NARRATOR: Thanks for joining this episode of the No. 86 lecture series, where we discuss the foundational principles of Property Law as well as current topics in the academic literature. Today’s episode features James Stern, Professor of Law at William & Mary Law School. His scholarship centers on property and private law theory and on intellectual property, privacy and related issues. As always, the Federalist Society takes no position on particular legal or public policy issues; all expressions of opinion are those of the speaker. PUBLIUS: Why do first year law students have to take property class? JAMES STERN: Property is a basic part of the law school curriculum for probably a couple of different reasons. The most fundamental of them is that it makes up one of the core building block components of the common law or private law generally. Private law is what you might think of as the basic rights that pertain between all individuals among each other as opposed to say rights that you have against the government or rights or the mechanics of criminal law or the mechanics of the litigation system like you get in civil procedure. You have contract property torts, and there's also maybe a sort of fourth vestigial or smaller piece which is unjust enrichment, which gets a lot of attention elsewhere in the world, but less so in the United States. You put those elements together, and that's kind of what the whole legal system in a sense is build out of, especially if you understand property in a kind of a broad sense. Property is in its core a major part of all the rights you have that are not strictly personal to yourself, like your body or maybe your reputation, your rights in things around you, and that's a really fundamental part of how the legal system is structured. It's also the case maybe partly for that reason that there are a lot of concepts that you come upon in property law that don't really have any analog any place else because of the way it works. Property presents particular problems that you don't see in kind of basic torts or contract, having to do with the way that different rights interact. It's a great way to get introduced to some of the kinds of problems that come up in law that you see elsewhere. In your basic property course, you might be looking at something like a simple real estate transaction in Blackacre, but in a whole range of different contexts, intellectual property or mergers and acquisitions in securities law or other things like that, the same basic concepts come into play. You learn them in a kind of a rudimentary setting in a first year property course, and that gives you a lot of other tools that you can bring to bear elsewhere in the study of law as you move on to more specialized areas. Thinking like a lawyer is one of those expressions that seems to make sense to just about everyone who's been to law school and become a lawyer, and yet it's sort of hard to define just what we mean by it. It maybe means somewhat different things to different people. To me, it means a couple of different things. One of them is just thinking with a certain kind of particularity, paying attention to details and asking why at each stage of a kind of a logical assertion or an assertion that is impliedly based on some kind of logical reasoning, thinking through that, and just turning up the level that you examine the different steps that go into that. That's kind of part of it, and in the context of law itself, balancing, I think, three different variables. Usually, for any given rule that you'll come upon in a legal system, there'll be a sort of a pro side and a con side. You can imagine the reasons that would support the rule being the way it is or the forces that push it that way. You can imagine the objections that might be to the rule being however it's constituted. There are recurring patterns that come up again and again with those. Then a third piece in this which might overlap with either of the other two is just the need for stability and administrability in the law and the ability to have a kind of a working system that you can scale up from. When I think about what it means to think like a lawyer for a first-year law student, a major part of it is bringing that out, bringing out the ability and not just the ability, but the habit of looking very closely at the underlying kind of logic behind a particular rule and trying to assess the balance between what you might think of as a perfect policy for this particular situation, particularly when we're dealing with a case law method, you're given a specific set of facts before you, but then also trying to balance that against the need for systemic clarity for everybody for coming up with a rule that's going to deal as best as possible with all the cases and not just with this one. That's the really major theme in property law, the need to come up with generalized rules that work across the board because property law covers a whole bunch of different kinds of stuff. There is an ever present tension between the need to particularize the rules for a particular case, however in terms of different kinds of resources or different kinds of fact patterns, versus just keeping the rules plain and simple so that everyone can understand them across a broad range of cases and so it's kind of intuitive. Property presents a really good opportunity for that. PUBLIUS: Since all law students learn the same basic property principles, does that mean the class is taught the same way by every professor? JAMES STERN: When it comes to teaching property, I don't think there's necessarily one way to skin the cat. I tend not to do what I think of as the standard paradigm, which is to begin with original acquisition of property, property by capture, how you come to own unowned resources out in the wild. To me, and this is just me, that seemed a little bit strange