but a basis of
expectation,’ then crystal rules are the very stuff of property: their great advantage, or
so it is commonly thought, is that they signal to all of us, in a clear and distinct language,
precisely what our obligations are and how we may take care of our interests. Thus, I
should inspect the property, record my deed, and make my payments if I don’t want to
lose my home to unexpected physical, legal, or financial impairments. I know where I
stand and so does everyone else, and we can all strike bargains with each other if we
want to stand somewhere else.
Economic thinkers have been telling us for at least two centuries that the more
important a given kind of thing becomes for us, the more likely we are to have these
hard-edged rules to manage it. We draw these ever-sharper lines around our
entitlements so that we know who has what, and so that we can trade instead of getting
into the confusions and disputes that would only escalate as the goods in question
became scarcer and more highly valued.
At the root of these economic analyses lies the perception that it costs something to
establish clear entitlements to things, and we won’t bother to undertake the task of
removing goods from an ownerless ‘commons’ unless it is worth it to us to do so. What
makes it worth it? Increasing scarcity of the resource, and the attendant conflicts over
it. To use the example given by Harold Demsetz, one of the most notable of the
modern economists telling this story, when the European demand for fur hats

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increased demand for (and scarcity of) fur-bearing animals among Indian hunters, the
Indians developed a system of property entitlements to the animal habitat. Economic
historians of the American West tell a similar story about the development of property
rights in various minerals and natural resources. Easy-going, anything-goes patterns of
appropriation at the outset came under pressure as competition for resources increased,
and were finally superseded by much more sharply defined systems of entitlement. In
effect, as our competition for a resource raises the costs of conflict about it, those
conflict costs begin to outweigh the costs of taking it out of the commons and
establishing clear property entitlements. We establish a system of clear entitlements so
that we can barter and trade for what we want instead of fighting.
The trouble with this ‘scarcity story’ is that things don’t seem to work this way, or at
least not all the time. Sometimes we seem to substitute fuzzy, ambiguous rules of
decision for what seem to be perfectly clear, open and shut, demarcations of
entitlements. I call this occurrence the substitution of ‘mud’ rules for ‘crystal’ ones.
Thus, … over time, the straightforward common law crystalline rules have been
muddied repeatedly by exceptions and equitable second-guessing, to the point that the
various claimants under real estate contracts, mortgages, or recorded deeds don’t know
quite what their rights and obligations really are. And the same pattern has occurred in
other areas too. …
Quite aside from the wealth transfer that may accompany a change in the rules, then,
the change may sharply alter the clarity of the relationship between the parties. But a
move to the uncertainty of mud seems disruptive to the very practice of a private
property/contractual exchange society. Thus, it is hardly surprising that we individually
and collectively attempt to clear up the mud with new crystal rules—as when private
parties contract out of ambiguous warranties, or when legislatures pass new versions
of crystalline record systems—only to be overruled later, when courts once again
reinstate mud in a different form.…
Early common law mortgages were very crystalline indeed. They had the look of
pawnshop transactions and were at least sometimes structured as conveyances: I
borrow money from you, and at the same time I convey my land to you as security for

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my loan. If all goes well, I pay back my debt on the agreed ‘law day,’ and you reconvey
my land back to me. But if all does not go well and I cannot pay on the appointed day,
then, no matter how heartrending my excuse, I lose my land to you and, presumably,
any of the previous payments I might have made. As the fifteenth century commentator
Littleton airily explained, the name ‘mortgage’ derived from the rule that, if the debtor
‘doth not pay, then the land which he puts in pledge … is gone from him for ever, and
so dead.’
This system had the advantage of great clarity, but it sometimes must have seemed very
hard on mortgage debtors to the advantage of scoundrelly creditors. Littleton’s advice
about the importance of specifying the precise place and time for repayment, for
example, conjures up images of a wily creditor hiding in the woods on the repayment
day to frustrate repayment; presumably, the unfound creditor could keep the property.
But by the seventeenth century, the intervention of courts of equity had changed things.
By the eighteenth and nineteenth centuries, the equity courts were regularly giving
debtors as many as three or four ‘enlargements’ of the time in which they might pay
and redeem the property before the final ‘foreclosure,’ even when the excuse was lame.
One judge explained that an equity court might well grant more time even after the
‘final’ order of ‘foreclosure absolute,’ depending on the particular circumstances.
The muddiness of this emerging judicial remedy argued against its attractiveness. Chief
Justice Hale complained in 1672 that, ‘[b]y the growth of Equity on Equity, the Heart
of the Common Law is eaten out, and legal Settlements are destroyed; . . . as far as the
Line is given, Man will go; and if an hundred Years are given, Man will go so far, and
we know not whither we shall go.’ Instead of a precise and clear allocation of
entitlements between the parties, the ‘equity of redemption’ and its unpredictable
foreclosure opened up vexing questions and uncertainties: How much time should the
debtor have for repayment before the equitable arguments shifted to favor the creditor?
What sort of excuses did the debtor need? Did it matter that the property, instead of
dropping in the lap of the creditor, was sold at a foreclosure sale?
But as the courts moved towards muddiness, private parties attempted to bargain their
way out of these costly uncertainties and to reinstate a crystalline pattern whereby
lenders could get the property immediately upon default without the costs of

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foreclosure. How about a separate deal with the borrower, for example, whereby he
agrees to convey an equitable interest to the lender in case of default? Nothing doing,
said the courts, including the United States Supreme Court, which in 1878 stated flatly
that a mortgagor could not initially bargain away his ‘equity of redemption.’ Well, then,
how about an arrangement whereby it looks as if the lender already owns the land, and
the ‘borrower’ only gets title if he lives up to his agreement to pay for it by a certain
time? This seemed more promising: In the 1890s California courts thought it perfectly
correct to hold the buyer to his word in such an arrangement, and to give him neither
an extension nor a refund of past payments. By the 1960s, however, they were changing
their minds about these ‘installment land contracts.’ After all, these deals really had
exactly the same effect as the old-style mortgages—the defaulting buyer could lose
everything if he missed a payment, even the very last payment. Human vice and error
seemed to put the crystal rule in jeopardy: In a series of cases culminating with a default
by a ‘willful but repentant’ little old lady who had stopped paying when she mistakenly
thought that she was being cheated, the California Supreme Court decided to treat
these land contracts as mortgages in disguise. It gave the borrower ‘relief from
forfeiture’—a time to reinstate the installment contract or get back her past payments.
With mortgages first and mortgage substitutes later, we see a back-and-forth pattern:
crisp definition of entitlements, made fuzzy by accretions of judicial decisions, crisped
up again by the parties’ contractual arrangements, and once again made fuzzy by the
courts. Here we see private parties apparently following the ‘scarcity story’ in their
private law arrangements: when things matter, the parties define their respective
entitlements with ever sharper precision. Yet the courts seem at times unwilling to
follow this story or to permit these crystalline definitions, most particularly when the
rules hurt one party very badly. The cycle thus alternates between crystal and mud.
Notes and Questions
1. Bear in mind that crystals don’t just help lenders, and mud doesn’t just help
borrowers. It all depends on the particulars of the situation. In fact, as you read
the materials, consider whether insistence on hard-edged rules might aid
borrowers under today’s circumstances, and whether this would be justified.

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2. Carol Rose later describes the situations in which courts muddy crystalline rules
as cases involving “ninnies, hard-luck cases, and the occasional scoundrels who
take advantage of them.” As you read through the rest of this chapter, consider
whether that is a fair characterization of the parties to the various disputes we
will be studying.

C. The Rise of Mortgage Securitization and the Global
Financial Crisis of 2008
In 2008 the world entered into a global financial crisis that proved to be the worst since
the Great Depression of the 1930s. The Global Financial Crisis had many causes, but
certainly one precipitating factor was a high default rate in the U.S. home mortgage
sector, especially mortgages known as subprime mortgages. Several large financial
institutions, and possibly the entire world economic system, were on the brink of
collapse in 2008. In the U.S. and many other countries, this collapse was only prevented
by massive bailouts. In the wake of the crisis, stock markets “plunged”, the housing
market “tanked” and evictions, foreclosures, and unemployment rose. How exactly did
all this happen? And what did it have to do with the humdrum world of residential
mortgages?
Adam J. Levitin, The Paper Chase: Securitization, Foreclosure,

and the Uncertainty of Mortgage Title

63 DUKE L.J. 637 (2013) (excerpts reprinted by permission)
… II. THE SHIFT IN MORTGAGE FINANCING TO SECURITIZATION
Securitization is a relatively recent development in residential mortgage lending.
Residential mortgages began to be securitized in 1970, but securitization remained a
relatively small part of American housing finance prior to the 1980s. In 1979 only 10
percent of outstanding mortgages by dollar amount were securitized. Instead, mortgage
lending was primarily a local aﬀair … so mortgage loans were rarely transferred.

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… By 1983, 20 percent of outstanding mortgages by dollar amount were securitized,
and a decade later fully half of outstanding mortgages by dollar amount were securitized.
Today nearly two-thirds of mortgage dollars outstanding are securitized.
A firm can raise funds on potentially more advantageous terms if it can borrow solely
against its assets, not its assets and liabilities. Securitization enabled such borrowing.
To do so, a firm sells assets to a legally separate, specially created entity. The legally
separate entity pays for the assets by issuing debt. Because the entity is designed to have
almost no other liabilities, the debt it issues will be priced simply on the quality of the
transferred assets, without any concern about competing claims to those assets.
Therefore, ensuring that the assets are transferred and are free of competing claims is
central to securitization.
Although residential-mortgage securitization transactions are complex and vary
somewhat depending on the type of entity undertaking the securitization, there is still
a core standard transaction. First, a financial institution (the “sponsor” or “seller”)
assembles a pool of mortgage loans either made (“originated”) by an aﬃliate of the
financial institution or purchased from unaﬃliated third-party originators. Second, the
pool of loans is sold by the sponsor to a special-purpose subsidiary (the “depositor”)
that has no other assets or liabilities and is little more than a legal entity with a mailbox.
This is done to segregate the loans from the sponsor’s assets and liabilities. Third, the
depositor sells the loans to a passive, specially created, single-purpose vehicle (SPV),
typically a trust in the case of residential-mortgage securitization. The trustee will then
typically convey the mortgage notes and security instruments to a document custodian
for safekeeping. The SPV issues certificated debt securities to raise the funds to pay for
the loans. As these debt securities are backed by the cash flow from the mortgages,
they are called mortgage-backed securities (MBS). …
Notes and Questions
1. You may not feel that you fully understand securitization. It will get clearer with
time. Perhaps the most important thing to understand is that the entity that
claims to own, and tries to enforce, the mortgage debt in case of default is
usually not the entity that originated the loan. It’s common to discuss “banks”

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and “lenders” without paying much attention to the details of the actual
mortgage transactions, and the problem is worsened because the entities
involved are often related and even bear highly similar names. But lawyers often
need more precision.
2. Among other things, non-originator owners can claim that equitable defenses—
such as fraudulent inducement, which was unconscionably common in the runup to the mortgage crisis—are unavailable to homeowners/mortgagors under
the “holder in due course” doctrine. The holder in due course doctrine is similar
to the rule, discussed in O’Keeffe v. Snyder, that a good faith purchaser who buys
property from a fraudster acquires good title, even though the fraudster did not
have good title. With a mortgage, that means that a homeowner who was
deceived into taking a predatory loan, as discussed in the next section, is still
bound to pay back the loan according to its terms as long as the mortgage was
transferred to a holder in due course. See, e.g., Kurt Eggert, Held Up in Due
Course: Predatory Lending, Securitization, and the Holder-in-Due-Course Doctrine, 35
CREIGHTON L. REV. 502 (2002). Recently, some reforms have attempted to
limit the holder in due course doctrine, at least with respect to loans with
specific bad features.
3. Another important thing to understand about securitization is that it involves
the creation of new property rights from old. Investors in mortgage-backed
securities do not own individual mortgages. Rather, they own the right to
benefit from the stream of payments from mortgagors to the trusts that hold
the mortgages. This right has been turned into a separate property right through
the magic of securitization. But the value of this right is still, as investors
discovered to their sorrow, dependent on the value of the underlying assets.

D. Redlining
For much of the 20th century in the United States, many private lenders refused to
extend mortgage credit—and federal agencies refused to extend or insure mortgage
loans—on the basis of the racial composition of the neighborhood in which the

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mortgaged property was located. Community activists in the Austin neighborhood of
Chicago coined the term “redlining” in the 1960s to describe the phenomenon:
Savings and loan associations, at the time the primary source of
residential mortgages, drew red lines around neighborhoods they
thought were susceptible to racial change and refused to make mortgages
in those neighborhoods. Using the U.S. Department of Housing and
Urban Development (HUD) appraisal methodology developed by
Homer Hoyt from the University of Chicago, these lending institutions
considered racially changing neighborhoods a bad credit risk because
they assumed property values would decline. By extension,
neighborhoods that were not racially changing but in close proximity to
racially changing neighborhoods were labeled unstable and redlined. The
resulting limitations on the availability of residential credit became a selffulfilling prophecy as residents found it difficult to get a fair market price
for their homes.
Jean Pogge, Reinvestment in Chicago Neighborhoods: A Twenty-Year Struggle, in FROM
REDLINING TO REINVESTMENT: COMMUNITY RESPONSES TO URBAN
DISINVESTMENT 133, 134 (Gregory Squires ed., Temple University Press 2011). As we
will see, redlining and the foreclosure crisis of 2008 are connected.

1. Redlining’s History
The term “redlining” refers to the practice of lenders, insurers, and government
agencies of drawing literal red lines on city maps around neighborhoods that were
collectively deemed an unacceptable credit risk. This “location-based” discrimination is
distinct from discrimination against particular individuals on the basis of race, though
the two forms of discrimination often go hand in hand.
In the 1980s, historian Kenneth Jackson showed that the practice of redlining could be
traced back at least as far as the Home Owners Loan Corporation (HOLC), a federal
agency created in 1933 to help stem the tide of foreclosures generated by the Great
Depression. Kenneth T. Jackson, Race, Ethnicity, and Real Estate Appraisal: The Home
Owners Loan Corporation and the Federal Housing Administration, 6 J. URB. HIST. 419 (1980).

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HOLC was largely responsible for introducing and popularizing the type of federallybacked, fully-amortized, long-term residential mortgage loan that is now the norm in
the United States. But it also helped to systematize and institutionalize the appraisal
theories and methods that gave rise to redlining, even creating what can now be
recognized as the earliest extant redlined maps: HOLC’s “Residential Security Maps,”
such as the maps of Chicago shown below.

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The University of Richmond Digital Scholarship Lab’s “Mapping Inequality” project
has recently digitized HOLC’s maps and reports, converted them into standardized
geographical data formats, and made the results available on their website:
https://dsl.richmond.edu/panorama/redlining/. The project’s authors explain how
HOLC’s appraisal methods worked in practice:
Neighborhoods receiving the highest grade of “A”—colored green on
the maps—were deemed minimal risks for banks and other mortgage
lenders when they were determining who should receive loans and which
areas in the city were safe investments. Those receiving the lowest grade
of “D,” colored red, were considered “hazardous.” Conservative,
responsible lenders, in HOLC judgment, would “refuse to make loans

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in these areas [or] only on a conservative basis.” HOLC created area
descriptions to help to organize the data they used to assign the grades.
Among that information was the neighborhood’s quality of housing, the
recent history of sale and rent values, and, crucially, the racial and ethnic
identity and class of residents that served as the basis of the
neighborhood’s grade. These maps and their accompanying
documentation helped set the rules for nearly a century of real estate
practice.
Robert K. Nelson, LaDale Winling, Richard Marciano, Nathan Connolly, et al.,
“Mapping Inequality,” American Panorama, ed. Robert K. Nelson and Edward L.
Ayers, available at https://dsl.richmond.edu/panorama/redlining [CC-BY-NC-SA
4.0].
Historians and sociologists have long argued over whether the HOLC maps were a
cause of redlining, or were instead a symptom of the prevailing theories of real estate value
that were widespread at the time that HOLC was created. The answer is probably a bit
of both. HOLC certainly did not invent the practice of valuing real estate on the basis
of the racial makeup of the neighborhood in which such real estate is located. For
example, a leading real estate appraisal textbook from the early 1930s was merely
restating conventional wisdom among real estate professionals when it said that “racial
heritage and tendencies seem to be of paramount importance” in influencing land
values, and that “there is one difference in people, namely race, which can result in a
very rapid decline [in real estate values, which] can be partially avoided by segregation.”
FREDERICK M. BABCOCK, THE VALUATION OF REAL ESTATE 86, 91 (1932). And
indeed, HOLC itself did not even engage in redlining, insofar as it actually did most of
its lending in areas it designated “declining” or “hazardous.” However, as Jackson
argued in his influential book, CRABGRASS FRONTIER: THE SUBURBANIZATION OF
THE UNITED STATES 199 (1985), HOLC and its parent agency, the Federal Home Loan
Bank Board (FHLBB), “applied these notions of ethnic and racial worth to real-estate
appraising on an unprecedented scale,” hiring and training armies of appraisers and
analysts to use these racial theories of neighborhood value in mapping out and
categorizing nearly every residential parcel in over 200 American cities. Those
professionals, the procedures they developed, and the maps they prepared, influenced

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private mortgage lenders as well as another New Deal agency of more lasting
importance: the Federal Housing Administration (FHA), created in 1934.
FHA—which still exists today as a division of the department of Housing and Urban
Development—plays an outsize role in the American residential mortgage market.
FHA does not itself extend mortgage credit, but instead insures private mortgage loans
that meet certain criteria. This mitigates the risk to lenders by allowing them to
purchase insurance—backed by the full weight of the federal treasury—against losses
arising from non-repayment of residential mortgage loans they originate. Such risk
reduction, in turn, encourages more lending at lower prices, expanding access to
mortgage credit. In order to qualify for FHA insurance, a mortgage loan must meet
certain underwriting criteria designed by the agency to keep the risk of loss on any
given insured loan within acceptable ranges. The strong demand for FHA insurance
among mortgage lenders means that the agency’s underwriting criteria exert
tremendous influence on the availability (and cost) of residential mortgage loans in the
private market.
FHA’s underwriting criteria are collected in a series of manuals for appraisers, the
earliest of which were prepared in large part by Frederick Babcock (who wrote the 1932
textbook quoted above, and was an early head of FHA’s underwriting division). From
its inception, FHA included neighborhood racial characteristics among its criteria for
insurability. The agency’s manual for 1936 allocated 20% of its location risk rating
points to “Protection from Adverse Influences.” Among those adverse influences were
“infiltration of business and industrial uses, lower-class occupancy, and inharmonious
racial groups.” FHA, UNDERWRITING MANUAL § 229 (1936). With respect to the latter,
the agency instructed as follows:
The Valuator should investigate areas surrounding the location to
determine whether or not incompatible racial and social groups are
present, to the end that an intelligent prediction may be made regarding
the possibility or probability of the location being invaded by such
groups. If a neighborhood is to retain stability it is necessary that
properties shall continue to be occupied by the same social and racial
classes. A change in social or racial occupancy generally leads to

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instability and a reduction in values…. Once the character of a
neighborhood has been established it is usually impossible to induce a
higher social class than those already in the neighborhood to purchase
and occupy properties in its various locations.
Id. § 233. The head of FHA’s Division of Economics and Statistics instructed staff
members applying these criteria “to outline blocks with ‘a considerable number’ of
populations commonly associated with low real estate values, such as ‘Italians or Jews
in the lower income group,’ as well as those with 10 percent or more ‘negroes or race
other than white.’” Jennifer Light, Discriminating Appraisals: Cartography, Computation, and
Access to Federal Mortgage Insurance in the 1930s, 52 TECH. & CULTURE 485, 499 (2011),
quoting Homer Hoyt, Instructions for Dividing the City into Neighborhoods (n.d.). Staff
members were similarly encouraged to reflect local prejudices in downgrading
neighborhoods populated by immigrants of other disfavored national origins and their
descendants. See generally Jennifer S. Light, Nationality and Neighborhood Risk at the Origins
of FHA Underwriting, 36 J. URB. HIST. 634 (2010).
These FHA evaluations looked not only to current conditions but also to likely future
developments, on the theory that once a nonwhite resident entered a White
neighborhood the White residents would relocate to more homogeneously White
neighborhoods in an accelerating cascade—a phenomenon that came to be known as
“White Flight.” * Jackson notes that “In a March 1939 map of Brooklyn, for example,
the presence of a single, non-white family on any block was sufficient to mark that
entire block black.” JACKSON, CRABGRASS FRONTIER, supra, at 208-09. FHA’s theory
* In the mid-20th century, real estate speculators developed a practice of stoking fears of nonwhite neighbors and

falling property values among residents of homogeneously White neighborhoods in order to profit from changing
racial demographics. These speculators often spread rumors that Black families were moving in to a
neighborhood, hoping to induce White homeowners to sell their homes at a discount out of fear that if they
waited until the racial balance of their neighborhood had changed, they would have to accept an even lower price.
The speculators often snapped up the homes of these panicky White homeowners for cash and then resold the
homes to Black families at a substantial markup—often under onerous financing terms such as installment
contracts that Black families were compelled to accept because of their inability to access mortgage credit through
mainstream channels. This practice, known as “blockbusting,” accelerated so-called “white flight” from urban
neighborhoods to the suburbs from the late 1950s through the 1980s, and is unlawful under the Fair Housing
Act. See 42 U.S.C. § 3204(e); 24 C.F.R. § 100.85.

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of race and home values led it to recommend that deeds to parcels of residential real
estate include covenants “[p]rohibit[ing] of the occupancy of properties except by the
race for which they are intended.” FHA, Underwriting Manual § 284(3)(g) (1936). *
“There are striking similarities between the survey methods and questionnaires used
by FHA and FHLBB [HOLC’s parent agency], as well as their maps and grading system,
and it is hard to imagine that the two agencies were not working together.” Amy Hillier,
Redlining and the Homeowners’ Loan Corporation, 29 J. URBAN HIST. 394, 403 (2003). But
even though FHA clearly had access to HOLC’s maps, it also clearly conducted its own
independent analyses and even made maps of its own. Indeed, many private lenders of
the period were also using similar methods to generate similar maps—the predecessors
of the maps that became the focus of neighborhood activists in Chicago in the 1960s.
Thus, while the HOLC maps are a vivid illustration of the redlining era, and HOLC’s
institutionalization of race-based neighborhood appraisals did have consequences for
other players in the mortgage market, it seems that “HOLC was as much a follower as
a leader when it came to neighborhood appraisals.” Hillier, supra, at 412; see also Louis
Lee Woods, The Federal Home Loan Bank Board, Redlining, and the National Proliferation of
Racial Lending Discrimination, 1921–1950, 38 J. URB. HIST. 1036, 1038 (2012) (“While the
HOLC did not create racial and socioeconomic lending bias, it certainly helped
nationalize the practice.”).
Whether HOLC was a leader or a follower in tying real estate values and mortgage
availability to the race of neighborhood residents, there is no dispute that de jure
redlining was a real phenomenon, nor that the redlining era had a profound and lasting
effect on the housing stock of the United States, the density of its residential
neighborhoods, and the segregation of those neighborhoods on the basis of race. FHA
removed neighborhood racial characteristics from its underwriting criteria in 1966, and

* We will discuss these racially restrictive deed covenants, held unenforceable as unconstitutional by the Supreme

Court in Shelley v. Kraemer, 334 U.S. 1 (1948), in our unit on Restrictive Covenants. In general, they forbade any
owner of property subject to such a covenant from selling or leasing their property to anybody who was not
White and Christian. Some forbade anyone who was not White and Christian from using the property as a
residence, sometimes excepting domestic servants. Such covenants were—until Shelley was decided—enforceable
in an action by other property owners within the same community for injunctive relief.

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the use of racial criteria by any public or private residential mortgage lending institution
was rendered unlawful by the Fair Housing Act of 1968, but three decades of de jure
redlining had already reshaped the face of American residential neighborhoods. One
recent study found that the Black share of population in areas graded “D” on HOLC
maps grew from 1930 to 1970, as it did in areas graded “C” bordering areas graded “B,”
despite the fact that both “B” and “C” areas had virtually no Black residents prior to
the advent of HOLC and FHA (the authors refer to this phenomenon as “yellow-lining”
in reference to the yellow color-coding of “C”-graded areas on HOLC maps). Daniel
Aaronson et al., The Effects of the 1930s HOLC “Redlining” Maps, Federal Reserve Bank
of Chicago Working Paper Series No. WP 2017-12 (Feb. 2019), available at
http://hdl.handle.net/10419/200568. That same study showed that less favorable
HOLC rankings were correlated with falling homeownership rates, falling home values,
and rising vacancy rates during the same period, which the authors argue reflects
housing disinvestment in redlined and even “yellow-lined” neighborhoods. Id.

2. Redlining’s Lasting Impact
During the redlining era, neighborhoods where substantial numbers of nonwhite
people lived were often deemed categorically ineligible for FHA-insured loans. And
because federal insurance allowed lenders to offer credit more cheaply, this meant that
residents of predominantly White neighborhoods were able to borrow more easily and
cheaply to buy or improve their homes, while residents of racially mixed or majorityminority neighborhoods either paid more for mortgage credit or were not able to access
the mortgage market at all. In the latter case, those who wanted to buy homes in
redlined neighborhoods had to purchase under (often usurious) installment contracts
that carried high risks of default and forfeiture. This systematic deprivation of access
to mortgage credit and housing wealth over the course of decades has had long-term
consequences, both for individuals and, importantly, for neighborhoods.
Half a century after the FHA disavowed redlining, American residential communities
are still marked by substantial racial segregation. The degree of segregation across HOLC
boundaries does seem to have diminished somewhat in some areas since the advent of
the Fair Housing Act. See Aaronson et al, supra. But that does not mean there has been
broad racial residential integration. In many locations the neighborhood lines set down

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by HOLC in the late 1930s bear striking resemblances to boundaries of residential racial
segregation in the 21st century. One recent study found that in the aggregate, over 85%
of neighborhoods graded “A” in HOLC maps from the late 1930s were majority-White
neighborhoods in 2016, while approximately 64% of neighborhoods graded “D” in
those maps were majority-minority in 2016. See NCRC, HOLC “REDLINING” MAPS:
THE PERSISTENT STRUCTURE OF SEGREGATION AND ECONOMIC INEQUALITY
(March 20, 2018), available at https://perma.cc/Z2V5-2R39.
To visualize this persistence of residential racial segregation, consider the
following comparison of HOLC maps from the 1930s with Racial Dot Maps—
maps that represent individual residents with dots color-coded by census racial
classification—of the same areas in 2010:
LEGENDS

Sources:
Robert K. Nelson, LaDale Winling, Richard Marciano, Nathan Connolly, et al., “Mapping Inequality,” American Panorama, ed. Robert
K. Nelson and Edward L. Ayers, https://dsl.richmond.edu/panorama/redlining/ (CC-BY-NC-SA 4.0)
Racial Dot Maps, http://demographics.coopercenter.org/racial-dot-map/ Images Copyright, 2013, Weldon Cooper Center for Public
Service, Rector and Visitors of the University of Virginia (Dustin A. Cable, creator). Map data by OpenStreetMap, under CC-BY-SA.

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ST. LOUIS, MO

DETROIT, MI

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BROOKLYN, NY

DALLAS, TX

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DENVER, CO

OAKLAND, BERKELEY, & ALAMEDA, CA

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MINNEAPOLIS, MN

If the era of de jure redlining ostensibly ended no later than the passage of the federal
Fair Housing Act of 1968, why are residential communities largely segregated even now,
half a century later? Scholars have tended to coalesce around three overlapping
explanations. See generally Camille Zubrinsky Charles, The Dynamics of Racial Residential
Segregation, 2 ANN. REV. SOC. 167 (2003).
1. Racial Wealth Gaps and “Lock-In.” One explanation may arise from the
observation that decades of de jure discrimination and segregation rendered
Black home buyers as a group less wealthy than White home buyers as a group,
and resulted in systematic disparities in the value of housing stock in
neighborhoods where mainly nonwhite people lived relative to housing stock in
predominantly White neighborhoods. Since housing is a durable but
depreciating asset, over time the unequal allocation of credit and capital
investment generated a disparity of home values that correlated with
neighborhood racial demographics: predominantly white neighborhoods came
to be comprised of more valuable homes and wealthier homeowners than
racially mixed or majority-minority neighborhoods. See generally DOUGLAS
MASSEY & NANCY A. DENTON, AMERICAN APARTHEID: SEGREGATION AND
THE MAKING OF THE UNDERCLASS (1993).

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Even when de jure discrimination ostensibly ended, these consequences of its
history remained, and they would be difficult to change even if one were to
assume the absence of overt racial bias (by no means a safe assumption).
Because (1) wealthier people can afford and tend to prefer more expensive
homes, (2) wealth correlates with race, and (3) the value of homes correlates
with the racial demographics of the neighborhood in which those homes are
located, segregation may be, in a sense, “locked in”: Black homebuyers cannot
afford to buy into high-value predominantly White neighborhoods, and White
homebuyers can afford not to live in lower-value racially diverse or majorityminority neighborhoods, so segregation persists. See DARIA ROITHMAYR,
REPRODUCING RACISM 93-120 (2014).
This explanation, while theoretically sound and grounded in historical
experience, does not seem to be the whole story. While racial wealth and income
gaps are real, and can be traced in part to policy decisions of the redlining era,
empirical analysis suggests that these gaps are only a modest (though real)
contributor to the persistence of residential racial segregation. In particular,
wealth gaps alone do not explain observed levels of exclusion of Black
homeowners from predominantly White neighborhoods. See generally Kyle
Crowder et al., Wealth, Race, and Inter-Neighborhood Migration, 71 AM. SOC. REV.
72 (2006). Other, overlapping factors must also be playing a role.
2. Segregation as an Emergent Phenomenon. In the 1970s, the prominent
game theorist Thomas C. Schelling (whose insights about cooperation and
conflict had helped defuse the Cuban Missile Crisis and would later lead to his
being awarded the Nobel Prize in economics) developed a still-influential
mathematical model of segregation. See Thomas C. Schelling, Dynamic Models of
Segregation, 1 J. MATHEMATICAL SOC. 143 (1971). This model demonstrated
how large systematic discriminatory effects can emerge from the interaction of
uncoordinated, individual private choices. Moreover, such systematic effects
could arise and persist even where individual decisions are motivated by
preferences far milder than what we might consider overt racial animus or
hatred. The example Schelling gave was a preference not to live in a
neighborhood where one is part of a small racial minority:

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“Whites and blacks may not mind each other’s presence, may
even prefer integration, but may nevertheless wish to avoid
minority status. Except for a mixture at exactly 50:50, no mixture
will then be self-sustaining because there is none without a
minority, and if the minority evacuates, complete segregation
occurs. If both blacks and whites can tolerate minority status but
there is a limit to how small a minority the members of either
color are willing to be—for example, a 25% minority—initial
mixtures ranging from 25% to 75% will survive but initial
mixtures more extreme than that will lose their minority
members and become all of one color. And if those who leave
move to where they constitute a majority, they will increase the
majority there and may cause the other color to evacuate.
Evidently if there are lower limits to the minority status that
either color can tolerate, and if complete segregation obtains
initially, no individual will move to an area dominated by the
other color. Complete segregation is then a stable equilibrium.”
Simulations based on Schelling’s model demonstrate how segregation can
indeed emerge from such uncoordinated choices and entrench itself once
established. In particular, they demonstrate that if an environment is already
segregated, simply removing bias is not enough to desegregate it. You can try such
a simulation for yourself at: Vi Hart & Nicky Case, Parable of the Polygons,
https://ncase.me/polygons/. (This simulation also suggests that cultivating
widespread homeowner preferences against racial homogeneity may be one tool
to promote desegregation.)
3. Private Discrimination. Just as widespread invidious racial discrimination in
the allocation of housing and mortgage credit existed long before HOLC was
created, private discrimination did not magically disappear when the Fair
Housing Act was enacted. When the activists of Austin coined the term
“redlining,” they were referring to lines drawn on maps at their local, privately
owned savings and loan offices, not maps drawn by the federal government
(though there was a historical and causal relationship between the two).

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Sadly, even though the federal Fair Housing Act, analogous state and local laws,
and associated regulations have long forbidden various discriminatory
behaviors with respect to housing, such behaviors persist even today. For
example, an ambitious three-year investigation conducted by the newspaper
Long Island Newsday from 2016 to 2019 demonstrated that in the New York City
suburbs of Long Island, real estate agents regularly discriminated against
nonwhite house hunters compared to White house hunters. Notably, about a
quarter of the agents investigated steered White house hunters toward more
homogeneously White neighborhoods, while steering comparable nonwhite
house hunters toward more mixed or majority-minority neighborhoods. See
Ann Choi, Bill Dedman, Keith Herbert, & Olivia Winslow, Long Island Divided,
NEWSDAY (Arthur Browne ed. Nov. 17, 2019), available at
https://perma.cc/KG54-DLF3. Such steering is unlawful under the Fair
Housing Act and related regulations. See, e.g., 24 C.F.R. § 100.70(c). Nevertheless,
it clearly persists and—along with other forms of private discrimination—likely
contributes to the continued de facto racial segregation of residential
neighborhoods.

3. Overcoming the Legacy of Redlining
If we believe that racially segregated residential neighborhoods are a problem, what is
the solution? Consider the following proposals. Do you think they are likely to be
effective? Might they be counterproductive?
1. Racial Wealth Gaps and Reparations. If today’s racial wealth and income
gaps are indeed the product of past discrimination, can we count on these gaps
to close over time as people in formerly redlined neighborhoods take advantage
of economic opportunities now available to them? Is the problem simply that
not enough time has passed since the redlining era? Is “lock-in” a phenomenon
that might fade away if only we are patient enough?
If private housing discrimination were absent, and intergenerational social
mobility (defined as upward changes in income and wealth from one generation
to the next) were high, we might expect the passage of time to ameliorate racial

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wealth gaps and thereby reduce residential racial segregation. But as we have
seen, private housing discrimination persists even half a century after being
outlawed. And the latest research demonstrates that social mobility in the
United States is not only low, it is negatively correlated with segregation—people who
grow up in segregated neighborhoods are less likely to see generational increases
in income or wealth. See Raj Chetty et al., Where is the Land of Opportunity? The
Geography of Intergenerational Mobility in the United States, 129 Q. J. ECON. 1553,
1607-09 (2014) (“[B]oth blacks and whites living in areas with large African
American populations have lower rates of upward income mobility…. [and
m]ore racially segregated areas have less upward mobility.”) If this research is
right, and lock-in will not simply fade away, what more should be done?
As we discussed in our unit on Allocation, historical injustices whose effects are
felt in the present can be difficult to resolve through litigation. For this reason,
many have proposed broader programs of redistribution to address such
injustices, and the legacy of redlining is among the targets of such programs.
Indeed, the Ta-Nehisi Coates article cited after our discussion of Johnson v.
M’Intosh and Mabo’s Case cites redlining as its primary example of systematic
racial injustice in the United States that deprived Blacks of opportunities
afforded to Whites to build intergenerational wealth, calling out for reparations
as a remedy. Ta-Nehisi Coates, The Case for Reparations, THE ATLANTIC (June
2014), available at http://www.theatlantic.com/features/archive/2014/05/thecase-for-reparations/361631/.
2. Tackling Demand-Side Discrimination. If Schelling’s model of segregation
is correct, real estate professionals like those investigated by Newsday might
believe they have reasons to perpetuate continued residential segregation even
if those professionals privately deplore (or believe they deplore) segregation and
racial bias. For example, real estate agents might believe they are faithfully
catering to the odious preferences of their house hunting clients when they
preferentially direct White clients to homogeneously White neighborhoods, or
direct nonwhite clients to racially mixed or majority-minority neighborhoods.
That is, they may think that homebuyers generally prefer to live among people
who look like them.

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This belief may not be wrong! Consistent with the Schelling model, surveys find
that White people tend to express preferences to live in an area where Whites
are clearly in the majority, while nonwhites are more likely to express
preferences to live in areas where races are evenly mixed. See, e.g., W. A. V.
Clark, Residential Preferences and Neighborhood Racial Segregation: A Test of the Schelling
Segregation Model, 28 DEMOGRAPHY 1 (1991). Some house hunters might even
explicitly instruct their brokers about the racial demographics they are seeking
in a new neighborhood. But if real estate agents tailor housing searches to such
client preferences—even if the agents themselves abhor racial bias—they may
be contributing to continued residential racial segregation. Should professional
acquiescence to such discriminatory preferences on the part of house hunters
be unlawful?
Professor Lee Ann Fennell thinks so. See Lee Anne Fennell, Searching for Fair
Housing, 97 B.U. L. REV. 349 (2017). She argues that the law ought to treat such
home seekers’ preferences for segregated housing the same way it treats the
proverbial Mrs. Murphy’s desire to discriminate in her selection of boarders
(you’ll remember the “Mrs. Murphy exception” to the Fair Housing Act’s
prohibitions from our unit on Leasing Real Property). That is, she would allow
home seekers to ultimately decide to purchase a home based on the racial
demographics of the neighborhood in which the home is located, but she would
forbid them from publishing those preferences or communicating them to real
estate professionals, and would prohibit those professionals from soliciting or
complying with such client instructions. Id. at 395-403.
Professor Fennell’s proposal is—by her own admission—in tension with
current understandings of fair housing law. In particular, the Court of Appeals
for the Seventh Circuit has opined that real estate brokers who follow their
house-hunting customers’ instructions to limit their search based on the racial
composition of neighborhoods would not violate the Fair Housing Act, even if
the result is residential racial segregation, because such brokers would not
subject those customers to disparate treatment on the basis of race. Village of
Bellwood v. Dwivedi, 895 F.2d 1521, 1530-31 (7th Cir. 1990). In the court’s view,
the Fair Housing Act is designed to protect home buyers from discrimination,

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not to construct a less segregated society. So long as home buyers are not
subjected to disparate treatment, the court said, brokers ought not be held liable.
However, the same opinion affirmed that “a person who serves as a conduit for
another person’s discrimination can, it is true, be guilty of intentional
discrimination, or, what is the same thing, of disparate treatment. … And it is
actionable discrimination, regardless of its effects and notwithstanding the
merchant’s own freedom from racial animus.” Id. On this understanding of the
law, a seller who instructed a broker not to show their home to potential buyers
on the basis of race could still be held liable, as could a broker who complied
with such instructions, on grounds that the broker would be subjecting potential
buyers to disparate treatment on the basis of race.
Is the distinction drawn by the Village of Bellwood court consistent with the
justifications for the Mrs. Murphy exception? Is Professor Fennell’s proposal?
Do the justifications for the Mrs. Murphy exception apply to a homebuyer’s
selection of a neighborhood to live in?
3. Segregation vs. Gentrification. How might residential neighborhoods change
if more homeowners began valuing racial diversity among their neighbors as a
more important factor in deciding where to live? Given the persistent racial gaps
in wealth and income, and the correlation of housing values with the race of
neighborhood residents, how might such an increased preference for diversity
manifest itself in homeowner behaviors? Who will be in the best position to
choose to live in a more integrated neighborhood as demand for such
neighborhoods increases?
Recall our discussion of the problem of gentrification in our unit on Leasing
Real Property. The same dynamics that arise when wealthy tenants suddenly
begin leasing residences in a poorer neighborhood can arise when racially
diverse or majority-minority neighborhoods get an influx of new investment in
owner-occupied housing from White home buyers. So long as wealth and race
are correlated, and housing values tend to drive local costs of living, integrationby-gentrification may perversely have the effect of driving out nonwhite residents

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of diverse neighborhoods who can no longer afford to live there, ultimately
simply rearranging the boundary lines of racially segregated neighborhoods.
At least, integration-by-gentrification could have that effect. So far, empirical
evidence is somewhat mixed. Perhaps because displacement is likely to lag
gentrification, and because it is difficult to distinguish displacement (poorer,
nonwhite residents being forced out by richer, White newcomers) from
succession (poorer, nonwhite residents leaving at a normal rate and being
replaced by richer, White newcomers), researchers disagree on whether
displacement is happening at all in gentrifying neighborhoods, let alone the
extent to which it is a problem. For a literature review, see Miriam Zuk et al.,
Gentrification, Displacement, and the Role of Public Investment, 33 J. PLANNING LIT. 31,
36-39 & tbl. 2 (2018).
Setting aside the potential problem of displacement, are segregation and
gentrification our only options? Can you imagine a mechanism for residential
racial integration that doesn’t involve gentrification? If the problem is that race,
wealth, and neighborhood home values are correlated, is there any way to create
opportunities for poorer homeowners to move into more expensive
neighborhoods?
4. Creditworthiness and Community Investment. Like real estate agents who
believe they are satisfying their clients’ preferences, finance professionals
looking out for their institutions’ balance sheets might make decisions that have
the effect of perpetuating residential racial segregation, even if the professionals
themselves privately deplore (or believe they deplore) segregation and racial bias.
Because, as discussed above, the value of residential real estate in racially diverse
or majority-minority neighborhoods tends to be lower than the value of real
estate in predominantly White neighborhoods, lending officers might well
reason that loans secured by homes in racially diverse or majority-minority
neighborhoods are likelier to result in losses for the lender than loans secured
by real estate in predominantly White neighborhoods. A lending officer who
sincerely believed this could in good faith tell himself that it would be
irresponsible to extend credit secured by property in such neighborhoods. But

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writing off the credit needs of entire neighborhoods on the basis of such
generalizations can be expected to leave many otherwise creditworthy
borrowers without access to mortgage financing, based solely on the racial
demographics of the neighborhood where they live—exactly the harm caused
by de jure redlining.
To counteract this tendency, the Community Reinvestment Act of 1977
(“CRA”), 12 U.S.C. § 2901 et seq., was enacted to require financial institutions
to extend credit in all communities where they accept deposits—including lowand moderate-income neighborhoods—consistent with the “safe and sound”
operation of the institution. 12 U.S.C. § 2903(a)(1). The CRA and its
implementing regulations require federally regulated financial institutions to
report their lending activities to the federal agency that regulates them. The
agencies, in turn, must evaluate whether the reporting institutions are adequately
meeting the credit needs of the communities they serve, and publish their
evaluation accompanied by a rating of the institutions’ performance. In addition
to subjecting financial institutions to public scrutiny, these evaluations are also
used by federal regulators to determine whether the regulated institution should
be granted permission to expand by acquisition, merger, or the opening of new
branches and offices.

E. Predatory Lending
Along with the actors in the mortgage securitization chain described by Levitin, many
mortgage loans, particularly subprime loans, were made with the assistance of a
mortgage broker, who matched borrowers with lenders. As you will see, the broker’s
incentives did not line up with those of his or her borrower-clients. This led to many
vulnerable borrowers being taken advantage of, and victims were often targeted based
on their residence in the very same communities that had been subject to redlining.
The difference between the redlining era and the period leading up to the foreclosure
crisis is that instead of being denied mortgage credit, vulnerable communities were often
steered toward mortgage loans that were more expensive and less stable than other,
more traditional loans that they could have qualified for. This type of predatory lending
targeting minority communities has become known as “reverse redlining.”

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As you read the following case, focus on the elements that made these loans bad loans.
The discrimination is important, but so is how it was carried out. If you don’t
understand a loan provision, consider whether an average borrower would—and then
look it up!
McGlawn v. Pennsylvania Human Relations Commission
891 A.2d 757 (Commonwealth Ct. Penn. 2006)
This case involves an issue of first impression: whether the Pennsylvania Human
Relations Act (Act) extends to a mortgage broker’s predatory lending activities known
as “reverse redlining.” 2 We affirm the Commission’s holding that the Act prohibits
reverse redlining. However, we vacate part of the Commission’s award of actual
damages and remand for further proceedings.
Respondent McGlawn and McGlawn, Inc. (Broker) a state-licensed mortgage broker,
and Respondent Reginald McGlawn (Reginald McGlawn) petition for review of the
decision of the Pennsylvania Human Relations Commission (Commission). The
decision held Respondents violated Sections 5(h)(4)(loan provision) 3 and 5(h)(8)(i)(real
estate transaction provision) 4 of the Act by discriminating against Complainants and

2 In United Cos. Corp. v. Sargeant, 20 F.Supp.2d 192 (D.Mass.1998), the United States District Court defined

“redlining” as[:]
“the practice of denying the extension of credit to specific geographic areas due to the income,
race or ethnicity of its residents. The term was derived from the actual practice of drawing a
red line around certain areas in which credit would be denied. Reverse redlining is the practice
of extending credit on unfair terms to those same communities.”
3 Section 5(h)(4) of the Act, 43 P.S. § 955(h)(4), makes it unlawful to

“[d]iscriminate against any person in the terms or conditions of any loan of money, whether
or not secured by a mortgage or otherwise for the acquisition, construction, rehabilitation,
repair or maintenance of housing accommodation or commercial property because of …
race….”
4 Section 5(h)(8)(i) of the Act, 43 P.S. § 955(h)(8)(i), makes it an unlawful to[:]

“[d]iscriminate in real estate related transactions, as described by and subject to the following: (i)[i]t shall
be unlawful for any person or other entity whose business includes engaging in real estate-related

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other similar situated persons (collectively, Complainants), in mortgage loan
transactions, because of their race and the racial composition of their neighborhoods.
The Commission’s final order directed Respondents to (1) cease and desist from
discriminating against African Americans because of their race; (2) pay Complainants
actual damages; 6 (3) pay Complainants damages for embarrassment and humiliation; 7
and (4) pay a civil penalty of $25,000.00. Further, the Commission’s order directed
Broker to (5) provide employee training to its employees designed to educate them in
their responsibility to treat clients in a non-discriminatory manner consistent with the
provisions of the Act; and to (6) develop and implement a record-keeping system
designed to accurately record information about Broker’s charges in all mortgage
transactions. 8 The order also required Respondents to report the means of compliance
and directed the Commission to contact the Department of Banking so that it may take
such licensing action as it deemed appropriate.
I. BACKGROUND
A.
Broker, a corporation which brokers mortgage loans, refinancing and insurance for its
customers, was founded in 1985 by its chief officers, Reginald McGlawn, and his
brother, Anthony McGlawn. Reginald McGlawn is Broker’s mortgage loan specialist,

transactions to discriminate against any person in making available such a transaction or in the terms
[or] conditions of such a transaction because of race….”
6 The Commission awarded Complainants actual damages in these amounts: Taylor, $45,770.68; Poindexter,

$24,447.80; Brunson, $63,996.34; Jackson, $74,875.74; Slaughter, $29,685.46; Jacobs, $47,549.62; Hawkins,
$41,952.72; Miles, $101,562.81; Watts, $116,298.87; and Norwood, $154,209.11.
7 The Commission awarded Complainants damages for embarrassment and humiliation in the following amounts:

Taylor, $25,000.00; Poindexter, $15,000.00; Brunson, $15,000.00; Jackson, $20,000.00; Slaughter, $20,000.00;
Jacobs, $20,000.00; Hawkins, $20,000.00; Miles, $10,000.00; Watts, $20,000.00; and Norwood, $20,000.00.
8 In particular, Broker must accurately record the following data for each transaction: (a) the dollar amount and

percentage of the broker’s fee charged; (b) any other fees paid; (c) the amount and type of the loan; and (d) the
employee involved in the transaction. Broker shall submit this information to the Commission on a bi-annual
basis for three years.

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and Anthony McGlawn is Broker’s insurance specialist. Broker also employs other
McGlawn family members.
Broker specializes in arranging sub-prime mortgage loans for its customers. The prime
lending market provides credit to those considered good credit risks. The sub-prime
lending market provides credit to people the financial industry considers enhanced
credit risks. These people generally have a flawed credit history or a debt-to-income
ratio outside the range the financial industry considers acceptable for prime credit. As
discussed hereafter, sub-prime interest rates are usually two to three percentage points
higher than prime rates.
In 1998-2000, Broker arranged sub-prime mortgage loans for Complainants, who own
real property in Philadelphia County. Broker is an African American-owned company.
Complainants are African Americans who reside in predominantly African American
neighborhoods.
In April 2001, Complainant Lucrecia Taylor (Taylor) filed a verified complaint with the
Commission alleging Broker unlawfully discriminated against her in the terms and
conditions of a real estate-related transaction and loan of money because of her race
and the racial composition of her neighborhood, African American. Specifically, Taylor
alleged Broker targeted her, as an African American, for a mortgage loan transaction
containing predatory and unfair terms in violation of the Act’s loan and real estate
transaction provisions. Significantly, Taylor stated her allegations were made not only
on her own behalf, but on behalf of all other similarly situated persons affected by
Broker’s discriminatory practices. After the pleadings were closed, the Commission
notified Taylor and Broker that probable cause existed to credit Taylor’s allegations.
In August 2002, Complainant Lynn Poindexter (Poindexter) filed a like complaint
against Broker on behalf of herself and all other similarly situated persons. The
Commission subsequently found probable cause existed to credit Poindexter’s
allegations. The Commission consolidated the two cases….
The Commission was thereafter able to identify other individuals affected by Broker’s
alleged discriminatory practices….

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B.
In its decision, the Commission found Broker engaged in predatory brokering activities
regarding all Complainants. Those actions resulted in unfair and predatory mortgage
loans. It also found Broker engaged in an aggressive marketing plan targeting African
Americans and African American neighborhoods in the Philadelphia area. Nearly all of
Complainants contacted Broker in response to radio, television and newspaper
advertisements.
Broker’s predatory practices, the Commission noted, included arranging loans
containing onerous terms such as high interest rates, pre-payment penalties, balloon
payments and mandatory arbitration clauses. In addition, Broker charged
Complainants high broker fees, undisclosed fees, yield spread premiums and various
other additional closing costs. Broker’s predatory practices also included falsification
of information on loan documents, failure to disclose information regarding terms of
the loan, and high pressure sales tactics.
… The seminal case prohibiting reverse redlining is Hargraves v. Capital City Mortgage
Corp., 140 F.Supp.2d 7 (D.D.C.2000). There, the United States District Court adopted
a two-pronged test for discrimination under the FHA [Fair Housing Act] based on
reverse redlining. First, the plaintiffs must establish the defendant’s lending practices
and loan terms were predatory and unfair. Hargraves. Second, the plaintiffs must
establish that defendant intentionally targeted them because of their race or that the
defendant’s lending practices had a disparate impact on the basis of race.
Citing Hargraves and the opinions of Complainants’ experts, the Commission concluded
Complainants established a prima facie reverse redlining claim against Broker under
the Hargraves test. The Commission rejected Broker’s arguments that (1) it did not
discriminate because it did not arrange loans for non-African Americans on more
preferable terms, (2) it had a legitimate business necessity for its actions, (3) it is not
responsible for the terms and conditions of the loans or the disclosure of information
relating to the loans, and (4) all mortgage brokers are predators.

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As a result, the Commission held Respondents violated the loan provisions and the
real estate transaction provisions of the Act by unlawfully discriminating against
Complainants in the terms and conditions of real estate-related transactions… .
III. SUBSTANTIAL EVIDENCE
Respondents … assert the Commission’s conclusion Broker engaged in reverse
redlining is not supported by substantial evidence. 14 In particular, Respondents
maintain the evidence does not show Broker engaged in predatory lending practices or
targeted African Americans.
“It is well settled that the party asserting discrimination bears the burden of proving a
prima facie case of discrimination.” “Once a prima facie case is established, a rebuttable
presumption of discrimination arises.” “The burden then shifts to the defendant to
show some legitimate, nondiscriminatory reason for its action.” . . .
A. Predatory Lending
Respondents first argue Broker did not engage in predatory or unfair lending practices
because it did not approve Complainants’ loans or lend them the money. Therefore,
they were not responsible either for the terms and conditions of Complainants’ loans
or for the disclosure of information related to the loans. Those responsibilities belong
to the lending institutions that set the terms and approved the loans.
The Commission accepted the testimony of Complainants’ expert witnesses. Michelle
Lewis, President and Chief Executive Officer of Northwest Counseling Service, Inc.
(Complainants’ first expert), stated that a mortgage broker is significantly involved in
making the loan. The broker is the middleman who creates the loan opportunity. The
broker’s customer relies on the broker’s expertise in lending matters and has an
expectation that the broker will be able to obtain the best available deal.

