Property

Property Notes and Outline Bruce Kennedy L3010 530-2736 Exams: 10/8/97 25% of grade mid term: Short answers Material on the mid-term except the rule of perpetuities will not be revisited on the final 12/11/97 75% of grade. Final exam: Short & Long essay, everything but estates. WEEK OF 8/25/97 PHILOSOPHY OF PROPERTY AS A SOCIAL INSTITUTION A) What is Property (pp. 2-11) Lawyers think of property as bundles of rights. What are the legal rights of the owner to the land: 1) Right to exclude (keep people off of it) 2) Right to use (enjoy) a) Derivative is the right to fruits & profits 3) Right to occupy 4) Right to alienate (sell, lease, mortgage, etc.) These rights are limited (Setbacks, sidelots, before you can build on property) 1) You can only exclude certain people (not police, minorities, etc.) 2) Zoning limits what you can do on the property. 3) You can’t use the property to for illegal activities 4) Restraints on alienation are limited in some areas a) Limited: Must execute a deed, or will to transfer ownership b) Substantive: Racial covenants can’t be enforced. B) RIGHTS IN PROPERTY ARE EXCLUSIVE, BUT NOT ABSOLUTE 1) Exclusive: The owner can use the property as they see fit. 2) Absolute: Because the state cannot exercise limits on these rights. Expectation of the use of the property plus the expectation of excluding others from the use of the property. The potential for interference is too great and is not backed up by law. Property is a social expectation base on a legal relationship. State: has many hats; it is the defender of property; but the state reserves the right to regulate property for the public interest (and the size of the property interest gets less and less); the state can be taker (because of regulation of property) C) Economic Analysis of the Law (p. 6) 1) Universality: Should be as wide as possible and allow to meet market needs. Private Property is essential because: every civilization has had private property (too allocate resources) 2) Exclusivity: The more exclusive a property is the more efficient the use of the property will be 3) Transferability: If there is no way to transfer property around, it won’t be used efficiently State v. Shack (p. 14) Under this principle, an owner of property has no right to maintain a nuisance, to violate a building code, or to violate any laws regarding the general public welfare. The rule used is the based on the rationale that “property rights serve human values. They are recognized to that end and are limited by it.” A central concern is the welfare of the migrant workers. They are generally “outside of the mainstream of the community in which they are housed and are unaware of their rights and opportunities, and of the services available to them.” The statute is clear that the D’s are guilty, and declines to go after amendment rights, they looked at it from a landlord-tenant theory (court declines because they saw the migrants and owner as employment). The court looks at it as a conflict between liberty interest of the workers and the property owner. The derivative they used is that dominion over property does not include dominion over the occupants. Property owner rights do not defeat a state interest. Powell (P. 18) quote: “…Such an owner must expect to find absoluteness of his property rights curtailed by the organs of society, for the promotion of the best interests of others for whom these organs also operate to protect agencies.” D) The Method of Freedom (p. 43) What are usually discussed as rights are liberties. Therefore, you have to depend on people who have an economic stake in the property to defend it. This is in harmony with the economic basis of property. Posner: would allow for the accumulation of wealth with no restraint Lippman: would want to put the brakes on accumulation of property. E) Seligman, Principles of Economics (p. 38) 1) Occupation theory of private property is that property belongs by rights to the person who first takes it. 2) Natural Rights Theory: Private property is a natural right. 3) Labor Theory: the real title to private property is derived from the toil and trouble experienced in creating it. 4) Legal Theory: says that whatever is recognized, as such by the law is rightfully private property. 5) Social Utility Theory: Society invokes all these theories because society sees the rights as social progress F) Ely, Property & Contract in Their Relation to the Distribution of Wealth (p. 39) Property is an exclusive but not absolute right. 2 sides of Private property: 1) Individual side: eminent domain, and taxes. 2) Universal side: W/o it the state could not finance it’s own operations G) Morris R. Cohen, Property and Sovereignty (p. 40) The state must intervene to protect private property, otherwise property would become valueless. The state sometimes limits private property to foster communal rights. These are hard to see, because our freedoms came from the state through struggles. Agrees that state actions can be rooted in self interests and need private property for a tax base and eminent domain. H) Real v. Personal property 1) REAL: Immovable: land and attachments. Permanent, stationary and controlled in a limited way (Came from English Law 2) PERSONAL: Movables: chattels. Temporary, fungible, can be consumed or destroyed (came from ecclesiastical law) I) 2 types of action on Property 1) Real Actions: (in rem) recovery of the thing itself. Land = Real estate 2) Personal Actions (in personam) compensatory recovery. Chattel = Personaltee a) Chattels can be converted to real property. (roof shingles, dishwasher, etc.) (What if a renter puts a dishwasher in a house, can they recover it as chattel? In some cases yes, some no) What is the precise relationship of the parties involved in relation to the object? J) Tangible v. Intangible 1) Tangible 2) Intangible: Intellectual property, easements, etc. K) Sole v. Concurrent Ownership 1) Sole: (one person owns the property) 2) Concurrent (Husband & wife as tenants by the entirety) The exact interest is that the H & W have an undivided interest in the property. 3) Concurrent (Larry Moe & Curly are joint tenants) L) Present v. Future Interests (Possessory – they both have an interest the court will enforce now – if A starts destroying property – B can take A to court to stop the action (A has a future interest) 1) Present: G gives the land to A for life (A can sell his life interest to C) 2) Future: and G gives the land to B for the remainder M) Division between legal and equitable property interests 1) Legal Interest: Settlor grants interest in Blackacre to A in trust to pay income to B for life. A is the legal owner of Blackacre and is the trustee, and B is the beneficiary. 2) Equitable Interest: If there is a problem with the income to B, them B can go into a court of equity to clear this up. N) Geographic Divisions: Separate piece of Blackacre can be sold: i.e. air rights, subsurface rights, surface rights. If the neighbor who lives next to mine (Whiteacre) does something to interfere with my property, I will have the right to lateral support O) Reich, The New Property (p. 66) Reich wants to consider the entitlements (the stream of wealth from government) as property. If we create these forms of property, we will do this at the costs of old forms of property. This leads to the Moore case P) Moore v. Regents of the University of California (p. 68) The natural cell was used to build an artificial cell (Property). The court said the natural cell was not property, and the artificial cell becomes property. Very quickly after a natural cell is taken, it changes drastically. If the focus is on the patients cells, his cells died, and he insisted that he had a property interest in the cells. This came against patent law (Patents can only come for man made items). The valuable part of the cell line was created by the Dr. not by the patient. The value of the product is attributable to the disease. How do you value the property at the time of conversion. The spleen had some value, but not much. The spleen could be considered some personal property. Should the disease be held in public trust? The best clue to solve the problem of the disease is to have the spleen to study it against a normal spleen. 8/27/97 There is no logic in personal property Focus on concepts of ownership and possession. What is the context in which these words are used. Possession: of drugs, of a duck, and of a house. A) The Acquisition of Property (p. 95) Goddard v. Winchell (New Property) (p. 97) Doctrine of title by Accretion: the owner of the soil owns what ever they find on it. (What is added to land naturally is the landowners) Items such as these belong to the owner of the soil where they are found. Title by Accretion indirectly determines the owner of the object. The public policy of this is a rule of convenience and allows the extension of property ownership with clarity and surety Title by occupancy: the first occupant may claim to title of things found in nature. Title by occupancy directly determines the owner of the object. Public policy awards the initiative of the discoverer. If this was applied there would be a number of suits similar to this each year. The court decided title by Accretion. The natural process ended when the meteorite was embedded in the ground. The finder may or may not have been a trespasser. If he were found to be a trespasser then he would not get the meteorite. The buyer would not have good title to the property if the seller (trespasser) did not (Accretion) Immovable found in the soul belong to the owner of the soil (Occupancy) Movables not otherwise owned belong their possessor. Possession is indipustable proof of occupancy Eads v. Brazelton (Abandoned Property) (p. 102) P has no legal right to defend the cargo, so the find that the lead was abandoned. P had the intent to possess, but he did not take control of the property. P achieved an expectancy of economic gain. P could claim for interference with expected economic gain (tort). If the true owner claimed the property once salvaged, does he have a claim. There must be a manifestation that the true owner intends the abandonment of the property. The key to abandonment is intent. Abandoned property can be occupied is: 1) have the intent to possess the property, and 2) take control of the property. You do not need to seize the property, but take steps to take control of the property. Possession is a finding of fact. Policy actual taking v. possession. The law wants to reward those who bring property to society. Hunting Cases: Capturing or killing an animal is possession. Chasing the animal is not possession. If you capture an animal and it escapes (unless domesticated) you do not have possession. The concept to abandonment is only to chattel. You can’t abandon land. Armory v. Delamirie (Lost Property) (p. 106) This is a different case because it is lost property. 1) Ownership refers to a relationship among people and not a relationship between a person and a thing. The court is saying the finder is the owner in relation to the goldsmith, but not in relation to the person who lost the property. A policy reason for the case is to reestablish the status quo peacefully. (the goldsmith must return the object to the chimneysweep). 2) The idea is that the sweeps ownership interest is not absolute, but if the goldsmith had not been forced to return the jewel, he would have sold it at full profit. The court wants to avoid profiting by the goldsmith. 3) The true owner could sue the goldsmith because the true owner’s ownership is still primary. Development of the English Law Findings Bridges v. Hawkesworth (Position of Finder of Lost Property) (p. 107) The difference between this and Amory is that there is a landowner involved here. The position of the shopkeeper according the court was that he had to vest his ownership position before the finder. The court said that the shopkeeper has a right to the property when the goods are put under the care of the shopkeeper (this creates a bailment). The finder of lost goods does not gain title to the found property, but he has a right to possession of the property against everyone except the true owner. He does not become the owner, but is instead, the bailee of the property for the owner. Bailment is a situation where the owner of goods, the bailor, delivers the property to the bailee, in trust, for the bailee to keep the goods or dispose of them under the direction of the true owner. Although the lost property situation does not, of course, involve an express Bailment agreement between the owner and the finder, the fiction is used to give the finder the right to possession with the duty to preserve the property for the true owner. The finder will be guilty of conversion if he appropriates the chattel to his own use with knowledge of who the true owner is, or if the finder is reasonably able to discover the true owner’s identity and fails to do so. The weight of authority holds that when, as in this case, a person finds a chattel on the property of another, he is entitled to the chattel unless he is a trespasser when he makes the find. Prior possessors have a superior position against subsequent possessors. South Staffordshire Water Co. v. Sharman (Finder of Lost Items) (p. 108) The landowner wins this case (inconsistent with Bridges), the court reconstrues Bridges because of the following: This case is distinguishable from the Bridges case. In Bridges, the shop was open to the public, and the finder, as well as all others, was invited in. In the present case, the rings were found on land that was not open to the public and were found by employees who were under the control of P. The essential difference is that P manifested control over the land and its content, whereas Hawkesworth, being a public shopkeeper, had not. Public /Private place distinction is not a helpful distinction. Develops a modern idea of lost and found on their land. Landowners tend to exclude people from land, and this extends to the lost property on their land. The reason this is important is that the general rule is that prior possessors have better rights than previous possessors. Hannah v. Peel (Owners rights to lost items on land) (p. 111) This court reads the dicta in Sharman as a holding. Said that the finders action were more meritorious than the owner of the property. The landowner did nothing about the broach, because he knew nothing about the finding of the broach. Despite the court’s statement this case is in conformity with the ruling of South Staffordshire Water Co. in that case, the finder was an employee or agent of the landowner, the landowner had been in possession of the land, and the lost article was attached to the land by being in the mud and under the water. In this case, the finder was on the land rightfully and was independent of the owner, the owner had never been in possession of the land, and the broach was unattached to the land. The court found that the