NARRATOR: Thanks for joining this episode of the No. 86 lecture series, where we discuss the foundational questions in Property Law: What is Property? Why do we need it? Why is it a first year law school course - and how does it relate to other courses? Today’s episode features Donald Kochan, Professor of Law and Deputy Executive Director of the Law and Economics Center at Antonin Scalia Law School. 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: Let’s start with a deceptively simple question - What is property? Is there a simple answer? DONALD KOCHAN: The question of, "What is property?" has no precise answer. To answer that, the best we can usually do in the property class is define the attributes of property, and those attributes help to make us understand what property is itself. Those attributes are also going to be somewhat different depending on the type of property you are discussing. But the shared attributes are ownership. So first off, there's the ownership principle. It is something which you own, which means you have some entitlement to the thing and that entitlement is different than what other people have. So it's an individualized entitlement, an individualized ownership. In addition, that ownership comes with certain attributes, certain qualities, certain benefits and one of those keys is that you have the right to exclude all others from accessing, using, enjoying, benefiting from that thing which you own. In other words, you are the sovereign governor of the things that you own and you regulate how other people interact with that thing. So property, that thing you own, really becomes about what is yours versus what is not theirs. So it is this idea of a demarcation of ownership that gives you the ability to exclude others from those things you own. And as such, property is those things which you call your own. It is those things which you call mine. It is the stuff which you call mine and, importantly, has the fundamental characteristics as recognized by the law so that a judge will also recognize it as yours. That is, it is not something which you just claim to be yours, but that you have acquired in one of the legitimate ways that is recognized by the law to entitle you to ownership and thereafter to the benefits of ownership, including the right to exclude others. So exclusion is the sine qua non of property and it really is the fundamental characteristic which differentiates property from other things. You have the right to keep that property. People cannot force you to sell it. You have a right to refuse to sell. You can use the property so long as you're not harming another. That's the principle protection in property of “sic utere tuo ut alienum non laedas,” so as to use your property not to injure another. So there are reciprocal obligations in property. You cannot simply use your property in any way you wish, but you can use it in any way that does not harm someone else. So there's this reciprocal obligation that you accept those kinds of limitations on how you use the property, understanding that you benefit from the fact that your neighbor also has the same limitation on their property. They can't use their property in a way that harms you, just as you cannot use your property in a way that harms them. PUBLIUS: Why is Property necessary for a well-ordered society? DONALD KOCHAN: A well ordered society is dependent on a system of property which includes a system of strong property rights as well as a confidence in a neutral arbitration system. So a well ordered society is dependent on a system of property. In part, that means a system of strong property rights which can be asserted against others as well as asserted against the government. And you need, therefore, a system of courts, neutral arbiters, which can resolve disputes over that property. If you have those things, then you create the conditions of order that allow people to engage with each other in a civil, peaceful manner. You avoid self help. Let me talk about each of those things for just a minute. So one is that if I know that you own your house and your yard and I'm your neighbor, there's a clear understanding of my rights and responsibilities vis-a-vis your property. I know I can't go onto your property, you know you can't come onto mine. We have a reciprocal understanding of the rights of each party. It's clearly defined, and therefore we don't have constant battles and disputes over who owns what. In addition, property allows for us to avoid self help. That is, we have a court system. If we disagree where the boundary line is between our two properties, a court can resolve that for us and we don’t have to get to fisticuffs to decide who owns that piece of property. In addition, property serves a well ordered society because it prevents plunder. It prevents plunder from both private individuals and from the government. The reason is because if I own my property, if someone comes and tries to take that, I can ask the government to exercise its fundamental responsibility to resolve that dispute and protect my property against the plunderer who has come and taken it. And so we have this protection against stealing, against thieves, against plunder by others, which means we avoid that chaos that would happen if nothing was owned. If nothing was owned, it would be the strongest person who would just come in, and if you were stronger than me, you would come and take away my backpack and take all my books. And I would have no recourse to say that I have an entitlement to get those back, and the courts would have nothing against which to judge whether or not I should get those books back. Property gives us the mechanism