because in most of the stuff around you, the daily life of the property system is not about acquiring ownership of unowned things, but rather about managing a system where everything already is owned. Now, I think there is actually a good deal to be said for the traditional approach that I can touch on in a second. My own approach is a little bit different. I like to start from the beginning with some cases that get at the kind of core of what ownership of property or rights in property of some kind, what that entails, and my basic thesis there is that it entails control as against the claims of others, control over what happens to a particular resource. That's what it means to be the owner of something. By and large, you get to decide what's done with it. I think there are some other very important aspects of a property law system as well that are also worth getting into, but that's kind of a starting point. From there, I tend to move on and say, "All right, well, what are the different kinds of things that are susceptible to ownership? What does it mean? Can you own a radio broadcasting channel, for example? Can you own a river?" All these different kinds of assets that are out there, and if you can, how might the property system adjust to deal with differences that are presented by different kinds of resources. From there, I try to move on to some, I think, general institutional themes of a property system, some trends or some patterns that seem to hold across different kinds of things that might be within a property system, like rules that govern just what it is when we know that you own something, just what is the sum total that comes with that. If you own a fruit tree, do you also own the fruit that come from it? That's the kind of basic illustration of that principle. There are lots of different examples. If you own an acre of land, do you own a cave that exists underneath it? Do you own the airways all the way up above it? For that matter, do you own the radio spectrum that permeates through it? All kinds of different questions that come up there, and there are all kinds of interesting rules that govern the way those questions are handled and dealt with. I spend a bit of time on that, and then dive into some of the more particular doctrines along the way in more specified fields that are important to see in property. I think there is something to be said for the approach I don't follow, which is to start with Pierson versus Post, the fox case, and how it is that you come to own things. That is the deeper lesson in there is trying to figure out what the rules are for establishing ownership, you actually get some of a window into what it is that a property system is good for even when it's up and running. That is to say there's a lot of overlap between the things that you think about in deciding what it takes to become the owner of something and the reasons for having a property system at all, which are going to suffuse every decision that you make along the way in developing the different rules of a property system. PUBLIUS: Now that we’ve talked a bit about the why and how to learn about property law, let’s discuss some of the basic principles. The most basic question is obviously “what is property?” JAMES STERN: Property is in the end kind of hard to define, but in a very basic formulation, I would describe property as a system of rights to control what is done with individual resources in the world around us. Property law assigns rights of control over individual resources that are stable across time and that pertain to in general the world at large. Everyone is bound by the decisions of whomever has control within the property system. There are lots of different things that are almost an infinite variety of different things out there that are subject to property systems of one kind or another. An obvious example is real estate or land, and within the realm of land law, you might say, there are other kinds of resource rights that have an ownership structure or property-like structure that rub up against the rights in land, like rights in water, subsurface water, water at the surface, ponds and lakes, streams and rivers, rights in other kinds of resources associated with land, like oil and gas, and questions that arise in terms of how you assign ownership of those as between the owners of surface land. There are obviously all kinds of questions that come up when it comes to personal property law, to tangible, physical things. That includes animals and livestock, pets and farm animals. It also includes your car, your boat, your diamond necklace, your furniture. It might or might not include the candelabra screwed into your wall. Well, really depending on whether it's screwed into the wall. If it's screwed into the wall, it's a fixture and part of the real property, so all of those kinds of things. Then there is lots of property in intangible things. That includes the domain where I do a lot of research and work, intellectual property law, things like patents, copyrights, trademarks, trade secrecy, and similar kinds of rights in these kind of intangible, notional things. There are other sorts of intangibles too. Think of your bank account, your bank account is full of, if it's full of anything at all, it's full of your claims against the bank representing money. That's totally abstract, but it's highly valuable to you. Accounts receivable if you're a business, it's not something you can hold in your hand, but they belong to you, and you can sell them off to someone else. A whole range of different things that are potentially subject to property law, and then there are questions about just what we are going to call property in the end as well. Is your law degree, when you come out of law school, a piece of property? I tend to think not. I mean, your diploma maybe, the physical diploma. I tend to