broach had been involuntarily lost, rather than voluntarily misplaced, so the finder would have possession. McAvoy v. Medina (Title of Lost Goods to the Finder) (p. 114) The court is correct at the time of the case. The court awards the property to the landowner on the idea it is mislaid property. The focus of lost or misplaced property cased is to determine whether it is likely that the true owner can ever be found. Because the finder was the first in possession, he has supreme rights. On the other hand, where goods have been voluntarily placed and then forgotten, the true owner is much more likely to be found. As the true owner would be more likely to return to where he remembered placing the article, the owner of the premises is seen as a bailee for the true owner. Schley v. Couch (Treasure Trove) (p. 115) Texas does not follow the rule of treasure trove, but adjudicates possession of buried money by the usual rule pertaining to lost or misplaced property. If the circumstances indicate the money was voluntarily placed there and then forgotten it has been misplaced and the owner of the property will have possession. If the circumstances indicated, the money was involuntarily placed there, then it was lost and the finder has possession. Money buried in glass jars indicates that it was misplaced. If there had been sufficient lapse of time since it was buried, it could be deemed to be lost. In this case, the money was buried during WW2, which is too short a time to be considered lost property. The money was deemed to be in the bailment of D (landowner). Lost Property: Involuntarily placed. Mislaid Property: the property that is intentionally placed where the owner can get it at a later date. Volition rather than intent defines mislaid property. Determining lost versus mislaid property: This is tough since it is so subjective. Q) Legislation on Lost and Found Articles (p. 122) There are statutes on lost property, because the common law idea is real screwy. The police become the bailment for the property. R) Creation of Bailments (p. 126) Statutes create more problems. Bailment the rightful possession of personal property by one who is not the owner Bailor = Owner. Bailee holds the property for a certain purpose with the idea that the property will be returned to the bailor after that purpose is accomplished. Duties are: 1) Exercise a certain level of care over the bailed chattel (this varies with the benefit of the bailment – if the bailment is for the sole benefit of the bailor he is only liable for gross negligence – if it is mutually beneficial bailee is held to ordinary negligence --if sole benefit of bailee he is held for even slight negligence.) 2) Return the chattel to the bailor on demand (where a bailee sells a chattel to another or delivers it to the wrong person he is guilty of conversion is is held strictly liable.) This is easy if it is a voluntary bailment it becomes questionable with an involuntary bailment – bailee does not know who the bailor is – but the rule is held to (good faith, absence of malice don’t matter)) S) Elements of create a bailment 1) Delivery of physical control over the chattel, coupled with 2) An intent on part of the bailee to exercise control Bailments can arise 1) Voluntarily by contract (storage of furniture) 2) Voluntarily without a contract (possession of chattel changes hand and a bailment is implied in fact -borrow a neighbors car) 3) Involuntarily: Bailee takes up chattel and the bailment is implied in law (finding something) Bailment is not: 1) Held in trust 2) A sale 3) A lease 4) Custody (trying on clothes in a dept. store) Involuntary bailment: If the bailee is not aware of the property, he has not accepted the bailment. Voluntary Bailments 1) Bailment solely benefit of bailor: Gross negligence 2) Don burns up neighbors lawnmower: Liable with slight negligence Week of 9/2/97 Allen v. Hyatt-Regency-Nashville Hotel (p. 126) Issue: Is it a bailment? In a bailment, there is a statutory assumption of negligence. With a payment by both parties, the standard of care is for ordinary negligence. The court takes the position in favor of the bailor because he doesn’t have a clue of what happened to his property, only the bailee would know for sure. There is divided control in a case like this, the bailor has control of the key. This makes these cases very difficult to figure out. An alternative is to look at this as tort law, and negligence, not property law. A tort would create a duty of care, and the loss could be spread through the cost of parking tickets. The court also said that by private action the parties (by conduct or contract) did not impose a bailment. However, the court found that the garage did control the vehicle. Note 2 (a): Note 2 (b): Review this is a K Note 2 (c): Bailee is under mistake as to the value of the object, this does not relieve him of his duty. How Bailments work: Idea Parking lots Valet Parking: The valet has physical control of the car and intends to control it. Park & Lock Case: Usually found that these are found as Bailments, even if the garage did not have the keys. Because they did have control in a garage situation this could be found to be a bailment. Football Game: Vacant lot turns into a parking lot. You keep the key and the lot is unattended. This is not a bailment, it is a license to use the land of another. Bailment Problems A) Does a bailment exist? Are the definitional elements satisfied? 1) Delivery of Physical Control of Chattel 2) Intent to Exercise Control B) If bailment exits, what is scope of bailment? What chattel is included in the bailment? 1) Concealed property problem – usually no bailment 2) Mistake of Value Problem – Usually no defense C) If Bailment exists, What standard of liabilities applies? 1) Misdelivery Traditional Rule Strict Liability Minority Rule (Involuntary Bailment) negligence 2) Duty of Care Beneficiary Threshold Standard of Liability Bailor Bailee Gross Negligence Mutual Bailee’s Ordinary Negligence Bailee Bailee’s Slight Negligence D) Given Appropriate standard of care, who has burden of Proof? How is burden satisfied? Courts Recognize: Bailor’s Problem of proof and come to the rescue with presumptions 1) Proof of non-delivery raises presumption of Bailee’s negligence 2) Return of damages goods raises presumption of Bailee’s negligence Usually presumption – once rebutted by evidence is dead and of no effect and jury must weigh actual proof. BONA FIDE PURCHASE (p. 135-136) Which party is should really own the property? The point is that like all ownership interests the court is looking to the relationship between the parties, not with the chattel or real property. No one can convey better title than one has, but substantial deviations from this principle have occurred. This comes into focus when someone steals something, and sells the goods to a fence or a bona fide purchaser (pays full price and has no knowledge that the seller is without title). The thief has void title, so the purchaser would have void title. This means that the true owner’s title continues. Exceptions have now come about in the modern rule. This is very apparent In fraud cases. These were done because of the needs of commerce not to be slowed down. A pure person does not have to prove title. 1) Fraud: Hypo O owns diamonds and by fraudulent means is induced to sell them to C (C has voidable title at this point) Then C sells them to P, a bona fide purchaser (He gets good title) By implication C’s title is no longer. As of the 2 parties P is blameless and if O had been more careful, the chain of events would have never taken place. There is still a cause of action against C for conversion as well as theft. 2) Estoppel: O gives diamonds to J to display and take offers (entrustment). P comes in and buys them. J was not empowered to sell the goods (limited agent) J takes off and O sues P. On these facts O would be estopped from claiming the item against P. The common law says that J is seen by P to be the owner or authorized to sell (because he led P to believe he had this authority). UCC §2-403: broadened this by saying that this is OK as long as a) J is a merchant, and b) he is a merchant of these goods. Legal Title: The formal right of ownership of property. Title is the means whereby the owner of lands has the just possession of his property. Equitable Title: a right in the party to whom it belongs to have legal title transferred to him; or the beneficial interest of one person whom equity regards as the real owner, although the legal title is vested in another. (i.e. mortgage with a bank) Among competing equities the senior prevails UNAUTHORIZED POSSESSION Possession Deemed Ownership as to Third Party (pp. 145-148) Replevin: An action whereby the owner or person entitled to repossession of goods or chattels may recover those goods or chattels from one who has wrongfully taken or who wrongfully detains such goods or chattels. Also can refer to a provisional remedy that is an incident of replevin action allowing the P at any time before judgement to take the disputed property from the D and hold the property contingent on the outcome of the lawsuit. Anderson v. Gouldberg (p. 145) Majority Rule: The idea is P has lawful possession and from that lawful possession, he has that carries a rebuttable ownership interest. The only way that D can rebut that title is by being the true owner or acting on behalf of the true owner Issue: 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. Rule: One who has acquired the possession of property, whether by finding or by bailment, or mere tort, has a right to retain that possession as against a mere wrongdoer who is a stranger to the property Analysis: P brought an action to recover possession of 93 pine logs (or their value) from D. P claimed he cut the logs in a specific area of Isanti County and had hauled them to a mill in the area. P showed no authorization from the landowner to cut the logs. D claims the logs were actually cut on the property of the Ann River Logging Company (which was adjacent to the property P claimed to cut the logs on), and that they took the logs from the P at the direction of the Ann River Logging Company. The trial court said that “even if P got possession of the logs as a trespasser, his title would be goods as against any except the real owner or some one who had authority from the owner to take them, and left the case for the jury to decide. The jury found for the P and assessed his damages at $153.45. D appealed after their motion for a new trial was denied. Conclusion: The court said that all facts from the trial court are assumed correct, and that the Ps obtained possession of the logs in the 1st instance by trespassing on the land of some 3rd party. To maintain replevin the P’s possession must be lawful (lawful against the person who deprived him of it), and possession is good title against all except those having better title. One who takes property from the possession of another can only rebut this presumption of title by showing superior title in himself, or in some way connecting himself with one who has. The court created a judicial forum to allow the true owner to make a claim of possession. One who has acquired the possession of property, whether by finding or by bailment, or mere tort, has a right to retain that possession as against a mere wrongdoer who is a stranger to the property. Order affirmed. Russell v. Hill (p. 146) Minority Rule: The P’s title , by possession , that give rebuttable title, but the court will allow the D to rebut by claiming a superior title to the true owners title by appealing to the rights of a stranger. Trover: The recovery of damages against a person who had found another’s goods and wrongfully converted them to his own use. Issue: Can the illegal possessor of property bring an action of trover against someone who takes it from them without permission? Rule: Only the real owner can bring trover against D. Before the P could recover in an action of trover, he had to show both title and possession or the right to possession. Analysis: In 1887 Busbee, received a grant from the state for land. Iowa McCoy made a subsequent application and received a grant from the state for part of the land that Busbee originally was granted. Busbee was the owner of the land (because he had the grant, which was properly registered, and registered before Mrs. McCoy’s). Mrs. McCoy sold Russell (P) timber on the land that was granted to her and Busbee, and P cut the timber and took it to the river to float it down to a furniture company in Asheville. While the logs were on the bank of the river, Ds, w/o any claim of right or title to them from Busbee, or any one else, took the logs w/o Ps consent and sold them to a Lumber company in Asheville for $686.84. The company at the time of the trial was insolvent. The trial court found that on the facts that the P could not recover. Conclusion: The S.C. of N.C. felt that there was no error in the ruling of the lower court. Busbee was the owner of the land, Mrs. McCoy was not in possession. If she had been in adverse possession, the title to the logs would have passed to the P, and he would have won. At that point, Busbees’ only alternative would have been to proceed against Mrs. McCoy. Only the real owner can bring trover against D. Before the P could recover in an action of trover, he had to show both title and possession or the right to possession. Similar cases that are contrary to this bring up Armory. In that case the owner was not known, and it was properly found that trover was in favor of the finder against the D. But that court said, the case would have been different if the owner was known. Affirmed There is no distinction between the cases here. Bailee: Person entrusted with property Bailor: Person whose property is borrowed Adverse Possession (pp. 162-165) ADVERSE POSSESSION: Is a legal mechanism that allows someone who possesses land or chattel for a long period to transmute possessory title to actual title. The doctrine is related to, but different from statute of limitations. This begins from the first time that the cause of action accrued. If the owner does not Statute of limitation denies the owner any legal remedy (He Adverse Possession not only denies the owner any legal remedy but it also extinguishes his title Chapin v. Freeland (p. 149) The law was that the statute of limitations barred a remedy. But the courts decided to change the law with the rule by enlarging the statute of limitations by shifting title of property as well as barring remedy (this operates similar to adverse possession) Holmes felt that it was inconsistent. Adverse possession has 2 purposes: 1) Bar stale claims. Reliance interest of possessor 2) The need to periodically clear land titles. (This is one way) Bundles required for adverse possession 1) The possession must a) have certain type of physically characteristics b) be exclusive c) be actual 2) Person on possession must be under