“Substantial evidence is such relevant evidence as a reasonable mind might accept as adequate to support a
conclusion.” “Further, substantial evidence supporting a finding of racial discrimination may be circumstantial
and based on inferences.”
14

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The Commission also relied on Ira Goldstein, Director of Public Policy and Program
Assessment for the Reinvestment Fund (Complainants’ second expert), who testified
that, in brokered transactions, the broker’s customer--the borrower, never actually
meets the lender. As a result, in the borrower’s mind, the broker is the lender.
Complainants’ second expert also testified that in loan transactions where a yield spread
premium 17 is used, the broker plays a significant role in establishing the interest rate of
the loan.
As additional support for its determination, the Commission cited Reginald McGlawn’s
testimony. He testified, “[W]hen people come to us, I provide loans.” Reginald
McGlawn also testified he chooses which lender receives the borrower’s loan
application. He also stated he sets the broker fee and gives the borrower the option of
using a yield spread premium, which has the effect of increasing the interest rate.
1.
There is substantial evidence to support the Commission’s determination that
Respondents engaged in brokering activities that resulted in predatory and unfair loans.
… Broker’s activities were a substantial part of the loan transactions at issue. In
particular, Broker selected which lender received Complainants’ loan applications.
Broker was the sole negotiator for Complainants with the ultimate lender. Also, Broker
influenced the ultimate interest rates in loans involving yield spread premiums. Further,
Broker received substantial sums directly from loan proceeds, such as broker fees and
insurance premiums. As the Commission properly concluded, these items are
considered terms of a loan transaction….

17 In Taylor v. Flagstar Bank, FSB, 181 F.R.D. 509 (M.D.Ala.1998), the United States District Court defined

“yield spread premiums” as:
payments made by a mortgage lender to a mortgage broker on an “above par” loan brought
to the lender by the broker. To be “above par” is to be above the going rate, to be above the
lowest rate that a lender will offer without charging “discount points.” In crude terms,
therefore, the yield spread premium is (allegedly) simply a payment made by the lender to the
broker in return for the broker having brought the lender a high interest loan.

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2.
We next review the Commission’s determination that Respondents’ practices were
predatory and unfair. …
In finding Broker arranged predatory and unfair loans for Complainants, the
Commission applied the Hargraves definition of “predatory lending practices.” The
Hargraves Court stated predatory lending practices are indicated by loans with
unreasonably high interest rates and loans based on the value of the asset securing the
loan rather than the borrower’s capacity to repay it. The Court also recognized
predatory lending practices include “loan servicing procedures in which excessive fees
are charged.”
The Commission also noted the New Jersey Superior Court’s decision in Assocs. Home
Equity Servs., Inc. v. Troup, 343 N.J.Super. 254, 778 A.2d 529 (2001). The Troup Court
explained the term “predatory lenders” refers to those lenders who target certain
populations for credit on unfair or onerous terms. Characteristically, predatory loans
do not fit the borrower either because the borrower’s needs are not met or because the
terms are so onerous there is a strong likelihood the borrower will be unable to repay
the loan.
In determining what lending practices are predatory and unfair, the Commission also
accepted as credible Complainants’ experts opinions as to what constitutes a predatory
loan. Complainants’ first expert testified there are a number of loan features which are
characteristic of a predatory loan. They include high interest rates, paying off a low
interest mortgage with a high interest mortgage, payment of points, yield spread
premiums, high broker fees, undisclosed fees, balloon payments, pre-payment penalties,
arbitration clauses and fraud. A predatory and unfair loan may include any combination
of these characteristics.
Complainants’ second expert testified that, even assuming a borrower is an enhanced
credit risk, the difference in interest rates between a sub-prime and prime market loan
is usually no greater than three percentage points. Anything higher than a three-point
difference is indicative of a predatory loan. This expert also testified predatory loan
practices include, among other things: flipping (successive refinancing of the same

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loan); hiding critical terms, establishing loan terms the borrower cannot meet; packing
(including unnecessary products such as insurance policies); charging improper fees for
items outside the settlement sheet; creation of false documents; and failing to advise
borrowers of their rescission rights.
The Commission examined the terms of Complainants’ loans and their experiences
with Respondents in light of the foregoing. We briefly review the Commission’s
findings regarding Complainants Taylor and Poindexter.
Taylor. Taylor contacted Broker in October 2000 in order to obtain a refinancing loan
of $10,000.00 to make some emergency home repairs (leaky roof, doors and windows,
plumbing repair). In 2000, she owed $7,300.00 on her home. Her home mortgage had
a 3% interest rate with a monthly payment of $110.90. Taylor’s sole income source was
social security disability.
Broker arranged a 30-year mortgage loan for Taylor with Delta Funding Corporation
(Delta) in the amount of $20,500.00 with a 13.09% interest rate. Taylor was not given
an opportunity to review any of the documents before signing them. Taylor was told
to sign the documents.
The Commission found Taylor’s loan transaction had several predatory characteristics.
Taylor’s was charged $4,276.60 in total settlement costs, or approximately 20% of the
loan. 20 Two days after Taylor signed the loan documents, her uncle reviewed them and
advised her to cancel the loan. Taylor called Aaron McGlawn, a Broker employee, and
stated she did not want the loan. He did not advise Taylor she could legally rescind the
loan within a three-day period; rather, he told Taylor she could cancel the loan if she
had the money to pay the people Broker already paid.

20 Taylor was charged $440.00 for a broker fee and $410.00 for a yield spread premium. Taylor testified she was

unaware her loan contained a yield spread premium or that it would raise her interest rate. Her loan also included
a $370.31 charge for a homeowner’s insurance policy even though she was covered by another policy. Taylor was
unaware of this charge and stated her house was already insured. Taylor’s settlement sheet also reflected charges
for debts she did not owe at the time of closing, including a $83.81 water bill and two ambulance bills ($477.50
and $250.00). Though Broker told Taylor this money would be returned to her, she never received it.

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The settlement sheet indicates Taylor received $8,902.07. At closing, Reginald
McGlawn informed Taylor she owed an additional $1,200.00 fee because of where she
lived. Anthony McGlawn cashed the check and gave Taylor the money. He then asked
Taylor for the $1,200.00 fee. Taylor paid the fee out of the cash; but she was not given
a receipt. This fee was not reflected on the settlement sheet.
Complainants’ second expert reviewed Taylor’s loan transaction. He noted several
predatory characteristics. First, Taylor’s 13.09% interest rate was substantially above
the three-point spread between sub-prime and prime loans. The Commission noted
Broker arranged a loan for Taylor at twice the amount she requested and increased her
interest rate from 3% to 13.09%. Such loans are considered to be deceptive and
detrimental. 21 In addition, Taylor’s loan included an additional undisclosed $1,200.00
broker fee.
The Commission found Broker engaged in predatory brokering activities on Taylor’s
behalf. These Broker actions resulted in a predatory and unfair refinancing loan. This
finding is supported by substantial evidence.
Poindexter. Poindexter testified by deposition that she acquired her home as a gift
from her grandfather and owned it free and clear. She described the neighborhood as
being African American.
In response to a radio advertisement, Poindexter contacted Broker to obtain a small
loan to pay off her bills; she did not want a mortgage. She eventually met with Reginald
McGlawn. Poindexter told him she was going to college and working part time at a
grocery store.
During their conversations, Reginald McGlawn informed Poindexter she did not make
enough money but that he would “take care of things.” Broker subsequently submitted
documentation to Gelt Financial Corporation indicating Poindexter had a second job
21 In addition to the higher interest rate, the Commission found Broker’s charges for the homeowners’ policy

and broker fees to be predatory and unfair. It also found Broker’s refusal to either inform Taylor of her rescission
rights or permit her to cancel her loan within the three-day rescission period was a predatory practice intended
to process the loan transaction despite Taylor’s desire to cancel it.

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as a receptionist with Ivory Towers, Contractors, Inc. Poindexter stated she did not
prepare these documents, was never employed by Ivory Towers and was unaware of
these documents.
Poindexter’s settlement sheet indicates her loan was approved for $22,400.00. It listed
a broker fee of $2,240.00 (10% of the loan amount) and a $423.87 charge for a
homeowner’s insurance policy. Poindexter’s loan also contained a balloon payment of
$20,193.79 and a pre-payment penalty. At the time she signed the documents,
Poindexter was unaware of either the balloon payment or the pre-payment penalty.
Prior to settlement, Poindexter never discussed the interest rate with Respondents. She
did not have time to review the loan documents before signing them.
The Commission found Broker engaged in predatory brokering activities regarding
Poindexter, which resulted in a predatory and unfair loan. This finding is supported by
substantial evidence.
Similarly situated persons. The Commission also found Broker engaged in predatory
brokering practices on behalf of the eight similarly situated persons (Brunson, Jackson,
Slaughter, Jacobs, Hawkins, Miles, Watts and Norwood), which resulted in unfair and
predatory loans. The Commission noted the terms of these individuals’ mortgage loans,
as well as their factual circumstances, were “disturbingly similar” to those of Taylor
and Poindexter. These findings are also supported by substantial evidence.
In view of the foregoing, we conclude Complainants proved Respondents engaged in
predatory and unfair lending practices. Respondents’ actions resulted in onerous loans
containing terms of a predatory nature designed to benefit Broker, not Complainants.
Therefore, Complainants met the first requirement for proving a reverse redlining
claim.
B. Intentional Discrimination
The second element of a reverse redlining claim is a showing that the defendant either
intentionally targeted on the basis of race or that there was a disparate impact on the
basis of race. Here, the Commission determined Broker intentionally targeted African

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699

Americans and African American neighborhoods. The Commission also found ample
evidence of disparate impact.
… In reverse redlining cases, evidence of the defendant’s advertising efforts in African
American communities is sufficient to show intentional targeting on the basis of race.
The Commission reviewed Broker’s advertisements. On its website, Broker states “[i]t
is one of the first African American owned and operated Mortgage and Insurance
Financial Services in Philadelphia and the surrounding area.” Broker’s website also
states “[o]ur primary focus is to assist financially challenged customers in purchasing
and or refinancing their existing mortgage, as well as providing various types of
insurance.”
In addition, Anthony McGlawn, Broker’s co-founder and insurance specialist, testified
Broker engaged in extensive advertising on radio and television, in the newspapers and
in the yellow pages. Several of these sources are oriented toward African American
audiences and readers. Reginald McGlawn also testified the majority of Broker’s
customers are African Americans.
… Complainants also testified the decision to contact Broker was influenced by the
fact that it was an African American company. For example, both Taylor and
Poindexter testified this fact played a role in their decisions to use Broker’s services.
The record also indicates Broker’s business activities have a disparate impact on
African American neighborhoods. This can be established by statistical evidence.
Hargraves. The Commission accepted the testimony of Radcliffe Davis, a Commission
investigator (Investigator). In response to Taylor and Poindexter’s complaints,
Investigator visited Broker’s office and reviewed 100 customer loan applications for
things such as refinancing, debt consolidation and home improvement. Of those 100
applications, 66 identified the race of the applicant. Of those 66 applicants, 65 were
African American.
In addition, Complainants’ second expert testified he prepared a document mapping
the 11 properties involved in this matter. Nine of these properties were in areas that

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have at least a 90% African American population. The other two areas have a 50-75%
African American population.
Considering the foregoing, the Commission’s conclusion regarding intentional
discrimination is supported by substantial evidence and is in accord with applicable law.
Hargraves. Complainants also established by statistical evidence that Broker’s business
activities had a disparate impact on African Americans and African American
neighborhoods.
In sum, Complainants met their burden of establishing a prima facie reverse redlining
claim against Broker.
C. Rebuttal
“Once a prima facie case is established, a rebuttable presumption of discrimination
arises.” “The burden then shifts to the defendant to show some legitimate,
nondiscriminatory reason for its action.” In predatory lending cases, the financial
institution may avoid liability by showing its lending practices were legitimate.
Respondents contend Complainants did not prove Broker’s business activities were
discriminatory because they did not establish Broker made loans to non-African
Americans on more preferable terms. This argument was rejected in Hargraves. Citing
Contract Buyers League v. F & F Investment, 300 F.Supp. 210 (N.D.Ill.1969), the Hargaves
Court recognized that injustice cannot be permitted merely because it is visited
exclusively upon African Americans. We adopt this reasoning now.
Respondents also argue that any mortgage broker which arranges sub-prime loans
could be considered a predator. We disagree. The interest rates of Complainants’ loans
are far in excess of the three-point difference usually separating prime and sub-prime
loans. In addition, Broker’s high broker fees, undisclosed fees and padded closing costs
benefited Broker, not Complainants. These types of loans do not serve the borrower’s
wants or needs. See In re Barker (broker’s motivation for arranging this type of loan was
not to serve borrower’s interest, “but to serve its own interest of obtaining a handsome
broker’s fee.”) 251 B.R. at 260. “Such self-dealing constitutes a flagrant violation of the
Broker’s fiduciary duties to the [borrower].”

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Respondents further argue Broker had no legal obligation to ensure Complainants
could repay their loans.
Whether or not a broker must ensure a client’s ability to repay a loan, a broker cannot
ignore circumstances suggesting an inability to repay. Indeed, one of the clearest
indicators of a predatory and unfair loan is one which exceeds the borrower’s needs
and repayment capacity.
On several occasions, Broker arranged loans in excess of the amounts Complainants
sought. Moreover, Broker discouraged several Complainants from canceling their loans
within the three-day rescission period. Broker also submitted falsified documents with
Complainants’ loan applications indicating Complainants possessed greater income or
assets than they really did. Broker’s disregard of Complainants’ ability to repay their
loans strongly supports the Commission’s decision to reject the legitimate practice
defense.
Respondents also assert they did not target African Americans or African American
neighborhoods. Rather, Respondents claim Complainants, who are poor credit risks,
came to Broker after being turned down by other brokers.
… [N]early all Complainants contacted Broker in response to one of its radio, television
or newspaper advertisements targeting individuals with poor credit. Further, Broker
concentrated its advertising efforts in the African American media. The Commission
did not err in concluding Broker intentionally targeted African Americans for subprime mortgage loans. Hargraves.
Accordingly, no error is evident in the Commission’s rejection of the Respondents’
legitimate practice defense.
[The court upheld damages constituting the amounts paid to the broker out of the loan
proceeds for items that only benefited the broker, such as the disclosed and undisclosed
broker fees and yield spread premiums. It remanded for further calculation of the
damages constituting the difference between the total amount of interest Complainants
would be paying as a result of the predatory loans and the total amount of interest they

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would have paid with a loan at the prevailing mortgage interest rate “realistically
available” to them given their credit ratings.]
… Here, Complainants’ testified regarding the emotional distress suffered as a result
of their dealings with Broker. Taylor testified she no longer trusts anyone and does not
socialize anymore. She further stated she frequently cries and suffers from anxietyrelated sleep and appetite disturbances. All of these difficulties resulted from her
dealing with Broker. The Commission awarded her $25,000.00.
Poindexter also testified she suffers from depression as a result of her dealings with
Broker. Her self-esteem was shattered and she relives the experience with every
payment. Poindexter further stated she suffers from headaches and sleeplessness. She
feels like she was stabbed in the back by people she trusted. The Commission awarded
Poindexter $15,000.00.
The Commission reviewed each of the similarly situated Complainants’ testimony
regarding the emotional and physical distress they suffered as a result of their
experiences with Broker and awarded each of them damages for humiliation and
embarrassment.
Given the direct evidence of emotional distress as well as the circumstances of fraud,
deceit, and betrayal of trust, we conclude the awards for embarrassment and
humiliation were within the Commission’s statutory authority. . . .
Notes and Questions
1. Some commentary on unaffordable mortgages asks “why would borrowers take
out loans that were doomed to foreclosure?” Does the opinion offer any
insights into this question? See Oren Bar-Gill, The Law, Economics and Psychology
of Subprime Mortgage Contracts, 94 CORNELL L. REV. 1073 (2009); see also Jeff
Sovern, Preventing Future Economic Crises Through Consumer Protection Law or How
the Truth in Lending Act Failed the Subprime Borrowers, 71 OHIO ST. L.J. 763 (2010)
(arguing that the explanation of key terms, even in non-predatory loans, was
simply insufficient for ordinary borrowers to understand). Here’s another
question: “why would lenders give out loans that were doomed to foreclosure?”

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As it turns out, given the collapse of the housing market, most foreclosures do
not return enough to the lender to pay back the initial loan.
2. Resistance to helping homeowners at risk of foreclosure often focuses on the
problem of “moral hazard”—if people weren’t forced either to pay back the
loans on the terms on which those loans were granted or to lose their homes,
some argued, that would encourage irresponsible borrowing. More broadly:
when we seek to hold one party responsible for harm, we often make another
party less responsible. As a result of the subprime mortgage collapse, many
banks failed or were bailed out by the federal government. However,
homeowners generally were not bailed out.
3. For some larger context, consider this excerpt from Ta-Nehisi Coates’ The Case
for Reparations, Atlantic, May 2014:
In 2010, Jacob S. Rugh, then a doctoral candidate at Princeton,
and the sociologist Douglas S. Massey published a study of the
recent foreclosure crisis. Among its drivers, they found an old
foe: segregation. Black home buyers—even after controlling for
factors like creditworthiness—were still more likely than white
home buyers to be steered toward subprime loans. Decades of
racist housing policies by the American government, along with
decades of racist housing practices by American businesses, had
conspired to concentrate African Americans in the same
neighborhoods. … [T]hese neighborhoods were filled with
people who had been cut off from mainstream financial
institutions. When subprime lenders went looking for prey, they
found black people waiting like ducks in a pen.
“High levels of segregation create a natural market for subprime
lending,” Rugh and Massey write, “and cause riskier mortgages,
and thus foreclosures, to accumulate disproportionately in
racially segregated cities’ minority neighborhoods.”

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Plunder in the past made plunder in the present efficient. The
banks of America understood this. In 2005, Wells Fargo
promoted a series of Wealth Building Strategies seminars.
Dubbing itself “the nation’s leading originator of home loans to
ethnic minority customers,” the bank enrolled black public
figures in an ostensible effort to educate blacks on building
“generational wealth.” But the “wealth building” seminars were a
front for wealth theft. In 2010, the Justice Department filed a
discrimination suit against Wells Fargo alleging that the bank had
shunted blacks into predatory loans regardless of their
creditworthiness. This was not magic or coincidence or
misfortune. It was racism reifying itself. According to The New
York Times, affidavits found loan officers referring to their black
customers as “mud people” and to their subprime products as
“ghetto loans.”
“We just went right after them,” Beth Jacobson, a former Wells
Fargo loan officer, told The Times. “Wells Fargo mortgage had
an emerging-markets unit that specifically targeted black
churches because it figured church leaders had a lot of influence
and could convince congregants to take out subprime loans.”
In 2011, Bank of America agreed to pay $355 million to settle
charges of discrimination against its Countrywide unit. The
following year, Wells Fargo settled its discrimination suit for
more than $175 million. But the damage had been done. In 2009,
half the properties in Baltimore whose owners had been granted
loans by Wells Fargo between 2005 and 2008 were vacant; 71
percent of these properties were in predominantly black
neighborhoods.
4. African-American and other minority borrowers were disproportionately
steered to expensive subprime loans even though they qualified for cheaper
conventional loans—high-income African American borrowers were six times

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as likely to get subprime loans as white borrowers with similar incomes.
However, it is not the case, as is sometimes asserted, that unwise loans to
African-Americans driven by federal mandates for equality in lending were
responsible for the crash. In fact, institutions subject to federal fair lending
rules made loans which were less likely to default than loans from institutions
that were not subject to such rules. David Min, Faulty Conclusions Based on
Shoddy
Foundations
(Feb.
2011),
https://www.americanprogress.org/issues/economy/reports/2011/02/08/91
26/faulty-conclusions-based-on-shoddy-foundations/; National Consumer
Law Center, Why Responsible Mortgage Lending Is a Fair Housing Issue (Feb.
2012), https://www.nclc.org/images/pdf/credit_discrimination/fair-housingbrief.pdf.
5. In recent years, legislatures and regulators have attempted to regulate mortgage
lending to stamp out the worst origination abuses, such as the yield spread
premium. Much regulation focuses on the concept of “suitability”: loans that
the borrowers are likely to be able to repay, rather than loans based merely on
the market value of the house. Loans based on the value of property alone,
without sufficient attention to borrower characteristics, encouraged lenders to
believe that they could profit even in case of a default, or sometimes that they
could profit even more from default than from payment. In 2014, the
Consumer Financial Protection Bureau (CFPB) issued rules on high-cost loans
and homeownership counseling, implementing the Home Ownership and
Equity
Protections
Act
and
subsequent
additions.
(http://www.consumerfinance.gov/regulations/high-cost-mortgage-andhomeownership-counseling-amendments-to-regulation-z-andhomeownership-counseling-amendments-to-regulation-x/) Under these rules,
loans considered “high cost” are subject to a number of limitations; high cost
loans are those that specify high interest rates, high fees rolled into the mortgage
amount (as in McGlawn), or prepayment penalties that last more than 36 months
or exceed more than 2% of the prepaid amount. Under the new rules, for highcost loans, balloon payments are generally banned, with limited exceptions.
Creditors are prohibited from charging prepayment penalties and financing

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points and fees. Late fees are restricted to four percent of the payment that is
past due, and certain other fees are limited or banned. Before a lender gives a
high-cost mortgage, they must confirm with a federally approved counselor that
the borrower has received counseling on the advisability of the mortgage.
6. Whether or not borrowers are seeking high-cost loans, lenders are now subject
to a rule requiring them to assess a borrower’s ability to repay, though that rule
does not cover home equity lines of credit, timeshare plans, reverse mortgages,
or temporary loans. The lender must not use a “teaser” or introductory interest
rate to calculate the borrower’s ability to repay; for adjustable-rate mortgages, it
must consider ability to repay under the highest possible rate allowed by the
mortgage. Certain so-called “plain vanilla” mortgages—fixed-rate, fully
amortized (with no balloon payments) loans for no longer than 30 years—are
presumptively acceptable under the regulations. In addition, lenders have to
make counseling information available to all borrowers. Although loan
information remains complex, the CFPB has tested different versions of
mandatory disclosures, trying to find the most understandable ways of
communicating the costs and risks of mortgages to non-lawyers. See CFPB
Finalizes “Know Before You Owe” Mortgage Forms, Nov. 20, 2013. Take a
look at the forms. (http://www.consumerfinance.gov/newsroom/cfpbfinalizes-know-before-you-owe-mortgage-forms/) Now that you have read this
far, can you understand them?

F. The Mortgage Crisis
Predatory lending was a significant contributor to the housing crash of 2007-2008 and
the resulting Global Financial Crisis. Many people, whether or not they accept this
proposition, believe that poor people were taking out the mortgages at issue. However,
middle and high income borrowers took on more mortgage debt than poor people,
and also contributed most significantly to the increase in defaults after 2007. Manuel
Adelino, Antoinette Schoar, & Felipe Severino, Loan Originations and Defaults in the
Mortgage Crisis: Further Evidence (NBER Working Paper July 2015),
https://www.nber.org/papers/w21320.

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When home prices started to drop and defaults to accumulate, the mortgage-backed
securities that had previously seemed so attractive to investors began to spread the
damage widely, as payments dried up. The economic impact was multiplied by a variety
of sophisticated financial instruments that, in the end, amounted to little more than
bets that U.S. housing prices would never drop. When they did drop, the world
economy did as well.
From 1942 to 2005, about 4% of mortgages were delinquent at any given time, and
about 1% were in foreclosure. At the peak of the crisis in 2010, up to 15% of mortgages
were delinquent, and 4.6% were in foreclosure. Foreclosures Public Data Summary
Jan 2015. As of late 2014, less than 8% of mortgages were delinquent and more than
3% were in the foreclosure process, or about one million homes. The good news is
that most of the still-troubled loans were originated before 2007, and new foreclosures
are now less one-half of one percent of all mortgages. Still, between 2007 and 2015,
about six million homes were sold at foreclosure sales. This foreclosure crisis has
already outlasted the foreclosure crisis of the Great Depression.
Even homeowners who kept up with their payments often found themselves
“underwater”: owing more than their homes were worth. Nearly one-third of
mortgaged homes were underwater in 2012, though the number dropped to 15.4% in
early 2015. Homes with lower value were more likely to be underwater, contributing
to income inequality. Michelle Jamrisko, This Is the Housing Chart That Keeps One
Economist Up at Night, BLOOMBERGBUSINESS, Jun. 12, 2015. Unsurprisingly,
underwater homeowners are substantially more likely to default on their mortgages
than homeowners with equity, no matter the size of their monthly payments or their
interest rates. Moreover, underwater homeowners who don’t default find it very
difficult to sell their homes, and are therefore constrained in where they can take jobs.
This is a problem because job mobility historically has been a major contributor to
improved economic prospects in the U.S.
Even when “strategic default” might be in a homeowner’s best interest—where the
homeowner is deeply underwater and lives in a non-recourse state, and alternative
housing is readily available—Americans remain relatively unlikely to default if they have
any alternatives. Most borrowers will run up credit card bills, drain retirement savings,

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and put off medical care to avoid default for as long as possible. Tess Wilkinson-Ryan,
Breaching the Mortgage Contract: The Behavioral Economics of Strategic Default, 64 VAND. L.
REV. 1547 (2011) (reporting that even though defaulting on a mortgage may be in an
individual’s financial self-interest, feelings of moral obligation may prevent or delay
default). Under what circumstances might you counsel a client to engage in a strategic
default? Default will have consequences for the defaulter’s credit score and therefore
possibly her ability to get other housing or even a job, depending on her location and
her field of work. But then again, draining her retirement account, possibly only to
postpone and not avoid foreclosure, will have negative repercussions as well.

G. Foreclosure Abuses
One ongoing problem is that the complicated structure of post-securitization mortgage
lending left responsibility for problems diffuse, and even put incentives in precisely the
wrong places. Because the trusts that own the mortgages and package them into
mortgage-backed securities are passive legal vehicles with no employees or activities of
their own, they contracted with mortgage servicers, often divisions of the same banks
that initially sponsored the mortgage originators. The basic job is straightforward:
servicers collect payments from homeowners and pass them along to the trust that
represents the investors. Servicers are also responsible for handling foreclosures. In
exchange, servicers typically get a small percentage of the value of the outstanding loans
each year in fees. For a $200,000 loan to a borrower with good credit, a servicer might
collect about $50 per month, with income decreasing as the balance of the loan drops.
Servicers also make money from the “float” — interest earned during the short time
the servicer holds the loan payment.
It is standard for servicers to be contractually required to keep paying the trust every
month, even when there’s a default, until there’s a foreclosure. This would seem a
strong incentive to do everything possible to help homeowners avoid a default, which
is usually what investors want. The holder of a mortgage loses an average $60,000 on
a foreclosure, according to figures announced by the federal government.
But the systems weren’t set up that way. Among other things, servicers hired very few
people with the ability to work with borrowers to find an affordable repayment; they

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were largely set up to take in money and pass it on. When the crisis hit, they were
overwhelmed with troubled loans. Further, at the beginning of the foreclosure crisis,
servicers often took the position that they were contractually prohibited from
negotiating with borrowers by their agreements with the trusts, which allegedly did not
allow them to reduce mortgagors’ nominal obligations without the consent of the trust.
(Recall that the trusts are not functioning companies with humans making day-to-day
decisions, so the servicers’ position meant that no one could agree to a renegotiation.)
Separately, servicers had incentives that conflicted with borrowers’ and investors’
interests. Servicers can charge fees for late payments, title searches, property upkeep,
inspections, appraisals and legal fees that can total hundreds of dollars each month and
can all be charged against a homeowner’s account. Servicers have first dibs on
recouping those fees when a foreclosed home is sold, meaning they usually collect
unless the home is essentially worthless. Moreover, when homeowners tried to catch
up or make partial payments as they sought a renegotiated loan, servicers applied their
payments first to the servicers’ own fees rather than to the underlying loan. These fees
can be lucrative. In 2010, major servicer Ocwen reported $32.8 million in revenue from
late fees alone, representing 9 percent of its total revenue. Professor Levitin, who has
done extensive work on the legal and business structures resulting from securitization,
concluded that a loan kept in default for a year or two could prove more profitable to
a servicer than a typical healthy, performing loan.
The following case involves a trustee rather than a typical servicer, but otherwise it
provides a sense of the problems that can arise when participants in the mortgage
transaction are indifferent to the welfare of mortgagors.
Klem v. Washington Mutual Bank
295 P.3d 1179 (Wash. 2013).
¶ 1 Dorothy Halstien, an aging woman suffering from dementia, owned a home worth
somewhere between $235,000 and $320,000. At about the time she developed dementia,
she owed approximately $75,000 to Washington Mutual Bank (WaMu), secured by a
deed of trust on her home. Because of the cost of her care, her guardian did not have
the funds to pay her mortgage, and Quality Loan Services (Quality), acting as the trustee

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of the deed of trust, foreclosed on her home. On the first day it could, Quality sold her
home for $83,087.67, one dollar more than she owed, including fees and costs. A notary,
employed by Quality, had falsely notarized the notice of sale by predating the notary
acknowledgment. This falsification permitted the sale to take place earlier than it could
have had the notice of sale been dated when it was actually signed.
¶ 2 Before the foreclosure sale, Halstien’s court appointed guardian secured a signed
purchase and sale agreement from a buyer willing to pay $235,000 for the house.
Unfortunately, there was not enough time before the scheduled foreclosure sale to
close the sale with that buyer. In Washington, the trustee has the discretion to postpone
foreclosure sales. This trustee declined to consider exercising that discretion, and
instead deferred the decision to the lender, WaMu. Despite numerous requests by the
guardian, WaMu did not postpone the sale. A jury found that the trustee was negligent;
that the trustee’s acts or practices violated the Consumer Protection Act (CPA), chapter
19.86 RCW; and that the trustee breached its contractual obligations. The Court of
Appeals reversed all but the negligence claim. We reverse the Court of Appeals in part
and restore the award based upon the CPA. We award the guardian reasonable attorney
fees and remand to the trial court to order appropriate injunctive relief.
FACTS
¶ 3 The issues presented require a detailed discussion of the facts. In 1996, Halstien
bought a house on Whidbey Island for $147,500. In 2004, she borrowed $73,000 from
WaMu, secured by a deed of trust on her home. That loan was the only debt secured
by the property, which otherwise Halstien owned free and clear. Unfortunately, by 2006,
when Halstien was 74 years old, she developed dementia. At the time, Halstien’s
daughter and her daughter’s boyfriend were living at the home with her.
¶ 4 Washington State’s Adult Protective Services became concerned that Halstien was
a vulnerable adult being neglected at home. After an investigation, protective services
petitioned the court for the appointment of a professional guardian to protect Halstien.
The court granted the petition and Dianne Klem, executive director of Puget Sound
Guardians, was appointed Halstien’s guardian in January 2007. Klem soon placed
Halstien in the dementia unit of a skilled nursing facility in Snohomish County.

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¶ 5 Halstien’s care cost between $3,000 and $6,000 a month. At the time, Halstien
received about $1,444 a month in income from Social Security and a Teamsters’
pension. The State of Washington paid the balance of her care and is a creditor of her
estate.
¶ 6 Halstien’s only significant asset was her Whidbey Island home, which at the time
was assessed by the county at $257,804. WaMu also had an appraisal indicating the
home was worth $320,000, nearly four times the value of the outstanding debt. Klem
testified that if she had been able to sell the home, she could have improved Halstien’s
quality of life considerably by providing additional services the State did not pay for.
¶ 7 Selling the home was neither quick nor easy. Even after Halstien was placed in a
skilled care facility, her daughter still lived in the home (without paying rent) and both
the daughter and her brother strongly opposed any sale. The record suggests Halstien’s
children expected to inherit the home and, Klem testified, getting the daughter and her
family to leave “was quite a battle.” Ultimately, Puget Sound Guardians prevailed, but
before it could sell the home, it had to obtain court permission (complicated, apparently,
by the considerable notice that had to be given to various state agencies and to family
members, and because some of those entitled to notice were difficult to find), remove
abandoned animals and vehicles, and clean up the property.
¶ 8 During this process Halstien became delinquent on her mortgage. Quality,
identifying itself as “the agent for Washington Mutual,” posted a notice of default on
Halstien’s home on or around October 25, 2007. The notice demanded $1,372.20 to
bring the note current. The record establishes that the guardianship did not have
available funds to satisfy the demand.
¶ 9 A notice of trustee sale was executed shortly afterward by Seth Ott for Quality. The
notice was dated and, according to the notary jurat of “R. Tassle,” notarized on
November 26, 2007. However, the notice of sale was not actually signed that day. The
sale was set for February 29, 2008.
¶ 10 This notice of sale was one of apparently many foreclosure documents that were
falsely notarized by Quality and its employees around that time. There was considerable
evidence that falsifying notarizations was a common practice, and one that Quality

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employees had been trained to do. While Quality employees steadfastly refused to
speculate under oath how or why this practice existed, the evidence suggests that
documents were falsely dated and notarized to expedite foreclosures and thereby keep
their clients, the lenders, beneficiaries, and other participants in the secondary market
for mortgage debt happy with their work. Ott acknowledged on the stand that if the
notice of sale had been correctly dated, the sale would not have taken place until at
least one week later.
¶ 11 On January 10, 2008, Puget Sound Guardians asset manager David Greenfield
called Ott in his capacity as trustee. Greenfield explained that Halstien was in a
guardianship and that the guardianship intended to sell the property. Greenfield initially
understood, incorrectly, that the trustee would postpone the sale if Puget Sound
Guardians presented WaMu with a signed purchase and sale agreement by February 19,
2008. Puget Sound Guardians sought, and on January 31, 2008, received, court
permission to hire a real estate agent to help sell the house.
¶ 12 Unknown to Greenfield, Quality, as trustee, had an agreement with WaMu that it
would not delay a trustee’s sale except upon WaMu’s express direction. This agreement
was articulated in a confidential “attorney expectation document” that was given to the
jury. This confidential document outlines how foreclosures were to be done and billed.
It specifically states, “Your office is not authorized to postpone a sale without
authorization from Fidelity or Washington Mutual.” This agreement is, at least, in
tension with Quality’s fiduciary duty to both sides and its duty to act impartially. Cox
v. Helenius, 103 Wash.2d 383, 389, 693 P.2d 683 (1985) (citing GEORGE E.
OSBORNE, GRANT S. NELSON & DALE A. WHITMAN, REAL ESTATE
FINANCE LAW § 7.21 (1979) (“[A] trustee of a deed of trust is a fiduciary for both
the mortgagee and mortgagor and must act impartially between them.”)).3
¶ 13 Regardless of what Washington law expected or required of trustees, David Owen,
Quality’s chief operations officer in San Diego, testified that Quality did what WaMu
told it to do during foreclosures. Owen testified that there were two situations where
3 Since then, the legislature has amended the deed of trust act to provide that the trustee owes a duty of good

faith to both sides. LAWS OF 2008, ch. 153, § 1; RCW 61.24.010(4) (effective June 12, 2008).

Mortgages and Foreclosures

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Quality would postpone a sale without bank permission: if there was a bankruptcy or
if the debt had been paid. Owen could not remember any time Quality had postponed
a sale without the bank’s permission.
¶ 14 By February 19, 2008, Puget Sound Guardians had a signed purchase and sale
agreement, with the closing date set for on or about March 28, 2008. This was almost
a month after the scheduled foreclosure sale, but well within the 120 day window a
trustee has to hold the trustee’s sale under RCW 61.24.040(6). Quality referred the
guardians to the bank “to find out the process for making this happen.” Klem testified
Quality “told us on two occasions that they unequivocally could not assist us in that
area, that only the bank could make the decision.”
¶ 15 Puget Sound Guardians contacted WaMu, which instructed them to send copies
of the guardianship documents and a completed purchase and sale agreement. Over
the next few days, WaMu instructed the guardians to send the same documents to
WaMu offices in Seattle, Washington, southern California, and Miami, Florida. Klem
testified that Puget Sound Guardians called WaMu on “[m]any occasions,” and that if
the bank ever made a decision, it did not share what it was. The guardian also faxed a
copy of the purchase and sale agreement to various WaMu offices on February 19, 21,
26, 27, and 28. In all, the guardian contacted Quality or WaMu over 20 times in the
effort to get the sale postponed. Simply put, Quality deferred to WaMu and WaMu was
unresponsive.
¶ 16 Accordingly, the trustee’s sale was not delayed and took place on February 29,
2008. Quality, as trustee, sold the Halstien home to Randy and Gail Preston for
$83,087.67, one dollar more than the amounts outstanding on the loan, plus fees and
costs. 4 The Prestons resold the house for $235,000 shortly afterward.
¶ 17 Klem later testified it was “shocking when we found out that [the home] had
actually been sold for $83,000…. Because we trusted that they would sell it for the
value of the home.” In previous cases where a ward’s home had gone into foreclosure,
Klem testified, either the trustee had postponed the sale to allow Puget Sound
4 As of trial, Quality had not delivered that one dollar to the Halstien estate.

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Guardians to sell the property or had sold the property for a reasonable price. Klem
testified that if they had just one more week, it was “very possible” that they could have
closed the sale earlier.
¶ 18 In April 2008, represented by the Northwest Justice Project, Puget Sound
Guardians sued Quality for damages on a variety of theories, including negligence,
breach of contract, and violation of the CPA. Later, with permission of the court,
Quality’s California sister corporation was added as a defendant. Halstien died that
December.
¶ 19 Quality defended itself vigorously on a variety of theories. Initially successfully,
Quality argued that any cause of action based on the trustee’s duties was barred by the
fact Klem had not sought an injunction to enjoin the sale. The record suggests that it
would have been impossible for the guardianship to get a presale injunction due to the
time frame, the need for court approval, and the lack of assets in the guardianship estate.
While Judge Monica Benton dismissed some claims based on the failure of the estate
to seek an injunction, she specifically found that the negligence, breach of contract, and
CPA claims could go forward.
¶ 20 The case proceeded to a jury trial. The heart of the plaintiff’s case was the theory
that Quality’s acts and practices of deferring to the lender and falsifying dates on
notarized documents were unfair and deceptive and that the trustee was negligent in
failing to delay the sale. David Leen, an expert on Washington’s deed of trust act,
chapter 61.24 RCW, testified that it was common for trustees to postpone the sale to
allow the debtors to pay off the default. He testified that under the facts of this case,
the trustee “would absolutely have to continue the sale.”
¶ 21 By contrast, Ott, representing Quality as trustee in this case, testified that he did
not take into account whether the house was worth more than the debt when
conducting foreclosures. When asked why, Ott responded, “My job was to process the
foreclosure … according to the state statutes.” When pressed, Ott explained that he
counted the days, prepared the forms, saw they were filed, and nothing more. He
acknowledged that, prior to 2009, he would sometimes incorrectly date documents. He
testified that he had been trained to do that. He also testified that Quality, as trustee,

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would not delay trustee sales without the lender’s permission. And he testified that he
had never actually read Washington’s deed of trust statutes. 5
¶ 22 The jury found for the plaintiff on three claims: negligence, CPA, and breach of
contract. … The jury determined that the damages on all three claims were the same:
$151,912.33 (the difference between the foreclosure sale price and $235,000)….
¶ 24 Quality brought a blunderbuss of challenges to the trial court’s decisions. … The
Court of Appeals concluded … that the evidence was insufficient to uphold the breach
of contract and CPA claims. …
ANALYSIS
…
I. CPA CLAIMS
¶ 26 To prevail on a CPA action, the plaintiff must prove an “(1) unfair or deceptive
act or practice; (2) occurring in trade or commerce; (3) public interest impact; (4) injury
to plaintiff in his or her business or property; (5) causation.” Hangman Ridge Training
Stables, Inc. v. Safeco Title Ins. Co., 105 Wash.2d 778, 780, 719 P.2d 531 (1986). The
plaintiff argues that both Quality’s historical practice of predating notarized foreclosure
documents and Quality’s practice of deferring to the lender on whether to postpone
most sales, satisfies the first element of the CPA. Deciding whether the first element is
satisfied requires us to examine the role of the trustee in nonjudicial foreclosure actions.
A deed of trust is a form of a mortgage, an age-old mechanism for securing a loan. 18
William B. Stoebuck & John W. Weaver, Washington Practice: Real Estate:
Transactions § 17.1, at 253, § 20.1, at 403 (2d ed. 2004). In Washington, it is a statutorily
blessed “three-party transaction in which land is conveyed by a borrower, the ‘grantor,’
to a ‘trustee,’ who holds title in trust for a lender, the ‘beneficiary,’ as security for credit
or a loan the lender has given the borrower.” If the deed of trust contains the power
of sale, the trustee may usually foreclose the deed of trust and sell the property without
5 This inspired a juror’s question, “If you never read the statute, how did you know you were following it,

following Washington law?” Ott responded that he relied on his training. …

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judicial supervision. Id. at 260–61; RCW 61.24.020; RCW 61.12. 090; RCW
7.28.230(1)….
A. Unfair or Deceptive Acts or Practices
¶ 28 The legislature has specifically stated that certain violations of the deed of trust
act are unfair or deceptive acts or practices for purposes of the CPA. [The Supreme
Court found that this list was not exclusive; other violations could be unfair or
deceptive as determined by a common-law, evolutionary process: “‘It is impossible to
frame definitions which embrace all unfair practices. There is no limit to human
inventiveness in this field. Even if all known unfair practices were specifically defined
and prohibited, it would be at once necessary to begin over again’” (citation omitted).]
…
B. Failure To Exercise Independent Discretion To Postpone Sale
¶ 35 Until the 1965 deed of trust act, there was no provision in Washington law for a
nonjudicial foreclosure. In 1965, the legislature authorized nonjudicial foreclosure for
the first time, subject to strict statutory requirements. Because of the very nature of
nonjudicial foreclosures, Washington courts have not shied away from protecting the
rights of the parties. …
¶ 36 The power to sell another person’s property, often the family home itself, is a
tremendous power to vest in anyone’s hands. Our legislature has allowed that power
to be placed in the hands of a private trustee, rather than a state officer, but common
law and equity requires that trustee to be evenhanded to both sides and to strictly follow
the law. This court has frequently emphasized that the deed of trust act “must be
construed in favor of borrowers because of the relative ease with which lenders can
forfeit borrowers’ interests and the lack of judicial oversight in conducting nonjudicial
foreclosure sales.” We have invalidated trustee sales that do not comply with the act.
¶ 37 As a pragmatic matter, it is the lenders, servicers, and their affiliates who appoint
trustees. Trustees have considerable financial incentive to keep those appointing them
happy and very little financial incentive to show the homeowners the same solicitude.
However, despite these pragmatic considerations and incentives under our statutory

Mortgages and Foreclosures

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system, a trustee is not merely an agent for the lender or the lender’s successors.
Trustees have obligations to all of the parties to the deed, including the homeowner.
RCW 61.24.010(4) (“The trustee or successor trustee has a duty of good faith to the
borrower, beneficiary, and grantor.”); Cox v. Helenius, 103 Wash.2d 383, 389, 693 P.2d
683 (1985) ( “[A] trustee of a deed of trust is a fiduciary for both the mortgagee and
mortgagor and must act impartially between them.”) (citing George E. Osborne, Grant
S. Nelson & Dale A. Whitman, Real Estate Finance LAW § 7.21 (1979)). In a judicial
foreclosure action, an impartial judge of the superior court acts as the trustee and the
debtor has a one year redemption period. In a nonjudicial foreclosure, the trustee
undertakes the role of the judge as an impartial third party who owes a duty to both
parties to ensure that the rights of both the beneficiary and the debtor are protected.
Cox, 103 Wash.2d at 389, 693 P.2d 683. While the legislature has established a
mechanism for nonjudicial sales, neither due process nor equity will countenance a
system that permits the theft of a person’s property by a lender or its beneficiary under
the guise of a statutory nonjudicial foreclosure. 10 An independent trustee who owes a
duty to act in good faith to exercise a fiduciary duty to act impartially to fairly respect
the interests of both the lender and the debtor is a minimum to satisfy the statute, the
constitution, and equity, at the risk of having the sale voided, title quieted in the original
homeowner, and subjecting itself and the beneficiary to a CPA claim. 11

10 Washington courts have a long tradition of guarding property from being wrongfully appropriated through

judicial process. When “a jury … returned a verdict which displeased [Territorial Judge J.E. Wyche] in a suit over
160 acres of land” he threatened to set aside their verdict and remarked, “‘While I am judge it takes thirteen men
to steal a ranch.’”
11 We have not had occasion to fully analyze whether the nonjudicial foreclosure act, ch. 61.24 RCW, on its face

or as applied, violates article I, section 3 of our state constitution’s command that “[n]o person shall be deprived
of life, liberty, or property, without due process of law.” While article I, section 3 was mentioned in passing in
Kennebec, Inc. v. Bank of the West, 88 Wash.2d 718, 565 P.2d 812 (1977), where we joined other courts in
concluding that the Fourteenth Amendment does not bar nonjudicial foreclosures, no independent state
constitutional analysis was, or has since been done. Certainly, there are other similar “self help” statutes for
creditors that are subject to constitutional limitations despite the State’s limited involvement. See, e.g., Culbertson
v. Leland, 528 F.2d 426 (9th Cir.1975) (innkeeper’s use of Arizona’s innkeeper’s lien statute to seize guest’s
property was under color of law and subject to a civil rights claim). “Misuse of power, possessed by virtue of
state law and made possible only because the wrongdoer is clothed with the authority of state law, is action taken
‘under color of state law.’” Id. at 428 (quoting United States v. Classic, 313 U.S. 299, 325–26, 61 S.Ct. 1031, 85

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¶ 38 The trustee argues that we “should not hold that it is unfair and deceptive either
to honor a beneficiary’s instructions not to postpone a sale without seeking its
authorization, or to advise a grantor to contact her lender.” We note that Quality
contends that it did not have a practice of deferring to the lender but merely followed
its “legally-mandated respect for its Beneficiary’s instructions” and asserts that
“[s]imply put, no competent Trustee would fail to respect its Beneficiary’s instructions
not to postpone a sale without first seeking the Beneficiary’s permission.” We disagree.
The record supports the conclusion that Quality abdicated its duty to act impartially
toward both sides.
¶ 39 Again, the trustee in a nonjudicial foreclosure action has been vested with
incredible power. Concomitant with that power is an obligation to both sides to do
more than merely follow an unread statute and the beneficiary’s directions. If the
trustee acts only at the direction of the beneficiary, then the trustee is a mere agent of
the beneficiary and a deed of trust no longer embodies a three party transaction. If the
trustee were truly a mere agent of the beneficiary there would be, in effect, only two
parties with the beneficiary having tremendous power and no incentive to protect the
statutory and constitutional property rights of the borrower.
¶ 40 We hold that the practice of a trustee in a nonjudicial foreclosure deferring to the
lender on whether to postpone a foreclosure sale and thereby failing to exercise its
independent discretion as an impartial third party with duties to both parties is an unfair
or deceptive act or practice and satisfies the first element of the CPA. Quality failed to
act in good faith to exercise its fiduciary duty to both sides and merely honored an
agency relationship with one.

L.Ed. 1368 (1941)); accord Smith v. Brookshire Bros., Inc., 519 F.2d 93, 95 (5th Cir.1975) (exercise of statute
that allowed merchant to detain suspected shoplifters subject to civil rights claim); Adams v. Joseph F. Sanson
Inv. Co., 376 F.Supp. 61, 69 (D.C.Nev.1974) (finding Nevada’s landlord lien act violated due process because it
allowed landlord to seize tenant property without notice); Collins v. Viceroy Hotel Corp., 338 F.Supp. 390, 398
(N.D. Ill. 1972) (finding Illinois innkeepers’ lien laws, which allowed an innkeeper to seize guest’s property
without notice, violated due process); Hall v. Garson, 430 F.2d 430, 440 (5th Cir. 1970) (exercise of a statute
giving a landlord a lien over the tenant’s property gave rise to a civil rights claim against private party).

Mortgages and Foreclosures

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C. Predating notarizations
¶ 41 Klem submitted evidence that Quality had a practice of having a notary predate
notices of sale. This is often a part of the practice known as “robo-signing.” Specifically,
in this case, it appears that at least from 2004–2007, Quality notaries regularly falsified
the date on which documents were signed.
¶ 42 Quality suggests these falsely notarized documents are immaterial because the
owner received the minimum notice required by law. This no-harm, no-foul argument
again reveals a misunderstanding of Washington law and the purpose and importance
of the notary’s acknowledgment under the law. A signed notarization is the ultimate
assurance upon which the whole world is entitled to rely that the proper person signed
a document on the stated day and place. Local, interstate, and international transactions
involving individuals, banks, and corporations proceed smoothly because all may rely
upon the sanctity of the notary’s seal. This court does not take lightly the importance
of a notary’s obligation to verify the signor’s identity and the date of signing by having
the signature performed in the notary’s presence. Werner v. Werner, 84 Wash.2d 360,
526 P.2d 370 (1974). As amicus Washington State Bar Association notes, “The proper
functioning of the legal system depends on the honesty of notaries who are entrusted
to verify the signing of legally significant documents.” While the legislature has not yet
declared that it is a per se unfair or deceptive act for the purposes of the CPA, it is a
crime in both Washington and California for a notary to falsely notarize a document.
… A notary jurat is a public trust and allowing them to be deployed to validate false
information strikes at the bedrock of our system. …
… ¶ 44 We hold that the act of false dating by a notary employee of the trustee in a
nonjudicial foreclosure is an unfair or deceptive act or practice and satisfies the first
three elements under the Washington CPA.
¶ 45 The trustee argues as a matter of law that the falsely notarized documents did not
cause harm. The trustee is wrong; a false notarization is a crime and undermines the
integrity of our institutions upon which all must rely upon the faithful fulfillment of
the notary’s oath. There remains, however, the factual issue of whether the false
notarization was a cause of plaintiff’s damages. That is, of course, a question for the
jury. We note that the plaintiff submitted evidence that the purpose of predated

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notarizations was to expedite the date of sale to please the beneficiary. Given the
evidence that if the documents had been properly dated, the earliest the sale could have
taken place was one week later. [sic] The plaintiff also submitted evidence that with
one more week, it was “very possible” Puget Sound Guardians could have closed the
sale. This additional time would also have provided the guardian more time to persuade
WaMu to postpone the sale. But given the trustee’s failure to fulfill its fiduciary duty to
postpone the sale, there is sufficient evidence to support the jury’s CPA violation
verdict, and we need not reach whether this deceptive act was a cause of plaintiff’s
damages….
Notes and Questions
1. What, if anything, is the relevance of the sale price of the home to the court’s
decision? Why would the bank bid a dollar more than what was owed on the
loan?
2. Klem involves a variant on what is known as “robo-signing”—the creation of
documents with important legal effects on foreclosure, without sufficient
personal knowledge or even understanding by the person signing the document.
Jay Patterson, a forensic accountant who has examined hundreds of mortgage
loans in bankruptcy or foreclosure, concluded that “95 percent of these loans
contain some kind of mistake,” from an unnecessary $15 late fee to thousands
of dollars in fees and charges stemming from a single mistake that snowballed
into a wrongful foreclosure. Most of these cases resulted in defaults, but when
they were litigated, the facts could be telling. For example, one bankruptcy case,
In re Stewart, involved a home in Jefferson Parish, New Orleans. Wells Fargo
was the servicer. The debtor fell behind in her payments, and on September 12,
2005, Wells Fargo agents generated two opinions on the value of the home.
Opinions require at least minimal inspection of the property. Stewart was
charged $125 for each opinion. However, on September 12, 2005, Jefferson
Parish was under an evacuation order due to the devastation then being wrought
by Hurricane Katrina. These were only two of the numerous fees the
bankruptcy judge found had been wrongly charged to Stewart.

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721

What ought to be done to rein in servicer misbehavior of this sort?