think your degree itself is not, but there is at least one case that suggests otherwise. It's potentially a very capacious term that brings in a lot of different stuff. PUBLIUS: As you say, that’s a lot of different stuff that can fall under the category of property. What does it mean for someone to have a right to their property? JAMES STERN: Property rights are a really fundamental part of any legal, or I might even just say normative system, a normative system in the sense of a set of rules that tells you what to do and what not to do. In any kind of moderately complex setting of different people, you're going to have to have rules that govern what's done with different things at different times. It's just too difficult to slice up the world in terms of rules of right and wrong conduct that doesn't take account of particular stuff, who gets to decide what's done with that chair today, not just how should you go about your life and what is good behavior and what's not. Even in say Soviet Russia, they had a law of personal property. It wasn't the case you could just go down the street or go into someone's apartment and just take someone's shirt or take their broom that they swept the floor with. People had rights of a sort in personal objects there as well. That's a kind of very fundamental building block of any legal system. This is true for a couple of different reasons. One is that you need security of expectations in the resources that you use around you, in part so that you know what the effects of the decisions that you make are going to be. If you plow a field and plant seeds in it, you want to know that when all is said and done, you're going to be able to reap the harvest from that planting. Similarly, if you park your car on the street, you want to know that it's going to be there when you get back. It's possible with technological changes that you can get to the point where you don't need specifically that. Think of something like well, taxi cabs and now Uber or other kinds of ride share devices, although at the end of the day, the taxi cab is owned by someone. If you're using scooters on a scooter app, those are owned by someone. Even when you're sharing things, that usually at the end of the day needs to be backed up by some kind of ultimate authority who's got control over what happens to stuff. You've got to have rules that govern that. Then property also turns out to be kind of important in a mirror image sort of secondary way as against government authorities as a way of spreading out decision-making power so it's not simply concentrated in a single set of hands that can act in an arbitrary manner. Property carves out a realm of freedom for individuals where they can pursue their own interests and sort of determine the ingredients of their own lives without needing a permission slip every time from a kind of central governing authority. That turns out to be quite important too and sets up as well a kind of a check or a rival center of power or rival centers of power as against any single centralizing authority that might be brought to bear. A major, major part of property law that can be easy to under appreciate is its temporal dimension. Property rights in particular, things persist across time. That's an important part of it because property. It's about giving you a secure basis for expectations in the resources that you use. More than that, it's keyed to resources that tend to persist across time, so especially with land, which exists on a permanent basis, there's a historical dimension to property rights claims. When you go to buy a house, you have to undertake a title search, and sort of in principle, there are devices that limit this, but in principle, this means tracing your claims about to the dawn of time, to the first property, to the original acquirer who acquired something when it was unowned. That's a pretty tall order. One of the features of the common law that's interesting to think about is the way in which the common law by virtue of the extent to which it was unwritten could facilitate that historical continuity simply by positing that something was very old. It's just these great phrases like "time out of mind" or "for time immemorial" this has been what the rule is or this is who the owner of Blackacre has been. That has a kind of a romantic feel to it in a way, but there's actually serious policy work you might say that's going on there, which is in establishing this secure piece of things. People often think of the common law as in law school, the emphasis is often on the kind of changed dimension of common law, but actually common law, the common law, the historic common law was much more stable than that picture suggests, and a lot of the emphasis was on continuity across time. That's something to keep your eyes open for in looking at property law is just the extent to which some of this rather florid language is actually getting at something that's important to the property system, which is the ability to maintain continuity across time, although it's also the case that that has to be balanced against the need for change. That's in some ways one of the great fundamental tensions in property law, the need to establish stability and security on the one hand, but also the need to adapt to new circumstances on the other and just how you manage that balance in a way that's not ad hoc and that doesn't undermine the goal of security. PUBLIUS: Let’s go back to another basic principle in a property system that you mentioned when talking about how you teach. How does a legal system deal with unowned property? JAMES STERN: In general, there are a couple of different approaches that a legal system might adopt when it comes to figuring out for something that is unowned or unclaimed how it is that you go about establishing ownership over it. You could have a system where the