a hostile possession 3) They must possess under some claim of right 4) The possession must be continuous 5) The possession must last for the length of the statutory period or longer. (The statute of limitation can be tolled or stopped for certain reasons, i.e. a minor, disability) The Kind of land dictates what the physical characteristics are 1) Fencing the land satisfies in farm areas, but not in urban settings 2) Taxes, no requirement that the adverse possessor pay taxes 3) How the adverse possessor reacts with the rest of the world (do they act to the rest of the world like a real owner (open and notorious acts) 4) Must have exclusive control, he does not share the property with someone else against the true owner 5) Possession must be actual, Adverse possessor must use a reasonable portion of the land 6) Constructive possession: The deed doesn’t accurately describe the land. The courts are willing to extend the land boundaries to what the owner thought they had 7) The possession must be hostile (inconsistent to the owners rights and without his consent) REVIEW THE SUPPLEMENTAL MATERIAL ON THE INTERNET Chattel is different than Land when it comes to adverse possession. How do you meet the criteria if personal property is being claimed by adverse possession. (A ring in a drawer is not open, notorious and hostile possession) Court described the permissive use as voluntary bailment Week of 9/8/97 Snowball Corporation v. Pope (p. 162) This case illustrates how adverse possession works with land Quiet Title: judicial determination that P is legal owner of this parcel of land. Pope defense is adverse possession, which is common defense for quiet title actions. Statute of Limitations: usually 21 years on land, here is 10 years. Snowball argues should not apply since they were unaware. Where unawareness is factor in adverse possession, are cases where activity of adverse possessor is hidden so really don’t know adverse possession is going on. Court here said statute of limitations is not tolled by the fact that the true owner was unaware, otherwise would have to throw out whole doctrine of adverse possession. Elements of Adverse Possession: Burden of Proof on the adverse possessor 1) Notorious: Popes lived on and used the property for 35 years, and the town board knew it as well as numerous residents in the areas. 2) Exclusive: Only one entity claims possession adversely (Only the Popes claimed the land) 3) Open and Visible Possession: it is necessary and sufficient if its nature and character is such as is calculated to apprise the world that the land is occupied and who the occupant is. Basic requirements are same for land as for chattels, but some parts of equation are more complicated when get to land, because each piece of land has its own character and that affects how people can use it in open, notorious and visible ways to establish an adverse possession. TITLE BY ACCESSION Improving Another’s Property by Mistake (p. 167-175) Wetherbee v. Green (p. 167) True owner wants to recover the hoops. D willing to pay for price of raw wood ($25) but D doesn’t want to turn over hoops because more valuable. ISSUE: Can the innocent improver (who in good faith, mistakenly takes & dramatically improves raw property) gain title to property they have greatly improved? Yes POLICY INTERESTS that support innocent improver to gain title are: 1) Unjust enrichment to true owner if property is returned to him, over compensates true owner beyond the extent of his true loss. 2) Forfeiture of value on the part of the person, who made the improvements, penalizes the involuntary improver too severely. GENERAL RULE: One whose property has been appropriated by another without authority has the right to follow it and recover possession from anyone who may have received it. Provided there has been no destruction of its substantial identity. Exception: I own stick of walnut wood and someone takes it and makes a pipe organ from it, I can follow it as long as it has not been so changed as to destroy its’ substantial identity. We now have a collision of rules: After substantial change in identity, only have to compensate the original owner for the input, the raw materials. Original owner loses title to the raw goods, and the improver gains title to the improved goods. Line drawing problem: TWO PRINCIPLES OF LAW Someone wrongfully deprived of property can go find it. On the other hand someone who improves property a great deal can lay claim to title to it as against the owner of the raw materials. How do you draw the line? Blackstone defines improver’s rights – new product belongs to the new operator, but still has to make restitution for the value of goods converted, the raw materials. Theme behind his idea is Physical Transformation what the thing evolves to. Civil Law: Looks at whether the property can return to the original state 1) No one can obtain title by accession unless the raw materials are taken in innocence 2) He transforms into a form which could not be restored in the original condition Both are talking about physical transformation, but looking at it from different points of view. What if willfully appropriates then improves the property? What are his rights in relation to the true owners? 1) Willful improver loses it all. Goes back to true owner. Confusion of Goods – where fungible goods are mixed together, usually of different quality? Rights of parties If cannot identify own goods, a person without fraud or intentional wrong doing or reckless disregard, commingles his goods with the goods of another – so there is confusion – so they cannot be distinguished, still can be protected to the extent that the law can. But must be innocent, in good faith. Court will try to separate the goods if they can be identified, if not will make some kid of reasonable partition or reasonable restitution. Traditional CL rule: if have willful, fraudulent or malicious commingling courts will allow no remedy at all. The true owner takes everything. Courts arbitrarily determine if the gods have been physically transformed, grain into malt, money into a silver cup, timber into a house all are transformations. Cloth into garment or leather into shoes is not. This court thinks is the wrong standard to look at. Better way to gauge whether or not goods are transformed is an economic analysis – is a comparative value test. Compare value of raw material to the value of the improved goods. If its great then there has been a transformation. Here relative value is 1:24. That’s what case is often cited for. Both the use of the economic standard to gauge when goods are transformed to shift title to the improver and the relative value needed to actually shift title. If it is a factor of 2 or 3, courts reluctant to shift title, but if factor of 20 they are. If improver can gain title to property thru dramatic improvement the next question is whether compensation is available for labor spent to improve property. This issue in: Isle Royale Mining Company v. Hertin (p. 171) Issue: Whether, as the result of an honest mistake regarding a property rights, a person in good faith performs labor on the property of another, the benefit of which I appropriated by the original owner, the person performing such labor is entitled to be compensated to the extent of the benefit received by the owner? Rule: The Doctrine of Accession states that the exception to this rule is that under certain circumstances, a trespasser can take title of property of another, where in good faith he has expended his own labor on the object, under circumstances which would make it grossly unjust to permit the other party to appropriate the benefit of such labor. Analysis: In the winter of 1873-74 D’s by mistake, who originally were the P’s in this suit, made a mistake regarding the location where they cut at least a cord of wood, which they hauled and piled on the bank of the Portage river. The land really belonged to the mining company. The next spring the wood was Conclusion: The common law says that when a person goes on the land of another on an assumption of ownership, though in perfect good faith and under honest mistake as to his rights, he may be held responsible as a trespasser. His good faith does not excuse him from the payment of damages. The Doctrine of Accession states that the exception to this rule is that under certain circumstances, a trespasser can take title of property of another, where in good faith he has expended his own labor on the object, under circumstances which would make it grossly unjust to permit the other party to appropriate the benefit of such labor. Hardy v. Burroughs (p. 173) Issue: Can the P, the builder, bill the P, except on grounds of fraud or estoppel growing out of the conduct of the real owners of the land? Rule: Equitable relief: It isn’t equitable that D’s should profit by Ps’ innocent mistake, that Ds take all and Ps take nothing Analysis: P constructed a house on a specific lot, and the lot was owned by Ds. The Ps built the house on the lot by mistake. P sold the house on land contract to Tanhersley. The value of the house was $1,250, and D decided not to make any adjustment with the P for improving the land. There was no fraud, and no estoppel. DONATIVE TRANSFERS (p. 176-198) Gift: a voluntary transfer of property without consideration or compensation. Can be real property or personal property. If real property the law insists upon either Deed or Will. The concern at this point of class is the donative transfer of chattels. 2 kinds of gifts 1) Inter-vivos: ordinary gifts between the living. Are unconditional and irrevocable property transfers 2) Causa mortis: gifts made in contemplation of death of the donor. Are revocable if the threat which prompted the donor to make the gift subsides, the donor survives. In most jurisdictions, gifts causa mortis are automatically revoked if the donor survives. 3 elements needed to complete a valid Gift 1) Delivery: the object must be delivered to the donee by the donor 2) Donative Intent: the transfer be motivated by the gratuitous desire of the donor to transfer ownership 3) Acceptance: the donee accepts ownership of the gift. Burden of proof on the donee to establish the elements The requirements are intended to cloak gifts with legal solemnity and to deny effect to light hearted transfers. 4 Policy reasons why courts want to restrain gift transfers 1) Much of the law of gifts is intended to protect donors from their own impulsive behavior (donors are children) 2) Courts want to protect property owners, heirs, creditors who might have some interest in property from false claims by donees (collateral interest in property) Courts sensitive to gift causa mortis where donor is dead, and donor not in position to rebut donee’s assertion that it was a gift. An evidentiary problem. 3) Afford judges a measure of control over juries. Juries might improvidently determine gifts exits and the calmer/cooler heads of judges can impose legal rules to dispose of claims on legal grounds. 4) Gifts cause mortis raise additional concern because of their close resemblance and intrusion on the problem of wills. Are thought of as a “poor person’s will.” Difference between Wills and Gifts in causa mortis: 1) Gifts made by Will are highly formalized, and do not take effect until the execution of the document (Will) at death. AKA testamentary gifts. 2) Gifts in causa mortis take effect when the gift is completed, (delivery occurs, donative intent is satisfied, and acceptance). However, are revocable up until the donor’s death. 3) To protect integrity of the law of wills, courts have limited the scope of gifts in causa mortis as vehicles to transfer chattels. 9/8/97 Class A person who claims ownership by voluntary transfer must show that: 1) the transferor manifested intent to transfer the claimed interest and 2) that formalities required by common law or statute have been observed. In re Cohn (p. 176) Rule: Manual delivery of chattel is always good delivery. Is not always required. Can have symbolic gift transfer, believes is gratuitous promise to transfer property in future, that is unenforceable and the wife wants the gift. Analysis: The appeal involves the validity of a gift of certificates of stock, effected by the execution and delivery of an instrument of gift, unaccompanied by actual delivery of the certificates. On 9/20/1911 the decedent, Leopold Cohn, wrote out and delivered to his wife, in the presence of his entire family, on his wife’s birthday a letter stating that “ I give this day to my wife, Sara K. Cohn, as a present for her 46th birthday 500 shares of common American Sumatra Tobacco Company common stock.” The donor died 6 days after the delivery of the letter. The donor owned 7,213 shares of the stock, but the stock was in the name and possession of his firm and deposited in a safe deposit box in NYC, which was in the name of the firm. The firm’s principals included the donor, his brother Abraham and nephew Leonard and were dissolved by the death of Abraham on 8/30/1911. Prior to that time the firm owned 18,033 shares of stock. On 12/20/1910, the stock had been charged off on the books and was not an asset of the firm after that time. The testator was entitled to 40% of 7,213 shares, but there was never actual delivery by the firm to the donor in his lifetime. Just prior to his death the donor had agreed to go into a new partnership and was to contribute some of the shares of stock to the new company as an asset. On 9/22/1911, 2 days after the delivery of the letter to his, the donor directed his counsel to hurry the new partnership agreement, because he wanted to get the stock belonging to him, which was to be delivered when the new partnership agreement was signed. The donor died on 9/26/1911 before he could get delivery on the stocks. 2 of the donors daughters testified that the letter of the gift of 500 shares was given by their father to their mother. Conclusion: The writing was not prepared under seal by donor. If had been it would have satisfied requirements for delivery. The policy behind delivery requirement is evidence that rebuts fraud or mistake. Courts are primarily concerned with parol (oral) inter vivos gifts. In this case, delivery was adequate, although it was symbolic. Instrument clearly demonstrated donative intent and suggest that donor had relinquished dominion over the stock (property). Dissent: Looks at the business reality of the transaction. Leopold wanted to make gift and retain control, this can’t be done. Either he makes an irrevocable gift or not. No gift was given based on the letter alone. If the court has no gift on the facts, it only had the alternative of a promise to create a future gift. Gruen v. Gruen (p. 183) Issue: Is an inter vivos gift. Analysis: Between son and stepmother over gift of painting from father to son. Father wrote that gave son painting but wished to retain possession for his life. Father retained possession of painting, insured it, and allowed it to be exhibited, made repairs on it. Son never had possession during father’s life. Stepmother refused to relinquish after dad died, son brought action in replevin. Stepmother says that it is either an invalid will or an invalid inter vivos gift, because cannot inherently have an inter vivos gift that tenders possession upon the death of the donor. Conclusion: The differences in the intent behind inter vivos gift and gift by will are: 1) Inter Vivos Gift: intent to create present transaction, create a present existing ownership interest, just the possession/enjoyment of the painting would be postponed into the future. Is irrevocable. If father decided to sell the painting, the son could block the sale because the son has a future interest. 