through which I can make the demand for my property to be returned when my property is plundered by another. And it’s those conditions that are set out from the beginning and understood by all that discourages plunder in the first place because there will be no benefit from plundering because you will not be allowed to keep it in a system in which the government protects other people’s rights to property by punishing you both through the criminal law and also allowing the civil law to allow property owners to make demands upon others. So we end up with this ordered society through property rights. Through the peacefulness that comes from allowing people to coexist in the world understanding what is theirs and not theirs, and that in and of itself is beneficial to an ordered society. PUBLIUS: What is the proper role of the government in protecting property rights? Where do these rights come from? DONALD KOCHAN: So the property law is in many ways about property rights, and property rights are considered individual rights in the United States. We have a long tradition, a long history, in which those rights have been seen as fundamental parts of individual liberty, that without property rights, people could not in fact have freedom. One of the reasons why private property has been considered so critical to individual liberty is because of how easily it could be infringed upon. That is, arbitrary government action which seized the property of private individuals was often seen as the heart of despotism. And so the need to protect against those kind of arbitrary seizures was one of the reasons we needed to break away from the king in the American Revolution. It is one of the reasons why there was a demand, even in England, for greater protections in the Magna Carta. This was seen as the height of governmental abuse, was the invasion upon private property. The people should be free to control their land. People should be free from arbitrary seizure of their belongings. And without it, it was understood that individuals could not have their liberty protected, if there's no security in the property that people own, people have very little incentive to invest in acquiring or improving property. Influenced by John Locke and the lesson that Locke presented about the importance of private property, Madison, writing in his famous essay Property in the National Gazette said, "Government is instituted to protect property of every sort, this being the end of government that alone is a just government, which impartially secures to every man whatever is his own." In that, Madison captures this fundamental obligation of the government. First, the government must prevent itself from invading the private property of private individuals. But second, a fundamental purpose of government is to set itself up as a neutral arbiter for property disputes between individuals as well, in which the government acts as the impartial protector of property rights so that the property rights can both advance individual liberty, people can feel free and unencumbered in their rights to property, and people can feel comfortable and confident in engaging in exchange over property through contract law that, in fact, allows society to flourish. And so really, the idea that property is an attribute of individual liberty is something well recognized in the tradition of the English common law from the Magna Carta to the constitution. We have this recognition that property should be a right held by the individual against others, those who might invade it, as well as against the government. That is, this understanding that the government may not infringe upon the private property of an individual is seen as an inherent attribute of individual liberty and an inherent limitation on the function of a legitimate government. In the United States Constitution, we of course have what is known as the Takings Clause, and this states that, "Nor shall private property be taken for public use without just compensation." This is one of the key recognitions of the delineation of rights between property rights and governmental power in the United States Constitution, that the individual has the right to exclude the government from infringing upon their private property rights if the government is doing it for anything other than a public use. And if the government is doing it for a public use, then the coercive action requires compensation to the individual. Again, recognizing this fundamental right to property. In addition, the constitution recognizes what's called the Due Process Clause, which requires that any deprivation of life, liberty, or property cannot be done without due process of law. And this too is again recognizing that property sits at the top of the fundamental attributes of individual liberty. So if we're actually thinking not only about the normative protection of individual liberty, but if we're also thinking about the utilitarian benefits of improving the society, facilitating markets in property, then we need to have strong property rights so that people feel like, "If I buy that house today, the government's not going to come and take it away from me tomorrow," right? I'll be incentivized to go buy that house if, in fact, I believe that I can purchase it and keep it. And keep it not only against other private intruders, but keep it against government invasion. And that idea that commerce is flowing because people have confidence in their ability to keep the property that they own is highly beneficial. It also means that things are moving to higher and better uses. I purchase property and I'm more likely to make improvements on that property, move it