H. Chain of Title Problems
Klem features a foreclosure sale that did nothing to preserve the equity of the
homeowner, as well as backdated documents that changed the time of sale. But
documentation problems go much, much deeper than that evidenced in Klem—perhaps
to the foundation of land title in the U.S.
U.S. Bank National Association, trustee vs. Antonio Ibanez
458 Mass. 637 (2011)
After foreclosing on two properties and purchasing the properties back at the
foreclosure sales, U.S. Bank National Association (U.S.Bank), as trustee for the
Structured Asset Securities Corporation Mortgage Pass-Through Certificates, Series
2006-Z; and Wells Fargo Bank, N.A. (Wells Fargo), as trustee for ABFC 2005-OPT 1
Trust, ABFC Asset Backed Certificates, Series 2005-OPT 1 (plaintiffs) filed separate
complaints in the Land Court asking a judge to declare that they held clear title to the
properties in fee simple. We agree with the judge that the plaintiffs, who were not the
original mortgagees, failed to make the required showing that they were the holders of
the mortgages at the time of foreclosure. As a result, they did not demonstrate that the
foreclosure sales were valid to convey title to the subject properties, and their requests
for a declaration of clear title were properly denied.
Procedural history. On July 5, 2007, U.S. Bank, as trustee, foreclosed on the mortgage of
Antonio Ibanez, and purchased the Ibanez property at the foreclosure sale. On the
same day, Wells Fargo, as trustee, foreclosed on the mortgage of Mark and Tammy
LaRace, and purchased the LaRace property at that foreclosure sale.
In September and October of 2008, U.S. Bank and Wells Fargo brought separate
actions in the Land Court under G.L. c. 240, § 6, which authorizes actions “to quiet or
establish the title to land situated in the commonwealth or to remove a cloud from the
title thereto.” The two complaints sought identical relief: (1) a judgment that the right,
title, and interest of the mortgagor (Ibanez or the LaRaces) in the property was
extinguished by the foreclosure; (2) a declaration that there was no cloud on title arising

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Property

from publication of the notice of sale in the Boston Globe; and (3) a declaration that
title was vested in the plaintiff trustee in fee simple. U.S. Bank and Wells Fargo each
asserted in its complaint that it had become the holder of the respective mortgage
through an assignment made after the foreclosure sale.
In both cases, the mortgagors--Ibanez and the LaRaces--did not initially answer the
complaints, and the plaintiffs moved for entry of default judgment… .
On March 26, 2009, judgment was entered against the plaintiffs. The judge ruled that
the foreclosure sales were invalid because, in violation of G.L. c. 244, § 14, the notices
of the foreclosure sales named U.S. Bank (in the Ibanez foreclosure) and Wells Fargo
(in the LaRace foreclosure) as the mortgage holders where they had not yet been
assigned the mortgages. The judge found, based on each plaintiff’s assertions in its
complaint, that the plaintiffs acquired the mortgages by assignment only after the
foreclosure sales and thus had no interest in the mortgages being foreclosed at the time
of the publication of the notices of sale or at the time of the foreclosure sales. 8
The plaintiffs then moved to vacate the judgments. At a hearing on the motions on
April 17, 2009, the plaintiffs conceded that each complaint alleged a postnotice,
postforeclosure sale assignment of the mortgage at issue, but they now represented to
the judge that documents might exist that could show a prenotice, preforeclosure sale
assignment of the mortgages. The judge granted the plaintiffs leave to produce such
documents, provided they were produced in the form they existed in at the time the
foreclosure sale was noticed and conducted. In response, the plaintiffs submitted
hundreds of pages of documents to the judge, which they claimed established that the
mortgages had been assigned to them before the foreclosures. Many of these

8 In the third case, LaSalle Bank National Association, trustee for the certificate holders of Bear Stearns Asset

Backed Securities I, LLC Asset-Backed Certificates, Series 2007-HE2 vs. Freddy Rosario, the judge concluded
that the mortgage foreclosure “was not rendered invalid by its failure to record the assignment reflecting its status
as holder of the mortgage prior to the foreclosure since it was, in fact, the holder by assignment at the time of
the foreclosure, it truthfully claimed that status in the notice, and it could have produced proof of that status (the
unrecorded assignment) if asked.”

Mortgages and Foreclosures

723

documents related to the creation of the securitized mortgage pools in which the
Ibanez and LaRace mortgages were purportedly included.
The judge denied the plaintiffs’ motions to vacate judgment on October 14, 2009,
concluding that the newly submitted documents did not alter the conclusion that the
plaintiffs were not the holders of the respective mortgages at the time of foreclosure.
We granted the parties’ applications for direct appellate review.
Factual background. We discuss each mortgage separately, describing when appropriate
what the plaintiffs allege to have happened and what the documents in the record
demonstrate.
The Ibanez mortgage. On December 1, 2005, Antonio Ibanez took out a $103,500 loan
for the purchase of property at 20 Crosby Street in Springfield, secured by a mortgage
to the lender, Rose Mortgage, Inc. (Rose Mortgage). The mortgage was recorded the
following day. Several days later, Rose Mortgage executed an assignment of this
mortgage in blank, that is, an assignment that did not specify the name of the assignee. 11
The blank space in the assignment was at some point stamped with the name of Option
One Mortgage Corporation (Option One) as the assignee, and that assignment was
recorded on June 7, 2006. Before the recording, on January 23, 2006, Option One
executed an assignment of the Ibanez mortgage in blank.
According to U.S. Bank, Option One assigned the Ibanez mortgage to Lehman
Brothers Bank, FSB, which assigned it to Lehman Brothers Holdings Inc., which then
assigned it to the Structured Asset Securities Corporation, 12 which then assigned the
mortgage, pooled with approximately 1,220 other mortgage loans, to U.S. Bank, as
trustee for the Structured Asset Securities Corporation Mortgage Pass-Through
Certificates, Series 2006-Z. With this last assignment, the Ibanez and other loans were

11 This signed and notarized document states: “FOR VALUE RECEIVED, the undersigned hereby grants,

assigns and transfers to _______ all beneficial interest under that certain Mortgage dated December 1, 2005
executed by Antonio Ibanez….”
12 The Structured Asset Securities Corporation is a wholly owned direct subsidiary of Lehman Commercial Paper

Inc., which is in turn a wholly owned, direct subsidiary of Lehman Brothers Holdings Inc.

724

Property

pooled into a trust and converted into mortgage-backed securities that can be bought
and sold by investors--a process known as securitization.
For ease of reference, the chain of entities through which the Ibanez mortgage allegedly
passed before the foreclosure sale is:
Rose Mortgage, Inc. (originator)

Option One Mortgage Corporation (record holder)

Lehman Brothers Bank, FSB

Lehman Brothers Holdings Inc. (seller)

Structured Asset Securities Corporation (depositor)

U.S. Bank National Association, as trustee for the Structured Asset Securities
Corporation Mortgage Pass-Through Certificates, Series 2006-Z
According to U.S. Bank, the assignment of the Ibanez mortgage to U.S. Bank occurred
pursuant to a December 1, 2006, trust agreement, which is not in the record. What is
in the record is the private placement memorandum (PPM), dated December 26, 2006,
a 273-page, unsigned offer of mortgage-backed securities to potential investors. The
PPM describes the mortgage pools and the entities involved, and summarizes the
provisions of the trust agreement, including the representation that mortgages “will be”
assigned into the trust. According to the PPM, “[e]ach transfer of a Mortgage Loan
from the Seller [Lehman Brothers Holdings Inc.] to the Depositor [Structured Asset

Mortgages and Foreclosures

725

Securities Corporation] and from the Depositor to the Trustee [U.S. Bank] will be
intended to be a sale of that Mortgage Loan and will be reflected as such in the Sale
and Assignment Agreement and the Trust Agreement, respectively.” The PPM also
specifies that “[e]ach Mortgage Loan will be identified in a schedule appearing as an
exhibit to the Trust Agreement.” However, U.S. Bank did not provide the judge with
any mortgage schedule identifying the Ibanez loan as among the mortgages that were
assigned in the trust agreement.
On April 17, 2007, U.S. Bank filed a complaint to foreclose on the Ibanez mortgage in
the Land Court under the Servicemembers Civil Relief Act (Servicemembers Act),
which restricts foreclosures against active duty members of the uniformed services. 13
In the complaint, U.S. Bank represented that it was the “owner (or assignee) and holder”
of the mortgage given by Ibanez for the property. A judgment issued on behalf of U.S.
Bank on June 26, 2007, declaring that the mortgagor was not entitled to protection
from foreclosure under the Servicemembers Act. In June, 2007, U.S. Bank also caused
to be published in the Boston Globe the notice of the foreclosure sale required by G.L.
c. 244, § 14. The notice identified U.S. Bank as the “present holder” of the mortgage.
At the foreclosure sale on July 5, 2007, the Ibanez property was purchased by U.S.
Bank, as trustee for the securitization trust, for $94,350, a value significantly less than
the outstanding debt and the estimated market value of the property. The foreclosure
deed (from U.S. Bank, trustee, as the purported holder of the mortgage, to U.S. Bank,
trustee, as the purchaser) and the statutory foreclosure affidavit were recorded on May
23, 2008. On September 2, 2008, more than one year after the sale, and more than five
months after recording of the sale, American Home Mortgage Servicing, Inc., “as
successor-in-interest” to Option One, which was until then the record holder of the
Ibanez mortgage, executed a written assignment of that mortgage to U.S. Bank, as
trustee for the securitization trust. This assignment was recorded on September 11,
2008.

13 As implemented in Massachusetts, a mortgage holder is required to go to court to obtain a judgment declaring

that the mortgagor is not a beneficiary of the Servicemembers Act before proceeding to foreclosure. St.1943, c.
57, as amended through St.1998, c. 142.

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Property

The LaRace mortgage. On May 19, 2005, Mark and Tammy LaRace gave a mortgage for
the property at 6 Brookburn Street in Springfield to Option One as security for a
$103,200 loan; the mortgage was recorded that same day. On May 26, 2005, Option
One executed an assignment of this mortgage in blank.
According to Wells Fargo, Option One later assigned the LaRace mortgage to Bank of
America in a July 28, 2005, flow sale and servicing agreement. Bank of America then
assigned it to Asset Backed Funding Corporation (ABFC) in an October 1, 2005,
mortgage loan purchase agreement. Finally, ABFC pooled the mortgage with others
and assigned it to Wells Fargo, as trustee for the ABFC 2005-OPT 1 Trust, ABFC
Asset-Backed Certificates, Series 2005-OPT 1, pursuant to a pooling and servicing
agreement (PSA).
For ease of reference, the chain of entities through which the LaRace mortgage
allegedly passed before the foreclosure sale is:
Option One Mortgage Corporation (originator and record holder)

Bank of America

Asset Backed Funding Corporation (depositor)

Wells Fargo, as trustee for the ABFC 2005-OPT 1, ABFC Asset-Backed
Certificates, Series 2005-OPT 1
Wells Fargo did not provide the judge with a copy of the flow sale and servicing
agreement, so there is no document in the record reflecting an assignment of the
LaRace mortgage by Option One to Bank of America. The plaintiff did produce an
unexecuted copy of the mortgage loan purchase agreement, which was an exhibit to
the PSA. The mortgage loan purchase agreement provides that Bank of America, as

Mortgages and Foreclosures

727

seller, “does hereby agree to and does hereby sell, assign, set over, and otherwise convey
to the Purchaser [ABFC], without recourse, on the Closing Date … all of its right, title
and interest in and to each Mortgage Loan.” The agreement makes reference to a
schedule listing the assigned mortgage loans, but this schedule is not in the record, so
there was no document before the judge showing that the LaRace mortgage was among
the mortgage loans assigned to the ABFC.
Wells Fargo did provide the judge with a copy of the PSA, which is an agreement
between the ABFC (as depositor), Option One (as servicer), and Wells Fargo (as
trustee), but this copy was downloaded from the Securities and Exchange Commission
website and was not signed. The PSA provides that the depositor “does hereby transfer,
assign, set over and otherwise convey to the Trustee, on behalf of the Trust … all the
right, title and interest of the Depositor … in and to … each Mortgage Loan identified
on the Mortgage Loan Schedules,” and “does hereby deliver” to the trustee the original
mortgage note, an original mortgage assignment “in form and substance acceptable for
recording,” and other documents pertaining to each mortgage.
The copy of the PSA provided to the judge did not contain the loan schedules
referenced in the agreement. Instead, Wells Fargo submitted a schedule that it
represented identified the loans assigned in the PSA, which did not include property
addresses, names of mortgagors, or any number that corresponds to the loan number
or servicing number on the LaRace mortgage. Wells Fargo contends that a loan with
the LaRace property’s zip code and city is the LaRace mortgage loan because the
payment history and loan amount matches the LaRace loan.
On April 27, 2007, Wells Fargo filed a complaint under the Servicemembers Act in the
Land Court to foreclose on the LaRace mortgage. The complaint represented Wells
Fargo as the “owner (or assignee) and holder” of the mortgage given by the LaRaces
for the property. A judgment issued on behalf of Wells Fargo on July 3, 2007, indicating
that the LaRaces were not beneficiaries of the Servicemembers Act and that foreclosure
could proceed in accordance with the terms of the power of sale. In June, 2007, Wells
Fargo caused to be published in the Boston Globe the statutory notice of sale,
identifying itself as the “present holder” of the mortgage.

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Property

At the foreclosure sale on July 5, 2007, Wells Fargo, as trustee, purchased the LaRace
property for $120,397.03, a value significantly below its estimated market value. Wells
Fargo did not execute a statutory foreclosure affidavit or foreclosure deed until May 7,
2008. That same day, Option One, which was still the record holder of the LaRace
mortgage, executed an assignment of the mortgage to Wells Fargo as trustee; the
assignment was recorded on May 12, 2008. Although executed ten months after the
foreclosure sale, the assignment declared an effective date of April 18, 2007, a date that
preceded the publication of the notice of sale and the foreclosure sale.
Discussion. The plaintiffs brought actions under G.L. c. 240, § 6, seeking declarations
that the defendant mortgagors’ titles had been extinguished and that the plaintiffs were
the fee simple owners of the foreclosed properties. As such, the plaintiffs bore the
burden of establishing their entitlement to the relief sought. To meet this burden, they
were required “not merely to demonstrate better title … than the defendants possess,
but … to prove sufficient title to succeed in [the] action.” There is no question that the
relief the plaintiffs sought required them to establish the validity of the foreclosure sales
on which their claim to clear title rested.
Massachusetts does not require a mortgage holder to obtain judicial authorization to
foreclose on a mortgaged property. With the exception of the limited judicial procedure
aimed at certifying that the mortgagor is not a beneficiary of the Servicemembers Act,
a mortgage holder can foreclose on a property, as the plaintiffs did here, by exercise of
the statutory power of sale, if such a power is granted by the mortgage itself.
Where a mortgage grants a mortgage holder the power of sale, as did both the Ibanez
and LaRace mortgages, it includes by reference the power of sale set out in G.L. c. 183,
§ 21, and further regulated by G.L. c. 244, §§ 11-17C. Under G.L. c. 183, § 21, after a
mortgagor defaults in the performance of the underlying note, the mortgage holder
may sell the property at a public auction and convey the property to the purchaser in
fee simple, “and such sale shall forever bar the mortgagor and all persons claiming
under him from all right and interest in the mortgaged premises, whether at law or in
equity.” Even where there is a dispute as to whether the mortgagor was in default or
whether the party claiming to be the mortgage holder is the true mortgage holder, the

Mortgages and Foreclosures

729

foreclosure goes forward unless the mortgagor files an action and obtains a court order
enjoining the foreclosure.
Recognizing the substantial power that the statutory scheme affords to a mortgage
holder to foreclose without immediate judicial oversight, we adhere to the familiar rule
that “one who sells under a power [of sale] must follow strictly its terms. If he fails to
do so there is no valid execution of the power, and the sale is wholly void.”
…
One of the terms of the power of sale that must be strictly adhered to is the restriction
on who is entitled to foreclose. The “statutory power of sale” can be exercised by “the
mortgagee or his executors, administrators, successors or assigns.” Under G.L. c. 244,
§ 14, “[t]he mortgagee or person having his estate in the land mortgaged, or a person
authorized by the power of sale, or the attorney duly authorized by a writing under seal,
or the legal guardian or conservator of such mortgagee or person acting in the name
of such mortgagee or person” is empowered to exercise the statutory power of sale.
Any effort to foreclose by a party lacking “jurisdiction and authority” to carry out a
foreclosure under these statutes is void. See Davenport v. HSBC Bank USA, 275
Mich.App. 344, 347-348 (2007) (attempt to foreclose by party that had not yet been
assigned mortgage results in “structural defect that goes to the very heart of defendant’s
ability to foreclose by advertisement,” and renders foreclosure sale void).
A related statutory requirement that must be strictly adhered to in a foreclosure by
power of sale is the notice requirement articulated in G.L. c. 244, § 14. That statute
provides that “no sale under such power shall be effectual to foreclose a mortgage,
unless, previous to such sale,” advance notice of the foreclosure sale has been provided
to the mortgagee, to other interested parties, and by publication in a newspaper
published in the town where the mortgaged land lies or of general circulation in that
town. “The manner in which the notice of the proposed sale shall be given is one of
the important terms of the power, and a strict compliance with it is essential to the
valid exercise of the power.” See Chace v. Morse, supra (“where a certain notice is
prescribed, a sale without any notice, or upon a notice lacking the essential
requirements of the written power, would be void as a proceeding for foreclosure”).

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Property

Because only a present holder of the mortgage is authorized to foreclose on the
mortgaged property, and because the mortgagor is entitled to know who is foreclosing
and selling the property, the failure to identify the holder of the mortgage in the notice
of sale may render the notice defective and the foreclosure sale void. See Roche v.
Farnsworth, supra (mortgage sale void where notice of sale identified original
mortgagee but not mortgage holder at time of notice and sale).
For the plaintiffs to obtain the judicial declaration of clear title that they seek, they had
to prove their authority to foreclose under the power of sale and show their compliance
with the requirements on which this authority rests. Here, the plaintiffs were not the
original mortgagees to whom the power of sale was granted; rather, they claimed the
authority to foreclose as the eventual assignees of the original mortgagees. Under the
plain language of G.L. c. 183, § 21, and G.L. c. 244, § 14, the plaintiffs had the authority
to exercise the power of sale contained in the Ibanez and LaRace mortgages only if
they were the assignees of the mortgages at the time of the notice of sale and the
subsequent foreclosure sale. See In re Schwartz, 366 B.R. 265, 269
(Bankr.D.Mass.2007) (“Acquiring the mortgage after the entry and foreclosure sale
does not satisfy the Massachusetts statute”). See also Jeff-Ray Corp. v. Jacobson, 566
So.2d 885, 886 (Fla.Dist.Ct.App.1990) (per curiam) (foreclosure action could not be
based on assignment of mortgage dated four months after commencement of
foreclosure proceeding).
The plaintiffs claim that the securitization documents they submitted establish valid
assignments that made them the holders of the Ibanez and LaRace mortgages before
the notice of sale and the foreclosure sale. We turn, then, to the documentation
submitted by the plaintiffs to determine whether it met the requirements of a valid
assignment.
Like a sale of land itself, the assignment of a mortgage is a conveyance of an interest in
land that requires a writing signed by the grantor. In a “title theory state” like
Massachusetts, a mortgage is a transfer of legal title in a property to secure a debt.
Therefore, when a person borrows money to purchase a home and gives the lender a
mortgage, the homeowner-mortgagor retains only equitable title in the home; the legal
title is held by the mortgagee. See Vee Jay Realty Trust Co. v. DiCroce, 360 Mass. 751,

Mortgages and Foreclosures

731

753 (1972), quoting Dolliver v. St. Joseph Fire & Marine Ins. Co., 128 Mass. 315, 316
(1880) (although “as to all the world except the mortgagee, a mortgagor is the owner
of the mortgaged lands,” mortgagee has legal title to property). Where, as here,
mortgage loans are pooled together in a trust and converted into mortgage-backed
securities, the underlying promissory notes serve as financial instruments generating a
potential income stream for investors, but the mortgages securing these notes are still
legal title to someone’s home or farm and must be treated as such.
Focusing first on the Ibanez mortgage, U.S. Bank argues that it was assigned the
mortgage under the trust agreement described in the PPM, but it did not submit a copy
of this trust agreement to the judge. The PPM, however, described the trust agreement
as an agreement to be executed in the future, so it only furnished evidence of an intent
to assign mortgages to U.S. Bank, not proof of their actual assignment. Even if there
were an executed trust agreement with language of present assignment, U.S. Bank did
not produce the schedule of loans and mortgages that was an exhibit to that agreement,
so it failed to show that the Ibanez mortgage was among the mortgages to be assigned
by that agreement. Finally, even if there were an executed trust agreement with the
required schedule, U.S. Bank failed to furnish any evidence that the entity assigning the
mortgage--Structured Asset Securities Corporation--ever held the mortgage to be
assigned. The last assignment of the mortgage on record was from Rose Mortgage to
Option One; nothing was submitted to the judge indicating that Option One ever
assigned the mortgage to anyone before the foreclosure sale. Thus, based on the
documents submitted to the judge, Option One, not U.S. Bank, was the mortgage
holder at the time of the foreclosure, and U.S. Bank did not have the authority to
foreclose the mortgage.
Turning to the LaRace mortgage, Wells Fargo claims that, before it issued the
foreclosure notice, it was assigned the LaRace mortgage under the PSA. The PSA, in
contrast with U.S. Bank’s PPM, uses the language of a present assignment (“does
hereby … assign” and “does hereby deliver”) rather than an intent to assign in the
future. But the mortgage loan schedule Wells Fargo submitted failed to identify with
adequate specificity the LaRace mortgage as one of the mortgages assigned in the PSA.
Moreover, Wells Fargo provided the judge with no document that reflected that the
ABFC (depositor) held the LaRace mortgage that it was purportedly assigning in the

732

Property

PSA. As with the Ibanez loan, the record holder of the LaRace loan was Option One,
and nothing was submitted to the judge which demonstrated that the LaRace loan was
ever assigned by Option One to another entity before the publication of the notice and
the sale.
Where a plaintiff files a complaint asking for a declaration of clear title after a mortgage
foreclosure, a judge is entitled to ask for proof that the foreclosing entity was the
mortgage holder at the time of the notice of sale and foreclosure, or was one of the
parties authorized to foreclose under G.L. c. 183, § 21, and G.L. c. 244, § 14. A plaintiff
that cannot make this modest showing cannot justly proclaim that it was unfairly denied
a declaration of clear title.
We do not suggest that an assignment must be in recordable form at the time of the
notice of sale or the subsequent foreclosure sale, although recording is likely the better
practice. Where a pool of mortgages is assigned to a securitized trust, the executed
agreement that assigns the pool of mortgages, with a schedule of the pooled mortgage
loans that clearly and specifically identifies the mortgage at issue as among those
assigned, may suffice to establish the trustee as the mortgage holder. However, there
must be proof that the assignment was made by a party that itself held the mortgage.
A foreclosing entity may provide a complete chain of assignments linking it to the
record holder of the mortgage, or a single assignment from the record holder of the
mortgage. The key in either case is that the foreclosing entity must hold the mortgage
at the time of the notice and sale in order accurately to identify itself as the present
holder in the notice and in order to have the authority to foreclose under the power of
sale (or the foreclosing entity must be one of the parties authorized to foreclose under
G.L. c. 183, § 21, and G.L. c. 244, § 14).
The judge did not err in concluding that the securitization documents submitted by the
plaintiffs failed to demonstrate that they were the holders of the Ibanez and LaRace
mortgages, respectively, at the time of the publication of the notices and the sales. The
judge, therefore, did not err in rendering judgments against the plaintiffs and in denying
the plaintiffs’ motions to vacate the judgments.

Mortgages and Foreclosures

733

We now turn briefly to three other arguments raised by the plaintiffs on appeal. First,
the plaintiffs initially contended that the assignments in blank executed by Option One,
identifying the assignor but not the assignee, not only “evidence[ ] and confirm[ ] the
assignments that occurred by virtue of the securitization agreements,” but “are
effective assignments in their own right.” But in their reply briefs they conceded that
the assignments in blank did not constitute a lawful assignment of the mortgages. Their
concession is appropriate. We have long held that a conveyance of real property, such
as a mortgage, that does not name the assignee conveys nothing and is void; we do not
regard an assignment of land in blank as giving legal title in land to the bearer of the
assignment.
Second, the plaintiffs contend that, because they held the mortgage note, they had a
sufficient financial interest in the mortgage to allow them to foreclose. In
Massachusetts, where a note has been assigned but there is no written assignment of
the mortgage underlying the note, the assignment of the note does not carry with it the
assignment of the mortgage. Rather, the holder of the mortgage holds the mortgage in
trust for the purchaser of the note, who has an equitable right to obtain an assignment
of the mortgage, which may be accomplished by filing an action in court and obtaining
an equitable order of assignment. [Barnes v. Boardman, 149 Mass. 106, 114, 21 N.E.
308 (1889)] (“In some jurisdictions it is held that the mere transfer of the debt, without
any assignment or even mention of the mortgage, carries the mortgage with it, so as to
enable the assignee to assert his title in an action at law…. This doctrine has not
prevailed in Massachusetts, and the tendency of the decisions here has been, that in
such cases the mortgagee would hold the legal title in trust for the purchaser of the
debt, and that the latter might obtain a conveyance by a bill in equity”). In the absence
of a valid written assignment of a mortgage or a court order of assignment, the
mortgage holder remains unchanged. This common-law principle was later
incorporated in the statute enacted in 1912 establishing the statutory power of sale,
which grants such a power to “the mortgagee or his executors, administrators,
successors or assigns,” but not to a party that is the equitable beneficiary of a mortgage
held by another.
Third, the plaintiffs … argue that the use of postsale assignments was customary in the
industry, and point to Title Standard No. 58(3) issued by the Real Estate Bar

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Property

Association for Massachusetts, which declares: “A title is not defective by reason of …
[t]he recording of an Assignment of Mortgage executed either prior, or subsequent, to
foreclosure where said Mortgage has been foreclosed, of record, by the Assignee.” To
the extent that the plaintiffs rely on this title standard for the proposition that an entity
that does not hold a mortgage may foreclose on a property, and then cure the cloud on
title by a later assignment of a mortgage, their reliance is misplaced because this
proposition is contrary to G.L. c. 183, § 21, and G.L. c. 244, § 14. If the plaintiffs did
not have their assignments to the Ibanez and LaRace mortgages at the time of the
publication of the notices and the sales, they lacked authority to foreclose under G.L.
c. 183, § 21, and G.L. c. 244, § 14, and their published claims to be the present holders
of the mortgages were false. Nor may a postforeclosure assignment be treated as a
preforeclosure assignment simply by declaring an “effective date” that precedes the
notice of sale and foreclosure, as did Option One’s assignment of the LaRace mortgage
to Wells Fargo. Because an assignment of a mortgage is a transfer of legal title, it
becomes effective with respect to the power of sale only on the transfer; it cannot
become effective before the transfer.
However, we do not disagree with Title Standard No. 58(3) that, where an assignment
is confirmatory of an earlier, valid assignment made prior to the publication of notice
and execution of the sale, that confirmatory assignment may be executed and recorded
after the foreclosure, and doing so will not make the title defective. A valid assignment
of a mortgage gives the holder of that mortgage the statutory power to sell after a
default regardless whether the assignment has been recorded. Where the earlier
assignment is not in recordable form or bears some defect, a written assignment
executed after foreclosure that confirms the earlier assignment may be properly
recorded. A confirmatory assignment, however, cannot confirm an assignment that
was not validly made earlier or backdate an assignment being made for the first time.
Where there is no prior valid assignment, a subsequent assignment by the mortgage
holder to the note holder is not a confirmatory assignment because there is no earlier
written assignment to confirm. In this case, based on the record before the judge, the
plaintiffs failed to prove that they obtained valid written assignments of the Ibanez and
LaRace mortgages before their foreclosures, so the postforeclosure assignments were
not confirmatory of earlier valid assignments.

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Finally, we reject the plaintiffs’ request that our ruling be prospective in its application.
A prospective ruling is only appropriate, in limited circumstances, when we make a
significant change in the common law. We have not done so here. The legal principles
and requirements we set forth are well established in our case law and our statutes. All
that has changed is the plaintiffs’ apparent failure to abide by those principles and
requirements in the rush to sell mortgage-backed securities.
Conclusion. For the reasons stated, we agree with the judge that the plaintiffs did not
demonstrate that they were the holders of the Ibanez and LaRace mortgages at the time
that they foreclosed these properties, and therefore failed to demonstrate that they
acquired fee simple title to these properties by purchasing them at the foreclosure sale.
Judgments affirmed.
CORDY, J. (concurring, with whom Botsford, J., joins).
I concur fully in the opinion of the court, and write separately only to underscore that
what is surprising about these cases is not the statement of principles articulated by the
court regarding title law and the law of foreclosure in Massachusetts, but rather the
utter carelessness with which the plaintiff banks documented the titles to their assets.
There is no dispute that the mortgagors of the properties in question had defaulted on
their obligations, and that the mortgaged properties were subject to foreclosure. Before
commencing such an action, however, the holder of an assigned mortgage needs to
take care to ensure that his legal paperwork is in order. Although there was no apparent
actual unfairness here to the mortgagors, that is not the point. Foreclosure is a powerful
act with significant consequences, and Massachusetts law has always required that it
proceed strictly in accord with the statutes that govern it. As the opinion of the court
notes, such strict compliance is necessary because Massachusetts is both a title theory
State and allows for extrajudicial foreclosure.
The type of sophisticated transactions leading up to the accumulation of the notes and
mortgages in question in these cases and their securitization, and, ultimately the sale of
mortgaged-backed securities, are not barred nor even burdened by the requirements of
Massachusetts law. The plaintiff banks, who brought these cases to clear the titles that
they acquired at their own foreclosure sales, have simply failed to prove that the

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underlying assignments of the mortgages that they allege (and would have) entitled
them to foreclose ever existed in any legally cognizable form before they exercised the
power of sale that accompanies those assignments. The court’s opinion clearly states
that such assignments do not need to be in recordable form or recorded before the
foreclosure, but they do have to have been effectuated….
Notes and Questions
1. In a “title” theory state like Massachusetts, the mortgagee in theory has legal
title to the property, though the mortgagee holds it in trust for the mortgagor,
who has equitable title. The alternative “lien” theory holds that legal title
remains in the mortgagor, and the mortgage is merely a lien on the property.
Does the difference between title theory and lien theory make any difference in
this case? (Because of the mortgagor’s equitable title in title theory states, the
general modern answer is that there is no difference in the governing legal
principles, but the reasoning may vary from state to state.) What about the fact
that the foreclosure was done through a nonjudicial power of sale—should that
make a difference?
2. One of the reasons the court gives for its judgment is that, in Massachusetts,
assignment in blank isn’t allowed for an interest in land. Why might the
legislature make such a rule? This is not the rule in all states, but amazingly the
originators didn’t pay much attention to state by state variations.
3. Who owns the houses at issue, after the opinion? What steps should the banks
take now? What is the effect of Massachusetts’ recording statute on a scenario
in which a third party buys the property at the foreclosure sale and records?
4. Consider the following excerpt from Paul McMorrow, A new act in foreclosure
circus, BOSTON GLOBE (January 14, 2011):
According to the real estate tracker the Warren Group, there have
been more than 44,000 residential foreclosures recorded in
Massachusetts since 2006. In the majority of those cases, the
foreclosing bank turned around and re-sold the seized property.

Mortgages and Foreclosures

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So there are now tens of thousands of Massachusetts residents
living in homes that, until relatively recently, belonged to
somebody else.
… I took a random sample of 30 foreclosure deeds from Chelsea
(one of the cities hit hardest by foreclosures) since the beginning
of 2006. Of those 30 foreclosure cases, 10 had paperwork on file
with the Registry of Deeds that raised the sort of chain-ofcustody concerns at the heart of the Ibanez decision. In one case,
no mortgage was on file with the registry. Another showed no
paperwork assigning the note to a mortgage servicer. In other
cases, mortgage originators didn’t sign off on documents
transferring the notes into mortgage pools, or transfer paperwork
was filed after a foreclosure occurred. All of the properties have
since been re-sold.
That’s not to say any of those foreclosures will or should be
overturned in court. But it is an indication of how pervasive
sloppy record-keeping was, and how many foreclosures could be
challenged on technical grounds based on the recent SJC decision.
And it presents a series of terrible questions to anyone who
bought a foreclosed house from a big bank. Among them: Is my
mortgage valid? Will I be able to refinance or sell my home? Do
I even really own my house?
How would you go about answering McMorrow’s questions for a client?
5. Consider also Abigail Field, Lawyers’ Carelessness Was Key to the Mortgage Mess,
DAILYFINANCE (Feb. 1, 2011):
The Ibanez case highlighted a basic, non-due-diligence problem
too -- one that, according to bankruptcy and legal-aid attorneys I
speak with, is occurring across the country. The banks’ lawyers
can’t produce complete sets of securitization contracts even after
being given the specific opportunity to do so. In various cases,

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Property

the banks have submitted unsigned drafts. They’ve submitted
signed copies of some contracts, but not even drafts of others.
And they’ve submitted contracts without their exhibits, like a list
of the mortgages being securitized.
Every corporate deal I was ever involved with resulted in “closing
sets,” a series of binders containing every contract with each
exhibit. … [A] key part of the value lawyers add is keeping the
documents in good order and accessible to their clients when
needed.
So, the issue of partial deal documents that came to light in Ibanez
and continues to crop up elsewhere means one of three things:
1. Securitization deals were so carelessly done that, despite all the
proper documents being created, closing sets don’t exist.
2. Securitization deals were so carelessly done that not all the
proper documents were created (such as lists of the mortgages
involved) and so closing sets don’t exist.
3. All the documents and closing sets are fine, and the big banks
have grown so incompetent they can’t give their foreclosure
attorneys deal documents that they do have or could get from
their securitization counsel.
I’m not sure which of these is worst.
What should the banks’ lawyers have done with the documents they had available
to use in the foreclosure process?
6. Review the alleged chain of title for the Ibanez/US Bancorp mortgage. US
Bancorp took the mortgage from a now-bankrupt subsidiary of the nowbankrupt firm Lehman Brothers. Getting an assignment from Lehman may be
difficult or even impossible. Among other things, because Lehman is bankrupt,
it may not transfer assets out of its estate to particular creditors without going

Mortgages and Foreclosures

739

through extensive proceedings that are designed to be fair to all the creditors.
Regardless, an assignment from Lehman would be insufficient: there is still the
undocumented Option One-Lehman transfer. It might be simplest for US
Bancorp to go straight to Option One and ask for an assignment. But US
Bancorp didn’t buy the mortgage from Option One. There is no contractual
relationship between those two entities and thus no duty on Option One to do
everything necessary to ensure that US Bancorp has good title. Even if US
Bancorp asks Option One for an assignment, Option One likely regarded the
mortgage as sold to Lehman many years back and may not have appropriate
records. Furthermore, Option One may consider any attempt to assign a
mortgage that was already sold to Lehman to be legally risky; it will certainly
want US Bancorp to indemnify it and likely to pay extra for the privilege of
getting the assignment. This problem is not confined to loans that passed
through Lehman (though there were a great many that did)—many companies
involved in the mortgage bubble have entered bankruptcy or changed
ownership, making documentation of the assignments all but impossible.
7. Given that the mortgages were concededly in default, is there any reason to
insist on the formalities in cases like this? After all, the one thing we know is
that the homeowners weren’t paying what they owed. See, e.g., Editorial, The
Politics of Foreclosure, WALL ST. J. (Oct. 9, 2010). But see Miller v. Homecomings
Financial, LLC, 881 F. Supp. 2d 825, 832 (S.D.Tex. 2012) (“Banks are neither
private attorneys general nor bounty hunters, armed with a roving commission
to seek out defaulting homeowners and take away their homes in satisfaction of
some other bank’s deed of trust.”); David A. Dana, Why Mortgage “Formalities”
Matter, 24 LOY. CONSUMER L. REV. 505 (2012) (given the importance of the
home, and of the rule of law, formalities matter, and may also deter future
careless lending).
8. Sometimes the sloppiness in record-keeping led to truly astonishing errors. In
a random audit on WaMu Mortgage Pass-Through Certificates, Mortgage Loan
Trusts, one loan was found in 6 different trusts, another loan was found in five
trusts’ original SEC loan level data, 39 were listed in 3 trusts, and 503 were listed
in two separate trusts. The most extreme example, a New York condo, appeared

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Property

in 6 different trusts from May through November 2006. Gary Victor Dubin,
Securitized
Distrust
(Mar.
15,
2012),
https://deadlyclear.wordpress.com/2012/03/15/securitized-distrust/.
9. Occasionally, evidence of these careless procedures appears in official title
records. Recall that, in order to move the mortgage from its originator to its
ultimate holder, an assignment was required—usually more than one, with a
chain going from the originator, to the sponsor who lent the originator money
to make the loan, to the depositor that funded the sponsor, to the trust that
ultimately held the mortgages as assets underlying the mortgage-backed
securities it issued. Who exactly is the assignee in this record from Nassau
County, New York?

Mortgages and Foreclosures

741

10. The toxic brew of carelessness, unprecedented volume of foreclosures, and
disregard for the rights of borrowers has finally begun to attract judicial
attention. A bankruptcy judge recently identified
“a general willingness and practice on Wells Fargo’s part to create
documentary evidence, after‐the‐fact, when enforcing its claims,
WHICH IS EXTRAORDINARY. Moreover, [the Wells Fargo
employee’s] testimony does not stop at describing manufactured
mortgage assignments. … [T]he “assignment team” included
people tasked with endorsing notes [from other entities to Wells
Fargo]… Frankly, it does not appear that [the Wells Fargo
employee] understood the difference between preparing
legitimate assignments and indorsements by Wells Fargo and
improper assignments and indorsements to Wells Fargo.”
In re Carrsow-Franklin, No. 10‐20010 (S.D.N.Y. Bkcy. Jan. 29, 2015) (emphasis
in original). What responsibility do lawyers have to train employees in charge
of tasks with such legal relevance?
Note on Subsequent Purchasers
Bevilacqua v. Rodriguez, 460 Mass. 762, 955 N.E.2d 884 (2011), dealt with property
owners with defective title resulting from Ibanez-style foreclosure problems earlier in
the chain. In other words, the mortgagee (or, realistically, its representative/putative
representative) had foreclosed in a manner held unlawful by Ibanez, then had sold the
house again to a new buyer. The Massachusetts high court held that the new buyers
could not clear title under the Massachusetts “try title” procedure, which is a way that
an owner can quiet title and establish which of competing claims is valid. The court
ruled that procedure is only available to people who can plausibly claim to be owners.
In Bevilacqua, the chain of title had been broken by the unsuccessful foreclosure before
the purchase, and so the new buyer couldn’t bring a plausible claim as an owner. This
is not a terribly surprising result: if someone records a deed to the Brooklyn Bridge,
then brings a try title claim to confirm her ownership, title to the bridge is not conveyed
magically even if the true owner fails to show up.

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Property

The Bevilacqua court left open the possibility that owners/lenders could try to put the
chain of title back together and conduct a new, valid foreclosure, though this will
certainly prove complicated in practice, as the notes above suggest. Another possibility
is to track down the old preforeclosure owner (who is still the owner because of the
Ibanez problem) and obtain a quitclaim deed from her. If you represented an old owner
in this situation, what would you counsel? What if you represented a new buyer?
Is it fair to strip the new buyer of title, when the buyer is unlikely to have any
responsibility (or even much understanding of) the shoddy recording practices that
caused the problem? How else should we resolve the problem? Bevilacqua/his title
insurer will have a claim against the seller, but we still need to know who gets the
house—you should be able to see similarities from our discussion of stolen property.

I. An Additional Puzzle Piece: The Mortgage and the Note
As previously discussed, what we conventionally call a “mortgage” actually has two
parts. The “note” is the borrower’s promise to repay the debt: the note is governed by
contract law, or more specifically commercial law. The note specifies the terms of the
debt, including late fees and how interest is calculated. It can be replaced by a “Lost
Note Affidavit,” but that’s supposed to be for special circumstances. The “mortgage”
is the interest in land associated with the loan. It is a lien, governed by real estate law.
The mortgage is the thing that should be filed and recorded. The mortgage is what
gives the lender the right to take the collateral (the house) if the note isn’t paid by the
borrower.
Why split things up in this way? It seems to offer more opportunities for things to go
wrong. Is there a reason not to put the two documents together and require the
“mortgage” to contain all the terms of the debt? What happens if the ownership of
the two legal interests, and custody of the two documents, becomes separated? The
standard rule is that “[t]he note is the cow and the mortgage the tail. The cow can
survive without a tail, but the tail cannot survive without the cow.” Best Fertilizers of
Ariz., Inc. v. Burns, 571 P.2d 675, 676 (Ariz. Ct. App. 1977), rev’d on other grounds, 570
P.2d 179 (Ariz. 1977) (quoting Professor Chester Smith). That is, the note is the real

Mortgages and Foreclosures

743

debt; a mortgage with no associated note is worthless. However, a note with no
associated mortgage is just an unsecured loan.
Because of this, the law does not favor separation of the note and the mortgage, and
works very hard to impute a relationship between them that makes the mortgage
enforceable. The Restatement (Third) of Property (Mortgages) states that “in general a
mortgage is unenforceable if it is held by one who has no right to enforce the secured
obligation.” As a result, if the mortgagee transfers the mortgage to A and the note to
B, neither can foreclose unless A can foreclose on B’s behalf. Thus, the Restatement
concludes,
The [necessary] trust or agency relationship may arise from the terms of
the assignment, from a separate agreement, or from other circumstances.
Courts should be vigorous in seeking to find such a relationship, since
the result is otherwise likely to be a windfall for the mortgagor and the
frustration of B’s expectation of security.
See also Eaton v. Federal National Mortgage Association, 462 Mass. 569 (2012)
(mortgage foreclosure may only be carried out by one who holds the mortgage and also
either holds the note or acts on behalf of the note holder).
Most of our discussion, and most of the litigation over chain of title, has focused on
problems with the mortgages, not the notes. It seems undeniable, however, that there
are similar if not worse issues with the notes (and MERS never purported to track
notes). Some have argued that transfers of the notes are governed by the Uniform
Commercial Code’s provisions for negotiable instruments, not by state foreclosure
statutes. See, e.g., Dale A. Whitman & Drew Milner, Foreclosing on Nothing: The Curious
Problem of the Deed of Trust Foreclosure Without Entitlement to Enforce the Note, 66 ARK. L.
REV. 21 (2013). A number of states seem to agree that the mortgagor has nothing to
complain about if she’s in default, and that she lacks standing to challenge ownership
of the note. If the wrong claimant takes the property, the right claimant can sue.
The contrary position relies on relativity of title: peaceable possessors have legitimate
rights until someone proves better title. Just because a possessor doesn’t have a right
to be on the property doesn’t mean that she can be ejected by someone with no better

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claim. See Tapscott v. Lessee of Cobbs, 11 Gratt. 172, 52 Va. 172 (1854); see also
Yvanova v. New Century Mortgage Corp., No. S218973 (Cal. Feb. 18, 2016) (borrower
has standing to sue for wrongful foreclosure when the foreclosing party allegedly didn’t
own the note and deed of trust; “[t]he borrower owes money not to the world at large
but to a particular person or institution, and only the person or institution entitled to
payment may enforce the debt by foreclosing on the security”).

J. What Now?
Despite all these flaws in the system, shouldn’t the borrowers just have paid? After all,
if they hadn’t defaulted, they wouldn’t have entered into the resulting hellscape.
Even if you excuse the victims of fraud from this claim—and there were many—it is
important to remember that the mortgage contract is not just an agreement that the
home may be sold upon a default on the loan. It’s an agreement that if the homeowner
defaults on the loan, the mortgagee may sell the property following the required legal
procedure. A mortgage loan involves a bundle of rights, including procedural rights.
These rights have a price: for example, loans in judicial foreclosure states have
historically been more expensive than loans in nonjudicial foreclosure states. When
the lender (or someone claiming rights as successor of the lender) ignores the rights,
it’s getting something it hasn’t paid for.
Entirely separately, we might want people to be able to renegotiate their deals when
renegotiation makes everyone better off—but with the system the way it is, that’s
proven extremely difficult. Procedural protections provide both time and negotiating
leverage.
For an eye-opening account by one young lawyer of the messy process of seeking a
loan modification for a borrower, see Wajahat Ali, Could It Be That the Best Chance
To Save a Young Family from Foreclosure Is a 28-Year-Old Pakistani American
Playright-Slash-Attorney Who Learned Bankruptcy Law on the Internet?,
McSweeney’s (Jan. 2010), http://www.mcsweeneys.net/articles/could-it-be-that-thebest-chance-to-save-a-young-family-from-foreclosure-is-a-28-year-old-pakistaniamerican-playright-slash-attorney-who-learned-bankruptcy-law-on-the-internet.

Mortgages and Foreclosures

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Essentially, Ali could never get the same answer twice from the servicer; it repeatedly
denied receiving documents supporting his clients’ request for modification; it denied
modifications based on completely mistaken premises; and it didn’t even tell him or his
clients when it finally did grant a modification, leaving them expecting foreclosure. It
took multiple threats to file bankruptcy, which would have automatically stayed a
foreclosure, to induce the servicer to respond.
Federal bank regulators signed settlements in March 2011 with 14 loan servicers, who
promised further internal investigations, remediation for some who were harmed, and
a halt to the filing of false documents. The servicers claimed to have ended this
behavior in late 2010. Reuters examined a large number of foreclosure filings and
concluded that, to the contrary, robo-signing was ongoing. In February 2012 the
servicers promised to stop again. There’s very little indication that they’ve stopped.
However, the major servicing companies did enter into a $25 billion settlement with
federal and many state officials that was supposed to compensate homeowners for
servicing errors and require better behavior going forward. In response, property
professor Mark Edwards wrote:
Let’s say I hire an armed gang to expel you from your house. My gang
removes all of your belongings, changes the locks, and warns you that
you’d better not try to come back. I then sell your house to someone
else. You might have called the police, but the armed gang I hired
actually are the police. You might have gone to court to stop me, but
the court is on my side, because I deliberately mislead the courts. Now
let’s say I did the same thing thousands and thousands of times to other
people as well. And you can prove it. I’d be in pretty big trouble,
wouldn’t I? ….
[The settlement provides for] $1500 to $2000 per home…. $1500-2000
is less than the legal expenses banks incur when a foreclosure is
challenged. It’s less than title insurance on homes worth over $200K.
Why would regulators agree to a settlement of this magnitude? What were the
alternatives?

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Property

Mortgage crisis-related disputes continue. For example, in March 2015, the
Department of Justice’s U.S. Trustee Program (USTP), which oversees bankruptcy
estates, entered into a national settlement agreement with JPMorgan Chase Bank N.A.
requiring Chase to pay more than $50 million to over 25,000 homeowners who are or
were in bankruptcy. Among other things, Chase acknowledged that it filed more than
50,000 payment change notices that were improperly signed, under penalty of perjury,
by persons who had not reviewed the accuracy of the notices.
In 2013, the Consumer Finance Protection Bureau issued national rules on mortgage
servicing standards. Except for smaller servicers, mortgage servicers must make goodfaith efforts to contact borrowers by the 36th day of delinquency and tell them about
loss mitigation options, such as short sales and loan modifications. By day 45, servicers
must send written notice of these options and the name of a contact person. Servicers
may only begin foreclosures if a homeowner is over 120 days delinquent, and a
borrower’s pending loss mitigation application precludes the initiation of a foreclosure.
If the foreclosure has been initiated when a borrower submits a loss mitigation
application, the servicer may not move for final judgment or sale as long as the
application is complete 37 days before the sale. Servicers may not “double-track”—
pursue mitigation measures with a borrower while also continuing the foreclosure
process. If the servicer denies the borrower’s application, it must give specific reasons
and afford a right of appeal. Mortgage Servicing Rules Under the Real Estate
Settlement Procedures Act (Regulation X), 78 Fed. Reg. 10696 (codified at 12 C.F.R.
§1024) (2013).
As a result of changes in foreclosure procedures and servicer behavior, the average
time between the beginning of a foreclosure and its end has increased substantially. In
2007, a foreclosure in New York took less than 300 days, while it took 1089 days by
the end of 2012. California, which more commonly uses the speedier nonjudicial
foreclosure process, experienced a more than doubled time of 347 days. RealtyTrak,
(2013),
2013
Short
Sale
Trends
http://www.slideshare.net/fullscreen/RealtyTrac/2013-short-sale-trends/1.
What are the possible benefits of delay for homeowners? What about the possible
risks? In some cases, servicers initiate foreclosures but do not complete them, leading

Mortgages and Foreclosures

747

to so-called “zombie foreclosures.” Completing the foreclosure would make the
mortgagee the legal owner of the property, subject to property taxes and to the duty to
avoid creating a nuisance condition on the property. In markets with many empty
houses, the mortgagee may well wish to avoid this outcome, because it won’t be able
to sell the house quickly or otherwise recoup its maintenance costs. In addition, when
people believe that they will soon be kicked out, they tend not to maintain the property,
and some even deliberately inflict damage. However, the mortgagors are often unaware
of their continuing legal duties, and abandon the property in the belief that the
foreclosure will occur, exposing themselves to unforeseen liability and their
communities to further deterioration of the tax base and the physical condition of
homes. Is there anything law could do to mitigate the problem of such “zombie
foreclosures”?
Various programs have attempted to help homeowners at risk of foreclosure, with
generally modest results. The federal government set up the Home Affordable
Modification Program (HAMP), which was supposed to keep four million
homeowners in their homes by reducing interest rates and extending repayment times,
though not by forgiving principal. Six years later, under 900,000 homeowners were
participating in modifications. Servicers rejected four million applications, or 72% of
requests. The main culprits were the fact that the program was voluntary, and that the
servicers were allowed to run the process on their own. In 38% of cases, the servicers
claimed that the borrowers failed to supply all the paperwork or to make the first
modified payment. Office of the Special Inspector General for the Troubled Asset
Relief Program (SIGTARP), Quarterly Report to Congress (July 29, 2015). Not all of
that paperwork was actually absent. In 2014, SIGTARP found that the employees of
one servicer piled so many unopened Federal Express packages from homeowners
containing their HAMP supporting documents into one room that eventually the floor
buckled. SIGTARP also found that this servicer denied homeowners from HAMP en
masse, without reviewing their applications at all.
Incompetence plays a large role, but that incompetence also may redound to the benefit
of servicers: in one case, for example, a servicer delayed responding to a HAMP
modification request four times over nearly two years, adding $40,000 in interest, fees,
and costs to the amount the borrower allegedly owed. The servicer first mistakenly

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denied a modification because it inexplicably decided that the borrower didn’t live at
the residence. Then it mistakenly denied a modification as unaffordable because it
inexplicably used the wrong figures to calculate the borrower’s income despite
extensive documentation of the correct figures. Then it mistakenly denied a
modification because the borrower allegedly had too much money in the bank to
qualify; this money was in fact the amount the borrower had set aside in escrow to pay
the mortgage, as directed by the court-appointed referree. The servicer also maintained
that the borrower hadn’t submitted complete documentation for his modification
application, though when the referree directed a representative of the servicer to appear
at a hearing, the representative (who had just testified to her personal knowledge of
this incompleteness) was able to pull up the full application on her laptop. Finally, the
servicer denied a modification as unaffordable, without further explanation of how it
calculated affordability. See US Bank N.A. v Sarmiento, 121 A.D.3d 187 (N.Y. App.
Div. 2014). The court found that the servicer’s lack of good faith disqualified it from
claiming the additional amount owed. As the lawyer for the borrower, how would you
have dealt with two years of delay by the servicer?
In the absence of further federal legislation, states may have more options in dealing
with foreclosure abuses, because foreclosure procedure is a state-law matter. See
CENTER FOR RESPONSIBLE LENDING AND CONSUMERS UNION, CLOSING THE GAPS:
WHAT STATES SHOULD DO TO PROTECT HOMEOWNERS FROM FORECLOSURE (May
2013). The most effective programs seem to be those that require mandatory
mediation between the mortgagee and the homeowner before a foreclosure can
proceed. The most effective of those require the mortgagee to send a representative
with (1) authority to negotiate a modification and (2) proof of the chain of title to the
mortgage. Why do you think that voluntary programs, under which homeowners are
entitled to mediation but must affirmatively request it, are less effective than mandatory
programs? What effects will requiring proof of the chain of title have on the parties’
negotiations? If you were an attorney for a servicer, what would you ask for from
homeowners in return for a modification that left them with the ability to stay in their
homes?
Massachusetts law now prohibits a creditor from publishing notice of an intended
foreclosure sale for many residential mortgages unless the creditor “has first taken

Mortgages and Foreclosures

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reasonable steps and made a good faith effort to avoid foreclosure.” MASS. GEN. LAWS
ch. 244 §35B. The creditor must calculate the relative benefits of foreclosure and
modification, and must offer the borrower a modified mortgage loan with an affordable
payment (if the net present value of such a loan exceeds the anticipated recovery from
foreclosure) or notify the borrower that he is not eligible for a modification and provide
the borrower with copies of the creditor’s net present value and affordable payment
analyses. One might think that no law would be required to require creditors to
maximize their profits from a loan, but creditors didn’t want to engage in individualized
determinations. Is the Massachusetts model a good one?
In New York, the courts implemented a requirement that lawyers filing for foreclosure
had to certify that they had taken “reasonable” measures to verify the accuracy of
documents submitted to the court, under penalty of sanctions. The month before this
requirement went into place, roughly 100-200 foreclosures were filed each day. The
next month, no more than 5 foreclosures were filed on any given day, with the
exception of one day in which 22 foreclosures were filed. Amazingly, this requirement
replaced a previous order requiring attorneys for foreclosing entities to certify that to
the best of their knowledge there weren’t any false statements of fact or law in their
documents.
New York’s system also includes pre-foreclosure conferences; although they are
voluntary, they are encouraged, and the courts presently get 80% of foreclosure
defendants to show up for a pre-foreclosure conference session. Thus, there is a real
risk that someone will challenge the foreclosure documents if they’re not in order. In
order to make such programs work, it is important to convince homeowners that there
is some hope—many have engaged in futile attempts to get a modification before. If
they aren’t encouraged, many of them believe that the judicial procedure is just another
runaround. Is the New York model a good one?

