Property Outline I - Larson (Fall 2007)

PROPERTY Professor Larson Fall 2007 PERSONAL PROPERTY (Chapter 2) I. DISTINCTION BETWEEN REAL AND PERSONAL PROPERTY a. All property is either PERSONAL property or REAL property i. Real property: rights associated with land ii. Personal property: consists of rights associated with movable things (chattels or goods) and intangible rights not associated with land iii. Intellectual property b. Property means you have the right to exclude other persons from a thing c. Title: The union of all elements (ownership, possession, custody) constituting the legal right to control and dispose of property d. Possession: The right under which one may exercise control over something to the exclusion of others e. Terms: i. Writ of replevin: Action for the repossession of property wrongfully taken or detained by a defendant; recover possession of goods ii. Writ of trover: Action for recovery of damages for the conversion of personal property; recover value of goods 1. Conversion: An act of dominion or control that is inconsistent with the owner’s rights (largely replaced replevin and trover) iii. Ejectment: Recover possession of land from another f. Certain items change between being real and personal depending on their attachment to the land i. Improvement: The transformation from goods to part of real property (i.e. a building, driveway, stone wall) ii. Fixtures: Items which are attached to the land or a building; legally part of the real property for at least some purposes 1. Mobile home example – being on wheels versus having a concrete foundation g. When buying land, some things on the land might be included while others might not be: i. Test: If a reasonable person would assume something was included, the seller should put it in the contract if otherwise. h. Wood v. Wood (Colorado Supreme Court 1947): A husband and wife divorced, and in the settlement, husband gave her a deed to a section of land with a corn crop on it that they had raised together; the deed contained no reservations; the wife then took her land and sold it; the husband brought suit, saying the corn belonged to him i. Court held that a transfer of land does not carry with it the unharvested crop on it if the crops are matured and have stopped drawing sustenance from the ground – the crops have become personal property FINDERS a. Rule for finders: A finder has right to property found against all others but the true owner i. A true owner does not lose a title by losing the property II. 1 b. Armory v. Delamirie (Court of King’s Bench 1722): P was a chimney sweeper’s boy who found a ring with a valuable jewel in it, and took it to the defendant goldsmith’s shop; D’s apprentice offered the boy money for it, who refused the money and demanded the ring back; the apprentice gave him the socket without the stones i. The finder of an object, though he does not by such finding acquire an absolute property or ownership, has such a property as will enable him to keep it against all but the rightful owner, and consequently may maintain a trover action against anyone who wrongfully takes the object from him ii. Where the boy found the ring is important – if he had found it while working, it would have been his employer’s; if he had found it in a client’s fireplace, it would have been theirs c. Bridges v. Hawkesworth (Court of Queen’s Bench 1851): P was a traveling businessman who had business with defendant shopkeeper; while in D’s shop, P found a small parcel of money on the floor; P gave D the package, and requested that D deliver the money to the owner; D advertised the finding, but after 3 years, no one claimed it; P then asked D for the money back, and D refused i. The court cited the rule that a finder has a right to any article which has been lost against all the world except for the true owner ii. Court ruled that P had a right to the package against anyone but the true owner even though it was found inside D’s store – D only found the package through P, and D invited the public into his shop d. South Staffordshire Water Co. v. Sharman (Queen’s Bench Division 1896): P had possession of the land on which pool was located; D was employed by P to clean out the pool, and found two gold rings at the bottom; P demanded the rings, D refused i. “The possession of land carries with it in general possession of everything which is attached to or under that land, and, in the absence of a better title elsewhere, the right to possess it also. And it makes no difference that the possessor is not aware of the thing’s existence…The legal possession rests on a real de facto possession constituted by the occupier’s general power and intent to exclude unauthorized interference.” ii. RULE: Where a person has possession of house or land, with a manifest intention to exercise control over it and the things which may be upon or in it, if something is found on that land, whether by an employee of the owner or a stranger, the presumption is that the possession of that thing is in the owner of the locus in quo e. Conditions that affect the right of the finder: i. The finder’s status – i.e. customer, tenant, employee, owner, etc 1. Invitation: If invited on the property where object found, finder prevails a. Hannah v. Peel (King’s Bench Division 1945): P was the owner of an estate which he never occupied and was requisitioned by the army; H was stationed at the estate, and he found a brooch; H gave it to the police, police gave it to P, P sold it; H maintained his right to possession and demanded the brooch i. Court cited Holmes in Hawkesworth, who said that the shopkeeper, not knowing of the money, 2 could not have had the intent to appropriate it or the intent to exclude others from it ii. Also cited Frederick Pollock, who emphasized the shopkeeper’s lack of de facto control 1. Ruled the brooch was H’s (probably wrong ruling, but wanted to rule for solider) 2. Employees and those on premises for limited purposes cannot keep found objects 3. Trespassers – most state’s say a landowner would have a greater right ii. Place where object is found: 1. If on private property, land owner supersedes the finder a. Persons possesses everything attached to and under land even if they aren’t aware of its existence (constructive possession) b. South Straffordshire 2. Private property open to the public a. Hawkesworth f. A property owner must: i. Have intent to exclude others ii. Have intent to appropriate it (Holmes in Hawkesworth) iii. Have de facto control – intent to take the whole thing and all its parts (Frederick Pollock in Hawkesworth) g. Rules: i. Rule for mislaid property: Right of possession against all but the true owner is in the owner or occupant of the land it is found on (laid down unintentionally, but forgotten) ii. Rule for lost property: Can be retained by the finder even if found on the premises of another (unintentionally put somewhere) iii. Rule for treasure-trove: Traditionally treated as lost property with finders’ rights – but if finder was trespassing at the time, it disqualifies his right to possession (not lost or mislaid – put somewhere purposefully) 1. Morgan v. Wiser (Tennessee Court of Appeals 1985): W unlawfully came onto M’s land, searched it with a metal detector, and found a cache of gold coins a. Where property is found embedded in the soil under circumstances repelling the idea that it has been lost, the finder acquires no title to it, for the presumption is that the possession of the article found is in the owner of the locus in quo b. Importance of discouraging trespassers by not rewarding them h. Who has a right over others (except the true owner)? i. Lost property = FINDER (vs. landowner who is not original owner) ii. Abandoned property = FINDER iii. Mislaid property = LANDOWNER iv. Treasure trove = FINDER v. Embedded in soil = LANDOWNER i. Maritime law of salvage: Original owners retain ownership of the lost item, but salvagers are entitled to a generous reward for recovery 3 i. Columbus-America Discovery Group, Inc. v. Atlantic Mutual Insurance Co. (US Court of Appeals for the 4th Circuit 1992): CA found wreck of ship in ocean with treasure of $1 billion in gold; CA wanted to be declared the owner against insurance companies who had originally insured the gold in 1857; CA maintained that insurers abandoned the gold by paying out the claim and destroying all related documents 1. Court found that the law of finds was applied and law of salvage should have been a. Finds requires abandonment j. Rule of capture: The first person to take possession of an unowned object becomes its owner (wild animals, abandoned property) k. Popov v. Hayashi (San Francisco County Superior Court 2002): Barry Bonds baseball case; property right between man who initially had the ball but lost control due to a mob versus man who picked it up after it rolled out of the mob; court made the men sell the ball and split profits i. Equitable division: If several people participate in a finding, they are joint finders with equal rights in the property