2) Father has a life estate: in the picture and the son has a remainder. As of the moment the gift is completed (all elements met), have an enforceable interest that the court recognizes. Not a promise to a future gift. Is a present gift of a future interest. 3) Intent behind Will: intent to take effect when Will becomes effective, at his death. If put in Will, the painting goes to my son, father can change Will at any time, and as often as he likes until death. Document does not take effect until he dies. Court does not find arrangement strange, these kinds of remainder interests commonly created with land, stock, bonds, etc. What stepmother wants is to deny same kind of from being created in ordinary chattels. Court finds no intellectual reason for treating chattels differently than other forms that already have recognized remainder interests. Defense argued that the gift was invalid because the father failed to make physical delivery of painting to son. Court rejected this, saying delivery is not required because subject matter of the gift does not include right to possession until father died. There is no reason to expect that the gift (possession) would be delivered. The letter was sufficient. Foster v. Reis (p. 185) gift causa mortis case Issue: Was delivery of the gift proper for causa mortis delivery? Rule: The elements of a causa mortis gift are: 1) Made in view of donor’s impending death 2) Donor must die of disorder 3) Delivery of the item 4) Donor must be competent to make the gift 5) Donor must intend to make the gift 6) Acceptance A valid gift causa mortis that is either a gift with possession in the donor until the donor dies, or a gift which vested possession with the donee, but which is defeasible if the donor lives. Does not matter who has possession. Analysis: On the facts of the case the court did not excuse the delivery requirement because when donee got note the donor was already under anesthetic and donee didn’t know where the property was before. The court would not allow a “license theory”, that the note created a license to have donee pick up property and then collectively the note and donee’s activity constitute delivery. Court said that the donor’s incapacity ends the agency without any kind of notice to the agent. Because this did not happen while she was conscious, won’t let agency theory satisfy the delivery requirement. Conclusion: Court test for delivery: Must be accomplished by the donor, cannot be by the donee. There must be some affirmative act of the donor, not just possession of the donee. She did not physically give the note to him. Court did not allow the note, to fulfill the requirement of delivery because it came to close to a Will. However, the note did mention the Will, donor thinks this is gift to be completed before anyone reads her Will. Court was concerned that the note could have bee construed as a renegade Will. Dissent: Would find a valid gift in causa mortis, on theory that note created a license for donee to go and peaceably take up the chattel, and once chattel taken up delivery is accomplished. Make reference that when great men check into hospitals they execute documents to make sure their affairs are handled while incapacitated and the court should not impose ancient techniques to defeat the relatively simple efforts of the humble people to try to arrange their affairs before they undergo a possibly fatal operation. Dissent aware that gifts causa mortis used as “Poor People’s Wills” and think they should be. Class 10/15/97 Concurrent Ownership (p. 316) There are 3 ways in which 2 or more people may own present possessory interests in the same property: A) Joint Tenancy (which includes the right of survivorship) B) Tenancy in Common (which does not have the right of survivorship) C) Tenancy by the Entirety (which exists only between husband and wife, and which includes not only survivorship but “indestructibility.” Tenancy Joint Tenancy By the Tenancy in Entirety Common Corporate Non-corporate Unity Unity (Survivorship) (No survivorship) Greater Lesser Fiduciary Fiduciary Duty Duty 1) Introduction to Concurrent Ownership (p. 316) A) Joint Tenancy: In a joint tenancy, 2 or more people own a single, unified interest in real or personal property. General attributes are: a) Survivorship: If there are 2 joint tenants, and one dies, the other becomes sole owner of the interest that the 2 of them had previously held. b) Possession: Each joint tenant is entitled to occupy the entire premises, subject only to the same right of occupancy by the other tenant(s). c) Equal shares: One joint tenant cannot have a ¼ interest say, with the other having a ¾ interest. d) Partitionable: Land (but not all land-i.e. a condominium) can be divided if both agree. Land can be divided in kind, or by sale and distribution of proceeds. (A semi-partition can take place by renting the land and splitting the rent among the co-tenants) e) Death of these agreements: 1) by survivorship, 2) all tenants give their rights to one person, 3) dismantling). Created by a single instrument and must be created in both or all-joint tenants at the same time. Language used: To A and B as joint tenants with the right of survivorship Unities of Joint Tenancy (modern courts are backing off of this, they are important regarding severance and conveyance.) 1) Unity of interest: the joint tenants had identical interests, both as to their share, and as to the duration of their interest. 2) Unity of title: the joint tenants each acquired title by the same deed or will. 3) Unity of time: Each joint tenant’s interest vested at the same time 4) Unity of possession: All the joint tenants had a right to possess and enjoy the entire property Conveyance by A to A and B: Common Law the owner cannot create a joint tenancy between himself and another by conveying “to A and B as joint tenants.” (Many states now allow this) Seised Pur My et Pur tout: (Not needed on exam) Severance can be accomplished and normally creates a tenancy in common. This can by done by: A) Conveyance by 1 joint tenant: A joint tenant may convey his interest to a 3rd party. 1) If there are 3 or more original joint tenants, a conveyance by one of them to a stranger will produce a tenancy in common as between the stranger and the remaining original joint tenants. B) Granting of mortgage: Courts are split as to whether this severs the joint tenancy. 1) Title Theory: The mortgage is treated as a conveyance, and thus severs the joint tenancy (so the mortgagee can foreclose on the undivided ½ interest of the mortgagor, but the interest of the other party is not affected) 2) Lien Theory: The mortgage does not sever the joint tenancy; in some but not all lien theory states, if the mortgagee dies first, the other joint tenant takes the whole property free an clear of the mortgage. C) Lease: Most courts seem to hold that a lease issued by one joint tenant does not act as a severance. B) Tenancy by the Entirety: at common law is a conveyance to 2 persons who are husband and wife results automatically in a “tenancy by the entirety.” This uses the 4 traditional unities and a 5th unity, the unity of person. This is to say that the husband and wife are seen as one person. 1) Usually abolished: Only 22 states retain the tenancy by the entirety. Even in those states, a conveyance to husband and wife does not necessarily create a tenancy by the entirety. Instead, there is usually just a rebuttable presumption that a conveyance to a husband and wife is intended to create a tenancy by the entirety. 2) Right of survivorship: in this is more durable than the joint tenancy, see the severance below. 3) Murder: Ends the right of survivorship at the time of the crime (one spouse murders another). 4) No severance: The essential feature to this is that it is not subject to severance. So long as both parties are alive, and remain husband and wife, neither can break the tenancy. Each spouse knows that if he or she survives the other, he/she will get a complete interest. Married Women’s Property Act: All states have enacted. This act gives women equality, and protects her assets from her husband’s creditors. C) Tenancy in Common: Each party has an equal interest in the whole in a “tenancy in common” each tenant has a separate “undivided” interest. 1) No right of survivorship: Each tenant in common can make a testamentary transfer of his interest; if he dies intestate, his interest passes under the statute of decent. 2) Unequal Shares: A and B may hold as tenants in common, with A holding an “undivided ¼ interest” and B an “undivided ¾ interest.” a) Rebuttable presumption of equality: If the conveyance does not specify the size of the interests, there is a rebuttable presumption that equal shares were intended. 3) Presumptions favoring the tenancies in common in most states, rather than joint tenancies, so long as the co-tenants are not husband and wife. However, this can be rebutted by clear evidence showing that the parties intended to create a joint tenancy. 4) Heirs: If the intestacy statute specifies that 2 persons are to take an equal interest as co-heirs, they take as tenants in common. Sample Grants CREATING JOINT TENANCY: To A & B Creates a Tenancy in Common Per statutory presumptioin favoring a T.I.C. over a Joint Tenancy (J.T.) To A & B jointly Creates a TIC insufficient expression of intent ot create a JT To A & B, as joint tenants May create To A & B, not as tenants in coomon This is the magic language byt as tennatns with righ of survivorship CREATING A TENENACY IN THE ENTIRETY Consult the stateutw of the relevant jurisdiciton to detering: 2) if the tenancy by the entirety has been abolished & 3) If not, what language is effective to crete the tenacy To H & W, husband and wife Creates T by th E by state un North Carolina To H & W, as tenats by the entireity Usually creates a T by the E, but creates only a joint tenacy in Conn. And NH To H & W, not as joint tenants or tenanfct in common but as tennats in the entirety Magic language 4) Marital Estates (p. 324) Common law system generally looks at the feudal system which gave the husband complete dominion over his wife’s property, by means of the following doctrines: 1) Personal property (coverture): All personal property owned by the wife at the time of the marriage became the property of the husband. 2) Real property (jure uxoris): The husband had the right to possess his entire wife’s lands during marriage, and to spend the rents and profits of the land as he wished. A) Dower & Curtesy (p. 324): A) Dower: Is a widow’s portion or interest in her husband’s real estate; a woman’s right to one-third of her husband’s lands or tenements of which he was seised (ownership and possession of real property under lawful title) in fee simple or fee tail at anytime during their marriage. This has been abolished in the majority of states. Any land owned in fee simple by a husband alone, or by the husband and a 3rd party as tenants in common, qualified. This gave a life estate in 1/3 of those lands to the wife. (There is no dower in life estate held by the husband, even if LE-PAV). Dower inchoate: Any conveyance of the freehold by H to a 3rd party did not affect the right of dower inchoate, so after H died W could still demand her dower rights from the person who bought from H. B) Curtesy: A husbands’ right to his deceased wife’s estate, dependent upon the birth of a child capable of inheriting the estate. A “curtsey initiate” exists when such a capable child is born, but before the wife dies. ‘After her death, the right is called a “curtsey consummate.” A widower (H) is entitled to a life estate in each piece of real estate in which W held a freehold interest during their marriage, provided the freehold was inheritable by issue born alive of the marriage (So if H and W were childless, and W predeceased H, H had no right of curtsey.) Abolished in most jurisdictions Practicality: Where dower and curtsey still exists, the main consequence is that both husband and wife must sign any deed if the recipient is to take free and clear of the right, even if only one spouse holds title. Modern “elective share” statutes: are substitutes for dower and curtesy. The surviving spouse has the right to renounce the will, and instead receive a designated portion of the estate. 1) Effect: One spouse cannot disinherit the other. 2) Size of share: The elective share is commonly ½ or 1/3 of both personal and real property. 3) Length of marriage is irrelevant: B) Homestead Rights (p. 325) Most states have enacted. Exempted property may not be seized and sold by creditors. Usually, the family’s residence is exempt from seizure, but only up to a certain dollar limit. Homestead exemptions do not bar a mortgagee from foreclosing – the exemption only protects against seizure by “general” or “unsecured” creditors. C) Community Property (p. 326) In Arizona, California, Idaho, Louisiana, New Mexico, Nevada, Texas, and Washington. The key is that property acquired during the marriage belongs jointly to husband and wife from the moment it is acquired. Upon divorce or death, the property is treated as belonging ½ to each spouse. 1) What is “community property:” All property acquired during marriage is presumed to be community property. The presumption can be rebutted by showing it falls within one of the class of separate property: a) Before marriage: Property acquired by either spouse before marriage is separate property. b) Gift or inheritance: Property acquired by gift, inheritance or bequest, even after marriage is separate property. c) Earnings: Income produced by either spouse’s labor is community property. 