K. Concluding Thoughts
The history of mortgages includes many episodes in which financial and legal
innovations hurt borrowers by undercutting the various protections they traditionally
could depend on, such as clarity in knowing who they were dealing with in a loan

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transaction. In the most recent iteration of the cycle, the same financial and legal
innovations created systematic trouble on the lender side. This too is a property story:
the securitized pools (a new kind of property distinct from the property rights in the
underlying mortgages) helped create the moral hazard that led brokers to make bad
loans and stick the mortgage-backed security buyers with toxic junk. The investors in
the securities were unwilling or unable, or sometimes both, to examine individual loans
and instead invested on the theory that enough loans in the pool would pay off to justify
the investment, so they didn’t pay enough attention to the quality of the individual
underlying loans. Is it possible to split property up in so many ways that the new rights
become dangerous instead of productive?
Finally: Frederic Bastiat wrote, “When plunder becomes a way of life for a group of
men living together in society, they create for themselves in the course of time a legal
system that authorizes it and a moral code that glorifies it.” Does his claim help explain
MERS? What about Johnson v. M’Intosh?

Recording Acts
Famed con artist George C. Parker specialized in selling the Brooklyn Bridge. Parker
and other con artists working in New York around the start of the 20th century would
convince victims that they stood to make a fortune charging tolls. Unfortunately, the
buyers obtained nothing, no matter how fancy the paperwork Parker offered them,
because Parker did not own the bridge. Nemo dat quod non habet was the Latin motto of
the common law: “No man can give what he does not have.” Parker, having no title,
could give none to his buyers.
Today, “I’ve got a bridge to sell you” is a punchline: only an incredible rube, we like to
believe, could be so gullible as to think that a man in the street with a “Bridge for Sale”
sign is actually its owner. But the problem arises even in less dramatic cases. Suppose
Dorothy Dupe is scheduled to buy Blackacre on Wednesday from Sadie Scamalot.
What if on Tuesday Scamalot sells Blackacre to Charles Clueless first? Then on
Wednesday before the “sale,” Scamalot is no longer the owner of Blackacre, and under
nemo dat, Dupe owns nothing after the “sale.” Sometimes, equity would intervene to
protect a second buyer who lacked notice of the prior sale—but such doctrines have
serious risks for Clueless, who may have no idea that Scamalot is about to turn around
and “sell” Blackacre again.
The heart of the problem here is that Clueless and Dupe don’t know enough about
potential conflicting claims to Blackacre. Dupe can’t find Clueless to confirm that she
should be dealing with him rather than with Scamalot, and Clueless can’t find Dupe to
warn her off from buying something Scamalot no longer owns. Recording systems try
to prevent some of these messes by making available better information about who
owns what. If Clueless recorded his interest in Blackacre by making it a matter of public
record, then it becomes reasonable to treat Dupe as having constructive notice of Clueless’s
claim of ownership: even if she didn’t check the records, she should have. Conversely,
if Clueless fails to record, there is much less Dupe can do to protect herself, so it
becomes reasonable to let Dupe take title free and clear of Clueless’s claim. Thus, the
system gives Clueless a strong incentive to record and gives Dupe a strong incentive to
check the records. As a result, there are good records of people’s property claims.
751

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Clueless and Dupe never get into this mess in the first place, and Scamalot’s scheme
fails.
Recording systems are useful even in the absence of fraud; they create the trust and
certainty needed to make land transactions common and reliable. Most home sales
today happen between people who do not otherwise know each other and don’t
otherwise expect to transact again. How can the buyer be sure the seller is really the
owner? A recording system provides the answer. Perhaps more importantly, a
recording system gives lenders sufficient assurance that they’ll be able to recover
something in case of a loan default; with that security, they are willing to loan more and
at lower rates.
For this and other reasons, a recording system can be a vital part of a large-scale,
modern economy. According to the New York Times, for example, the absence of a
functioning recording system in Greece “scares off foreign investors; makes it hard for
the state to privatize its assets, as it has promised to do in exchange for bailout money;
and makes it virtually impossible to collect property taxes.” Suzanne Daley, Who Owns
This Land? In Greece, Who Knows?, NEW YORK TIMES (May 26, 2013). Clear title is often
important for access to government services and even water and electricity
connections: otherwise it’s not clear where the checks and bills should go.
The materials in this section work through real property recording systems from the
outside in. First, another excerpt from a previously encountered article by Carol Rose
traces some recurring themes in the history of recording law. Second, Argent Mortgage
Co. v. Wachovia Bank N.A. considers the main variations of real property recording
systems under state recording acts, many of which create additional incentives to record
quickly by creating a “race” to the recording office. Third, Hartig v. Stratman examines
the process of searching title records: what must a reasonable buyer do to confirm that
there are no conflicting claims? Board of Education of Minneapolis v. Hughes then illustrates
the kinds of messes that can arise even with a reasonably well-functioning recording
system. Next, we briefly examine how the shoddy recordkeeping that was the hallmark
of the mortgage crisis has infiltrated real property recording systems through the
vehicle of MERS: a private, computerized recordkeeping system created by financial
institutions to facilitate assignments of mortgages while circumventing the public

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recording system. A Note on Informal Title finishes by considering some of the
systemic advantages that have been claimed for well-functioning public recording
systems, and some of the empirical evidence for and against those claims.
Carol M. Rose, Crystals And Mud In Property Law
40 STAN. L. REV. 577 (1988)
(excerpts reprinted by permission)
… In establishing recording systems, legislatures have lent support to private parties’
efforts to sharpen the definition of their entitlements. The raison d’etre of such systems
is to clarify and perfectly specify landed property rights for the sake of easy and smooth
transfers of land.
But the Anglo-American recording system in fact has been a saga of frustrated efforts
to make clear who has what in land transfers. Common law transfers of land required
a certain set of formalities between the parties, but thereafter, conflicting claims were
settled by the age-old principle, ‘first in time, first in right.’ Thus, on Tuesday I might
sell my farm to you, and on Wednesday I might wrongfully purport to sell it once again
to innocent Farmer Brown. Poor Farmer Brown remains landless even though he knew
nothing about the prior sale to you and indeed had no way of knowing about it. This
outcome was hardly satisfactory from a property rights perspective. ‘First in time, first
in right’ may work well enough in a community where everyone knows all about
everyone else’s transactions, but outside that context, the doctrine does little to put
people on notice of who owns what, and the opportunities for conflicting claims are
endless.
But the efforts to remedy this flaw have gone through new cycles of certainty and
uncertainty. Henry VIII attempted—without great success—to establish public
registration of land claims through the Statute of Enrollments in 1536. Versions of the
Statute resurfaced in Massachusetts’ 1640 recording act and in other seventeenth and
eighteenth century colonial recording acts, all of which were much more widely (though
still somewhat irregularly) applied than their Henrician model had been.
Henry’s Statute and its original American counterparts reflected an emphatically
crystalline view of property. Their literal language suggests that they were versions of

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what has come to be called a ‘race’ statute) the first purchaser to record (the winner of
the ‘race’ to the registry) can hold his title against all other claimants, whether or not
he was in fact the first to purchase. In such a system, the official records become an
unimpeachable source of information about the status of land ownership; the law
counts the record owner, and only the record owner, as the true owner. The purchaser
can buy in reliance on the records without fear of divestment by some unknown
interloper, and without the need to make some cumbersome extra-record search for
such potential interlopers.
This system was too crystalline to last. The characters to muck up this crystalline system
[are] ninnies, hard-luck cases, and the occasional scoundrels who take advantage of
them. What are we to do, for example, with the silly fellow who buys an interest in
property but simply forgets to record? Or with the more conscientious one who does
attempt to record his interest, but whose records wind up in the wrong book? Or with
the lost soul whose impeccably correct filing is dropped behind the radiator by the
neglectful clerk? Some courts take a hard line, perhaps concluding that the first owner
was in a better position than our innocent outsider—that is, the next purchaser—to
detect and correct the flaws in the records. But our sympathies for the luckless
unrecorded owner put pressure on the recording system that would divest him in favor
of the later-arriving outsider.
Our sympathies are all the greater when the outsider is not so innocent after all. What
shall we do, say, when the unrecorded first buyer is snookered out of his claim by a
later purchaser who knows perfectly well that the land had already been sold? Shall we
allow this nasty second buyer to perfect a claim simply because he carefully follows the
official recording rules? This thought was too much for the courts of equity, and too
much for American legislatures as well. By the early nineteenth century, the British
equity courts had imported an element of non-record ‘notice’ into what had initially
been a ‘race’ system. Under these doctrines, the later purchaser could take free of the
prior claims only if he did not know about those prior claims, either from the records
or from non-record facts that should put him ‘on notice.’ American legislatures
followed this move to such a degree that, at present, only a handful of states maintain
a race system with any rigor. The other states deny the subsequent claim of the person
who had or should have had notice of the earlier claim.

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This development means mud: What ‘should’ a purchaser know about, anyway? To be
sure, if someone is living on the land, perhaps the potential purchaser should make a
few inquiries about the occupant’s status. But what if the ‘occupant’s’ acts are more
ambiguous, consisting of, say, shovelling some manure onto the contested land? Well,
said one court, a buyer should have asked about the source of all that manure—and
since he didn’t, and thus did not find out about the manure shoveller’s prior but
unrecorded claim, the later buyer did not count as an innocent; his title was a nullity.
With the emergence of this judicial outlook, the crystalline idea of the recording system
has come full cycle back to mud. To be sure, the recording system can give one a fair
guess about the legal status of any given property. But by the end of the last century,
as a Massachusetts court put it, ‘it would be seldom that a case could occur where some
state of facts might not be imagined which, if it existed, would defeat a title.’ Thus, the
test of a title’s ‘marketability’ became a question of whether the title was subject to
‘reasonable’ doubt—a matter, of course, for the discretion of the court. In the
meantime, a whole title insurance industry sprang up to calm the fears of would-be
purchasers who wanted to avoid questions about which doubts were reasonable and
which were not. It is this industry, in a sense, that once again makes crystals out of the
recording system’s mud; and according to the reformers, it is this industry that now
stands in the way of a more rational method of cleaning up the mess once and for all.
Yet one must wonder whether cleaning up the mess might not just repeat the cycle of
mud/crystal/mud. One of the most popular suggestions for reform is the so-called
‘Torrens’ system, named for someone who thought that shipping registry methods
could be used beneficially in real estate. In this system, all claims on a given property—
sales, liens, easements, etc.—are first registered and then incorporated in a certificate.
Torrens registration echoes eerily the colonial ‘race’ statutes: No unregistered claim
counts, and the owner’s certificate for a given property acts as the complete record of
everything that anyone might claim.
Well, perhaps not everything: Government liens, fraudulent transactions, and,
according to some courts, even simple errors or neglect in registration can produce
unregistered claims that count. Hence this neo-race system provides no complete relief
from the recording system’s mud. Even after we look at the Torrens certificate, we still

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have to be on the lookout for the G-men, the forgers, and the ninnies who neglected
to register their claims properly. Not a lot of mud, to be sure, but just wait. In some
jurisdictions with a long history of Torrens registration, courts have in effect
reestablished a ‘notice’ system, defeating the interest of one who registers his claim
when he knows about a prior unregistered one—or merely when he should have known
about the prior claim. This practice, of course, means that the registry and certificate
no longer count as the complete source of information about a property’s title status.
The most striking aspect of these developments is that first the title recording acts, and
later the registration systems, represented deliberate choices to establish crystaline rules
for the sake of simplicity and ease of land sales and purchases. People who failed to
use the records or registries were supposed to lose their claims, no matter how innocent
they might have been, and no matter how nastily their opponents might have behaved.
Yet these very crystalline systems have drifted back into mud through the importation
of equitable ideas of notice—only to be replaced by new crystalline systems in the form
of private contract or public legislation….
Let us suppose that we have a system for the clarification of property titles. Might we
have a tendency to overuse the system, so that in the end it becomes so hopelessly
bogged down in detail that the purpose of clarity is defeated? Certainly our traditional
land records have this quality. Some early cases permitted only fee interests to be
recorded, but it was the very attractiveness of the system that created pressure to allow
the recordation of other interests; liens, for example, or easements. Indeed, some
claims may be in the records even though they are not legally recordable. Then too,
many claims are recorded and just stay put over time, and sometimes even conflict with
other recorded claims. The layers of these recorded but unextinguished claims can grow
so thick that it hardly seems worth the time to go back and check them all. So, in a
sense, we treat our clarifying systems—in this case the recording mechanisms—as a
kind of ‘commons.’ The resulting system overload, in turn, creates a certain disgust
with the lush proliferation of records. In fact, one of our current recording reforms
would simply extinguish claims that have not been asserted during a given period.
Thus, the very attractiveness of making clear one’s claims by recording them defeats
the purpose of the system, that is, to clarify all claims against a given property. One

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sees the same pattern in the excessively long contracts that attempt to specify all
possible contingencies and that no one actually reads; however comforting it might be
to ‘have it in writing,’ it really isn’t worth the effort to nail down everything, and the
overly precise contract may wind up being just as opaque as—and perhaps even more
arbitrary than—the one that leaves adjustments to the contingencies of future relations.
The trouble, then, is that an attractively simple legal device draws in too many users, or
too complex a set of uses. And that, of course, is where the simple rule becomes a
booby trap. It is this booby trap aspect of what seems to be clear, simple rules—that
scenario of disproportionate loss by some party-that seems to drive us to muddy up
crystal rules with the exceptions and the post hoc discretionary judgments.
Argent Mortgage Co. v. Wachovia Bank N.A.
52. So. 3d 796 (Dist. Ct. App. 2010)
GRIFFIN, J.
Argent Mortgage Company, LLC [“Argent”] appeals the trial court’s entry of judgment
in favor of Wachovia Bank National Association, as Trustee Under Pooling and
Servicing Agreement Dated as of November 1, 2004, Asset Backed Pass–Through
Certificates Series 2004–WWF1 [“Wachovia”]. Argent argues that the trial court erred
by finding that the mortgage now owned by Wachovia has priority over Argent’s
mortgage. We reverse.
On August 31, 2004, Gene M. Burkes and Ann Burkes [“the Burkes”] as
borrower/mortgagor and Olympus Mortgage Company as lender/mortgagee executed
a mortgage [“the Olympus Mortgage”] on real property as security for a $90,000.00
loan. The Olympus Mortgage was recorded on January 5, 2005. Subsequently, the
Olympus Mortgage was assigned to Wachovia. As a result of default, Wachovia filed a
complaint to foreclose the Olympus Mortgage and to enforce lost loan documents.
Wachovia joined Argent as a defendant, alleging that Argent might claim some interest
in or lien upon the subject property by virtue of a recorded mortgage.
On December 10, 2004, the Burkes as borrower/mortgagor and Argent as
lender/mortgagee executed a mortgage [“the Argent Mortgage”] as security for a

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$65,000.00 loan on the same real property that is the subject of the Olympus Mortgage.
The Argent Mortgage was recorded on January 31, 2005. Subsequently, Wells Fargo
Bank became the owner of the Argent Mortgage. An action to foreclose the Argent
Mortgage was initiated as a result of default.
[Argent and Wachovia filed cross motions for summary judgment.] Ultimately, the trial
court deemed “the Florida statutes on recordation,” namely sections
695.01 and 695.11, Florida Statutes, “to be of the race-notice variety,” found that the
Olympus Mortgage should have priority over the Argent Mortgage, and entered a
partial final judgment in favor of Wachovia.
On appeal, … Argent asserts that section 695.01, Florida Statutes, alone determines
which mortgage has priority, that section 695.01 is, and, for over a century, has been
recognized to be a “notice” statute, not a “race-notice” statute and that, under section
695.01, the Argent Mortgage has priority over the Olympus Mortgage.
Wachovia acknowledges that section 695.01, Florida Statutes, is a “notice” type of
recording statute. However, Wachovia contends that amendments made to section
695.11, Florida Statutes, have converted Florida into a “race-notice” state.
As an initial matter, it bears explaining that recording statutes are classified into three
categories: race, notice, and race-notice. These can generally be described as follows:
• Under a race recording statute, a subsequent mortgagee of real property will prevail
against a prior mortgagee of the said real property if the subsequent mortgage is
recorded before the prior mortgage.
• Under a notice recording statute, a subsequent mortgagee of real property for value
and without notice (actual and constructive) of a prior mortgage of the said real
property will prevail against the prior mortgagee.
• Under a race-notice recording statute, a subsequent mortgagee of real property for
value and without notice (actual and constructive) of a prior mortgage of the said
real property will prevail against the prior mortgagee if the subsequent mortgage is
recorded before the prior mortgage.

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Importantly, under either a notice or a race-notice recording statute, the subsequent
mortgagee cannot be without constructive notice if the prior mortgage has been
recorded as of the time of execution of the subsequent mortgage.
Application of each type of recording statute to the undisputed facts here yields the
following results:
• Wachovia prevails under a race recording statute because the Olympus Mortgage
was recorded before the Argent Mortgage;
• Argent prevails under a notice recording statute because it is a subsequent
mortgagee for value and did not have notice of the Olympus Mortgage at the time
of execution of the Argent Mortgage; and
• Wachovia prevails under a race-notice recording statute because, although Argent
is a subsequent mortgagee for value and did not have notice of the Olympus
Mortgage at the time of execution of the Argent Mortgage, the Olympus Mortgage
was recorded before the Argent Mortgage.
Commentators appear uniformly to categorize section 695.01 as a “notice” type of
recording statute. See 2–26 RALPH E. BOYER, FLORIDA REAL ESTATE
TRANSACTIONS § 26.02 (Matthew Bender & Co., Inc. 2010) (“Florida has a notice type
recording statute, the primary function of which is to protect subsequent purchasers
(which for purposes of this discussion includes mortgagees and creditors who are
within the statute’s protection) against claims arising from prior unrecorded
instruments ....”).
Florida courts over time have described and applied Florida’s recording statute in a
manner that is consistent with a “notice” type of recording statute. [citing cases]
Florida’s approach to the problem was succinctly described by the Florida Supreme
Court in Van Eepoel Real Estate Co. v. Sarasota Milk Co., 100 Fla. 438, 129 So. 892, 895
(1930):
[I]t is generally held, in states having recording statutes similar to ours,
that if A conveys lands to B, a bona fide purchaser for value, who does

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not go into possession and who failed to record his deed until after A
conveys the same land to C, a second bona fide purchaser for value
without notice of B’s interest, and B then records his deed before C
records his, the title of C shall nevertheless prevail as between C and B,
because it is the fault of B that he did not immediately record his deed,
thereby permitting C to deal with the property and part with his
consideration without knowledge of B’s interest. So B is estopped and
the equities are with C.
Section 695.01, notwithstanding, the trial court accepted Wachovia’s argument that a
1967 amendment to a different statute, section 695.11, Florida Statutes, entitled,
“Instruments deemed to be recorded from time of filing” converted Florida from a
“notice” to a “race-notice” jurisdiction. * The earliest version of section 695.11 dates
back to 1885. Examination of the language of the 1906, 1920, and 1935 iterations
of section 695.11, make clear that this statute was intended to provide a mechanism for
determining the time at which an instrument was deemed to be recorded. Nothing in
the case law suggests that section 695.11 modifies section 695.01. … 3
Wachovia relies on an earlier opinion of this Court, Rice v. Greene, 941 So.2d 1230 (Fla.
5th DCA 2006), in support of its contention that Florida has a race-notice type of
recording statute. In Rice, this Court … found:

* [Eds.—Section 695.11 reads, “All instruments which are authorized or required to be recorded in the office of

the clerk of the circuit court of any county in the State of Florida, … and which are filed for recording on or
after the effective date of this act, shall be deemed to have been officially accepted by the said officer, and
officially recorded, at the time she or he affixed thereon the consecutive official register numbers … and at such
time shall be notice to all persons. The sequence of such official numbers shall determine the priority of
recordation. An instrument bearing the lower number in the then-current series of numbers shall have priority
over any instrument bearing a higher number in the same series.”]
3 Case law confirms that the purpose of section 695.11 is to determine the time at which an instrument is deemed

to be recorded and to serve as notice. [citing cases] Section 695.11 has an important purpose to determine the
priority between judgment liens. [citing cases] Because a certified copy of a judgment must be recorded in order
to create a lien on real property, a judgment that is recorded earlier in time, namely one that bears a lower official
register number, will win priority.

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In other words, an unrecorded deed is not good or effectual in law or
equity against creditors or subsequent purchasers for valuable
consideration who are without notice of the transaction.
Therefore, because Mr. Greene had no notice of the earlier warranty deed
between Mr. Rice and Mrs. Schwartz and paid valuable consideration for the
property, Mr. Greene’s recording of his warranty deed before Mr. Rice gives Mr.
Greene priority to the property.
Id. at 1232 (emphasis added). According to Wachovia, this language proves that
priority in recording is key. Notably, however, Rice does not mention section
695.11 and recording was not an issue. The subsequent purchaser in Rice (Mr. Greene)
had priority to the property under a notice type of recording statute because he paid
value for the property and did not have notice (actual or constructive) of the earlier
warranty deed at the time of the conveyance. The fact that Mr. Greene’s deed was
recorded before Mr. Rice’s does not affect the outcome under a notice type of
recording statute. Although a portion of the sentence in Rice, on which Wachovia relies,
mentions recording, in that case, it was superfluous.
We conclude that Florida is, and remains, a “notice” jurisdiction, and notice controls
the issue of priority. Since Argent is a subsequent mortgagee for value and did not have
notice of the Olympus Mortgage at the time of execution of the Argent Mortgage, the
Argent Mortgage has priority over the Olympus Mortgage. As such, the trial court erred
by entering partial summary final judgment in favor of Wachovia on the issue of
priority.
Questions
1. Who would have won in Argent if Argent had recorded on January 3 instead of
on January 31? What about in a race jurisdiction? In a race-notice jurisdiction?
2. Who would have won in Argent if the Burkes had disclosed the existence of the
Olympus Mortgage to Argent on December 6? On December 16? What about
in a race jurisdiction? In a race-notice jurisdiction?

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3. What kind of recording acts are the three state statutes listed below? Explain
how the categorization—race, notice, or race-notice—follows from the text of
the statute.
FLA. STAT. § 695.01
No conveyance, transfer, or mortgage of real property, or of any interest therein, nor
any lease for a term of 1 year or longer, shall be good and effectual in law or equity
against creditors or subsequent purchasers for a valuable consideration and without
notice, unless the same be recorded according to law … .
N.C. STAT. § 47-18
No (i) conveyance of land, or (ii) contract to convey, or (iii) option to convey, or (iv)
lease of land for more than three years shall be valid to pass any property interest as
against lien creditors or purchasers for a valuable consideration from the donor,
bargainer or lesser but from the time of registration thereof in the county where the
land lies… .
ALASKA STAT. § 40.17.080
… A conveyance of real property in the state, other than a lease for a term of less than
one year, is void as against a subsequent innocent purchaser in good faith for valuable
consideration of the property or a part of the property whose conveyance is first
recorded. …
Hartig v. Stratman
729 N.E.2d 237 (2000)
SHARPNACK, Chief Judge: …
Melvin and Louise Stratman are the owners of real property located at 2208 E. Walnut
St. in Evansville, Indiana. The property next door, at 2210 E. Walnut St., is owned by
[Timothy] Hartig. The instant dispute centers around a shared driveway that is located
on both parcels of property, with the majority of the driveway being on Hartig’s
property.

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The record of title to Hartig’s property discloses that Hartig purchased the property
from Sean Holmes on September 28, 1995. Holmes in turn purchased the property
from John Connell on May 31, 1994. On the same day that Connell sold the property
to Holmes, Connell entered into a written easement agreement with the Stratmans
regarding the shared driveway. The agreement gave the Stratmans a perpetual easement
over the portion of the driveway that is located upon the parcel at 2210 E. Walnut St.
and gave the property owners at 2210 E. Walnut St. a perpetual easement over the
portion of the driveway that is located upon the Stratman parcel. The Stratman-Connell
easement agreement was recorded in the Vanderburgh County Recorder’s Office on
June 8, 1994, at 2:25 p.m. The deed transferring the property at 2210 E. Walnut Street
from Connell to Holmes was also recorded on June 8, 1994, but it was recorded one
minute earlier, at 2:24 p.m. It is undisputed that when Holmes sold the property to
Hartig, he did not inform Hartig about the existence of the driveway easement
agreement.
Thereafter, on February 13, 1998, the Stratmans filed a complaint alleging that Hartig
was blocking the driveway and refusing to allow them to use it. [The Stratmans claimed
a prescriptive easement to use the driveway; the court dismissed their complaint.] Then,
on August 26, 1998, the Stratmans filed a “Second Paragraph of Amended Complaint,”
asserting the right to use the driveway by virtue of the Connell-Stratman easement
agreement. Thereafter, Hartig filed a motion for summary judgment, which the trial
court denied on June 29, 1999. …
B.
Hartig next contends that he is entitled to summary judgment because the ConnellStratman driveway easement agreement was recorded outside his chain of title and
therefore not binding on him. Indiana’s recording statute provides:
Every conveyance or mortgage of lands or of any interest therein …
shall be recorded in the recorder’s office … ; and every conveyance [or]
mortgage … shall take priority according to the time of the filing thereof,
and such conveyance [or] mortgage … shall be fraudulent and void as
against any subsequent purchaser, … or mortgagee in good faith and for
a valuable consideration, having his deed [or] mortgage … first recorded.

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Ind. Code § 32-1-2-16. The purpose of this statute is to provide protection to
subsequent purchasers and mortgagees. This protection is derived from the fact that a
landowner will not be deemed to have constructive notice of adverse claims that appear
outside the chain of title.
To determine the chain of title, the prospective purchaser must go to the recorder’s
office and search through the grantor index, beginning with the person who received
the grant of land from the United States and continuing until the conveyance of the
tract in question. The particular grantor’s name is not searched thereafter.
Here, when Hartig conducted a title search of the property at 2210 E. Walnut St., he
would have discovered the conveyance to Connell. Next, Hartig would have discovered
the conveyance from Connell to Holmes that was recorded on June 8, 1994, at 2:24
p.m. Hartig would not have discovered the Connell-Stratford [Ed: presumably
“Connell-Stratman”] easement agreement that was recorded one minute later, however,
because Connell’s name would not have been searched after the conveyance to Holmes
was discovered. Therefore, the easement agreement is not within Hartig’s chain of title
and he cannot be deemed to have constructive notice of its existence. Accordingly, we
hold that the trial court erred in denying Hartig’s motion for summary judgment with
respect to the issue of the driveway easement agreement.
Questions
1. Morse v. Curtis, 2 N.E. 929 (Mass. 1885), explained,
If [a title examiner] can start with an owner who is known to have
a good title … he is obliged to run through the index of grantors
until he finds a conveyance by the owner of the land in question.
After such conveyance the former owner becomes a stranger to
the title, and the examiner must follow down the name of the
new owner to see if he has conveyed the land, and so on. It would
be a hardship to require an examiner to follow in the index of
grantors the name of every person who at any time, through,
perhaps, a long chain of title, was the owner of the estate.

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Does this policy persuasively justify Hartig?
2. In some jurisdictions today, title records are indexed not only by grantors’ and
grantees’ names, but also by unique numerical identifiers for every parcel of real
property in the jurisdiction. For example, in New York City all recorded
instruments conveying an interest in real property are indexed by reference to
the Borough, Block, and Lot (“BBL”) numbers on city tax maps. See Automated
City Register Information System (http://a836-acris.nyc.gov); New York City
Department of Finance Digital Tax Maps (http://gis.nyc.gov/taxmap/). If
Hartig had arisen in a jurisdiction that maintained such a “tract index,” would
the result have been any different? See Andy Assocs., Inc. v. Bankers Trust Co.,
49 N.Y.2d 13, 399 N.E.2d 1160, 424 N.Y.S.2d 139 (1979).
3. Suppose the Stratmans reason as follows: Hartig bought without notice, so we
lost to him, but we can fix the notice problem going forward. We’ll put up a big
sign on our front yard at 2208 E. Walnut St. reading, “We own a driveway
easement across 2210 E. Walnut St.” True or false: if the Stratmans do this,
anyone who buys the house from Hartig takes with notice of the easement and
is therefore bound by it. Would it make a difference if Hartig v. Stratman had
never been litigated and reduced to judgment?
4. In Hartig, the Connell-Stratford deed was outside Hartig’s chain of title because
it was recorded too late: after Connell was no longer the record owner. Deeds
can also be recorded too early: before the grantor is the record owner. How
could that happen? Suppose that the Bluth Corporation is building a subdivision
on land in Sudden Valley that it is purchasing from the federal government.
Although the contract of sale with the government has been signed, the delivery
of the actual deed to Bluth has been delayed for complex bureaucratic reasons.
You represent the Devon Bank, which is financing the development with a loan
to Bluth, which will be secured with a mortgage on the land. The bank’s
manager proposes that the bank go through with the loan and protect its interest
by recording the mortgage immediately and ensuring that Bluth records the
deed from the government as soon as it issues. Is this a good idea?

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5. Who is a “purchaser … for a valuable consideration” entitled to the protection
of a recording act? In Hood v. Webster, 2 N.E.2d 43 (N.Y. 1936), Florence Hood
executed a deed to a farm to her brother-in-law William Hood in 1913; the deed
was escrowed and was to be delivered to William at Florence’s death. In 1928,
Florence executed and delivered another deed to the same farm, this time to her
nephew, Howard Webster. Howard’s deed recited that it was given for “One
Dollar and other good and valuable consideration.” Florence died in 1933. Held:
the “recital was not enough to put [Howard] into the position of purchaser[] for
a valuable consideration.” Is this right? What if the deed had recited that it was
given for “Ten Billion Dollars and other good and valuable consideration?”
What if Howard had testified that the farm was worth $20,000 and he had given
Florence $1,000 in cash? The dissent argued that the record showed that
William had reneged on a promise to pay Florence $200 a month for life, and
that Howard had “come to live with [Florence] and help her on the farm” when
she executed the deed to him. Do these facts affect your view of the case?
Board of Education of Minneapolis v. Hughes
136 N.W. 1095 (Minn. 1912)
BUNN, J.
Action to determine adverse claims to a lot in Minneapolis. … The trial resulted in a
decision in favor of plaintiff, and defendants appealed from an order denying a new
trial.
The facts are not in controversy and are as follows: On May 16, 1906, Carrie B. Hoerger,
a resident of Faribault, owned the lot in question, which was vacant and subject to
unpaid delinquent taxes. Defendant L. A. Hughes offered to pay $25 for this lot. His
offer was accepted, and he sent his check for the purchase price of this and two other
lots bought at the same time to Ed. Hoerger, husband of the owner, together with a
deed to be executed and returned. The name of the grantee in the deed was not
inserted; the space for the same being left blank. It was executed and acknowledged by
Carrie B. Hoerger and her husband on May 17, 1900 [Ed: presumably 1906], and
delivered to defendant Hughes by mail. The check was retained and cashed. Hughes

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filled in the name of the grantee, but not until shortly prior to the date when the deed
was recorded, which was December 11, 1910. On April 27, 1909, Duryea & Wilson,
real estate dealers, paid Mrs. Hoerger $25 for a quitclaim deed to the lot, which was
executed and delivered to them, but which was not recorded until December 21, 1910.
On November 19, 1909, Duryea & Wilson executed and delivered to plaintiff a
warranty deed to the lot, which deed was filed for record January 27, 1910. It thus
appears that the deed to Hughes was recorded before the deed to Duryea & Wilson,
though the deed from them to plaintiff was recorded before the deed to defendant.
The questions for our consideration may be thus stated: (1) Did the deed from Hoerger
to Hughes ever become operative? (2) If so, is he a subsequent purchaser whose deed
was first duly recorded, within the language of the recording act?
The decision of the first question involves a consideration of the effect of the delivery
of a deed by the grantor to the grantee with the name of the latter omitted from the
space provided for it, without express authority to the grantee to insert his own or
another name in the blank space. It is settled that a deed that does not name a grantee
is a nullity, and wholly inoperative as a conveyance, until the name of the grantee is
legally inserted. …[T]he deed to defendant Hughes was not operative as a conveyance
until his name was inserted as grantee. [But] Hughes had implied authority from the
grantor to fill the blank with his own name as grantee, and … when he did so the deed
became operative.
When the Hughes deed was recorded, there was of record a deed to the lot from
Duryea & Wilson to plaintiff, but no record showing that Duryea & Wilson had any
title to convey. The deed to them from the common grantor had not been recorded.
We hold that this record of a deed from an apparent stranger to the title was not notice
to Hughes of the prior unrecorded conveyance by his grantor. He was a subsequent
purchaser in good faith for a valuable consideration, whose conveyance was first duly
recorded; that is, Hughes’ conveyance dates from the time when he filled the blank
space, which was after the deed from his grantor to Duryea & Wilson. He was,
therefore, a ‘subsequent purchaser,’ and is protected by the recording of his deed before
the prior deed was recorded. The statute cannot be construed so as to give priority to
a deed recorded before, which shows no conveyance from a record owner. It was

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necessary, not only that the deed to plaintiff should be recorded before the deed to
Hughes, but also that the deed to plaintiff’s grantor should be first recorded.
Our conclusion is that the learned trial court should have held on the evidence that
defendant L. A. Hughes was the owner of the lot.
Questions
1. The deed from Duryea & Wilson to the plaintiff is called a “wild deed.” Why?
Draw a diagram of the conveyances in Hughes, noting which of them were
recorded. What would someone searching the title to the property have found?
Put another way, what went wrong here? Whose fault was it? What can or
should a recording system do about it?
2. What kind of recording act does Minnesota have, according to Hughes? How
can you tell? Would the result have been different under either of the other
types of recording acts?
3. What result if Hughes had filled in his name on the blank deed when he received
it from Hoerger in 1906 rather than when he recorded it in 1910?
4. Clerical Errors. What result if a deed as delivered to the clerk reads “Bolan”
but the clerk enters it in the indexes under “Bolen?” Under “Nolan?” Long ago,
courts would invoke the doctrine of idem sonans (Latin for “sounds the same”)
to hold that subsequent purchasers would be on notice of an instrument that
had been indexed under a name that was different from the name on the
instrument itself, but close enough to identify the party phonetically. This rule
obviously protects the prior interest at the cost of some potential unfairness to
the subsequent purchaser, and more recently idem sonans has been significantly
weakened by states that once enforced it. See, e.g., Nat’l Packing Corp. v.
Belmont, 547 N.E.2d 373 (Ohio Ct. App. 1988).
But what if the clerk neglects to index a deed at all? What if the clerk drops the
deed behind the radiator and forgets about it? In such a case, should a
subsequent purchaser be deemed on notice of the instrument? If not, is there

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any way for the recording party to be secure against subsequent purchasers in
such circumstances?
5. In 2008, the New York Daily News “stole” the Empire State Building by recording
a phony deed to it in New York City’s recording system. The deed purported
to transfer ownership of the building to “Nelots Properties L.L.C.”; it bore a
fake notary stamp and purported to be “witnessed” by Fay Wray, the actress
who starred in King Kong. Clerks made no attempt to verify any of the
information on the deed, which was duly recorded. Should they have?
6. Tax protesters—people who challenge the authority of government to collect
taxes—sometimes record multi-million-dollar “liens” against the houses of local
tax officials and government lawyers. Unlike a typical judgment lien, which
arises from a judgment of a court of competent jurisdiction, these “liens” arise
from the actions of “common law courts” established by the protesters
themselves. What effect does recording one of these “liens” have? What can the
victims do about it? How might a state government deal with the general
problem of fraudulent recording?
Adam J. Levitin, The Paper Chase: Securitization, Foreclosure,

and the Uncertainty of Mortgage Title

63 DUKE L.J. 637 (2013) (excerpts reprinted by permission)
SECURITIZATION-ERA MORTGAGE TITLE SYSTEMS
…MERS [Mortgage Electronic Registration Systems, Inc.] is a private, contractual
superstructure that is grafted onto the public land-recordation system. Financial
institutions that are members of MERS register the loans they service (but do not
necessarily own) with the MERS System electronic database. Each loan receives a
unique identifier known as a MERS Identification Number (MIN). The MIN is
sometimes stamped on the note or sometimes simply recorded in the lender’s own
records. MERS is then inserted in the local land records as the mortgagee, instead of
the actual lender. Sometimes this involves an assignment of the mortgage from the
lender to MERS, but the more prevalent arrangement has MERS recorded as the
original mortgagee, thereby obviating any recordation of assignments. MERS serves as

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the mortgagee of record, but only as a nominee for the actual lender and supposedly
for its successors and assigns. The language included in MERS mortgages is that MERS
is acting “solely as nominee for Lender and Lender’s successors and assigns.” MERS
claims no beneficial interest whatsoever in the loan.
MERS’s goal is to immobilize mortgage title through a common-agency structure by
acting as nominee for the lender and those subsequent transferees of the lender that
are members of MERS. Although legal title remains in MERS’s name, subsequent
transfers are supposed to be tracked in MERS’s database.
Thus, MERS aims to achieve the priority and enforcement benefits of public
recordation while tracking beneficial ownership title in its own database. MERS’s
operation has two important implications. First, instead of paying county recordation
and transfer fees, financial institutions pay only for MERS membership and MERS
transaction fees. MERS thus oﬀers potential cost savings in the securitization process
through the avoidance of local recording fees. Second, MERS’s electronic database,
not the county land records, represents the main evidentiary source for determining
who is currently the real party in interest on a mortgage.
In theory, MERS’s database tracks two distinct characteristics: the identity of the party
with the rights to service the mortgage (often an agent for the trustee for the trust
created for the ultimate beneficial owners of the mortgage loan) and the legal title to
mortgages (for example, the trustee for the trust created for the ultimate beneficial
owners of the mortgage). MERS’s publicly available records do not track chain of title.
It is impossible for outsiders to determine if transfers were made in the MERS system
and when. Instead, MERS publicly tracks only the current servicer and sometimes the
current beneficial owner of a loan.
A major problem with MERS as a title system is that it is not accurate and reliable in
terms of what it reports. MERS’s members are nominally required to report transfers
of mortgage servicing rights to MERS, but MERS does not actually compel reporting
of servicing-rights transfers, and there is little incentive to be punctual with reporting.
Indeed, the lack of record validation combined with voluntary reporting has led a

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federal judge to describe MERS as “the Wikipedia of land registration systems.” Not
surprisingly, the information in the MERS database is often inaccurate or incomplete.
MERS does not even formally require any reporting of legal title to the mortgages,
much less of transfers of legal title; any information about legal title is supplied through
strictly voluntary reporting. …
MERS’s database functions as a do-it-yourself private mortgage recordation system.
Historically, MERS itself has had only around fifty employees who perform corporate
and technology support functions. Employees of MERS’s members carry out most of
the tasks done in MERS’s name, including the making of entries in the MERS database.
These employees of MERS’s members are listed as assistant secretaries or vice
presidents of MERS, but they have no actual employment relationship with MERS.
There are over twenty thousand of these “corporate signing oﬃcers.” Accordingly, a
transfer of either servicing or legal title in the MERS system involves nothing more
than an employee of a MERS member entering the transfer in the MERS database.
A transfer within the MERS system involves voluntary self-reporting and nothing more
and therefore fails to incentivize timely, accurate reporting. There are no formalities to
a transfer in the MERS system. As a result, MERS may not in fact know who its
principal is within the common-agency arrangement at any given point in time because
MERS is relying on reporting from its members.
Notes and Questions
1. According to Donald J. Kochan, public recording serves a number of important
purposes:
Recording creates a network of information supporting a
network of transactions. Property recording systems offer
information to a number of constituencies, including: (1) owners,
acting as sellers or as borrowers; (2) lenders, including mortgage
providers; (3) other providers of capital; (4) buyers; (5)
leaseholders; (6) title insurance companies; (7) governmental
entities, such as police, regulators, and taxing authorities; and (8)

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other parties who may need to interact with the property at some
time and know who the law deems to have ownership of the
property. Recording allows all of these market and legal
participants to connect. It is imperative that we recognize the
variety of market players that use and benefit from the recording
statutes and from the existence of reliable, verifiable records of
ownership.
It is not just the owner and the most immediate lender that care
about proper recording. Those who wish to invest in, contract
with, lease from, or provide capital to property owners demand
the existence of a recording system so that they can identify the
ownership interests associated with the property, including
determining whether and to what extent that property is
encumbered by a mortgage. So, too, do prospective buyers of
property require a verifiable repository of title information to
guide their purchasing decisions. These other players must be
able to discover the limits on title with a level of clarity. Similarly,
those who wish to provide loans secured by property or to make
other capital investments in property need assurances that the
owner owns the property that he says he owns and that the
system reflects all competitive claims to or liens on title.
… At the very least, fragmentation of interests by securitization
makes ownership interests in real property harder to identify,
necessitating the existence of an accurate and complete means for
tracking and recording these interests. … [Securitization] is an
important financial mechanism for the efficient provision of
capital and should not be sacrificed in an effort to resolve the
mortgage crisis or to prevent future crises. In fact, it is difficult
to see the provision of loans in today’s financial system without
some reliance on securitization.

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To make securitization effective, the loan-granting institution
typically assigns its rights in both the note and the mortgage,
sometimes to different parties. Due to transfers to the secondary
market, securitization, and multiple assignments of notes and
mortgages, it can become difficult to trace all of the steps along
the way. This flurry of activity—and the number and variety of
participants involved—can lead to problems in the chain of title
and identifying who ultimately and currently holds the
enforceable note and mortgage interests against the property
owner. These problems are especially evident when the
formalities of transfer, such as required endorsements of notes,
are not satisfied and when the transfers are not recorded in some
central repository.
Donald J. Kochan, Certainty of Title: Perspectives after the Mortgage Foreclosure Crisis
on the Essential Role of Effective Recording Systems, 66 ARK. L. REV. 267 (2013).
Could MERS fulfill the functions of recording in such a system? What would
need to change?
2. Along with the “Wikipedia” characterization of MERS as freely editable, a
Reuters investigation used a different metaphor: “MERS has served in effect as
an instant teller machine for mortgage assignments. Servicers simply have their
own employees sign the needed documents as MERS officials.” At least one
bank has sued another bank for allegedly assigning the first bank’s mortgages to
itself using MERS.
3. Recall the mortgage documentation problems in Ibanez. Why were large
institutions so cavalier about record-keeping, particularly regarding public
records that provide assurance of title and priority? Fannie Mae is a
government-backed, now government-run institution that bought many
mortgages. A 2006 internal Fannie Mae investigation explained:
Fannie Mae’s position is that it does not need to appear in the
land records in order to have the benefit of the security provided

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by the mortgage…. [T]he transfer of an obligation secured by a
security interest also transfers the security interest. Thus, the
transfer of the promissory note, which is the obligation, also
transfers the mortgage, which is the security interest. Once the
note is sold to Fannie Mae, the mortgage also transfers, despite
the fact that the servicer, lender, or MERS’ name appears in the
land records. Borrowers thus cannot determine the chain of
owners from public records….
Fannie Mae believes that lost note affidavits are the servicer’s
responsibility and can not be effectively reviewed under the
current system. Fannie Mae has delegated the execution of lost
note affidavits to servicers. It does not believe that it is in a
position to make a subjective call as to whether a servicer has lost
a note…. Fannie Mae views such an investigation as unnecessary
because document custodians are responsible for retaining
mortgage documents and must bear an expense if they are unable
to locate mortgage documents. For these reasons, Fannie Mae
believes that servicers are not likely to state that the notes are lost, stolen
or missing if they in fact are not. (emphasis added)
Can you spot the problem here? One entity, Lender Processing Services, at one
point had a price list for “recreating” mortgage-related documents. A lost note
affidavit was $12.95, as was a note allonge (a document that is supposed to be
stapled to the original note documenting a transfer); an intervening assignment
to fill a gap in the record chain of title was $35, and “recreating” an entire file
was $95.
An important point to remember here is that recording usually only matters
when there’s a bona fide purchaser contesting ownership. As long as the
originator didn’t sell the mortgage twice, an unrecorded interest is still valid
against the mortgagor, assuming the claimant can prove that it owns the interest.
That may be a faulty assumption, but Fannie Mae figured that risk was low.

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Note on Recording Systems and Informal Title
Up to a billion people worldwide are squatters, living on land they have no legal right
to occupy, usually on the outskirts of cities. They’re vulnerable to eviction or at least
extortion from officials who take advantage of their lack of legal rights. Moreover, the
influential economist Hernando De Soto has argued that record title would help poor
people enter the formal economy by giving them clear ownership of assets. Poor people
are often highly entrepreneurial, but face great barriers entering the formal economy—
and thus their efforts may lead to fines and jail rather than to wealth. As owners, they’d
have better incentives to invest in improving their land; they could also pledge their
land to lenders in order to raise capital to start legitimate businesses; and they might
even be able to get insurance in case of disaster. See HERNANDO DE SOTO, THE
MYSTERY OF CAPITAL: WHY CAPITALISM TRIUMPHS IN THE WEST AND FAILS
EVERYWHERE ELSE (2000). In the U.S., about 70% of new business credit comes from
using title to other assets, such as homes, as collateral. The likelihood of being able to
recover from these identifiable assets is the foundation of much willingness to lend.
De Soto argues that: “Property is much more than a body of norms. It is also a huge
information system that processes raw data until it is transformed into facts that can
be tested for truth, and thereby destroys the main catalysts of recessions and panics—
ambiguity and opacity.” Hernando de Soto, Toxic Assets Were Hidden Assets, WALL ST.
J., Mar. 25, 2009. Legal title and a robust recording system provides reliable information.
De Soto’s views have been highly influential, but also controversial. Record title might
help for specific situations, but the government first has to decide to give the title to
the people who are living on the land, and that generally requires formally dispossessing
someone else—often someone wealthy who will fight back. De Soto favors squatters’
rights, and his argument depends in many ways on the same foundation as adverse
possession. However, if the “legal” owners’ title was unjustly acquired—which is often
the case—then squatters’ rights can also be founded on theories of labor or first in
time.
Does formalizing title work? The evidence is mixed. De Soto’s ideas were adopted as
part of land title reform in Peru. In a six-year period, more than 1.2 million households,
containing 6.3 million people, received title to the properties they were living on. Using

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similar areas that weren’t subject to reform as controls, Erica Field determined that
labor force participation increased and child labor decreased. Apparently, many
squatter families try to run a small business out of their house so they can safeguard
the homestead at the same time; with legal title, that’s no longer necessary. However,
there was not much evidence of increased access to credit, contrary to de Soto’s
predictions. See Erica Field, Entitled to Work: Urban Property Rights and Labor Supply in
Peru, 122 Q.J. ECON. 1561 (2007). By contrast, in Thailand, the size of loans obtained
from banks by farmers with formalized property was more than 50% larger than loans
to farmers without record title. Results from around the world are ambiguous; formal
title sometimes seems to spur investment, and sometimes it doesn’t. See CLAUDIA R.
WILLIAMSON, THE TWO SIDES OF DE SOTO: PROPERTY RIGHTS, LAND TITLING, AND
DEVELOPMENT, ANNUAL PROCEEDINGS OF THE WEALTH AND WELL-BEING OF
NATIONS 95 (2011).
Moreover, it’s important not to make the overgeneralized claim that “strong” or “clear”
property rights are necessary for economic development. It should already be clear to
you that Western property rights vary a lot and can be subject to lots of their own
uncertainties, from the acts required to possess a previously unowned resource to the
boundaries of an intellectual property right. England industrialized while its property
law was highly unclear. What’s needed is sufficient certainty to go forward, not perfect
certainty—and that certainty can come from various sources, including but not limited
to formal law.
The first Chinese law focusing specifically on property rights did not become effective
until 2007. China’s unprecedented real estate development during the prior two
decades thus occurred without any published law of real estate; investors committed
hundreds of billions of dollars without assurance of what they would own even if all
went well. See GREGORY M. STEIN, MODERN CHINESE REAL ESTATE LAW (2012). In
Shenzhen, an economic powerhouse of a city with over 10 million residents, half of
the buildings have no legal titles. Instead, professionals have developed practices and
networks, including government officials (with a bit of bribery thrown in), that facilitate
transactions even among strangers. See Shitong Qiao, Planting Houses in Shenzhen: A Real
Estate Market without Legal Titles, 29 CAN. J.L. & SOC. 253 (2013). Qiao quotes an official
at the Shenzhen Real Estate Ownership Registration Center: “Nobody cares whether

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they have legal titles or not. You say they are illegal: dare you void the contracts? …
There is a huge amount of transactions—you say farmers cannot sell, it is illegal
[because the Chinese government owns all rural land], but they do it privately with little
ado. Are you to tell them whether it is legal or illegal?” Another quote from a senior
official: “[I]t is a war against the people that cannot be won.” Facts on the ground
matter. On the other hand, China has also repeatedly suffered from conflicts,
sometimes violent, between developers who claim government sanction and squatters
who assert that their actual possession should be respected.
At a minimum, record title can be useless without an overall well-functioning legal
system. If corruption is a nation’s problem, title won’t solve that by itself. In addition,
expropriation by the wealthy or well-connected is an enduring problem. Without
careful implementation of a titling system, it’s the already-powerful who end up with
legal title—either initially, or when the formal system’s property taxes start to kick in.
A De Soto-type titling program in Cambodia led to fires and forced evictions of slum
dwellers, followed by transfers of newly valuable inner-city land to wealthy developers.
See John Gravois, The de Soto Delusion, SLATE, Jan. 29, 2005. Older programs to provide
title to members of Indian tribes, supposedly to help them integrate into the broader
U.S. economy, suffered from similar problems. See Ezra Rosser, Anticipating de Soto:
Allotment of Indian Reservations and the Dangers of Land-Titling, in HERNANDO DE SOTO
AND PROPERTY IN A MARKET ECONOMY (D. Benjamin Barros ed., 2010).
If De Soto is right, the U.S. may have turned its back on his insights by inflicting serious
damage on our land recording system and investing too much in financial instruments
for which no centralized records are available. Even without the mortgage crisis, in the
U.S., not everyone has record title, especially in low-income communities where
property often transfers by intestate inheritance. In Louisiana, for example, an
estimated 15% of the homeowners who applied for federal housing assistance after
Hurricane Katrina—approximately 20,000 homeowners—lacked clear record title.
This problem affected many homeowners concentrated in the low-income
neighborhoods of New Orleans Parish and is one reason they received smaller amounts
of help than many other, better-off neighborhoods. In Texas, about one out of five
low-income households applying for hurricane recovery assistance had at least one title
issue impeding their ability to access assistance. See Heather Way, Informal Homeownership

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in the United States and the Law, 29 ST. L. U. PUB. L. REV. 113 (2009); see also Jane E.
Larson, Informality, Illegality, and Inequality, 20 YALE L. & POL’Y REV. 137 (2002)
(discussing large-scale squatter communities in Texas); Zoe Loftus-Farren, Tent Cities:
An Interim Solution to Homelessness and Affordable Housing Shortages in the United States, 99
CALIF. L. REV. 1037 (2011). Should the U.S. consider schemes for titling people or
communities presently without record title?
Problems
1. Peter and Nathan Petrelli are the record owners of land in Disturbia. They hold
the land as joint tenants. Peter conveys his interest to Angela Petrelli, who pays
fair market value for it. Angela gives her interest to her granddaughter Claire
Bennet, who records. Peter and Nathan then sell the land to Matt Parkman,
who doesn’t know anything about Peter’s earlier conveyance to Angela. Matt
records. Disturbia’s recording statute reads in relevant part as follows: “Every
conveyance is void as against any subsequent purchaser of the same property,
or any part thereof, in good faith and for a valuable consideration, whose
conveyance is first duly recorded.” Who owns what, and why?
2. Peter Bishop and Olivia Dunham are the record owners of Fringeacre as joint
tenants with right of survivorship. Bishop and Dunham grant Bishop’s father,
Walter Bishop, an easement to pasture his cows on Fringeacre. Walter does not
record the easement. Later, Dunham gives her interest in Fringeacre as a gift
to Astrid Farnsworth, who does not know about Walter Bishop’s easement, and
who records. When Dunham subsequently dies, Peter Bishop sells Fringeacre
to Philip Broyles, who had seen Walter’s cows grazing on the property; when
Broyles asked Peter about the cows, Peter said, “Yeah, I let my dad do that.”
Broyles records. The relevant recording statute is: “No conveyance or mortgage
of an interest in land is valid against any subsequent purchaser for value without
notice thereof, unless it is recorded.” Who owns what, and why? How, if at all,
would the answer change if the recording statute read, “Every unrecorded
conveyance of an interest in land shall be void as against any subsequent
purchaser in good faith and for a valuable consideration whose conveyance shall
be first duly recorded”?