found III. BAILEES a. Bailment: Rightful possession of goods by one who is not the owner b. Bailor = property, true owner; Bailee = property holder c. Three different scenarios: i. “favor” = no bailment, no liability 1. Gratuitous bailment – sole benefit of the bailor 2. Liable for gross negligence 3. Ex: Finder of a lost item ii. “use it as yours” = partial liability 1. Bailment for mutual benefit 2. Liable for ordinary negligence 3. Ex: Dealer lets customer test drive car iii. “borrow” = liable 1. Bailment solely for the benefit of the bailee 2. Liable for any or slight negligence 3. Bailment for hire 4. Ex: A borrows a power tool from B – A must treat it better than he would treat his own tool d. First American Bank v. District of Columbia (District of Columbia Court of Appeals 1990): Bank employee parked car with bank bags in it illegally; it got towed; he asked police not to tow it, they refused; he asked police to get bank bags out, they refused; car taken to impound, where it was found to be completely locked; when bank supervisor came to get the car later, it was unlocked and a bank bag missing i. A bailee that receives compensation for its services is held to a standard of ordinary care – mutual benefit is required ii. This was a bailment for mutual benefit, and that the tow company had violated the standard of care for ordinary negligence e. Shamrock Hilton Hotel v. Caranas (Texas Court of Appeals 1972): C and wife were at D hotel; wife left her purse in hotel restaurant; busboy picked it up, gave it to cashier, who gave it to someone claiming to have lost it; purse contained 4 f. $13,000 in jewelry; Cs filed suit against the hotel alleging negligent delivery to an unknown person i. Court ruled that this was a mutual-benefit bailment because the busboy had picked up the purse and so hotel assumed responsibility for it ii. Court ruled that it was reasonable to know that there was valuable jewelry in the purse Misdelivery: If a possessor of goods, such as a finder, delivered property to a third person whom he reasonably believed to be the true owner, but was mistaken, he became liable to claims by the true owner (strict liability) IV. BONA FIDE PURCHASERS a. Bona fide purchasers: One who buys something for value without notice of another’s claim to the property and without actual or constructive notice of any defects in, or infirmities, claims or equities against the seller’s title i. One who has in good faith paid valuable consideration for property without notice of prior adverse claims b. Types of title: i. Good title: Where the owner transfers the title in a voluntary transaction ii. Void title: Where there is an invalid transfer (i.e. theft), not a voluntary transaction 1. Thief has no right to title 2. Cannot transfer the title iii. Voidable title: Where there is a voluntary transaction, but either party can cancel, there’s a cloud on the title 1. Can transfer the title 2. Can transfer it to a good faith purchaser, a bona fide purchaser c. UCC § 2-403: Good faith purchaser i. A purchaser of goods acquires all title which his transferor had or had power to transfer except that a purchaser of a limited interest acquires rights only to the extent of the interest purchased. A person with violable title has power to transfer a good title to a good faith purchaser for value. When goods have been delivered under a transaction of purchase the purchaser has such power even though: 1. Transferor deceived as to identity of purchaser 2. Delivery in exchange for dishonored check 3. Agreed transaction was “cash sale” 4. Delivery procured through fraud punishable as larcenous ii. Any entrusting of possession of goods to merchant who deals in goods of that kind gives him power to transfer all rights to buyer in ordinary course of business 1. Pawn shop, Consignment sale, auction, e-bay d. Lost property: The finder doesn’t have better claim than the true owner, but if they sell it to a BFP, the BFP gets as good a title as the original owner i. Also: treasure trove, embedded in soil property, mislaid property ii. BFP doctrine kicks in when a rightful possessor sells the good – not the true owner 1. A person who has some sort of limited title e. Kotis v. Nowlin Jewelry Inc (Texas Court of Appeals 1992): Sitton acquired a watch from Nowlin by forging a check; S called Kotis, asking him if he wanted to buy it; K bought the watch, and then called N, asking about Sitton’s purchase 5 f. of the watch; N filed a claim seeking to be declared the sole owner of the watch; K filed a counterclaim, alleging that he was a BFP and entitled to possession i. Sitton acquired the watch by a voluntary transaction and the delivery fit under UCC 2-403(b) and (d), so he acquired voidable title ii. To be a BFP, a purchaser has to show that he is truly a good faith purchaser 1. Kotis did not believe the transaction between S and N was lawful – an unreasonably low price is evidence the buyer knows the goods are stolen – therefore he was not a BFP Charles Evans BMW v. Williams (Georgia Court of Appeals 1990): W agreed to sell his car to H, and accepted a check as payment; W signed the title and made no indication on it of H as new owner; H, presenting himself as W, sold the car to BMW; BMW gave him a check, written to W, which H cashed as W; by the time W learned that H’s check was fake, BMW had sold the car to another; the title and car were returned to BMW, and BMW was required to return it to Williams; BMW filed action of conversion against W i. H acquired the car from W by a voluntary transaction that fit under UCC 2-403(b), and H then a voidable title, giving him the power to transfer good title to a BFP ii. Court ruled that there was ample evidence to support BMW’s status as a BFP – they had no reason to believe that H wasn’t W (he cashed their check, fixed a problem in registration, etc), so they acquired good title when H sold it to them V. GIFTS a. Gift: The voluntary transfer of property to another without compensation i. All gifts are either testamentary (by will) or inter vivos (made during lifetime) ii. Required: 1. INTENT to make either a present or future transfer; to relinquish complete ownership, absent a life estate possession; transfer of an irrevocable right a. Life estate: Divides ownership of property over time between present possessor (donor) and owner of a future interest (donee) b. Future interest: Gift is presently owned, even though the owner’s right to possession is deferred until the death of the life tenant c. Remainder interest: A current gift to take effect at owner’s death – valid i. A promise to make a gift in the future at the owner’s death is invalid 2. DELIVERY can be actual, constructive or symbolic; has to be sufficient to divest the donor of dominion and control over the property a. Constructive: an act that amounts to a transfer of title by operation of law when actual transfer is impractical or impossible (i.e. giving keys to a car) b. Symbolic: Delivery by instrument (i.e. letter) 3. ACCEPTANCE 6 a. When a gift is beneficial to a donee, acceptance is usually presumed b. Gift causa mortis: A gift made in contemplation of the donor’s imminent death. The essentials are that i. (1) The gift must be made with a view to the donor’s present illness or peril ii. (2) The decent apprehended death (can be implied) iii. (3) There must be a delivery of the res of the intended gift, either actually or constructively iv. (4) The donor must actually die 1. If no death, donor can get it back 2. Some courts allow for this in suicide situations v. In re Estate of Smith (Pennsylvania Superior Court 1997): Smith, right before committing suicide, wrote out 4 checks and gave them to various loved ones; he either delivered or mailed each check, which were not received until after his death; the recipients cashed or deposited the checks he also wrote a note instructing his car to be sold to a friend for a certain amount; executor of his estate asked 4 recipients to give checks back, who refused 1. The gifts of the checks constituted a gift causa mortis, and the option to buy the car at a certain price was also a direct gift of property and thus a gift causa mortis 2. Majority believed by considering gifts made in contemplation of suicide to be gifts causa mortis they further the public policy against suicide since the donor may retrieve the gifts if the suicide is not completed – dissent disagreed c. Inter vivos gift: A gift of personal property made during the donor’s lifetime and delivered to the donee with the intention of irrevocably surrendering control over the property i. Versus testamentary: Giving a $100 versus giving a $100 check, which can be cancelled ii. Simpson v. Simpson (Florida Court of Appeals 1998): Father told son he could have his guns; son did not pick up the guns until after father died; father left entire estate to son; son wanted guns declared not part of the estate because they had been a gift given to him during father’s life 1. To establish an inter vivos gift, intent and delivery are