to a higher and better use, if in fact I believe that I will own it tomorrow as well and it won't just be taken away from me. So this idea of investing in property and improving upon property over time is facilitated by this freedom from arbitrary governmental seizure of property. PUBLIUS: So property rights have an important place in our legal framework. Can you talk a bit about how you approach this topic with students? Why is Property Law a first year course? DONALD KOCHAN: So the property class serves two purposes. One is that you learn about property and you are going to learn how to understand property and property concepts, you are going to understand how the law looks at property and how the law regulates property. And so in that sense, this is very much a subject-specific course. But at the same time, the property subject is a wonderful one for learning to think like a lawyer. One of the reasons why is because property is really about principles, foundations, policies, paradigms, and ideas. And if you understand why the rules are generated the way they are, you're going to learn how to advocate for an application of those rules that's beneficial for your client. But if you lose sight of those underlying reasons for the rules, you're not going to be very effective at trying to understand how the rules should be applied in any particular case. One of the misconceptions that students sometimes have is that they're going to come in and they're going to learn black letter rules, and those black letter rules I'm going to be able to plug into a black box and it's going to spit out an answer. Property is a class that doesn't have many clear rules. And the reason why is because it really is about the application of these higher level principles through a set of doctrines which are developed based on those principles that have fact-intensive and fact-specific, context-specific application. So what you really learn in property is the basic rules which are going to govern the dispute, but these rules don't necessarily decide the dispute. What decides the dispute is figuring out how the facts fit into these rules, how those rules should apply to the particular facts. And property is a wonderful class for learning the key lawyering skill of cross-argumentation. And what I mean by this is that a lot of students come in and they think, "We're going to learn rules and then we're going to apply the rules and we're going to find right answers." What the law school course allows you to do is learn the fundamental principles that underlie the rules, then you're going to learn the rules, and then you're going to learn that there is no single right answer, but instead, you're going to have the tools to develop arguments on both sides. And the best students are those who learn how to argue one side, then argue the other side, and maybe a third side or a fourth side as well, and then explain why one is better than the other. Property is a wonderful vehicle for doing that because of the fact it doesn't give you precise clear answers. And in that sense, you learn very much the lawyering skill by learning the kind of argumentation that's necessary to be persuasive in property because you're not going to be given a lot of correct answers. The best lawyers are able to zealously argue the opposite side as well, trying to make the best case for the opposite side, which will make sure you're not blindsided in defending your client. And then, only then, should you weigh and decide which side has the better argument. And property gives you a great opportunity to do those things. PUBLIUS: How is Property related to the other first year courses? DONALD KOCHAN: One of the reasons why property is so important to the first year curriculum is because property really does serve as the foundation for understanding each of the interconnected parts of the common law, property, contracts, and torts most directly. And the reason why is because each of these segments of the common law are trying to identify the rights and responsibilities of individuals vis-a-vis each other. They are dependent on a neutral arbiter who can resolve disputes and determine what is the nature of a wrong in each of these categories, and to determine what the respective rights are between each of the parties. Torts are a way to protect the things that you own and/or the person. In other words, property, the idea of ownership, the fundamental attribute of ownership is the right to exclude others from that thing, right? The, "Keep out, stay away. This is mine, not yours." That demarcation, that boundary kind of delineation that occurs in property is precisely the boundary that we see in torts. In torts, we're saying, "You don't have a right to invade my space and hit me in the face. You don't have a right to cause me bodily injury. Why? Because I have a right to exclude you, just like I have a right to exclude you from my home if you have no entitlement to enter it, just like I have a right to exclude you from my yard because you would otherwise be a trespasser. Similarly, torts are about protecting not the integrity of a piece of real property or land or your car, personal property, but it's to protect your entitlement to yourself. If you understand this idea of the right to exclude, you understand why torts are a wrong. They are an invasion against someone else's entitlement to exclude you from their body, from their person. One of the things I try and start out with in one of my early classes in property is a boxing analogy. And so when I talk about the boxing analogy, I say, "Well, one thing that we could do is think about our face if we have self ownership as being our