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3. Damon Salvatore conveys Blackacre to Bonnie Bennet. Salvatore subsequently
conveys Blackacre to Caroline Forbes for valuable consideration. Forbes lacks
knowledge of the deed to Bennet. Bennet records, then Forbes records.
Thereafter, Forbes sells the western half of Blackacre to Jeremy Gilbert, and the
eastern half back to Salvatore. Who owns Blackacre and why? Answer with
respect to each of the following laws (Hint: first identify what type of statute
this is):
a. “No conveyance or mortgage of an interest in land is valid against any
subsequent purchaser for value without notice thereof, whose
conveyance is first recorded.”
b. “No conveyance or mortgage of an interest in land is valid against any
subsequent purchaser for value without notice thereof, unless it is
recorded.”
c. “No conveyance or mortgage of an interest in land is valid against any
subsequent purchaser whose conveyance is first recorded.”

Eminent Domain
We have seen that property may be transferred by gift, by will or intestate succession,
by sale, and by foreclosure of a security interest. We now address a final mechanism by
which property may change hands. Eminent domain is the inherent power of the
state to transfer title of private property into state hands. In the United States, when
the government “takes” land in this manner, it must pay the owner “just
compensation.” This is a constitutional requirement, as the Takings Clause of the Fifth
Amendment provides: “nor shall private property be taken for public use, without just
compensation.” This brief constitutional provision encompasses three distinct issues
that we will deal with in this book (though not in this order): (1) has there been a
“taking” of private property? (2) Is the taking for “public use”; and (3) has “just
compensation” been provided?
Precedent under the Takings Clause regulates the manner in which the state directly
exercises its eminent domain power. As we will see, however, the clause also limits the
ability of the state to regulate. Property owners sometimes challenge property
regulations as being so onerous that it is as if the state has appropriated property and
compensation is therefore due. Much of the Supreme Court’s takings caselaw concerns
these so-called “regulatory takings,” which we will address in a future chapter.

A. Rationales
The power to take property is recognized (but not granted) by the Constitution and
long historical practice, but what justifies it? Simply calling it an attribute of sovereignty
does not provide a reason for its use. Property ownership usually encompasses the right
to say no. If I want to ship a mobile home across your field, but we don’t agree on a
price, it’s my duty to stay out. I cannot declare your property mine in exchange for a
judicially determined measure of “just compensation.” What makes the state different?
One traditional explanation concerns the transaction costs of government enterprises.
In a normal market, buyers can choose from among competing sellers. If houses in
town A are too expensive, you can look for one in town B, and if you are priced out of
the market, so be it. The state is often more constrained. Imagine a planned road that
780

Eminent Domain

781

will connect two cities. Building the road requires assembling multiple, connected
parcels. The number of plausible routes is finite, and increasingly constrained as plans
progress. Owners along the planned route therefore may hold out for higher sale
values, knowing the state has few alternatives. The absence of a functioning market
depletes the social surplus of the road and may kill the project altogether. Eminent
domain enables the government to engage in projects like these without the risk that a
single property owner might exercise a veto. * Of course private entities sometimes
undertake large projects. Why might they succeed despite lacking the eminent domain
power? For one argument, see Daniel B. Kelly, The “Public Use” Requirement in Eminent
Domain Law: A Rationale Based on Secret Purchases and Private Influence, 92 CORNELL L.
REV. 1, 5 (2006) (“[T]akings for the benefit of private parties are generally
unnecessary—even if a private project potentially also has a public benefit—because
private parties can avoid the holdout problem using secret buying agents. These
undisclosed agents overcome the holdout problem by purchasing property without
revealing the identity of the assembler or the nature of the assembly project to existing
owners.”).
A second question concerns the requirement of compensation. Why do you think it is
required? Fairness? Perhaps, but life is unfair. Moreover, we have insurance to protect
against life’s calamities. Why couldn’t we insure against government takings? Might the
answer have something to do with the nature of government action? Unlike forces of
nature, it is susceptible to outside influence. Can you think of other rationales? For a
discussion, see Steve P. Calandrillo, Eminent Domain Economics: Should “Just Compensation”
Be Abolished, and Would “Takings Insurance” Work Instead?, 64 OHIO ST. L.J. 451 (2003).
If the government did not have a duty to compensate, how would its behavior change?

* Courts sometimes also require property owners to bear an intrusion in exchange for money. For example,

private condemnation statutes allow landlocked owners to obtain access to public roads so long as they pay
compensation. Likewise, recall that Boomer required nuisance plaintiffs to accept a de facto servitude on their land
upon payment of permanent damages by the defendant cement plant. Both situations may be described as
involving high transaction costs either in the form of bilateral monopoly or problems of coordinating numerous
parties.

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Property

Finally, no discussion of the Takings clause is complete without acknowledging its links
to the institution of American slavery. As Tonja Jacobi, Sonia Mittal, and Barry R.
Weingast summarize in Creating A Self-Stabilizing Constitution: The Role of the Takings
Clause, 109 NW. U. L. REV. 601, 621-622 (2015):
One of the deepest divides that faced the Constitutional Convention was
slavery. Southern slaveholders exhibited considerable anxiety over a
constitution that might affect their “property.” During the Convention,
debate on key questions of structure and process was repeatedly
postponed until structural protections for slaveholders were agreed
upon. … Madison’s inclusion of the Takings Clause reflected his desire
to protect two specific minority groups--landowners and slaveholders-whose support was necessary to pass the Constitution but who, in
Madison’s view, would increasingly be left unprotected by the
majoritarian political process enshrined in the Constitution. In 1787,
landowners and slaveholders were very powerful, but Madison feared
their power would diminish over time as they became a minority, and he
crafted the Takings Clause with their future protection in mind. …
For Madison, the Takings Clause established an absolute requirement
that the government compensate the landowner if it were to order a slave
freed. Madison expected that slaveholders and landowners would
increasingly find themselves a minority over time and that without
additional protection—or what he occasionally called “auxiliary
precautions”—both groups would be continually subject to
expropriation at the hands of a growing, landless majority. The Takings
Clause fits in this category of auxiliary precautions. By restricting
legislative control over the individual rights of landowners and
slaveholders, the Clause helped to lower the stakes in politics on an
ongoing basis for two important groups whose support was necessary to
secure the Constitution’s adoption and ongoing success. Considered in
this light, the Takings Clause complements a range of other
countermajoritarian features of the Constitution—such as bicameralism,

Eminent Domain

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equal representation in the Senate, and the taxation and customs
clauses—to lower the stakes for slaveholders and landowners.

B. “Public Use”
The Fifth Amendment declares that if private property is taken “for public use”
compensation is required. What function does the term “public use” play in the clause?
One could read the phrase as descriptive, i.e., as describing situations in which the
government takes property via eminent domain (as opposed to taking it via the exercise
of other powers, like taxation or punishment for a criminal offense). Under that
reading, the only limit to the state’s taking authority is its willingness to pay (and the
operation of other Constitutional requirements, like Equal Protection, Due Process, or
the like). The Supreme Court takes a different view. Its precedent treats the term “for
public use” as a substantive limitation to the takings power, albeit not a strong one.
Kelo v. City of New London, Conn.
545 U.S. 469 (2005)
Justice STEVENS delivered the opinion of the Court.
In 2000, the city of New London approved a development plan that, in the words of
the Supreme Court of Connecticut, was “projected to create in excess of 1,000 jobs, to
increase tax and other revenues, and to revitalize an economically distressed city,
including its downtown and waterfront areas.” In assembling the land needed for this
project, the city’s development agent has purchased property from willing sellers and
proposes to use the power of eminent domain to acquire the remainder of the property
from unwilling owners in exchange for just compensation. The question presented is
whether the city’s proposed disposition of this property qualifies as a “public use”
within the meaning of the Takings Clause of the Fifth Amendment to the Constitution.
I
The city of New London (hereinafter City) sits at the junction of the Thames River and
the Long Island Sound in southeastern Connecticut. Decades of economic decline led
a state agency in 1990 to designate the City a “distressed municipality.” In 1996, the

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Property

Federal Government closed the Naval Undersea Warfare Center, which had been
located in the Fort Trumbull area of the City and had employed over 1,500 people. In
1998, the City’s unemployment rate was nearly double that of the State, and its
population of just under 24,000 residents was at its lowest since 1920.
These conditions prompted state and local officials to target New London, and
particularly its Fort Trumbull area, for economic revitalization. To this end, respondent
New London Development Corporation (NLDC), a private nonprofit entity
established some years earlier to assist the City in planning economic development, was
reactivated. In January 1998, the State authorized a $5.35 million bond issue to support
the NLDC’s planning activities and a $10 million bond issue toward the creation of a
Fort Trumbull State Park. In February, the pharmaceutical company Pfizer Inc.
announced that it would build a $300 million research facility on a site immediately
adjacent to Fort Trumbull; local planners hoped that Pfizer would draw new business
to the area, thereby serving as a catalyst to the area’s rejuvenation. After receiving initial
approval from the city council, the NLDC continued its planning activities and held a
series of neighborhood meetings to educate the public about the process.… Upon
obtaining state-level approval, the NLDC finalized an integrated development plan
focused on 90 acres of the Fort Trumbull area.
The Fort Trumbull area is situated on a peninsula that juts into the Thames River. The
area comprises approximately 115 privately owned properties, as well as the 32 acres
of land formerly occupied by the naval facility (Trumbull State Park now occupies 18
of those 32 acres). The development plan encompasses seven parcels. Parcel 1 is
designated for a waterfront conference hotel at the center of a “small urban village”
that will include restaurants and shopping. This parcel will also have marinas for both
recreational and commercial uses. A pedestrian “riverwalk” will originate here and
continue down the coast, connecting the waterfront areas of the development. Parcel
2 will be the site of approximately 80 new residences organized into an urban
neighborhood and linked by public walkway to the remainder of the development,
including the state park. This parcel also includes space reserved for a new U.S. Coast
Guard Museum. Parcel 3, which is located immediately north of the Pfizer facility, will
contain at least 90,000 square feet of research and development office space. Parcel 4A
is a 2.4–acre site that will be used either to support the adjacent state park, by providing

Eminent Domain

785

parking or retail services for visitors, or to support the nearby marina. Parcel 4B will
include a renovated marina, as well as the final stretch of the riverwalk. Parcels 5, 6,
and 7 will provide land for office and retail space, parking, and water-dependent
commercial uses.
The NLDC intended the development plan to capitalize on the arrival of the Pfizer
facility and the new commerce it was expected to attract. In addition to creating jobs,
generating tax revenue, and helping to “build momentum for the revitalization of
downtown New London,” the plan was also designed to make the City more attractive
and to create leisure and recreational opportunities on the waterfront and in the park.
The city council approved the plan in January 2000, and designated the NLDC as its
development agent in charge of implementation. The city council also authorized the
NLDC to purchase property or to acquire property by exercising eminent domain in
the City’s name. The NLDC successfully negotiated the purchase of most of the real
estate in the 90–acre area, but its negotiations with petitioners failed. As a consequence,
in November 2000, the NLDC initiated the condemnation proceedings that gave rise
to this case.
II
Petitioner Susette Kelo has lived in the Fort Trumbull area since 1997. She has made
extensive improvements to her house, which she prizes for its water view. Petitioner
Wilhelmina Dery was born in her Fort Trumbull house in 1918 and has lived there her
entire life. Her husband Charles (also a petitioner) has lived in the house since they
married some 60 years ago. In all, the nine petitioners own 15 properties in Fort
Trumbull—4 in parcel 3 of the development plan and 11 in parcel 4A. Ten of the
parcels are occupied by the owner or a family member; the other five are held as
investment properties. There is no allegation that any of these properties is blighted or
otherwise in poor condition; rather, they were condemned only because they happen
to be located in the development area.
In December 2000, petitioners brought this action in the New London Superior Court.
They claimed, among other things, that the taking of their properties would violate the
“public use” restriction in the Fifth Amendment. After a 7–day bench trial, the Superior

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Property

Court granted a permanent restraining order prohibiting the taking of the properties
located in parcel 4A (park or marina support). It, however, denied petitioners relief as
to the properties located in parcel 3 (office space).
After the Superior Court ruled, both sides took appeals to the Supreme Court of
Connecticut. That court held, over a dissent, that all of the City’s proposed takings
were valid. It began by upholding the lower court’s determination that the takings were
authorized by chapter 132, the State’s municipal development statute. That statute
expresses a legislative determination that the taking of land, even developed land, as
part of an economic development project is a “public use” and in the “public interest.”
Next, relying on cases such as Hawaii Housing Authority v. Midkiff, 467 U.S. 229 (1984),
and Berman v. Parker, 348 U.S. 26 (1954), the court held that such economic
development qualified as a valid public use under both the Federal and State
Constitutions.
Finally, adhering to its precedents, the court went on to determine, first, whether the
takings of the particular properties at issue were “reasonably necessary” to achieving
the City’s intended public use and, second, whether the takings were for “reasonably
foreseeable needs.” The court upheld the trial court’s factual findings as to parcel 3,
but reversed the trial court as to parcel 4A, agreeing with the City that the intended use
of this land was sufficiently definite and had been given “reasonable attention” during
the planning process.
The three dissenting justices would have imposed a “heightened” standard of judicial
review for takings justified by economic development. Although they agreed that the
plan was intended to serve a valid public use, they would have found all the takings
unconstitutional because the City had failed to adduce “clear and convincing evidence”
that the economic benefits of the plan would in fact come to pass.
We granted certiorari to determine whether a city’s decision to take property for the
purpose of economic development satisfies the “public use” requirement of the Fifth
Amendment.

Eminent Domain

787

III
Two polar propositions are perfectly clear. On the one hand, it has long been accepted
that the sovereign may not take the property of A for the sole purpose of transferring
it to another private party B, even though A is paid just compensation. On the other
hand, it is equally clear that a State may transfer property from one private party to
another if future “use by the public” is the purpose of the taking; the condemnation of
land for a railroad with common-carrier duties is a familiar example. Neither of these
propositions, however, determines the disposition of this case.
As for the first proposition, the City would no doubt be forbidden from taking
petitioners’ land for the purpose of conferring a private benefit on a particular private
party. Nor would the City be allowed to take property under the mere pretext of a
public purpose, when its actual purpose was to bestow a private benefit. The takings
before us, however, would be executed pursuant to a “carefully considered”
development plan. The trial judge and all the members of the Supreme Court of
Connecticut agreed that there was no evidence of an illegitimate purpose in this case.…
On the other hand, this is not a case in which the City is planning to open the
condemned land—at least not in its entirety—to use by the general public. Nor will the
private lessees of the land in any sense be required to operate like common carriers,
making their services available to all comers. But although such a projected use would
be sufficient to satisfy the public use requirement, this “Court long ago rejected any
literal requirement that condemned property be put into use for the general public.”
[Midkiff, 467 U.S.] at 244. Indeed, while many state courts in the mid–19th century
endorsed “use by the public” as the proper definition of public use, that narrow view
steadily eroded over time. Not only was the “use by the public” test difficult to
administer (e.g., what proportion of the public need have access to the property? at
what price?), but it proved to be impractical given the diverse and always evolving needs
of society.… Thus, in a case upholding a mining company’s use of an aerial bucket line
to transport ore over property it did not own, Justice Holmes’ opinion for the Court
stressed “the inadequacy of use by the general public as a universal test.” Strickley v.
Highland Boy Gold Mining Co., 200 U.S. 527, 531 (1906). We have repeatedly and
consistently rejected that narrow test ever since.

788

Property

The disposition of this case therefore turns on the question whether the City’s
development plan serves a “public purpose.” Without exception, our cases have
defined that concept broadly, reflecting our longstanding policy of deference to
legislative judgments in this field.
In Berman v. Parker, 348 U.S. 26 (1954), this Court upheld a redevelopment plan
targeting a blighted area of Washington, D. C., in which most of the housing for the
area’s 5,000 inhabitants was beyond repair. Under the plan, the area would be
condemned and part of it utilized for the construction of streets, schools, and other
public facilities. The remainder of the land would be leased or sold to private parties
for the purpose of redevelopment, including the construction of low-cost housing.
The owner of a department store located in the area challenged the condemnation,
pointing out that his store was not itself blighted and arguing that the creation of a
“better balanced, more attractive community” was not a valid public use. Writing for a
unanimous Court, Justice Douglas refused to evaluate this claim in isolation, deferring
instead to the legislative and agency judgment that the area “must be planned as a whole”
for the plan to be successful. The Court explained that “community redevelopment
programs need not, by force of the Constitution, be on a piecemeal basis—lot by lot,
building by building.” The public use underlying the taking was unequivocally affirmed:
“We do not sit to determine whether a particular housing project is or is
not desirable. The concept of the public welfare is broad and inclusive....
The values it represents are spiritual as well as physical, aesthetic as well
as monetary. It is within the power of the legislature to determine that
the community should be beautiful as well as healthy, spacious as well as
clean, well-balanced as well as carefully patrolled. In the present case, the
Congress and its authorized agencies have made determinations that take
into account a wide variety of values. It is not for us to reappraise them.
If those who govern the District of Columbia decide that the Nation’s
Capital should be beautiful as well as sanitary, there is nothing in the
Fifth Amendment that stands in the way.”
In Hawaii Housing Authority v. Midkiff, 467 U.S. 229 (1984), the Court considered a
Hawaii statute whereby fee title was taken from lessors and transferred to lessees (for

Eminent Domain

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just compensation) in order to reduce the concentration of land ownership. We
unanimously upheld the statute and rejected the Ninth Circuit’s view that it was “a
naked attempt on the part of the state of Hawaii to take the property of A and transfer
it to B solely for B’s private use and benefit.” Reaffirming Berman’s deferential approach
to legislative judgments in this field, we concluded that the State’s purpose of
eliminating the “social and economic evils of a land oligopoly” qualified as a valid
public use. Our opinion also rejected the contention that the mere fact that the State
immediately transferred the properties to private individuals upon condemnation
somehow diminished the public character of the taking. “[I]t is only the taking’s
purpose, and not its mechanics,” we explained, that matters in determining public
use.…
Viewed as a whole, our jurisprudence has recognized that the needs of society have
varied between different parts of the Nation, just as they have evolved over time in
response to changed circumstances.… For more than a century, our public use
jurisprudence has wisely eschewed rigid formulas and intrusive scrutiny in favor of
affording legislatures broad latitude in determining what public needs justify the use of
the takings power.
IV
Those who govern the City were not confronted with the need to remove blight in the
Fort Trumbull area, but their determination that the area was sufficiently distressed to
justify a program of economic rejuvenation is entitled to our deference. The City has
carefully formulated an economic development plan that it believes will provide
appreciable benefits to the community, including—but by no means limited to—new
jobs and increased tax revenue. As with other exercises in urban planning and
development, the City is endeavoring to coordinate a variety of commercial, residential,
and recreational uses of land, with the hope that they will form a whole greater than
the sum of its parts. To effectuate this plan, the City has invoked a state statute that
specifically authorizes the use of eminent domain to promote economic development.
Given the comprehensive character of the plan, the thorough deliberation that
preceded its adoption, and the limited scope of our review, it is appropriate for us, as
it was in Berman, to resolve the challenges of the individual owners, not on a piecemeal

790

Property

basis, but rather in light of the entire plan. Because that plan unquestionably serves a
public purpose, the takings challenged here satisfy the public use requirement of the
Fifth Amendment.
To avoid this result, petitioners urge us to adopt a new bright-line rule that economic
development does not qualify as a public use. Putting aside the unpersuasive suggestion
that the City’s plan will provide only purely economic benefits, neither precedent nor
logic supports petitioners’ proposal. Promoting economic development is a traditional
and long-accepted function of government. There is, moreover, no principled way of
distinguishing economic development from the other public purposes that we have
recognized. In our cases upholding takings that facilitated agriculture and mining, for
example, we emphasized the importance of those industries to the welfare of the States
in question…. It would be incongruous to hold that the City’s interest in the economic
benefits to be derived from the development of the Fort Trumbull area has less of a
public character than any of those other interests. Clearly, there is no basis for
exempting economic development from our traditionally broad understanding of
public purpose.
Petitioners contend that using eminent domain for economic development
impermissibly blurs the boundary between public and private takings. Again, our cases
foreclose this objection. Quite simply, the government’s pursuit of a public purpose
will often benefit individual private parties.… The owner of the department store in
Berman objected to “taking from one businessman for the benefit of another
businessman,” referring to the fact that under the redevelopment plan land would be
leased or sold to private developers for redevelopment. Our rejection of that
contention has particular relevance to the instant case: “The public end may be as well
or better served through an agency of private enterprise than through a department of
government—or so the Congress might conclude. We cannot say that public
ownership is the sole method of promoting the public purposes of community
redevelopment projects.”
It is further argued that without a bright-line rule nothing would stop a city from
transferring citizen A’s property to citizen B for the sole reason that citizen B will put
the property to a more productive use and thus pay more taxes. Such a one-to-one

Eminent Domain

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transfer of property, executed outside the confines of an integrated development plan,
is not presented in this case. While such an unusual exercise of government power
would certainly raise a suspicion that a private purpose was afoot, the hypothetical cases
posited by petitioners can be confronted if and when they arise. They do not warrant
the crafting of an artificial restriction on the concept of public use.
Alternatively, petitioners maintain that for takings of this kind we should require a
“reasonable certainty” that the expected public benefits will actually accrue. Such a rule,
however, would represent an even greater departure from our precedent.… The
disadvantages of a heightened form of review are especially pronounced in this type of
case. Orderly implementation of a comprehensive redevelopment plan obviously
requires that the legal rights of all interested parties be established before new
construction can be commenced. A constitutional rule that required postponement of
the judicial approval of every condemnation until the likelihood of success of the plan
had been assured would unquestionably impose a significant impediment to the
successful consummation of many such plans.
Just as we decline to second-guess the City’s considered judgments about the efficacy
of its development plan, we also decline to second-guess the City’s determinations as
to what lands it needs to acquire in order to effectuate the project.…
In affirming the City’s authority to take petitioners’ properties, we do not minimize the
hardship that condemnations may entail, notwithstanding the payment of just
compensation. We emphasize that nothing in our opinion precludes any State from
placing further restrictions on its exercise of the takings power. Indeed, many States
already impose “public use” requirements that are stricter than the federal baseline.
Some of these requirements have been established as a matter of state constitutional
law, while others are expressed in state eminent domain statutes that carefully limit the
grounds upon which takings may be exercised. As the submissions of the parties and
their amici make clear, the necessity and wisdom of using eminent domain to promote
economic development are certainly matters of legitimate public debate. This Court’s
authority, however, extends only to determining whether the City’s proposed
condemnations are for a “public use” within the meaning of the Fifth Amendment to
the Federal Constitution. Because over a century of our case law interpreting that

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provision dictates an affirmative answer to that question, we may not grant petitioners
the relief that they seek.…
Justice KENNEDY, concurring.
…. This Court has declared that a taking should be upheld as consistent with the Public
Use Clause, U.S. Const., Amdt. 5, as long as it is “rationally related to a conceivable
public purpose.” Hawaii Housing Authority v. Midkiff, 467 U.S. 229, 241 (1984). This
deferential standard of review echoes the rational-basis test used to review economic
regulation under the Due Process and Equal Protection Clauses. The determination
that a rational-basis standard of review is appropriate does not, however, alter the fact
that transfers intended to confer benefits on particular, favored private entities, and
with only incidental or pretextual public benefits, are forbidden by the Public Use
Clause.
A court applying rational-basis review under the Public Use Clause should strike down
a taking that, by a clear showing, is intended to favor a particular private party, with
only incidental or pretextual public benefits, just as a court applying rational-basis
review under the Equal Protection Clause must strike down a government classification
that is clearly intended to injure a particular class of private parties, with only incidental
or pretextual public justifications.…
A court confronted with a plausible accusation of impermissible favoritism to private
parties should treat the objection as a serious one and review the record to see if it has
merit, though with the presumption that the government’s actions were reasonable and
intended to serve a public purpose. [Justice Kennedy went on to observe that the trial
court made findings that supported the conclusion “that benefiting Pfizer was not ‘the
primary motivation or effect of this development plan’”.] .…This case, then, survives
the meaningful rational-basis review that in my view is required under the Public Use
Clause.…
…. There may be private transfers in which the risk of undetected impermissible
favoritism of private parties is so acute that a presumption (rebuttable or otherwise) of
invalidity is warranted under the Public Use Clause. This demanding level of scrutiny,

Eminent Domain

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however, is not required simply because the purpose of the taking is economic
development.…
Justice O’CONNOR, with whom THE CHIEF JUSTICE, Justice SCALIA, and
Justice THOMAS join, dissenting.
…. Under the banner of economic development, all private property is now vulnerable
to being taken and transferred to another private owner, so long as it might be
upgraded—i.e., given to an owner who will use it in a way that the legislature deems
more beneficial to the public—in the process. To reason, as the Court does, that the
incidental public benefits resulting from the subsequent ordinary use of private
property render economic development takings “for public use” is to wash out any
distinction between private and public use of property—and thereby effectively to
delete the words “for public use” from the Takings Clause of the Fifth Amendment.
Accordingly I respectfully dissent.…
….Where is the line between “public” and “private” property use? We give
considerable deference to legislatures’ determinations about what governmental
activities will advantage the public. But were the political branches the sole arbiters of
the public-private distinction, the Public Use Clause would amount to little more than
hortatory fluff. An external, judicial check on how the public use requirement is
interpreted, however limited, is necessary if this constraint on government power is to
retain any meaning.
Our cases have generally identified three categories of takings that comply with the
public use requirement, though it is in the nature of things that the boundaries between
these categories are not always firm. Two are relatively straightforward and
uncontroversial. First, the sovereign may transfer private property to public
ownership—such as for a road, a hospital, or a military base. Second, the sovereign
may transfer private property to private parties, often common carriers, who make the
property available for the public’s use—such as with a railroad, a public utility, or a
stadium. But “public ownership” and “use-by-the-public” are sometimes too
constricting and impractical ways to define the scope of the Public Use Clause. Thus
we have allowed that, in certain circumstances and to meet certain exigencies, takings
that serve a public purpose also satisfy the Constitution even if the property is destined

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for subsequent private use. See, e.g., Berman v. Parker, 348 U.S. 26 (1954); Hawaii Housing
Authority v. Midkiff, 467 U.S. 229 (1984).…
…. We are guided by two precedents about the taking of real property by eminent
domain. In Berman, we upheld takings within a blighted neighborhood of Washington,
D.C. The neighborhood had so deteriorated that, for example, 64.3% of its dwellings
were beyond repair. It had become burdened with “overcrowding of dwellings,” “lack
of adequate streets and alleys,” and “lack of light and air.” Congress had determined
that the neighborhood had become “injurious to the public health, safety, morals, and
welfare” and that it was necessary to “eliminat[e] all such injurious conditions by
employing all means necessary and appropriate for the purpose,” including eminent
domain. Mr. Berman’s department store was not itself blighted. Having approved of
Congress’ decision to eliminate the harm to the public emanating from the blighted
neighborhood, however, we did not second-guess its decision to treat the
neighborhood as a whole rather than lot-by-lot.
In Midkiff, we upheld a land condemnation scheme in Hawaii whereby title in real
property was taken from lessors and transferred to lessees. At that time, the State and
Federal Governments owned nearly 49% of the State’s land, and another 47% was in
the hands of only 72 private landowners. Concentration of land ownership was so
dramatic that on the State’s most urbanized island, Oahu, 22 landowners owned 72.5%
of the fee simple titles. The Hawaii Legislature had concluded that the oligopoly in land
ownership was “skewing the State’s residential fee simple market, inflating land prices,
and injuring the public tranquility and welfare,” and therefore enacted a condemnation
scheme for redistributing title.…
In moving away from our decisions sanctioning the condemnation of harmful property
use, the Court today significantly expands the meaning of public use. It holds that the
sovereign may take private property currently put to ordinary private use, and give it
over for new, ordinary private use, so long as the new use is predicted to generate some
secondary benefit for the public—such as increased tax revenue, more jobs, maybe
even esthetic pleasure. But nearly any lawful use of real private property can be said to
generate some incidental benefit to the public. Thus, if predicted (or even guaranteed)
positive side effects are enough to render transfer from one private party to another

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constitutional, then the words “for public use” do not realistically exclude any takings,
and thus do not exert any constraint on the eminent domain power.…
Justice THOMAS, dissenting.
Long ago, William Blackstone wrote that “the law of the land ... postpone[s] even public
necessity to the sacred and inviolable rights of private property.” 1 Commentaries on
the Laws of England 134–135 (1765) (hereinafter Blackstone). The Framers embodied
that principle in the Constitution, allowing the government to take property not for
“public necessity,” but instead for “public use.” Amdt. 5. Defying this understanding,
the Court replaces the Public Use Clause with a “ ‘[P]ublic [P]urpose’ ” Clause (or
perhaps the “Diverse and Always Evolving Needs of Society” Clause (capitalization
added)), a restriction that is satisfied, the Court instructs, so long as the purpose is
“legitimate” and the means “not irrational.” This deferential shift in phraseology
enables the Court to hold, against all common sense, that a costly urban-renewal project
whose stated purpose is a vague promise of new jobs and increased tax revenue, but
which is also suspiciously agreeable to the Pfizer Corporation, is for a “public use.”
I cannot agree. If such “economic development” takings are for a “public use,” any
taking is, and the Court has erased the Public Use Clause from our Constitution, as
Justice O’CONNOR powerfully argues in dissent. I do not believe that this Court can
eliminate liberties expressly enumerated in the Constitution and therefore join her
dissenting opinion. Regrettably, however, the Court’s error runs deeper than this.
Today’s decision is simply the latest in a string of our cases construing the Public Use
Clause to be a virtual nullity, without the slightest nod to its original meaning. In my
view, the Public Use Clause, originally understood, is a meaningful limit on the
government’s eminent domain power. Our cases have strayed from the Clause’s
original meaning, and I would reconsider them.…
The consequences of today’s decision are not difficult to predict, and promise to be
harmful. So-called “urban renewal” programs provide some compensation for the
properties they take, but no compensation is possible for the subjective value of these
lands to the individuals displaced and the indignity inflicted by uprooting them from
their homes. Allowing the government to take property solely for public purposes is
bad enough, but extending the concept of public purpose to encompass any

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economically beneficial goal guarantees that these losses will fall disproportionately on
poor communities. Those communities are not only systematically less likely to put
their lands to the highest and best social use, but are also the least politically
powerful.…
…. In the 1950’s, no doubt emboldened in part by the expansive understanding of
“public use” this Court adopted in Berman, cities “rushed to draw plans” for downtown
development. B. Frieden & L. Sagalyn, Downtown, Inc. How America Rebuilds Cities
17 (1989). “Of all the families displaced by urban renewal from 1949 through 1963, 63
percent of those whose race was known were nonwhite, and of these families, 56
percent of nonwhites and 38 percent of whites had incomes low enough to qualify for
public housing, which, however, was seldom available to them.” Public works projects
in the 1950’s and 1960’s destroyed predominantly minority communities in St. Paul,
Minnesota, and Baltimore, Maryland. In 1981, urban planners in Detroit, Michigan,
uprooted the largely “lower-income and elderly” Poletown neighborhood for the
benefit of the General Motors Corporation. J. Wylie, Poletown: Community Betrayed
58 (1989). Urban renewal projects have long been associated with the displacement of
blacks; “[i]n cities across the country, urban renewal came to be known as ‘Negro
removal.’” Pritchett, The “Public Menace” of Blight: Urban Renewal and the Private
Uses of Eminent Domain, 21 Yale L. & Pol’y Rev. 1, 47 (2003). Over 97 percent of
the individuals forcibly removed from their homes by the “slum-clearance” project
upheld by this Court in Berman were black. Regrettably, the predictable consequence of
the Court’s decision will be to exacerbate these effects.…
Notes and Questions
1. If the state pays compensation and bears the political costs, what is wrong with
taking from A and giving to B? Suppose the state wants land to be used for a
particular purpose. Is it sensible to require the state to conduct operations or
might turning them over to private actors enhance efficiency? Or is a “public
use” requirement more about policing local political processes, deterring
corruption or special interest capture? If so, is this an efficient mechanism?
2. Kelo provoked a strong public reaction and a flurry of state legislative activity
designed to control abuses of eminent domain. By 2009, 43 states had enacted

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eminent domain restrictions. Does this mean that democracy works? Are there
advantages to the Supreme Court’s setting limits on eminent domain? Compare
Alberto B. Lopez, Revisiting Kelo and Eminent Domain’s “Summer of Scrutiny”, 59
ALA. L. REV. 561, 565 (2008) (“[P]ost-Kelo legislation symbolizes the
government’s effort to remedy the breach of the public’s trust caused by Kelo
regardless of one’s substantive view of those legislative measures. Furthermore,
the robust post-Kelo legislative response is a testament to the strength of one of
the core principles of our government—federalism.”), with Ilya Somin, The
Limits of Backlash: Assessing the Political Response to Kelo, 93 MINN. L. REV. 2100,
2105 (2009) (“Only seven states that had recently engaged in significant
numbers of economic development and blight condemnations have enacted
post-Kelo legislative reforms with any real teeth.”). Can one’s answer be
independent of one’s prior views on the legitimate uses of eminent domain?
3. As Justice Thomas’s dissent notes, one criticism of the eminent domain power
has been that it has been used in either a discriminatory or racially
disproportionate manner. Which way does this consideration cut in Kelo? After
all, the practice of labeling of minority communities as “blighted” is a matter of
historical record. Might the Court’s approval of eminent domain’s use on Kelo’s
facts improve the politics of eminent domain law by making clear that anyone
could be on the receiving end of a condemnation? And to the extent the
problem with eminent domain is discriminatory application, why isn’t the
Constitution’s Equal Protection Clause a preferable safeguard? Or does the
history cited by Justice Thomas answer that question?
4. Most of the affected homeowners in New London negotiated a purchase price
with the New London Development Corporation (NLDC). For her part, Kelo
reportedly turned down a purchase offer that would have netted her a $22,000
profit on her home. The decision to litigate, while not letting her keep her
property, did lead to a higher purchase price. The public outcry in the wake of
the Kelo ruling led to favorable settlements for the holdout landowners. For
example,

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Kelo agreed in June 2006 to sell for $442,000 ($392,000 plus a
pay-off of her $50,000 mortgage); not too bad for a place she had
purchased in August 1997 for $53,500, and NLDC had appraised
for condemnation at $123,000 in November 2000. She only sold
the lot. Avner Gregory, the same preservationist who had
refurbished the house after moving it from its original location to
the site where Kelo found it, relocated the house a second time
to a vacant parcel with a pre-existing foundation, in a modest
neighborhood several miles away, on the other side of the
Amtrak rail line from Fort Trumbull. A plaque identifies the
house as “The Kelo House.”
George Lefcoe, Jeff Benedict’s Little Pink House: The Back Story of the Kelo Case, 42
CONN. L. REV. 925, 954-55 (2010) (footnotes omitted). In 2009 Pfizer
announced it would leave New London to cut costs, taking its jobs to its facility
in Groton, Connecticut. Patrick McGeehan, “Pfizer to Leave City That Won
Land-Use Case,” New York Times, p. A1 (November 13, 2009), available at
http://www.nytimes.com/2009/11/13/nyregion/13pfizer.html?_r=0.

C. Eminent Domain Operations
Local governments carry out condemnations in a variety of ways. There is no standard
eminent domain regime. Some states require some sort of pre-condemnation activity
(e.g., formal findings that a condemnation is necessary or efforts to negotiate with the
landowner); others do not. Some jurisdictions require the condemning authority to
initiate a judicial action; others allow an administrative procedure, giving the landowner
the right to challenge the taking in court. Some states provide for expedited procedures,
“quick take” provisions, either as an independent cause of action or by motion within
an ongoing proceeding. 13 POWELL ON REAL PROPERTY § 79F.06.
In Illinois, for example, the condemning authority files an eminent domain action in
the circuit court for the county of the property. The complaint details: “(i) the
complainant’s authority in the premises, (ii) the purpose for which the property is
sought to be taken or damaged, (iii) a description of the property, and (iv) the names

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of all persons interested in the property as owners or otherwise, as appearing of record,
if known.” 735 ILL. COMP. STAT. ANN. 30/10-5-10. Either the condemning authority
or the property owner may request a jury trial. Expedited procedures (called a “quick
take” procedure) are also available upon motion. Id. § 30/20-5-5.

D. Just Compensation
What is just compensation? The standard approach is fair market value. See, e.g., 735
ILL. COMP. STAT. ANN. § 30/10-5-60 (“[T]he fair cash market value of property in a
proceeding in eminent domain shall be the amount of money that a purchaser, willing,
but not obligated, to buy the property, would pay to an owner willing, but not obliged,
to sell in a voluntary sale.”). This amount may include costs directly attributable to the
condemnation. See id. § 30/10-5-62 (providing for compensation of reasonable
relocation costs).
Evidentiary difficulties aside, the fair market value metric potentially understates the
value of the home from the perspective of the property owner in at least three ways.
First, fair market value ignores subjective values. A property owner often values it more
than the market (as reflected by the fact that it has not yet been sold for the market
price). If the property is a home, it may have high sentimental value (e.g., if it is where
one raised children) or offer idiosyncratic amenities that cannot be easily duplicated but
are not reflected in market price (e.g., proximity to friends, work, etc.). Second, eminent
domain is a forced transaction. The landowner may experience the transaction as a
violation of personal autonomy. Third, to the extent the project produces a surplus,
the displaced landowner does not get a share. In other words, suppose five lots are
each individually worth $10,000, but they can be assembled into a park that confers
$100,000 of benefits on the surrounding area. The owners of the condemned lots do
not share in the surplus, they still receive only $10,000. See, e.g., 735 ILL. COMP. STAT.
ANN. § 30/10-5-60 (“In the condemnation of property for a public improvement, there
shall be excluded from the fair cash market value of the property any appreciation in
value proximately caused by the improvement and any depreciation in value
proximately caused by the improvement”).

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Property

What happens when only part of a parcel is taken? The general approach is to allow
compensation for the effect of the severance on the land retained by the condemnee.
Imagine O owns Blackacre and Whiteacre as one parcel with a combined value of
$100,000. If Blackacre is taken for a fair market value of $50,000, and the severance
leaves Whiteacre worth only $40,000, O is entitled to compensation for the lost
$10,000. Note, however, that if O owned only Whiteacre, and its value was reduced by
$10,000 due to the next-door condemnation of Blackacre, O would receive nothing.
13 POWELL ON REAL PROPERTY § 79F.04.
What if a partial taking enhances the value of the remainder? See, e.g., 735 ILL. COMP.
STAT. ANN. § 30/10-5-55 (“In assessing damages or compensation for any taking or
property acquisition under this Act, due consideration shall be given to any special
benefit that will result to the property owner from any public improvement to be
erected on the property.”); Illinois State Toll Highway Auth. v. Am. Nat. Bank & Trust
Co. of Chicago, 642 N.E.2d 1249, 1255 (Ill. 1994) (“[S]pecial benefits are any benefits
to the property that enhance its market value and are not conjectural or speculative.”).
This mix of rules leads to results that may strike you as unfair. Imagine a government
project to build a subway station, and three affected landowners, Alice, Bob, and
Charles. Alice’s parcel is condemned in its entirety; half of Bob’s land is condemned;
and Charles’s land is untouched. Suppose further that the transit station leads to a
doubling in the property values of the surrounding land. On these facts, Alice receives
the pre-project value of her land. Bob receives nothing (assuming the appreciation of
his retained half matches the pre-project value of the condemned portion); and Charles
receives a windfall. Is there any way to avoid these difficulties?
Holders of future interests are also entitled to compensation. See generally 2 NICHOLS
ON EMINENT DOMAIN § 5.02; see, e.g., CAL. CODE CIV. PROC. § 1265.420 (“Where
property acquired for public use is subject to a life tenancy, upon petition of the life
tenant or any other person having an interest in the property, the court may order any
of the following: (a) An apportionment and distribution of the award based on the
value of the interest of life tenant and remainderman; (b) The compensation to be used
to purchase comparable property to be held subject to the life tenancy; (c) The
compensation to be held in trust and invested and the income (and, to the extent the

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instrument that created the life tenancy permits, principal) to be distributed to the life
tenant for the remainder of the tenancy; (d) Such other arrangement as will be equitable
under the circumstances.”).

Part V: Use
Two neighboring owners may wish to make use of their land in ways that are
incompatible: use by one would interfere with or prevent use by the other. For example,
it would be difficult for me to operate a daycare center next door to your
slaughterhouse, or for you to grow soybeans in the shadow of my office towers, or for
either of us to enjoy a single-family home across the street from an oil refinery.
Property law regulates these types of competing uses in various ways. The common
law of nuisance purports to set standards by which one owner can prevent the desired
use of another. Owners can agree among themselves to regulate their uses, and have
those agreements enforced not only between themselves but between all subsequent
owners of the affected land. Such private land use restrictions are known as servitudes.
One type of servitude—an easement—provides one owner a right to use the other’s
land. Another type of servitude—a restrictive covenant—provides one owner the right
to prevent neighboring landowners from using their land in particular ways. Covenants
can even be used to bind entire communities in mutual and reciprocal schemes of
privately regulated land uses: the common-interest community.
Governments are also heavily involved in regulating potentially conflicting land uses,
enacting zoning schemes to confine potentially conflicting uses to separate areas of
their jurisdiction, and imposing restrictions on the legal uses of property, though the
scope of this power is limited by the Takings Clause of the Fifth Amendment to the
federal Constitution.
In each of these systems for regulating incompatible uses, disputes will lead to someone
having their wishes fulfilled, and someone else finding their desires frustrated. As you
read these chapters, pay attention to how each of these legal doctrines picks winners
and losers, how they set the conditions according to which some uses can receive more
favorable treatment than others, and most importantly, how they allocate the power to
decide when a particular condition for favoring or disfavoring a particular use is
satisfied.

802

Nuisance
“There is perhaps no more impenetrable jungle in the entire law than
that regarding the word ‘nuisance.’ ”
—W. Page Keeton et al., PROSSER AND KEETON ON TORTS § 86 (5th ed.
1984).
People want to use land for different things. We’ve already seen how the resulting
conflicts provide a rationale for property rights. In the so-called tragedy of the
commons, for example, each cattle owner has an incentive to use the pasture for
grazing before someone else beats him or her to it. The race to consume leaves the
pasture depleted and everyone worse off. Property rights are one, but by no means the
only, mechanism for addressing the problem, as an individual owner may have the
necessary incentive to ensure that the plot is not overconsumed. Likewise property
rights enable owners to manage their holdings free from external interference. The
farmer may plant her corn even though her neighbor wishes a hotel were there. And
property rights facilitate the reconciliation of incompatible interests without outside
intervention. Determining whether Blackacre is better off as a hotel or a farm might be
a hard call for an outside regulator. But with enough money, the would-be hotelier may
simply buy out the farmer (or vice versa).
This hardly exhausts the universe of potential dispute. As we have already seen,
disputes may emerge within property boundaries. One joint tenant may want to use a
pond for irrigation; the other, fishing. Property law provides another set of
management mechanisms for this kind of disagreement—e.g. partition actions—that
we studied in our unit on concurrent interests. Likewise the law of leaseholds has its
own set of doctrines for managing the inevitable battles of the landlord/tenant
relationship.
Here we are interested in conflicts that arise between neighboring property owners.
The collision is not within an ownership interest (as with cotenants) but between such
interests. My lifelong dream of operating the world’s smokiest factory may be
803

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Property

incompatible with my neighbor’s desire for odorless living. We each own our respective
land. What then?
One solution is to engage in private governance. We might strike a deal, and the law of
servitudes lets us bind our successors in ownership to the arrangement. Alternatively,
the state might resolve our dispute via regulation—the government may declare my
facility illegal via zoning law or air quality regulation, effectively picking a winner
between competing interests.
The law of nuisance takes a different tack. It also involves picking a winner, but turns
the choice over to a court. The court’s role, however, is not explicitly regulatory. Rather,
it is there to determine whether the complained-of act is contrary to someone else’s
property rights. Stated another way, if my factory is a nuisance, your property rights
already preclude its operation. The nuisance action merely clarifies that I violated your
property rights (and that my property rights did not include the right to use my land in
the way I had). In essence, the court is determining whether a boundary has been
crossed. But from another perspective, nuisance looks a lot like regulation. A judicial
regulator (rather than a politically accountable agency) takes a look at the facts and
decides whose interests ought to prevail. We might look at nuisance questions from
either view, which complicates the doctrine.