necessary a. Court found no evidence of delivery, so no gift iii. Gruen v. Gruen (NY Court of Appeals 1986): P sought declaration that he was rightful owner of a painting which his deceased father gave him; father promised P a famous painting for his 21st birthday on the condition that he would receive possession of it after his father’s death; he communicated this desire for P to have it through a series of letters; P never had possession of the painting, as his father retained a life estate in it; son said it was an inter vivos gift 1. For an inter vivos gift with a life estate to be valid, the donor must intend the gift to have no effect until after their death, and the donor must intend to transfer some present interest; in a life estate case, delivery is not necessary a. Court ruled that the father had transferred some interest to the son (son called it “his” painting), that the letters 7 constituted delivery by instrument, and that because the painting was of value to him that constituted acceptance b. This gift was irrevocable – if father had put it in his will, he could have taken it out or sold it d. Engagement ring: Consider the intent of the donor at the time – was the ring given as a conditional or unconditional gift? i. Fault-based: The person not at fault for the end of the engagement gets the ring regardless of who gave it as a gift ii. No-fault based: 1. Gift given upon a condition: Upon non-occurrence of the marriage, the ring goes back to whomever gave it 2. Gift given without implied or express condition: The ring cannot be revoked after it is given as a gift iii. Restatement § 58: Gifts made in the hope of marriage are not recoverable, in absence of fraud; they are not expressed to be conditional 1. If the donee wrongfully breaks off the promise of marriage, donor is entitled to restitution of engagement ring if it’s a family heirloom iv. Lindh v. Surman (Pennsylvania Supreme Court 1999): L and S were in a relationship where the man proposed, they broke up, she gave ring back; they got back together, and then after proposing again, the man broke the engagement again; the woman refused to give the ring back 1. The law treats an engagement ring as a conditional gift 2. The woman argued for a fault-based theory, which the court rejected, saying it would clog up courts having to listen to jilted lovers quarrel over who was the bad guy in breaking the engagement a. Court adopted no-fault position – she had to give the ring back no matter what v. Albinger v. Harris (Montana Supreme Court 2002): A and H were in a relationship where A proposed multiple times, and H returned the ring multiple times; after a final breaking of a last engagement, H refused to give the ring back 1. Court ruled that the ring was a gift given without implied or express condition = the woman’s a. Court reasoned that women, because they could no longer sue for damages based on a broken engagement, had a right to keep the ring 8 INTELLECTUAL PROPERTY (Chapter 4) I. INTRODUCTION a. Includes the laws of patents, copyrights, trademarks, trade secrets and the right of publicity b. Patents: i. Granted by the US Patent Office after careful examination of an inventor’s application ii. Patents confer 20 years of exclusive rights in those technological works which have the characteristics of utility, novelty, and non-obviousness iii. Patent law is exclusively under federal government authority – states are not permitted to issue patents c. Copyright: i. Arises when works of authorship are captured in permanent form ii. Copyright arises instantly, no paperwork is required iii. They endure for the life of the author plus 70 years d. Trademarks: i. They are not designed to promote investment in their creation, but rather to protect consumers from being deceived as to the origin of goods bearing the marks ii. Trademark rights develop as consumers associate the marks on the goods with a single source iii. Both the federal government and states can create trademark rights iv. Grows out of use, not just adoption v. Trademark Act of1946 (Lanham Act) e. Trade Secret Law: i. Confers on those who manage to keep valuable information to themselves the competitive advantage of exclusive access to that information ii. Trade secrets last for as long as the secrecy is maintained f. Right of Publicity: i. Serves to protect the interests of celebrities in controlling the exploitation of their names and likenesses g. Misappropriation: i. A kind of unfair competition claim ii. An assertion of inappropriate borrowing of the fruits of another’s investment HISTORICAL FOUNDATIONS OF INTELLECTUAL PROPERTY LAW a. The Constitution i. Article 1, Section 8: The Congress shall have power to promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discovering b. Justifications for intellectual property rights: II. 9 i. (1) Utilitarian justification = give authors or inventors an incentive just large enough to encourage them to engage in the socially useful creative or innovative work society wants them to do ii. (2) The authors or inventors are naturally and inherently entitled to the value of the creative or innovative work iii. Important to decide whether we are seeking to give the innovator only the portion of the fruits which believe is necessary to induce the public benefit, or all of the fruits of the exploitation of their work (“public benefit” versus “natural rights” justifications) c. Baker v. Selden: S copyrighted a book explaining a particular system of bookkeeping, as well as several other books containing additions and improvements to this system; S filed a complaint against B saying that B had infringed his rights by B printing a book with similar information i. The court held that S copyrighted his specific book and arrangement of words, but not the exclusive right to make and use account-books ii. Copyright protection is extended to the protection of the expression of the idea, not the idea itself 1. We encourage creativity by granting exclusive rights to expressions of ideas to get an idea out in the public sphere so others can benefit from it d. Patent v. copyright: i. Patent is more expensive, much harder to get (paperwork) ii. You have to anticipate getting a patent ahead of time, you can’t get it later iii. A innovation or invention has to be proven novel, useful, and nonobvious iv. If an expression of an idea has literally merged with the idea, and if it has become the only practical way of expressing it, there can be no copyright e. Trademark issues: i. Battling a very strong public policy against free speech and free market economy, so there must be good justification for allowing people to monopolize a market ii. Justifications: 1. Protecting the public a. Confusing to have people use the same trademarks i. Consumers have to spend more time figuring out what product they are actually buying b. People assume the product is coming from one place when its in fact coming from another 2. Unjust enrichment a. Another company is benefiting from an established company’s good will and hard work; reaping what you don’t sow b. Quality control 3. Tarnishment a. Tarnishes the brand name b. Have to show economic loss 4. Companies won’t spend money and time building up their brand name if someone else can either steal it or latch onto it’s reputation t o enrich their own similar product 10 a. Building brand names facilitates the creation of an national market economy, because a company needs a brand name to sell their product in other non-local markets b. Creates competition, because companies have to create a quality product that people will recognize and buy over others f. Hanover Star Milling Co. v. Metcalf: H brought action against M for trademark infringement based on M’s sales of flour in Ala.; in 1885, H began selling “Tea Rose” flour in Ill; in 1900, H began selling flour in Ala and other southeastern states; later M, an Ala merchant, started selling flour with same “Tea Rose” mark; AW brought trademark infringement action against H; in 1872, AW, Ohio company, began using “Tea Rose” on their flour, but sold it under different name in Ala. i. Where two parties independently are employing the same mark upon goods of the same class, but in separate markets remote from one another, the question of prior adoption is irrelevant, unless at least it appears that the second adopter has selected the mark with some detrimental design to the interests of the first user, such as to take the benefit of the reputation of the goods ii. A proprietor of a trademark cannot monopolize markets that his trade has never reached and where the mark signifies not his goods but those of another g. International News Service v. Associated Press: AP had expensive arrangements with overseas reporters to gather news for them; INS gained access to AP news through bribery, news bulletin boards and early editions; INS would rewrite the news and publish it as their own; AP brought suit for copyright infringement i. There are no property rights and therefore no right to copyright