property, and I have a property rule to exclude your fist from my face." This helps us understand also the reciprocal nature of property rights. You own your fist, I own my face. You cannot use what you own in your fist to invade what I own in my face. If you try to hit me in the face, I have a right to exclude you and I have a right to get an injunction against you ever doing it in the first place. That's a property rule. If you hit me in the face, that would be a tort. You understand that it's the violation of the rights to exclude your first from my face that becomes the tort in that sense. But, we could also contract, in which I say that I will allow you to use my property in a way that is beneficial to you. Let's say you get five units of pleasure out of hitting me in my face and I only get one unit of harm by doing so, we could engage in an exchange in which you are allowed to hit my face. That's boxing, right? Now, liability rules [add the words: are an alternative choice for governance rules we could use to govern liability] we could use to govern in which people can go around hitting each other without any violation of an entitlement and say all you have to do is pay for hitting the person in the face. [Add the words: Under a liability rule regime—as compare tio a property rule regime—“] That explains what a liability rule is. In other words, you are allowed to go around and hit people in their face, but you have to pay for the damage you did, but you can't be prevented from doing it. A last category of rules is inalienability rules. And inalienability rules would be we outlaw boxing. We say that, "You're not allowed to alienate the rights to your freedom of being hit from your face in a contractual relationship, but instead we say there's some other societal value that precludes us from allowing people to alienate that part of their ownership and so we could outlaw boxing entirely. That's one way in which I'm trying to draw this connection between the three principle common law subjects. PUBLIUS: You mentioned that the third common law course is Contracts. How is that related to Property? DONALD KOCHAN: The fundamental question in any property dispute is who owns and who does not own the particular piece of property. Why? Because that idea of ownership comes with certain entitlements. One is to exclude others, another is that you have the entitlement to transfer the property to someone else. If I own something, I have the right to give it to someone else in free exchange but I need to have a level of ownership in order to do that. The person who buys or contracts with me for the property needs to have confidence that I own it, that I had a right to sell it. If I didn't have a right to sell it, they're certainly not going to want to purchase it because they're purchasing the right to own it and sell it themselves. Let me give you an example. If you are selling a house, you want to project to the world that you are the owner. Why? Because you're going to get a higher price for the house. Who's going to want to buy a house from someone who doesn't own the house? It would be a silly proposition that you would pay a million dollars to someone who claims to own a house if you did not have some confidence in their ownership of that house. But if they can prove to you that they own the house, which is why we have recording statutes that allow for public information to be projected to the world, that gives the world confidence that you have recorded and solidified your rights under the law to ownership, it's verifiable. It's a way that buyers out there can verify that you're the owner. That recording system then adds this tremendous amount of confidence to the contracting world because now the people who are out buying it know that if they purchase it from you, they're not just purchasing the house, they're purchasing all of the attributes of ownership that you have, including the right to exclude, and they stand in your place. However, if they think that they're purchasing from someone or are not confident that they're purchasing from someone that is truly the owner, you're going to discount that, right? If there's a risk that someone is going to come knocking on the door and say, "Actually, I'm the owner of the house, not the person who sold this to you," you are unlikely to buy that house because you are very concerned that someone with superior title to the house will come knocking on the door and kick you out. So as another example, imagine if you are buying an expensive Rolex watch and you go to the store, it's going to be priced at a certain value. Now, when you're walking the streets, someone might open their jacket and offer you a Rolex watch from inside at a much lower price. But you don't actually know, A, whether or not that is stolen and whether or not the person has a right to sell it, or B, whether it's counterfeit. You're going to pay a higher price for the watch which has greater indicia of legitimate ownership than you would the one where you fear that there is a owner with superior title other than the seller that may come at some point and try and dispossess you of the property. So the price of property often reflects the level of confidence you have in the ownership of the seller and the exchange is more likely to occur when that confidence is high. And so contracts are dependent on property. If you did not have the concept of ownership, you could not have the confidence necessary to facilitate exchange in contracts. Contracts law has to look to ownership principles and property principles in order for it to be effective in a free market. 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!