5) General Aspects of Concurrent Ownership (p. 328) In re: Estate of Michael (p. 328) (1966) Issue: Rule: By statute, tenancies in common are presumed, by the Act of 1812, which said that, survivorship in joint tenancies was eliminated unless the instrument creating the estate expressly provided that such incident should exist Analysis: On 2/24/47 real estate, known as King Farm, was deed to Harry and Bertha Michael (H & W), and Ford Michael (son) and Helen Michael (Ford’s wife). The deed said, “…Harry L. Michael and Bertha M. Michael, his wife, tenants by the entireties and Ford W. Michael and Helen M. Michael, his wife, as tenants by the entireties, with right of survivorship….” Harry died leaving his wife and two sons, Ford and Robert (appellant). Bertha died a 1 ½ years later. Her will (which was written after her Husband died) states: ‘…settle by estate in such way that my sons Ford … and Robert each receive an equal share of the same…executors shall use their own discretion in the matter…. “ Bertha’s guideline for this was “…my interest in the “King Farm”…go to Robert and the sum of $1,000.00, be paid to Ford…to balance this gift…” The 2 sons were appointed executors… a dispute arose as what, if any, interest Bertha…had in King Farm. The court held that the deed created a joint tenancy with right of survivorship between the 2 sets of husbands and wives. Robert said that the deed created a tenancy in common, each couple holding its undivided ½ interest as tenants by the entireties. Conclusion: At common law, joint tenancy was favored. The courts of the US have opposed joint tenancy. The presumption being that all tenants holds jointly as tenants in common, unless a clear intention to the contrary is shown. Penn. By the Act of 1812, survivorship in joint tenancies was eliminated unless the instrument creating the estate expressly provided that such incident should exist. The court in applying this to the facts failed to find sufficient clear expression of intent to create a right of survivorship, as required by case law. Laura v. Christian (p. 332) (1975) Rule: The foreclosure or tax title is not automatically held for the benefit of the other tenants, but they have a right to elect to contribute within a reasonable time after the sale; if they do so, they maintain their ownership interest. Analysis: P owned a ¾ and D a ¼ interest in Fireside Lodge. The property was subject to a mortgage, and both parties learned in 7/71, that there would be a foreclosure if the mortgage were not paid. In 4/72, the day before the scheduled foreclosure sale, P paid off the mortgage in order to save the property. Meanwhile, D learned the property had substantially increased in value as the result of development of an adjoining parcel of land. D waived until 1/73, then when P sued to quiet title for himself, D offered to pay his share of the mortgage. Conclusion: This was found for D. When P paid off the mortgage, he did so for the benefit of his co-tenant. D was required to elect whether to contribute within a reasonable time, his 9-month delay was not, however, unreasonable. Therefore he maintains his ¼ interest, but P has a lien on the property to ensure that D actually makes payments. Comment: Co-tenants are required to act towards each other in good faith. If they receive their interests at the same time, they will usually be held to be in a fiduciary relationship. One important consequence is that if one of them buys an outstanding interest, he holds that interest on behalf of all of them. Note #1 (p.334) Tax liens as well as debt are affected by the above rule. Note #2 (p. 334) Explore the relationship between co-tenants. There is a high duty of trust and fiduciary responsibility. Example: Joint tenancy between A, B & C. A goes insolvent and is forced to sell to Y. Y is now a tenant in common, and there is still a joint tenancy between B & C. B & C have a fiduciary duty to each other, but not to Y. Statute of Ann: in the U.S. the co-tenants are accountable for rents, farming and mining. In England, it does not give rise to any duty to account to co-tenants if they live on the property. If a co-tenant has denied possession, and the co-tenant has demanded re-entry. Mere occupancy is not enough, you need evidence of ouster. Where the co-tenants agree that 6) Creation and Attributes of Concurrent Miller v. Riegler (p. 349) (1967) Issue: Can a holder of a fee simple create a joint tenancy in himself and another. Rule: Statutes and case law explicitly authorize the holder of a fee simple to create a joint tenancy in himself and another. Analysis: Mrs. Wagar, an elderly woman, had two nieces, P & D. She lived with D, and set up a joint checking account and joint safe deposit box, both in the names of herself and D. She also took half of her stock certificates and had the ownership changed to be “Mrs. Wagar and Mary Jane Riegler, as joint tenants with right of survivorship and not as tenants in common.” Mrs. Wager and D agreed that Mrs. Wagar would have full rights to the dividends for her life. The stocks and all dividends were kept in the safe deposit box. Mrs. Wagar died. D conceded that all property in the box belonged to the estate (of which P and D were both beneficiaries), except that she claimed that the stock was also part of the estate, on the grounds that the joint tenancy was simply for the convenience of Mrs. Wagar. Conclusion: Held for D. Although the other contents of the box were admittedly part of the estate, Mrs. Wagar manifested a clear intention that D would take the stock if she were to survive Mrs. Wagar. Testimony as to Mrs. Wagar’s intention was admissible; her accountant testified that her intent was to treat the stock as being in joint tenancy with D. In addition, the creation of the joint tenancy did not fail because of destruction of the “4 unities.” a) Unity of interest: the joint tenants had identical interests, both as to their share, and as to the duration of their interest. b) Unity of title: the joint tenants each acquired title by the same deed or will. c) Unity of time: Each joint tenant’s interest vested at the same time NOT MET d) Unity of possession: All the joint tenants had a right to possess and enjoy the entire property. 1) Mrs. Wagar used the magic language to setup a joint tenancy. But in addition, the testimony showed that she knew what she was doing. 2) The issue of the unities was discussed, because not all of the unities were met. Since Mrs. Wagar could have created the tenancy by conveying to a straw man (If Mrs. Wagar wished to create a joint tenancy in herself and D, she could have conveyed to a 3rd person or a “straw man” and in turn that 3rd person would convey to Mrs. Wagar and D) and having it re-conveyed to her and D as joint tenants, there is not sound reason to prevent this result form being accomplished directly, as a majority of states permits. 3) The fact that the dividends from the stock were to go solely to Mrs. Wagar does not mean that the stock itself was not in joint tenancy; joint tenants are always free to make any agreement they wish regarding use of the property, including its income. 10/20/97 Class Discussion Concurrent Ownership continued: Jackson v. O’Connell (p. 357) (1961) Issue: If there are three joint tenants, and one of the joint tenants conveys their interest in land to one of the other joint tenants, does the remaining joint tenancy survive? Rule: If there are three joint tenants. As to the interest conveyed by a joint tenant, the grantee becomes a tenant in common. However, as to the interest not conveyed the remaining joint tenancy survives Analysis: Neil Duffy devised to his sisters, Nellie, Anna, and Katherine, as joint tenants his property. Nellie then conveyed all her interest in the property to Anna. Anna then died, giving her interest in the property to her 4 nieces, Beatrice, Eileen, Catherine, and Margaret (Ps). The Ps sued Katherine, claiming that the conveyance by Nellie severed the entire joint tenancy, and that Anna thereby gained a 2/3 interest in the property held as tenants in common with Katherine’s 1/3 interest. The four Ps claimed that they each held a 1/6 interest. Conclusion: Held for Katherine. Nellie’s conveyance of her interests severed the joint tenancy, but only as to that share; Anna then held this share as a tenant in common with Katherine. However, as to the remaining interest in the property, Anna and Katherine continued to hold this interest (representing 2/3) as joint tenants. Katherine gained sole title to this 2/3 interest upon Anna’s death, so that the four Ps each hold only ¼ of 1/3 or 1/12. Matter of Estate of Vadney (p. 360) (1994) Issue: Rule: The state statute Analysis: Miss Vadney executes a deed conveying property to her and her son. Mrs. Vadney dies, and her will does not mention the property. The other children contend that the estate was only a tenancy in common. Was the deed effective in creating a joint tenancy? Does the grantor Conclusion: Mann v. Bradley (p. 389) (1975) Issue: May a joint tenancy be terminated by mutual agreement, and may such an agreement to dissolve a joint tenancy and joint the property as tenants in common be inferred from the manner in which the parties deal with the property? Rule: A joint tenancy may be terminated by mutual agreement, and an agreement to dissolve a joint tenancy and hold the property as tenants in common may be inferred from the manner in which the parties deal with the property. Analysis: Betty and Aaron (D) Mann held their residence in joint tenancy. When they later divorced, they entered into a court approved agreement whereby their residence was to be sold and the proceeds divided equally between them, if and when any of the following occurred: 1) Betty remarried 2) Their younger child attained age of 21, or 3) They mutually agreed to sell. Betty lived in the house with her children (P) until her death. D advised the children (P) that, due to the joint tenancy survivorship provisions, he now owned the house. The administrix (P) and the children (P) successfully quieted title in themselves on the theory that the divorce settlement had the legal effect of converting the joint tenancy in common so that Betty’s interest passed to the children (P) upon her death. The court of appeals affirmed. Aaron (D) petitioned for a writ of certiorari. He argued that the property had remained in joint tenancy since none of the three contingencies stipulated in the divorce settlement had occurred. Conclusion: The modern tendency is not to require the act of the co-tenant to be destructive of one of the fourth essential unities of 1) time, 2) title, 3) possession, or 4) interest. Rather, the parties’ intent to dissolve is sufficient. The divorce agreement provided for the ultimate sale of the property and the division of the proceeds. It evinced the intent to no longer hold the property in joint tenancy as of the agreement’s date. The whole tenor of the agreement’s provisions – despite the three eventualities stated – was inconsistent with the continuance of the right of survivorship that is essential to a joint tenancy. Affirmed. Discussion: There can be no severance of a tenancy by the entireties since both the husband and wife own the whole and not shares, a joint tenancy may be severed because a joint tenant both owns the whole and also his proportionate share. Any joint tenant may sever his interest and defeat the right of the other joint tenant’s right of survivorship. Note #1(p. 391): Divorce alone does not sever a joint tenancy. Duncan v. Vassaur (p. 392) (1976) Issue: After killing her husband, Betty Vassaur claimed he rights of survivorship in their property which had been in joint tenancy. Rule: By the criminal homicide of his fellow co-tenant, the guilty party receives no right of survivorship since he has severed the joint tenancy by an act inconsistent with its continued existence. Analysis: Edgar Vassaur, Jr. and Betty Vassaur, spouses, owned property as joint tenants. After being charged with 1st degree manslaughter of Edgar, Betty conveyed the property to her father, Duncan (P). Edgar Vassaur, Sr., (D), the administrator claimed ownership of ½ of the property, as well as liens on the victim’s insurance and the proceeds of a loan. Duncan (P) brought a quiet title action. Edgar, Sr. (D) asserted the above claims in his answer and cross petition. The trial court ruled for Duncan (P) who had demurred and moved for judgement on the pleadings. Edgar Sr. (D) appealed, arguing that the “slayer statute” forbade a killer from claiming his victim’s estate; and that by killing Edgar Jr.; Betty had severed the joint tenancy. Conclusion: A number of states have varying views on this issue. They range from entitling the murderer to keep the property, though placing it in a constructive trust for the victim’s estate or following the above stated rule. The court is of the opinion that the solution is not only equitable in denying a murderer the fruits of his crime but comports with reason in that one must be survivor. Accordingly, the Supreme Court of Oklahoma reversed and remanded with instructions to allow Duncan (P) the opportunity also to prove that he was a bona fide purchaser of the property. Comment: There is a conflict in the few cases dealing with the murder of one joint tenant by another. While some cases hold that a murderer forfeits all interest to the victim’s representatives, others give him the entire interest as the survivor. Many of the statutes designed to deny a murderer his rights in cases of succession do not cover the joint tenancy situation and the cases must be determined on a nonstatutory basis. Misconduct If there is misconduct by a beneficiary against a settlor, courts have imposed constructive trusts against the property so the beneficiary cannot benefit from his wrong. (Constructive trusts are a remedy courts use to prevent unjust enrichment. This is raised by a court of equity against a person who obtains or holds legal title to property through fraud, abuse of confidence, or some other unconscionable conduct, that is, title which in good conscience he should not hold.) This approach leaves many questions unanswered in the court system. The questions are: 1) What bad actions disqualify the wrongdoer? 2) What property interests are affected? 3) What is the effect of applying the statute? 4) Is a bona-fide purchaser who takes property from a wrongdoer protected? In re: Estate of Safran (p. 194) (1981) Issue: Should a beneficiary under a will, who is found to have caused the death of the testator by reckless conduct be able to take under the provisions of the Will? Rule: It must be proven that a beneficiary under a Will unlawfully and intentionally killed the testator in order to cut off his rights under the will. The proof must be by “clear and convincing” evidence. Wisc. Law: “…the murderer may take under the will, but that he takes subject to a constructive trust imposed for the benefit of alternate beneficiaries…” Intentional killer shall be disqualified from inheritance. The Wisconsin laws “reflect a legislative intent to limit disqualification to intentional killers. If that rule is to be extended to include some of the degrees of negligent homicide, that change should be made by the legislature…” Uniform Probate Code §2-803 (p. 198) Effects of homicide on Intestate Succession, Wills, Trusts, Joint Assets, Life Insurance, and Beneficiary Designations. “…a surviving spouse, heir or devisee who feloniously and intentionally kills the decedent is not entitled to any benefits under the will…” The official comment is confined to “intentional and felonious homicide, and excludes the accidental manslaughter killing…” §2-803(b): an individual who feloniously and intentionally kills the decedent forfeits all benefits…with respect to the decedent’s estate. §2-803(d): a severance does not affect a 3rd party interest in property acquired for value and in good faith reliance on an apparent title by survivorship in the killer…” Constructive Trust: is done by operation of law, and imposed by a court on the property. It requires the holder of the property to transfer the property back to the victim. 