in facts, the news ii. The court said that AP had a quasi-property right in the facts they published in their stories because they had expended time, money, and effort in gathering them 1. They concluded this was not a copyright case, but rather an unfair competition case iii. The court held that INS could take facts and publish them at the same time that AP did but not earlier in order to gain a competitive edge (i.e. publish facts it stole in Boston from AP in San Fran before AP did) iv. This case created misappropriation in that a party can misappropriate facts during a certain period of time – quasi property because only property during the time in which the facts are valuable h. Kellogg Co. v. National Biscuit Co: NB sued K for unfair competition after K made a breakfast food commonly known as shredded wheat, with same name and in same shape as NB shredded wheat; NB claimed exclusive right to name “Shredded Wheat” and exclusive right to its shape i. NB had no right to term “Shredded Wheat” because it was the generic term for the cereal, and therefore K, like the public, had a right to use it ii. “To establish a trade name in the term “shredded wheat” the plaintiff must show more than a subordinate meaning which applies to it – it must show that the primary significance of the term in the minds of the consuming public is not the product but the producer” iii. Trademark can be extended to a product’s design, called “trade dress” 11 III. INTELLECTUAL PROPERTY LAW MATURES a. Graham v. John Deere Co. of Kansas City: G sued JD for patent infringement; G had invented an improvement to a device designed to absorb shock from plows i. Court discussed patent law originated by Thomas Jefferson: 1. Based his ideas on utilitarian economic concern of promoting technological innovation rather than protecting inventors’ moral rights to their discoveries ii. The nonobviousness requirement set forth in 35 U.S.C. §103 was meant to codify the previous common law requirement that an invention be a significant improvement in the art iii. The court interpreted 35 U.S.C. §103 to require a determination of the questions below to resolve the issue of obviousness: 1. Scope and content of the prior art 2. Level of ordinary skill in the prior art 3. Differences between the claimed invention and the prior art a. Secondary considerations which could serve as evidence of nonobviousness – commercial success, long-felt but unsolved needs, and failure of others iv. Court said that this invention was obvious, and therefore did not fall under the protection of the Patent Act of 1952 b. E.I. DuPont DeNemours & Co. v. Christopher: D was building a factory, and C bros were hired by a third party to fly over the factory and take pictures of its progress; D sued, alleging that Cs had wrongfully obtained photos revealing D’s trade secret, which was an unpatented process for producing methanol, which gave D a competitive edge, and which D had taken time and money to research and reasonably safeguard i. This trade secret law was a Texas state civil law that was common law and derived from cases and the Restatement of Torts ii. Elements of a trade secret violation: 1. Improper means or breach of confidence 2. Reasonable effort to protect the information of idea iii. D had taken reasonable measures to keep its factory a secret – it was in a remote location, probably had all workers sign non-disclosure agreements c. Trade secret v. patent: i. TS lasts longer if you can keep it secret ii. TS can be cheaper, more flexible iii. TS = no need for disclosure of information 1. P = reverse engineering, i.e. you have to disclose methods of making invention or doing innovation to the public iv. TS = foreign competitors cannot look it up v. TS can be hard to keep a secret d. Revision of the Copyright Statute: i. Omnibus Copyright Revision Act enacted in 1978 ii. Copyright exists in original works of authorship fixed in any tangible medium of expression: 12 1. Literary works; musical works, including words; dramatic works, including music, pantomimes and choregraphic works; pictorial, graphic, and sculptural works; motion pictures and other audiovisual works; sound recordings; architectural works iii. 17 USC 107 – Limitations on Exclusive Rights: Fair Use 1. The fair use of a copyrighted work for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research is not an infringement of copyright. In determining whether something qualifies for the fair use doctrine, consider: a. The purpose and character of the use b. The nature of the copyrighted work c. The amount and substantiality of the portion used in relation to the work as a whole d. The effect of the use upon the potential market IV. INTELLECTUAL PROPERTY AT THE END OF THE 20TH CENTURY a. Jordache Enterprises, Inc. v. Hogg Wyld, Ltd: J was jeans manufacturer; HW was created by two women making jeans for larger women and named their jeans “Lardashe,” a play on Jordache; J brought suit for trademark infringement under Lanham Act i. Lanham Act: Prohibits unauthorized use of a reproduction, copy or imitation of a registered trademark in a way that is “likely to cause confusion” with the registered mark ii. The court identified several factors relevant to whether there is a likelihood of confusion between two marks: 1. The degree of similarity between the designation and the trademark in: a. Appearance, pronunciation, verbal translation of pictures or designed involved, or suggestion 2. The intent of the actor in adopting the designation 3. The relation in use and manner of marketing 4. The degree of care likely to be exercised by purchasers iii. Court decided that HW was trying to parody Jordache, which was not prohibited by Lanham Act iv. J had also argued that HW was tarnishing its image 1. The test for an anti-dilution act is whether it economically hurts the company or not 2. J could not show that because of the connection of parody from HW people were buying less J products because it reminded them of L b. Feist Publications, Inc. v. Rural Telephone Service Co: R was telephone company required by state to provide a telephone book; F was a publishing company specializing in telephone books, and R refused to give F the rights to use its white page listings, so F used them anyways, and R sued i. While facts cannot be copyrighted, compilations of facts can be 1. Because the compiler to time and effort to compile the facts in a socially-beneficial way 2. But a compilation has to have some degree of originality to be able to be protected 13 3. Compilation: a work formed by the collection and assembling of preexisting materials or of data that are selected, coordinated, or arranged in such a way that the resulting work as a whole constitutes an original work of authorship. ii. R’s phone book failed the originality test because (a) they were required to make the book, it wasn’t something they undertook on their own, and (b) they merely arranged it in alphabetical order, which took no creativity c. White v. Samsung Electronics America, Inc: S ran ad with a robot in a white wig turning letters similar to Vanna White; W sued for violation of right to publicity arising under Lanham Act; majority awarded W a right of publicity; dissent in this case important i. Under the majority’s opinion, it is now a tort for advertisers to remind the public of a celebrity 1. Instead of having an exclusive right in her name, likeness, signature or voice, every famous person now has an exclusive right to anything that reminds the view of her ii. It’s the “Wheel of Fortune” set, not the robot’s face or dress or jewelry that evokes White’s image 1. The majority is giving White an exclusive right not in what she looks like or who she is, but in what she does for a living d. Panavision International, L.P. v. Toeppen: T bought the domain name for Panavision.com; P sent letter to T, telling him that they had the trademark to the name and for him to stop using it; T refused, instead offering to sell it to them; P sued T for trademark infringement and dilution i. Federal Trademark Dilution Act: In order to prove a violation of this act, a plaintiff must show that the mark is famous, the defendant made commercial use of the mark, the defendant’s use began after the mark was famous, the defendant’s use dilutes the quality of the mark by diminishing the capacity of the mark to identify and distinguish goods and services ii. Blurring: when a defendant uses a plaintiff’s trademark to identify the defendant’s goods or services, creating the possibility that the mark will lose its ability to serve as a unique identifier of the plaintiff’s product iii. P won because many consumers would be turned off by not being able to find P’s website easily 1. This case was before Google, where a consumer can now easily search for a company’s website, so today it would probably be decided differently PROPERTY IN LIVING THINGS (Chapter 5) I. ANIMALS AND OTHER ORGANISMS a. Pierson v. Post: Post was in pursuit of a fox; Pierson saw Post pursuing the fox, cut him