A. The Problem of Nuisance Definition
“A private nuisance is a nontrespassory invasion of another’s interest in the private use
and enjoyment of land.” RESTATEMENT (SECOND) OF TORTS § 821D (1979). What
does that mean? Nuisance law is a history of courts trying to come to grips with a fairly
vague exhortation. Judges sometimes invoke the maxim sic utere tuo ut alienum non laedas.
“[O]ne must so use his own rights as not to infringe upon the rights of another. The
principle of sic utere precludes use of land so as to injure the property of another.” Cline
v. Dunlora S., LLC, 726 S.E.2d 14, 17 (Va. 2012).
That’s intuitive, but unhelpful. Back to the factory versus the home. If my ownership
of land includes the right to emit smoke, I interfere with my neighbor’s ability to enjoy
her home. But if her property right includes the ability to shut me down, then her

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preferred property use interferes with my ability to use my property as I see fit. The
harms are reciprocal. Appeals to sic utere beg the question. That said, there is something
intuitively appealing about the maxim, and perhaps you have a strong intuition (based
on what?) that factories “cause” harm in a way that homes do not. How far do
intuitions of harm go? What if, instead of using my property, I prefer to let it fall into
disuse? Does this passive act cause harm?
Puritan Holding Co. v Holloschitz
372 N.Y.S.2d 500 (Sup. Ct. 1975)
WALTER M. SCHACKMAN, J.
Plaintiff owns a small apartment building, recently renovated, on West 93rd Street in
Manhattan, almost directly across the street from a building owned by the defendant.
The latter building has been abandoned. Plaintiff claims the defendant has created a
nuisance by not properly caring for her property and claims it has suffered damages as
a result. Defendant did not appear in the action and an inquest was held before the
court.
The uncontroverted proof at trial was that defendant’s building had deteriorated,
become unsightly and been taken over by derelicts. The building’s condition has caused
a deterioration in values on the block. A real estate expert testified that the depreciation
in value of plaintiff’s property since the abandonment of defendant’s building was
$30,000 to $35,000. He further stated it would be impossible for plaintiff to obtain a
mortgage because of the condition of the defendant’s property. The question for the
court is whether the failure of the defendant to supervise her abandoned property
constitutes the maintenance of a private nuisance.
An excellent definition of nuisance appears in 4 ALR3d 908: “The nuisance doctrine
operates as a restriction upon the right of an owner of property to make such use of it
as he pleases. In legal phraseology the term ‘nuisance’ is applied to that class of wrongs
which arises from the unreasonable, unwarrantable, or unlawful use by a person of his
own property, and which produces such material annoyance, inconvenience,
discomfort or hurt that the law will presume a consequent damage. It is so
comprehensive that it has been applied to almost all wrongs which have interfered with

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the rights of the citizen in his person, property, the enjoyment of his property, or his
comfort. It has been said that the term ‘nuisance’ is incapable of an exact and exhaustive
definition which will fit all cases, because the controlling facts are seldom alike, and
each case stands on its own footing.”
The court has made a search of the reported cases in New York and has been unable
to find any similar to the case at bar. However, it has been held that “every person who
suffered actual damages, whether direct or consequential, from a nuisance, might
maintain an action for his own particular injury.” (Lansing v Smith, 4 Wend 9.) There are
numerous cases where property owners, adjacent to or in the vicinity of a nuisance,
were entitled to damages. Examples are: where a tire shop emitted offensive odors and
fumes; the discharge of large quantities of dust; an open burning operation by a city in
a landfill area and blasting operations.
In considering whether an activity is a nuisance, the court must be mindful of the
location and surroundings as well as other circumstances. An activity which occurs in
a particular location and surroundings may be reasonable, while the same activity in
another location and in other surroundings may be a nuisance.
West 93rd Street is in the West Side Urban Renewal area which has recently seen a
marked upward trend in real estate values. Annually there are thousands of buildings
abandoned throughout New York City. Some buildings abandoned and left in disrepair
in certain deteriorating neighborhoods of the city may not constitute a nuisance.
However, here a building has been abandoned in a location where property owners are
trying to maintain and upgrade the housing standards. Defendant has clearly violated
section C26-80.0 of the Administrative Code of the City of New York which requires
that vacant buildings must be either continuously guarded or sealed. The court is of the
opinion that defendant’s actions constitute a nuisance.
The court is not unmindful of the fact that given the number of abandonments,
estimated by the Housing and Development Administration of the City of New York
at approximately 12,000 units per year, and the further fact that the city does not have
the funds to force the owners to maintain these properties, a decision in favor of
plaintiff herein could result in a multiplicity of lawsuits. However, one bad building

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may eventually destroy an entire neighborhood. The courts have a duty to examine
each situation independently.
Plaintiff has provided sufficient proof that defendant’s building is, in its present
condition, a nuisance. It is entitled to the difference between the market value of the
building before and after the nuisance. Plaintiff’s expert has testified that the difference
in value is $30,000 to $35,000. The court finds in favor of the plaintiff in the sum of
$30,000.
Notes and Questions
1. How much should it matter that the defendant independently violated a local
regulation?
2. If Holloschitz does not go too far, how much freedom should courts have to
judge land uses? Are there any metrics that would both provide judicial
discretion as well as contain it? We will examine several approaches below, but
the question underscores the problem of unclear boundaries in nuisance law. A
lot of property doctrine exists to help us determine the scope of property rights
without asking a judge. The metes and bounds in a deed tell us what is a trespass.
The adverse possession limitations period lets expectations settle. Title
recording gives notice of competing interests. And so on. When push comes to
shove, litigation may be necessary to resolve disputed boundaries, but in most
cases there are ways to determine them without the aid of a court. By contrast,
the boundaries clarified by nuisance law are harder to ascertain ex ante in part
because nuisance is more a flexible standard than a bright-line rule. What
measures short of litigation are available to people like the plaintiff here? To be
sure, the law cannot anticipate every possible conflict between property owners.
There is therefore something to be said for ex post determinations of what is a
reasonable use of land. Is this reason enough to use nuisance law to supplement
regulatory and zoning schemes?
3. Aesthetics. Courts generally reject nuisance claims based on aesthetic harm,
but that reluctance may be eroding. Rattigan v. Wile, 841 N.E.2d 680, 683 (Mass.
2006) (“We conclude in this appeal that activities on one’s property that create

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or maintain unreasonable aesthetic conditions for neighbors are actionable as a
private nuisance.”); id. at 689-90 (arguing that the modern trend is to allow such
claims). Courts also sometimes consider aesthetic harm as part of the larger
nuisance analysis. Sowers v. Forest Hills Subdivision, 294 P.3d 427, 430 (Nev.
2013) (“[W]e hold that the aesthetics of a wind turbine alone are not grounds
for finding a nuisance. However, we conclude that a nuisance in fact may be
found when the aesthetics are combined with other factors, such as noise,
shadow flicker, and diminution in property value.”).
4. What if a building became dilapidated because its owner could not afford
upkeep? If so, does Holloschitz hint at nuisance’s potential to serve as a tool of
exclusion of poor people? What other activities (or groups) might the law target?
See generally Alfred L. Brophy, Integrating Spaces: New Perspectives on Race in the
Property Curriculum, 55 J. LEGAL EDUC. 319, 331-33 (2005) (discussing attempts
to use nuisance law as a tool of racial discrimination); John Copeland Nagle,
Moral Nuisances, 50 EMORY L.J. 265, 276-94 (2001) (discussing range of activities
targeted by nuisance plaintiffs). For commentary on the disability rights
implications of a recent nuisance suit between neighbors, see David Perry,
Flowers v Gopal-Rich folks try to declare autistic boy a “Public Nuisance”, (September
23, 2015), http://www.thismess.net/2015/09/flowers-v-gopal-rich-folks-tryto.html. Could the mere presence of a sex offender in a residential community
of families with young children be considered a nuisance? Some public nuisance
ordinances deem repeated 911 calls a nuisance; what effect might such property
law rules have on victims of domestic violence? See Emily Werth, The Cost of
Being “Crime Free”: Legal and Practical Consequences of Crime Free Rental Housing and
Nuisance
Property
Ordinances
(Aug.
2013)
http://povertylaw.org/sites/default/files/files/housing-justice/cost-of-beingcrime-free.pdf.
5. Nuisance and Trespass. Does the difference between nuisance and trespass
turn on the nature of the particular right of ownership involved (i.e., use versus
possession)? On whether the injury to the plaintiff resulted from a physical
invasion of the plaintiff’s property (i.e., quare clausum fregit)? Consider the
following historical discussion:

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Historically, trespass and nuisance were two distinct commonlaw classes of injury involving real property. 9 R. Powell, Real
Property (1999) § 64.01[1], p. 64–5; 4 Restatement (Second),
Torts, § 821D, comment (a) (1979). A defendant who invaded a
plaintiff’s possession was a trespasser; a defendant who interfered
with a plaintiff’s use and enjoyment of his property by acts done
elsewhere than on the plaintiff’s land was subject to a claim of
nuisance.
This ancient distinction between trespass and nuisance, on the
basis of whether an invasion of a plaintiff’s land was direct or
indirect, is not followed by more recent cases. Instead, recent case
law treats trespass cases as involving acts that interfere with a
plaintiff’s exclusive possession of real property and nuisance
cases as involving acts interfering with a plaintiff’s use and
enjoyment of real property. In other words, the distinction no
longer rests on the means by which the invasion is effected but,
instead, on the nature of the right with which the tortfeasor
interferes. When viewed in this way, claims of nuisance may
include an instance of trespass in that a physical entry onto land
possessed exclusively by another also may affect, in the abstract,
the possessor’s use and enjoyment of the land.
Boyne v. Town of Glastonbury, 955 A.2d 645, 652-53 (Conn. App. 2008)
(successive citations to POWELL and the Restatement omitted); see also, e.g., Cook
v. DeSoto Fuels, Inc., 169 S.W.3d 94, 103 (Mo. Ct. App. 2005) (“[Plaintiffs’]
allegations that [defendant] caused gasoline to enter their property can
constitute a claim for both trespass and nuisance because that contamination
involves a direct physical invasion that interferes with both the right to
possession and the use and enjoyment of property.”); Maryland Heights
Leasing, Inc. v. Mallinckrodt, Inc., 706 S.W.2d 218 (Mo. Ct. App. 1985)
(complaint of low-level radiation emissions stated claim for nuisance and
trespass).

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B. Adjudicating Nuisance
Although some acts are treated as per se nuisances (typically illegal activities) courts
must generally engage in contextual assessments of harm to determine whether a
nuisance exists in fact (also referred to as a nuisance per accidens).
Sans v. Ramsey Golf & Country Club, Inc.
149 A.2d 599 (N.J. 1959)
FRANCIS, J.
An injunction was issued by the Chancery Division of the Superior Court against
defendant Ramsey Golf and Country Club, Inc., barring the further use of the men’s
and women’s third tees of its golf course. The Appellate Division affirmed .…
The issue presented is a novel one. The facts which created it are not seriously in
dispute. The physical setting which forms its background is the product of the ingenuity
of a real estate developer.
[The defendant operated a residential and country club development with a nine-hole
golf course.] The development tract contained three small lakes, one of which, called
Mirror Lake, became the water hazard hole about which this controversy centers.…
In 1949 the plaintiffs, husband and wife, purchased a lot in the development. Naturally,
they were aware of the existence of the golf course, and they became members of the
club. They commenced construction of a home on the lot in 1950, after which they
acquired two adjoining parcels. One side of their property adjoins the fairway of the
second hole. The rear line of the three lots is near Mirror Lake but does not run to the
water. It is separated from the edge of the lake by a strip of land varying in width from
11 to 40 feet, which is owned by the golf club.
In 1948 the present third women’s tee was built. Its location was designed to create a
short par 4 water hole.… [T]he tee had been in continuous use since its installation,
although the plaintiff Ralph Sans testified that he did not notice it until 1950 when his
home was being built. Subsequently, apparently in 1949, a separate men’s tee was built
for this hole about 30 feet farther from the northerly edge of the lake. The purpose

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was to lengthen the water hazard for the men. Both tees are on golf club property.
According to Sans, the men’s tee is ‘roughly’ 50 to 60 feet from the southerly corner
of the rear of his house; the women’s tee is closer.
In order to reach the third tees from the second green, the golfers walk along the 11 to
40-foot-wide path (owned by defendant and described above) separating plaintiffs’ rear
lawn from the lake.
Plaintiffs moved into their new home in June or July of 1951, and have lived there since
that time. They have two children, who were 10 and 11 years of age when the case was
heard. As the membership of the club grew, play on the golf course increased, and the
players’ use of the third tees and the path to reach them became annoying and
burdensome to plaintiffs. They began to complain to defendant’s officials, and
thereafter and until this suit was brought, they sought to effect the relocation of the
tees to the north of the northerly line of the lake. Such a change is feasible. In fact,
when a stay of the restraint issued by the trial court was denied, a new temporary tee
was built and has been in use pending the determination of this appeal. The objection
of defendant to adopting it permanently is that an attractive short par 4 water hole is
transformed into an ordinary par 3 one on a nine-hole course which already has three
par 3 holes.
Plaintiffs’ complaint charged defendant and its members with trespassing on their land
by using the pathway along the lake in walking to the ladies’ and men’s tees in question.
This contention was abandoned when it appeared that plaintiffs did not own the strip
and that, although National had not conveyed it to defendant in the original 1945 deed,
a transfer had been made by deed in 1955. Other allegations, however, in company
with the issues appearing in the pretrial order, were deemed by the trial court to present
a claim that the location of the tees and the manner and incidents of their use by
defendant and its members constituted a private nuisance as to plaintiffs. The trial was
conducted on the latter basis.
Proof was adduced that in the golf season play begins on the third tees as early as 6
A.M. and continues throughout the day until twilight. On week-ends and holidays the

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Property

activity is more intense. Sans spoke of an ‘endless stream of golfers’ using the path just
in back of his house.…
When Sans bought his first lot in 1949, the one on which his home was later
constructed, he did not see the tee or tees in question. And there is no proof that
anyone called them to his attention. It does appear that a certain brochure respecting
the development had been given to him. A similar one was introduced in evidence. It
contained what appeared to be an aerial color view of the tract, including the course.
Although the tees were indicated, none was depicted on plaintiffs’ side of the lake.
When an inquiry was made on cross-examination as to whether he did not know that
he was ‘buying a piece of property immediately adjacent to the golf course,’ he
answered: ‘No, we did not buy a piece adjacent to the golf course. We had a choice of
three lots on that end and we bought the lot away from the golf course.’ And as has
been indicated, he testified further that he did not see a tee in the rear of his lots until
some time in 1950 when his home was being erected.
According to plaintiffs, the constant movement of the players to and from the tee in
close proximity to their rear lawn and house was accompanied by a flow of
conversation which became annoying and burdensome to them. It awakened them and
their children as early as 7 in the morning and it pervaded their home all day long until
twilight. Moreover, they have a consciousness that everything they say in or around the
house can be heard out on the path and so they are ‘under a constant strain and
constant tension.’ They ‘never feel relaxed or free at home’; ‘(w)e never know when
there is someone in our back yard.’ Occasionally, a low hook or slice or heeled shot of
a golfer carries upon their lawn. Then, by means of a trespass, the ball is retrieved.
Sometimes it is played from that position. Apparently there are no out-of-bounds
stakes in the area. The combination of difficulties makes it impossible to sit outside
and ‘enjoy supper.’
At times there are as many as 12 persons waiting to use the ladies’ and men’s tees. On
a short course containing three par 3 holes, such backing up of playing groups,
particularly at a 260-yard water hole, might well be expected. This gathering adds to the
conversation, and the voices can be heard in the house. While silence is the
conventional courtesy when a golfer is addressing his ball and swinging, the ban is

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813

relaxed between shots, and presumably the nature of the comments depends in some
measure upon the success or failure of the player in negotiating the hazardous water.
But an even more serious objection involves plaintiffs’ children. They have no freedom
of play on their back lawn. Golfers tell them not to play there and constantly admonish
them to be quiet. If they move their activities to the north side of the property, they
are endangered by balls being driven on the second fairway. This exposure has
constantly worried Mrs. Sans. The children have a dog. On one occasion they were
cavorting in the rear of the house and the dog was barking. A golfer instructed them
to keep it quiet, and when they were unable to do so he walked on plaintiffs’ property
and knocked the animal unconscious with a club-even though one of the children
pleaded with him not to do it. Complaint about the incident to one of defendant’s
officials met with the response that ‘The dog had no right to be there.’ At times the
players allow their own dogs to accompany them around the course, and they have
attacked plaintiffs’ dog when it was on the rear lawn.
The resident members of the club have the common right to use the lakes for fishing
and boating. Plaintiffs have an aluminum boat in the lake immediately to the rear of
their house. If the children take the boat out, the golfers at these tees order them off
the water. They cannot fish with safety from the banks to the rear of the house for the
same reason, and because of the danger of being struck by golf balls. Even in the winter,
when children were ice skating there, golfers were hitting balls over their heads to the
third fairway.…
Defendant recognized the danger, and at times during the winter the tee was closed off
to avoid possible injury to the skaters. When this happened the hole was played from
the other side of the lake-presumably in a manner similar to that followed since the
injunction in this case.
On the basis of the evidence, which stands without substantial dispute, plaintiffs claim
that the third tees in their present location constitute a private nuisance and that their
use should be enjoined. Defendant denies that the facts in their total impact warrant
that conclusion. Further, it claims that plaintiffs bought their lots, built their home and
moved into the area with full knowledge of the existence and use of the golf course

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Property

and therefore assumed any annoyances and inconveniences incident to the playing of
the game.
The circumstances here are unique. A situation where a person buys or builds a home
adjoining a wholly independent, unrelated and existing conventional type golf course
is quite dissimilar. The basic theme of this development was residence. The recreational
facilities, including the golf course were subordinate. Their purpose and existence were
to make the area a desirable one in which to dwell. Note the ecstatic exclamations of
the developer’s brochures:
‘The perfect home location; * * * a millionaire’s paradise for moderate
income families; * * * Ramsey Country Club Estates is the culmination
of a ten year search for the perfect home location * * *. Each approved
purchaser will automatically receive a share representing proportionate
ownership in the Country Club and all its properties. The Club will own
the impressive $100,000. ivy covered stone mansion for its club house.
Here will be the center of social life for this unusual new community * *
*. Owner-members of the Ramsey Country Club will own for their
exclusive use the new 9-hole golf course * * * (the record contains no
explanation of how the associate members-non-owners of property in
the development-happened to be admitted to the club. Sans understood
that membership was to be limited to property owners.), spacious sand
bathing beaches, three picturesque lakes for canoeing, boating and
fishing * * * complete facilities for the enjoyment of all winter sports * *
*. Residents will enjoy swimming, canoeing, fishing, ice-skating in the
comfort and safety of their own private community. * * * This
magnificent club house and its grounds-all of these wonderful
recreational facilities-will be shared, owned and enjoyed by a selected
group of families who will live luxuriously in these unusual and
incomparable surroundings for less than the cost of a small city
apartment.’ (Emphasis added, insertion ours.)
The plaintiffs may justly assert that these comments add equitable strength to their
position in the present controversy. The brochure given to them before they became

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815

purchasers in 1949 portrayed the layout of the course; the greens were numbered and
the tees were indicated. As has been pointed out, no tee appeared on their side of
Mirror Lake. No suggestion is made that any representative of the developer or of
defendant apprised them of any such tee. And it is not shown on the detailed map on
file in the county clerk’s office. In the factual context, the element of reliance by the
Sans cannot be overlooked.
Thus the heart of the project was and is the home. The pastime facilities were intended
to be no more than an aid to the enjoyment of the home, as the veins facilitate the
functions of the heart. An avoidable and readily curable ailment in one vein should not
be permitted to impair the central organ. Especially is this true when the remedy calls
for a comparatively simple adjustment which will not materially impair the physical
structure in its entirety.
The essence of a private nuisance is an unreasonable interference with the use and
enjoyment of land. The elements are myriad. The law has never undertaken to define
all of the possible sources of annoyance and discomfort which would justify such a
finding. Pollock, Torts (1887), 260, 261. Litigation of this type usually deals with the
conflicting interests of property owners and the question of the reasonableness of the
defendant’s mode of use of his land. The process of adjudication requires recognition
of the reciprocal right of each owner to reasonable use, and a balancing of the
conflicting interests. The utility of the defendant’s conduct must be weighed against
the quantum of harm to the plaintiff. The question is not simply whether a person is
annoyed or disturbed, but whether the annoyance or disturbance arises from an
unreasonable use of the neighbor’s land or operation of his business. Prosser, Torts
(2d ed. 1955), 410. As the Court of Appeals of Ohio put it in Antonik v. Chamberlain,
81 Ohio App. 465, 78 N.E.2d 752, 759 (1947):
‘The law of nuisance plys between two antithetical extremes: The
principle that every person is entitled to use his property for any purpose
that he sees fit, and the opposing principle that everyone is bound to use
his property in such a manner as not to injure the property or rights of
his neighbor.’

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Property

Defendant’s members have the right to the ordinary and expected use of the golf
course. Plaintiffs have the correlative right to the enjoyment of their property. The
element of reciprocity must be emphasized because the parties’ interests stem from a
common source and are more mutually interdependent than in the usual case. The
Appellate Division properly suggests the pertinent inquiry to be ‘whether defendant’s
activities materially and unreasonably interfere with plaintiffs’ comforts or existence,
‘not according to exceptionally refined, uncommon, or luxurious habits of living, but
according to the simple tastes and unaffected notions generally prevailing among plain
people.”
In the unusual circumstances of this case, the activities of defendant are manifestly
incompatible with the ordinary and expected comfortable life in plaintiffs’ home and
the normal use of their property. The evaluation of the conflicting equities must be
made in the factual framework presented. And any relief granted must result from a
reasonable accommodation of those equities to each other in the light of the evaluation.
In our judgment, the facts considered in their totality demonstrate that plaintiffs’
interests are paramount and demand reasonable protection. The trial court and the
Appellate Division felt that a proper balance of equitable convenience could be
achieved by requiring defendant to relocate the ladies’ and men’s third tees. Such relief,
in our opinion, does not represent a burden disproportionate to the travail which would
be suffered by plaintiffs and their family through the perpetuation of the present
method of play on the course.
Judgment affirmed.
Notes and Questions
1. Why does Sans conclude that the “conflicting equities” favor the plaintiff?
2. Threshold harms. One way courts avoid getting too involved in nuisance cases
is by requiring significant harm before engaging in the balancing of equities.
RESTATEMENT (SECOND) OF TORTS § 821F (1979) (“There is liability for a
nuisance only to those to whom it causes significant harm, of a kind that would
be suffered by a normal person in the community or by property in normal
condition and used for a normal purpose.”);

Nuisance

817

Before plaintiffs may recover the injury to them must be
substantial. By substantial invasion is meant an invasion that
involves more than slight inconvenience or petty annoyance. The
law does not concern itself with trifles. Practically all human
activities, unless carried on in a wilderness, interfere to some
extent with others or involve some risk of interference, and these
interferences range from mere trifling annoyances to serious
harms. Each individual in a community must put up with a certain
amount of annoyance, inconvenience or interference, and must
take a certain amount of risk in order that all may get on together.
But if one makes an unreasonable use of his property and thereby
causes another substantial harm in the use and enjoyment of his,
the former is liable for the injury inflicted.
Watts v. Pama Mfg. Co., 256 N.C. 611, 619, 124 S.E.2d 809, 815 (1962) (citing
4 RESTATEMENT (FIRST) OF THE LAW OF TORTS § 822, cmts. g & j).
3. Restatement standards. The Restatement (Second) of Torts standard for a
private nuisance is an activity that invades another’s interest in the use and
enjoyment of land where the invasion is either “(a) intentional and unreasonable,
or (b) unintentional and otherwise actionable under the rules controlling liability
for negligent or reckless conduct, or for abnormally dangerous conditions or
activities.” RESTATEMENT (SECOND) OF TORTS § 822 (1979). We will focus on
the first prong, intentional conduct that a court nonetheless finds unreasonable.
Section 826 sets forth two tests. The invasion is unreasonable if “the gravity of
the harm outweighs the utility of the actor’s conduct” or if “the harm caused by
the conduct is serious and the financial burden of compensating for this and
similar harm to others would not make the continuation of the conduct not
feasible.” *

* The Restatement likewise provides standards for assessing the gravity of the harm to the plaintiff, including

factors like degree, duration, character, ability to avoid, and nature of the plaintiff’s activity (e.g., social value and
local suitability). § 827. As the list indicates, they leave room for subjective interpretation. Likewise, the

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Property

4. “Coming to” a nuisance. One way to adjudicate between competing interests
is through first-in-time, first-in-right principles. Generally, whether the plaintiff
came to the nuisance (i.e., acquired its property interest after the commencement
of the allegedly unreasonable activity by the defendant) is treated as a factor to
be considered in balancing the equities, and not as a bar to a nuisance suit. Why
do you think that is? Are there circumstances in which you think coming to a
nuisance ought to bar a suit? Likewise, compliance with zoning ordinances is a
non-dispositive factor in the defendant’s favor.
5. Idiosyncratic harms. The harm giving rise to nuisance liability must be “of a
kind that would be suffered by a normal person in the community or by
property in normal condition and used for a normal purpose.” RESTATEMENT
(SECOND) OF TORTS § 821F (1979). This creates difficulty for a range of
asserted, but unproven, harms. See, e.g., San Diego Gas & Electric Co. v.
Superior Court, 55 Cal. Rptr. 2d 724, 752 (1996) (rejecting nuisance claim based
on fear of powerline electromagnetic fields). What about technological change?
American law generally rejects the notion that one has a right to light from
adjacent properties. But what if one has a solar panel? Prah v. Maretti, 321
N.W.2d 182, 191 (Wis. 1982) (allowing nuisance claim by owner of a solar
heated home to proceed).
6. Malice. There is little utility to actions taken for the purposes of harming a
neighbor, and the Restatement provides that such acts are nuisances when they
cause harm to a property owner’s interests. RESTATEMENT (SECOND) OF
TORTS § 829. * “Spite fences” are often explicitly the subject of statutes. See, e.g.,
N.H. REV. STAT. ANN. § 476:1 (“Any fence or other structure in the nature of
a fence, unnecessarily exceeding 5 feet in height, erected or maintained for the

assessment of the defendant’s conduct includes considerations of social value, suitability to the location, and
ability to avoid or prevent. § 828.
* The provision also treats acts contrary to “common standards of decency” as a nuisance, offering as an

illustration a farmer who breeds animals in full view of a neighbor’s family. RESTATEMENT (SECOND) OF TORTS
§ 829 cmt. d.

Nuisance

819

purpose of annoying the owners or occupants of adjoining property shall be
deemed a private nuisance.”).
7. Private arrangements. If a nuisance is a violation of a property right, it stands
to reason that the right may have been transferred prior to the nuisance suit. Cf.
DeSarno v. Jam Golf Mgmt., LLC, 670 S.E.2d 889, 890 (Ga. 2008)
(distinguishing Sans and holding no trespass or nuisance claims were possible
because “the easement in this case explicitly permitted the complained-of
conduct and indeed exonerated the golf course owner from any liability for
damages caused by the errant golf balls”).
Note on the Clarity of Rights and Coase
The vagaries of nuisance standards reflect the difficulty of properly assigning the right
(either to continue action or to enjoin the action). But perhaps all that really matters is
the clarity of the property right. This was the suggestion of Nobel-Prize-winning
economist Ronald Coase (1910-2013) in his famous article, The Problem of Social Cost, 3
J.L. & ECON. 1 (1960). The article concerned the previously encountered problem of
externalities—costs or benefits of an action that are borne by someone other than the
actor. When a factory emits smoke, for example, the smoke causes harms to others that
the factory owner does not experience. They are external to his decision to operate,
and therefore more likely to be produced than we might want. Externalities need not
be negative. The factory might stimulate economic development, e.g., by attracting
restaurants to open nearby to cater to its workers.
It has been argued that property rights emerge when the benefits of internalizing
externalities outweigh the costs of establishing a property system. Harold Demsetz,
Toward a Theory of Property Rights, 57 AM. ECON. REV. 347 (1967). To return to the
pasture held in common, suppose we make the land subject to private ownership.
Giving property rights to a single party means that she will bear the cost of overgrazing
(and thus take them into account before allowing that to happen, thereby internalizing
the externality). She will likewise reap the benefits of improvements like an irrigation
system, which without property rights would have been shared by too many to make
the investment worthwhile.

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Property

But other externalities may remain. What happens when the smells of the pasture annoy
the neighbors? Or if the land is used for fracking? Or a factory? How do we address
the resulting harms to others? Regulation is a traditional answer to the problem of
externality. The party causing the harm can either be made to pay or, if the harm is
serious enough, cease the offending activity.
Enter Coase. He argued that the traditional approach, of trying to stop the harm, is
question-begging in light of the reciprocity of harms:
The question is commonly thought of as one in which A inflicts harm
on B and what has to be decided is: how should we restrain A? But this
is wrong. We are dealing with a problem of a reciprocal nature. To avoid
the harm to B would inflict harm on A. The real question that has to be
decided is: should A be allowed to harm B or should B be allowed to
harm A? The problem is to avoid the more serious harm.
Coase, supra, at 2. In other words, the issue is not stopping harm, but rather ascertaining
whether the complained-of act does more harm than good. The market can help here,
so long as property rights are clear and transaction costs are ignored. “It is always
possible to modify by transactions on the market the initial legal delimitation of rights.
And, of course, if such market transactions are costless, such a rearrangement of rights
will always take place if it would lead to an increase in the value of production.” Id. at
15.
So imagine a world in which there is only a smoke-producing factory (and its owner)
and a house (and its owner, who has sued the factory for causing a nuisance). Suppose
further that the homeowner values life without smoke at $50, and the factory owner
values operating at $100. The nuisance suit then clarifies who has the relevant property
right. If the homeowner wins, he now has the right to enjoin the factory owner. In a
world without transactions costs, what happens next? We would expect the factory
owner to pay the homeowner to release the injunction (as she values operation more
than he values life without smoke). What if the activity is deemed to not be a nuisance?
Then there is no deal to be had. The factory owner’s property rights encompass the
right to emit smoke, and she values it more than the homeowner.

Nuisance

821

One interesting consequence of our hypothetical scenario is that the initial allocation
of property rights does not matter with regards to whether the factory operates. Absent
transaction costs, operations continue no matter which property owner “wins” the
right to harm the other. * Coase argued that
It is necessary to know whether the damaging business is liable or not
for damage caused since without the establishment of this initial
delimitation of rights there can be no market transactions to transfer and
recombine them. But the ultimate result (which maximises the value of
production) is independent of the legal position if the pricing system is
assumed to work without cost.
Id. at 8. This insight is referred to as the Coase Theorem.† The theorem has a variety of
expressions. It is the idea that absent transactions costs, parties will bargain to efficient
outcomes concerning externalities regardless of the initial allocation of property rights.
The implication for nuisance law is the suggestion that if transaction costs are low, it
might matter more that property rights be clear than that they be properly assigned in
the first instance.
The Problem of Social Cost is one of the more cited and debated articles in legal history.
One problem with characterizing the debate is that it involves not only Coase’s work,
but the various interpretations that may or may not be a fair representation of his ideas.
See, e.g., Robert C. Ellickson, The Case for Coase and Against “Coaseanism”, 99 YALE L.J.
611 (1989) (“Coase’s name is consistently attached to propositions that he has explicitly
repudiated.”). For present purposes, it is worth noting four reasons to be cautious in
drawing normative lessons from Coase. First, as Coase himself emphasized,
transactions costs are always present in the real world and often quite high. So if a
factory is emitting smoke that falls on a neighborhood (rather than a single
homeowner), bargaining costs may be large. The neighbors will face the difficulty of
coordination (and the attendant problems of free riders and holdouts). Moreover, the
* To make sure you understand this point, repeat the exercise with reversed dollar values. You will see that the

factory will shut down regardless of whether it is a nuisance.
† The use of the term “Coase Theorem” to describe Coase’s insight is generally ascribed to George Stigler.

822

Property

health consequences of the factory may not be well known (i.e., there is a cost to simply
having the information necessary for the neighborhood to know how highly it values
freedom from smoke). Second, even if property rights allocations matter less than we
think with respect to the production of externalities, they remain important from the
perspective of distributive justice. When a judge decides whether A must pay B, or vice
versa, one becomes wealthier at the expense of the other. The Coase Theorem tells us
nothing about who merits the windfall. Likewise, wealth matters with respect to how
the gain or loss is experienced insofar as money has a diminishing marginal utility. So,
someone with only $1000 to his name is likely to value an additional $1000 more than
would a millionaire. Third, unequal baseline distributions of wealth mean that many
hypothesized transactions based on competing subjective valuations of entitlements
may be impossible: what might it mean for a person with net financial worth of $10,000
to value their respiratory health at $100,000? Could such a person effectively bargain
over another’s right to pollute the air they breathe? Fourth, the proposition that initial
allocations do not matter has been empirically challenged. It has been observed that
people value what they possess more than what they do not. I may, for example, be
willing to pay $50 to shut a factory down. But if my starting point is one in which the
factory is not yet operating and I have a veto, I might demand $100 to release it. The
“endowment effect” might mean that initial allocations therefore matter. For a colorful
example of this effect in play over the right to recline an airline seat, see Christopher
Buccafusco & Christopher Jon Sprigman, Who Deserves Those 4 Inches of Airplane Seat
(Sept.
23,
2014),
available
at
Space?
SLATE
http://www.slate.com/articles/health_and_science/science/2014/09/airplane_seat_
reclining_can_economics_reveal_who_deserves_the_space.single.html).
All that said, Coase’s article suggests that we keep in mind the value of clear property
rights and the prospect that market mechanisms may sometimes be preferable to
judicial allocations. Likewise Coase reminds us anew that law is not all. And, indeed,
neither is the market. As we discussed in earlier chapters, social norms may play a
powerful role in resolving usage disputes. These norms may be powerful enough to
resolve disputes notwithstanding changes in the underlying legal regime. For a classic
account of this dynamic, concerning payments by farmers for damage done by

Nuisance

823

wandering cattle, see Robert Ellickson, ORDER WITHOUT LAW: HOW NEIGHBORS
SETTLE DISPUTES (1994).

C. Remedies
Nuisance plaintiffs usually seek injunctions. The ongoing harm of the nuisance suggests
equitable relief, as damages for past harms would not address those that would follow
if the nuisance continues. 9-64 POWELL ON REAL PROPERTY § 64.07. But because
equity involves balancing, courts sometimes decline injunctions or offer more tailored
remedies.
Boomer v. Atlantic Cement Co.
257 N.E.2d 870 (N.Y. 1970)
BERGAN, Judge.
Defendant operates a large cement plant near Albany. These are actions for injunction
and damages by neighboring land owners alleging injury to property from dirt, smoke
and vibration emanating from the plant. A nuisance has been found after trial,
temporary damages have been allowed; but an injunction has been denied.
The public concern with air pollution arising from many sources in industry and in
transportation is currently accorded ever wider recognition accompanied by a growing
sense of responsibility in State and Federal Governments to control it. Cement plants
are obvious sources of air pollution in the neighborhoods where they operate.
But there is now before the court private litigation in which individual property owners
have sought specific relief from a single plant operation. The threshold question raised
by the division of view on this appeal is whether the court should resolve the litigation
between the parties now before it as equitably as seems possible; or whether, seeking
promotion of the general public welfare, it should channel private litigation into broad
public objectives.
A court performs its essential function when it decides the rights of parties before it.
Its decision of private controversies may sometimes greatly affect public issues. Large
questions of law are often resolved by the manner in which private litigation is decided.

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Property

But this is normally an incident to the court’s main function to settle controversy. It is
a rare exercise of judicial power to use a decision in private litigation as a purposeful
mechanism to achieve direct public objectives greatly beyond the rights and interests
before the court.
Effective control of air pollution is a problem presently far from solution even with
the full public and financial powers of government. In large measure adequate technical
procedures are yet to be developed and some that appear possible may be economically
impracticable.
It seems apparent that the amelioration of air pollution will depend on technical
research in great depth; on a carefully balanced consideration of the economic impact
of close regulation; and of the actual effect on public health. It is likely to require
massive public expenditure and to demand more than any local community can
accomplish and to depend on regional and interstate controls.
A court should not try to do this on its own as a by-product of private litigation and it
seems manifest that the judicial establishment is neither equipped in the limited nature
of any judgment it can pronounce nor prepared to lay down and implement an effective
policy for the elimination of air pollution. This is an area beyond the circumference of
one private lawsuit. It is a direct responsibility for government and should not thus be
undertaken as an incident to solving a dispute between property owners and a single
cement plant—one of many—in the Hudson River valley.
The cement making operations of defendant have been found by the court of Special
Term to have damaged the nearby properties of plaintiffs in these two actions. That
court, as it has been noted, accordingly found defendant maintained a nuisance and
this has been affirmed at the Appellate Division. The total damage to plaintiffs’
properties is, however, relatively small in comparison with the value of defendant’s
operation and with the consequences of the injunction which plaintiffs seek.
The ground for the denial of injunction, notwithstanding the finding both that there is
a nuisance and that plaintiffs have been damaged substantially, is the large disparity in
economic consequences of the nuisance and of the injunction. This theory cannot,
however, be sustained without overruling a doctrine which has been consistently

Nuisance

825

reaffirmed in several leading cases in this court and which has never been disavowed
here, namely that where a nuisance has been found and where there has been any
substantial damage shown by the party complaining an injunction will be granted.
The rule in New York has been that such a nuisance will be enjoined although marked
disparity be shown in economic consequence between the effect of the injunction and
the effect of the nuisance.
The problem of disparity in economic consequence was sharply in focus in Whalen v.
Union Bag & Paper Co., 208 N.Y. 1, 101 N.E. 805. A pulp mill entailing an investment
of more than a million dollars polluted a stream in which plaintiff, who owned a farm,
was ‘a lower riparian owner’. The economic loss to plaintiff from this pollution was
small. This court, reversing the Appellate Division, reinstated the injunction granted by
the Special Term against the argument of the mill owner that in view of ‘the slight
advantage to plaintiff and the great loss that will be inflicted on defendant’ an injunction
should not be granted. ‘Such a balancing of injuries cannot be justified by the
circumstances of this case’, Judge Werner noted. He continued: ‘Although the damage
to the plaintiff may be slight as compared with the defendant’s expense of abating the
condition, that is not a good reason for refusing an injunction’.
Thus the unconditional injunction granted at Special Term was reinstated. The rule laid
down in that case, then, is that whenever the damage resulting from a nuisance is found
not ‘unsubstantial’, viz., $100 a year, injunction would follow. This states a rule that
had been followed in this court with marked consistency.
There are cases where injunction has been denied. McCann v. Chasm Power Co., 211
N.Y. 301, 105 N.E. 416 is one of them. There, however, the damage shown by plaintiffs
was not only unsubstantial, it was non-existent. Plaintiffs owned a rocky bank of the
stream in which defendant had raised the level of the water. This had no economic or
other adverse consequence to plaintiffs, and thus injunctive relief was denied.… Thus
if, within Whalen v. Union Bag & Paper Co., Supra which authoritatively states the rule
in New York, the damage to plaintiffs in these present cases from defendant’s cement
plant is ‘not unsubstantial’, an injunction should follow.

826

Property

Although the court at Special Term and the Appellate Division held that injunction
should be denied, it was found that plaintiffs had been damaged in various specific
amounts up to the time of the trial and damages to the respective plaintiffs were
awarded for those amounts. The effect of this was, injunction having been denied,
plaintiffs could maintain successive actions at law for damages thereafter as further
damage was incurred.
The court at Special Term also found the amount of permanent damage attributable to
each plaintiff, for the guidance of the parties in the event both sides stipulated to the
payment and acceptance of such permanent damage as a settlement of all the
controversies among the parties. The total of permanent damages to all plaintiffs thus
found was $185,000. This basis of adjustment has not resulted in any stipulation by the
parties.
This result at Special Term and at the Appellate Division is a departure from a rule that
has become settled; but to follow the rule literally in these cases would be to close down
the plant at once. This court is fully agreed to avoid that immediately drastic remedy;
the difference in view is how best to avoid it.
One alternative is to grant the injunction but postpone its effect to a specified future
date to give opportunity for technical advances to permit defendant to eliminate the
nuisance; another is to grant the injunction conditioned on the payment of permanent
damages to plaintiffs which would compensate them for the total economic loss to
their property present and future caused by defendant’s operations. For reasons which
will be developed the court chooses the latter alternative.
If the injunction were to be granted unless within a short period—e.g., 18 months—
the nuisance be abated by improved methods, there would be no assurance that any
significant technical improvement would occur.
The parties could settle this private litigation at any time if defendant paid enough
money and the imminent threat of closing the plant would build up the pressure on
defendant. If there were no improved techniques found, there would inevitably be
applications to the court at Special Term for extensions of time to perform on showing
of good faith efforts to find such techniques.

Nuisance

827

Moreover, techniques to eliminate dust and other annoying by-products of cement
making are unlikely to be developed by any research the defendant can undertake
within any short period, but will depend on the total resources of the cement industry
nationwide and throughout the world. The problem is universal wherever cement is
made.
For obvious reasons the rate of the research is beyond control of defendant. If at the
end of 18 months the whole industry has not found a technical solution a court would
be hard put to close down this one cement plant if due regard be given to equitable
principles.
On the other hand, to grant the injunction unless defendant pays plaintiffs such
permanent damages as may be fixed by the court seems to do justice between the
contending parties. All of the attributions of economic loss to the properties on which
plaintiffs’ complaints are based will have been redressed.
The nuisance complained of by these plaintiffs may have other public or private
consequences, but these particular parties are the only ones who have sought remedies
and the judgment proposed will fully redress them. The limitation of relief granted is a
limitation only within the four corners of these actions and does not foreclose public
health or other public agencies from seeking proper relief in a proper court.
It seems reasonable to think that the risk of being required to pay permanent damages
to injured property owners by cement plant owners would itself be a reasonable
effective spur to research for improved techniques to minimize nuisance.…
The damage base here suggested is consistent with the general rule in those nuisance
cases where damages are allowed. ‘Where a nuisance is of such a permanent and
unabatable character that a single recovery can be had, including the whole damage
past and future resulting therefrom, there can be but one recovery’ (66 C.J.S. Nuisances
s 140, p. 947). It has been said that permanent damages are allowed where the loss
recoverable would obviously be small as compared with the cost of removal of the
nuisance.…

828

Property

Thus it seems fair to both sides to grant permanent damages to plaintiffs which will
terminate this private litigation. The theory of damage is the ‘servitude on land’ of
plaintiffs imposed by defendant’s nuisance. (See United States v. Causby, 328 U.S. 256,
261, 262, 267, 66 S.Ct. 1062, 90 L.Ed. 1206, where the term ‘servitude’ addressed to
the land was used by Justice Douglas relating to the effect of airplane noise on property
near an airport.)
The judgment, by allowance of permanent damages imposing a servitude on land,
which is the basis of the actions, would preclude future recovery by plaintiffs or their
grantees.
This should be placed beyond debate by a provision of the judgment that the payment
by defendant and the acceptance by plaintiffs of permanent damages found by the
court shall be in compensation for a servitude on the land.
Although the Trial Term has found permanent damages as a possible basis of
settlement of the litigation, on remission the court should be entirely free to ex-examine
this subject. It may again find the permanent damage already found; or make new
findings.
The orders should be reversed, without costs, and the cases remitted to Supreme Court,
Albany County to grant an injunction which shall be vacated upon payment by
defendant of such amounts of permanent damage to the respective plaintiffs as shall
for this purpose be determined by the court.
JASEN, Judge (dissenting).
I agree with the majority that a reversal is required here, but I do not subscribe to the
newly enunciated doctrine of assessment of permanent damages, in lieu of an
injunction, where substantial property rights have been impaired by the creation of a
nuisance.
It has long been the rule in this State, as the majority acknowledges, that a nuisance
which results in substantial continuing damage to neighbors must be enjoined. To now
change the rule to permit the cement company to continue polluting the air indefinitely

Nuisance

829

upon the payment of permanent damages is, in my opinion, compounding the
magnitude of a very serious problem in our State and Nation today.
In recognition of this problem, the Legislature of this State has enacted the Air
Pollution Control Act declaring that it is the State policy to require the use of all
available and reasonable methods to prevent and control air pollution.
The harmful nature and widespread occurrence of air pollution have been extensively
documented. Congressional hearings have revealed that air pollution causes substantial
property damage, as well as being a contributing factor to a rising incidence of lung
cancer, emphysema, bronchitis and asthma.
The specific problem faced here is known as particulate contamination because of the
fine dust particles emanating from defendant’s cement plant. The particular type of
nuisance is not new, having appeared in many cases for at least the past 60 years. It is
interesting to note that cement production has recently been identified as a significant
source of particulate contamination in the Hudson Valley. This type of pollution,
wherein very small particles escape and stay in the atmosphere, has been denominated
as the type of air pollution which produces the greatest hazard to human health. We
have thus a nuisance which not only is damaging to the plaintiffs, 5 but also is decidedly
harmful to the general public.
I see grave dangers in overruling our long-established rule of granting an injunction
where a nuisance results in substantial continuing damage. In permitting the injunction
to become inoperative upon the payment of permanent damages, the majority is, in
effect, licensing a continuing wrong. It is the same as saying to the cement company,
you may continue to do harm to your neighbors so long as you pay a fee for it.
Furthermore, once such permanent damages are assessed and paid, the incentive to
alleviate the wrong would be eliminated, thereby continuing air pollution of an area
without abatement.

5 There are seven plaintiffs here who have been substantially damaged by the maintenance of this nuisance. The

trial court found their total permanent damages to equal $185,000.

830

Property

It is true that some courts have sanctioned the remedy here proposed by the majority
in a number of cases, but none of the authorities relied upon by the majority are
analogous to the situation before us. In those cases, the courts, in denying an injunction
and awarding money damages, grounded their decision on a showing that the use to
which the property was intended to be put was primarily for the public benefit. Here,
on the other hand, it is clearly established that the cement company is creating a
continuing air pollution nuisance primarily for its own private interest with no public
benefit.
This kind of inverse condemnation may not be invoked by a private person or
corporation for private gain or advantage. Inverse condemnation should only be
permitted when the public is primarily served in the taking or impairment of property.
The promotion of the interests of the polluting cement company has, in my opinion,
no public use or benefit.
Nor is it constitutionally permissible to impose servitude on land, without consent of
the owner, by payment of permanent damages where the continuing impairment of the
land is for a private use. This is made clear by the State Constitution which provides
that ‘(p)rivate property shall not be taken for public use without just compensation’
(emphasis added). It is, of course, significant that the section makes no mention of
taking for a private use.
In sum, then, by constitutional mandate as well as by judicial pronouncement, the
permanent impairment of private property for private purposes is not authorized in the
absence of clearly demonstrated public benefit and use.
I would enjoin the defendant cement company from continuing the discharge of dust
particles upon its neighbors’ properties unless, within 18 months, the cement company
abated this nuisance.
It is not my intention to cause the removal of the cement plant from the Albany area,
but to recognize the urgency of the problem stemming from this stationary source of
air pollution, and to allow the company a specified period of time to develop a means
to alleviate this nuisance.

Nuisance

831

I am aware that the trial court found that the most modern dust control devices
available have been installed in defendant’s plant, but, I submit, this does not mean that
better and more effective dust control devices could not be developed within the time
allowed to abate the pollution.
Moreover, I believe it is incumbent upon the defendant to develop such devices, since
the cement company, at the time the plant commenced production (1962), was well
aware of the plaintiffs’ presence in the area, as well as the probable consequences of its
contemplated operation. Yet, it still chose to build and operate the plant at this site.
In a day when there is a growing concern for clean air, highly developed industry should
not expect acquiescence by the courts, but should, instead, plan its operations to
eliminate contamination of our air and damage to its neighbors.
Accordingly, the orders of the Appellate Division, insofar as they denied the injunction,
should be reversed, and the actions remitted to Supreme Court, Albany County to grant
an injunction to take effect 18 months hence, unless the nuisance is abated by improved
techniques prior to said date.
Notes and Questions
1. What are the costs and benefits of leaving the question of the cement plant’s
legality to the legislature? Modern environmental law is characterized by farreaching federal legislation (e.g., the Clean Air Act, the Clean Water Act, the
Endangered Species Act, etc.). How might things have been different had
nuisance law been the primary mechanism of environmental regulation?
2. Preemption. State and federal legislation offers the prospect of more
comprehensive regulation than case-by-case nuisance adjudication. Once these
regulations are in place, defendants often claim they preempt resort to private
nuisance remedies. See 9-64 POWELL ON REAL PROPERTY § 64.06 (collecting
examples of successful and unsuccessful preemption defenses). Should
compliance with, for example, a federal clean air regime provide immunity to a
local nuisance suit based on air pollution? Is federal regulation best seen as a
ceiling or a floor for environmental standards?

832

Property

On this question, note that federal environmental laws are often criticized for
interfering with “property rights.” But to the extent they limit the availability of
local nuisance law, might they also be seen as interfering with the property rights
of would-be nuisance plaintiffs?
Note on “Property Rules” and “Liability Rules”
When should a court award damages and when is an injunction appropriate? One of
the most famous takes on the problem is found in Guido Calabresi & A. Douglas
Melamed, Property Rules, Liability Rules, and Inalienability: One View of the Cathedral, 85
HARV. L. REV. 1089 (1972). The authors outline a framework for the protection of
entitlements, distinguishing “property” and “liability” rules.
An entitlement is protected by a property rule to the extent that someone
who wishes to remove the entitlement from its holder must buy it from
him in a voluntary transaction in which the value of the entitlement is
agreed upon by the seller. It is the form of entitlement which gives rise
to the least amount of state intervention: once the original entitlement is
decided upon, the state does not try to decide its value. It lets each of
the parties say how much the entitlement is worth to him, and gives the
seller a veto if the buyer does not offer enough. Property rules involve a
collective decision as to who is to be given an initial entitlement but not
as to the value of the entitlement.
Whenever someone may destroy the initial entitlement if he is willing to
pay an objectively determined value for it, an entitlement is protected by
a liability rule. This value may be what it is thought the original holder
of the entitlement would have sold it for. But the holder’s complaint that
he would have demanded more will not avail him once the objectively
determined value is set. Obviously, liability rules involve an additional
stage of state intervention: not only are entitlements protected, but their
transfer or destruction is allowed on the basis of a value determined by
some organ of the state rather than by the parties themselves.

Nuisance

833

Id. at 1091. * We might think of an injunction against trespass as an illustration of a
property rule. The trespasser must keep out unless the property owner agrees to let her
enter. Contract damages are an example of a liability rule. If one is willing to pay
damages, one is free to breach. As the examples suggest, property rules are associated
with, well, property rights, while liability rules are associated with contract remedies.
But there are exceptions in both subjects. For example, some states allow for private
condemnation of rights of way to provide access to landlocked privately owned land.
The owner of the property has no ability to say no to another’s entry into his land, but
is limited to a compensation remedy. Conversely, under certain circumstances a
contract may be enforced by specific performance.
Calabresi and Melamed spend some time on the question of how entitlements are
assigned in the first instance (i.e., is the factory a nuisance or does its owner have the
right to pollute), but for present purposes we will focus on the question of deciding
how to protect an entitlement once assigned. In a vacuum, property rules let parties
decide for themselves how to value entitlements, but in the real world, transaction costs
get in the way. Holdouts and freeriders may interfere with the coordination of multiple
purchasers or sellers of entitlement (e.g., when multiple neighbors live near an
offending factory). When negotiation costs exceed the entitlement’s value, it will
remain with the party to whom it was assigned, regardless of overall efficiency. In such
cases, a liability rule might be preferable.
As applied to nuisance, the authors observe:
Traditionally . . . the nuisance-pollution problem is viewed in terms of
three rules. First, Taney may not pollute unless his neighbor (his only
neighbor let us assume), Marshall, allows it (Marshall may enjoin Taney’s
nuisance). Second, Taney may pollute but must compensate Marshall for
damages caused (nuisance is found but the remedy is limited to damages).
Third, Taney may pollute at will and can only be stopped by Marshall if
Marshall pays him off (Taney’s pollution is not held to be a nuisance to

* And some entitlements, as the authors discuss, are inalienable.

834

Property

Marshall). In our terminology rules one and two (nuisance with
injunction, and with damages only) are entitlements to Marshall. The
first is an entitlement to be free from pollution and is protected by a
property rule; the second is also an entitlement to be free from pollution
but is protected only by a liability rule. Rule three (no nuisance) is instead
an entitlement to Taney protected by a property rule, for only by buying
Taney out at Taney’s price can Marshall end the pollution.
The very statement of these rules in the context of our framework
suggests that something is missing. Missing is a fourth rule representing
an entitlement in Taney to pollute, but an entitlement which is protected
only by a liability rule. The fourth rule … can be stated as follows:
Marshall may stop Taney from polluting, but if he does he must
compensate Taney.
Id. at 1115-16 (footnotes omitted). In a low-transaction cost world, Calabresi and
Melamed would use property rules, and assign the entitlement based on whether or not
the polluter is the low-cost risk avoider. In such cases improper allocations have
distributive consequences, but transactions would at least ensure economic efficiency.
(Do you see why?)
The moment we assume, however, that transactions are not cheap, the
situation changes dramatically. Assume we enjoin Taney and there are
10,000 injured Marshalls. Now even if the right to pollute is worth more
to Taney than the right to be free from pollution is to the sum of the
Marshalls, the injunction will probably stand. The cost of buying out all
the Marshalls, given holdout problems, is likely to be too great, and an
equivalent of eminent domain in Taney would be needed to alter the
initial injunction. Conversely, if we denied a nuisance remedy, the 10,000
Marshalls could only with enormous difficulty, given freeloader
problems, get together to buy out even one Taney and prevent the
pollution. This would be so even if the pollution harm was greater than
the value to Taney of the right to pollute.

Nuisance

835

Id. at 1119. In such situations, the “rule four” possibility would increase the range of
options in a nuisance case. If circumstances made a liability remedy appropriate, a court
would be free to assign the entitlement to either party as efficiency or distributional
concerns warranted. Id. at 1120.
Like a particle predicted by atomic theory, the rule four injunction option was described,
but awaited observation in nature. It would not take long.
Spur Industries, Inc. v. Del E. Webb Development Co.
494 P.2d 700 (Ariz. 1972)
CAMERON, Vice Chief Justice.
From a judgment permanently enjoining the defendant, Spur Industries, Inc., from
operating a cattle feedlot near the plaintiff Del E. Webb Development Company’s Sun
City, Spur appeals. Webb cross-appeals. Although numerous issues are raised, we feel
that it is necessary to answer only two questions. They are:
1. Where the operation of a business, such as a cattle feedlot is lawful in the first
instance, but becomes a nuisance by reason of a nearby residential area, may the feedlot
operation be enjoined in an action brought by the developer of the residential area?
2. Assuming that the nuisance may be enjoined, may the developer of a completely new
town or urban area in a previously agricultural area be required to indemnify the
operator of the feedlot who must move or cease operation because of the presence of
the residential area created by the developer?
The facts necessary for a determination of this matter on appeal are as follows. The
area in question is located in Maricopa County, Arizona, some 14 to 15 miles west of
the urban area of Phoenix, on the Phoenix-Wickenburg Highway, also known as Grand
Avenue. About two miles south of Grand Avenue is Olive Avenue which runs east and
west. 111th Avenue runs north and south as does the Agua Fria River immediately to
the west. See Exhibits A and B below.