5) Condominiums and Time Share Arrangements (p. 398) Cooperatives and condominiums: A) Cooperatives: usually refers to a means of owning a multi-dwelling (i.e. apartment house). A cooperative corporation owns the building. Each resident of the building must be a shareholder in the corporation. a) Proprietary lease: the corporation is the lessor and the shareholder is lessee. The lease usually provides that its continuance depends on the lessee’s continuing to be the holder of the same shares in the corporation. b) Board’s right of approval: A key feature to a cooperative form of ownership is that the board of directors or the entire body of shareholders have the right to approve or reject any proposed sale of share in the corporation. This in essence gives the cooperative the right to choose their neighbors. B) Condominium: is a form of ownership in which each individual resident holds a fee simple in a certain physical space or parcel, but all the residents collectively own certain “common areas.” These are welded together. These are not partionable. a) High rise apartments: b) Horizontal management: c) Charges: the association sets charges to defray the cost of maintaining the common areas. But maintenance of the interior living unit is the responsibility of the individual resident. Centex Homes Corp. v. Boag (p. 399) (1974) Issue: Will the remedy of equitable performance lie for the enforcement of a contract for the sale of a condominium apartment? Rule: The equitable remedy of specific performance will not assert for the enforcement of a contract for the sale of a condominium apartment as it has no unique quality and damages at law are adequate. Analysis: On 9/13/73 Boag (D) contracted to purchase a condominium from Centex (P) for $73,700. Before the signing of the contract D had given a $500, deposit to P and after the signing of the contract gave D and additional $6,870. The 2 amounts totaled 10% of the purchase price. After this D was transferred from NYC to Chicago, and he cancelled the $6,870 check and told P that he was not going to buy the condo. P sued D for specific performance of the purchase agreement or in the alternative for liquidated damages of $6,870 and moved for a summary judgement. Conclusion: The mutuality of remedy concept has been the prop that has supported equitable jurisdiction to grant specific performance in actions by vendors of real estate. It is not essential that the remedy be mutual as the rule is satisfied if the decree of specific performance operates effectively against both parties and gives each the benefit of a mutual obligation. The effective disappearance of the mutuality of remedy doctrine from our law dictates that specific performance relief should no longer be automatically available to a seller of real estate, but should be confined to those special instances where a seller will otherwise suffer an economic injury for which the remedy at law is inadequate. A condominium apartment unit has no unique quality but is one of hundreds of virtually identical units being offered by P for sale to the public. The units are sold by sample, or model apartments, in much the same manner as items of personal property are sold in the marketplace. One must conclude that the damages sustained by P, resulting from the breach of a sales agreement are measurable, and the remedy at law is adequate. Ps damages are limited to the retention of the $500. Comments: Condos are a new type of subdivision –vertical rather than horizontal—and they have the same potential for development that has occurred in subdivision growth since the end of WWII. All of the states now have condo statutes governing this form of concurrent ownership, and condo laws represent a blend of common-law principles and legislative policy. It also represents a new area for lawyers to enter. Dutcher v. Owens (p. 404) (1983) Issue: Should the onus of liability of injuries arising from the management of condominium projects reflect a degree of control exercised by the condo coownner limited to his pro-rata interest? Rule: Given the uniqueness of the type of ownership involved in condos, the onus of liability for injuries arising from the management of condo projects should reflect a degree of control exercised by the condo co-owner and is limited to his pro rata interest. Analysis: Owens (P) leased a condominium apartment from Dutcher (D) which was located in a condominium project. Dutcher’s (D) ownership of the apartment included a 1.572% undivided ownership in the common elements of the project. Owens (P) subsequently suffered substantial property loss in a fire which began in an external light fixture in a common area. The trial court rendered judgment against Dutcher (D) on the jury’s finding of liability, I the amount of $1,087.04, which represented Dutcher’s (D) 1.572% undivided ownership in the common elements of the condo project. The court of appeals reversed in part, held that D as a unit owner was a tenant in common with the other unit owners, and was therefore jointly and severally liable. D appealed, maintaining that as a condo co-owner he should only be liable for pro rata interest in the management of a condo project. Conclusion: A condo is an estate in real property together with a separate fee simple interest in another portion of the same parcel. An individual apartment cannot be conveyed separately from the undivided interest in the common interest or vice versa. This is in keeping with the statutory scheme under the Texas Condo Act. To say that a condo co-owner has any effective control over the operation of the common areas would be to sacrifice “reality to theoretical formalism” for, in fact, a co-owner has no more control over operations than he would have as a stockholder in a corporation which owned and operated the project. Here, because of the limited control afforded a unit owner by the statutory condominium regime, the creation of the regime effects a re-allocation of tort liability and is limited to his pro rata interest in the regime as a whole, where such liability arises from those areas held in tenancy in common. Affirmed Comments: As a system, the tem “condominium” means a form of ownership under which separate units of a multi-unit improvement of real property are subject to ownership by different owners, and there is appurtenant to each unit an individual share in the common elements. As applied to the building, the term “condominium” simply refers to the entire building of project and can refer to an individual living unit as well. The condominium form of ownership goes back to at least the Middle Ages, but condominium regimes were seldom created in the U.S. before statutory enactment in the 1960s. Non-Freehold Estates: Landlord and Tenant (p. 409) Creation of Leasehold Estates (p. 409) Statute of Frauds applies to any lease in the U.S. and requires a writing for all leases for more than a year. Four estates involve a landlord-tenant relationship: A) the tenancy for years: Most leases come under this category. This is any estate that is for a fixed period. The keys to this are certain term of time, and automatic termination at the end of the term. B) the periodic tenancy: is one that continues from one period to the next automatically, unless either party terminates it at the end of a period of notice. A year to year tenancy would be periodic. A lease that states no time period creates a periodic tenancy by implication. This type of lease requires a notice of termination or it is automatically renewed. Common Law: 6 months’ notice was needed to terminate a year to year tenancy, and a full period’s notice was necessary when the period was less than a year. The notice had to set the end of a period as the termination date. Modern: most states require only 30 days notice for any tenancy. Notice must still be at the end of a period. C) the tenancy at will: is a tenancy which has no stated duration and which may be terminated at any time by either party. This type of lease is created by implication. (i.e. If T takes possession with L’s permission, with no term stated and no period for paying rent defined, it will probably be at will) D) the tenancy at sufferance: There is only one way this exists, it is where a tenant holds over at the end of a valid lease. Here the landlord has a right of election between: 1) Evicting the tenant, and 2) Holding him to another term as tenant. If this is done, most courts hold that a periodic tenancy is then created. Leaseholds were seen as chattels. Tenant’s Right of Possession and Enjoyment A) Tenant’s right of possession: 1) American View: the property owner has a duty to deliver only legal possession, not actual possession. Despite the name, at most a slight majority of courts follows this rule. 2) English View: T has the right to terminate the lease and recover damages for the breach if the prior tenant holds over and L doesn’t get him out. T may also continue the lease and get damages for the period until the prior tenant is removed. B) Quiet enjoyment: This can be violated in 2 ways: 1) Claims if paramount title: L, by making the lease, impliedly warrants that he has legal power to give possession to T for the term of the lease. If someone else successfully asserts a claim to the property that is superior to T’s claim under the lease, L has breached the warranty. a) Before T takes possession: If T discovers the paramount title before he takes possession, he may terminate the lease b) After T takes possession: T may not terminate the lease (or refuse to pay rent) merely on the grounds that a 3rd party holds a paramount title. (T is estopped to deny L’s title). On the other hand, if the 3rd person then asserts his paramount title in such a way that T is evicted, T may terminate the lease and recover damages. 2) Interference by landlord or 3rd party: If L or someone claiming under L interferes with T’s use of the premises, this will be a breach of the covenant of quiet enjoyment. a) Conduct by other tenants: if this makes the premises uninhabitable for T, the traditional view is that L is not responsible. The modern trend is to impute the acts of other tenants to L where these acts are in violation of the other leases, and L could have prevented the conduct by eviction or otherwise. b) Constructive eviction: If T’s claim is merely that his use or enjoyment of the property has been substantially impaired the eviction is constructive. T must abandon the premises for this to take effect. C) Condemnation: If the government uses its right of eminent domain to condemn all or part of the leased premises, T may have a remedy. 1) Total taking: If the entire premises are taken, the lease terminates and T does not have to pay rent. 2) Partial: If only a portion of the premises is taken (even a major part), at common law the lease is not terminated. T must continue paying the full rent. The modern trend is to let T terminate if the condemnation “significantly interferes” with his use, and to give him a reduction in rent even for a small interference. D) Illegality: If T intends to use the property for illegal purposes, and L knows this fact, the court will probably treat the lease as unenforceable. Conditions of premises( c-25) A) Common Law view: 1) Independence of covenants: 2) Constructive eviction: B) Modern implied warranty of habitability 1) Waiver of known pre-existing defects 2) Standards for determining “habitability” a) Relevance of nature of building 3) Kinds of leases a) Residential: has aspects of contracts (which are guided by state statutes), and land conveyance. b) Commercial Leases 4) Waiver in lease 5) Remedies a) Terminate lease b) Withhold rent c) Use rent for repairs 6) Retaliatory eviction barred C) Destruction of premises 1) Modern View Brown v. Southall Realty Co. (p. 409) (1968) Issue: May a court because of violations of the housing code void a lease? Rule: As a general rule, an illegal contract, made in violation of statutory prohibition designed for police or regulatory purposes, is void and confers no right upon the wrongdoer; and, a lease made in violation of housing regulations which imply such prohibitory purposes is just as void as any other contract. Analysis: Brown (D) leased premises from P. Before the lease, housing Inspector of the District of Columbia had notified P of various code violations: 1) an obstructed commode 2) a broken railing, and 3) insufficient ceiling height in the basement Consequently, P gave a sworn statement to the Housing Division that the affected areas would not be occupied until the violations were taken care of. Despite the sworn statement, P leased the premises to D on a representation that they were habitable. D withheld rent because of these conditions. P sued to regain legal possession. From a judgement for P, D appealed. Though she has already vacated the premises, she desires to avoid the adjudication of her failure to pay rent as wrongful for res Judicata purposes. Conclusion: To determine whether an ordinance is “prohibitory,” the court must look to the intent of the legislature as manifested in the subject matter involved and the penalty provided. The District of Columbia has clearly indicated that its prohibitions were intended to insure that all dwellings be “habitable.” The provision of penalties usually implies prohibition. To uphold the validity of this agreement, in light of the statutorily prohibited defects known to have existed at the time of the lease, would be to flout the purposes for which the Housing Code was instituted. The lease is void. The judgement reversed. Comments: This case points up the clear trend of authority of protecting the tenant’s right to a habitable premises by finding a lease void which is made in spite of housing code violations. The covenant of quiet enjoyment by the property owner, the covenant to pay rent by the tenant were not mutually dependent. Breach of one, did not traditionally, justify the breach of another. So, where premises were found to be so inhabitable as to constitute a constructive eviction, the tenant was held to rent for all the time of occupancy. By applying contract principles to leases, inhabitable conditions which violate the housing codes render such leases void, relieving the tenant of his responsibility to pay rent ab initio. This case is actually more important for what it does not say: that a lease is a contract