off, and captured and killed the fox, claiming it as his own i. Trespassers and illegal hunters have no right to keep the animals they kill or capture ii. The court reversed the judgment for Pierson, saying Post had acquired property right to the fox by his labor of almost capturing the fox 14 b. If you wound a deer, it staggered off, and someone else comes along and kills it easily and claims it – if you had mortally wounded it, the deer would be yours; but if not, then it would be the other persons c. You have possession of a wild animal when you have deprived it of its natural liberty, and brought it within a certain control because the pursuer manifests an unequivocal intention of appropriating the animal to his individual use d. The state has sovereign right to all wild animals for the benefit of the people e. Bilida v. McCleod: B rescued a raccoon Mia, whom she raised as a pet; after policeman discovered her living with B without a permit (which was required to have such a wild animal), state officials took M and promised B that she would not be killed; she was killed anyways, and B filed suit against the officials, claiming violations of her constitutional rights i. A person cannot have a property right in something that’s illegal to possess without a permit f. Diamond v. Chakrabarty: C, a microbiologist, applied for a patent for a bacteria he created that was capable of breaking down components of crude oil, a quality not possessed by any naturally-occurring bacteria and was significant for treating oil spills; the patent office denied his application, saying that micro-organisms are products of nature and are not patentable i. It was new, useful, and non-obvious, and not a product of nature, so it should have been patenable ii. But there was a question of whether or not to extend patents to living things – creating a property right that could extend to humans, etc 1. The problem with patenting life is that it reproduces itself, so how do we deal with the offspring? Can an owner of genetically modified corn plant the seeds and make more? iii. The court disregarded this moral dilemma and said that Congress plainly meant for patent laws to be given wide scope, and that until Congress took such action to specifically preclude all living things from being patented, this could be patented iv. Now genetically-modified crops and other things have created a huge commercial development of biotechnology II. HUMAN LIFE a. Dred Scott v. Sandford: D was a slave whose owner took him from slave state Missouri to Illinois, a free state, and then to Minnesota, also a free state, then back to Missouri; D brought suit for his freedom i. Dissenters claimed there was no natural right to own slaves, that it had been implemented by governments, by man ii. Locke: Natural rights 1. Every man has property in his own person – people have a natural right to life, liberty and property 2. People can own things because society is maximized by private ownership (utilitarianism) a. People will take better care of things and then everyone benefits iii. Acquinas: 1. Nature has given man land to use, but not man to each other 2. Humans have a biblical right to ownership over land, animals, clothes 15 iv. At the time, the Constitution clearly said slavery was okay, so one way to fix that was to amend the constitution b. Moore v. Regents of University of California: M’s doctor, G, used cells from his spleen that was removed as party of his leukemia treatment without is permission for research and eventually created a commercial cell line which they patented and profited from i. The court ruled that to establish a conversion action, M had to establish an interference with his ownership or right of possession 1. M did not expect to retain possession of his cells following their removal (CA law limits continuing interest in exercised cells) ii. The cell line was not M’s property because the line was distinct from the cells taken from his body 1. G’s original additions to M’s cells was enough to create a property right in the cells over M’s iii. Have to consider arguments weighing public benefit in the research versus the right to bodily integrity iv. M could maintain an action for breach of fiduciary duty, especially since M specifically refused to sign a waiver that would allow G to use his cells in any commercial endeavor v. States usually prohibit selling organs for transplantation but not for research c. Newman v. Sathyavaglswaran: N’s children died, and the coroner removed their corneas without the parents’ notice or consent following a CA code which allowed the coroner to remove a person’s corneas without knowledge of the next of kin; parents sued, alleging violation of due process of law i. This was a presumed consent law which allow the taking and transfer of body parts by coroner without consent of next of kin as long as no objection is known beforehand ii. Circuit court said that the parents did have a property right iii. Traditionally, next of kin did not get a property right 1. But now, with advances in cremation, it has forced states to give a quasi-property to them PRESENT ESTATES (Chapter 6) I. INTRODUCTION a. There are four types of present estates in land: i. Fee simple, fee tail, life estate, and leasehold b. The fee simple takes four forms: i. Fee simple absolute ii. Fee simple subject to condition subsequent iii. Fee simple determinable iv. Fee simple subject to executory limitation c. A deed typically has both a granting clause, which describes the estate being created and the property being conveyed, and a habendum clause, which more specifically defines the extent of the grantee’s estate 16 d. Eminent domain: Using its eminent domain authority, a government or governmental entity may force a private landowner to sell her property for a public purpose i. The government must pay fair market value for the property ii. This process is called condemnation e. In re O’Connor’s Estate: John O’Connor’s estate escheated to the state for want of heirs; Adams county, where O’Connor was probated, contended that the state was liable for an inheritance tax i. Escheat: Lapsing or reverting to the state as the original and ultimate proprietor of real estate by reason of failure of persons legally entitled to hold the same (lack of heirs) ii. Estate in land: Constitutes a person’s right or interest in a particular parcel of real property or real estate iii. Intestate: Of or relating to a person who has died without a valid will iv. Heirs: Determined at ones death; relatives designated by state statute to receive a dead person’s (decedent’s) property in the event that he dies without a valid will (intestate) 1. An entity cannot be a relative (i.e. Pepperdine cannot be an heir) v. Conveyance: Done by a written deed vi. Will: Designates who or what entities receive an estate upon the owner’s death 1. Those receiving property under a will are called devisees, and those receiving personal property (or a legacy or a bequest) are called legatees vii. Issue: A person’s lineal descendants; they are first in line for intestate inheritance viii. Ancestors: A person’s lineal forebears; people second in line for intestate inheritance ix. Collaterals: All other relatives II. FEE SIMPLE ABSOLUTE a. The most complete estate in that it carries the greatest rights and has the fewest limits b. “O to A and his heirs” i. The words “to A’ are called words of purchase and indicate who is receiving the estate ii. The words “and his heirs” are words of limitation or words of inheritance c. Roberts v. Rhodes: Smiths deeded land to school to be used for school purposes without reversion or any other language of limitation; after using the land as a school for more than 70 years, the school sold the land to Rhodes; Roberts claimed title to the land by reversion since the land was no longer used as a school i. Quitclaim: A formal release of one’s claim or right to property 1. Quitclaim deed: Used to convey property where there is doubt as to the validity of the grantor’s title or authority 2. Warranty deed: Conveying land where the grantor promise to warrant and defend the grantee’s title and possession of the estate against all legal challenges ii. Assigns: Anyone to whom a grantor conveys property iii. If the Smiths had wanted the land to revert to Roberts upon its ceasing to be used as a school, they would have needed to use specific language 17 iv. The court employed rules of construction 1. The law abhors a forfeiture, so where there is doubt between a fee simple absolute and a fee simple defeasible, the court will rule in favor of the one that grants the most property rights, which would be the former 2. We want people to control property, we don’t want to impose a cloud on the title III. FEE SIMPLE DEFEASIBLE a. An estate that ends either because there are no more heirs of the person to whom it is granted or because of a special limitation b. Fee simple subject to condition subsequent i. An estate subject to the grantor’s power to end the estate if