836

Property

Nuisance

837

Farming started in this area about 1911. In 1929, with the completion of the Carl
Pleasant Dam, gravity flow water became available to the property located to the west
of the Agua Fria River, though land to the east remained dependent upon well water
for irrigation. By 1950, the only urban areas in the vicinity were the agriculturally related
communities of Peoria, El Mirage, and Surprise located along Grand Avenue. Along
111th Avenue, approximately one mile south of Grand Avenue and 1 1/2 miles north
of Olive Avenue, the community of Youngtown was commenced in 1954. Youngtown
is a retirement community appealing primarily to senior citizens.
In 1956, Spur’s predecessors in interest, H. Marion Welborn and the Northside Hay
Mill and Trading Company, developed feed-lots, about 1/2 mile south of Olive Avenue,
in an area between the confluence of the usually dry Agua Fria and New Rivers. The
area is well suited for cattle feeding and in 1959, there were 25 cattle feeding pens or
dairy operations within a 7 mile radius of the location developed by Spur’s predecessors.
In April and May of 1959, the Northside Hay Mill was feeding between 6,000 and 7,000
head of cattle and Welborn approximately 1,500 head on a combined area of 35 acres.
In May of 1959, Del Webb began to plan the development of an urban area to be
known as Sun City. For this purpose, the Marinette and the Santa Fe Ranches, some
20,000 acres of farmland, were purchased for $15,000,000 or $750.00 per acre. This
price was considerably less than the price of land located near the urban area of Phoenix,
and along with the success of Youngtown was a factor influencing the decision to
purchase the property in question.
By September 1959, Del Webb had started construction of a golf course south of
Grand Avenue and Spur’s predecessors had started to level ground for more feedlot
area. In 1960, Spur purchased the property in question and began a rebuilding and
expansion program extending both to the north and south of the original facilities. By
1962, Spur’s expansion program was completed and had expanded from approximately
35 acres to 114 acres. See Exhibit A above.
Accompanied by an extensive advertising campaign, homes were first offered by Del
Webb in January 1960 and the first unit to be completed was south of Grand Avenue
and approximately 2 1/2 miles north of Spur. By 2 May 1960, there were 450 to 500

838

Property

houses completed or under construction. At this time, Del Webb did not consider
odors from the Spur feed pens a problem and Del Webb continued to develop in a
southerly direction, until sales resistance became so great that the parcels were difficult
if not impossible to sell.…
By December 1967, Del Webb’s property had extended south to Olive Avenue and
Spur was within 500 feet of Olive Avenue to the north. See Exhibit B above. Del Webb
filed its original complaint alleging that in excess of 1,300 lots in the southwest portion
were unfit for development for sale as residential lots because of the operation of the
Spur feedlot.
Del Webb’s suit complained that the Spur feeding operation was a public nuisance
because of the flies and the odor which were drifting or being blown by the prevailing
south to north wind over the southern portion of Sun City. At the time of the suit,
Spur was feeding between 20,000 and 30,000 head of cattle, and the facts amply support
the finding of the trial court that the feed pens had become a nuisance to the people
who resided in the southern part of Del Webb’s development. The testimony indicated
that cattle in a commercial feedlot will produce 35 to 40 pounds of wet manure per day,
per head, or over a million pounds of wet manure per day for 30,000 head of cattle,
and that despite the admittedly good feedlot management and good housekeeping
practices by Spur, the resulting odor and flies produced an annoying if not unhealthy
situation as far as the senior citizens of southern Sun City were concerned. There is no
doubt that some of the citizens of Sun City were unable to enjoy the outdoor living
which Del Webb had advertised and that Del Webb was faced with sales resistance
from prospective purchasers as well as strong and persistent complaints from the
people who had purchased homes in that area.…
It is noted … however, that neither the citizens of Sun City nor Youngtown are
represented in this lawsuit and the suit is solely between Del E. Webb Development
Company and Spur Industries, Inc.
MAY SPUR BE ENJOINED?
The difference between a private nuisance and a public nuisance is generally one of
degree. A private nuisance is one affecting a single individual or a definite small number

Nuisance

839

of persons in the enjoyment of private rights not common to the public, while a public
nuisance is one affecting the rights enjoyed by citizens as a part of the public. To
constitute a public nuisance, the nuisance must affect a considerable number of people
or an entire community or neighborhood.
Where the injury is slight, the remedy for minor inconveniences lies in an action for
damages rather than in one for an injunction. Moreover, some courts have held, in the
‘balancing of conveniences’ cases, that damages may be the sole remedy. See Boomer
v. Atlantic Cement Co., 26 N.Y.2d 219, 309 N.Y.S.2d 312, 257 N.E.2d 870, 40
A.L.R.3d 590 (1970), and annotation comments, 40 A.L.R.3d 601.
Thus, it would appear from the admittedly incomplete record as developed in the trial
court, that, at most, residents of Youngtown would be entitled to damages rather than
injunctive relief.
We have no difficulty, however, in agreeing with the conclusion of the trial court that
Spur’s operation was an enjoinable public nuisance as far as the people in the southern
portion of Del Webb’s Sun City were concerned.
§ 36-601, subsec. A reads as follows:
‘§ 36-601. Public nuisances dangerous to public health
‘A. The following conditions are specifically declared public nuisances
dangerous to the public health:
‘1. Any condition or place in populous areas which constitutes a breeding
place for flies, rodents, mosquitoes and other insects which are capable
of carrying and transmitting disease-causing organisms to any person or
persons.’
By this statute, before an otherwise lawful (and necessary) business may be declared a
public nuisance, there must be a ‘populous’ area in which people are injured:
‘* * * (I)t hardly admits a doubt that, in determining the question as to
whether a lawful occupation is so conducted as to constitute a nuisance
as a matter of fact, the locality and surroundings are of the first

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Property

importance. (citations omitted) A business which is not per se a public
nuisance may become such by being carried on at a place where the
health, comfort, or convenience of a populous neighborhood is affected.
* * * What might amount to a serious nuisance in one locality by reason
of the density of the population, or character of the neighborhood
affected, may in another place and under different surroundings be
deemed proper and unobjectionable. * * *.’ MacDonald v. Perry, 32 Ariz.
39, 49-50, 255 P. 494, 497 (1927).
It is clear that as to the citizens of Sun City, the operation of Spur’s feedlot was both a
public and a private nuisance. They could have successfully maintained an action to
abate the nuisance. Del Webb, having shown a special injury in the loss of sales, had a
standing to bring suit to enjoin the nuisance. The judgment of the trial court
permanently enjoining the operation of the feedlot is affirmed.
MUST DEL WEBB INDEMNIFY SPUR?
A suit to enjoin a nuisance sounds in equity and the courts have long recognized a
special responsibility to the public when acting as a court of equity:
§ 104. Where public interest is involved.
‘Courts of equity may, and frequently do, go much further both to give
and withhold relief in furtherance of the public interest than they are
accustomed to go when only private interests are involved. Accordingly,
the granting or withholding of relief may properly be dependent upon
considerations of public interest. * * *.’ 27 Am.Jur.2d, Equity, page 626.
In addition to protecting the public interest, however, courts of equity are concerned
with protecting the operator of a lawfully [sic], albeit noxious, business from the result
of a knowing and willful encroachment by others near his business.
In the so-called ‘coming to the nuisance’ cases, the courts have held that the residential
landowner may not have relief if he knowingly came into a neighborhood reserved for
industrial or agricultural endeavors and has been damaged thereby:

Nuisance

841

‘Plaintiffs chose to live in an area uncontrolled by zoning laws or
restrictive covenants and remote from urban development. In such an
area plaintiffs cannot complain that legitimate agricultural pursuits are
being carried on in the vicinity, nor can plaintiffs, having chosen to build
in an agricultural area, complain that the agricultural pursuits carried on
in the area depreciate the value of their homes. The area being Primarily
agricultural, and opinion reflecting the value of such property must take
this factor into account. The standards affecting the value of residence
property in an urban setting, subject to zoning controls and controlled
planning techniques, cannot be the standards by which agricultural
properties are judged.
’People employed in a city who build their homes in suburban areas of
the county beyond the limits of a city and zoning regulations do so for a
reason. Some do so to avoid the high taxation rate imposed by cities, or
to avoid special assessments for street, sewer and water projects. They
usually build on improved or hard surface highways, which have been
built either at state or county expense and thereby avoid special
assessments for these improvements. It may be that they desire to get
away from the congestion of traffic, smoke, noise, foul air and the many
other annoyances of city life. But with all these advantages in going
beyond the area which is zoned and restricted to protect them in their
homes, they must be prepared to take the disadvantages.’ Dill v. Excel
Packing Company, 183 Kan. 513, 525, 526, 331 P.2d 539, 548, 549
(1958). See also East St. Johns Shingle Co. v. City of Portland, 195 Or.
505, 246 P.2d 554, 560-562 (1952).
And:
‘* * * a party cannot justly call upon the law to make that place suitable
for his residence which was not so when he selected it. * * *.’ Gilbert v.
Showerman, 23 Mich. 448, 455, 2 Brown 158 (1871).
Were Webb the only party injured, we would feel justified in holding that the doctrine
of ‘coming to the nuisance’ would have been a bar to the relief asked by Webb, and,

842

Property

on the other hand, had Spur located the feedlot near the outskirts of a city and had the
city grown toward the feedlot, Spur would have to suffer the cost of abating the
nuisance as to those people locating within the growth pattern of the expanding city.…
There was no indication in the instant case at the time Spur and its predecessors located
in western Maricopa County that a new city would spring up, full-blown, alongside the
feeding operation and that the developer of that city would ask the court to order Spur
to move because of the new city. Spur is required to move not because of any
wrongdoing on the part of Spur, but because of a proper and legitimate regard of the
courts for the rights and interests of the public.
Del Webb, on the other hand, is entitled to the relief prayed for (a permanent
injunction), not because Webb is blameless, but because of the damage to the people
who have been encouraged to purchase homes in Sun City. It does not equitable or
legally follow, however, that Webb, being entitled to the injunction, is then free of any
liability to Spur if Webb has in fact been the cause of the damage Spur has sustained.
It does not seem harsh to require a developer, who has taken advantage of the lesser
land values in a rural area as well as the availability of large tracts of land on which to
build and develop a new town or city in the area, to indemnify those who are forced to
leave as a result.
Having brought people to the nuisance to the foreseeable detriment of Spur, Webb
must indemnify Spur for a reasonable amount of the cost of moving or shutting down.
It should be noted that this relief to Spur is limited to a case wherein a developer has,
with foreseeability, brought into a previously agricultural or industrial area the
population which makes necessary the granting of an injunction against a lawful
business and for which the business has no adequate relief.
It is therefore the decision of this court that the matter be remanded to the trial court
for a hearing upon the damages sustained by the defendant Spur as a reasonable and
direct result of the granting of the permanent injunction. Since the result of the appeal
may appear novel and both sides have obtained a measure of relief, it is ordered that
each side will bear its own costs.…

Nuisance

843

Notes and Questions
1. What if there had been no “guilty” developer like Del Webb? Why doesn’t the
logic of the coming to a nuisance cases (quoted by the opinion) apply to those
who chose to purchase from Del Webb?
2. Public vs. Private Nuisances. Public nuisances involve unreasonable
interferences with rights held by the general public. Under the Restatement, they
arise when the complained-of actions threaten public health, violate statutory
law (including administrative regulations), or otherwise have a significant effect
on a public right. RESTATEMENT (SECOND) OF TORTS § 821B (1979). Unlike
private nuisances, they do not require an interference with the use of land. Id.
cmt. h. As Spur indicates, one may sue on a public nuisance if one alleges a
“special injury” specific to the plaintiff and not shared by the public at large.
3. In addition to using “coming to” nuisance arguments, feedlot operators may be
specifically protected from nuisance suits. Some states explicitly insulate
agricultural operations from nuisance liability with “right to farm” legislation.
KAN. ST. ANN. 2-3201 provides:
It is the declared policy of this state to conserve and protect and
encourage the development and improvement of farmland for
the production of food and other agricultural products. The
legislature finds that agricultural activities conducted on farmland
in areas in which nonagricultural uses have moved into
agricultural areas are often subjected to nuisance lawsuits, and
that such suits encourage and even force the premature removal
of the lands from agricultural uses. It is therefore the purpose of
this act to provide agricultural activities conducted on farmland
protection from nuisance lawsuits.

Regulatory Takings
You will recall that the government has the power to take private property and dedicate
it to public uses (broadly construed), but that under the Takings Clause of the Fifth
Amendment, in order to do so the government must provide the owner with “just
compensation.” But what if instead of taking private property to use in the way the
government prefers, the government simply orders the private owner to use their
property in the way the government prefers? So long as title remains in the private
owner, there has been no “taking,” right? And that way the government can get what
it wants without having to pay the “just compensation” the Constitution requires.
This is a sufficiently obvious dodge around the Takings Clause that courts have long
held that some land use regulations that seriously interfere with the rights of property
owners can be tantamount to a taking, even if the government does not literally divest
the property owners of title. But drawing the line between permissible regulation of
land uses and impermissible “regulatory takings” is a complex task that has divided the
Supreme Court for at least a century.

A. General Principles
Pennsylvania Coal Co. v. Mahon
260 U.S. 393 (1922)
Mr. Justice HOLMES delivered the opinion of the Court.
This is a bill in equity brought by the defendants in error to prevent the Pennsylvania
Coal Company from mining under their property in such way as to remove the
supports and cause a subsidence of the surface and of their house. The bill sets out a
deed executed by the Coal Company in 1878, under which the plaintiffs claim. The
deed conveys the surface but in express terms reserves the right to remove all the coal
under the same and the grantee takes the premises with the risk and waives all claim
for damages that may arise from mining out the coal. But the plaintiffs say that
whatever may have been the Coal Company’s rights, they were taken away by an Act
of Pennsylvania, approved May 27, 1921 (P. L. 1198), commonly known there as the
Kohler Act. The Court of Common Pleas found that if not restrained the defendant
844

Regulatory Takings

845

would cause the damage to prevent which the bill was brought but denied an injunction,
holding that the statute if applied to this case would be unconstitutional. On appeal the
Supreme Court of the State agreed that the defendant had contract and property rights
protected by the Constitution of the United States, but held that the statute was a
legitimate exercise of the police power and directed a decree for the plaintiffs. A writ
of error was granted bringing the case to this Court.
The statute forbids the mining of anthracite coal in such way as to cause the subsidence
of, among other things, any structure used as a human habitation, with certain
exceptions, including among them land where the surface is owned by the owner of
the underlying coal and is distant more than one hundred and fifty feet from any
improved property belonging to any other person. As applied to this case the statute is
admitted to destroy previously existing rights of property and contract. The question
is whether the police power can be stretched so far.
Government hardly could go on if to some extent values incident to property could
not be diminished without paying for every such change in the general law. As long
recognized some values are enjoyed under an implied limitation and must yield to the
police power. But obviously the implied limitation must have its limits or the contract
and due process clauses are gone. One fact for consideration in determining such limits
is the extent of the diminution. When it reaches a certain magnitude, in most if not in
all cases there must be an exercise of eminent domain and compensation to sustain the
act. So the question depends upon the particular facts. The greatest weight is given to
the judgment of the legislature but it always is open to interested parties to contend
that the legislature has gone beyond its constitutional power.
This is the case of a single private house. No doubt there is a public interest even in
this, as there is in every purchase and sale and in all that happens within the
commonwealth. Some existing rights may be modified even in such a case. But usually
in ordinary private affairs the public interest does not warrant much of this kind of
interference. A source of damage to such a house is not a public nuisance even if similar
damage is inflicted on others in different places. The damage is not common or public.
The extent of the public interest is shown by the statute to be limited, since the statute
ordinarily does not apply to land when the surface is owned by the owner of the coal.

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Property

Furthermore, it is not justified as a protection of personal safety. That could be
provided for by notice. Indeed the very foundation of this bill is that the defendant
gave timely notice of its intent to mine under the house. On the other hand the extent
of the taking is great. It purports to abolish what is recognized in Pennsylvania as an
estate in land-a very valuable estate-and what is declared by the Court below to be a
contract hitherto binding the plaintiffs. If we were called upon to deal with the plaintiffs’
position alone we should think it clear that the statute does not disclose a public interest
sufficient to warrant so extensive a destruction of the defendant’s constitutionally
protected rights.
But the case has been treated as one in which the general validity of the act should be
discussed. The Attorney General of the State, the City of Scranton and the
representatives of other extensive interests were allowed to take part in the argument
below and have submitted their contentions here. It seems, therefore, to be our duty
to go farther in the statement of our opinion, in order that it may be known at once,
and that further suits should not be brought in vain.
It is our opinion that the act cannot be sustained as an exercise of the police power, so
far as it affects the mining of coal under streets or cities in places where the right to
mine such coal has been reserved. As said in a Pennsylvania case, ‘For practical
purposes, the right to coal consists in the right to mine it.’ Commonwealth v. Clearview
Coal Co., 256 Pa. 328, 331, 100 Atl. 820. What makes the right to mine coal valuable is
that it can be exercised with profit. To make it commercially impracticable to mine
certain coal has very nearly the same effect for constitutional purposes as appropriating
or destroying it. This we think that we are warranted in assuming that the statute does.
It is true that in Plymouth Coal Co. v. Pennsylvania, 232 U. S. 531, it was held
competent for the legislature to require a pillar of coal to the left along the line of
adjoining property, that with the pillar on the other side of the line would be a barrier
sufficient for the safety of the employees of either mine in case the other should be
abandoned and allowed to fill with water. But that was a requirement for the safety of
employees invited into the mine, and secured an average reciprocity of advantage that
has been recognized as a justification of various laws.

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The rights of the public in a street purchased or laid out by eminent domain are those
that it has paid for. If in any case its representatives have been so short sighted as to
acquire only surface rights without the right of support we see no more authority for
supplying the latter without compensation than there was for taking the right of way in
the first place and refusing to pay for it because the public wanted it very much. The
protection of private property in the Fifth Amendment presupposes that it is wanted
for public use, but provides that it shall not be taken for such use without compensation.
A similar assumption is made in the decisions upon the Fourteenth Amendment.
Hairston v. Danville & Western Ry. Co., 208 U. S. 598, 605. When this seemingly
absolute protection is found to be qualified by the police power, the natural tendency
of human nature is to extend the qualification more and more until at last private
property disappears. But that cannot be accomplished in this way under the
Constitution of the United States.
The general rule at least is that while property may be regulated to a certain extent, if
regulation goes too far it will be recognized as a taking. It may be doubted how far
exceptional cases, like the blowing up of a house to stop a conflagration, go-and if they
go beyond the general rule, whether they do not stand as much upon tradition as upon
principle. In general it is not plain that a man’s misfortunes or necessities will justify
his shifting the damages to his neighbor’s shoulders. We are in danger of forgetting
that a strong public desire to improve the public condition is not enough to warrant
achieving the desire by a shorter cut than the constitutional way of paying for the
change. As we already have said this is a question of degree-and therefore cannot be
disposed of by general propositions. But we regard this as going beyond any of the
cases decided by this Court.…
We assume, of course, that the statute was passed upon the conviction that an exigency
existed that would warrant it, and we assume that an exigency exists that would warrant
the exercise of eminent domain. But the question at bottom is upon whom the loss of
the changes desired should fall. So far as private persons or communities have seen fit
to take the risk of acquiring only surface rights, we cannot see that the fact that their
risk has become a danger warrants the giving to them greater rights than they bought.
Decree reversed.

848

Property

Mr. Justice BRANDEIS dissenting.
The Kohler Act prohibits, under certain conditions, the mining of anthracite coal
within the limits of a city in such a manner or to such an extent ‘as to cause the * * *
subsidence of * * * any dwelling or other structure used as a human habitation, or any
factory, store, or other industrial or mercantile establishment in which human labor is
employed.’ Coal in place is land, and the right of the owner to use his land is not
absolute. He may not so use it as to create a public nuisance, and uses, once harmless,
may, owing to changed conditions, seriously threaten the public welfare. Whenever
they do, the Legislature has power to prohibit such uses without paying compensation;
and the power to prohibit extends alike to the manner, the character and the purpose
of the use. Are we justified in declaring that the Legislature of Pennsylvania has, in
restricting the right to mine anthracite, exercised this power so arbitrarily as to violate
the Fourteenth Amendment?
Every restriction upon the use of property imposed in the exercise of the police power
deprives the owner of some right theretofore enjoyed, and is, in that sense, an
abridgment by the state of rights in property without making compensation. But
restriction imposed to protect the public health, safety or morals from dangers
threatended is not a taking. The restriction here in question is merely the prohibition
of a noxious use. The property so restricted remains in the possession of its owner.
The state does not appropriate it or make any use of it. The state merely prevents the
owner from making a use which interferes with paramount rights of the public.
Whenever the use prohibited ceases to be noxious-as it may because of further change
in local or social conditions-the restriction will have to be removed and the owner will
again be free to enjoy his property as heretofore.
The restriction upon the use of this property cannot, of course, be lawfully imposed,
unless its purpose is to protect the public. But the purpose of a restriction does not
cease to be public, because incidentally some private persons may thereby receive
gratuitously valuable special benefits. Thus, owners of low buildings may obtain,
through statutory restrictions upon the height of neighboring structures, benefits
equivalent to an easement of light and air. Welch v. Swasey, 214 U. S. 91. Furthermore,
a restriction, though imposed for a public purpose, will not be lawful, unless the

Regulatory Takings

849

restriction is an appropriate means to the public end. But to keep coal in place is surely
an appropriate means of preventing subsidence of the surface; and ordinarily it is the
only available means. Restriction upon use does not become inappropriate as a means,
merely because it deprives the owner of the only use to which the property can then
be profitably put. The liquor and the oleomargine cases settled that. Mugler v. Kansas,
123 U. S. 623, 668, 669; Powell v. Pennsylvania, 127 U. S. 678, 682. See also Hadacheck
v. Los Angeles, 239 U. S. 394; Pierce Oil Corporation v. City of Hope, 248 U. S. 498.
Nor is a restriction imposed through exercise of the police power inappropriate as a
means, merely because the same end might be effected through exercise of the power
of eminent domain, or otherwise at public expense. Every restriction upon the height
of buildings might be secured through acquiring by eminent domain the right of each
owner to build above the limiting height; but it is settled that the state need not resort
to that power. If by mining anthracite coal the owner would necessarily unloose
poisonous gases, I suppose no one would doubt the power of the state to prevent the
mining, without buying his coal fields. And why may not the state, likewise, without
paying compensation, prohibit one from digging so deep or excavating so near the
surface, as to expose the community to like dangers? In the latter case, as in the former,
carrying on the business would be a public nuisance.
It is said that one fact for consideration in determining whether the limits of the police
power have been exceeded is the extent of the resulting diminution in value, and that
here the restriction destroys existing rights of property and contract. But values are
relative. If we are to consider the value of the coal kept in place by the restriction, we
should compare it with the value of all other parts of the land. That is, with the value
not of the coal alone, but with the value of the whole property. The rights of an owner
as against the public are not increased by dividing the interests in his property into
surface and subsoil. The sum of the rights in the parts can not be greater than the rights
in the whole. The estate of an owner in land is grandiloquently described as extending
ab orco usque ad coelum. But I suppose no one would contend that by selling his interest
above 100 feet from the surface he could prevent the state from limiting, by the police
power, the height of structures in a city. And why should a sale of underground rights
bar the state’s power? For aught that appears the value of the coal kept in place by the
restriction may be negligible as compared with the value of the whole property, or even

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Property

as compared with that part of it which is represented by the coal remaining in place
and which may be extracted despite the statute. Ordinarily a police regulation, general
in operation, will not be held void as to a particular property, although proof is offered
that owing to conditions peculiar to it the restriction could not reasonably be applied.
But even if the particular facts are to govern, the statute should, in my opinion be
upheld in this case. For the defendant has failed to adduce any evidence from which it
appears that to restrict its mining operations was an unreasonable exercise of the police
power. Where the surface and the coal belong to the same person, self-interest would
ordinarily prevent mining to such an extent as to cause a subsidence. It was, doubtless,
for this reason that the Legislature, estimating the degrees of danger, deemed statutory
restriction unnecessary for the public safety under such conditions.
It is said that this is a case of a single dwelling house, that the restriction upon mining
abolishes a valuable estate hitherto secured by a contract with the plaintiffs, and that
the restriction upon mining cannot be justified as a protection of personal safety, since
that could be provided for by notice. The propriety of deferring a good deal to tribunals
on the spot has been repeatedly recognized. May we say that notice would afford
adequate protection of the public safety where the Legislature and the highest court of
the state, with greater knowledge of local conditions, have declared, in effect, that it
would not? If the public safety is imperiled, surely neither grant, nor contract, can
prevail against the exercise of the police power.… Nor can existing contracts between
private individuals preclude exercise of the police power.… The fact that this suit is
brought by a private person is, of course, immaterial. To protect the community
through invoking the aid, as litigant, of interested private citizens is not a novelty in
our law. That it may be done in Pennsylvania was decided by its Supreme Court in this
case. And it is for a state to say how its public policy shall be enforced.
This case involves only mining which causes subsidence of a dwelling house. But the
Kohler Act contains provisions in addition to that quoted above; and as to these, also,
an opinion is expressed. These provisions deal with mining under cities to such an
extent as to cause subsidence of—

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(a) Any public building or any structure customarily used by the public as a place of
resort, assemblage, or amusement, including, but not limited to, churches, schools,
hospitals, theaters, hotels, and railroad stations.
(b) Any street, road, bridge, or other public passageway, dedicated to public use or
habitually used by the public.
(c) Any track, roadbed, right of way, pipe, conduit, wire, or other facility, used in the
service of the public by any municipal corporation or public service company as defined
by the Public Service Law, section 1.
A prohibition of mining which causes subsidence of such structures and facilities is
obviously enacted for a public purpose; and it seems, likewise, clear that mere notice
of intention to mine would not in this connection secure the public safety. Yet it is said
that these provisions of the act cannot be sustained as an exercise of the police power
where the right to mine such coal has been reserved. The conclusion seems to rest
upon the assumption that in order to justify such exercise of the police power there
must be ‘an average reciprocity of advantage’ as between the owner of the property
restricted and the rest of the community; and that here such reciprocity is absent.
Reciprocity of advantage is an important consideration, and may even be an essential,
where the state’s power is exercised for the purpose of conferring benefits upon the
property of a neighborhood, as in drainage projects; or upon adjoining owners, as by
party wall. But where the police power is exercised, not to confer benefits upon
property owners but to protect the public from detriment and danger, there is in my
opinion, no room for considering reciprocity of advantage. There was no reciprocal
advantage to the owner prohibited from using his oil tanks in 248 U. S. 498; his
brickyard, in 239 U. S. 394; his livery stable, in 237 U. S. 171; his billiard hall, in 225 U.
S. 623; his oleomargarine factory, in 127 U. S. 678; his brewery, in 123 U. S. 623; unless
it be the advantage of living and doing business in a civilized community. That
reciprocal advantage is given by the act to the coal operators.
Notes and Questions
1. Rules and Standards. Pennsylvania Coal establishes a balancing test to
determine whether government regulation goes “too far” and becomes a taking.

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In Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419 (1982), the Court
carved out an exception to this flexible, standards-based approach, clarifying
that any “permanent physical occupation” by or under the authorization of the
government is a taking as a categorical, per se, matter. In Loretto, a state statute
required residential landlords to permit cable television providers to install
equipment on their property to allow provision of television service to tenants,
upon provision of administratively-determined compensation (in the case itself,
$1). Justifying its per se rule, the Court explained:
Property rights in a physical thing have been described as the
rights “to possess, use and dispose of it.” United States v. General
Motors Corp., 323 U.S. 373, 378 (1945). To the extent that the
government permanently occupies physical property, it
effectively destroys each of these rights. First, the owner has no
right to possess the occupied space himself, and also has no
power to exclude the occupier from possession and use of the
space. The power to exclude has traditionally been considered
one of the most treasured strands in an owner’s bundle of
property rights. Second, the permanent physical occupation of
property forever denies the owner any power to control the use
of the property; he not only cannot exclude others, but can make
no nonpossessory use of the property. Although deprivation of
the right to use and obtain a profit from property is not, in every
case, independently sufficient to establish a taking, it is clearly
relevant. Finally, even though the owner may retain the bare legal
right to dispose of the occupied space by transfer or sale, the
permanent occupation of that space by a stranger will ordinarily
empty the right of any value, since the purchaser will also be
unable to make any use of the property.
Id. at 435. In dissent, Justice Blackmun noted that determining what constitutes
a “physical occupation,” let alone a “permanent” one, might not be so clear in
any given circumstance—no clearer, at least, than the balancing test that
otherwise applies to regulatory takings. Is administrability or ease of application

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the only reason for favoring a bright-line, per se rule over a more flexible
standard? If not, what else might justify the categorical rule of Loretto? We will
encounter additional categorical rules—exceptions to the balancing tests that
ostensibly govern most regulatory takings disputes—below.
2. Nuisances. Justice Brandeis’s dissent objects that the Kohler Act simply
prohibits a “noxious use.” A number of prior precedents, Brandeis argues,
established that the state may enjoin such uses even if doing so “deprives the
owner of the only use to which the property can then be profitably put.” In
Hadacheck v. Sebastian, 239 U.S. 394 (1915), for example, the Court found no
taking where an ordinance prohibiting brickyards largely destroyed the value of
an existing facility. The land was alleged to be worth $800,000 as a brickyard
and $60,000 otherwise. Nonetheless, the Court deemed it within the state’s
police power to declare previously lawful activities to be nuisances and enjoin
them. Id. at 410 (“[T]here must be progress, and if in its march private interests
are in the way, they must yield to the good of the community.”). The principle
that regulating nuisances is never a taking has been referred to as a second
categorical rule in takings law. As we will see below (in our discussion of the
Lucas case), the actual doctrine may not be so simple.
3. Diminution of value. How far is too far depends on how one defines the
property interest at stake. For Holmes, the Kohler Act “purports to abolish …
an estate in land,” by preventing the exercise of the mining company’s
bargained-for rights. On this logic, the diminution of value is total. Brandeis, by
contrast, objected that “[t]he rights of an owner as against the public are not
increased by dividing the interests in his property into surface and subsoil. The
sum of the rights in the parts can not be greater than the rights in the whole.”
Analyzing the takings question by looking at the property as a composition of
discrete “estates,” rather than as an integrated whole has been called
“conceptual severance.” Margaret Jane Radin, The Liberal Conception of Property:
Cross Currents in the Jurisprudence of Takings, 88 COLUM. L. REV. 1667, 1676 (1988)
(“[T]his strategy hypothetically or conceptually “severs” from the whole bundle
of rights just those strands that are interfered with by the regulation, and then

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hypothetically or conceptually construes those strands in the aggregate as a
separate whole thing.”).
The issue is also sometimes referred to as the “denominator problem.”
Suppose I have a parcel of land that I could sell for $200,000, but I could also
sell the mining rights alone for $100,000. Suppose further that the state enacts
a ban on mining, which reduces the market value of the land to $100,000. How
do we evaluate the diminution of value? Is it 50% ($100,000/$200,000)? Or is
the denominator the mining rights alone, making the diminution 100%
($100,000/$100,000)? If we were to permit conceptual severance, how should
the relevant estates be identified? In Pennsylvania Coal, Holmes noted that the
mining interest at issue was an established one under state law. Is that a
satisfactory basis? Can state law define federal rights in this way? What if an
anti-regulatory state legislature took advantage of its time in power to create
broad new “estates” (e.g., one for oil drilling, one for factory smoke, etc.)?
4. Support estates revisited. On this question, note that the Court revisited the
takings implications of Pennsylvania statutes designed to protect surface
structures from mining. Keystone Bituminous Coal Ass’n v. DeBenedictis, 480 U.S.
470 (1987), upheld a statute whose implementing regulations required coal
companies to leave approximately 50% of coal in the ground beneath protected
buildings. The Court did so notwithstanding Pennsylvania law’s “unique”
approach of treating the “support estate” as a discrete interest in land. By a 5-4
vote, the Court concluded that the interest is part and parcel of other mining
interests (thus expanding the denominator at issue in considering diminution of
value). “Because petitioners retain the right to mine virtually all of the coal in
their mineral estates, the burden the Act places on the support estate does not
constitute a taking. Petitioners may continue to mine coal profitably even if they
may not destroy or damage surface structures at will in the process.” Id. at 501.
This result may seem at odds with Pennsylvania Coal. The dissent certainly
thought so. The majority read Pennsylvania Coal narrowly as reaching only a
specific application of the Kohler Act to bargained-for rights to mine under a
particular house. The rest, pertaining to the general applicability of the Kohler

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Act was described as an “uncharacteristically” advisory opinion on Justice
Holmes’s part. Id. at 484. In any case, the majority viewed the Subsidence Act
as different than the earlier law in two key respects. First, the Court read the
history of the statute as disclosing a public purpose. “None of the indicia of a
statute enacted solely for the benefit of private parties identified in Justice
Holmes’ opinion are present here.” Id. at 486. That some private parties did
benefit was seen as incidental. Second, as noted above, the Court viewed the
challengers as retaining valuable mining rights. Unlike “the Kohler Act[, which]
made mining of “certain coal” commercially impracticable,” the Subsidence Act
was not shown to have worked a similar harm, at least for purposes of a facial
challenge.
5. Baseline Games. Is Justice Brandeis’s distinction between “confer[ring]
benefits on property owners” and “protect[ing] the public from detriment and
danger” persuasive? What Justice Brandeis views as prevention of a harm—
preventing the collapse of surface structures overlying coal formations owned
by mining interests—Justice Holmes views as conferral of an unbargained-for
benefit—a support estate that was willingly bargained away. Is one of them
wrong? What is the baseline against which the economic effects of a regulation
ought to be evaluated?
6. “Reciprocity of advantage.” Reciprocity of advantage refers to a sort of
implicit compensation of regulation. Suppose you own land in a part of town
zoned for residential use. You may not build a factory on your property, but
neither can your neighbors. Your property’s residential value is enhanced
accordingly. “Under our system of government, one of the State’s primary ways
of preserving the public weal is restricting the uses individuals can make of their
property. While each of us is burdened somewhat by such restrictions, we, in
turn, benefit greatly from the restrictions that are placed on others.” Keystone
Bituminous Coal Ass’n, 480 U.S. at 491. The principle is often invoked to argue
that regulations should not “single out” anyone for disproportionate burdens.
That does not mean that everything comes out even. “The Takings Clause has
never been read to require the States or the courts to calculate whether a specific
individual has suffered burdens … in excess of the benefits received. Not every

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individual gets a full dollar return in benefits for the taxes he or she pays; yet,
no one suggests that an individual has a right to compensation for the difference
between taxes paid and the dollar value of benefits received.” Id. at 491 n.21.
Penn Cent. Transp. Co. v. City of New York
438 U.S. 104 (1978)
Mr. Justice BRENNAN delivered the opinion of the Court.
The question presented is whether a city may, as part of a comprehensive program to
preserve historic landmarks and historic districts, place restrictions on the development
of individual historic landmarks—in addition to those imposed by applicable zoning
ordinances—without effecting a “taking” requiring the payment of “just
compensation.” Specifically, we must decide whether the application of New York
City’s Landmarks Preservation Law to the parcel of land occupied by Grand Central
Terminal has “taken” its owners’ property in violation of the Fifth and Fourteenth
Amendments.
I
A
Over the past 50 years, all 50 States and over 500 municipalities have enacted laws to
encourage or require the preservation of buildings and areas with historic or aesthetic
importance. These nationwide legislative efforts have been precipitated by two
concerns. The first is recognition that, in recent years, large numbers of historic
structures, landmarks, and areas have been destroyed without adequate consideration
of either the values represented therein or the possibility of preserving the destroyed
properties for use in economically productive ways. The second is a widely shared belief
that structures with special historic, cultural, or architectural significance enhance the
quality of life for all. Not only do these buildings and their workmanship represent the
lessons of the past and embody precious features of our heritage, they serve as
examples of quality for today. “[H]istoric conservation is but one aspect of the much
larger problem, basically an environmental one, of enhancing—or perhaps developing
for the first time—the quality of life for people.”

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New York City, responding to similar concerns and acting pursuant to a New York
State enabling Act, adopted its Landmarks Preservation Law in 1965. See N.Y.C.
Admin. Code, ch. 8–A, § 205–1.0 et seq. (1976). The city acted from the conviction that
“the standing of [New York City] as a world-wide tourist center and world capital of
business, culture and government” would be threatened if legislation were not enacted
to protect historic landmarks and neighborhoods from precipitate decisions to destroy
or fundamentally alter their character. § 205–1.0(a). The city believed that
comprehensive measures to safeguard desirable features of the existing urban fabric
would benefit its citizens in a variety of ways: e. g., fostering “civic pride in the beauty
and noble accomplishments of the past”; protecting and enhancing “the city’s
attractions to tourists and visitors”; “support[ing] and stimul [ating] business and
industry”; “strengthen[ing] the economy of the city”; and promoting “the use of
historic districts, landmarks, interior landmarks and scenic landmarks for the education,
pleasure and welfare of the people of the city.” § 205–1.0(b).
The New York City law is typical of many urban landmark laws in that its primary
method of achieving its goals is not by acquisitions of historic properties, 6 but rather
by involving public entities in land-use decisions affecting these properties and
providing services, standards, controls, and incentives that will encourage preservation
by private owners and users. While the law does place special restrictions on landmark
properties as a necessary feature to the attainment of its larger objectives, the major
theme of the law is to ensure the owners of any such properties both a “reasonable
return” on their investments and maximum latitude to use their parcels for purposes
not inconsistent with the preservation goals.
The operation of the law can be briefly summarized. The primary responsibility for
administering the law is vested in the Landmarks Preservation Commission
(Commission), a broad based, 11-member agency assisted by a technical staff. The

6 The consensus is that widespread public ownership of historic properties in urban settings is neither feasible

nor wise. Public ownership reduces the tax base, burdens the public budget with costs of acquisitions and
maintenance, and results in the preservation of public buildings as museums and similar facilities, rather than as
economically productive features of the urban scene. See Wilson & Winkler, The Response of State Legislation
to Historic Preservation, 36 Law & Contemp. Prob. 329, 330–331, 339–340 (1971).

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Property

Commission first performs the function, critical to any landmark preservation effort,
of identifying properties and areas that have “a special character or special historical or
aesthetic interest or value as part of the development, heritage or cultural characteristics
of the city, state or nation.” If the Commission determines, after giving all interested
parties an opportunity to be heard, that a building or area satisfies the ordinance’s
criteria, it will designate a building to be a “landmark,” situated on a particular
“landmark site,” or will designate an area to be a “historic district.” After the
Commission makes a designation, New York City’s Board of Estimate, after
considering the relationship of the designated property “to the master plan, the zoning
resolution, projected public improvements and any plans for the renewal of the area
involved,” may modify or disapprove the designation, and the owner may seek judicial
review of the final designation decision. Thus far, 31 historic districts and over 400
individual landmarks have been finally designated, and the process is a continuing one.
Final designation as a landmark results in restrictions upon the property owner’s
options concerning use of the landmark site. First, the law imposes a duty upon the
owner to keep the exterior features of the building “in good repair” to assure that the
law’s objectives not be defeated by the landmark’s falling into a state of irremediable
disrepair. Second, the Commission must approve in advance any proposal to alter the
exterior architectural features of the landmark or to construct any exterior
improvement on the landmark site, thus ensuring that decisions concerning
construction on the landmark site are made with due consideration of both the public
interest in the maintenance of the structure and the landowner’s interest in use of the
property.
In the event an owner wishes to alter a landmark site, three separate procedures are
available through which administrative approval may be obtained. First, the owner may
apply to the Commission for a “certificate of no effect on protected architectural
features”: that is, for an order approving the improvement or alteration on the ground
that it will not change or affect any architectural feature of the landmark and will be in
harmony therewith. Denial of the certificate is subject to judicial review.
Second, the owner may apply to the Commission for a certificate of “appropriateness.”
Such certificates will be granted if the Commission concludes—focusing upon

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859

aesthetic, historical, and architectural values—that the proposed construction on the
landmark site would not unduly hinder the protection, enhancement, perpetuation, and
use of the landmark. Again, denial of the certificate is subject to judicial review.
Moreover, the owner who is denied either a certificate of no exterior effect or a
certificate of appropriateness may submit an alternative or modified plan for approval.
The final procedure—seeking a certificate of appropriateness on the ground of
“insufficient return,”—provides special mechanisms, which vary depending on
whether or not the landmark enjoys a tax exemption, to ensure that designation does
not cause economic hardship.
Although the designation of a landmark and landmark site restricts the owner’s control
over the parcel, designation also enhances the economic position of the landmark
owner in one significant respect. Under New York City’s zoning laws, owners of real
property who have not developed their property to the full extent permitted by the
applicable zoning laws are allowed to transfer development rights to contiguous parcels
on the same city block. A 1968 ordinance gave the owners of landmark sites additional
opportunities to transfer development rights to other parcels. Subject to a restriction
that the floor area of the transferee lot may not be increased by more than 20% above
its authorized level, the ordinance permitted transfers from a landmark parcel to
property across the street or across a street intersection. In 1969, the law governing the
conditions under which transfers from landmark parcels could occur was liberalized,
apparently to ensure that the Landmarks Law would not unduly restrict the
development options of the owners of Grand Central Terminal. The class of recipient
lots was expanded to include lots “across a street and opposite to another lot or lots
which except for the intervention of streets or street intersections f [or]m a series
extending to the lot occupied by the landmark building [, provided that] all lots [are] in
the same ownership.” New York City Zoning Resolution 74–79 (emphasis deleted). In
addition, the 1969 amendment permits, in highly commercialized areas like midtown
Manhattan, the transfer of all unused development rights to a single parcel.
B
This case involves the application of New York City’s Landmarks Preservation Law to
Grand Central Terminal (Terminal). The Terminal, which is owned by the Penn Central

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Property

Transportation Co. and its affiliates (Penn Central), is one of New York City’s most
famous buildings. Opened in 1913, it is regarded not only as providing an ingenious
engineering solution to the problems presented by urban railroad stations, but also as
a magnificent example of the French beaux-arts style.
The Terminal is located in midtown Manhattan. Its south facade faces 42d Street and
that street’s intersection with Park Avenue. At street level, the Terminal is bounded on
the west by Vanderbilt Avenue, on the east by the Commodore Hotel, and on the north
by the Pan-American Building. Although a 20-story office tower, to have been located
above the Terminal, was part of the original design, the planned tower was never
constructed. The Terminal itself is an eight-story structure which Penn Central uses as
a railroad station and in which it rents space not needed for railroad purposes to a
variety of commercial interests. The Terminal is one of a number of properties owned
by appellant Penn Central in this area of midtown Manhattan.… At least eight of these
are eligible to be recipients of development rights afforded the Terminal by virtue of
landmark designation.
On August 2, 1967, following a public hearing, the Commission designated the
Terminal a “landmark” and designated the “city tax block” it occupies a “landmark
site.” The Board of Estimate confirmed this action on September 21, 1967. Although
appellant Penn Central had opposed the designation before the Commission, it did not
seek judicial review of the final designation decision.
On January 22, 1968, appellant Penn Central, to increase its income, entered into a
renewable 50-year lease and sublease agreement with appellant UGP Properties, Inc.
(UGP), a wholly owned subsidiary of Union General Properties, Ltd., a United
Kingdom corporation. Under the terms of the agreement, UGP was to construct a
multistory office building above the Terminal. UGP promised to pay Penn Central $1
million annually during construction and at least $3 million annually thereafter. The
rentals would be offset in part by a loss of some $700,000 to $1 million in net rentals
presently received from concessionaires displaced by the new building.
Appellants UGP and Penn Central then applied to the Commission for permission to
construct an office building atop the Terminal. Two separate plans, both designed by

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861

architect Marcel Breuer and both apparently satisfying the terms of the applicable
zoning ordinance, were submitted to the Commission for approval. The first, Breuer I,
provided for the construction of a 55-story office building, to be cantilevered above
the existing facade and to rest on the roof of the Terminal. The second, Breuer II
Revised, called for tearing down a portion of the Terminal that included the 42d Street
facade, stripping off some of the remaining features of the Terminal’s facade, and
constructing a 53-story office building. The Commission denied a certificate of no
exterior effect on September 20, 1968. Appellants then applied for a certificate of
“appropriateness” as to both proposals. After four days of hearings at which over 80
witnesses testified, the Commission denied this application as to both proposals.[ *]
The Commission’s reasons for rejecting certificates respecting Breuer II Revised are
summarized in the following statement: “To protect a Landmark, one does not tear it
down. To perpetuate its architectural features, one does not strip them off.” Breuer I,
which would have preserved the existing vertical facades of the present structure,
received more sympathetic consideration. The Commission first focused on the effect
that the proposed tower would have on one desirable feature created by the present

[*] [Eds.—Reproductions of the proposals appear below:]

(From: http://www.architakes.com/?p=13036).

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Property

structure and its surroundings: the dramatic view of the Terminal from Park Avenue
South. Although appellants had contended that the Pan-American Building had already
destroyed the silhouette of the south facade and that one additional tower could do no
further damage and might even provide a better background for the facade, the
Commission disagreed, stating that it found the majestic approach from the south to
be still unique in the city and that a 55-story tower atop the Terminal would be far
more detrimental to its south facade than the Pan-American Building 375 feet away.
Moreover, the Commission found that from closer vantage points the Pan Am Building
and the other towers were largely cut off from view, which would not be the case of
the mass on top of the Terminal planned under Breuer I. In conclusion, the
Commission stated:
“[We have] no fixed rule against making additions to designated buildings—it
all depends on how they are done . . . . But to balance a 55-story office tower
above a flamboyant Beaux-Arts facade seems nothing more than an aesthetic
joke. Quite simply, the tower would overwhelm the Terminal by its sheer mass.
The ‘addition’ would be four times as high as the existing structure and would
reduce the Landmark itself to the status of a curiosity.
“Landmarks cannot be divorced from their settings—particularly when the
setting is a dramatic and integral part of the original concept. The Terminal, in
its setting, is a great example of urban design. Such examples are not so plentiful
in New York City that we can afford to lose any of the few we have. And we
must preserve them in a meaningful way—with alterations and additions of such
character, scale, materials and mass as will protect, enhance and perpetuate the
original design rather than overwhelm it.”
Appellants did not seek judicial review of the denial of either certificate.… Further,
appellants did not avail themselves of the opportunity to develop and submit other
plans for the Commission’s consideration and approval. Instead, appellants filed suit
in New York Supreme Court, Trial Term, claiming, inter alia, that the application of the
Landmarks Preservation Law had “taken” their property without just compensation in
violation of the Fifth and Fourteenth Amendments and arbitrarily deprived them of
their property without due process of law in violation of the Fourteenth Amendment.

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Appellants sought a declaratory judgment, injunctive relief barring the city from using
the Landmarks Law to impede the construction of any structure that might otherwise
lawfully be constructed on the Terminal site, and damages for the “temporary taking”
that occurred between August 2, 1967, the designation date, and the date when the
restrictions arising from the Landmarks Law would be lifted. The trial court granted
the injunctive and declaratory relief, but severed the question of damages for a
“temporary taking.” [The New York Supreme Court, Appellate Division, reversed, and
this ruling was affirmed by the state Court of Appeals.]
II
The issues presented by appellants are (1) whether the restrictions imposed by New
York City’s law upon appellants’ exploitation of the Terminal site effect a “taking” of
appellants’ property for a public use within the meaning of the Fifth Amendment,
which of course is made applicable to the States through the Fourteenth Amendment,
and, (2), if so, whether the transferable development rights afforded appellants
constitute “just compensation” within the meaning of the Fifth Amendment. We need
only address the question whether a “taking” has occurred.
A
…. The question of what constitutes a “taking” for purposes of the Fifth Amendment
has proved to be a problem of considerable difficulty. While this Court has recognized
that the “Fifth Amendment’s guarantee . . . [is] designed to bar Government from
forcing some people alone to bear public burdens which, in all fairness and justice,
should be borne by the public as a whole,” Armstrong v. United States, 364 U.S. 40, 49
(1960), this Court, quite simply, has been unable to develop any “set formula” for
determining when “justice and fairness” require that economic injuries caused by public
action be compensated by the government, rather than remain disproportionately
concentrated on a few persons. Indeed, we have frequently observed that whether a
particular restriction will be rendered invalid by the government’s failure to pay for any
losses proximately caused by it depends largely “upon the particular circumstances [in
that] case.” United States v. Central Eureka Mining Co., 357 U.S. 155, 168 (1958).

864

Property

In engaging in these essentially ad hoc, factual inquiries, the Court’s decisions have
identified several factors that have particular significance. The economic impact of the
regulation on the claimant and, particularly, the extent to which the regulation has
interfered with distinct investment-backed expectations are, of course, relevant
considerations. So, too, is the character of the governmental action. A “taking” may
more readily be found when the interference with property can be characterized as a
physical invasion by government, than when interference arises from some public
program adjusting the benefits and burdens of economic life to promote the common
good.
“Government hardly could go on if to some extent values incident to property could
not be diminished without paying for every such change in the general law,” Pennsylvania
Coal Co. v. Mahon, 260 U.S. 393, 413 (1922), and this Court has accordingly recognized,
in a wide variety of contexts, that government may execute laws or programs that
adversely affect recognized economic values. Exercises of the taxing power are one
obvious example. A second are the decisions in which this Court has dismissed “taking”
challenges on the ground that, while the challenged government action caused
economic harm, it did not interfere with interests that were sufficiently bound up with
the reasonable expectations of the claimant to constitute “property” for Fifth
Amendment purposes. See, e. g., United States v. Willow River Power Co., 324 U.S. 499
(1945) (interest in high-water level of river for runoff for tailwaters to maintain power
head is not property); United States v. Chandler-Dunbar Water Power Co., 229 U.S. 53 (1913).
More importantly for the present case, in instances in which a state tribunal reasonably
concluded that “the health, safety, morals, or general welfare” would be promoted by
prohibiting particular contemplated uses of land, this Court has upheld land-use
regulations that destroyed or adversely affected recognized real property interests.
Zoning laws are, of course, the classic example, see Euclid v. Ambler Realty Co., 272 U.S.
365 (1926) (prohibition of industrial use); Gorieb v. Fox, 274 U.S. 603, 608 (1927)
(requirement that portions of parcels be left unbuilt); Welch v. Swasey, 214 U.S. 91 (1909)
(height restriction), which have been viewed as permissible governmental action even
when prohibiting the most beneficial use of the property.

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865

Zoning laws generally do not affect existing uses of real property, but “taking”
challenges have also been held to be without merit in a wide variety of situations when
the challenged governmental actions prohibited a beneficial use to which individual
parcels had previously been devoted and thus caused substantial individualized harm.
Miller v. Schoene, 276 U.S. 272 (1928), is illustrative. In that case, a state entomologist,
acting pursuant to a state statute, ordered the claimants to cut down a large number of
ornamental red cedar trees because they produced cedar rust fatal to apple trees
cultivated nearby. Although the statute provided for recovery of any expense incurred
in removing the cedars, and permitted claimants to use the felled trees, it did not
provide compensation for the value of the standing trees or for the resulting decrease
in market value of the properties as a whole. A unanimous Court held that this latter
omission did not render the statute invalid. The Court held that the State might
properly make “a choice between the preservation of one class of property and that of
the other” and since the apple industry was important in the State involved, concluded
that the State had not exceeded “its constitutional powers by deciding upon the
destruction of one class of property [without compensation] in order to save another
which, in the judgment of the legislature, is of greater value to the public.”
Again, Hadacheck v. Sebastian, 239 U.S. 394 (1915), upheld a law prohibiting the claimant
from continuing his otherwise lawful business of operating a brickyard in a particular
physical community on the ground that the legislature had reasonably concluded that
the presence of the brickyard was inconsistent with neighboring uses.…
Pennsylvania Coal Co. v. Mahon, 260 U.S. 393 (1922), is the leading case for the
proposition that a state statute that substantially furthers important public policies may
so frustrate distinct investment-backed expectations as to amount to a “taking.” There
the claimant had sold the surface rights to particular parcels of property, but expressly
reserved the right to remove the coal thereunder. A Pennsylvania statute, enacted after
the transactions, forbade any mining of coal that caused the subsidence of any house,
unless the house was the property of the owner of the underlying coal and was more
than 150 feet from the improved property of another. Because the statute made it
commercially impracticable to mine the coal, and thus had nearly the same effect as the
complete destruction of rights claimant had reserved from the owners of the surface

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Property

land, the Court held that the statute was invalid as effecting a “taking” without just
compensation.
Finally, government actions that may be characterized as acquisitions of resources to
permit or facilitate uniquely public functions have often been held to constitute
“takings.” United States v. Causby, 328 U.S. 256 (1946), is illustrative. In holding that
direct overflights above the claimant’s land, that destroyed the present use of the land
as a chicken farm, constituted a “taking,” Causby emphasized that Government had not
“merely destroyed property [but was] using a part of it for the flight of its planes.” Id.,
328 U.S., at 262–263, n. 7.
B
…. Because this Court has recognized, in a number of settings, that States and cities
may enact land-use restrictions or controls to enhance the quality of life by preserving
the character and desirable aesthetic features of a city, appellants do not contest that
New York City’s objective of preserving structures and areas with special historic,
architectural, or cultural significance is an entirely permissible governmental goal. They
also do not dispute that the restrictions imposed on its parcel are appropriate means of
securing the purposes of the New York City law. Finally, appellants do not challenge
any of the specific factual premises of the decision below. They accept for present
purposes both that the parcel of land occupied by Grand Central Terminal must, in its
present state, be regarded as capable of earning a reasonable return, and that the
transferable development rights afforded appellants by virtue of the Terminal’s
designation as a landmark are valuable, even if not as valuable as the rights to construct
above the Terminal. In appellants’ view none of these factors derogate from their claim
that New York City’s law has effected a “taking.”
They first observe that the airspace above the Terminal is a valuable property interest,
citing United States v. Causby, supra. They urge that the Landmarks Law has deprived
them of any gainful use of their “air rights” above the Terminal and that, irrespective
of the value of the remainder of their parcel, the city has “taken” their right to this
superadjacent airspace, thus entitling them to “just compensation” measured by the
fair market value of these air rights.