as well as the sale of an interest (term) in land. 1) Access to the Rental Market (p. 414) Fair Housing Act (p. 414) 2) Tenant’s Right of Possession (p. 423) Adrian v. Rabinowitz (p. 423) (1936) Issue: Does a lease impliedly impose on a lessor the duty of putting the lessee in actual and exclusive possession of the premises at the beginning of the term? Rule: Where the commencement of the lease is in the future, the lessor is under an implied duty to have the leased premises legally and actually open for the lessee’s immediate possession. Analysis: On 4/30/34, Adrian (P) leased a store building from D. The lease was to start on 6/15 and was to last 6 months. The lease said that if the lessee shall and may peaceably and quietly have, hold, and enjoy the premises on 6/14. The prior tenant of the premises failed to respond to the lessor’s notice to vacate. The lessor immediately brought an action for removal of the holdover. On 7/9, P took possession. The trial court held that P did not have to pay any rent for the time period of which he was deprived of possession. P was also awarded $500 as the loss sustained when he resold his stock of seasonable shoes. Conclusion: The English rule is that where the lease is to commence at a point in the future, there is an impliedly undertaking by the lessor that the premises shall be open to the lessee’s actual and legal entry when the time for possession arrives. The rule makes the intent of the parties, and the implied duty on the lessor is an essential, if implied, term of the lease. In this case, the lessor prosecuted the holdover tenant. The lessor therefore, interpreted the lease as imposing this duty. The measure of damages for a breach of a lease is, in the absence of special circumstances communicated by one party to the other, the difference between actual rental value and the rent reserved for the period in which the lessee did not have possession. Consequential damages were not allowed unless expressly in the contract. Comment: A minority of courts follow the American Rule which imposes on the lessor merely the obligation to give the lessee the legal right to possession, but not the duty to put the tenant into possession. The rationale is that once the lease commences, the lessee has the right to possession, not the lessor. Therefore, occupancy by another is a wrong toward the lessee only. This rule is based on the general rule that a party to a bargain, himself without fault, is not responsible for the tortious interference of a 3rd party. A covenant for quiet enjoyment, if not expressed by the lease, is, as a rule, implied in every lease unless the terms of the lease are construed to exclude the implication. Blackett v. Olanoff (p. 429) (1977) Issue: Can a constructive eviction be found where the landlord permits a 3rd party to substantially impair the rights of other tenants? Rule: Where a property owner permits conduct of 3rd persons which substantially impairs the right of quiet enjoyment of other tenants, it is constructive eviction. Analysis: D and other tenants permanently left an apartment building owned by P and others. P sued for rent due and owing. Ds alleged that their right to quiet enjoyment had been substantially impaired by the landlords (P). P had rented nearby property as a bar. The noise from the bar was often very loud and significantly disturbed the apartment tenants. P periodically earned the bar tenants to keep the noise down, as they were obligated under the lease. The noise would abate for a while, but it always became loud again. The Ds finally vacated the apartments and P sued for rent. The court found that the tenants’ right to quiet enjoyment had been substantially interfered with and that this constituted a constructive eviction that was a defense to an action for rent. P appealed, alleging that there could be no constructive eviction where the landlord had not, by his actions, caused the breach of the contract. Conclusion: Normally there must be some action by the landlord himself which causes the constructive eviction. Intent to deprive the tenants of their rights is not required. Where the property owner permits an activity to continue, which he can control, which causes significant impairment of the rights of other tenants, this constitutes a breach of the landlord’s covenants. P permitted a bar next to a residential apartment. P had the power to control the noise in the bar under the terms of the lease. P knew that the noise from the bar was disturbing tenants and failed to correct the matter. Under these circumstances, a constructive eviction may be found. Affirmed. Comments: Other examples of non-conduct by the landlord which have been held to constitute constructive eviction are: Failure to supply adequate light, heat, etc; authorization by the landlord for a tenant to obstruct the view, light and air of another tenant to a substantial extent; and a defective boiler causing excessive soot and smoke for a long period of time. Constructive Eviction: 1) Defense 2) Offense: to sustain an action of damages to the landlord. 10/22/97 Class 4) Provisions Governing the Tenancy (p. 433) A) Duration (p. 433) Interests in Land of Another and in Natural Resources Affecting Another’s Land (p. 523) 1) Interests Created by Volition, Implication and Prescription (p. 523) A) Easements, Profits a Prende and Licenses (p. 523) Easement: is a privilege to use the land of another. Non-possessory interest in the land of another. CLASSIFICATION OF EASEMENTS Affirmative easement: is one that entitles its holder to do a physical act on another’s land. Negative easement: is one that enables its holders to prevent the owner of land from making certain used of than land. (Easement for air, light and view). This obligation can be framed as a covenant instead of an easement. Spurious easement: entitles one to the performance of some act by the owner of the burdened land, such as maintaining a fence. Sub categories of Easements: Appurtenant vs. in gross: Appurtenant Easement: is one that benefits its holder in the use of a certain piece of land. The land for whose benefit the appurtenant easement is created is the dominant tenement. (Blackacre owned by S, stands between Whiteacre, owned by D, and the public road, S gives D the right to pass over a defined part of Blackacre to get from Whiteacre to the road. The right of way is an easement that is appurtenant to Whiteacre.) TEST: its benefits must be intimately tied to a particular piece of land. Definitions: Servient tenement: an estate that is obligated to provide a benefit to another estate. Dominant tenement: is a tenement or estate whose owner benefits from an easement on another estate. (i.e. A, the owner of a piece of land, sells half of it to B, his neighbor, yet retains the right to build a driveway across the land to get to the street. A holds the dominant estate, B the servient) Easement in gross: is one whose benefit is not tied to any particular parcel. (i.e. O gives E, who lives across the town, the right to come on to Blackacre anytime he wants, and use O’s swimming pool. Since the grant is not given because of E’s ownership of nearby land, it is in gross) England does not recognize this, the U.S. does. Profits a Prende: is the right to go onto the land of another and remove the sold or a product of it. The right to mine minerals, drill oil, or capture wild games or fish, are all easements. (In the U.S. profits are functionally identical to easements. This is the right to extract something from the land, and the right of access of the land to extract. (Theses can be classified as appurtenant and in gross.) If the grantor allows someone to do something on the land the profit is in gross If it is related to land, rather to a person it is appurtenant (Bundle of 2 legal rights 1) to go on the land, and 2) to take something from the land (Profits can be in gross or appurtenant) Creation of Easements: There are 4 ways to create easements, they are: 1) Express Creation: created by a deed or a will a) Statute of Frauds: An express easement must be in writing. b) Reservation (in deed) of Grantor: An express easement is created when the owner of the land conveys the land to someone else, and reserves for himself an easement in it. (i.e. A deeds Blackacre to B, with the statement in the deed that “A hereby retains a right of way over the eastern eight feet of the property.”) c) Creation in stranger to deed: this was not allowed in the old common law, but now it is (i.e. O owns 2 parcels, 1 & 2. O sells parcel 1 to P, w/o recording any easement over parcel 2 in favor of parcel 1. O then deeds parcel 2 to D, with a statement in the deed, “Easement reserved in favor of P or his successors to parcel 1.” This easement would be enforced even though P was not a party to the O-D deed) The exceptions to the revocability of a license are: Oral license acted upon: A license is irrevocable if its use would have been an easement except for failure to meet the Statute of Frauds, and the licensee makes substantial expenditures on the land in reliance on the licensor’s promise that the license will be permanent, or of long duration. Mitchell v. Castellaw (p. 525) (1952) Express Creation Issue: Will an easement by implication of necessity be found where the necessity is not strict but merely reasonable? Rule: An easement by implication due to necessity will be recognized only where there is a strict necessity for its existence and not merely a reasonable necessity. Analysis: The dispute involves 3 adjacent lots originally owned by Stapp. The middle lot (#3) was leased to a service station in the 1930s, and the lease was still in effect at the time of the action by renewal. Stapp sold #2 lot to Smith and in the deed made reference to a driveway on lot #2 that had been used as access to the service station. While the deed stated that the grantee, his heirs, or assigns could not build on the area covered by the driveway, the clause reserving the right to use the driveway did not contain word of inheritance or others words of art. Smith sold the lot to Mitchell (D). In the meantime, Stapp had died, and the service station lot (#3) passed by inheritance to Castelaw (P). Castelaw (P) brought suit to establish the validity of the driveway easement as an easement appurtenant (it is by right used with the adjacent land for its benefit) of unlimited duration. Stapp had also conveyed the other adjacent lot (#1) to her daughter, who had then sold it to Mitchell (D) as well. At the time of the conveyance to the daughter, there existed a shed, which was part of the service station that encroached on lot #1 about 2 ½ feet. No mention of this encroachment was made in any of the deeds conveying lot #1. It was assumed that neither Stapp nor any of the grantees, until Mitchell (D), were aware of the actual encroachment although the structure was obvious to the eye. Castelaw (P) sued to validate the encroachment as an easement by implication. Conclusion: There is universal recognition that easements may be created by implied grant or implied reservation where the circumstances surrounding the conveyance indicate that such easement was intended by the parties even though the deed may be silent on the subject. However, the law is not quick to grant the existence of implied easements. Since a grantee is favored over a grantor in the law, an implied easement by reservation is more difficult to establish than an implied easement by grant. There is conflict among the authorities as to the standard to be applied in determining whether an implied easement has arisen because of necessity. Several courts and the Restatement would approve the finding of an implied easement upon the showing of a reasonable necessity. The court was of the opinion that the standard in the Texas jurisdiction should be that a strict necessity be shown. Since the trial court used the reasonable necessity standard in awarding the easement to P, the case was remanded for retrial using the strict necessity standard. Comments: The majority view on the standard to be employed in a determination of an implied easement will depend on whether the easement is by grant or by reservation. Implied grant: there need only be a showing of reasonable necessity. Implied Reservation: there must be a showing of strict necessity. This is because an easement by implied reservation is in derogation (partial abolition) of the grant made. In both, there must have been common ownership of both parcels at some time previous and at that time the use sought to be perpetuated created a “quasi easement” on the commonly owned parcels. Willard v. First Church of Christ, Scientist, Pacifica (p. 529) (1972) Issue: May a grantor, in deeding property to one person, effectively reserve and vest an interest in the same property in a 3rd party? Rule: Contrary to the ancient common-law rule, in modern rules, a grantor, in deeding property to one person, may effectively reserve and vest an interest in the same property in a 3rd party. Analysis: Genevieve McGuigan sold lot 19 to Petersen and he used the building on the lot for his office. He offered to buy the abutting lot 20 from her in order to sell both lots to Willard (P). McGuigan, a member of the 1st Church of Christ, Scientist (D), had always allowed the Church (D) to use the lot for parking. She had a clause included in the deed for lot 20 to Petersen that said the lot was subject to an easement for Church (D) parking to run with the land as long as used for Church purposes (“…subject to an easement for automobile parking during church hours for the benefit of the church on the property at the southwest corner of the intersection of Hilton Way and Francisco Blvd. … such easement to run with the land only so long as the property for whose benefit the easement is given is used for church purposes.”) . Petersen bought the lot and recorded the deed to the Willards (P). When the Willards (P) became aware of it, they brought quiet title action. At trial, McGuigan testified that she had originally bought lot 20 to provide Church (D) parking and would not have sold it without the easement. The trial court found that, although McGuigan and Petersen intended to convey an easement, the clause was invalidated under the common-law rule that the grantor, in deeding property to one person, cannot reserve an interest in the same property to a 3rd party. The Church (D) appealed. Conclusion: Contrary to the ancient common-law rule, in modern rules, a grantor, in deeding property to one person, may effectively reserve and vest an interest in the same property in a 3rd party. Today, courts try primarily to give effect to the grantor’s intent, whereas the common-law rule would defeat the intent. In addition, it must be recognized that, due to the encumbrance on the property, the grantee paid a reduced price for it. If would be inequitable to allow him to remove the 3rd party’s interest, thereby greatly increasing the property’s value. The determination of whether the common-law rule should still be used involved a balancing of equitable and policy considerations. In this case, despite Willard’s (P) contrary contentions that the grantees and title insurers relied on the common-law rule, the court believed that the modern position applied. Reversed. Comment: Because easements are interests in land, they normally must comply with the statute of frauds. However, easements may also exist by implication in those instances where the parties have not expressly reserved or granted them in writing. Since these easements are created by operation of law, no writing under the statue of frauds is necessary. However, easements by implication arise only when common title to land is severed. The court found that the common law rule frustrated the intent of the grantor, and for no good reason. The common-law rule also would increase the property value because they are claiming an unencumbered property, which is not fair. 1) Mrs. McGuigan should never have used the words “subject to”, there are too many connotations to this. The phrase is used to flag a problem to the property, not try to create an easement. 