something specifically happens ii. A fee simple subject to condition subsequent is created by giving the grantee a fee simple and then providing that it may be cut short if a condition happens 1. The grantor retains a future interest of a power of termination or a right of entry 2. Its continuance is tied to a condition subsequent; when the condition is triggered, the grantor has the right to terminate the estate 3. “But if,” “provided that,” “on the condition that,” “however,” “forfeits” 4. Courts favor this over a fee simple determinable where an estate automatically reverts iii. Higbee Corporation v. Kennedy: K was granted property, and the grant said that the land was granted “forever provided that he and his heirs and assigns wish to make use of it for the purpose of a road”; K agreed to keep a fence around the land, and failing to do so would forfeit his claim; K did not end up maintaining a fence around the land 1. The grantor did not meet his burden of using clear language to create a determinable estate would which have automatically reverted, therefore it was a condition subsequent a. All that is needed is a tiny bit of ambiguity to make an estate a fee simple subject to condition subsequent rather than a determinable c. Fee simple determinable i. An estate that will automatically end and revert to the grantor if some specified event occurs; subject to special limitation ii. A determinable fee is created by language that connotes that the fee is to last only until a stated event occurs 1. It can last indefinitely 2. If the limitation is triggered, then an estate in fee simple determinable automatically ends without an y action by the grantor or any other person 3. “So long as,” “during,” “while,” “until” 4. The grantor retains a future interest of a possibility of reverter iii. Mayor and City Council of Ocean City v. Taber: T gave trustees 50 acres of his land; the trustees conveyed a part of the land to the US gov’t for the purpose of building and running a life-saving station; the deed 18 said “when the US shall fail to use the said life saving station, the land hereby conveyed shall revert to the said trustees, their successors and assigns”; the US conveyed the land to the mayor and city council of OC, who stopped using it as a life saving station 1. The habendum clause is what designates it as a fee simple determinable (the granting clause is a fee simple absolute) a. Even though it says a “right to re-enter,” there is more evidence of a determinable than a condition subsequent 2. Land goes to the trustees d. Fee simple subject to executory limitation i. A fee simple defeasible that is subject to divestment in favor of someone other than the grantor if a specified event happens 1. It can last indefinitely 2. If the triggering act or event occurs then the estate automatically terminates a. The triggering act is imposed as a condition on the grantee’s estate rather than as a limitation on it b. If the condition is violated, then the present estate shifts from the initial grantee to a designated alterative grantee c. The alternative grantee is said to hold an executory interest 3. “Express condition,” “in the event that” ii. City of Palm Springs v. Living Desert Reserve: M conveyed 30 acres of land to PS, on the express condition that it be used in perpetuity as a desert wildlife preserve, and stipulated that if it was not used solely as such, the interest in the land would pass to LDR; city accepted the grant, and three years later wanted to build a golf course on it; they offer LDR $ for the land, which was refused, and threatened to take it by eminent domain; finally they just did it after passing a city resolution 1. When the city stops using the land as a desert preserve, it automatically passes to LDR IV. FEE TAIL a. Relic of medieval English property law that has no practical significance today – dynastic minded medieval landowners created the fee tail as a means to ensure that estates would stay within families and not be sold or lost by later descendants b. The estate endures as long as descendants of the original grantee are alive, and is inheritable only by the grantee’s descendants LIFE ESTATE a. Holding property in fee simple absolute allows its owner to convey it freely or pass it to her devisees or heirs, but often this is a secondary concern to lifetime possession and use i. Most life estates are created by gift, devise, or bequest ii. Few people buy life estates iii. A life estate lasts only so long as the grantee (life tenant) lives iv. Upon the life tenant’s death, the property automatically reverts to the original grantor or shifts to a designated successor grantee (remainderman) V. 19 1. Thus every life estate is paired with a future interest, either a reversion in the grantor or a remainder in a successor grantee v. Life tenants cannot pass their life estate to their devisees or heirs 1. They can convey the property during their lifetime, but their grantee will only possess it so long as the original life tenant lives 2. When a life estate is transferred to another, it is called a life estate pur autre vie vi. When there are multiple life tenants, usually when one tenant dies the life estate lasts until the last life tenant dies, the share of each survivor increasing by means of remainder b. White v. Brown: W lived with JL after JL’s husband died, along with W’s daughter, SWP (who was L’s niece – W was JL’s sister-in-law); in her will, JL wrote that SWP was the executor of the estate, and W would have JL’s house to live in and that the home was not to be sold; W alleged that she was vested with a fee simple absolute title to the house, and JL’s nieces and nephews contended that the will conveyed a life estate to W i. The court used rules of construction to determine that the will conveyed fee simple absolute, which allowed W to sell the house, because absolute gives absolute authority to do what a person wishes with the property ii. The court disfavors restraints on alienation – goes against the capitalist system of wanting the land to be used for the most advantageous purpose iii. Dissent believed it was clearly conveying a life estate c. Williams v. Estate of Williams: GA wrote a will, leaving his farm to his three daughters who had taken care of him and never married; will said that he wanted them to have the farm during their lives so long as they didn’t marry, and for it not to be sold during their lifetime i. Intent of testator was not to make an absolute gift – will contained words of limitation, and that he only wanted them taken care of during their unmarried lifetimes ii. Who had what? 1. Each daughter had a one-third life estate, determinable upon marriage a. They also each had a one-third executory interest in each of the other two daughters’ one third interest, which would vest in her possession if one of the other two died or married while she remained unmarried and alive b. They also each had a remainder interest, which would vest if one of the other two died or married while she remained unmarried and alive 2. GA’s heirs held a reversion in fee simple, subject to the determinable life estates and executory interests of the draughts, which reversion would vest in possession upon the death of the last surviving daughter d. Woodrick v. Wood: GW and CW owned land together; upon GW’s death, CW got a life estate in his interest in the land, and upon her death, the property would be divided half between their son, SW, and daughter, PW; SW conveyed his future interest to CW, so that she had a life estate and a 75% remainder interest; CW wanted to tear town a barn on the land, and PW objected i. Doctrine of waste: 20 1. The common law rule said it didn’t matter if the alteration improved or decreased the value of the property – as long as it altered the property it was considered committing waste 2. This case embraces the modern rule that if the waste improves the value of the property it cannot be enjoined ii. CW was allowed to raze the barn because it improved the value of the land VI. LEASEHOLD ESTATES a. The leasehold takes three forms: i. The terms of years: 1. Runs for a specific period of time, such as six months, five years, or 99 years 2. “To A for ___ years (or months)” 3. A tenant under a term of years can freely convey or devise his leasehold interest during its term for the balance of its term The periodic tenancy ii. The periodic tenancy: 1. From month-to-month leases or from year-to-year leases 2. The lease continues for succeeding periods until terminated by either the landlord or the tenant iii. The tenancy at will: 1. Has no fixed duration 2. IT can be terminated at will by either party b. Leasehold tenants are subject to the doctrine of waste FUTURE INTERESTS (Chapter 7) Future Interest in 2nd Grantee None None None Executory interest and/or remainder and/or remainder and/or remainder Present Estate Fee simple absolute Future Interest in Grantor None Fee simple subject to condition subsequent Right of entry Fee simple determinable Fee simple subject