government just claims control over a resource in the first instance and auctions it off or gives it away to the most deserving party, something like that. That's not what we have. That's a much more demanding approach administratively because you got to have a kind of central authority there, and there are all kinds of problems that arise with it. On an everyday basis, you need a system that kind of runs at the ground level all on its own. Even now, we have all kinds of informal rules about how you claim things. Think about a parking spot and how you signal, literally signal that you've claimed a particular parking spot by hovering around it, and you have to put your turn signal on. If you don't put your turn signal on, it's not yours. There are these great examples in Chicago of blizzards and stuff like that where people will go out, and they will shovel a parking spot after say there's been say two feet of snow, and they claim that spot as their own. Often, they have to mark it in some way, say by putting down a cone or even a mitten or something like that. There are kind of informal rules that apply to that. This kind of stuff comes up not only in formal contexts but in informal ones as well. In general, although there are you might say sort of adjustments or details that people can wrangle about in how these things work, the basic principle governing acquisition of property rights in unowned things is something like a rule of capture, whereby you come to own something by taking possession of it. There are different versions of this. Your rights might be more or less stable, depending on whether say something gets loose from you or not, and the line might be drawn, you might say further down the kind of timeline of putting something to use or not as far down it. The ultimate idea here is use. That's what we have property rights and things for is putting resources around us to use, and possession of a particular resource is generally conceived of as an integral step. It's something you have to do in order to make use of a particular resource. Broadly speaking, the approach the law takes is to say something like the first person who undertakes the effort necessary to actually achieve possession, capture occupancy, these are very similar ideas. The person who manages to do those things will be the one who is the owner of the resource. Now in different contexts, as I said, the line can be drawn differently. That's the big issue in the famous case of Pierson versus Post about the fox. How much should it matter that you are basically in hot pursuit? How much should it matter that you have called dibs on a particular resource versus actually netted it or grabbed it with your hands? How much does that matter? With different resources, we see slightly different approaches to that, but within that variation, although those variations are interesting and significant, you don't want to lose the larger picture, which is in general what we're talking about here, is ultimately capturing, possessing, coming to have within one's control the resource that ultimately will be the basis for the property claim. When it comes to assigning claims to unowned resources, one of the great illustrations I have found comes from the treatment of rights actually in whales in the 19th century among whalers. Now today, for obvious reasons, the harvesting of whales from the sea is not something we have as much enthusiasm for, but at the time, this was a major industry. Variations in the way this was approached that are described in a really terrific study by a professor named Robert Ellickson, who's a giant in the field of property, sheds a lot of light on this. The default rule for whales that obtained among whalers at the time was an approach known as a fast-fish, loose-fish. This is written about actually in Moby Dick. Fast here does not mean speedy. Fast here means fastened. It means that basically you've managed to sort of lasso the whale, of course not really a fish. You've managed to lasso the whale, and it's harpooned, and the harpoon is attached to your boat. You basically have roped it. The whale is yours if you manage to maintain that control by having it roped. This worked well with various different kinds of whales out there in the whale fisheries, but not for all of them. In some areas, in particular where the sperm whale was fished or whaled, the rule was a different rule. It was known as iron holds the whale. Here, all you needed to do was manage to land your harpoon in the whale, that is to say kind of stick it, and it didn't matter that you had a rope or a line attached from the harpoon to your boat. Why didn't it matter? Well, sperm whales are much more aggressive for one thing. They dive down, they come up again, and it just wasn't practical to insist on having the rope. If you did that, the concern is in part that not only is it unfeasible, but you'll end up awarding the ultimate prize, the sperm whale, not to the boat that undertook the most effort, but to kind of the last boat who swooped in, who may not really have done anything. They're just kind of fortuitously jumping on it, and so you needed a rule that in a sense awarded title to the whale at an earlier point in time. You have a kind of set of trade offs there that are undertaken, and this was done informally by whalers. This was never imposed by legislation or even by courts. It's something that bubbled up from within the different whaling communities, and the idea was for some kinds of resources, this rule works well. You've got to have an actual capture approach. For others, something that's a little bit ahead of that is necessary because insisting on actual capture all the way through is going to get it wrong. PUBLIUS: You’ve described capture rules that developed over time as a custom in certain industries. How do these rules translate into the legal