2) She should have deeded the easement to the Church and then deeded the property to Willard. If a grantor does not own property at time of conveyance, but later does, the title automatically vests at time conveyance. Urbaitis v. Commonwealth Edison (p. 534) (1991). Issue: This describes the ambiguities of calling an easement a “right o way.” Analysis: Benjamin Dodson conveyed an interest in land to the RR. The interest was conveyed to Commonwealth Edison. What was the interest that the RR had. RR and Commonwealth Edison said it was a Fee Simple. The people who lived there said that the easement was abandoned, and therefore it did not work Fee Simples cannot be abandoned Easements can be abandoned, and has fewer source of statute interpretation. Conclusion: The ambiguity was the term “right of way” in the grant clause. The grant clause looks like a fee simple, and the conditions are found further in the document. The conditions were “ a culvert, and street crossing”. The court could have looked at this problem by comparing the grant clause with the conditions. The grant clause was unambiguous and the conditional clause was repugnant. The court could have then said the grant clause clear and is found proper. The court in this case was to consider the deed as a whole, and looked at how the way right of way was used. Was this a description of a piece of land, or was right of way used as a legal description of the land? There is no magic language in “right of way” Case law goes both ways. An easement could be found, or possibly a fee simple. The court looks to see what is the intent of the grantor. A fee simple could not be abandoned, and the quiet title fails. License Cases Baseball Publishing Company v. Bruton (p. 538) (1938) Issue: Does the granting of a license by a landowner create specifically enforceable rights in the license holder? Rule: A license conveys no interest in the land but is merely a consensual and revocable excuse of a trespassory act, while an easement in gross does convey an interest in land and creates specifically enforceable rights. Analysis: P was in the business of locating places for billboards and signs. P agreed to pay D $25 for the right to build a sing on D’s building. The agreement also allowed P to renew the agreement for 4 additional years at $25/year. All signs were to remain the property of P. The agreement was in writing and was labeled as a lease. P mailed D the $25 but the check was returned. P mailed checks in each of the next 2 years, but the checks were not cashed. D, more than 2 years after the original agreement, took down the signs. Conclusion: A license conveys no interest in the land but is merely a consensual and revocable excuse of a trespassory act, while an easement in gross does convey an interest in land and creates specifically enforceable rights. Where one entered into an agreement to allow another the right to erect a sign but left the wall on which the sign was to be placed in possession of the owner, who continued to hold the right to use the wall for all purposes not forbidden by the contract and retained all the responsibilities of ownership and control, then the agreement is not a lease. A lease conveys an interest in land and transfers possession until the lease expires. A license is revocable at will of the owner though it may be subject of an action for specific performance, but a license may not because specific performance would serve to change a license into an estate in land. This agreement goes beyond a license and creates an easement in gross that is an interest in land, and an easement may be subject to specific performance. Comment: Easements in gross belong to the possessor personally and not in the possessor’s capacity as a landowner. They are similar to licenses, but when they are of a commercial nature, they are treated as a substantial interest in land. A license is a revocable privilege to go on land possessed by the licenser. It is not an interest in land but merely a consensual privilege, revocable at will by the licenser. Stoner v. Zucker (p. 541) (1906) Issue: Where parol (oral) license is executed by expenditure of money and by its mature was to be continuos in use, does the license become irrevocable? Rule: Where a licensee enters under a parol license and expends money or equivalent labor in execution of the license, the license becomes irrevocable for so long as the nature of the license requires. Analysis: Stoner (P) gave Zucker (D) a license to construct an irrigation ditch across his land so Zucker (D) could irrigate his land. Zucker (D) expended more than $7,000 to build the ditch. One year later, Stoner (P) revoked Zucker’s (D) license, but Zucker (D) continued to maintain the ditch and use it. Stoner (P) claimed Zucker (D) was a trespasser and sought to enjoin him from further entering his land. Conclusion: Where a licensee enters under a parol license and has expended money, or its equivalent in labor, in execution of the license, the license becomes irrevocable. The licensee Zucker (D), had a right of entry upon the licenser’s (P) lands so to maintain his structures or his rights under the license. Such right continues for as long a time as the nature of the license continues. As Zucker (D) expended a considerable sum of money, it would be unjust to permit revocation without allowing an adequate remedy. Zucker (D) was allowed to continue to have a license until the time he no longer requires water or nature stops the flow. Comment: An executed parol license is the only type of irrevocable license and could be termed an easement by estoppel. The two actually are indistinguishable as the term “irrevocable license” is self-contradictory. One requirement is that the expenditures on the license be reasonably foreseeable. In addition, the licensee must rely on the licenser’s apparent intention to permit the licensee to make substantial improvements on the land under license. Such a license is irrevocable only as long as necessary by its nature. If one has a license to fell trees on certain timberland and not suitable trees remain for that purpose, the license terminates. If here, the water Zucker (D) was transferring became so polluted so as to be unusable, the license would terminate. The licensee is limited to maintaining the current improvements to the land and cannot expand them. The statute of frauds is undermined by irrevocable licenses normally. However, the action of the P and D show substantially that there was an agreement between the two. The exceptions to the revocability of a license are: Oral license acted upon: A license is irrevocable if its use would have been an easement except for failure to meet the Statute of Frauds, and the licensee makes substantial expenditures on the land in reliance on the licensor’s promise that the license will be permanent, or of long duration. Marrone v. Washington Jockey Club (p. 544) (1912) Issue: Does an admission ticket create a right of property? Rule: Unless a contract creates an interest in the property it concerns, it is a revocable license. Analysis: On 2 successive days, Marrone (P) was prevented from entering D’s Bennings racetrack, although he had bought a ticket for admission, which he placed in the ticket box. Only reasonable force to eject Marrone (P) was used. Conclusion: While a contract, the admission ticket, binds the maker, it does not create an interest in the property it concerns, unless it operates as a conveyance. The admission ticket conveyed no interest in the racetrack (by common understanding). As it conveyed no right in the property, it was nothing more than a revocable license. The only remedy available is for breach of contract. As the right to enter was only contractual, there was no right to enforce specific performance of the contract by self-help. Comment: Admission tickets, says Judge Holmes, are not conveyances of an interest in the land to which they grant entry simply because of common understanding over the years of the purpose of an admission ticket. While an admission ticket is a contract, it cannot create an interest in property to be entered unless it makes a conveyance. An admission ticket grants only a mere licenses to use the land, which is, revocable. The proprietor granting the license can revoke it as to anyone to whom he granted it. If an ejection of a person from land is not privileged, it is a trespass upon the person, thus explaining Marrone’s (P) choice of action. One interesting point to remember about a ticket as a license is that a ticket is commonly understood to be assignable. Licenses on the other had in almost all cases, cannot be transferred. 10/27/97 Class (Easements Continued) 2) Creation by implication: This does not have to satisfy the statute of frauds a) Requirements: there are 3 requirements, they are: land must be divided up (or severed), so that the owner of a parcel is either selling part and retaining part, or subdividing the property and selling pieces to different grantees. The use for which the implied easement is claimed must have existed prior to the severance; and The easement must be at least reasonably necessary to the enjoyment of the dominant tenement. b) Severance: an easement will only be implied where the owner of a parcel sells part and retains part, or sells pieces simultaneously to more than one grantee. (i.e. A and B are neighboring landowners. A new street is built adjoining B’s property, and A can only get to this street by crossing B’s property. A crosses B’s property at a particular spot for several years, then sells to C. C has no easement by implication across B’s property, because there was never any conveyance between A and B, required for the creation of an easement by implication.) Prior use: The use for which the easement is claimed must have existed before the severance of ownership. This is the easement by prior use) Proof lies in necessity and prior use. The idea is there is an inferred intent to take the property as it is. c) Landowners: According to Common Law, the landowner cannot create an easement on his own land (what he may have is a quasi-easement). If an owner conveys part of the land the quasi-easement can ripen into an easement implied by prior use. (Grounded in necessity, and partly in the easements of property by prior use – Granite v. Mann) d) Necessity: According to most courts, the easement must be reasonably necessary to the enjoyment of what is claimed to be the dominant tenement. Courts are stricter in imposing this requirement where the easement is created by grant (i.e. in favor of the grantee), than where the easement is reserved (i.e. in favor of the grantor) (Example of easement by implication: O owns 2 houses side by side on one parcel. To give the garage behind house #1 access to the street, he builds a driveway that runs between the 2 houses. O then conveys house #2 including part of the land and the driveway, to A. An implied easement in favor of house #1, and against the land on which house #2 is located, will be reserved with respect to the driveway. Also, if O conveys house #1, an implied easement in favor of that house will be created against the land of house #2. This is because: O was the owner of both tenements just before the easement came into being; The use existed prior to the severance of the 2 tenements; The easement is reasonably necessary to the enjoyment of house #1’s garage) e) Easement of light and air: Is the right to have one’s view remain unobstructed cannot be created by implication, in most states. 3) Easement by necessity: is found if 2 parcels are so situated that an easement over one is “strictly necessary” to the enjoyment of the other. a) Common Grantor: the courts require that at one time, both the alleged dominant tenement and the alleged servient tenement were owned by the same person. (Unity of title) b) Severance: resulting in one parcel being landlocked. Landlocked Parcels: The most common example of an easement by necessity is where a parcel is landlocked, so that access to a public road can only be gained via a right of way over adjoining property c) Necessity: at the time of the severance No prior use: There does not have to have been an “prior use”. The easement does not have to have been used before the time the 2 parcels were split. (i.e. O owns parcels #1 and #2, which adjoin each other. In 1950, he sells parcel #1 to P and parcel #2 to D. In 1960, an old road serving #1 is closed, and a new one is built so that the only way to get from #1 to the road is by crossing #2. Because both parcels were owned originally by the same owner, O, the courts will grant #1 an easement over #2 to get to the road, even though no such d) Necessity: at the time of the lawsuit Easements are used: 1) To be fair to the taker of the land, and 2) The necessity for maximizing the productivity of the land. In easements the grantors intent rules Finn v. Williams (p. 546) (1941) Issue: Is an easement by necessity created when an owner conveys a portion of his land which has no outlet except over the retained land of the grantor or over the land of strangers? Rule: When an owner conveys a portion of his land which has no outlet except over the land of the grantor, or of strangers, an easement by necessity exists over the retained land of the grantor. Analysis: Charles Williams owned 140 acres of land. In 1895, he conveyed 40 acres of his land to Bacon, and in 1937, Finn (P) acquired title to those 40 acres. Zelphia Williams (D) inherited the remaining 100 acres from Charles, who was her husband. The 40 acres owned by P was entirely landlocked, but for many years, access was gained over private roads of strangers and a road over the Williams land. In 1939, Williams (D) refused Finn (P) any further access over her land. By that time, all of the other private roads leading