to executory limitation Fee tail Life estate Leasehold I. Possibility of reverter None Reversion Reversion Reversion INTRODUCTION a. The owner of a future interest holds a present property right that is enforceable in court 21 b. Some future interests are certain to materialize into present estates – a reversion or remainder is certain to become possessory by someone at the end of a life estate i. But a possibility of reverter, the right of entry, or executory interest only become possessory upon the happening of a triggering event c. All of these future interests are inheritable; reversions and some remainders are also devisable – all five types of future interests are freely transferable by sale, gift, or will d. A reversion, possibility of reverter, or right of entry may be retained by the grantor e. A remainder or executory interest may be created in a grantee II. REVERSION AND REMAINDERS a. A reversion is the name for the future interest left in the grantor after they, the holder of a greater estate in real property (such as fee simple absolute), transfer a lesser estate in the property that is certain to end (such as a life estate or a term of years) i. Deed = the reversion remains in the grantor; will – reversion remains in the successor in interest of the testator b. If the deed or will creating such a lesser estates specifies some second grantee who is to receive the leftover future interest, then that interest is called a remainder i. A future interest created in a grantee that is capable of becoming a present possessory estate upon the expiration of a prior estate ii. It must be expressly granted in the same instrument that created the preceding estate, which is a life estate iii. c. Remainders are either vested or contingent i. Vested = a remainder that is held by an ascertained person and that will become possessory upon the natural termination of the preceding estate 1. O to A for life, then to B and her heirs 2. Vested remainder subject to open: This remainder is vested in a class of persons, at least one of whom is qualified to take possession, but the class members’ shares are not yet fixed because more persons can subsequently become members of the class 3. Vested remainder subject to divestment: This is a remainder that can be completely divested by a condition subsequent or by an inherent limitation of the remainder estate ii. Contingent = a remainder that is held by an unascertained person or subject to a condition precedent other than the natural termination of the preceding estate 1. O to A for life, then to B if B is still alive 2. Condition precedent = an act or event that must exist or occur before a duty to perform something promised arises 3. Condition subsequent = a condition that, if occurs, will bring something else to an end iii. Alternative contingent remainders = O to A for life, then to B if B is alive, but if B does not survive A, then to C 1. This creates an alternative contingent remainder in C that would become a vested remainder if B dies before A 22 d. e. f. g. h. i. 2. B dying before A is a condition precedent to C obtaining the property Defeasance: The fact or an instance of bringing an estate or status to an end especially by conditional limitation; a condition upon the fulfillment of which a deed or other instrument is defeated or made void i. Defeasible = capable of being annulled, voided ii. Indefeasible = not vulnerable to being defeated, revoked or lost Both a reversion and a remainder follow an estate that ends naturally ABO Petroleum Corporation v. Amstutz: JT and AT, parents of B and R, owned property; they made two conditional deeds conveying two life estates, one for each girl; the property would remain the daughter’s during her life and the at her death it would revert, vest in, and become property absolute of her heirs, or if she died without heirs, then of her estate; later, the parents gave two more deeds granting absolute title to the grantee; later, B and R tried to convey fee simple to ABO; their heirs claimed that the girls had only gotten life estates, and so could only transfer a life estate to ABO i. Girls’ children = contingent remainders (heirs are determinable at death) ii. Girls’ estate = alternative contingent remainder iii. Parents = reversionary interest (because remainders are contingent) Swanson v. Swanson: GW died, leaving a life estate and power of appointment trust to his wife and remainders to his children; the trust provided that it would go the wife during her life and be appointed to the children either by her or at her death, and that if any of the children were not alive at the time of her death, their share would go to their children; one of the children, B, was dead when the wife died, and his wife claimed his interest i. Majority held that B just had to outlive GW for his interest to vest, and so he did so it went to his wife as his heir ii. Dissent said that B had to outlive the wife as well, and because he didn’t, his remainder interest was divested and did not pass to his estate iii. Gertrude had a power of appointment over the property 1. Such a power enables a life tenant to convey the property in fee simple absolute, thereby busting the lifetime limits on it 2. Where a life tenant holds a power of appointment but does not exercise it, however, the property passes to the designated holder of the remainder interest Trusts: i. Under a trust, one or more persons or entities (called trustees) own property on behalf of another person or persons (called beneficiaries) ii. The property (sometimes called the trust’s corpus or res) may be real, as in a house and land, or personal, such as stocks and bonds iii. The trustees are the legal owners of the property, but must manage it exclusively in the best interests of the beneficiaries and ultimately must convey it to them Baker v. Weedon: When JW died, he conveyed all of his property to his third wife, A, during her natural life, and that upon her death it would go to her children, and if she didn’t have any children, then it would go to his grandchildren from a previous marriage; A lived on the land and the state wanted to put a highway through it; the gc’s helped her get fair compensation for a portion of the land, but she wanted to sell all of it to live off of; the gc’s didn’t want her to sell it because with the highway around it, the land value would grow 23 i. A = life estate, gc’s = contingent remainder (contingent on her not having any children before she died) ii. The court ruled that A could not sell the whole of the land, but could sell as much of it as needed to make her able to live comfortably until her death iii. Permissive waste = to let property deteriorate without maintenance, allowing waste to happen; have to maintain a life estate iv. Affirmative waste = when she’s actively doing something to change it; tear down a barn on the property III. RIGHT OF ENTRY AND POSSIBILITY OF REVERTER a. Right of entry and possibility of reverter are future interests retained by grantors who create fee simple subject to condition subsequent and fee simple determinable i. They may last forever (though many states have statutorily limited the period in which these interests can exist) ii. They may terminate by their own terms iii. The holder of one of these has current property rights that are considerably less extensive than those possessed by the holder of a reversion or remainder interest b. Mahrenholz v. County Board of School Trustees: H gave land to trustees of a school district, with deed providing that the land was to be used for school purposes only and otherwise to revert to the grantors; H died intestate, and had son Harry; before they died H conveyed their reversionary interest to J; J transferred this interest to M; Harry conveyed his interest to M, and then later disclaimed it to CBST i. The court held, after analyzing the wording of the grant, that H intended to create a fee simple determinable followed by a possibility of reverter 1. The use of the word “only” immediately following the grant “for school purpose” demonstrates that H wanted to give the land to the school district only as long as it was needed and no longer 2. It suggests a limited grant, rather than a full grant subject to a condition ii. …this land to be used for school purposes only; otherwise to revert to the Grantors herein” 1. There is a break in the construction of the sentence, which could signal a condition subsequent 2. If there’s a break the courts tend to see that as evidence of condition subsequent 3. If it’s supposed to be automatic, there shouldn’t be any break – it would flow as one sentence 4. But this sentence following the break seemed pretty definite afterwards, overcoming the presumption of condition subsequent, making it a determinable c. Several states place time limits on exercising a right of entry i. Some of these statutes limit the duration of rights of entry and possibilities of reverter to a certain number of years from the date of their initial creation ii. Others