property system? JAMES STERN: In terms of how capture rules work in the law, it's often sort of suggested there are two different dimensions that are at play. One of them is reward to useful labor. In this sense, what we mean is someone undertakes a useful effort to go out and appropriate something and what we seek is to ensure that that labor is properly rewarded. Not in the sense of compensated, but that we protect what has been undertaken. Someone expends effort and initiative. They make investments in order to capture a resource, and that is what the driving consideration should be. That's why we care about capture in the end is because that's what it represents. It represents someone bringing something from the wild into a domain where it can be put to use by the human race. As against that, a different theory has much more to do with kind of claiming dibs on resources, a way of saying, "This is what capture's all about." It's about a way of saying to the world, "Look, I've claimed this for myself. I'm telling everyone that this is mine, and I would like it. I've made clear my intentions by capturing the resource." Those are two different kind of pieces that are at play within doctrines of capture. It's about on the one hand, protecting investments that people make and figuring out at what point do we think they've done enough to justify their having a property right in the resource? At what point do we want to start protecting their interest in possessing a resource because of what they've undertaken? Roughly speaking, the general rule is well, when they've achieved possession, then it's enough, but maybe we want to protect something less than that if we think possession is ultimately going to come about or does ultimately come about subsequently. On the other hand, is what we care about establishing clear rules that people can follow so that just being in hot pursuit, say of the fox in Pierson versus Post or of just merely having with the ordinary whales, not the sperm whales, with the ordinary whales having stuck it with your harpoon in the days of the whalers? Maybe that's not clear enough. We don't know either what that means, or it's just not a clear enough line to draw. That's not good enough. We want to see actual success because that establishes a clear line that the rest of the world can understand. At that point we know, just like those parking spots in Chicago, it's not enough just to shovel out the spot. You got to put the cone down on top of that so that we know you're claiming this. That tension pervades the different doctrines dealing with acquisition of unowned things. PUBLIUS: Although someone has firmly established ownership, there can still be questions about what their ownership entails. Can you talk a bit about trespass in property? JAMES STERN: Trespass to land, is the unauthorized crossing of the boundary that marks the property line. So that in and of itself is pretty simple. Now there can be some tricky cases that come up and of course, that you're likely to study in law school involving trespass, for example, by not with your physical body, but trespass with say, you're operating a woods shredder and some chips fly onto your neighbor's land is that trespass? If you have a smoke stack and you have particulate matter that settles on your neighbors land, is that a trespass? Kind of tricky edge cases, but for the most part, the law of trespass, especially with land is pretty simple. With physical objects, the general rule is don't touch stuff that's not yours. That's the basic concept and through it all, although there are all kinds of interesting details and particulars that you'll study in law school, kind of pushing on the boundaries of this. For the most part, it's pretty straight forward. Don't go on land that you don't own and don't touch things that aren't yours. Don't use things that aren't yours. Don't access bank accounts that aren't yours. Don't break into Facebook, Instagram, or YouTube accounts that aren't yours. All of these you can think of as versions of the same underlying principle. But now rights against trespass are not fully absolute. It's not the case, that is the owner of a particular piece of land. No unauthorized entrances by other people are ever permitted. First of all, there are all kinds of rules of implied consent that are going to be imputed to you if you don't do anything about it. In general, people are allowed to make a U-turn in your driveway. If you, at least, if you don't tell them that you're not okay with that. So that's not even going to be a trespass. But there are other situations where others are allowed to enter your land. Say if there's an emergency to get across, certainly if you're doing something illegal on your property, you may find the police will be there and that is not a trespass on their part when they come to make you stop. So all kinds of situations like that, that arise and then there are other kinds of paradigms where we basically relax the general rules about these things. Think about, an airplane flying over your property at 30,000 feet. We might say that in some theoretical sense that constitutes a trespass, but we let that go. And there are different doctrinal moves that are done to facilitate that. But in general, we don't say that a United Airlines has to get permission from everyone whose land they fly over in order to fly a particular route. So there are limitations on the general principle, and of course there's also other ways, there are ways in which you can involuntarily lose your property, such as under the law of eminent domain, where, although you are compensated for your property, you do ultimately lose it. And so in that sense, your rights are terminated. PUBLIUS: Let’s wrap up with one more question about ownership. What are some of the rules that govern voluntary transfer of property? JAMES STERN: Transfer of property is a major part of what the law of property is all about. Figuring out when property is transferred and when it's not, when it's properly transferred, who can transfer it, those questions occupy much of the life of property law. That's part of the reason that I tend to focus on this end of things as opposed to original capture of property, original ownership, because in the situations where you're likely to hire a lawyer to deal with a property question, this is a major one. Where you're dealing with disputes about whose property something is or what the boundary lines are. But the general rule for personal property, that's maybe the easiest one, is that title passes upon delivery. It gets a bit more complicated than that, particularly in commercial law under the UCC, which has some more complicated variations on these basic rules, but the general idea is that property is transferred at the point of delivery. With real estate, if you've ever engaged in a real estate transaction, there is a closing. It tends to be a pretty formal interaction and upon delivery of a deed, that's the general point at which we say a transfer occurs. The key point in all of this, if you really want to get to the DNA of the property system, is understanding the significance of the fact that others are going to have to know about your acquisition and you, for your acquisition of property to be valid, you have to make sure that there aren't competing claims that conflict with yours to this property so that the person who's selling to you actually is the owner, because I could offer after all to sell you the Brooklyn Bridge but the reason I can't actually sell you the Brooklyn Bridge is because it's not mine. That's an ever present difficulty and it's not just about having bad title, but there could be other subsidiary problems as well. For example, property that I'm trying to sell you might be subject to a mortgage or it might depend on certain easements or rights of way in order to be useful to you and you'll want to track down and figure out whether those are in place or whether it is in some way burdened by these things. Whether there's a tenant on the property that you might have to worry about. All kinds of questions like that, that have to be sorted out in order to figure out whether the transfer is good and what comes with it. That's on the recipients end, you want to make sure you know all of that, but more than that the system is in trying to figure out whether to ratify your transaction. It has to take into account all these other people who need to know stuff for the future to be able to answer exactly those same kinds of questions themselves. Good faith purchaser rules are a major part of how all sorts of different aspects of property law work and they're quite important. Although there's some variation among them, the basic themes are pretty common across the range of different situations. A good faith purchaser, there are two basic elements there. You have to be a purchaser of properties, good faith purchaser rules are only available for the benefit pf purchasers, not for people who acquire property some other way, such as by gift. A good faith purchaser is someone who purchases property without knowledge of some other claim upon it. Let's say you've got an owner how purports to sell the same property both to A first and then to B. B purchases the property from the owner, doesn't know that there was this previous attempted sale to A. A good faith purchaser rule, if we have a good faith purchaser, if B doesn't know about the transaction with A, B would be able to prevail in a contest with A to get that property. It's unfortunate that the owner has done this, but that happens. There's a bunch of different ways this kind of problem can come up. For example, if there's a mortgage that hasn't been properly recorded or something like that. A good faith purchaser rule protects a subsequent purchaser of property who comes along and doesn't know about some defect that existed along the way. In having good faith purchaser rules you've got a pretty clear trade off. You've got to decide in that situation I described before, who's going to win, A or B? With those two different cases the trade off on the one hand is between protecting the expectations of A so that A doesn't have to fear that there's someone who's going to come along and take the property away from them. Whereas, on the other hand in the situation of someone like B, you provide a confidence in the marketplace so that people who go to buy stuff don't worry about basically submerged driftwood in the river way, sort of speak, that's going to divest them of their property. So you've got to figure out whose in a better place to provide information in these kinds of situations. A can tell B potentially about that transaction. B can't tell A because B's transaction happened after A's so there's no way for B to notify A ahead of time. A can notify B, for example, by recording the transaction or somehow making it public. So, that's one of the reasons why there are these good faith purchaser carve outs in the law that can protect good faith purchasers and make it easier to acquire stuff without worrying about a whole exhaustive change of title going back. NARRATOR: Thank you for listening to this episode of the No. 86 Lecture series on Property Law. The spirit of debate of our Founding Fathers animates all of the No. 86 content, encouraging discussion and critical reflection relative to how each subject is widely understood and taught in law schools and among law students. Subscribe to the No. 86 Lecture series on your favorite podcast platform to have each episode delivered the moment it’s released. You can also go to fedsoc.org/no86 for lectures and videos on Federalism, Separation of Powers, the Judiciary and more. Thanks for listening. See you in class!