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867

Apart from our own disagreement with appellants’ characterization of the effect of the
New York City law, the submission that appellants may establish a “taking” simply by
showing that they have been denied the ability to exploit a property interest that they
heretofore had believed was available for development is quite simply untenable. Were
this the rule, this Court would have erred not only in upholding laws restricting the
development of air rights, see Welch v. Swasey, supra, but also in approving those
prohibiting both the subjacent, see Goldblatt v. Hempstead, 369 U.S. 590 (1962), and the
lateral, see Gorieb v. Fox, 274 U.S. 603 development of particular parcels. 27 “Taking”
jurisprudence does not divide a single parcel into discrete segments and attempt to
determine whether rights in a particular segment have been entirely abrogated. In
deciding whether a particular governmental action has effected a taking, this Court
focuses rather both on the character of the action and on the nature and extent of the
interference with rights in the parcel as a whole—here, the city tax block designated as
the “landmark site.”
Secondly, appellants, focusing on the character and impact of the New York City law,
argue that it effects a “taking” because its operation has significantly diminished the
value of the Terminal site. Appellants concede that the decisions sustaining other landuse regulations, which, like the New York City law, are reasonably related to the
promotion of the general welfare, uniformly reject the proposition that diminution in
property value, standing alone, can establish a “taking,” see Euclid v. Ambler Realty Co.,
272 U.S. 365 (1926) (75% diminution in value caused by zoning law); Hadacheck v.
Sebastian, 239 U.S. 394 (1915) (87 1/2 % diminution in value), and that the “taking”
issue in these contexts is resolved by focusing on the uses the regulations permit.…
[B]ut appellants argue that New York City’s regulation of individual landmarks is
fundamentally different from zoning or from historic-district legislation because the

27 These cases dispose of any contention that might be based on Pennsylvania Coal Co. v. Mahon, 260 U.S. 393

(1922), that full use of air rights is so bound up with the investment-backed expectations of appellants that
governmental deprivation of these rights invariably—i. e., irrespective of the impact of the restriction on the
value of the parcel as a whole—constitutes a “taking.” Similarly, Welch, Goldblatt, and Gorieb illustrate the fallacy
of appellants’ related contention that a “taking” must be found to have occurred whenever the land-use restriction
may be characterized as imposing a “servitude” on the claimant’s parcel.

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Property

controls imposed by New York City’s law apply only to individuals who own selected
properties.
Stated baldly, appellants’ position appears to be that the only means of ensuring that
selected owners are not singled out to endure financial hardship for no reason is to
hold that any restriction imposed on individual landmarks pursuant to the New York
City scheme is a “taking” requiring the payment of “just compensation.” Agreement
with this argument would, of course, invalidate not just New York City’s law, but all
comparable landmark legislation in the Nation. We find no merit in it.
It is true, as appellants emphasize, that both historic-district legislation and zoning laws
regulate all properties within given physical communities whereas landmark laws apply
only to selected parcels. But, contrary to appellants’ suggestions, landmark laws are not
like discriminatory, or “reverse spot,” zoning: that is, a land-use decision which
arbitrarily singles out a particular parcel for different, less favorable treatment than the
neighboring ones. In contrast to discriminatory zoning, which is the antithesis of landuse control as part of some comprehensive plan, the New York City law embodies a
comprehensive plan to preserve structures of historic or aesthetic interest wherever
they might be found in the city, and as noted, over 400 landmarks and 31 historic
districts have been designated pursuant to this plan.
Equally without merit is the related argument that the decision to designate a structure
as a landmark “is inevitably arbitrary or at least subjective, because it is basically a matter
of taste,” Reply Brief for Appellants 22, thus unavoidably singling out individual
landowners for disparate and unfair treatment. The argument has a particularly hollow
ring in this case. For appellants not only did not seek judicial review of either the
designation or of the denials of the certificates of appropriateness and of no exterior
effect, but do not even now suggest that the Commission’s decisions concerning the
Terminal were in any sense arbitrary or unprincipled. But, in any event, a landmark
owner has a right to judicial review of any Commission decision, and, quite simply,
there is no basis whatsoever for a conclusion that courts will have any greater difficulty
identifying arbitrary or discriminatory action in the context of landmark regulation than
in the context of classic zoning or indeed in any other context.

Regulatory Takings

869

Next, appellants observe that New York City’s law differs from zoning laws and
historic-district ordinances in that the Landmarks Law does not impose identical or
similar restrictions on all structures located in particular physical communities. It
follows, they argue, that New York City’s law is inherently incapable of producing the
fair and equitable distribution of benefits and burdens of governmental action which
is characteristic of zoning laws and historic-district legislation and which they maintain
is a constitutional requirement if “just compensation” is not to be afforded. It is, of
course, true that the Landmarks Law has a more severe impact on some landowners
than on others, but that in itself does not mean that the law effects a “taking.”
Legislation designed to promote the general welfare commonly burdens some more
than others. The owners of the brickyard in Hadacheck, of the cedar trees in Miller v.
Schoene, and of the gravel and sand mine in Goldblatt v. Hempstead, were uniquely
burdened by the legislation sustained in those cases. 30 Similarly, zoning laws often
affect some property owners more severely than others but have not been held to be
invalid on that account. For example, the property owner in Euclid who wished to use
its property for industrial purposes was affected far more severely by the ordinance
than its neighbors who wished to use their land for residences.
In any event, appellants’ repeated suggestions that they are solely burdened and
unbenefited is factually inaccurate. This contention overlooks the fact that the New
York City law applies to vast numbers of structures in the city in addition to the

30 Appellants attempt to distinguish these cases on the ground that, in each, government was prohibiting a

“noxious” use of land and that in the present case, in contrast, appellants’ proposed construction above the
Terminal would be beneficial. We observe that the uses in issue in Hadacheck, Miller, and Goldblatt were perfectly
lawful in themselves. They involved no “blameworthiness, . . . moral wrongdoing or conscious act of dangerous
risk-taking which induce[d society] to shift the cost to a pa[rt]icular individual.” Sax, Takings and the Police Power,
74 Yale L.J. 36, 50 (1964). These cases are better understood as resting not on any supposed “noxious” quality
of the prohibited uses but rather on the ground that the restrictions were reasonably related to the implementation
of a policy—not unlike historic preservation—expected to produce a widespread public benefit and applicable
to all similarly situated property.
Nor, correlatively, can it be asserted that the destruction or fundamental alteration of a historic landmark
is not harmful. The suggestion that the beneficial quality of appellants’ proposed construction is established by
the fact that the construction would have been consistent with applicable zoning laws ignores the development
in sensibilities and ideals reflected in landmark legislation like New York City’s.

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Property

Terminal—all the structures contained in the 31 historic districts and over 400
individual landmarks, many of which are close to the Terminal. Unless we are to reject
the judgment of the New York City Council that the preservation of landmarks benefits
all New York citizens and all structures, both economically and by improving the
quality of life in the city as a whole—which we are unwilling to do—we cannot
conclude that the owners of the Terminal have in no sense been benefited by the
Landmarks Law. Doubtless appellants believe they are more burdened than benefited
by the law, but that must have been true, too, of the property owners in Miller,
Hadacheck, Euclid, and Goldblatt.
Appellants’ final broad-based attack would have us treat the law as an instance, like that
in United States v. Causby, in which government, acting in an enterprise capacity, has
appropriated part of their property for some strictly governmental purpose. Apart from
the fact that Causby was a case of invasion of airspace that destroyed the use of the farm
beneath and this New York City law has in nowise impaired the present use of the
Terminal, the Landmarks Law neither exploits appellants’ parcel for city purposes nor
facilitates nor arises from any entrepreneurial operations of the city. The situation is
not remotely like that in Causby where the airspace above the property was in the flight
pattern for military aircraft. The Landmarks Law’s effect is simply to prohibit
appellants or anyone else from occupying portions of the airspace above the Terminal,
while permitting appellants to use the remainder of the parcel in a gainful fashion. This
is no more an appropriation of property by government for its own uses than is a
zoning law prohibiting, for “aesthetic” reasons, two or more adult theaters within a
specified area, or a safety regulation prohibiting excavations below a certain level.
C
Rejection of appellants’ broad arguments is not, however, the end of our inquiry, for
all we thus far have established is that the New York City law is not rendered invalid
by its failure to provide “just compensation” whenever a landmark owner is restricted
in the exploitation of property interests, such as air rights, to a greater extent than
provided for under applicable zoning laws. We now must consider whether the
interference with appellants’ property is of such a magnitude that “there must be an
exercise of eminent domain and compensation to sustain [it].” Pennsylvania Coal Co. v.

Regulatory Takings

871

Mahon, 260 U.S., at 413. That inquiry may be narrowed to the question of the severity
of the impact of the law on appellants’ parcel, and its resolution in turn requires a
careful assessment of the impact of the regulation on the Terminal site.
…[T]he New York City law does not interfere in any way with the present uses of the
Terminal. Its designation as a landmark not only permits but contemplates that
appellants may continue to use the property precisely as it has been used for the past
65 years: as a railroad terminal containing office space and concessions. So the law does
not interfere with what must be regarded as Penn Central’s primary expectation
concerning the use of the parcel. More importantly, on this record, we must regard the
New York City law as permitting Penn Central not only to profit from the Terminal
but also to obtain a “reasonable return” on its investment.
Appellants, moreover, exaggerate the effect of the law on their ability to make use of
the air rights above the Terminal in two respects. First, it simply cannot be maintained,
on this record, that appellants have been prohibited from occupying any portion of the
airspace above the Terminal. While the Commission’s actions in denying applications
to construct an office building in excess of 50 stories above the Terminal may indicate
that it will refuse to issue a certificate of appropriateness for any comparably sized
structure, nothing the Commission has said or done suggests an intention to prohibit
any construction above the Terminal. The Commission’s report emphasized that
whether any construction would be allowed depended upon whether the proposed
addition “would harmonize in scale, material and character with [the Terminal].” Since
appellants have not sought approval for the construction of a smaller structure, we do
not know that appellants will be denied any use of any portion of the airspace above
the Terminal.
Second, to the extent appellants have been denied the right to build above the Terminal,
it is not literally accurate to say that they have been denied all use of even those preexisting air rights. Their ability to use these rights has not been abrogated; they are
made transferable to at least eight parcels in the vicinity of the Terminal, one or two of
which have been found suitable for the construction of new office buildings. Although
appellants and others have argued that New York City’s transferable developmentrights program is far from ideal, the New York courts here supportably found that, at

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least in the case of the Terminal, the rights afforded are valuable. While these rights
may well not have constituted “just compensation” if a “taking” had occurred, the
rights nevertheless undoubtedly mitigate whatever financial burdens the law has
imposed on appellants and, for that reason, are to be taken into account in considering
the impact of regulation.
On this record, we conclude that the application of New York City’s Landmarks Law
has not effected a “taking” of appellants’ property. The restrictions imposed are
substantially related to the promotion of the general welfare and not only permit
reasonable beneficial use of the landmark site but also afford appellants opportunities
further to enhance not only the Terminal site proper but also other properties.
Affirmed.
Mr. Justice REHNQUIST, with whom THE CHIEF JUSTICE and Mr. Justice
STEVENS join, dissenting.
Of the over one million buildings and structures in the city of New York, appellees
have singled out 400 for designation as official landmarks. The owner of a building
might initially be pleased that his property has been chosen by a distinguished
committee of architects, historians, and city planners for such a singular distinction.
But he may well discover, as appellant Penn Central Transportation Co. did here, that
the landmark designation imposes upon him a substantial cost, with little or no
offsetting benefit except for the honor of the designation. The question in this case is
whether the cost associated with the city of New York’s desire to preserve a limited
number of “landmarks” within its borders must be borne by all of its taxpayers or
whether it can instead be imposed entirely on the owners of the individual properties.
Only in the most superficial sense of the word can this case be said to involve “zoning.”
Typical zoning restrictions may, it is true, so limit the prospective uses of a piece of
property as to diminish the value of that property in the abstract because it may not be
used for the forbidden purposes. But any such abstract decrease in value will more than
likely be at least partially offset by an increase in value which flows from similar
restrictions as to use on neighboring properties. All property owners in a designated
area are placed under the same restrictions, not only for the benefit of the municipality

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as a whole but also for the common benefit of one another. In the words of Mr. Justice
Holmes, speaking for the Court in Pennsylvania Coal Co. v. Mahon, there is “an average
reciprocity of advantage.”
Where a relatively few individual buildings, all separated from one another, are singled
out and treated differently from surrounding buildings, no such reciprocity exists. The
cost to the property owner which results from the imposition of restrictions applicable
only to his property and not that of his neighbors may be substantial—in this case,
several million dollars—with no comparable reciprocal benefits. And the cost
associated with landmark legislation is likely to be of a completely different order of
magnitude than that which results from the imposition of normal zoning restrictions.
Unlike the regime affected by the latter, the landowner is not simply prohibited from
using his property for certain purposes, while allowed to use it for all other purposes.
Under the historic-landmark preservation scheme adopted by New York, the property
owner is under an affirmative duty to preserve his property as a landmark at his own
expense. To suggest that because traditional zoning results in some limitation of use of
the property zoned, the New York City landmark preservation scheme should likewise
be upheld, represents the ultimate in treating as alike things which are different. The
rubric of “zoning” has not yet sufficed to avoid the well-established proposition that
the Fifth Amendment bars the “Government from forcing some people alone to bear
public burdens which, in all fairness and justice, should be borne by the public as a
whole.” Armstrong v. United States, 364 U.S. 40, 49 (1960).…
I
The Fifth Amendment provides in part: “nor shall private property be taken for public
use, without just compensation.” In a very literal sense, the actions of appellees violated
this constitutional prohibition. Before the city of New York declared Grand Central
Terminal to be a landmark, Penn Central could have used its “air rights” over the
Terminal to build a multistory office building, at an apparent value of several million
dollars per year. Today, the Terminal cannot be modified in any form, including the
erection of additional stories, without the permission of the Landmark Preservation
Commission, a permission which appellants, despite good-faith attempts, have so far
been unable to obtain. Because the Taking Clause of the Fifth Amendment has not

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always been read literally, however, the constitutionality of appellees’ actions requires
a closer scrutiny of this Court’s interpretation of the three key words in the Taking
Clause—“property,” “taken,” and “just compensation.”
A
Appellees do not dispute that valuable property rights have been destroyed. And the
Court has frequently emphasized that the term “property” as used in the Taking Clause
includes the entire “group of rights inhering in the citizen’s [ownership].” United States
v. General Motors Corp., 323 U.S. 373 (1945).…
While neighboring landowners are free to use their land and “air rights” in any way
consistent with the broad boundaries of New York zoning, Penn Central, absent the
permission of appellees, must forever maintain its property in its present state. The
property has been thus subjected to a nonconsensual servitude not borne by any
neighboring or similar properties.
B
….[A]n examination of the two exceptions where the destruction of property does not
constitute a taking demonstrates that a compensable taking has occurred here.
1
As early as 1887, the Court recognized that the government can prevent a property
owner from using his property to injure others without having to compensate the
owner for the value of the forbidden use.
“A prohibition simply upon the use of property for purposes that are declared, by valid
legislation, to be injurious to the health, morals, or safety of the community, cannot, in any just
sense, be deemed a taking or an appropriation of property for the public benefit. Such
legislation does not disturb the owner in the control or use of his property for lawful
purposes, nor restrict his right to dispose of it, but is only a declaration by the State
that its use by any one, for certain forbidden purposes, is prejudicial to the public
interests. . . . The power which the States have of prohibiting such use by individuals
of their property as will be prejudicial to the health, the morals, or the safety of the

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public, is not—and, consistently with the existence and safety of organized society,
cannot be—burdened with the condition that the State must compensate such
individual owners for pecuniary losses they may sustain, by reason of their not being permitted,
by a noxious use of their property, to inflict injury upon the community.” Mugler v. Kansas, 123 U.S.
623, 668–669 [(1887)].
Thus, there is no “taking” where a city prohibits the operation of a brickyard within a
residential area, see Hadacheck v. Sebastian, 239 U.S. 394 (1915), or forbids excavation
for sand and gravel below the water line, see Goldblatt v. Hempstead, 369 U.S. 590 (1962).
Nor is it relevant, where the government is merely prohibiting a noxious use of
property, that the government would seem to be singling out a particular property
owner. Hadacheck, supra, at 413. 8
The nuisance exception to the taking guarantee is not coterminous with the police
power itself. The question is whether the forbidden use is dangerous to the safety,
health, or welfare of others. Thus, in Curtin v. Benson, 222 U.S. 78 (1911), the Court held
that the Government, in prohibiting the owner of property within the boundaries of
Yosemite National Park from grazing cattle on his property, had taken the owner’s
property. The Court assumed that the Government could constitutionally require the
owner to fence his land or take other action to prevent his cattle from straying onto
others’ land without compensating him.…
Appellees are not prohibiting a nuisance. The record is clear that the proposed addition
to the Grand Central Terminal would be in full compliance with zoning, height
limitations, and other health and safety requirements. Instead, appellees are seeking to
preserve what they believe to be an outstanding example of beaux-arts architecture.
Penn Central is prevented from further developing its property basically because too
good a job was done in designing and building it. The city of New York, because of its
unadorned admiration for the design, has decided that the owners of the building must
preserve it unchanged for the benefit of sightseeing New Yorkers and tourists.

8 Each of the cases cited by the Court for the proposition that legislation which severely affects some landowners

but not others does not effect a “taking” involved noxious uses of property.

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Unlike land-use regulations, appellees’ actions do not merely prohibit Penn Central from
using its property in a narrow set of noxious ways. Instead, appellees have placed an
affirmative duty on Penn Central to maintain the Terminal in its present state and in
“good repair.” Appellants are not free to use their property as they see fit within broad
outer boundaries but must strictly adhere to their past use except where appellees
conclude that alternative uses would not detract from the landmark. While Penn
Central may continue to use the Terminal as it is presently designed, appellees
otherwise “exercise complete dominion and control over the surface of the land,”
United States v. Causby, 328 U.S. 256, 262 (1946), and must compensate the owner for
his loss. “Property is taken in the constitutional sense when inroads are made upon an
owner’s use of it to an extent that, as between private parties, a servitude has been
acquired.” United States v. Dickinson, 331 U.S. 745, 748 (1947).
2
Even where the government prohibits a noninjurious use, the Court has ruled that a
taking does not take place if the prohibition applies over a broad cross section of land
and thereby “secure[s] an average reciprocity of advantage.” Pennsylvania Coal Co. v.
Mahon, 260 U.S., at 415. It is for this reason that zoning does not constitute a “taking.”
While zoning at times reduces individual property values, the burden is shared relatively
evenly and it is reasonable to conclude that on the whole an individual who is harmed
by one aspect of the zoning will be benefited by another.
Here, however, a multimillion dollar loss has been imposed on appellants; it is uniquely
felt and is not offset by any benefits flowing from the preservation of some 400 other
“landmarks” in New York City. Appellees have imposed a substantial cost on less than
one one-tenth of one percent of the buildings in New York City for the general benefit
of all its people. It is exactly this imposition of general costs on a few individuals at
which the “taking” protection is directed.…
As Mr. Justice Holmes pointed out in Pennsylvania Coal Co. v. Mahon, “the question at
bottom” in an eminent domain case “is upon whom the loss of the changes desired
should fall.” The benefits that appellees believe will flow from preservation of the
Grand Central Terminal will accrue to all the citizens of New York City. There is no
reason to believe that appellants will enjoy a substantially greater share of these benefits.

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If the cost of preserving Grand Central Terminal were spread evenly across the entire
population of the city of New York, the burden per person would be in cents per
year—a minor cost appellees would surely concede for the benefit accrued. Instead,
however, appellees would impose the entire cost of several million dollars per year on
Penn Central. But it is precisely this sort of discrimination that the Fifth Amendment
prohibits.
Appellees in response would argue that a taking only occurs where a property owner is
denied all reasonable value of his property. The Court has frequently held that, even
where a destruction of property rights would not otherwise constitute a taking, the
inability of the owner to make a reasonable return on his property requires
compensation under the Fifth Amendment. But the converse is not true. A taking does
not become a noncompensable exercise of police power simply because the
government in its grace allows the owner to make some “reasonable” use of his
property.…
C
Appellees, apparently recognizing that the constraints imposed on a landmark site
constitute a taking for Fifth Amendment purposes, do not leave the property owner
empty-handed. As the Court notes, the property owner may theoretically “transfer” his
previous right to develop the landmark property to adjacent properties if they are under
his control. Appellees have coined this system “Transfer Development Rights,” or
TDR’s.
Of all the terms used in the Taking Clause, “just compensation” has the strictest
meaning. The Fifth Amendment does not allow simply an approximate compensation
but requires “a full and perfect equivalent for the property taken.” Monongahela
Navigation Co. v. United States, 148 U.S., at 326.…
Appellees contend that, even if they have “taken” appellants’ property, TDR’s
constitute “just compensation.” Appellants, of course, argue that TDR’s are highly
imperfect compensation. Because the lower courts held that there was no “taking,”
they did not have to reach the question of whether or not just compensation has already
been awarded.…

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Because the record on appeal is relatively slim, I would remand to the Court of Appeals
for a determination of whether TDR’s constitute a “full and perfect equivalent for the
property taken.”
II
Over 50 years ago, Mr. Justice Holmes, speaking for the Court, warned that the courts
were “in danger of forgetting that a strong public desire to improve the public
condition is not enough to warrant achieving the desire by a shorter cut than the
constitutional way of paying for the change.” Pennsylvania Coal Co. v. Mahon, 260 U.S.,
at 416. The Court’s opinion in this case demonstrates that the danger thus foreseen has
not abated. The city of New York is in a precarious financial state, and some may
believe that the costs of landmark preservation will be more easily borne by
corporations such as Penn Central than the overburdened individual taxpayers of New
York. But these concerns do not allow us to ignore past precedents construing the
Eminent Domain Clause to the end that the desire to improve the public condition is,
indeed, achieved by a shorter cut than the constitutional way of paying for the change.
Notes and Questions
1. The Penn Central test. The Penn Central factors are generally listed as an
inquiry into “[1] the regulation’s economic effect on the landowner, [2] the
extent to which the regulation interferes with reasonable investment-backed
expectations, and [3] the character of the government action.” Palazzolo v.
Rhode Island, 533 U.S. 606, 617 (2001). The first factor concerns diminution of
value, an issue raised by Pennsylvania Coal. As you see, the Court resisted the
conceptual severance claim, rejecting the notion that “air rights” were
something to be evaluated independently of the property as a whole.
2. Distinct Investment-Backed Expectations. The meaning of the second
factor as something distinct from the first is a matter of debate. Unhelpfully,
the Court later described the question as being one of “reasonable” investmentbacked expectations in Kaiser Aetna v. United States, 444 U.S. 164, 175 (1979).

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The idea is frequently credited to an article by Frank Michelman, who argued
that the principle more accurately captures what may rise to the level of a taking
than simple diminution of value:
The customary labels—magnitude of the harm test, or
diminution of value test—obscure the test’s foundations by
conveying the idea that it calls for an arbitrary pinpointing of a
critical proportion (probably lying somewhere between fifty and
one hundred percent). More sympathetically perceived, however,
the test poses not nearly so loose a question of degree; it does not
ask “how much,” but rather (like the physical-occupation test) it
asks “whether or not”: whether or not the measure in question
can easily be seen to have practically deprived the claimant of
some distinctly perceived, sharply crystallized, investmentbacked expectation.
The nature and relevance of this inquiry may emerge more clearly
if we notice one other familiar line of doctrine … when a new
zoning scheme is instituted, for “established” uses which would
be violations were the scheme applied with full retrospective
vigor. The standard practice of granting dispensations for such
“nonconforming uses” seems to imply an understanding that
simply to ban them without payment of compensation, thus
seriously reducing the property’s market value, would be wrong
and perhaps unconstitutional. But a ban on potential uses not yet
established may destroy market value as effectively as does a ban
on activity already in progress. The ban does not shed its
retrospective quality simply because it affects only prospective
uses. What explains, then, the universal understanding that only
those nonconforming uses are protected which were
demonstrably afoot by the time the regulation was adopted? The
answer seems to be that actual establishment of the use
demonstrates that the prospect of continuing it is a discrete twig
out of his fee simple bundle to which the owner makes explicit

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reference in his own thinking, so that enforcement of the
restriction would, as he looks at the matter, totally defeat a
distinctly crystallized expectation.
Frank I. Michelman, Property, Utility, and Fairness: Comments on the Ethical
Foundations of “Just Compensation” Law, 80 HARV. L. REV. 1165, 1232-34 (1967)
(footnotes omitted); Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1005-06
(1984) (“A ‘reasonable investment-backed expectation’ must be more than a
“unilateral expectation or an abstract need.” (citing Webb’s Fabulous Pharmacies,
Inc. v. Beckwith, 449 U.S. 155, 161 (1980)). As the excerpted text notes, the
principle of nonconforming uses in zoning law reflects the importance of
property owner expectations in uses that preexist the arrival of new zoning
rules.
Michelman’s argument, and some precedent, suggests that investment-backed
expectations are less likely to be found where the property in question is
purchased against a backdrop of regulation. Does that mean that takings
challenges are doomed whenever the property is acquired after the offending
regulations are in place? In Palazzolo v. Rhode Island, 533 U.S. 606 (2001), the
Court held in the negative. Ever straining for eloquence, Justice Kennedy
concluded that “[t]he State may not put so potent a Hobbesian stick into the
Lockean bundle.… Were we to accept the State’s rule, the postenactment
transfer of title would absolve the State of its obligation to defend any action
restricting land use, no matter how extreme or unreasonable. A State would be
allowed, in effect, to put an expiration date on the Takings Clause. This ought
not to be the rule. Future generations, too, have a right to challenge
unreasonable limitations on the use and value of land.” Id. at 627.
3. Character of the Governmental Action. Here, too, the Court is less than clear,
as its example of how this factor might be weighed in the property owner’s
favor, a permanent physical invasion, was later held to be a taking as a
categorical matter in Loretto. That sort of invasion is juxtaposed against an
interference “from some public program adjusting the benefits and burdens of
economic life to promote the common good,” suggesting room for judgment

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when a program falls short (e.g., when someone is unfairly singled out for the
burdens, whether there is a reciprocity of advantage, etc.). See, e.g., Thomas W.
Merrill, The Character of the Governmental Action, 36 VT. L. REV. 649, 664 (2012)
(“Several lower courts have picked up on the idea that the character factor is
designed to measure the distributional impact of the challenged governmental
action. These courts favor broad-based laws that offer reciprocity of advantage
and find suspect laws that single out particular owners for severe burdens while
conferring benefits on others.”).
4. The Denominator Problem Revisited. Note that Justice Brennan has shifted
the Court’s position on the “denominator problem” closer to that of Justice
Brandeis in Pennsylvania Coal. “‘Taking’ jurisprudence,” he says, “does not divide
a single parcel into discrete segments and attempt to determine whether rights
in a particular segment have been entirely abrogated.”
If the appropriate denominator for regulatory takings analysis is “a single parcel,”
how do we define what a parcel is? Justice Brandeis argued that it would be
absurd to allow a property owner to frustrate otherwise permissible land-use
regulation by unilaterally dividing his interest into small enough pieces that one
of them would be sufficiently diminished in value to entitle the owner to
compensation. But what about the reverse? Could a state treat multiple
contiguous lots under common ownership as a single “parcel” for purposes of
takings analysis? Under certain conditions, the answer seems to be yes. In Murr
v. Wisconsin, 137 S.Ct. 1933 (2017), the Court held that where a land use
regulation mandating minimum buildable area requirements for sale or
development of waterfront lots provided that non-conforming contiguous lots
would be “merged” into a single parcel if they should come under common
ownership, the “merged” parcel, rather than the separate undersized parcel,
should serve as the denominator. Writing for a five-Justice majority, Justice
Kennedy explained how the Court reached this result:
“[N]o single consideration can supply the exclusive test for
determining the denominator. Instead, courts must consider a
number of factors. These include the treatment of the land under

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state and local law; the physical characteristics of the land; and
the prospective value of the regulated land. The endeavor should
determine whether reasonable expectations about property
ownership would lead a landowner to anticipate that his holdings
would be treated as one parcel, or, instead, as separate tracts. The
inquiry is objective, and the reasonable expectations at issue
derive from background customs and the whole of our legal
tradition.”
137 S. Ct. at 1945. How (if at all) does this test differ from the approach of Penn
Central? From Pennsylvania Coal?
5. Takings and Due Process inquiries distinguished. The question whether a
regulation amounts to a taking is distinct from the issue of whether it violates a
liberty or property interest under the Due Process Clause. The latter asks
whether the government may impose the challenged regulation at all. The
former identifies a subset of cases in which the government regulation is such
an intrusion as to require compensation.
In takings cases, you may encounter citations to Agins v. City of Tiburon for the
proposition that “[t]he application of a general zoning law to particular property
effects a taking if the ordinance does not substantially advance legitimate state
interests.” 447 U.S. 255, 260 (1980). Does this mean that compensation must
be paid if the state cannot meet a higher burden than the one required for
regulation under the Due Process Clause? No. In Lingle v. Chevron U.S.A. Inc.,
544 U.S. 528, 540-42 (2005), the Court observed the phrase was “regrettably
imprecise” and clarified that “it has no proper place in our takings
jurisprudence.”
6. Several articles report that the government generally prevails under the Penn
Central test in the lower courts. F. Patrick Hubbard et al., Do Owners Have A
Fair Chance of Prevailing Under the Ad Hoc Regulatory Takings Test of Penn Central
Transportation Company? 14 DUKE ENVTL. L. & POL’Y F. 121 (2003); Basil H.
Mattingly, Forum Over Substance: The Empty Ritual of Balancing in Regulatory Takings

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Jurisprudence, 36 WILLAMETTE L. REV. 695 (2000). One such study argues that
calling the factors a balancing test misstates what is actually going on.
The analysis reveals that the Courts of Appeals for the First,
Ninth, and Federal Circuits, and the trial courts within the Ninth
Circuit, all decided Penn Central cases utilizing fewer than three
factors in a majority of the cases reaching the merits: on average,
the circuit courts of appeals utilized three factors only slightly
more than one-third of the time (37.8%). Complementing these
findings is data on how often the courts actually applied Penn
Central as a balancing test. The data shows that applying Penn
Central as a balancing test is statistically rare. Averaging the cases
that reached the merits of a takings claim, the courts applied Penn
as a balancing test less than 7% of the time. As an average
percentage of cases applying all three Penn Central factors (cases
that themselves are less than half of all cases reaching the merits),
courts applied it as a balancing test less than 14% of the time.
Together this data indicates that the predominant practice of the
federal courts is not to use Penn Central as a balancing test.
Adam R. Pomeroy, Penn Central After 35 Years: A Three Part Balancing Test or A
One Strike Rule?, 22 FED. CIRCUIT B.J. 677, 704 (2013). Pomeroy argues that
regulatory takings claims prevail only when the court concludes that the
regulation looks like an act that is normally a taking as a categorical matter. Id.
at 696 (“It seems that instead of balancing factual situations, the courts of
appeals have found regulatory takings under Penn Central only when a claim falls
barely short being a taking under one of the categorical rules.”).

B. Categorical Rules
As discussed in Notes 1-2 on pages 851-853, there are a few crystalline rules in the
otherwise muddy field of regulatory takings law. The first is the rule of Loretto:
regulations that impose a permanent physical occupation of private property are per se
takings. The second is the rule of Hadacheck (discussed by both opinions in Penn Central):

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regulations that abate a nuisance are per se not takings. The following cases introduce
additional categorical rules, and in so doing attempt to impose a new gloss on both the
Loretto and the Hadacheck rules.

1. “Wipeouts”
Lucas v. South Carolina Coastal Council
505 U.S. 1003 (1992)
Justice SCALIA delivered the opinion of the Court.
In 1986, petitioner David H. Lucas paid $975,000 for two residential lots on the Isle of
Palms in Charleston County, South Carolina, on which he intended to build singlefamily homes. In 1988, however, the South Carolina Legislature enacted the Beachfront
Management Act, S.C.Code Ann. § 48–39–250 et seq. (Supp.1990), which had the direct
effect of barring petitioner from erecting any permanent habitable structures on his
two parcels. See § 48–39–290(A). A state trial court found that this prohibition
rendered Lucas’s parcels “valueless.” App. to Pet. for Cert. 37. This case requires us to
decide whether the Act’s dramatic effect on the economic value of Lucas’s lots
accomplished a taking of private property under the Fifth and Fourteenth
Amendments requiring the payment of “just compensation.” U.S. Const., Amdt. 5.
I
A
South Carolina’s expressed interest in intensively managing development activities in
the so-called “coastal zone” dates from 1977 when, in the aftermath of Congress’s
passage of the federal Coastal Zone Management Act of 1972, 86 Stat. 1280, as
amended, 16 U.S.C. § 1451 et seq., the legislature enacted a Coastal Zone Management
Act of its own. See S.C.Code Ann. § 48–39–10 et seq. (1987). In its original form, the
South Carolina Act required owners of coastal zone land that qualified as a “critical
area” (defined in the legislation to include beaches and immediately adjacent sand
dunes, § 48–39–10(J)) to obtain a permit from the newly created South Carolina Coastal

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Council (Council) (respondent here) prior to committing the land to a “use other than
the use the critical area was devoted to on [September 28, 1977].” § 48–39–130(A).
In the late 1970’s, Lucas and others began extensive residential development of the Isle
of Palms, a barrier island situated eastward of the city of Charleston. Toward the close
of the development cycle for one residential subdivision known as “Beachwood East,”
Lucas in 1986 purchased the two lots at issue in this litigation for his own account. No
portion of the lots, which were located approximately 300 feet from the beach, qualified
as a “critical area” under the 1977 Act; accordingly, at the time Lucas acquired these
parcels, he was not legally obliged to obtain a permit from the Council in advance of
any development activity. His intention with respect to the lots was to do what the
owners of the immediately adjacent parcels had already done: erect single-family
residences. He commissioned architectural drawings for this purpose.
The Beachfront Management Act brought Lucas’s plans to an abrupt end. Under that
1988 legislation, the Council was directed to establish a “baseline” connecting the
landward-most “point[s] of erosion ... during the past forty years” in the region of the
Isle of Palms that includes Lucas’s lots. S.C.Code Ann. § 48–39–280(A)(2) (Supp.1988).
In action not challenged here, the Council fixed this baseline landward of Lucas’s
parcels. That was significant, for under the Act construction of occupiable
improvements was flatly prohibited seaward of a line drawn 20 feet landward of, and
parallel to, the baseline. § 48–39–290(A). The Act provided no exceptions.
B
Lucas promptly filed suit in the South Carolina Court of Common Pleas, contending
that the Beachfront Management Act’s construction bar effected a taking of his
property without just compensation. Lucas did not take issue with the validity of the
Act as a lawful exercise of South Carolina’s police power, but contended that the Act’s
complete extinguishment of his property’s value entitled him to compensation
regardless of whether the legislature had acted in furtherance of legitimate police power
objectives. Following a bench trial, the court agreed. Among its factual determinations
was the finding that “at the time Lucas purchased the two lots, both were zoned for
single-family residential construction and ... there were no restrictions imposed upon
such use of the property by either the State of South Carolina, the County of Charleston,

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or the Town of the Isle of Palms.” The trial court further found that the Beachfront
Management Act decreed a permanent ban on construction insofar as Lucas’s lots were
concerned, and that this prohibition “deprive[d] Lucas of any reasonable economic use
of the lots, ... eliminated the unrestricted right of use, and render[ed] them valueless.”
The court thus concluded that Lucas’s properties had been “taken” by operation of the
Act, and it ordered respondent to pay “just compensation” in the amount of
$1,232,387.50.
[The Supreme Court of South Carolina reversed, concluding that regulation “to prevent
serious public harm” is not a taking regardless no matter the effect on property
values.].…
III
A
Prior to Justice Holmes’s exposition in Pennsylvania Coal Co. v. Mahon, 260 U.S. 393
(1922), it was generally thought that the Takings Clause reached only a “direct
appropriation” of property, Legal Tender Cases, 12 Wall. 457, 551 (1871), or the
functional equivalent of a “practical ouster of [the owner’s] possession,” Transportation
Co. v. Chicago, 99 U.S. 635 (1879). Justice Holmes recognized in Mahon, however, that
if the protection against physical appropriations of private property was to be
meaningfully enforced, the government’s power to redefine the range of interests
included in the ownership of property was necessarily constrained by constitutional
limits. If, instead, the uses of private property were subject to unbridled,
uncompensated qualification under the police power, “the natural tendency of human
nature [would be] to extend the qualification more and more until at last private
property disappear[ed].” These considerations gave birth in that case to the oft-cited
maxim that, “while property may be regulated to a certain extent, if regulation goes too
far it will be recognized as a taking.”
Nevertheless, our decision in Mahon offered little insight into when, and under what
circumstances, a given regulation would be seen as going “too far” for purposes of the
Fifth Amendment. In 70–odd years of succeeding “regulatory takings” jurisprudence,
we have generally eschewed any “ ‘set formula’ “ for determining how far is too far,

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preferring to “engag[e] in ... essentially ad hoc, factual inquiries.” Penn Central
Transportation Co. v. New York City, 438 U.S. 104, 124 (1978) (quoting Goldblatt v.
Hempstead, 369 U.S. 590, 594 (1962)). We have, however, described at least two discrete
categories of regulatory action as compensable without case-specific inquiry into the
public interest advanced in support of the restraint. The first encompasses regulations
that compel the property owner to suffer a physical “invasion” of his property. In
general (at least with regard to permanent invasions), no matter how minute the
intrusion, and no matter how weighty the public purpose behind it, we have required
compensation. For example, in Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S.
419 (1982), we determined that New York’s law requiring landlords to allow television
cable companies to emplace cable facilities in their apartment buildings constituted a
taking even though the facilities occupied at most only 1 ½ cubic feet of the landlords’
property.
The second situation in which we have found categorical treatment appropriate is
where regulation denies all economically beneficial or productive use of land. As we
have said on numerous occasions, the Fifth Amendment is violated when land-use
regulation “does not substantially advance legitimate state interests or denies an owner
economically viable use of his land.” Agins, supra, 447 U.S., at 260 (citations omitted)
(emphasis added). 7

7 Regrettably, the rhetorical force of our “deprivation of all economically feasible use” rule is greater than its

precision, since the rule does not make clear the “property interest” against which the loss of value is to be
measured. When, for example, a regulation requires a developer to leave 90% of a rural tract in its natural state,
it is unclear whether we would analyze the situation as one in which the owner has been deprived of all
economically beneficial use of the burdened portion of the tract, or as one in which the owner has suffered a
mere diminution in value of the tract as a whole. (For an extreme—and, we think, unsupportable—view of the
relevant calculus, see Penn Central Transportation Co. v. New York City, 42 N.Y.2d 324, 333–334, 366 N.E.2d 1271,
1276–1277 (1977), aff’d, 438 U.S. 104 (1978), where the state court examined the diminution in a particular
parcel’s value produced by a municipal ordinance in light of total value of the takings claimant’s other holdings
in the vicinity.) Unsurprisingly, this uncertainty regarding the composition of the denominator in our “deprivation”
fraction has produced inconsistent pronouncements by the Court. Compare Pennsylvania Coal Co. v. Mahon, 260
U.S. 393, 414 (1922) (law restricting subsurface extraction of coal held to effect a taking), with Keystone Bituminous
Coal Assn. v. DeBenedictis, 480 U.S. 470, 497–502 (1987) (nearly identical law held not to effect a taking); see also
id., at 515–520 (REHNQUIST, C.J., dissenting); Rose, Mahon Reconstructed: Why the Takings Issue is Still a
Muddle, 57 S.Cal.L.Rev. 561, 566–569 (1984). The answer to this difficult question may lie in how the owner’s

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We have never set forth the justification for this rule. Perhaps it is simply, as Justice
Brennan suggested, that total deprivation of beneficial use is, from the landowner’s
point of view, the equivalent of a physical appropriation. See San Diego Gas & Electric
Co. v. San Diego, 450 U.S., at 652 (dissenting opinion). “[F]or what is the land but the
profits thereof[?]” 1 E. Coke, Institutes, ch. 1, § 1 (1st Am. ed. 1812). Surely, at least,
in the extraordinary circumstance when no productive or economically beneficial use
of land is permitted, it is less realistic to indulge our usual assumption that the legislature
is simply “adjusting the benefits and burdens of economic life,” Penn Central
Transportation Co., 438 U.S., at 124, in a manner that secures an “average reciprocity of
advantage” to everyone concerned, Pennsylvania Coal Co. v. Mahon, 260 U.S., at 415. And
the functional basis for permitting the government, by regulation, to affect property
values without compensation—that “Government hardly could go on if to some extent
values incident to property could not be diminished without paying for every such
change in the general law,” id., at 413—does not apply to the relatively rare situations
where the government has deprived a landowner of all economically beneficial uses.
On the other side of the balance, affirmatively supporting a compensation requirement,
is the fact that regulations that leave the owner of land without economically beneficial
or productive options for its use—typically, as here, by requiring land to be left
substantially in its natural state—carry with them a heightened risk that private property
is being pressed into some form of public service under the guise of mitigating serious
public harm.…
We think, in short, that there are good reasons for our frequently expressed belief that
when the owner of real property has been called upon to sacrifice all economically

reasonable expectations have been shaped by the State’s law of property—i.e., whether and to what degree the
State’s law has accorded legal recognition and protection to the particular interest in land with respect to which
the takings claimant alleges a diminution in (or elimination of) value. In any event, we avoid this difficulty in the
present case, since the “interest in land” that Lucas has pleaded (a fee simple interest) is an estate with a rich
tradition of protection at common law, and since the South Carolina Court of Common Pleas found that the
Beachfront Management Act left each of Lucas’s beachfront lots without economic value.

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beneficial uses in the name of the common good, that is, to leave his property
economically idle, he has suffered a taking. 8
B
The trial court found Lucas’s two beachfront lots to have been rendered valueless by
respondent’s enforcement of the coastal-zone construction ban. 9 Under Lucas’s theory
of the case, which rested upon our “no economically viable use” statements, that
finding entitled him to compensation. Lucas believed it unnecessary to take issue with
either the purposes behind the Beachfront Management Act, or the means chosen by
the South Carolina Legislature to effectuate those purposes. The South Carolina
Supreme Court, however, thought otherwise. In its view, the Beachfront Management
Act was no ordinary enactment, but involved an exercise of South Carolina’s “police
powers” to mitigate the harm to the public interest that petitioner’s use of his land
might occasion.… [and] within a long line of this Court’s cases sustaining against Due
Process and Takings Clause challenges the State’s use of its “police powers” to enjoin
a property owner from activities akin to public nuisances. See Mugler v. Kansas, 123 U.S.
623 (1887) (law prohibiting manufacture of alcoholic beverages); Hadacheck v. Sebastian,
239 U.S. 394 (1915) (law barring operation of brick mill in residential area); Miller v.
Schoene, 276 U.S. 272 (1928) (order to destroy diseased cedar trees to prevent infection

8 Justice STEVENS criticizes the “deprivation of all economically beneficial use” rule as “wholly arbitrary,” in

that “[the] landowner whose property is diminished in value 95% recovers nothing,” while the landowner who
suffers a complete elimination of value “recovers the land’s full value.” This analysis errs in its assumption that
the landowner whose deprivation is one step short of complete is not entitled to compensation. Such an owner
might not be able to claim the benefit of our categorical formulation, but, as we have acknowledged time and
again, “[t]he economic impact of the regulation on the claimant and ... the extent to which the regulation has
interfered with distinct investment-backed expectations” are keenly relevant to takings analysis generally. Penn
Central Transportation Co. v. New York City, 438 U.S. 104, 124 (1978). It is true that in at least some cases the
landowner with 95% loss will get nothing, while the landowner with total loss will recover in full. But that
occasional result is no more strange than the gross disparity between the landowner whose premises are taken
for a highway (who recovers in full) and the landowner whose property is reduced to 5% of its former value by
the highway (who recovers nothing). Takings law is full of these “all-or-nothing” situations.…
9 This finding was the premise of the petition for certiorari, and since it was not challenged in the brief in

opposition we decline to entertain the argument in respondent’s brief on the merits that the finding was erroneous.

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Property

of nearby orchards); Goldblatt v. Hempstead, 369 U.S. 590 (1962) (law effectively
preventing continued operation of quarry in residential area).
It is correct that many of our prior opinions have suggested that “harmful or noxious
uses” of property may be proscribed by government regulation without the
requirement of compensation. For a number of reasons, however, we think the South
Carolina Supreme Court was too quick to conclude that that principle decides the
present case. The “harmful or noxious uses” principle was the Court’s early attempt to
describe in theoretical terms why government may, consistent with the Takings Clause,
affect property values by regulation without incurring an obligation to compensate—a
reality we nowadays acknowledge explicitly with respect to the full scope of the State’s
police power.…
The transition from our early focus on control of “noxious” uses to our contemporary
understanding of the broad realm within which government may regulate without
compensation was an easy one, since the distinction between “harm-preventing” and
“benefit-conferring” regulation is often in the eye of the beholder. It is quite possible,
for example, to describe in either fashion the ecological, economic, and esthetic
concerns that inspired the South Carolina Legislature in the present case. One could
say that imposing a servitude on Lucas’s land is necessary in order to prevent his use
of it from “harming” South Carolina’s ecological resources; or, instead, in order to
achieve the “benefits” of an ecological preserve. Whether one or the other of the
competing characterizations will come to one’s lips in a particular case depends
primarily upon one’s evaluation of the worth of competing uses of real estate. A given
restraint will be seen as mitigating “harm” to the adjacent parcels or securing a “benefit”
for them, depending upon the observer’s evaluation of the relative importance of the
use that the restraint favors. Whether Lucas’s construction of single-family residences
on his parcels should be described as bringing “harm” to South Carolina’s adjacent
ecological resources thus depends principally upon whether the describer believes that

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the State’s use interest in nurturing those resources is so important that any competing
adjacent use must yield. 12
When it is understood that “prevention of harmful use” was merely our early
formulation of the police power justification necessary to sustain (without
compensation) any regulatory diminution in value; and that the distinction between
regulation that “prevents harmful use” and that which “confers benefits” is difficult, if
not impossible, to discern on an objective, value-free basis; it becomes self-evident that
noxious-use logic cannot serve as a touchstone to distinguish regulatory “takings”—
which require compensation—from regulatory deprivations that do not require
compensation. A fortiori the legislature’s recitation of a noxious-use justification cannot
be the basis for departing from our categorical rule that total regulatory takings must
be compensated. If it were, departure would virtually always be allowed. The South
Carolina Supreme Court’s approach would essentially nullify Mahon’s affirmation of
limits to the noncompensable exercise of the police power. Our cases provide no
support for this: None of them that employed the logic of “harmful use” prevention
to sustain a regulation involved an allegation that the regulation wholly eliminated the
value of the claimant’s land.
Where the State seeks to sustain regulation that deprives land of all economically
beneficial use, we think it may resist compensation only if the logically antecedent
inquiry into the nature of the owner’s estate shows that the proscribed use interests
were not part of his title to begin with. This accords, we think, with our “takings”
jurisprudence, which has traditionally been guided by the understandings of our citizens
regarding the content of, and the State’s power over, the “bundle of rights” that they
acquire when they obtain title to property. It seems to us that the property owner
necessarily expects the uses of his property to be restricted, from time to time, by
various measures newly enacted by the State in legitimate exercise of its police powers;

12 In Justice BLACKMUN’s view, even with respect to regulations that deprive an owner of all developmental

or economically beneficial land uses, the test for required compensation is whether the legislature has recited a
harm-preventing justification for its action. Since such a justification can be formulated in practically every case,
this amounts to a test of whether the legislature has a stupid staff. We think the Takings Clause requires courts
to do more than insist upon artful harm-preventing characterizations.

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“[a]s long recognized, some values are enjoyed under an implied limitation and must
yield to the police power.” Pennsylvania Coal Co. v. Mahon, 260 U.S., at 413. And in the
case of personal property, by reason of the State’s traditionally high degree of control
over commercial dealings, he ought to be aware of the possibility that new regulation
might even render his property economically worthless (at least if the property’s only
economically productive use is sale or manufacture for sale). See Andrus v. Allard, 444
U.S. 51, 66–67 (1979) (prohibition on sale of eagle feathers). In the case of land,
however, we think the notion pressed by the Council that title is somehow held subject
to the “implied limitation” that the State may subsequently eliminate all economically
valuable use is inconsistent with the historical compact recorded in the Takings Clause
that has become part of our constitutional culture.
Where “permanent physical occupation” of land is concerned, we have refused to allow
the government to decree it anew (without compensation), no matter how weighty the
asserted “public interests” involved—though we assuredly would permit the
government to assert a permanent easement that was a pre-existing limitation upon the
land owner’s title. We believe similar treatment must be accorded confiscatory
regulations, i.e., regulations that prohibit all economically beneficial use of land: Any
limitation so severe cannot be newly legislated or decreed (without compensation), but
must inhere in the title itself, in the restrictions that background principles of the State’s
law of property and nuisance already place upon land ownership. A law or decree with
such an effect must, in other words, do no more than duplicate the result that could
have been achieved in the courts—by adjacent landowners (or other uniquely affected
persons) under the State’s law of private nuisance, or by the State under its
complementary power to abate nuisances that affect the public generally, or otherwise.
On this analysis, the owner of a lake-bed, for example, would not be entitled to
compensation when he is denied the requisite permit to engage in a landfilling
operation that would have the effect of flooding others’ land. Nor the corporate owner
of a nuclear generating plant, when it is directed to remove all improvements from its
land upon discovery that the plant sits astride an earthquake fault. Such regulatory
action may well have the effect of eliminating the land’s only economically productive
use, but it does not proscribe a productive use that was previously permissible under
relevant property and nuisance principles. The use of these properties for what are now

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expressly prohibited purposes was always unlawful, and (subject to other constitutional
limitations) it was open to the State at any point to make the implication of those
background principles of nuisance and property law explicit. In light of our traditional
resort to “existing rules or understandings that stem from an independent source such
as state law” to define the range of interests that qualify for protection as “property”
under the Fifth and Fourteenth Amendments, this recognition that the Takings Clause
does not require compensation when an owner is barred from putting land to a use
that is proscribed by those “existing rules or understandings” is surely unexceptional.
When, however, a regulation that declares “off-limits” all economically productive or
beneficial uses of land goes beyond what the relevant background principles would
dictate, compensation must be paid to sustain it.
The “total taking” inquiry we require today will ordinarily entail (as the application of
state nuisance law ordinarily entails) analysis of, among other things, the degree of harm
to public lands and resources, or adjacent private property, posed by the claimant’s
proposed activities, see, e.g., Restatement (Second) of Torts §§ 826, 827, the social value
of the claimant’s activities and their suitability to the locality in question, see, e.g., id., §§
828(a) and (b), 831, and the relative ease with which the alleged harm can be avoided
through measures taken by the claimant and the government (or adjacent private
landowners) alike, see, e.g., id., §§ 827(e), 828(c), 830. The fact that a particular use has
long been engaged in by similarly situated owners ordinarily imports a lack of any
common-law prohibition (though changed circumstances or new knowledge may make
what was previously permissible no longer so, see id., § 827, Comment g. So also does
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