require that they be exercised or enforced within a certain number of years after the condition or limitation was breached 24 iii. Others require that holders of rights of entry or possibilities of reverter periodically file in the local land records a declaration of their continuing intent to enforce the condition or limitation d. Ink v. City of Canton: I conveyed land to city for the use of a public park, and the deed stipulated that when it stopped being used as a park, then all interest of the city would be forfeited and the land would revert to the heirs of I, and they could enter and take possession of the land; city accepted the land and built a park; the state appropriated all but 6 ½ acres of the land for easements for a highway, with 10 acres still useable for park purposes; the question was who the state should compensate for the taking of the land – the city or the heirs i. Heirs = possibility of reverter 1. This was triggered by the state’s appropriation of the land ii. So long as the city used the money from the state for Ink Park purposes, neither the land left for the park nor the money will revert to the estate 1. In most states, the court would give all the money from the appropriation to the owner of the fee simple determinable (the city), who would have had to use it for park purposes, or else it would revert to the estate IV. EXECUTORY INTERESTS a. A future interest created in an alternative grantee that divests (cuts short) a present estate before its natural end i. Becomes possessory automatically upon the happening of a triggering condition or limitation ii. Two basic types: 1. A springing executory interest = divests the grantor in the future; “from O to A when she marries,” would create an executory interest in A, divesting the grantor, O 2. A shifting executory interest = divests an initial grantee of her present estate and shifts the estate from an initial grantee to an alternative one; “from O to A, but if the property is no longer used as a library, then to B” creates an executory interest in B b. City of Klamath Falls v. Bell: D & S Corp gave land to the city as a gift for the use of a city library, the deed said that if at any time the city ceased to use the land for library purposes, title to the land would pass to FS and FD; after the city stopped using the land as a library, the city filed a complaint against FS and FD’s heirs i. TC ruled that the title was vested in the city because the gift to FS and FD was void under the rule of perpetuities ii. Court found that corp gave the city the land under a fee simple subject to executory limitation, and that the corp retained a possibility of reverter 1. Since FS and FD were sole shareholders when corp dissolved, they got the land RULE AGAINST PERPETUITIES a. “No interest is good unless it must vest, if at all, not later than 21 years (9 months) after some life in being at the creation of the interest” i. Was designed to promote the marketability and development of present estates and limit the dead-hand control of grantors over future interests V. 25 b. c. d. e. f. ii. Imposes a maximum time limit on the potential duration of every contingent remainder, vested remainder subject to open, and executory interest to which it applies 1. None of these future interests can last longer than 21 years beyond the death of the last relevant person alive at the time of its creation 2. Each of them must certainly vest, close, become possessory, or fail within this period (the life in being plus 21 years) – if not, the interest is void from the moment of its creation 3. A “life in being” must be a validating or measuring life, which is a life of someone alive when the interest was created whose life will determine whether and when the interest will vest or fail a. Ex: “Elvis conveys Blackacre to his children for life, remainder to his grandchildren) b. There is no measuring life i. Because Elvis is still alive, he may still have more children – the entire class of “Elvis’ children” must be considered together and as long as it is possible for Elvis to have more children after the conveyance, E’s children, singly or collectively, cannot be valid measuring lives because they are not necessarily all “in being” at the time of conveyance The court possesses an authority called cy pres which allows them to reform future interests so as to bring them within the perpetuities period i. It means “as near as possible” – the object is to carry out the intentions of the parties “as near as possible” under the rule Under a “wait and see” approach, contingent future interests remain valid throughout the perpetuities period, and are voided only if the contingency is not resolved by the end of period. Uniform Statutory Rule Against Perpetuities (USRAP) i. Under this statute, contingent future interests are valid for either the common-law perpetuities period or 90 years, whichever is longer ii. Thereafter, courts are empowered to reform the interest so as to bring it within this extended perpetuities period Interests subject to the rule are contingent remainders, executory interests, options to purchase land not incident to a lease for years, and powers of appointment i. Interests not subject to the rule are present interests in possession, reversions, vested remainders, possibilities of revert, rights of entry, powers of termination, and charitable trusts Warren v. Albrecht: JM gave land to JW during his life, and then at his death to his living children, and if there were no descendants then to JW’s sisters, and if none of them are alive, then to JM’s heirs; JW’s sons quitclaimed their interest to JW, and JW filed to have the deed declared void in violation of the rule i. Who had what? 1. JW = life estate 2. JW’s children = contingent remainders, certain to vest (if they’re alive) or fail (if they’re dead) at his death 3. Descendants of JW’s children = alternative contingent remainders 26 4. JW’s sisters = alternative contingent remainder, certain to vest (if JW has no surviving children) or fail (if JW has surviving children) at JW’s death 5. JM’s heirs = alternative contingent remainder ii. The court said that since at JW’s death, the interests were certain to vest or fail, the deed did not violate the rule g. United Virginia Bank/Citizens & Marine v. Union Oil Company of California: WA and UO had an agreement where the optionee had the right and option to purchase a parcel of land at the intersection of two highways; the option was granted for 120 days beginning at the time when the City of Newport News, VA, acquired the right of way of the two streets; the bank, on WA’s behalf, contended that the agreement violated the rule, because there was a possibility that the option might not expire within the period prescribed by the rule; UO said that since the roads are anticipated to be completed within 21 years, the rule wasn’t violated i. If there exists at the time the agreement is entered into a possibility that exercise of the option might be postponed beyond the prescribed period, the agreement is invalid because it is in violation of the rule. 1. There as a distinct possibility that the specified contingency might not occur until after the expiration of 21 years from the agreement being made VI. RULES OF CONSTRUCTION AND RULES OF LAW a. Rules of construction: Flexible guidelines used by courts to interpret ambiguous deeds and wills i. EX: When forced to choose between a fee simple absolute and a fee simple defeasible, the courts favor absolute ii. EX: When forced to choose between a fee simple determinable and a fee simple subject to condition subsequent, the courts favor condition subsequent b. Rules of law: Inflexible constraints on how grantors and grantees can convey and hold property i. Such rules have encountered resistance in American courts ii. Only the rule against perpetuities remains a significant factor in modern property law c. The traditional standard of proof for overcoming a rule of construction is by “clear and convincing evidence” d. Harris Trust and Savings Bank v. Beach: H and G married; H created two trusts for G, each giving her shares of stock in the family company, which G was to get the income from for life; both trusts provided that at G’s death, the trust would terminate and the fund would be distributed among H’s heirs; there was a question of whether H’s heirs were determined at H’s or G’s death i. If at H’s death, the trust’s estate passes under the wills of his two daughters, and would go to E’s two living children and D’s dead husband’s estate and four charities ii. If at G’s death, the trust’s estate would be divided among H’s now-living descendants – two grandchildren and three great-grandchildren iii. The court ruled that since the documents revolved around G’s life, then the heirs should be determined then iv. Per capita v. per stirpes distribution: 27 1. Per capita = Divided equally among all individuals, usually in the same class 2. Per stirpes = Divided equally among each family branch of a group of beneficiaries 28